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Understanding AMCON: What Does it Mean for Me?

18th April, 2017 at 11:00am

The Asset Management Corporation of Nigeria (AMCON) was established by an Act of the National Assembly on July 19th 2010, primarily to resolve the nation’s banking sector crisis and restore stability to its economy. It purports to do so by purchasing Non-Performing Loans from eligible financial institutions and effectively managing or disposing of them. However, the issue arises from the fact that the Act grants notably wide and novel powers in its bid to achieve its objects. This consequently results in significant legal implications on the key players involved, particularly legal practitioners, the judiciary, eligible financial institutions and even debtors. Additionally, the AMCON Practice Directions 2013, by providing for updated terminology and special debt recovery procedures, ensures that court proceedings are concluded as speedily and efficiently as possible. This article seeks to discuss the effect of these laws on different classes of affected persons and furthermore, to investigate the constitutionality of some of their provisions.

The AMCON Practice Directions 2013 have introduced several novel procedures that affect the legal practitioners engaged in AMCON matters and the Judges presiding over them. In particular, Part V provides that all proceedings initiated by an AMCON claim should hold every working day of the week with the aim of concluding the trial and final addresses within 3 months from the date the claim was started. This is in contrast with the average litigation process that stretches over months and sometimes even years before judgment is delivered. However, AMCON being a time-bound institution cannot enjoy the luxury of over extended adjournments and hence, requires an urgent approach.

Furthermore, the Practice Directions minimize the significance of technical irregularities. Formal defects that ordinarily may be cause for a suit to be thrown out, may, upon direction and at the discretion of the Judge, be amended and regularized[1]. In a similar manner, a claim filed in the wrong jurisdiction is not immediately invalidated and the presiding Judge may choose to proceed with the matter regardless[2]. The court may even validate substituted service done without appropriate permission[3] and proof of service may also not be necessary in particular circumstances. For example, if the party or counsel to be served admits to service or appears in court in response to the served document and is in possession of it, the requirement to file an affidavit, certificate or statement as to service may be negated[4]. All these special procedures are set in place to ensure justice is attained in a timely fashion. Hence, it is imperative that lawyers and judges alike work diligently and cohesively, through active case management or otherwise, to achieve this fundamental objective.

However, of great pertinence to all parties involved is a powerful tool provided under Part 13 of the AMCON Practice Directions 2013. This part permits interim orders to be granted at any time before proceedings have even been initiated and even after judgment. This is particularly significant regarding the powers granted under Sections 49 and 50 of the AMCON Act that provide for orders for possession of property and for freezing of bank accounts respectively to be granted against the debtor.


  1. Where the Corporation has reasonable cause to believe that a debtor or debtor company is the    bona fide owner of any movable or immovable property, it may apply to the Court by motion ex-parte for an order granting possession of the property to the Corporation
  2. The Corporation shall serve a certified true copy of the order of the Court issued pursuant to subsection (1) of this section on the debtor or debtor company.
  3. The Corporation shall commence debt recovery action against the debtor or debtor company in respect of whose property an order subsists pursuant to subsection (1) of this section within 14 days from the date of the order, failing which the order shall lapse. 


  1. Where the Corporation has reasonable cause to believe that a debtor or debtor company has funds in any account with any eligible financial institution, it may apply to the Court by motion ex-parte for an order freezing the debtor or debtor company’s account. 
  2. The Corporation shall commence debt recovery action against a debtor or debtor company whose account has been frozen by a Court Order issued under subsection (1) of this section within 14 days from the date of the order, failing which the order shall lapse.”

From the above sections, it is clear that the sole prerequisite for these orders is that there should be reasonable cause to believe the debtor or debtor’s company is the bona fide owner of any property or funds in any bank account. The implication is that once a debt is acquired from an eligible financial institution, AMCON may obtain such court orders without notice of the suit even being served on the obligor and possibly without any prior attempts at negotiation. Additionally, these Orders would be enforceable throughout the duration of the suit if AMCON commences debt recovery action within 14 days from the date the Order was issued.

Regarding this situation, one might rightly argue that the abrupt possession of property and/or bank funds work against Section 44 of the Constitution of the Federal Republic of Nigeria 1999 (CFRN) that guarantees a citizen’s right to moveable and immoveable property. Although Section 44 (2) provides a range of exceptions to this right, including financial obligations arising out of contracts, the Civil Procedure Rules of each state have laid down well-established methods of enforcing such agreements while also seeking to protect the rights of the obligor as much as possible. For example, under Order 7 Rule 2 of the Abuja Civil Procedure Rules 2004, “a motion ex parte shall be supported by an affidavit stating sufficient grounds why delay in granting the Order sought would entail irreparable damage or serious mischief to the party moving”. This provision is essential because it serves as a measure to ensure that appropriate caution is taken before the obligor’s rights are abrogated.

Furthermore, the Abuja Civil Procedure Rules make provision for the party affected by the Order to apply to the court to vary or discharge it within 7 days of service of the Order and even without any such application, the Order will naturally lapse after 14 days. Likewise, by virtue of Order 26 Rule 12(2) of the Federal High Court (Civil Procedure) Rules, 2009 an order made on motion ex parte will automatically lapse after 14 days. Hence, for the Order to last the duration of the suit, the application must be brought by motion on notice and this, thereby, gives the affected party an opportunity to be heard. Unfortunately, there are no similar provisions in the AMCON Practice Directions 2013 and for the entirety of the suit, the obligor may also be denied his right of being heard before a Court of Law. This appears to be in contravention to Section 36 (1) CFRN that guarantees a person is properly heard before a decision affecting him/her is made.

Conversely, it may be argued that this abrogation of rights is for a brief period of approximately three (3) months and not a final decision. However, does the short duration of the suit justify the deprival of interests guarded by the Constitution? In the case of 7up Bottling Company Ltd. vs. Abiola & Sons Ltd, Uwais JSC stated that there are certain steps that are only ancillary to the substantive case such as interim and interlocutory injunctions. These “orders to be made by the Court, unlike final decisions, are temporary in nature so they do not determine the civil rights and obligations of the parties in the proceedings as envisaged by the Constitution” (Pg. 280). This decision was upheld in Esai Dangabar vs Federal Republic of Nigeria where the Court held that the grant of an ex parte application was not in breach of the fundamental right to a fair hearing. In this case, the interim attachment of assets was held to be simply for its preservation pending the final determination of the case where the final decision on the confiscation or acquittal of the properties as the case may be will be made. Hence, according to Nigerian case law, as publicly controversial as the provisions of the AMCON Act may be, it may still be within the confines of the CFRN. Consequently, debtor or debtor companies and their legal representatives are advised to resolve their debts through negotiations before such drastic actions are initiated against them.

Nonetheless, however, the extent of the broad powers granted to AMCON may be observed even further under Section 48 of the AMCON Act:


  1. The Corporation shall have power to act as, or appoint a receiver for, a debtor company whose assets have been charged, mortgaged, pledged as security for an eligible bank asset acquired by the Corporation.
  2. A receiver under this Act shall have power to:
    (a) realize the assets of the debtor company;
    (b) enforce the individual liability of the shareholders and directors of the debtor company; and
    (c) manage the affairs of the company” 

This ability to act as or appoint a receiver for such a debtor company without any reference to the Court is generally viewed as problematic and may raise similar issues of breach of constitutional rights. Albeit Section 392 of the Companies and Allied Matters Act (CAMA) 1990 provides that the appointment of such a receiver should be notified to the Corporate Affairs Commission (CAC), this does little to secure the interests of the debtor company. As it is an appointment done outside the court, the AMCON Practice Directions 2013 also doesn’t provide any clarification on the procedure to be utilized for this appointment, the criteria for appointment or how/if the debtor company will be notified. Although the urgency of AMCON necessitates such drastic actions, it is also apparent that this is power is readily available to it once the assets of the obligor company have been charged as security for a loan. Hence, debtor companies should take heed and try to settle any outstanding debts as quickly as possible.

On the other hand, as an eligible financial institution selling bank assets to AMCON, there are also certain note worthy obligations and implications that arise from such a sale. By Section 34 of the AMCON Act, all the rights, powers and obligations accruing to the eligible financial institutions as creditors to the debtors automatically cease once acquired by AMCON and are, thence, vested in the Corporation. Also, upon request from the Corporation, such institutions are required to give the necessary assistance in legal proceedings involving bank assets acquired from them. This may take the form of making available vital documents or witnesses that could help their case[5]. These steps are paramount for the Corporation to achieve its objects of effectively disposing of its acquired assets. 

Moreover, however, the AMCON Act contains safety provisions against any liability that may be incidentally acquired along with the bank asset. Eligible financial institutions are required to enter into a purchase agreement with AMCON that indemnifies the Corporation against any loss that may be suffered by it if the collateral is invalid or unenforceable[6]. AMCON may equally direct that it be indemnified against any loss resulting from “any error, omission or mis-statement in any information or certificate provided to the Corporation”[7]. Furthermore, the financial institutions are solely liable for any damages sought by the debtor arising from the failure to disclose any obligation that the financial institution made in favour of the debtor or failure to record any note particularizing the consideration already paid by the debtor[8]. Therefore, from the above provisions, it is apparent that eligible financial institutions selling off their bank assets enter into a continuing relationship with AMCON until those bank assets are adequately disposed of. In order to reduce their liability, it is imperative for these financial institutions to conduct their affairs with their debtors and with AMCON diligently and in good faith.

In conclusion, the AMCON Act and the AMCON Practice Directions have introduced several novel provisions that affect the way debtors, financial institutions, their lawyers and judges interact with each other in the enforcement of debts. While the fundamental aim of the Practice Directions is the speedy dispensation of justice, we have investigated how their execution simultaneously borderlines the infringement of certain constitutional rights. In a similar manner, the primary objective of the AMCON Act is to assist eligible financial institutions in the effective disposal of its bank assets. However, the Act opens up various new avenues of liability for these financial institutions. Hence, it is important for all parties concerned to fully acquaint themselves with these new provisions so as to place themselves in the best position when dealing with AMCON.


  • Asset Management Corporation of Nigeria Act, 2010
  • Asset Management Corporation of Nigeria Practice Directions, 2013
  • Companies and Allied Matters Act, 1990
  • Constitution of the Federal Republic of Nigeria, 1999
  • Esai Dangabar vs Federal Republic of Nigeria (2012) LPELR-1973 (CA)
  • Federal High Court (Civil Procedure) Rules, 2009
  • High Court of the Federal Capital Territory, Abuja Civil Procedure Rules, 2004
  • 7up Bottling Company Limited & Ors vs. Abiola & Sons Bottling Company Limited (1994) LPELR-14099 (CA)
  • [1] AMCON Practice Directions, Part 7
  • [2] AMCON Practice Directions, Part 6.2
  • [3] AMCON Practice Directions, Part 3.2 (5)
  • [4] AMCON Practice Directions, Part 8.12
  • [5] AMCON Act, s.38
  • [6] AMCON Act, s.32
  • [7] AMCON Act, s.44 (a)
  • [8] AMCON Act, s.42