Durrant Pate/Contributor

Jamaica’s Supreme Court has issued an order sanctioning the reorganisation of the Cornerstone Group and Barita Investments Limited (BIL) into a single financial holding company, as prescribed by the relatively new FHC regime.

Both entities petitioned the Supreme Court in December 2023 with a reorganisation plan, which the High Court approved on April 4, for the formation of a new FHC in which all entities within both groups are placed. The reorganisation, contained in a scheme of arrangement, was approved pursuant to sections 206 to 208 of the Companies Act of Jamaica. 

Under the relevant section(s) of the act, the schemes will come into effect once the order has been filed with the Registrar of Companies on/or before Friday (April 11). The reorganisation is mandated by the Banking Services Act of 2014, which indicates that every group of companies containing two or more financial services entities, one of which is a deposit-taking institution, must hold all its regulated entities under one FHC.

The reorganisation will ensure all regulated entities within the group are held under one FHC to enable consolidated supervision by the Bank of Jamaica (BOJ) under the Banking Services Act. The reorganisation will proceed through a court-sanctioned composite scheme of arrangement.

Details of the reorganisation

Under the proposed new structure, Cornerstone Trust & Merchant Bank Limited, Barita and its subsidiary, Barita Unit Trusts Management Company Limited will be held under Barita Financial Group Limited (BFGL), the proposed FHC. 

The reorganisation will have no adverse effect on CUHJ’s shareholders or Barita’s shareholders. Barita’s shareholders, save for Cornerstone Financial Holdings Limited (CFHL), will continue to hold their shares in Barita, which will remain listed on the Jamaica Stock Exchange (JSE) and so no value will leave shares held by the Barita minority shareholders both before and after the reorganization.

The restructuring is also expected to result in CFHL assuming the assets and liabilities of CUHJL and CUHJ will thereafter be dissolved. CFHL, the parent company of BFGL, will become the ultimate holding company for the group, subject to BFGL being issued with the FHC licence by the Bank of Jamaica.

The second step of the planned reorganization will potentially involve the delisting of Barita on the JSE and the listing of BFGL. This second step will be the subject of a separate set of transactions which will involve further consultation with various stakeholders.

Currently, there are seven licensed FHCs in Jamaica, namely NCB Financial Group, JN Financial Group, JMMB Financial Holdings, Sagicor Group Jamaica, VM Financial Group, GraceKennedy Financial Group and Scotiabank Jamaica Group.