Ahead of the demutualization exercise, , the council of the Nigerian Stock Exchange (NSE) yesterday, appointed the inaugural board that would oversee the affairs of the Nigerian Exchange Group (NEG) post demutualisation.
This follows a successful court ordered meeting and Extra ordinary General Meeting (EGM) held in Lagos yesterday, where members of the exchange unanimously voted 100 per cent in favour of the appointment of the initial directors of the Group.
The appointed directors are Abimbola Ogunbanjo, Chairman and Non-Executive Director, Mr Oscar Onyema, Chief Executive Officer and Managing Director, Dr Umaru Kwairanga – Member and Non-Executive Director and Mrs Fatimah Bintah Bello-Ismail – Member and Non-Executive Director, among others.
Speaking at the event, Ogunbanjo, who is the President of the council, said the national council had also proposed a transition arrangement for the inaugural board of directors to be implemented immediately upon demutualisation and the re-registration of the exchange as a public limited liability company.
He said for the purpose of maintaining continuity and preserving the Exchange’s collective knowledge and learned experiences, as well as retaining stakeholders confidence and market stability, the board composition, post demutualisation would comprise individuals that have been selected from the current members of the national council as well as recently nominated independent directors.
According to him, the members of the national council retained afterwards would serve for a period of 18 months post demutualisation.
Ogunbanjo pointed out that on expiration of the period, the composition of the board will evolve in line with existing rules and regulation, market standards, competitive realities and succession planning policies.
“I feel elated that 19 years after initiating the process to demutualize and on the 60th anniversary of the Exchange, we are close to achieving the goal.The successful demutualisation of the Exchange was one of my main objectives when I assumed the Presidency of the Exchange. I am particularly happy it has been achieved during the lifetime of one of its founding fathers, Pa Akintola Williams.
“ In telling the story of how we have achieved this milestone, we recognize the efforts of several actors involved in this project – including the management and staff of the Exchange, our members, professional advisers, the Federal government of Nigeria, the Securities and Exchange Commission (SEC) and other capital market stakeholders without whom it could not have become a reality.”
Recall that the dealing and ordinary members of the exchange had on March 30, 2017, passed a reolution, authorising the National council of the exchange to commence the demutualisation process.
This was followed by the signing of the Demutualisation of The Nigerian Stock Exchange Bill into law in August 2018. In December 2019, the Securities and Exchange Commission of Nigeria (SEC) in a No Objection letter gave its consent to the NSE to hold the COM and EGM that would facilitate its conversion from a not-for-profit entity limited by guarantee into a profit-making, public limited liability company owned by shareholders.
Reacting on the development, the former Director General of the Nigerian Stock Exchange, Ndi Okereke-Onyiuke said the demutuualisation exercise would unlock new opportunities and attract more foreign investment for the exchange.
Additionally, she said the exchange would have access to fund that would enable it execute capital projects without dependent on the government aid.
“It is good, not only for stockbrokers and investors but for the Nigerians as a whole. It is good to have a demutualised exchange in Nigeria. I feel that people has come to understand what the stock exchange is all about.
“ With this demutualisation, a lot of people will come into the exchange since we have already gone through the process of teaching Nigerians how to be shareholders in quoted companies. I want to advice them to see the NSE now as a quoted company, it will have to behave like a father, and the exchange must maintain the rules and obey the rules.
“The exchange can attract further highly experienced staff, foreign investors now and foreign stockbroking firms. This is because the exchange is now opened up to the world. With this demutualisation, anybody in any part of the world can have access to stock market activities.
“The exchange will have a lot of money to execute high level plans and people that will invest in the exchange will also make money. It is the best thing that will happen to the Nigerian economy. It will definitely move the country forward because it is the engine room of the economy.”
To avoid government taking a controlling stake on the exchange, Okereke- Onyiuke said the exchange would limit government’s investment to 10 per cent, noting that government are not trained to crerate wealth.
“. People in government are not trained to create wealth; the operators are trained to create wealth not to spend it. Government can invest in stock exchange but we will limit the investment, no government can take more than 10 per cent because if government takes anything close to 20 per cent, they will start controlling it, making it look like government company and it will never happen, “ she said.
[3/5, 7:43 AM] Ambrose Investdata: ‘Why CBN must shelve loan to deposit
Expert in the financial market have flayed the Central Bank of Nigeria (CBN) to retain Loan to Deposit Ratio (LDR) at 65 per cent, urging the apex bank to reconsider its decision in order to forestall further depreciation in banking stocks in the nation’s bourse.
Specifically, the expert stressed the need for government to engender and fast track far reaching economic reform programmes that would bring about a more favourable economic climate, boost real sector operations and ultimately bring about a reduction in inflation rate to five per cent.
Addressing participants at the Investiture and Induction of Associates of the Chartered Institute of Stockbrokers, in Lagos at the weekend, the Founder of Stanbic IBTC Plc, Atedo Peterside categorically stated that the stock market is on a downtrend due to the CBN monetary policy decisions of the apex bank..
He noted that the new policies have impacted negatively on share prices of banking stocks, which have continued to witness a free fall thereby, depressing the All-share index and market capitalisation.
“What the Central Bank of Nigeria has done is to come out with a loan to deposit risk which is rigid and punitive. The logical implication of that is that if banks take deposit, they must take loan for you and when they do not find loans to take, they stop deposits because if they take it, they cannot realise them.
He continued: “So if inflation is 12 per cent and banks are offering you deposit at one per cent to two per cent, what are the likely things you are going to do, you can buy foreign exchange, because investors have a choice , you can buy property, and you can also buy foreign exchange.
“Unless you are buying a stock that you know is going to be very cheap and it has value in dollar terms, the short every body does is to think about speculating in foreign exchange, so these are the things that are making it impossible for the stock market to function.”
According to him, government must target a reduction of inflation rate to about five percent, if the nation must record reasonable level of growth.
Furthermore, he urged the apex bank to guide against naira devaluation, noting fear of devaluation is disincentive to investment.
The CBN, in exercise of its mandate to drive credit to the real sector of the economy particularly the small and medium scale enterprises (SMEs) had in October 2019, increased LDR to 65 per cent
However, analysts have argued that the new LDR policy has the potential to negatively impact the quality of banks’ loan portfolio in their attempt to meet the CBN target which could further increase the already high Non-Performing Loans (NPLs) especially in an economy beset by high inflationary trends and diminishing consumer demands.
