Ban On Sharing Of Gifts At AGMs Doesn’t Include ‘Light Refreshments’- SEC

One year after amending its Rules and Regulations to stop listed companies from distributing gift items at Annual General Meetings of public companies, the Securities and Exchange Commission (SEC), on Sunday clarified its position on, saying such does not include offering ‘light refreshments at such gatherings.
A statement by the commission recalled that according to the order contained in Rule 602 (4) of its Rules and Regulations states that “public companies shall not distribute gifts to shareholders, observers and any other person at Annual General Meetings/Extra-Ordinary General Meetings.”
Specifically, the rule provides that. “pubic companies shall not distribute gifts to shareholders, observers and any other persons at AGMs/EGMs. Public companies shall not convene any meeting with select group(s) of shareholders prior to an AGM/EGM.
It is has become necessary, the commission said, to clarify that “light refreshment” are not construed as “gifts.”
Justifying the Rule, the commission lamented the situation where public companies spend a significant amount of money on corporate gift items at AGMs/EGMs which has a great impact on their profitability.
“Few of the companies are making reasonable profits and even fewer can afford to pay dividends. If the amount budgeted for the gifts at AGMs/EGMs can be reserved for other relevant operational or administrative expenses, it would positively impact their earnings per share,” it explained.
SEC warned that any company that violates the provisions of the rule is liable to a penalty of not less than N10 million.