Ms. Mary Uduk, Acting Director-General of the Securities & Exchange Commission (SEC), last week hosted the first Capital Market Committee (CMC) meeting for the year in Lagos and indeed her maiden outing as chief executive of the capital market regulator. The CMC provides a forum for chief executives of capital market stakeholders to discuss issues and ensure the development and orderly conduct of the Nigerian capital market. Last Friday, she along with her team, briefed newsmen on outcome of the meeting, after which Ms. Uduk fielded questions and answers from the financial press, where she took on issues ranging from plans to enforce the law that requires investors to exchange company shares only on SEC-regulated trading platforms. The interaction also dueled on forbearance, electronic Dividend (e-Dividend), e-Initial Public Offering (e-IPO), as well as the high rate companies are voluntarily delisting from the Nigerian Stock Exchange (NSE), among others. Investdata was there. Excerpts…
Some (otherwise large) companies are not listed on any exchange at all, what is the SEC doing about this?
In as much as the capital market will like to attract as many companies as possible, the decision to be listed rests with the individual companies. All we do is to encourage companies and let them see the benefits of being listed. However, all public companies, whether listed or not, are expected to register their securities with the Commission. We also have rules stipulating that shares of public companies can only be transferred on SEC-approved trading platforms/exchanges.
Thus, even when a company delists, its shares can still be traded on, say, NASD OTC Plc. In addition, the Commission is liaising with the Corporate Affairs Commission to ensure that companies comply with registration of their securities and exchanging such securities only on SEC-approved platforms.
What are the terms of reference of the Committee on Listing?
The mandate of the Committee is to drive advocacy and other activities towards increasing the number of listed companies on our exchanges. Their broad terms of reference are to propose strategies to attract listings from target sectors; undertake relevant advocacy as well as other activity that may be relevant to the achievement of this mandate.
New mandate given to that committee is to find out why a number of companies are delisting. Are there regulatory issues; is it that they are having issues with compliance with our regulations? We have given them a mandate to come up with recommendations so that if we need to amend our rules to attract more listing we will look at international best practices and do that. If we have to talk to other government agencies and stakeholders we will equally do so.
What would the new SEC management do differently to boost investor confidence?
Members of the new management team have worked in the Commission for many years with experiences in different department of the Commission and aspects of the capital market. We have always been part of the Commission’s efforts at improving investors’ confidence and implementing the Capital Market Master Plan.
The Master Plan will continue to be our working document and we shall continue to implement initiatives that will promote investors’ confidence such as E-Dividend registration, Direct Cash Settlement, Dematerialization, Complaint Management Framework, Financial Literacy and Investors’ Protection Fund, among others.
What are the effects of the closed window on free e-dividend?
It is important to state that e-dividend registration has not ended; it is free registration that ended 31 March 2018. Before the deadline, the Commission was bearing the cost of registration, but the new direction now is that banks and NIBSS, along with registrars will charge a token sum of N150 per mandate. We are still soliciting for co-operation from the public to key into electronic dividend payment as this is what will address the fundamental issue of unclaimed dividend.
What is the total number of approved mandates?
As at end of March, 2018, the total approved mandates were 2.49 million, translating into 466,000 unique investor accounts
What is SEC doing to promote electronic IPO?
Globally, capital markets are moving towards Electronic IPOs (e-IPO) and the Nigerian Capital Market is working to adopt this trend. A committee was set up during the meeting comprising the Securities and Exchange Commission (SEC), Nigeria Stock Exchange (NSE), Association of Issuing Houses of Nigeria (AIHN), Association of Stock Brokers (ASHON), Central Securities and Clearing System(CSCS), Institute of Capital Market Registrars (ICMR), Capital market Solicitor Association(CMSA), Fund Managers Association of Nigeria (FMAN), and NIBSS
What is the latest on multiple subscriptions and forbearance?
On multiple subscriptions and forbearance for shareholders with multiple accounts, the forbearance window has now been extended to September 2018. Registrars have acknowledged that investors have started coming forward but there are still some challenges in the process. The CMC deliberated and recommended the appropriate Technical Committee to seek input and come up with recommendations to address these challenges. Therefore, we encourage all affected investors to come forward and take advantage of the window before the new deadline.
What other issues did the CMC consider?
The Technical Committee on Non-Interest capital market also presented its report and noted that the first sovereign sukuk which was issued in 2017 had about 1,600 retail investors that invested N5 billion in the instrument. The Committee’s next level of engagements is to work with supra-national entities (such as IFC, AfDB), state governments, institutions (such as Federal Mortgage Bank, NMRC) to include sukuk options in their capital investment plans.