Stakeholders in the nation’s capital market, under the aegis of the Capital Market Committee (CMC), on Thursday expressed worry over the frequent rate companies voluntarily de-list their shares from the Nigerian Stock Exchange (NSE).
The committee, chaired by the Acting Director-General of the Securities & Exchange Commission (SEC), Ms. Mary Uduk, and comprising chief executives of licenced capital market operators agreed that such pose a threat to the growth and development of the market.
Briefing newsmen on the outcome of the CMC meeting in Lagos on Friday, Ms. Uduk said delisting “poses a threat to the growth and development of the market in view of the fact that quite a number of them are highly capitalized companies. We are expecting the committee on listings would come up with strategies to attract new listings.”
She therefore announced the setting up of a sub-committee comprising representatives of the various stakeholder groups was therefore set up to brainstorm on how to stem the tide and rather attract more firms for listing. The committee will also interface with firms, while reviewing circumstances that lead to frequent voluntary delisting.
In the last few years, stocks that have taken the voluntary delisting route include: carbonated soft drinks maker and Coca-Cola Hellenic Company, Nigerian Bottling Company; and very recently- 7-Up Bottling Company. Before then, there had been SuperSports…
The committee will meet management of companies that ought to be listed to find out why they are not coming forward and then encourage them to do so, putting forward the advantages of listing their company shares, even as she noted that some have raised issues of tax. Recommendations on the way forward are to be made by the committee.
Explaining further during the question and answer session, Uduk said the commission is also liaising with the Corporate Affairs Commission (CAC) to compile a record of companies not listed on either the NSE or the NASD (the secondary market for Over-The-Counter trading of all securities of unquoted public companies in the country). The move would also expose those qualified to be public companies but have not registered their securities with the SEC.
“We have been waiting for them… We have a rule that says trading in shares of a public companies has to be through a SEC approved trading platform. We have been working with the NASD and registrars to enforce compliance. We have also made it a rule that any trading outside a SEC approved platform is illegal,” she added.
The Acting DG also acknowledged the fact that the number of companies with their shares traded on the NASD platform have increased tremendously in both volume and value.
The CMC also restated commitment such success of the Capital Market Master Plan and the electronic dividend (e-Dividend), with the Technical Committee on E-dividend registration putting total approved mandates currently at about 2.5m, translating into 466,000 unique investor accounts.
“The deadline for the free e-dividend registration was 31 March 2018 and that has not changed. The new direction of the industry is that bank managers along with registrars will charge a token sum of N150 per mandate,” the Acting DG stressed.
The commission therefore solicited the cooperation of stakeholders in its “data collection efforts on impact evaluation of the electronic dividend mandate System (e-DMMS), corporate governance and capital flows and ownership structure. The outcome of these studies will be made public.”
The commission stressed that the N150 which is debited from the account holder is shared equally by parties to the process: the bank, registrar and the Nigeria Inter Bank Settlement System (NIBSS).
The CMC also set up a sub-committee on the possibility of the electronic Initial Public Offering (e-IPO) and submit a report in three weeks.
It was noted that various stakeholders within the market, such as the NSE, Capital Market Registrars and the Association of Issuing Houses of Nigeria (AIHN), have deliberated on the e-IPO in the past.
The new committee is therefore expected to harmonise the various reports and create rules for e-IPO, taking into account existing SEC rules.
It was also noted at the CMC that distribution of electronic annual accounts of public companies has commenced, with concerns from some shareholders associations as it relates to those at the rural areas or are not information technology compliant.
“The market will deliberate further on the matter while the pilot period of one year would be allowed to go on,” Ms. Uduk assured further.
She said also that the various trade groups made commitments at the meeting to support the Commission as it works “with National Educational Research and Development Council (NERDC) to institute a stand-alone capital market curriculum for basic and senior secondary education in Nigeria.”