Kampala — THE Capital Markets Authority (CMA) has extended the initial public offer (IPO) of the National Insurance Corporation (NIC) to allow for full disclosure in the prospectus. This follows a request from the Privatisation Unit (PU) for the IPO to be put off for a while.

"CMA has no objection to the extension requested. It is important to note that whatever extension is granted should not be more than 90 days from the days of the prospectus," read the CMA letter dated September 30 signed by Angela Kiryabwire, the director legal and compliance.

The CMA has also asked NIC to take into account the issues raised in Makerere's letter in which the university accuses the insurance firm of making misleading statements in the material disclosures contained in the draft prospectus.

"Otherwise, investors would not have been given all material information to make an informed decision," said Kiryabwire.

CMA's position regarding the need for full disclosure joins a list of key industry stakeholders who are asking NIC to comply.

The acting solicitor general B. Kainamura disclosed in his legal guidance that the earlier approved prospectus contained the details of the NIC/ Makerere University funds.

NIC is embroiled in a battle with Makerere University board of trustees over the amount the insurer should pay to the staff pension scheme.

NIC replied last week stating it is under no such obligations to disclose the details.

"It (NIC) does not need the approval of any of its clients on the contents," said NIC.

MUK is demanding sh17.1b, while NIC says the figure is about sh15.1b.

In a letter to Makerere, NIC said the figure was much lower, following accumulated administration charges and interest.

"Therefore, your fund balance as at December 31, 2008 stands at sh13.8b and not sh17.1b you claim," read NIC's letter.

"NIC cannot unilaterally exclude it from the prospectus before publication. Should they wish to do so, then they should be asked to engage CMA on the matter before they do," said Kainamura.

Earlier this week, the head of the Uganda Securities Exchange, Simon Rutega, added his voice on the need for full disclosure.

"Ours is a disclosure-based market.

"We are not saying you are a good or bad company, we want you to disclose everything so that the investor can make an informed decision," he argued.

Rutega's argument is that any party interested in transacting or taking part on the stock exchange, the risk factor must be disclosed so that the potential investor "is aware that there is a dispute between Makerere and NIC."

Rutega said in that case, the financial strength or the financial performance of any company is no guarantee that they should be considered to enter the market.

"This market is not a merit-based market," he noted.

Rutega said so far NIC had made a 95% disclosure in its prospectus, only the issue of the NIC versus Makerere accounts remains unresolved.

He disclosed that the governing council of the USE approved the request for extension by one month on condition that the accounts are "reviewed and disclosed in accordance with the requirements of the USE listing rules."

David Sebabi, the PU director, reiterated that the differences in disclosure would be clarified.

He said the PU was proceeding to update the prospectus and subject it for appropriate approvals.

"Both Makerere University and NIC recognise the fact that it is the Government selling its 40% stake in the company.

It is in our interest to abide by guidelines, rules and regulations as set to ensure best practice in capital markets in Uganda," said Ssebabi.

If the sell of 40% NIC shares went ahead, there would be a lot more people from the public interested in knowing the details of the transactions and company books in which they are buying stakes.