Vanguard (Lagos)

26 February 2013

Nigeria: Dematerialisation - Shareholder Blasts Stockbrokers, Registrars Over Excessive Charges

A shareholder in the capital market has flared stockbrokers and registrars over huge cost they impose on shareholders who intend to dematerialise their certificates to meet the Nigerian Stock Exchange, NSE, and Securities and Exchange Commission, SEC's demand.

Chief Olufemi Timothy, a shareholders activist, affirmed that the dream of achieving a certificate-less market will remain a mirage if the issue of excessive charges is not urgently addressed.

He said that shareholders are charged N500 for verification of a single share certificate, while banks charge as much as N2000 to confirm a client's signature.

His words: "They are talking about attracting retail investors and dematerialising share certificates, but they are chasing shareholders away with excessive charges. Stock brokers for instance charge N500 to verify one share certificate no matter the number of units you have. When you also go to you registrar to verify your certificate, they will send you back to the banks, which will ask you to pay between N1500 and N2000 to confirm your signature.

"What this means is that I will need like N30,000 to dematerialise about 150 share certificates I have. Where do they think shareholders will get all this money from," he queried.

"Good business sense will tell you that you have to strive to increase your customers and reduce cost. When stockbrokers buy or sell shares on behalf of their clients, they take commission on such transaction, the same with registrars. So why impose all these extra cost on investors," he added.

He said that they should rather abandon the thought of having retail investors back in the market with the present situation, adding 'these are disincentives to investors.'

It would be recalled that as part of effort to rid the stock market of sharp practices involving the sale of clients' shares without permission and other related offences, the Nigerian Stock Exchange, NSE, in conjunction with the SEC had on several occasions toyed with the idea of dematerializing share certificates.

Only last year, the SEC extended the deadline for dematrialisation to January 2013.

Emeka Madubuike, the Chairman of the SEC Committee on Dematerialisation had said that the deadline would likely be extended to ensure effective sensitisation of investors.

He said that the capital market community was in the process of concluding arrangement for a nationwide enlightenment campaign and needed time to get the process right.

Madubuike said that the committee planned to get the details of all share certificates through biometrics and as a means of ensuring that dematerialised certificates belonged to their rightful owners.

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