23 April 2018

Nigeria: SEC Moves to Halt De-Listing of Quoted Companies

Abuja — Afraid of the potential threats de-listing quoted companies from the capital market could portend to Nigeria's economy, the Securities and Exchange Commission (SEC) yesterday disclosed that it had initiated moves to halt the development and encourage listings by more multinational companies in the country.

SEC in a statement said the decision to move to discourage company de-listing was part of what was agreed at the first meeting of the Capital Market Committee (CMC) last week in Lagos.

It explained that it had asked the CMC to look into the real reasons for such development, adding that it would further meet with shareholders groups to determine the reasons for the de-listings.

The statement quoted the SEC's Acting Director General, Mary Uduk, to have expressed the commitment of the SEC to see an improved listing of multinational companies in Nigeria on the capital market, adding that the practice of de-listing by quoted companies was a threat to the growth of the market.

"Increase in de-listing by public companies pose a threat to the market in view of the fact that quite a number of them are highly capitalised," said Uduk, who also explained that SEC had mandated the CMC to come up with strategies aimed at tackling de-listing and boosting listing of more multinationals.

She noted that some highly capitalised companies had delisted, thereby, affecting the growth of the market.

According to her, the committee would meet with stakeholders and find out why they are delisting as well as discuss with eligible ones why they are not listed.

Uduk who said some companies had complained of tax issues, however, gave the assurance that the commission would engage the government to address the issue, in addition to expecting the CMC to come up with recommendations on this.

"If they are regulatory issues - more rule amendment - we are open to it, but our rules must be in line with international best practices," Uduk said.

She gave the assurance that the apex capital market regulator would work in line with the committee's recommendations, and that SEC was collaborating with the Corporate Affairs Commission (CAC) to obtain the list of companies not yet quoted on any of the exchanges in the country.

SEC also disclosed that it would extend the forbearance window offered to investors with multiple accounts and subscriptions in Nigeria's capital market to a new date of September 2018, to enable them consolidate their identities for same.

The statement explained that the forbearance would enable investors who bought shares in multiple names to consolidate such multiple shareholder's identities with the registrars and Central Securities Clearing System (CSCS) into one that bears their official names.

It quoted Uduk to have said during the market boom, some investors bought shares with different names which they had forgotten, hence could no longer access the benefits of such investments.

Based on this, Uduk, asked the affected investors to take advantage of the forbearance window to ratify their accounts.

On the issuance of electronic annual accounts, she said the pilot scheme had begun, adding that the commission had received feedbacks of concerns from various shareholder associations on the electronic annual reports.

She said: "Shareholders expressed concerns of poor electricity supply and internet services in the rural areas. The market would deliberate further on the issue, while the pilot scheme of one year would go on. We are still looking at it but the pilot scheme will go on."

On e-dividend, she said the technical committee on e-dividend reported that the total and approved mandate currently stood at 2.5 million, thus translating into 466,000 unit investors.

Uduk, equally disclosed that retail players in the domestic capital market invested N5 billion in the Sukuk bond issued by the federal government last year.The amount, she said represented five per cent of the N100 billion bond with a seven-year tenor, for fixing 25 key economic road projects across the six geo-political zones, with N16.67 billion earmarked for road projects in each geo-political zone.

She noted that the Technical Committee on non-interest capital market reported that the sovereign Sukuk issued in 2017 attracted about 1,600 retail investors.

Following from that success, she stated that the next level of engagements was to work with supra-national entities such as the International Finance Corporation (IFC); African Development Bank (AfDB); state governments; and institutions like the Federal Mortgage Bank to include Sukuk options in their capital investment plans.

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