The Nation Newspaper

Category: Equities

  • Conoil leads equities’ gainers as half-year profit rises by 196%

    Conoil Plc continued  as the current highest-gaining stock at the stock market as the share price of the downstream oil major yesterday recorded the highest and the maximum daily  allowable gain of 10.24 per  cent to close the first trading session at N35.10 per share. Under the rules at the Nigerian Stock Exchange (NSE), share prices can only move-up or down, within a band of 10 per cent every trading day.

    The stock market reopened this week with strong underlying sentiments for equities, but profit-taking transactions on a handful of highly capitalised stocks shaved off N7 billion from the aggregate market value of quoted companies at the NSE. Despite preponderance of gainers to losers at 27 to 18, the benchmark index, the All Share Index (ASI) declined marginally by 0.07 per cent due to losses recorded mainly by Nestle Nigeria, Nigerian Breweries, Forte Oil and Seven-Up Bottling Company.

    The sustained uptrend yesterday brought the total gain so far this month by Conoil to 70.6 per cent as the oil major continued to excite investors with improved fundamentals. Against the background existing scramble on the heels of its full-year audited report for 2015, Conoil had at the weekend released its half-year report for 2016 with 196 per cent and 190 per cent growths in pre and post tax profits respectively.

    Conoil’s share price had risen by 33.84 per cent last week at the stock market, the highest by any stock and more than a double of the closest gain. Conoil’s share price rose from N23.79 per share to close the week at N31.84 per share. The ASI had indicated average gain of 1.02 per cent for the stock market last week.

    Key extracts of the six-month report for the first half ended June 30, 2016 showed that profit before tax rose from N528.5 million in first half 2015 to N1.566 billion in first half 2016, representing an  increase of 196 per cent. Profit after tax jumped by 190 per cent from N359.4 million in first half 2015 to N1.04 billion in first half 2016. Gross profit had risen from N4.78 billion in first half 2015 to N5.24 billion in first half 2016. However, turnover declined marginally to N39.5 billion in 2016 as against N43.03 billion in comparable period of 2015.

    The first-half report raised the prospects of increased return for shareholders for the current business year. Earnings per share rose by 190 per cent from 52 kobo in first half 2015 to N1.50 in first half 2016. Net asset per share increased from N23.71 to N24.02. Gross profit margin improved from 11.11 per cent in first half 2015 to 13.26 per cent in first half 2016. Pre-tax profit margin, which measures the profitability of the company’s business, tripled from 1.23 per cent in first half 2015 to 3.97 per cent in first half 2016.

    Analysts said the company’s results surpassed expectations, considering the volatility in the downstream sector of the oil industry and the nation’s economy.

    Capital market analysts were also of the view that going by this performance, the company would end up with a higher dividend payout for its shareholders at the end of the current financial year.

    Conoil recently declared a total dividend payout of N2.08 billion for the 2015 business year, representing a dividend per share of N3, 200 per cent above N1 per share paid for the 2014 business year.

    The capital market has been reacting positively to the company’s laudable 2015 financial performance, with a recent surge in the demand for its stock by investors. So far, Conoil investors have reaped a return of more than 60 per cent in the past two weeks.

    Conoil said the result showed that it outperformed its previous year both in the top-line and should exceed bottom-line performance at the current run-rate.

    According to the company, the impressive performance was linked to its innovative means of manufacturing and distributing products, huge financial investments in developing high-performance products and in the provision of services that matched and surpassed international standards.

    Key extracts of the audited report and accounts for the year ended December 31, 2015 showed that profit after tax rose by 176.5 per cent from N834 million in 2014 to N2.3 billion in 2015. Profit before tax jumped by 125.1 per cent from N1.5 billion in 2014 to N3.4 billion in 2015. Turnover dropped from N128.35 billion in 2014 to N82.92 billion in 2015, following the industry trend as oil and gas companies struggled with global fluctuations and domestic constraints. Conoil fell back on its internal cost management and control to optimise the top-line performance. With this, gross profit margin improved from 10.74 per cent in 2014 to 13.91 per cent in 2015. Administrative expenses dropped from N8.16 billion in 2014 to N6.89 billion in 2015. Pre-tax profit margin, which measures the underlying profitability of the company, quadrupled from 1.19 per cent to 4.16 per cent. Earnings per share also rose sharply by 177 per cent to N3.33 in 2015 as against N1.20 in 2014. While the paid up share capital remained unchanged at N346.98 million, shareholders’ funds increased from N16.1 billion in 2014 to N17.71 billion in 2015. Net assets per share closed 2015 at N25.52 compared with N23.19 in 2014.

  • Stock market opens trading week on positive note, gains 0.23%

    Contrary to Nigerian stock market analysts’ expectation that the equities market will experience a downturn at resuming of trading, the market posted a positive outing yesterday to open trading for the week.

    The equities market returned from the 2-day public holiday with a positive inclination as the lead indicator, All Share Index gained 64.61 absolute points or 0.23 per cent to close at 27,642.13 points. Similarly, the market capitalization appreciated by N22 billion to close at N9.495 trillion.

    Although, market breadth closed weaker but gains by some major capitalised stocks impacted positively on yesterday’s return. Among these capitalised stocks are, Conoil, Unilever, Dangote Cement, Flour Mills and Lafarge Africa.

    However, analysts said: “We expect a quiet start to proceedings this week, as investors gradually return after an extended weekend. While sentiment will likely remain mixed, we anticipate the bulls will have a head start, as they position in well beaten counters in search of bargains.”

    Market breadth closed negative with 15 gainers and 19 losers. Conoil led the gainers table by 10.17 per cent to close at N26.21 per share. Unilever followed with a gain of 4.99 per cent to close at N42.28, while African Prudential advanced by 4.84 per cent to close at N2.60 per share.

    While Unity Bank went up by 2.94 per cent to close at 70 kobo and Champion Breweries rose by 2.41 per cent to close at N2.55 per share.

    On the other hand, Diamond Bank led the laggards’ table by 5.83 per cent to close at N1.13 per share. Sterling Bank trailed with a loss of 4.95 per cent to close at 96 kobo, while Transnational Express and FCMB declined by 4.67 per cent each to close at N1.02 each per share. While Aiico Insurance shed by 4.48 per cent to close at 64 kobo.

    Meanwhile, the total volume traded declined by 33.19 per cent to 182.298 million shares, valued at N1.79 million, and traded in 2,776 deals. Transactions in the shares of Guaranty Trust Bank topped the activity chart with 43.33 million shares valued at N1.17 billion. Diamond Bank followed with 31.02 million shares worth N35.61 million, while FCMB traded 21.92 million shares valued at N22.56 million.

    FBN Holdings traded 16.41 million shares worth N50 million and Skye Bank transacted 14.77 million shares valued at N9.63 million.

     

  • Stock Exchange advises new stockbrokers on ethics

    •Equities open with N29b loss

    The Nigerian Stock Exchange (NSE) yesterday inducted 39 newly qualified stockbrokers with an advice to them to uphold the highest level of ethics and sense of responsibility. The newly inducted stockbrokers included Olayinka Ojo of GTI Securities and Mr. Sola Oni, a former spokesman of the NSE and chief executive officer, Sofunix Investment and Communications Limited.

    Chief executive officer, Nigerian Stock Exchange (NSE), Mr. Oscar Onyema, underscored the importance of qualitative and ethical human resources in the development of the capital market, noting that the long-term sustainable growth of the market depends on well-trained and ethical operators.

    According to him, the capital market will only be as good as the people working in it and the rigorous screening process of the Exchange’s dealing member qualification was essentially aimed at ensuring only the best hands operate in the market.

    “At the NSE, we are driving a growth strategy based on three strategic objectives which are to increase listings across five asset classes; increase order-flow across these asset classes; and operate a fair and orderly market based on just and equitable principles. Our target really is to work with a strong ecosystem in a seamless manner to introduce to achieve these objectives,” Onyema said.

    He noted that as an organization, the Exchange recognises the need to ensure that its member firms have the right human capital to execute on their goals sustainably.

    “With the right hands on board, the capital market is sure to achieve its 10-year master plan,” Onyema said.

    According to him, the robes of stockbrokers represent a commitment to uphold the Chartered Institute of Stockbrokers (CIS) ethical standards and the NSE code of conduct for dealing members, a pledge to be tall on integrity and spotless in character and a decision to put the interest of the market first.

    He said the Exchange would continue to do its part in ensuring that it provides a competitive platform for stockbrokers to participate in the financial market, noting that the Exchange has executed several initiatives to strengthen the operations of dealing members and to make them comparable with their foreign counterpart.

    “Furthermore, the Exchange has implemented a strong regulatory environment to protect investors against infractions while enhancing investor confidence in the market,” Onyema said.

    Meanwhile, Nigerian equities opened this week on the negative side with nearly two losers to a gainer. Aggregate market value of all quoted companies on the NSE dropped from N9.429 trillion to close at N9.400 trillion. The benchmark index, the All Share Index (ASI), also declined by 0.30 per cent from 27,450.91 points to close at 27,368.41 points. Average year-to-date return stood at -4.45 per cent.

    There were 17 losers to 10 gainers. Nigerian Breweries, the second most capitalised stock on the NSE, led the losers with a loss of N1.78 to close at N138.27. Guaranty Trust Bank, the most capitalised banking stock and fourth most capitalised stock, followed with a loss of 34 kobo to close at N25.95. Nigeria Aviation Handling Company (Nahco) dropped by 17 kobo to close at N3.23.

    Total turnover stood at 83.83 million shares valued at N711.12 million in 2,279 deals. FBN Holdings was the most active stock with a turnover of 11.66 million shares valued at N34.95 million.

    On the upside, Seven-Up Bottling Company led the gainers with a gain of N3.98 to close at N116.98. Champion Breweries followed with a gain of 9.0 kobo to close at N2.70 while Dangote Flour Mills, NPF Microfinance Bank and Honeywell Flour Mills added 4.0 kobo each to close at N3.90, 99 kobo and N1.40 respectively.

  • Embrace mutual funds, experts tell investors

    Investors have been urged to diversify their investments and hedge against the risks of volatility in the financial markets by buying into professionally managed collective investment schemes, otherwise known as mutual funds.

    Against the background of the decline in share prices, devaluation of Naira and the rising inflation, investments experts at Cordros Group advicd investors to use professionals and assets diversification to minimise risks and enjoy competitive returns.

    Acting Managing Director, Cordros Asset Management Limited(CAML), a subsidiary of Cordros Capital Limited, Mrs. Olafisayo Ogunbiyi-Badaru, said that despite the  volatility in the market, there are still investment opportunities that investors can take advantage of by using the professional services that will ensure steady income.

    According to her, in line with CAML’s strategy   to create an array of products suitable for the underserved retail segment of the economy, the company is currently offering 10 million units of Cordros Money Market Fund (CMMF)  at N100 per unit, with  minimum subscription  of N10,000.

    “This is in line with the company’s strategy   to create array of products suitable for the underserved retail segment of the economy. The fund is targeted at the retail investors and the main objective is to provide capital preservation, regular income, liquidity and capital appreciation,” Ogunbiyi-Badaru said.

    She explained that the fund’s investment objective is to provide capital preservation and regular income to unit holders by investing in high-quality money market instruments recognised by the Securities & Exchange Commission (SEC).

    She added that the fund is attractive to all investors who desire a steady stream of income and have low risk appetite.

    “High networth individuals with available short term ash balances can also take advantage of the fund to earn higher rates of return. Institutional clients who desire liquidity and easy accessibility to their funds with competitive returns can also take advantage,” Ogunbiyi-Badaru said.

    Also, Group Managing Director, Cordros Capital Limited, Mr. Wale Agbeyangi said the CMMF offers investors professional fund managers to avoid the mistakes of the amateur investor.

    He outlined that the fund consists of seasoned professional advisers led by Vetiva Capital Management Limited as the Issuing House, STL Trustees Ltd as the Trustee, African Prudential Registrars Ltd as Registrars to the Fund, Babalakin & Co as Solicitor to the Trustees, UBA Plc Global Investor Services as the Custodian, Access Bank Plc as the Receiving Bank and TAC Professional Services as the Reporting Accountant.

  • Core investor acquires Wema’s 75% stake in GNI

    Core investor acquires Wema’s 75% stake in GNI

    Wema Bank Plc has secured  approval of the Nigerian Stock Exchange (NSE) to sell its 75 per cent majority equity stake in Great Nigeria Insurance (GNI) Plc to Insurance Resourcery and Consultancy Services Limited.

    A document obtained by The Nation at the weekend indicated that authorities at the NSE, where both Wema Bank and GNI are listed, have approved the divestment. Under the transaction, a block divestment of 2.87 billion ordinary shares of GNI currently held by Wema Asset Management would be transferred to Insurance Resourcery and Consultancy Services, a relatively unknown firm.

    The divestment is valued at N1.44 billion at current market value of GNI, which currently has total paid up capital of 3.827 billion ordinary shares of 50 kobo each with a market capitalisation of N1.91 billion. GNI is trading at its nominal value of 50 kobo per share.

    GNI at the weekend indicated that Wema Bank was its core investor. “Besides many well meaning Nigerians ,who invested in Great Nigeria Insurance Plc, our other core investors are Wema Bank Plc and Odua Investment Group of Companies. Our relationships with these great groups have created a synergy for the growth of our business,” GNI stated in its corporate profile.

    GNI started operations in 1960 and its businesses include general and life insurance.

    Following the Central Bank of Nigeria (CBN)’s banking regulatory regime that required banks to either divest from non-core banking subsidiaries or form a holding company to hold those subsidiaries, Wema Bank had opted to divest from its non-core banking businesses, including GNI. The bank had since divested from Wema Insurance Brokers Limited, Wema Registrars Limited, Independent Securities Limited and Whyte Cleon Limited. It also integrated operations of four subsidiaries into its core banking business including Wema Asset Management Limited, Wema Securities and Finance Plc, Wema Homes (Savings and Loans) Limited and Wise Properties Limited. Wema Bank had 100 per cent equity stakes in the trio of Wema Registrars, Wema Insurance Brokers and Whyte Cleon Limited while it had 94.7 per cent stake in Independent Securities and 75 per cent in GNI.

    Meanwhile, the new core investor would be required to restructure GNI’s issued share capital to dilute the existing concentrated shareholdings of the core investors and allow more investments from the investing public.

    In the latest report on public shareholding status in quoted companies obtained by The Nation, the NSE indicated that GNI and 10 other companies were in violation of the listing requirement, which compels companies quoted on the main board of the NSE to ensure that a minimum of 20 per cent of its issued shares is in the hand of the general investing public.

    Companies listed on the Exchange are required to maintain a minimum free float for the set standards under which they are listed in order to ensure that there is an orderly and liquid market in their securities. The free float requirement for companies on the main board is 20 per cent while companies on the second board, otherwise known as Alternative Securities Market (ASEM) are required to have 15 per cent free float.

    Free float, otherwise known as public float, refers to the number of shares of a quoted company held by ordinary shareholders other than those directly or indirectly held by its parent, subsidiary or associate companies or any subsidiaries or associates of its parent company; its directors, who are holding office as directors of the entity and their close family members and any single individual or institutional shareholder holding a statutorily significant stake, which is 5.0 per cent and above in Nigeria.

    Thus, free float’s shares do not include shares held directly or indirectly by any officer, director, controlling shareholder or other concentrated, affiliated or family holdings.

    The report indicated that GNI currently has 16 per cent of its issued shares in the hands of the general investing public.

    According to the report, the management of the NSE had given GNI a deadline of July 8, 2016 to free more shares for the general investing public.

  • NSE, Bloomberg hold talks with business leaders

    NSE, Bloomberg hold talks with business leaders

    Business leaders and captains of industry will on Wednesday gather at the Nigerian Stock Exchange (NSE) to discuss opportunities and challenges in the Nigerian economy, as part of efforts to stimulate invest.

    The 2nd NSE Bloomberg CEO Roundtable is a collaboration between the NSE and Bloomberg.

    The CEO Roundtable themed “Navigating the Changing Business Landscape in Nigeria”, will bring together thought leaders and captains of industry to share in-depth knowledge about their sectors with capital market players and proffer much needed solutions to economic realities.

    The panel at the event will feature chief executive officers from the financial services, telecommunications, manufacturing and portfolio management sectors as well as renowned economists.

    Some of the confirmed speakers for the event include: Oscar Onyema, chief executive officer (CEO), NSE; Segun Ogunsanya, CEO, Airtel Nigeria; Bolaji Balogun, CEO, Chapel Hill Denham; Mark Bohlund, Senior Economist, Africa and the Middle East, Bloomberg Intelligence and Uk Eke, group managing director, FBN Holdings.

    Onyema, said the CEO Roundtable was in line with the commitment of the Exchange to provide a platform that ensures continuous dialogue to provide practical solutions for companies operating in Nigeria.

    “The headwinds that have befallen the Nigerian economy present an opportunity for businesses to take a step back, access the current situation and plan accordingly. It is expected that this event will critically examine the changes in the business landscape, highlight their impact and propose solutions that will enable businesses thrive and survive in the current environment,” Onyema said.

    Head, market structure strategy, Bloomberg, Selloua Chakri, said Bloomberg was working more closely than ever with key financial institutions and stakeholders in countries like Nigeria to help them grasp opportunities, tackle challenges, and bring more transparency to capital markets.

    “We’re delighted to partner with the NSE again to convene this prestigious group of business leaders for what will no doubt be a fascinating and informative discussion,” Chakri said.

    The event will feature a panel session on the theme and will centre on financing capital projects and the real economy in the current environment, policy measures needed to grow the manufacturing sector’s contribution to the economy and maintaining and attracting foreign investment through the downturn. There will also be a macro-economic review to guide discussions.

  • SEC gives operators October 31 deadline to join trade groups

    SEC gives operators October 31 deadline to join trade groups

    Securities and Exchange Commission (SEC) has directed capital market operators to register with their trade groups or associations by October 31 as it moves to strengthen the implementation of its new complaints management framework.

    In a circular to the operators, SEC said it would sanction those that fail to comply with the deadline.

    According to the commission, the directive was sequel to the decisions at the just-concluded Capital Market Committee (CMC) meeting held in Lagos earlier this month.

    SEC noted that as part of efforts to restore investor confidence in the capital market, it had developed rules on complaints management in February, last year.

    The rules outline a new and more responsive complaint management framework that requires the SEC,Self-Regulatory Organisations (SROs) and capital market Trade Groups/Associations to establish fair, impartial and objective complaints management policies for the handling of investor complaints. This new framework is expected to significantly improve dispute resolution within the market and ultimately reduce infraction rates as it streamlines the complaints management process.

    “Historically, the SEC had been receiving the overwhelming majority of complaints from investors even when such complaints could be addressed more swiftly at trade group level. In attending to such huge volumes of complaints, the SEC has had to allocate significant resources that could be better utilised in more effective market development and regulation.This informed the need to overhaul the complaints management mechanism in the capital market as encapsulated in the SEC Rules and Regulations which are available on the website,” SEC noted.

    According to the commission, to effectively delegate key complaints management functions to market operators, the SEC recognises the need to strengthen SROs and Industry Trade Groups/Associations to enable them play more prominent roles in the management and resolution of investor complaints.

    It noted that empowering SROs and trade groups to handle and resolve investor complaints is in line with best practice from both emerging and developed markets.

    However, the Commission pointed out that since the new complaints management framework was released by the SEC in February 2015, its implementation has been rather slow due to the inability of a few trade groups to develop their respective complaints management policies.

    The apex capital market regulator stated that a review of the framework’s implementation at the last CMC meeting revealed that a key constraint facing the trade groups is the non-compliance of some market operators who are yet to be registered with their relevant trade association.

  • EFInA gives $1.5m to support mobile banking

    Enhancing Financial Innovation & Access (EFInA) has awarded $1.5 million or about N421.5 million from its Innovation Grant to support Diamond Bank’s Diamond Y’ello Account (DYA), a mobile banking platform which was built on MTN Xaas platform.

    The DYA was built on a platform powered by CWG Plc. It was designed to enable MTN subscribers; which include the largely unbanked and under-banked populace in Nigeria, enjoy banking services from Diamond Bank using their mobile phones within the convenience of their varying locations. It provides easy access to a broad range of financial products tailored to meet consumers’ needs, at an affordable cost. These include bills payment, savings, retail collections, micro-credit and insurance transactions

    Speaking on the development, Mr James Agada, Chief Executive Officer, CWG Plc observed that the DYA has demonstrated significant prospects, hence no surprise on the investment by EFInA.

    According to him, within a period of a little over 12 months, the Diamond Yello Account has enabled over 6 million subscriber’s access banking services with ease. The EFInA grant shows that these giant strides are being recognized and this will challenge us at CWG to do more in deploying technology solutions that enable growth.

    The Innovation Grant, as released by EFInA to support the DYA; ‘Winning the North’ project, is intended to enhance financial inclusion to the unbanked in the North East and North West geopolitical zones, who have more financially excluded citizens than other parts of the Nation, as referenced in the EFInA Access Financial services in Nigeria 2014 survey. Furthermore, it is anticipated that this project will aid tilt the variances in the Financial sector; enabling the operators an opportunity to upgrade the features of the DYA in order to allow customers do more and cover a broader geographical base.

    It should be noted that CWG has worked in partnerships with other banks in the past, deploying innovative technology based products that enable customers’ access financial and other value added services through their mobile phones.

    CWG has also deployed the Finacle Banking Application to 60 per cent of the financial institutions, enhancing their operations and currently deploys about a third of the aggregate ATMs presently in the country.

  • Shareholders vow to resist SEC’s treasury for unclaimed dividends

    Major retail shareholders’ groups yesterday rose against the plan by the Securities and Exchange Commission (SEC) to establish a Nigerian Capital Market Development Fund (NCMDF) to take custody of unclaimed dividends of 12 years and above.

    SEC in a circular sent to capital market stakeholders on Tuesday, had called for a consideration of a new rule that will set up the NCMDF which will take custody of all unclaimed dividends of 12 years and above.

    Under the extant laws, unclaimed dividends will remain available for collection by beneficiaries up till 12 years when they become statute-barred and subsequently return to the companies that paid the dividends.

    Shareholders’ leaders across the groups said they would resist the transfer of statute-barred unclaimed dividends to any NCMDF, describing the plan as a wrong move and a volte face from the recent campaign by SEC for the removal of the 12-year limit to enable shareholders and their beneficiaries be able to collect their dividends at any time.

    National coordinator, Independent Shareholders Association of Nigeria (ISAN), Sir Sunny Nwosu, said his group would mobilise shareholders to resist what he described as “very offensive” attempt to take their private monies.

    “I think it’s wrong, we will not agree and we will not allow that to happen,” Nwosu told The Nation.

    He said SEC and other regulators have sufficient funds and avenues to mobilise resources to perform their statutory roles of market development, noting that dividends belong to shareholders and the paying companies.

    Shareholders’ activist and one of the co-founders of Nigeria Shareholders Solidarity Association (NSSA), Alhaji Gbadebo Olatokunbo, said the plan would lead to corruption and discourage investors from the domestic market.

    According to him, SEC and other stakeholders should focus more on solving issues surrounding unclaimed dividend rather than looking for ways to start once again on how to acquire what does not belong to them under the guise of regulations.

    “Unclaimed dividends belong to shareholders who are the owners of companies and its going back to the companies after 12 years is legitimate. We respectfully call on the Federal Government to urgently call the regulatory agencies to order, before they add more damage to our already sick economy,” Olatokunbo said.

    President, Association for the Advancement of Rights of Nigerian Shareholders (AARNS), Dr. Faruk Umar, however described the plan by SEC as a healthy development noting that the trust fund would discourage sharp practices around the unclaimed dividends.

    “The truth of the matter is that bulk of the unclaimed dividend that is more than 12 years belongs to people who are dead, multiple applicants who do not have bank account in their names, or small amounts of money that is not worth claiming. Someone that has not claimed his or her dividend in 12 years is unlikely to do so now. So, the Trust Fund should be established as this will discourage people from benefitting from the unclaimed dividend,” Umar said.

    According to him, with the anti-corruption stance of President Muhammadu Buhari’s government, and with the kind of integrity and transparency being exhibited by the current Director General of SEC, Mr Mounir Gwarzo, retails shareholders would support the establishment of the Fund this time around.

    In his remarks, coordinator, Constance Shareholders Association of Nigeria, Mallam Shehu Mikhail, said the existing rule on return of statute –barred dividends to companies should be retained.

    He criticized the plan by SEC for lack of details on benefits of such initiative to shareholders and the quoted companies.

  • SEC mulls special trust fund for unclaimed dividends

    Securities and Exchange Commission (SEC) yesterday launched a plan to establish a special purpose vehicle (SPV) for unclaimed dividends of more than 12 years. SEC estimates unclaimed dividends to be about N80 billion.

    The plan is a volte face from recent position by SEC that the provision of the Companies and Allied Matters Act (CAMA), which limits the lifespan of dividend be amended to ensure shareholders or their beneficiaries could claim their dividend at any time.

    In a circular sent to capital market stakeholders yesterday, the apex capital market regulator called for a consideration of a new rule that will set up the Nigerian Capital Market Development Fund (NCMDF) which will take custody of all unclaimed dividends of 12 years and above.

    Under the extant laws, unclaimed dividends will remain available for collection by beneficiaries up till 12 years when they become statute-barred and subsequently return to the companies that paid the dividends.

    The new rule seeks to change the return of the unclaimed dividends to companies that issued the dividends.

    According to SEC’s proposed “rule on application of 12 years and above unclaimed dividends”, companies and registrars in custody of dividends which remain unclaimed by shareholders 12 years after the date of declaration or subsequently attain the 12 years threshold shall upon the coming into effect of this rule transfer such money into the Nigerian Capital Market Development Fund (NCMDF).

    “All companies and registrars shall not later than 30 days after the end of every calendar year forward to the Commission a report of unclaimed dividends in their custody, which shall specify compliance with Sub Rule (1) of this Rule. Companies shall disclose details of compliance with this Rule in their annual reports,” SEC stated.

    The apex regulator stated that it relied on provisions of Section 313(1)(n) of the Investments and Securities Act (ISA) 2007 in deciding on the rule. Section 313 provides SEC with powers to make rules for the orderly governance of the capital market.

    The proposed new rule will undergo a two-week stakeholders’ review period, after which the Commission will decide on its next move in the rule-making process.

    Securities and Exchange Commission (SEC) Director-General, Mr. Mounir Gwarzo,  recently said there was need to amend some laws on the capital market and corporate affairs in order to attract and retain investors’ to the capital market.

    He noted that the provision in CAMA that limits dividend lifespan to 12 years, after which it becomes statute-barred and cannot be claimed, should be amended to ensure that investors can claim their dividend at any time whatsoever.

    “We don’t think that is right, the international best practice is that dividend must be in perpetuity. Once you can supply evidence that it is yours, that person should be able to claim it. The lacuna is a provision of the law and we are partnering with the parliament to see that such laws are amended and we had an excellent collaboration with them,” Gwarzo said.