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Tag: Stock Exchange

  • Photo: President Jonathan visits Nigerian Stock Exchange

    Photo: President Jonathan visits Nigerian Stock Exchange

    President Jonathan greets brokers on the floor of the Nigerian Stock Exchange on Thursday.
    President Jonathan greets brokers on the floor of the Nigerian Stock Exchange on Thursday.

     

     

     

     

     

     

     

     

     

     

    A wide angle shot of floor members greeting President Jonathan
    A wide angle shot of floor members greeting President Jonathan

     

     

     

     

     

     

     

    President Jonathan commissioning the X-Gen Platform at the Stock Exchange.
    President Jonathan commissioning the X-Gen Platform at the Stock Exchange.

  • Stock Exchange to suspend stockbrokers over minimum operating standard

    The Nigerian Stock Exchange (NSE) will on April 1 suspend all stockbrokers and dealers that fail to provide comprehensive report on their level of compliance with the minimum operating standard (MOS) requirements introduced last year by the management of the Exchange.

    A source told The Nation that the NSE has given all stockbrokers and dealers a March 31, 2015 deadline to submit a final MOS compliance level report, a report that is expected to outline previous and current actions as well as future projection on the compliance process.

    The source said the Exchange will immediately suspend operators that fail to meet the deadline from trading on the stock market in line with the Exchange’s determination to enforce compliance with the MOS.

    According to the source, the suspended stockbrokers and dealers will not be allowed to trade on the NSE until they have provided such compliance report and cleared by the management of the Exchange.

    The MOS  requirements relate to all the three classes of dealing members including broker dealers, brokers and dealers and address the five broad areas of manpower and equipment; organisational structure and governance; effective processes; global competitiveness; and technology.

    The NSE has insisted that the main objective of the MOS programme is to enhance investors’ protection and the integrity of the secondary market by ensuring that operators have adequate resources for professional and globally competitive operations.

    However, several operators saw the MOS as another way of wielding out small-sized brokers and dealers and they have characterised the MOS as unrealistic.

    Stockbroking firms have however said the new minimum standards were attempts by the Exchange to enforce consolidation in the industry.

    There are 238 broker-dealers on the NSE, but less than 15 per cent of the operators account for more than three-quarters of trading turnover at the market.

    On the rationale for the new standards, Head, Legal and Regulation Division of the NSE,  Ms. Tinuade Awe, had said the new minimum operating standards were meant to complement the tremendous transformation that the market had undergone in recent years and to extend these forward-moving traits to the dealing members.

    According to her, the objective of the minimum operating standards is to transform the operators into more competitive and compliant operators.

    “We intend to ensure that the broker dealers, brokers and dealers have very robust controls, strong governance framework and sustainable operations that will enable them compete on a global scale for the benefit of the investors and the Nigerian capital market,” Awe said.

    She noted that the capital market is very dynamic with a diverse mix of local and foreign investors who can only invest with the confidence that the dealing members operate pursuant to clearly defined standards that are comparable to those to which broker dealers in other markets operate with.

    We simply cannot afford to be inferior to anyone in terms of size, skill, technology or organisational governance of our market participants” Awe added.

    NSE had explained that investors will be given an extra degree of protection because the operators will become more robust and stronger, with good controls and globally acceptable processes.

  • Shareholders back demutualisation of Stock Exchange

    Nigerian shareholders have expressed supports for the demutualisation of the Nigerian Stock Exchange (NSE), describing the release of the draft rules for the demutualisation by the Securities and Exchange Commission (SEC) as a step in the right direction. NSE is Nigeria’s only regular securities exchange. Securities and Exchange Commission (SEC), two weeks ago, released the draft rules for demutualisation of securities exchange.

    Shareholders’ leaders who spoke to The Nation said the demutualisation of the Exchange would open up the marketplace for popular ownership and enable minority shareholders who have been part of the growth of the market to benefit from ownership of the market.

    Chairman, Ibadan Zone Shareholders Association (IBZA), Chief Sola Abodunrin, said demutualisation portends good omen for the Nigerian stock market as the NSE can now truly become a national institution in terms of ownership.

    National coordinator, Independent Shareholders Association of Nigeria (ISAN), Sir Sunny Nwosu, said the demutualisation of the Exchange will open up opportunity to minority retail shareholders to be part of the market they had contributed to.

    According to him, the demutualisation should be inclusive and should encourage participation by the generality of the people including shareholders that have been major stakeholders in the market.

    He said shareholders were in support of a provision in the draft rules for the demutualisation, which limits the maximum allowable equity stake for any individual or entity in the demutualised exchange to five per cent.

    “I think it is good for the shareholders, they should allow everybody to participate in the ownership, we are the growers of the market and we should be able to participate in the fortunes we have created. They should however ensure that nobody, no matter how big you are, should own more than five per cent in the Exchange,” Nwosu said.

    President, Constance Shareholders Association of Nigeria, Shehu Mikhail, described demutualisation as one of the best things to happen to the Exchange noting that it will create opportunities for the general investing public and also for the NSE itself.

    Demutualisation is the process of changing a member-owned stock exchange, otherwise known as mutual exchange, to a corporate entity owned by shareholders. In a mutual exchange, the three functions of ownership, management and trading are concentrated into a single group, hence the broker members of the exchange are both the owners and the traders on the exchange and they further manage the exchange as well.

    In a demutualised exchange, the three functions of ownership, management and trading are clearly separated. The draft rules by SEC simply defined demutualisation as “the separation of the ownership of the Securities Exchange from the right to trade on such Securities Exchange”.

    The NSE has been locked in intense grip of demutualisation with divergent views on the necessity, procedures and timing and other details of the exercise. The released of the draft culminated a four-year exercise to provide amenable template for the demutualisation.

    Established as Lagos Stock Exchange (LSE) in 1960, the stock exchange was conceptualized as a limited by guarantee not-for-profit organisation thriving on the goodwill, reputation and integrity of its members. While Nigeria’s doyen of accounting, Mr. Akintola William, is the only surviving initial signatory to the founding memorandum of the NSE, the membership list of the NSE has always included “the movers and shakers” of the Nigerian economy. Beside stockbroking firms and other capital market operators that are dealing members, members of the NSE currently included Alhaji Aliko Dangote, Chief Ernest Shonekan, Mr. Gamaliel Onosode, Mr. Oba Otudeko, Otunba Adekunle Ojora, Mr. Pascal Dozie, Chief Phillip Asiodu, Rear Admiral Allison Madueke (rtd.) and Senator Udo Udoma among others. Altogether, the NSE has some 360 individual and institutional members including some 255 active dealing members.

    Several State Investment Companies are also institutional members of the NSE, giving the States inputs into the operations of the NSE. These included Adamawa Securities Limited, Kaduna Investment Company, Kano State Investment and Properties Limited, Katsina State Investment and Property Development Company Limited, Kwara State Investment Corporation, New Nigerian Development Company Limited, Niger State Development Company Limited, Sokoto Investment Company Limited and Yobe Investment Company Limited among others.

    According to the draft of the demutualisation rules, obtained by The Nation, no single entity or person or related entities and persons should be permitted to own, directly or indirectly more than five per cent of the equity and or voting rights in the demutualised securities exchange.

    Besides, the rules stipulate that the aggregate equity interests of members of any specific stakeholder group such as stockbrokers and broker-dealer in the demutualised securities exchange should not exceed 40 per cent.

    The rules, made pursuant to section 313 of the Investments and Securities Act (ISA) 2007, stipulate that the securities exchange should initiate a process for determining the accurate list of members of the Exchange prior to the commencement of demutualization.

    The process of demutualization of the Securities Exchange should include an exchange of membership rights in the Securities Exchange for ownership of shares in the demutualised Securities Exchange.

    According to the rules, strategic investors should be given equity interest in the demutualised securities exchange subject to establishment of the facts that the strategic investor has technical expertise through previous experience in managing other Exchanges and the aggregate number of shares to be offered to the strategic investors shall not be more than 30 per cent of issued and fully paid up capital of the securities exchange. However, if the Exchange is in dire need of funds, it could issue a higher number of shares subject to approval of the Commission.

    The rules stipulate that the trading participants who are shareholders of the securities exchange shall with effect from the date of demutualization reduce their cumulative shareholdings in the demutualised securities exchange to not more than 10 per cent within five years.

    securities exchange and timelines for implementation of necessary structures to ensure the functional separation of commercial and regulatory functions, a detailed five year business development plan for the demutualized Securities Exchange together with the capital expenditure estimates and the sources of finance for the five year period, the manner in which the rights and liabilities of the existing members shall be treated in the demutualization, the procedure for the allocation of shares to the shareholders identified under subparagraphs (c) and (d) and a written declaration that demutualization shall not affect any rights and obligations of the Securities Exchange or render defective any legal proceedings by or against the Securities Exchange.

    Besides, the application must include the proposed timelines for the completion of operational manuals to guide the self-regulatory functions of the demutualized Securities exchange detailing the scope of regulatory functions to be performed by the demutualized Securities Exchange, the proposed rules of the demutualized Securities Exchange and the last audited financial statements of the Securities Exchange. However, the Commission may, in writing, require the Securities Exchange to provide any additional information which the Commission may require.

    The rules also stipulate the governance model, the resolution of the application and other details.

     

     

  • Stock Exchange goes tough on false sale of shares

    Stock Exchange goes tough on false sale of shares

    Amid the dwindling   fortunes of quoted  equities, the Nigerian Stock Exchange (NSE) may  wield the big stick on stockbrokers and dealers that may be implicated in any false sale of shares.

    False sale of shares, known as naked short selling, is  prohibited at the NSE.

    As Nigerian equities continued to reel under the adverse effects of tough macroeconomic and political outlook, there are suspicions that some brokers and dealers may want to cash in on the substantial devaluation of quoted shares to sell shares that they do not own with a view to buy back the shares later at lower values or to cover up short-term liquidity gap.

    Nigerian equities on Thursday slumped to a two-year low with a four-day loss of N684 billion. The market opened Friday with a year-to-date loss of about N2.16 trillion, representing average year-to-date return of -19.39 per cent. This is already worse than the performance in the entire 2014 when Nigerian equities ranked among the worst-performing stocks globally with average full-year decline of 16.14 per cent, representing a net loss of about N1.75 trillion during the year.

    The management of the NSE at the weekend issued a circular to stockbrokers and dealers reminding them of the implications of engaging in naked short selling. The circular, obtained by The Nation, detailed the applicable sanctions for naked short selling.

    Though couched as a reminder, a source said the Exchange was being proactive amidst suspicions that the increasingly hard-hitting bearishness at the stock market may lead to breach of rules and ethics. The Nigerian market had witnessed increased cases of infractions and unethical practices in the wake of the 2008-2009 recession. Reports of the regulatory authorities had linked the infractions and malpractices, including unauthorised sales of shares and diversion of sales proceeds, to liquidity problems that arose from the recession, after several stockbrokers and dealers suffered huge losses.

    According to the circular, brokers and dealers must not engage in false sale of shares as this is strictly prohibited at the Nigerian market.

    “Naked short selling is the practice of selling securities which the seller does not own, and has not made arrangements to borrow such securities. It is a violation of the Rules and Regulations Governing Dealing Members (Amendments and Additions – Part III),” the circular stated.

    It reminded brokers and dealers of the relevant rule titled “Penalties for Naked Short Selling”, which amongst others provides that “any dealing member that engages in naked short selling shall be liable to pay a fine of 10 per cent of the total transaction value and any benefit accruing from such transaction” to the Exchange.

    Besides, any dealing member involved in naked short selling more than once over a period of year shall be classified as a “serial offender”. Such serial offender will be suspended from trading for a period to be determined by the Exchange, according to the rule.

    The NSE also reminded the dealing members on the need to safeguard the integrity of their operating systems citing a rule that provides that every dealing member firm shall be fully responsible for all matters arising from access to the trading engine of the NSE through its trader identification code and password.

    One of the articles of membership at the NSE actually provides that every dealing member shall indemnify the Exchange against losses arising from its stockbroking activities.Oil price slump: Uncertainties over JV projects

    By Emeka Ugwuanyi

    Uncertainty looms over several Joint Venture (JV) projects being executed with the Nigerian National Petroleum Corporation (NNPC) by multinationals, as oil companies in the country are planning to cancel and postpone the execution of some projects that are either in their planning stage and those at infansy. This is due to the slump in oil price especially the Joint Venture (JV) projects

    The Nation learnt that international oil companies (IOCs) and some indigenous oil firms under the aegis of Oil Producers Trade Section (OPTS), are currently discussing on the oil price regime and the realities that come with it. The OPTS, it was learnt, have decided that most of the projects that would be affected are joint venture projects that are the planning stage and those on which action have just commenced.

    A source in the petroleum industry, who asked not to be identified, said the OPTS members are currently meeting and will soon come up with a position on the issue, stating that the majority of projects in their planning stages, or those being developed under the production sharing contract (PSC) arrangement will not be affected by the OPTS decision as funding of such projects are directly undertaken by the oil majors (IOCs).

    The source also said some major gas projects, such as the $5 billion Trans-Nigeria pipeline project and the $4 billion South-North gas pipeline, which is designed to be built from Calabar through Ajaokuta  to Kano, will be put on hold. The Trans-Nigeria pipeline project is one of the major backbone pipelines targeted at integrating the gas transmission systems in the country. It also forms part of the Trans-Sahara pipeline project.

    Another project the oil price fall would affect is the over $5 billion Brass Liquefied Natural Gas (Brass LNG) project, to be sited on Brass Island in Bayelsa State. The project was recently resuscitated after years of delay due to fund challenges and the disengagement of ConocoPhillips, which held 17 per cent interest in the project.

    Some of the IOCs’ officials, said they will come out with official release on the issues. Oil companies operating joint ventures with the NNPC, include Shell Petroleum Development Company (SPDC), ExxonMobil, Chevron, Total, Eni/Agip, Addax Petroleum, Petrobras and Pan Ocean, among others.

    The NNPC has reduced its capital budget for the 2015 joint venture oil operations by 40 per cent to $8.1 billion from the initial budget of $13.5 billion due to the slump in crude oil prices. The budget was planned when oil price was around $80 per barrel, while price currently stands at about $52 per barrel.

    NNPC Group Managing Director, Dr Joseph Dawha, had at the Offshore West Africa conference in Lagos last month, said the ongoing decline in crude oil price will cause delay of about three deep water projects in Nigeria adding that many companies have serious cash flow challenges due to oil price decline.

  • London Stock Exchange, GTI to collaborate on capital market development

    The London Stock Exchange Group (LSEG) and GTI Capital Group would work together to further integrate the Nigerian capital market and the global financial markets with a view to deepening the capital formation needed for unlocking Nigeria’s vast investment opportunities.

    This understanding was part of the visit of a team from LSEG to GTI Capital Group in Lagos, during which the team visited GTI Securities’ multi-purpose private trading floor, the first of such private trading floor in Sub-Sahara Africa.

    Chief of staff and head of international development, London Stock Exchange Group (LSEG), Mr. Nikhil Rathi, commended GTI’s vision of seamless facilitation of capital flow and investments between Nigerian and global financial markets.

    According to him, GTI’s vision of bringing Africa to the world and bringing the world to Africa is a commendable and noble vision that would lead to development of the Nigerian capital market and the economy.

    He noted that with the quality of management and information and communication technologies at GTI, the company is poised to play major role in the integration of Nigerian and global financial markets.

    Located on Tinubu Street, in the Marina axis of Lagos’s main Central Business District, the GTI Securities’ private trading floor is a multi-purpose trading floor designed to interface with the most modern trading engines around the world, providing stockbrokers on both sides direct trading opportunity. Already linked and trading online, real time, on the Nigerian Stock Exchange (NSE) and NASD OTC Plc, the private trading floor is concluding arrangements that will open up similar trading opportunities on the LSEG, New York Stock Exchange (NYSE) and other major exchanges.

    As a broker-dealer member of the NSE, GTI is also part of the West African Capital Market Integration (WACMI) programme, which is designed to integrate the region’s stock exchanges. The WACMI programme, at full implementation, will enable stockbrokers from any West African country to trade on any of the region’s exchanges and also allow companies to raise capital across the borders. GTI Securities’ private trading engine is designed to trade on all instruments including equities, bonds and derivatives.

    Also speaking during the visit, Co-Head of Emerging Markets and Head of Primary Markets, London Stock Exchange Group (LSEG), Mr. Ibukun Adebayo, noted that Nigeria, as the largest economy in Africa, has huge opportunities and enormous potential for the development of its capital market and the economy.

    He pointed out that Nigerian capital market is still a fraction of the country’s Gross Domestic Products (GDP) whereas it should have been in multiples of the GDP.

    He said the LSEG team, which had visited and signed Memorandum of Understanding (MoU) with the NSE, was in Nigeria to facilitate dual listing and greater connectivity between Nigeria and London.

    Group Managing Director, GTI Capital Group, Mr. Abubakar Lawal said he was optimistic that the visit would engender enduring relationship between Nigerian capital market and London stock market.

    He said GTI Securities’ private trading floor has created window of opportunities for investors in the United Kingdom, United States of America and other major global financial centres to trade directly on the Nigerian capital market.

    According to him, there are huge opportunities in Nigeria’s vast natural resources which a relationship between GTI and other global market operators like LSEG can help to unlock.

    “We need to harness the opportunities of immense capital in Europe and Americas to develop opportunities here in Nigeria,” Lawal said.

    He pointed out that GTI’s main objective is to put Nigeria back to work by fostering the capital formation needed to resuscitate ailing companies and create new businesses that will provide jobs for Nigerians and enhance national living standards.

    In his presentation, the private trading floor manager, Mr Nnamdi Obi, outlined that the trading floor uses a state-of-the-art trading infrastructure-FIX, which allows a broker to trade on any global exchange from the GTI’s floor.

    He said the trading floor is already embedded with adequate risk management frameworks to mitigate risks that could come with global trading.

    It should be recalled that key stakeholders had earlier visited and commended the private trading floor including the director general of the Securities and Exchange Commission (SEC), the chief executive officer and management team of Nigerian Stock Exchange, the president and council members of the Chartered Institute of Stockbrokers (CIS), the chairman and executive members of the Association of Stockbroking Houses of Nigeria (ASHON) and the managing director and directors of NASD OTC Plc among others.

    “What I see here today is an example of what Nigeria can achieve with vision. I could not have imagined what I’m seeing here today, it’s absolutely impressive. You have shown that Nigerians are associated with excellence. What I’m seeing, it could be in the city of London, it could be in New York, it could be in Tokyo or it could be in Lagos and it’s in Lagos. A hearty congratulation to GTI, I’m overwhelmed with what I’m seeing,” director general of SEC, Ms Arunma Oteh had said.

  • Stock Exchange expels brokers for shares fraud

    The council of the Nigerian Stock Exchange (NSE) has revoked the dealing licence and expelled some stockbroking firms for fraudulent sales of shares of their clients.

    The firms allegedly sold the shares of their clients without authorisation, a reference to common shares fraud where stockbrokers sell clients’ shares to take advantage of market prices or buoy their liquidity.

    In a circular issued to all stockbroking firms last week, which was obtained by The Nation, the NSE indicated that two stockbroking firms were delisted from the membership list at the stock market and their directors and employees  embargoed from working in any other stockbroking firm without the approval of the Exchange.

    According to the notice, the two firms- Lakesworth Investment & Securities Limited and Gosord Securities Limited, were investigated and indicted for unauthorised sales of investors’ shares.

    The multiple fraudulent transactions were in breach of the Article 59, section five of the Rules and Regulations Governing Dealing Members of the Exchange, the charter-like code and mode of operations that regulate stockbrokers at the Exchange.

    With the revocation of their licences and expulsion from the market, no dealing members must engage in any type of activity with the firms. Besides, Article 144, subsection C makes it mandatory for any stockbroking firm that may want to employ any of the former employees, directors and executives of the expelled firms to seek clearance from the Exchange.

    According to the provision under the “Specific Actions Requiring Prior Consent of the Exchange,” a dealing member shall not be allowed to do any of the following without the prior written consent of the Exchange including employing any of the directors, authorised clerks or other persons including principal officers such as the chief executive officer, chief finance officer, chief compliance officer and chief risk officer, who have been indicted by the Exchange or the Securities and Exchange Commission (SEC).

    Others that required clearance from the Exchange before employment included any person expelled, as an authorised clerk or its equivalent, from any other exchange; any person refused admission as a member of the Chartered Institute of Stockbrokers or any person expelled from its membership; any person expelled as a member of any professional association or institute and any person who is insolvent or has been convicted of theft, fraud, forgery, or any other crime involving dishonesty.

    A source told The Nation that the Exchange has been working to address the root causes of frauds among stockbroking firms. The source said inactive and illiquid stockbroking firms are prone to frauds, referring to a recent move by the Exchange to amend its rules to pave way for delisting of inactive stockbroking firms.

    The draft amendment to the rules and regulations governing dealing member is titled ‘revocation of inactive dealing member firms’ licences and it has already passed the initial rule-making processes.

    The Nation’s check indicated that the NSE has marked 81 out of the 322 stockbroking firms on its dealing members’ list as inactive. According to the amendment, where a dealing member is inactive for a period of six consecutive months, the Exchange shall revoke the licence of the dealing member. A dealing member must not under  no circumstances cease to carry out  its day to day business activities for, which it was licensed to operate without any reasonable cause.

  • Akintola Williams urges stock exchange to sustain integrity

    Akintola Williams urges stock exchange to sustain integrity

    The only surviving founding father of the Nigerian Stock Exchange (NSE) and the Doyen of the Accountancy, Mr. Akintola Williams, has urged stakeholders at the stock exchange to sustain the high degree of integrity on which the stock market was founded.

    Williams, now 95, together with six other eminent Nigerians, had in 1960 signed on the documents that birthed the then Lagos Stock Exchange (LSE), which later changed its name to Nigerian Stock Exchange (NSE).

    Speaking at a ceremonious ringing of closing bell for the NSE at the weekend, Williams noted that when the Exchange was founded and all through its formative years, frauds and manipulations were unknown at the stock market. The event was held to mark the 95th birthday anniversary of Williams, who clocked 95 on August 9.

    According to him, the stock market was founded on a high degree of integrity, which must be sustained in order to guarantee the sanctity of the market.

    “I shall remain eternally proud for being one of the seven founding fathers of the Lagos Stock Exchange late in 1960 subsequently renamed Nigerian Stock Exchange. I was a council member for thirteen years and was pleased to have worked under five Presidents of Council, two of whom were expatriates whilst the rest were Nigerians. I am happy to report that during this period of thirteen years and subsequently thereafter frauds and manipulations of prices were unknown and I note with considerable pleasure that this high degree of integrity is still going on. I plead that it should still be maintained and not relaxed,” Williams said.

    He also noted the need for stockbrokers “to become professionals”, in reference to campaign by stakeholders that stockbrokers should be allowed to trade on their own names as professionals just as lawyers and accountants.

    Williams said such professional status for stockbrokers will supplement the very high standard of professional ethics on which it already insists.

    He commended the phenomenal changes at the NSE pointing out that the Exchange has established 11 well-equipped branches with trading floors in 11 states.

    “I also notice that your call-over is now being superseded by the introduction of computer-based system – here again I rejoice with the Exchange on this achievement. The Exchange also needs to be congratulated on the substantial increase in the number of its dealing members. The number now exceeds 200,” Williams noted.

    Established as Lagos Stock Exchange (LSE) in 1960, the stock exchange was conceptualized as a limited by guarantee not-for-profit organisation thriving on the goodwill, reputation and integrity of its members. While Nigeria’s doyen of accounting, Mr. Akintola William, is the only surviving initial signatory to the founding memorandum of the NSE, the membership list of the NSE has always included “the movers and shakers” of the Nigerian economy. Late Chief Moshood Kashimawo Olawale Abiola (MKO) was a former president of the NSE.

    Beside stockbroking firms and other capital market operators that are dealing members, members of the NSE included Alhaji Aminu Dantata, Alhaji Aliko Dangote, Alhaji Abdul Rasaq (SAN), Chief Ernest Shonekan, Chief Jerome Udoji, Chief Chris Ogunbanjo, Chief Bayo Kuku, Dr. Lateef Adegbite, Dr, Chris Abebe, Mr. Gamaliel Onosode, Mr. Isaiah Balat, Alhaji Isyaku Umar, Mr. Oba Otudeko, Otunba Adekunle Ojora, Mr. Pascal Dozie, Mr. Paul Ogwuma, Chief Phillip Asiodu,  Rear Admiral Allison Madueke (rtd.), Senator Udo Udoma and Senator David Dafinone among others.

    Several State Investment Companies are also institutional members of the NSE, giving the States inputs into the operations of the NSE. These included Adamawa Securities Limited, Kaduna Investment Company, Kano State Investment and Properties Limited, Katsina State Investment and Property Development Company Limited, Kwara State Investment Corporation, New Nigerian Development Company Limited, Niger State Development Company Limited, Sokoto Investment Company Limited and Yobe Investment Company Limited among others.

  • Stakeholders flay delay in Stock Exchange’s annual report, general meeting

    early eight months after the end of the financial year, stakeholders have condemned the inability of the Nigerian Stock Exchange (NSE) to present its annual report and accounts and hold its annual general meeting within the best practice the Exchange enforces for its dealing members and quoted companies.

    Stakeholders, who spoke on condition of anonymity, being subject to regulatory supervision of the Exchange, criticized what they described as double-standard of corporate governance being implemented by the NSE, which sanctions quoted companies and stockbrokers for failing to submit their financial statement and accounts three months after the end of the reporting period.

    Dealing members of the Exchange who are entitled to receive the Exchange’s annual report and accounts and notice of annual general meeting at the weekend confirmed that they have received neither the annual report nor the notice.

    However, a reliable source in the know of the undercurrents at the Exchange said the Exchange has concluded arrangements to publish its annual report and accounts and notice of annual general meeting.

    According to the source, the Exchange will send its audited report to its members and make all necessary public publications before the end of this month in order to comply with the mandatory 21-day notice of annual general meeting. The source hinted that the Exchange’s general meeting has been scheduled for September 24.

    Stakeholders said the Exchange should take the lead in corporate governance noting that while the Exchange enforces the stringent post-listing rules on periodic reporting for quoted companies and its dealing members which have complex operations, it should demonstrate the practicability of its rules by complying with the minimum standards.

    They pointed out that the continuous failure of the NSE to meet the basic best practice that it sets for quoted companies and its members undermines the corporate governance at the market.

    Post-listing rules of NSE states that audited annual accounts of companies should be submitted within three months after the year end while quarterly financial statements are expected to be made available 45 days after the end of the quarter. Stockbrokers, who are members of the NSE, are also expected to comply with similar rule.

    While it does grant extension of a month, the NSE has been tough on implementing the rule on submission of reports. After the expiration of a one-month extension on April 30, 2014, the NSE had imposed a weekly fine of not less than N100, 000 each on all the companies that failed to submit their 2013 audited annual reports and accounts by the expiration of the extended deadline.

    The NSE had in a response to exclusive media enquiry by The Nation, stated that it has no intention to grant further extension of the April 30, 2014 deadline. The NSE stated that barely half of companies with December 31, 2013 year-end met the deadline and that defaulters will be sanctioned in line with Appendix 111 of the NSE Greenbook, which contains listing requirements.

    Section 14 of the Appendix 111 states that “any late submission of accounts shall attract a fine of N100, 000 per week from the due date until the date of submission” while “a listed company who contravenes any of the provisions of the Listing Rules and General Undertaking and fails to pay the penalty imposed on it for such contravention on or before the due date shall be liable to a further fine of N300, 000 in addition to N25, 000 per day for the period the violation continues”.

    Besides, the sanctioned companies are expected to state in their subsequent annual report details of contraventions and the sanctions imposed for such contraventions.

    According to the NSE, there were 136 companies with December year-end but only 71 companies had submitted by the close of working hours.

    “The Exchange has granted a one month extension to all listed companies irrespective of their year-end to submit their audited accounts and reports. There is no present intention to grant any further extensions,” the NSE had stated.

    The Nation’s check indicated that the NSE then tagged 80 companies with its “Below Listing Standard” (BLS), which confirmed their failure to submit their audited annual reports within the deadline and also confirms the imposition of sanctions. The 80 companies included 65 companies with December year-end and some 15 companies with year-end within the previous year.

    The sanctioned companies included  Dangote Flour Mills Plc, National Salt Company Nigeria Plc, UTC Nigeria Plc,  Continental Reinsurance Plc,   Royal Exchange Plc, Capital Oil Plc,  Aso Savings & Loans Plc,  John Holt Plc, Deap Capital Mgt & Trust Plc and Juli Plc.

    Also, a report on sanctions and fines for similar defaults in 2013 showed that the Exchange slammed about N105.9 million on 48 companies that delayed their results. The fines ranged between N200, 000 and N6.8 million.

    The NSE had slammed some N60.2 million as fines on 34 companies for failure to meet deadlines for 2011 audited reports. With a range of N3.8 million and N100, 000, average fine for the year was N1.77 million.

    When The Nation first exclusively reported concerns about the non-availability of the annual report of the NSE in May, NSE had responded that it has nine months to present its annual report and hold a general meeting of its members.

    Head, Legal and Regulatory Department, Nigerian Stock Exchange, Ms. Tinuade Awe had noted that “under the Companies and Allied Matters Act (, Section 345), The Exchange is required to lay its financial statements before a general meeting of its members no later than nine months after the year end covered by the statements. Our plan is to convene the AGM for our 31 December 2011 year end, ahead of the 30 September 2012 deadline.”

    Market operators however had described the position of the NSE as unacceptable escapism noting that while the same CAMA and Investment and Securities Act (ISA) applied to all corporate entities, NSE had relied on its rules to impose sanctions on companies. They said NSE should be held to the same standards it set for quoted companies and market operators under its regulations.

  • Stock Exchange sets criteria for new blue-chip board

    Stock Exchange sets criteria for new blue-chip board

    The Nigerian Stock Exchange (NSE) is set to create a new premium listing board exclusively for highly capitalised blue chip companies with high standards of corporate governance.

    A preview of the criteria for the new board obtained by The Nation indicated that the companies to be listed on the new board must have market capitalisation of not less than $1 billion, (about N157 billion).

    The companies must also score at least 70 per cent on the Exchange and the Convention for Business Integrity’s Corporate Governance Rating System (CGRS).

    Besides, the companies must have a minimum free float of 20 per cent or value of shares floated must be equal to or above $1 billion. Also, the number of shares representing its issued share capital must be equal to or above 10 billion units.

    The companies are expected to meet stringent corporate governance, capitalisation and liquidity conditions.

    According to the draft rules for the new board currently under consideration, to remain on the premium board, an issuer’s continued eligibility shall be evaluated by the Exchange annually in line with all the outlined criteria or on the basis of additional requirements which may from time to time be prescribed by the Exchange, provided that each company shall comply with all other continuing listing obligations as specified under the listings rules of the Exchange.

    The council of the NSE may also in its discretion grant an extension of time for a company to comply with the relevant free float requirements set out in these rules; provided that the company submits a formal and substantiated request in that regard setting out the reasons why it could not meet the said requirements and how it proposes to satisfy the requirements within the time granted.

    Also, in the event of non-compliance with any applicable codes or regulations affecting their governance, companies shall be expected without prompting, to disclose in the Directors’ report of their annual report why they are in breach.

    The Exchange indicated that the new board is aimed at providing a platform for greater global visibility for eligible Nigerian entities, which will make it easier for them to attract global capital flows and reduce the cost of borrowing.

    Head, Legal and Regulation,  NSE, Tinuade Awe, said the new board would subsist on a very strict regime with a great deal of emphasis placed on the need to comply with good corporate governance.

    According to her, the companies on the new board would be liable to sanctions in the event of breach of the premium board rules as well as the listings rules of the Exchange.

    Companies that are already on the main board of the NSE that meet the criteria could also migrate to the new board.

    The Nation’s  investigation indicates that quoted companies that may migrate to the new board include Dangote Cement, Nigerian Breweries, Nestle Nigeria, Guaranty Trust Bank, Zenith Bank, FBN Holdings, Seplat Petroleum Development Company, Lafarge Cement Wapco Nigeria, Guinness Nigeria, Ecobank Transnational Incorporated (ETI), Stanbic IBTC Holdings, Oando, United Bank for Africa, Forte Oil, Access Bank, Unilever Nigeria, Transnational Corporation of Nigeria, Flour Mills of Nigeria, Union Bank of Nigeria and Cadbury Nigeria

  • NCC clears coast for telcos’ listing on stock exchange

    NCC clears coast for telcos’ listing on stock exchange

    Regulator of the telecom sector, the Nigerian Communications Commission (NCC) over the weekend, cleared the coast for telcos in the country to take their business to the Nigerian Stock Exchange (NSE) for listing.

    The Commission unveiled a 31-page document titled: Code of Corporate Governance the Telecommunications Industry 2014, arguing that it embodies time-honoured virtues of accountability, responsibility and integrity that will ensure sustainable growth for the industry. The sector has achieved subscriber figures above 130 million and $35 billion in direct foreign investment (FDI) into the economy.

    Absence of a corporate governance code in place has been identified as one of the factors responsible for the reluctnace of the telcos to list of the NSE.

    Already three of the telcos: MTN, Airtel and Etisalat are already listed in Johannesburg, Abu Dubai Stock Exchange and National Stock Exchange, India respectively but they could also cross list on the NSE too. Onlt Globacom, a wholly indigenous operator with footprints in other African countries is not listed a any stock exchange.

    Presenting the document, NCC’s Chief Executive Officer/Executive Vice Chairman, Dr Eugene Juwah, said the combined factors of the strategic importance of telecommunications and unprecedented growth of the sector with extensive reach across all social and demographic groups in the economy makes it imperative that operators in this critical sector align to uphold a code of corporate governance which is specific to the industry.

    He said corporate governance codes globally could take several forms, some are generic or national in scope while others are drawn up for specific groups of firms (sector specific) or designed to address a specific aspect of corporate governance such as board practices, transparency and disclosure standards.

    He said national codes of corporate governance are typically focused on country-specific issues and are aimed at improving and guiding governance practices within a country’s specific legal environment and business context, sector-specific corporate governance codes on the other hand address the specific peculiarities of the affected sector (in Nigeria’s case, telecommunications) that are not typically dealt with under national or broadly-aimed codes.

    He said with the growing relevance of corporate governance beyond capital markets where compliance with best practice is enforced through listing rules, sector-specific codes have become increasingly more beneficial in those sectors where private unlisted firms operate.

    He said: “Recognised corporate governance principles of accountability, responsibility, transparency, integrity and ethical conduct, independence and others are important for all types of companies operating in the telecommunications industry whether public or private, large or small as the requirement for good corporate governance does not wane on account of size or type of business affiliation.”

    Juwah recalled that the journey to getting the code began June last year when the NCC organised the second stakeholders’ consultation on Corporate Governance with Enhancing Stakeholders Responsibility as it theme, adding that the first was consultation was in April of 2012 with Corporate Governance on the Telecommunications Industry-Compliance with Standards, Processes and Procedures as its theme.