From Fred Itua, Abuja
The Federal Government has expressed its support for current efforts by the National Assembly to amend the existing Nigerian Stock Exchange (NSE) Act of 1960 to enable it convert from a company limited by guarantee to a company limited by shares.
Finance Minister, Kemi Adeosun, who made this known at the weekend, said the government gave reasons its support for the project to include provision of access to global best practices, creation of a better regulatory framework/formula for ownership stakes, greater independent investor participation in governance of the exchange as well as putting the exchange in a better position to support the economy.
She spoke through the Director of Home Affairs in the Ministry, Mrs. Olubunmi Shinobola, at a public hearing on a bill titled, “An Act to facilitate the development of Nigeria’s Capital Market by enabling the conversion and re-registration of the Nigerian Stock Exchange from a Company Limited by Guarantee to a Public Company Limited by Shares and for related Matters, 2017”, jointly organised by the Senate and House of Representatives Committees on the Capital Market.
Other speakers such as the Governor of the Central Bank of Nigeria (CBN), Director General of the Securities and Exchange Commission (SEC), and Registrar, Chartered Institute of Stockbrokers (CIS), all gave their support to the bill.
Acting Chairman, Senate Committee on Capital Market and sponsor of the bill, Forster Ogola, said the NSE plays a major role in Nigeria’s financial market and its conversion and re-registration into a public company limited by shares is essential to develop and strengthen the capital market and enhance the formation of capital for the expansion of the Nigerian economy.
He said the move was also in line with the 2015-2025 Capital Market Master Plan, stressing that the proposed demutualisation would promote efficiency in the creation and harnessing of capital, as well as creating liquidity in the market and adopting and strengthening corporate governance best practices.
“It is anticipated that the demutualisation of the NSE will reinforce the continuous growth and development of a dynamic, fair, transparent and efficient capital market and thus significantly contribute to Nigeria’s economic development,” Ogola said.
Others who endorsed the bill include Registrar, Corporate Affairs Commission, Association of Stockbroking Houses of Nigeria, Chairman, Investments and Securities Tribunal, and the DG, Nigeria Pension Commission. The bill had earlier passed first and second readings on the floors of both chambers of the National Assembly.
Justifying the new bill, Mr. Oscar Onyema, Chief Executive Officer of the NSE, said it was in furtherance to the resolutions of the NSE Extraordinary General Meeting held on March 30, 2017 where members voted in favour of the demutualisation exercise.
He highlighted the benefits of a demutualised exchange to include facilitating the development of the capital market, improved corporate governance, availability of resources from capital investments, enhanced competitiveness, increased global brand and visibility of the exchange, investor participation opportunities and ability to build a more sustainable institution.
According to him, in addition to the above benefits, “it is of particular importance to the Nigerian capital markets and the wider economy that the Exchange be aided to successfully demutualise, as it enables the Exchange to serve the capital markets’ ecosystem and economy more effectively than it has done in the past.”