Stakeholders
in the Nigerian capital market have identified Demutualisation of the Nigerian
Stock Exchange (NSE) as a major factor that would significantly increase
the confidence of the local investor and spur activities in stock market. Besides,
they argued that the exercise would also reduce to the barest minimum,
over-dependence on foreign investors in the nation’s capital market. In
demutualisation, the members give up their rights and receive shares from the
company in return, which the (now former) members may then sell.
Demutualisation happens mostly when a stock exchange owned by its members goes public. The exercise, when completed would give the investing public the opportunity to trade on the shares of the Exchange just like any other quoted company.
The
Director-General of the Securities and Exchange Commission (SEC), Mounir Gwarzo, at the fourth Capital
Market Committee (CMC) meeting held recently in Lagos, explained that the
commission is currently reviewing the Companies and Allied Matters Act (CAMA),
which would provide an easy route for the exercise.
Gwarzo said:
“The role of SEC in demutualisation is to come up with
guideline and rules and regulation. SEC has come up with rules and is committed
to support any institution in the capital market that wants to demutualise. NSE
has appointed some consultants to drive the process. Again the review we are
having in CAMA will provide an easy route, any company that is mutualised that
wants to demutualise to have an easier way to do that.”
According to
stakeholders, when membership of the NSE is opened to majority of Nigerians and
they are called upon to own shares in the stock market, it would help create
awareness of activities in the market, give investors a ‘sense of belonging’
and more local investors would participate.
Similarly,
they pointed out that with demutualisation, corporate governance would be well
structured and investors would have more confidence to stake their fund in the
market.
Specifically,
the President of the Progressive Shareholders Association of Nigeria, Boniface Okezie said the exercise would
attract more local/retail investors into the stock market if it is done in an
‘all inclusive’ and transparent to enable investors get real value on
investment at the end of the exercise.
“If
the process will carry all Nigerians along, that will foster growth and woo more
local investors to the market,” he added. The
Managing Director of Stanwal Securities Limited, Augustine Ofonagoro admitted that demutualisation would go a long
way to reduce overdependence on foreign investors and attract local ones into
the market. He explained that when the NSE is fully demutualised and the
ownership structure clearly spelt out. “As NSE
demutualises and sell its own shares to the people, more people will know what
is happening here and they will bring all the money they are stocking else
where here because they will believe that the place belongs to them,” he
said. He added that effort to bring awareness of activities on the Exchange
reached a reasonable height in 2012 when a lot of road shows were organised in
the country.
The Chief
Executive Officer of High cap Securities, Imafidon
Adonri said demutualisation will enable the Stock Exchange operate
efficiently like a commercial business. According to him, this would give it
greater latitude to explore more income generating possibilities, adding that
with more income, it can acquire world-class facilities, which will enhance its
competitiveness.
He added
that it is also believed that as a business limited by shares, the standard of
corporate governance and transparency will be enhanced and with this, several
retail investors would have opportunity to be shareholders in the Exchange and
hence be able to influence its development. (Guardian)
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