Plans
to demutualise the Nigerian Stock Exchange (NSE) seem to be bringing
major capital market parties into collision. The procedure to
demutualise the NSE, which has been on the drawing board since the last
three years, means that its shares would be sold to the public and
listed on its daily official list.
However,
since the plan was mooted, it has pitted major capital market operators
against each other. The delay in exhibiting a genuine commitment to
demutualise was one of the underpinnings that led to the sack of the
former director general, Ndi Okereke-Onyiuke. The latest disagreement
stems from the decision of the Securities and Exchange Commission (SEC)
to nominate members into the council of the NSE.
“The
council will handle the demutualization so its constitution is very
important,” Rasheed Yusuf, chairman of the Association of Stockbroking
Houses of Nigeria (ASHON) said in a telephone interview. “All we are
saying is that due process should be followed.” According to him, the
commission is trying to have its nominees form the majority of the
council membership so that it can determine the direction of the
process of demutualization.
Preparing for demutualisation
According
to the commission, all its nominated members shall be on the Council
pending the election of a new council and are charged with working with
existing Council members to achieve the restructuring of the Exchange
to ensure good corporate governance practices and guide the new
Management team over the next few months to settle. It also includes,
“preparing the Exchange for its demutualization including the
restructuring of the legal framework,” according to a statement by the
commission.
SEC’s
spokesperson, Lanre Oloyi, said the appointment of council members was
an interim arrangement. “This transitional arrangement is until a new
council is properly constituted by the Stock Exchange. I cannot tell
you how long this will take. You know there are a lot of cases in
court,” Mr Oloyi added.
But
Mr Yusuf said the commission may not be playing fair. “Stockbrokers
nominated seven members to the council and SEC only accepted three.
Their reason was that there are pending court cases that would not
allow such. So why are they nominating six people to the council even
when the same court cases are still pending. What is good for the goose
is also good for the gander,” he said.
ASHON
last week wrote to the commission protesting the development. “Your
recent directive to the council of the Nigerian Stock Exchange to
appoint your nominated candidates as public interest members to the
council without any consultation with the shareholders/members was
discussed at an emergency meeting of market operators committee and our
conclusion was that the directive seem to be an overreach of the powers
of SEC,” the letter stated.
No independence
The
association enjoined SEC to uphold the principle it wants to instill in
the market. “For a new SEC that is preaching corporate governance, we
do not see how appointment of new members into the Nigerian Stock
Exchange council promotes good corporate governance, if the NSE council
lacks independence,” ASHON stated.
ASHON,
in the letter, a copy of which was forwarded to the minister for
finance, insisted that the current governing rules of the stock
exchange does not allow non members of the council to appoint members
into the council. “We will advise that this wrong headed idea be
abandoned immediately to avoid creating a crisis for a market that is
trying to restore investor confidence that was essentially lost because
of regulatory ineffectiveness and arbitrariness.”
Mr
Yussuf said while it awaits reaction from the commission, it was
optimistic that there would be an amicable resolution. “I am sure it is
something we can work out. We are all working to ensure that the market
develops and that investor confidence grows.”
