After years of delay, members of the Nigerian Stock Exchange (NSE) have finally approved the listing of the shares of the Exchange on the Exchange.
Termed “demutualisation” it transforms a stock exchange from a self-regulatory organisation with no shareholders, to a public company that is shareholder-owned just like the companies it lists on its platform. It is also transforms from a non-profit making entity into a profit making business.
BusinessDay had exclusively reported yesterday that the members of the Exchange would at the Extra-Ordinary General Meeting (EGM) give their approval for the Exchange to convert from a member-owned mutual organisation to a shareholder-owned public limited liability company (PLC), which aligns with global best practices.
Patrick Ezeagu, chairman, Association of Stockbroking Houses of Nigeria (ASHON) moved the historic the motion for the demutualisation of the NSE, which was supported by Emeka Madubuike, immediate past chairman of ASHON.
Members present with a show of hand, unanimously adopted the motion.
Members at the Extra-Ordinary General Meeting also authorised the National Council and Management of the Exchange to proceed with the process leading up to the Demutualisation of The Exchange.
Other approvals given at the EGM include the engagement of financial advisers, legal advisers, tax advisers and any other advisers that may be required for the Demutualisation of The Exchange.
The members also authorised that the National Council and Management should do all such things and exercise all such powers, as may be necessary or incidental to achieving the objective, subject to applicable laws and regulations and obtaining the approvals of members and the relevant regulatory authorities.
Aigboje Aig-Imoukhuede, the NSE Council President, read out the agreement to list the NSE, while Oluwaseyi Abe, President Chartered Institute of Stockbrokers, moved the motion for adoption of the agreement and was seconded by Oladipo Williams. The members thereafter voted unanimously in favour of the listing of the NSE.
Speaking to BusinessDay on phone yesterday, after the meeting, Ezeagu said, “The issue of Exchange demutualisation is important. Before now (yesterday), we have been discussing this, to see the ways out –looking at the pros and cons. We have seen that this is the way to go. Remember that last year at the Annual General Meeting, we turned it down, but now we have given our approval.”
“We approved it because as a demutualised Exchange, we will have greater value in terms of what the Exchange represents. Profit will be the driving force and capital sourcing will be greater. I moved the motion for the approval because I represent the entire stockbroking community, as well as my company, Solid-Rock Securities and Investment Plc. With this approval, the National Council of the Exchange, can now proceed with the necessary things that need to be done. What we have done is to empower the Council members to begin to do those things to achieve a demutualised Exchange,” The ASHON chairman further told BusinessDay on phone.
Also speaking to BusinessDay on phone on this development, Abe said, “African Exchanges are moving towards demutualisation. We have been on this for quite some time now. The way is now. The Exchange is on the path of growth, in line with what is obtainable in other Exchanges. It is the right way to go. It was an epoch and all members voted unilaterally for the demutualisation of the Exchange. “
For Aig-Imoukhuede, who now has the honour of presiding over the demutualisation process, “the approval of the NSE demutualisation plan marks the achievement of an important milestone towards completion of the exercise. The demutualisation of the Exchange will bring the Nigerian capital market at par with other international jurisdictions, resulting in enhanced governance, transparency and visibility, whilst attracting strategic partners, investors and good quality issuers. These are historic times indeed”.
Oscar Onyema, Chief Executive Officer, NSE agrees that “the approval of the demutualisation process will generate substantial motivation for the development of an agile Exchange, thereby consolidating its innovativeness and strengthening its leadership, both at local and international levels, whilst also adding value to its stakeholders. As a demutualised entity that is profit-seeking, the NSE will be in a better stead to capitalise on new income opportunities, free from any limitations arising from conflicting member interests and existing laws and more importantly, be able to better support the economic growth of Nigeria”.
Sewa Wusu, Head, Research and Investment Advisory, SCM Capital Limited told BusinessDay that the “it is a positive development for the stock market because it is in line with what happens at other Exchanges.”
“With this approval, a lot of people will like to invest in the Exchange and it will inject new vigour, trigger more innovation and product deepening. Demutualisation will enhance the Exchange’s capacity to bring more innovation into the market. As Nigeria’s economy grows, it requires more innovation in the market, in terms of products –like derivatives. The Exchange has done a lot in product development, like listing of Exchange Traded Funds (ETFs) –more will be expected from its shareholders after demutualisation which makes it a for-profit-organisation.”
Iheanyi Nwachukwu
