Nigeria: Capital Market to Admit New Companies Soon

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The Chief Executive Officer of the Nigerian Stock Exchange, Mr Oscar Onyema, has disclosed that the primary market is set to witness some level of activity in the nearest future.

The primary market is the part of the capital market that deals with issuing of new securities, where corporations can raise capital through the sale of new stock through an initial public offering (IPO) and companies, governments or public sector institutions can raise funds through bond issues.

Onyema, disclosed this as the recently concluded second quarter Capital Market Committee Meeting (CMC) held, at the Federal Palace Hotel, Victoria Island, Lagos, in confirmation of the optimism investors have recently expressed in the Nigerian capital market, which currently has a Year to Date (YTD) return of 37 per cent as against a negative YTD of 4.26 per cent during this period last year.

The Director General (DG) of the Securities and Exchange Commission (SEC), Mr. Mounir Gwarzo, who presided over the two-day meeting, also expressed delight at the recent positive vibes from the capital market and anticipates sustained growth as the economic fundamentals of the country continue to stabilize.

Gwarzo, however, stressed the need for all Capital Market Operators (CMOs) to professionally advise investors on equity investments in order not to “repeat the mistake of the past”.

Meanwhile, as part of the commission’s measures to stabilize the growth of the capital market, the SEC DG revealed that its partnership with the Nigerian Educational Research and Development Council (NERDC) to develop a curriculum on capital market studies to be taught in primary and secondary schools is beginning to yield positive results.

According to the DG, a committee is already in place, preparing the curriculum and content, and the commission has a budget in place for the financial literacy initiative which entails taking messages across the country through radio, television, newspapers and most importantly the new media (Social Media) that has taken over the place of traditional media.

With eventual implementation and execution market operators are hopeful that the level of youth participation in the capital market which is currently below 10 per cent will be significantly improved by the year 2020.

In the post CMC meeting held with Lagos capital market journalists, the SEC DG further revealed that the commission is set to put an end to the printing and distribution of annual reports at companies Annual General Meetings (AGM), starting from March 2018.

In his view, the purpose of printed annual reports for distribution to shareholders before the commencement of the AGMs, is poorly achieved as many shareholders complain of not receiving the reports or of receiving them well after the AGM has ended.

Gwarzo said a better method will be to send the annual reports electronically to all shareholders.

“This will save cost for the quoted companies and give shareholders opportunity to go through the reports beforehand so that they can make informed decisions and ask relevant questions during the AGM” he said.

Gwarzo also stated that, some hard copies of the annual report will be deposited at the head offices of the shareholder’s association, implying that SEC will regularize the registration of all shareholder association so to enable investors gain access to them whenever there is a need.

Further updates from the Q2 CMC Meeting, a gathering of the entire capital market community, which attracted Self-Regulatory Organizations (SROs)/Trade Groups and an array of Dignitaries, were on issues surrounding the e-dividend, database for capital market operators, dual licence portal amongst others.

On the e-dividend, the SEC DG maintained that the deadline remains December 31, 2017, explaining that all company secretaries had in a meeting declared their support towards this initiative and there will be no more issuance of dividend warrants by the elapsed date.

As regards the introduction of Dual Licenses Model (DLM), the DG stated that the commission is in discussion with the Central Bank of Nigeria (CBN) to enable operators in the capital market, have access to CBN windows for funds that will aid their operations.

He said they are still in discussion with CBN on how to address some areas of concerns, pointing out that CBN is very interested in the initiative.

Concerning the data base of operators in the market, Gwarzo said that an update on the data base for Capital Market Operators (CMOs) has been completed and that the commission has adopted a policy to grant exemption from the Commission’s registration process to Principal Officers of Trade-groups who are already registered sponsored individuals. He said currently the market has a total of 421 market operators.

He also hinted on the introduction of a Minimum Operating Standard (MOS) for all categories of market operators, to be implemented for all the Self-Regulatory Organizations (SROs) that have exchanges, Central Depository organizations alongside other operators in the capital market.

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