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SEC Calls For Merger Of Capital Market Shareholder Associations

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The Securities and Exchange Commission (SEC) for called for effective shareholder associations in the Nigerian capital market, saying it would strengthen corporate governance and increase shareholder value in quoted companies.

Speaking at the Issuers and Investors Alternative Dispute Resolution Initiative (IIADRI) annual symposium in Lagos at the weekend, acting director-general of SEC, Ms. Mary Uduk, urged 125 shareholders’ associations operating in the Nigerian capital market to form stronger alliance through mergers to be stronger and effective.

Uduk said that mergers would make shareholders’ associations stronger, more influential, and effective and as well enhance shareholder value. She said that merger would produce stronger and better associations and also help in market growth and development.

She noted that there were 125 shareholders’ associations presently recognised by the commission, noting that more applications for recognition were being processed.

The acting director-general said that the Securities and Exchange Board of India (SEBI) had 24 recognised investor associations, saying that the large number of associations in the Nigerian capital market was making it difficult for SEC management and needed to be looked into to make shareholders stronger.

She said that stronger and coordinated shareholders’ associations would foster the protection of investors’ interest through the enhanced scrutiny of the activities of companies by members of the associations.

She added that strong and coordinated associations provide invaluable benefits to shareholders by bringing good representations of shareholders at annual general meetings (AGMs) or extraordinary general meetings.

Also, the chief executive officer, DSE Advisory Services Limited, Ms. Daisy Ekineh, said that shareholder associations as currently exist were neither effective nor respected and therefore, not taken seriously by stakeholders including public companies.

According to her, they were perceived as often seeking pecuniary benefits from companies as against ensuring good governance. “The associations are also perceived as disruptive rather than disciplined at AGMs,” she said.

She noted that there were too many shareholders associations, making it difficult for regulators and others to effectively engage with them. 

“According to SEC records, there were over 100 CAC registered shareholders associations in 2017. To mitigate the negative activities of the associations, SEC issued the Code of Conduct for Shareholders Associations which should strengthen the associations, if embraced by them,” she said.

She pointed out that shareholder associations can only ensure required governance on companies if they themselves act responsibly and with integrity, adding that effective shareholder activism complements regulators in investor protection, promotes good corporate governance and could enhance shareholder value.

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