by ahuraka isah, Abuja
Stakeholders in the nation’s capital market have endorsed the ongoing consideration of a Bill by the National Assembly to demutualise the Nigerian Stock Exchange (NSE), from a company limited by guarantee to a company limited by shares.
They spoke at a public hearing on a bill titled : “ An Act to Facilitate the Development of Nigeria’s Capital Market by Enabling the Conversion and Re-registration of the Nigerian Stock Exchange from a Company Limited by Guarantee to a Public Company Limited by Shares and For Related Matters, 2017,” jointly organised by the Senate and House of Representatives Committees on the Capital Market, held at the National Assembly on Thursday in Abuja. The bill is sponsored by Senator Foster Ogola, acting chairman, Senate Committee on Capital Market,
Opening discussions on the Bill, Ogola said the Nigerian Stock Exchange(NSE) plays a major role in Nigeria’s financial market and its conversion and re-registration into a public company limited by shares was essential to develop and strengthen the capital market and enhance the formation of capital for the expansion of the Nigerian economy. He said the move was also in line with the 2015-2025 Capital Market Master Plan stressing that the proposed demutualisation would promote efficiency in the creation and harnessing of capital, as well as creating liquidity in the market and adopting and strengthening corporate governance best practices.
“ It is anticipated that the demutualisation of the Nigerian Stock Exchange will reinforce the continuous growth and development of a dynamic, fair, transparent and efficient capital market and thus significantly contribute to Nigeria’s economic development,” Ogola said. He urged all stakeholders to endorse the bill.
Demutualisation is a term used to describe the transition from a mutual association of exchange members, to a limited liability company, accountable to shareholders. Essentially, demutualisation separates ownership (and voting rights) from the right of access to trading on an Exchange.
The public hearing attracted all the key stakeholders in the capital market including officials of the Central Bank of Nigeria, Securities and Exchange Commission, Nigerian Stock Exchange, Corporate Affairs Commission, Federal Ministry of Finance, Association of Stockbroking Houses of Nigeria, Chartered Institute of Stockbrokers, Investments and Securities Tribunal, Nigeria Pension Commission, Senators, honourable members and the media. Before then, the bill has passed first and second readings on the floors of the senate and house of representatives.
Defending the move to demutualise the Nigerian Stock Exchange, the chief executive officer, Oscar Onyema, said it was in furtherance to the resolutions of the NSE Extraordinary General Meeting held on March 30, 2017 where members voted in favour of the demutualisation exercise. He highlighted the benefits of a demutualised exchange to include facilitating the development of the capital market, improved corporate governance, availability of resources from capital investments, enhanced competitiveness, increased global brand and visibility of the exchange, investor participation opportunities and ability to build a more sustainable institution.
According to him, in addition to the above benefits, “ it is of particular importance to the Nigerian capital markets and the wider economy that the Exchange be aided to successfully demutualise, as it enables the Exchange to serve the capital markets ecosystem and economy more effectively than it has done in the past.”
In his own remarks, the Senate President, Dr. Bukola Saraki, represented by senate deputy chief whip, Senator Francis Alimikhena, praised the efforts of the NSE since its establishment in 1960 and her various positive contributions to the growth of the nation’s economy.
Saraki said the proposed bill if passed into law would open more opportunities for the economy. He urged those in attendance to make useful contributions to ensure a robust discussion and legislation.
Also speaking, Speaker House of Representatives, Hon. Yakubu Dogara, represented by House minority leader, Leo Ogor, said the House was working on retooling the Nigerian economy and would be ready to accept any initiative and ideas that would deepen our economy and create opportunities for economic growth. The Speaker pledged the readiness of the House to give the NSE every necessary support it needs to achieve its goals.
Earlier in his welcome address, the Chairman, House of Representatives Committee on Capital Markets and Institutions, Hon. Yusuf Tajudeen, said the gathering was a fulfillment of one of the resolutions of a Stakeholders’ Forum on the Capital Market organised by the National Assembly in June 2016, stressing that the public hearing was a “ further demonstration of the commitment of the National Assembly through the committees on capital market to re-position the NSE towards achieving its role not only as a critical institution but a major contributor to the economic development of Nigeria”.