Stakeholders in the capital market have endorsed a Bill by the National Assembly to reform the Nigerian Stock Exchange, (NSE) by de-mutualising it from a company limited by guarantee to a company limited by shares.
Sponsored by Senator Foster Ogola, Acting Chairman, Senate Committee on Capital Market, the Bill aims at enhancing the conversion and re-registration of the NSE into a public company limited by shares considered to be essential to develop and strengthen the capital market and enhance the formation of capital for the expansion of the Nigerian economy.
The Bill also seeks to 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.
Ogola told journalists after the meeting of NSE stakeholders in Abuja 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”
“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, demutualization separates ownership (and voting rights) from the right of access to trading on an exchange,” he explained.
The meeting 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 and Federal Ministry of Finance. Others were the Association of stockbroking Houses of Nigeria, Chartered Institute of Stockbrokers, Investments and Securities Tribunal, Nigeria Pension Commission, senators, members of the House of Representatives 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 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 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.