Demutualisation: NSE obtains SEC ‘no objection’ nod, plans EGM

NSE to set order handling and best execution rules for stock dealing members
NSE CEO, Oscar Onyema
Access Bank Plc

The Nigerian Stock Exchange (NSE) has obtained the Securities and Exchange Commission (SEC) final approval termed ‘no objection’ for the demutualisation of the nation’s bourse, our correspondent reports.

Mr Oscar Onyema, the NSE Chief Executive Officer, said this on Monday at the 2019 Market Recap and 2020 Outlook held in Lagos.

Onyema said that the letter was received by the exchange in December 2019 for final stage of the demutualisation process.

Demutualisation of a stock exchange is a process by which a non-profit, member/brokers owned mutual exchange is converted into a profit-seeking shareholder corporation, open to members of the public.

Demutualising an exchange therefore transforms it from being owned by members or brokers, to one with a different governance structure where members of the public can buy shares.

“Now that we have seen the ‘No objection’ letter from the SEC in December, we are now putting in place final touches to have the court ordered meeting and the Extra Ordinary General Meeting (EGM).

“There will be significant engagement with investors, press and our primary constituency, the brokers and other members of the exchange and the general public. So there is a very robust plan already in place.

“We are working as quickly as we can to complete it and we hope that very soon, we will put out the notices for the EGM.

“There is statutory requirement, you have to wait for 28 days for the court ordered meeting and 21 days for EGM.

“We are following the process and we worked through the holiday period to see how quickly we can bring in these meetings,” he said.

Onyema said that the corporate structure of the exchange would change with demutualisation.

According to him, the exchange is working in collaboration with the SEC and EFCC to ensure that its zero tolerance to infractions are strictly adhered to, in addition to other measures already on ground to strengthen enforcement.

“The exchange is a self-regulatory organisation, while we have a number of tools to address infractions from an enforcement perspective.

“We have to work in partnership with the SEC and EFCC to address other aspects of enforcement where our powers are limited to.

“So, those engagements are well defined and we will continue to meet with them on a regular basis.’’

On delisting, he said the exchange would continue to provide value for listed firms to enable them find a compelling case to list or to stay listed.

“The life of an exchange is such that some companies leave and other companies come on board.

“If you look at the market capitalisation of the exchange, we have got a number of heavyweights and we also lost a number of companies.

“What the exchange is actually trying to do is that we have to be positive in terms of number of companies listed and market capitalisation.

“We cannot force anybody to stay listed or even list in the first place.

“We have to provide the value and we hope they continue to extract that value and find a compelling case to list or to stay listed.’’

Onyema assured that they would continue to work with the various parties, because before a company delists, even if it is through a merger, a lot of engagement had to take place.

“Sometimes, we have this engagement even in their home countries to make sure that we are tapping into the most senior people, the people that have the decision-making powers,” he said.

According to him, the exchange will continue to develop new strategic partnerships with the goal of delivering better products and services to its customers and maintain momentum in executing the NSE’s 2018-2021 corporate strategy.