At last, NSE opens own shares to public

‘Demutualisation to boost investors’ confidence, corporate governance’

Capital market investors can now subscribe to the shares of the Nigerian Stock Exchange (NSE). The management approved the long-awaited demutualisation of the bourse yesterday.

The approval was granted at the NSE’s Extra-Ordinary General Meeting (EGM) which held at the Stock Exchange House, Lagos.Demutualisation is transforming a stock exchange into a public company that is shareowner-based. It allows the shares of the bourse to be quoted on its floor.

The new development has opened a new vista in trading at the exchange. More people are likely to increase their activities as the move further exposes the workings in that very sensitive agency of government. A new regime of transparency would now be enthroned against the not-distant era of opaqueness and insider-dealings that led to its crash in the wake of the global meltdown of 2008. To follow also, are more funds for government and the citizens.

It will also lead to the provision of fresh avenue for the exchange to access more capital to meet its needs and stay competitive without necessarily placing additional financial burden on participants. Increased ownership of the bourse would enhance awareness about the market and boost investors’ confidence. And corporate governance would be improved as ownership will be separated from management, paving the way for robust investment.

The demutualisation of the NSE was first proposed in 2001, seeking proposals from local and foreign financial advisers in this respect in 2014.Specifically, the members authorised the National Council and Management of the Exchange to proceed with the process leading up to its demutualisation in deference to extant laws.

They also ratified the engagement of financial, legal and tax advisers to expedite the whole process.The President of the Council, Aigboje Aig-Imoukhuede, explained that the approval marked the achievement of an important milestone.

His words: “The demutualisation of the exchange will bring the Nigerian capital market at par with other international jurisdictions, result in enhanced governance, transparency and visibility while attracting strategic partners, investors and quality issuers. These are historic times indeed.”

To the Chief Executive Officer of the NSE, Oscar Onyema, the new development would generate substantial motivation for the development of an agile bourse, thereby consolidating its innovativeness, strengthening its leadership both at the local and international levels as well as adding value to its stakeholders.

“As a demutualised entity that is profit-seeking, the NSE will be in a better stead to capitalise on new income opportunities, free from any limitations arising from conflicting member interests and existing laws and more importantly, be able to better support the economic growth of Nigeria,” he noted.

Also yesterday, stakeholders described the move as a major factor that would significantly increase the confidence of local investors and spur activities in the stock market
For instance, the President, Progressive Shareholders Association of Nigeria, Boniface Okezie, in an interview with The Guardian, said the exercise would attract more local and retail investors into the market if effected in an ‘all inclusive’ and transparent manner to enable investors to get real value for their money.

“If the process will carry all Nigerians along, that will foster growth and woo more local investors to the market,” he added.The Managing Director, Stanwal Securities Limited, Augustine Ofonagoro, admitted that demutualisation would go a long way to reduce over-dependence on foreign investors and attract local ones into the market.

He noted: “As NSE demutualises and sells its own shares to the people, more people will know what is happening here and they will bring all the money they are stocking elsewhere here because they will believe that the place belongs to them.”

According to the Chief Executive Officer, Highcap Securities, Imafidon Adonri, the exercise would enable the bourse to operate efficiently like a commercial business.He observed that the new fillip would give the exchange greater latitude to explore more income-generating opportunities, adding that with more income, it could acquire world-class facilities to enhance its competitiveness.

Adonri added that as a business limited by shares, the standard of corporate governance and transparency would be improved thus more retail investors would actively participate to engender its robust development.