OPS, NSE differ on proposed mandatory listing of firms

MEMBERS of the Organised Private Sector (OPS) and the Nigerian Stock Exchange (NSE), on Tuesday differed on the proposed Private Companies’ Conversion and Listing Bill, as stakeholders demanded its withdrawal by the promoters. 

   According to the Lagos Chamber of Commerce and Industry (LCCI), the bill in its present state would do the business climate in Nigeria no good as the appropriate investment climate is yet to be created for investors to thrive. 

   The chamber added that listing on the Exchange should be based on the volition of the firms having examined the conditions through objective, empirical manner as well as having done investment/market considerations. 

  The NSE, on its part, unveiled incentives scheme prepared by the Exchange to encourage listing of private businesses on the nation’s bourse while penalties have also been designed for erring businesses. 

     LCCI President, Alhaji Remi Bello explained that the move by the chamber is to articulate the position of the private sector in designing its advocacy programmes as the bill had undergone the second reading and if successfully passed into law, would become an Act that will oblige private companies to convert to public liability companies. 

   Bello, who was represented by the chamber’s Director-General, Muda Yusuf added that the bill, which seeks to provide for the private companies whose shareholders funds exceed N40 billion or its annual turnover of N80 billion or its total assets exceed eighty billion, to convert to public liability company and get its shares listed in the stock exchange market thereby promoting growth for both the company and the Nigerian Capital Market is not in the interest of the public.

   Indeed, the chamber sought the amendment of the Companies and Allied Matters Act, 1990 (“CAMA”), noting that no amendment has been made to the Act in 24 years.

  Specifically, the LCCI said the regime of the Bill should be made voluntary while providing sufficient tax incentives to encourage and not mandate companies to be become public or be listed at the stock exchange, while the Corporate Affairs Commission should be strengthened with appropriate legislation to discharge the responsibilities placed on it by CAMA.

   “The mere listing of a company’s shares does not guarantee success of the relevant business. The main benefits of buying publicly quoted shares are capital appreciation and the ease of disposal. These two concepts depend largely on the operational success of the relevant business.

    “Contrary to the supposed intention of the Bill to redistribute wealth, just a insignificant percentage of the populace, particularly the money bags would benefit as it would give them opportunity to channel their wealth to purchasing shares in some target companies. It would also lead to a situation where investors in the stock market would sell their investments in some companies to acquire the shares of these target companies, thus grossly distorting the stock market.

   “The bill is anti-entrepreneurship and discourages innovation. A lot of people have worked assiduously hard to bring their companies to where it is today. The decision of whether to raise funds from the public through the stock market or to allow the public own shares in their companies should be absolutely theirs to make. One of the arguments proposed by the proponents of the Bill is that it will provide employment.

   “However, this bill does not necessarily create employment opportunities as many foreign investors have expatriates in their employment. Some even run highly mechanized or automated businesses so this cancels out this so called benefit of this Bill”, the Vice-Chairman, LCCI’s committee on Law and Taxation, Bimbo Atilola added. 

   Head, Corporate Services, NSE, Kola Adeeko noted that the Exchange did not sponsor the bill but is rather encouraging businesses to list on the NSE in order to enjoy the benefits being offered through the scheme. 

   “We disagree on the concept of compulsion. The NSE seeks to convince rather than compel. Sustainability and corporate governance issues are key themes the bill seeks to address”, he added.