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Investors urge market regulators to ensure transparency in post-demutualisation


Nigeria Stock Exchange, Lagos

Capital market stakeholders, investors have urged the regulators to ensure that share allotment is done in a transparent manner to boost post demutualisation. 

This comes as the legislative framework that will allow the Nigerian Stock Exchange (NSE) transform from an organisation limited by guarantee into a new one limited by shares has passed a second reading at the House of Representatives.
Demutualisation is the process through which any member owned organisation becomes a shareholder-owned company. Basically, it refers to the conversion of a non-profit, mutually owned company to a for-profit entity limited by shares. Demutualisation segregates ownership and management from the trading rights of the members of an exchange.

The stakeholders, who spoke with The Guardian, noted that transparent exercise would significantly increase confidence of local and foreign investors and enhance activities in the stock market.
Furthermore, they added that equitable shares allotment would attract strategic partners, investors and good quality issuers to the market.
The National Co-ordinator, Proactive Shareholders Association of Nigeria, Oderinde Taiwo, said: “We want the exchange to be transparent enough when the time comes for the public offering of the shares.“With this, I believe Nigerian investors will subscribe to it, and it will deepen our capitalisation and the entire market.”
The President, Institute of Capital Market Registrars (ICMR), Bayo Olugbemi, said: “Demutualisation has been on the front burner for a long time now. It is not a government initiative but that of the stock exchange itself. What it means is that the shares of NSE will be opened to all interested investors thereby showing example. It is like the saying ‘physician, heal thyself’. It is good for the market and investors.”
Already, no one individual is allowed to have more than five per cent allotment, even as no one group can have more than 20 per cent post demutualisation, The Guardian has learnt. However, the NSE may grant 30 per cent to strategic investors through special application.
A member of the lower legislative chamber of the National Assembly, Yusuf Ayo Tajudeen, recently sponsored the bill, titled: “Demutualisation of the Nigerian Stock Exchange Bill, 2017.” Tajudeen presented the bill to the House on March 29, when it scaled through the first reading.
At the plenary last week, the lawmaker explained that the demutualisation of the local bourse was necessary to better enhance investors’ confidence in the capital market, which has been experiencing rising profile lately.
He argued that with the bill passed and assented to, it will give NSE the opportunity to convert and re-register itself into a public limited company from its present company limited by guarantee.Members of the NSE, had, on March 30th, during its Extra-Ordinary General Meeting (EGM), approved the demutualisation scheme of the Exchange.

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