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Brokers to own 78% of proposed Nigerian Exchange Group Plc

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20% goes to ordinary memebers

Barring any disapproval, ownership of the upcoming Nigerian Exchange Group Plc will be on the basis of 78:22 ratio between the dealing and ordinary members.

The sharing formula is contained in a distribution rationale for the allotment of shares for the post-demutualised Nigerian Stock Exchange (NSE), unveiled by the management in Lagos, yesterday.

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Dealers are licensed brokers engaged in stocks, shares, and other securities listed on the Exchange, while the ordinary members involve other categories of owners.
      
In a notice published on the NSE’ website on Tuesday, a total of 1,964,115,918 ordinary shares in the demutualised and re-registered Nigerian Exchange Group Plc will be allotted to each dealing member firm (stockbroking firms).
 
“Following extensive consultations with respective stakeholder groups – and the careful consideration of the contributions of members to the development of the exchange, the national council of the exchange unanimously proposed and approved a share allocation of 78 per cent and 22 per cent respectively as between dealing and ordinary members based on the distribution rationale.

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“Prior to the allotment of the Scheme Shares, 2 per cent of the issued share capital (‘’Claims Review Shares’’) will be reserved for purposes of allotment to parties who are adjudged as being entitled to shares in the demutualised Exchange, pursuant to the provisions of the Demutualisation Act 2018.”

Ahead of the exercise, members of the NSE, will on March 3, hold a court-ordered meeting in Lagos, where they are expected to consider and possibly approve the allotment of shares.
   
If approved by the meeting, each Dealing Member shall receive 6,007,884 (Six Million, Seven Thousand and Eight Hundred and Eighty-Four) ordinary shares of 50 kobo each in Nigerian Exchange Group Plc credited as fully paid, while each Ordinary Member shall receive 2,441,274 (Two Million, Four Hundred and Forty-One Thousand, Two Hundred and Seventy-Four) ordinary shares of 50 kobo each credited as fully paid

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The Exchange had reported a net asset value of N25.6 billion as at December 30, 2018; and this has been factored into the valuation that has been undertaken
   
All assets, liabilities, and undertakings including real property and intellectual property rights of The Exchange – with the exception of the securities exchange licence and all assets and appurtenances in relation to the securities trading business of The NSE would be retained by Nigerian Exchange Group Plc.

Furthermore, the securities exchange license of the Exchange and all its assets and existing contracts required to carry on the securities exchange function would be transferred to Nigerian Exchange Limited

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According to the notice, these will come after a vote at the court-ordered meeting to convert the exchange from a company limited by guarantee to one limited by shares and re-registered as a public company in the name, Nigerian Exchange Group Plc.
   
Upon post-demutualisation, the Exchange will be better positioned to implement commercial strategies to improve its role as a trading arena and undertake improvements to facilitate more competition.
     
Improvements will allow for efficient, effective and more competitive trading.  Improved global trading facilities will also help maximise economies of scale and scope and increase our accessibility and market reach.
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More so, the Exchange will be better positioned to seek strategic alliances and consolidation, introducing greater geographical collaborations and M&A possibilities.
   
Demutualising will enhance The Exchange’s access to skills, knowledge and technical efficiencies from strategic shareholders.
 
The Exchange’s brand will achieve global visibility thus enhancing its profile, and enable it to raise funds more easily to finance strategic objectives and expansion.

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Also, the opportunity for a potential Initial Public Offer or strategic investment will be created, opening up opportunities for domestic and institutional investors and creating liquidity for existing members.
   
The Exchange added that the newly demutualised Exchange will continue to provide services similar to the previous entity.

“Although the governance structure will change; with ‘outside’ shareholders being represented on the Board of Directors, the new for-profit structure will allow for the Board and Management to take decisions that are in the interest of all stakeholders.”

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