Angst as NASS deliberates over firms’ listing bill

THE National Assembly may soon commence deliberations on “Private Companies Conversion and Listing Bill, 2013”, aimed at enforcing the listing  of certain private companies  on the Nigeria Stock Exchange (NSE).

  Companies to be affected are those with shareholders’ funds in excess of N40 billion or with yearly turnover of over N80 billion or its total assets of over N80 billion. They will automatically convert to public liability companies and get their respective shares listed on the Exchange.

   While The Guardian confirmed that the bill was at the legislators, it could not be confirmed if it was being  sponsored by the Securities and Exchange Commission (SEC) or actually initiated it.

  Though the bill was scripted to  enhance activities in the NSE and ensuring wealth redistribution and poverty reduction amongst others, the policy, if approved and implemented, according to financial experts and analysts, has many downsides.  

   The financial experts and analysts who spoke to The Guardian noted that the policy might not achieve its objectives through legislative fiat, but rather by a combination of policies that would make investment more friendly and worthwhile, just as it was done in South Africa

   According to an analyst, the authors of the bill did not seem to know how free-market economy works around the world, or just decided to be unserious. 

   In his words:’’You can’t legislate on the turnover of a private company as a basis for compulsory listing on the bourse. Such a bill, as well intentioned as it may be, is ill-advised.

  ’Who checks the books of the companies to determine when the turnover threshold tops N40 billion? CAC? SEC? When you force companies to list, how do you want to turn around and regulate them at the same time? So what if they choose to delist anytime – will the SEC/NSE say no? Or if they fail to meet listing requirements or commit other offence, will the SEC/NSE have the moral right to delist the companies at that point?”

  Also speaking with The Guardian, a financial analyst who pleaded anonymity, said investment of any kind should be voluntary, not by compulsion. 

  In his words: “Why should we legislate something that can be tantamount to a ‘coup’ on the core investors? Also, the whole project has a semblance of what happened in the indigenisation era in Nigeria under the military government, but we should remember that this is democracy and everything that we do as a nation is expected to be guided by best practices in a democratic setting. 

  “It is also on record that the NIPC – Nigerian Investment Promotion Commission Act has a section that states clearly that no enterprise shall be forced to cede part of its investment to any one, therefore are we now going to contradict ourselves, and if so, how do we expect the outsiders to see us as a nation?

  A financial analyst also expressed the fear of a possibility of the hijack of the process by ‘smart’, dubious people. 

  ’’For instance, there was a particular period in Nigeria when the shares of Union Bank were being secretly purchased by a particular ‘gang’ of investors. They kept on buying the shares and had almost reached a comfortable majority, aiming to take total control of the bank before the vibrant and eagle –eyed staff union of the bank stepped into the matter and alerted the public, warning the so called ‘smart’ investors against the move and threatening to react ‘aggressively’ if they did not heed their warning. 

  “Of course, that was the end of the move which would have led to a major upset in the history of bank take-overs (through the back door) in the country. 

    “Therefore, while the government, through its agencies, that is SEC and NSE may be pushing for the successful passage of the bill, the companies that will be directly affected by the bill by being forced to part with a certain percentage of the ownership and control are not likely to take it without a fight.