NSE fines NEM Insurance ₦575, 505 for rule violation

The Nigerian Stock Exchange has fined NEM Insurance Plc the sum of N575,505.00 for contravening Section 19:8 of its Rulebook.

The section states in part, “Upon receiving the approval of The Exchange every Issuer shall immediately publish on its website the Notice of Meeting, circulars, annual reports, scheme document and other information memorandum that will be considered at the general meeting.”

The notice of the sanction was contained in a letter dated Wednesday 24 October 2018 and signed by Godstime Iwenekhai, head, Listings Regulation Department, NSE. The fine represents 50% of NSE’s listing fee for the breach.

The sanctioning of the insurance company came after a major shareholder in the company Eaton Acquisitions Limited wrote to NSE through its solicitors Bernateva Partners, seeking the reversal of the decisions reached at the Annual General Meeting held in Ibadan, Oyo State in June 2018.

The Exchange also received complaints from five shareholders of NEM, including Premium Green Limited, Starvest Limited, Three Sea Investment Limited and Oluwaseyilola A. Ojo, claiming that NEM Insurance had failed to notify them of the AGM in accordance with section 217 (1) of the Companies and Allied Matters Act (CAMA), SEC clause 24 and NSE rule 19.3, which prescribed at least 21 days’ notice to shareholders of an AGM to be held.

The shareholders also asked NSE to reverse the special resolution proposed and passed at the AGM to raise additional capital through a private placement at a price below the market price of NEM Insurance stock.

In its investigation, the Exchange found out that NEM Insurance did not dispatch the Notice of the 48th AGM and Annual Reports to the claimants at least 21 days before the date of the meeting and and that the shareholders who did not receive the Notice of AGM were not given the opportunity to attend and exercise their voting rights in respect of any of the resolutions passed at the 48th AGM, including the proposed special resolution to raise additional capital through special/private placement.

The fine, according to the NSE, must be paid on or before November 7, 2018 and failure to do so contravenes Clause 14(d), Appendix III: Form of General Undertaking (Equities), Rulebook of The Exchange, which stipulates a further fine of N300,000 in addition to N25,000 per day for the period of the violation.

NSE is expected to communicate its findings to the Steering Board of the Corporate Governance Rating System, which may decide to suspend, withdraw or do nothing to the CGRS rating of NEM Insurance.