Investors fault N10 million issuing house registration fee
Two shareholder groups, Proactive shareholders Association and Progressive shareholders Association have condemned a move by the Securities and Exchange Commission (SEC) to increase the registration fee for issuing houses, underwriters and fund managers to N10 million from the current N500,000, urging the regulator to shelve the proposal.
The shareholders’ groups hinged their argument on the harsh operating environment occasioned by the macroeconomic challenges currently affecting the domestic economy.
The investors cited a dearth of liquidity and low confidence that have shrouded the stock market in the past few years despite its current cheap prices.
According to them, an upward review of charges in the market at this time would worsen the apathy in the market and expose operators to more hardship.
President of Proactive Shareholder Association, Taiwo Oderinde, said the planned upward review would impoverish operators who are already battling with low patronage in business activities.
Oderinde argued that what is paramount in the market currently is how to attract more issuers to the market with various incentives, especially tax holidays to boost the operations of issuing houses and not to subject issuing houses to further hardship.
He said: “Any agent of the government that is making such a proposal at this time is not helping the market and the people.
“It is unfortunate that at a time when governments in other countries are supporting operators with various relief materials and intervention measures, ours is increasing fees to the detriment of the market.
“Why are we always making things difficult for the capital market stakeholders?”
The National Coordinator of Progressive Shareholders Association, Boniface Okezie, said: “I do not know where the SEC wants them to get this money from; is it from the market that has been on a downtrend in the past few years?
“At a time when everybody is struggling to survive or is there another market elsewhere for them to raise such a huge amount of money from.”
Although Okezie admitted that it was good to raise one’s ambition but stated that this cannot be achieved at a time when the issuing houses have experienced a prolonged IPO drought. He pointed out that this would be an additional burden to operators and issuing houses, which would not augur well for the market.
He urged the commission to reconsider its stance, noting that any upward review of charges from any quarter will impact negatively on the market.
Recall that the SEC had on Monday, disclosed a plan to review registration fees for issuing houses, underwriters and fund managers upward from the current N500,000 to N10 million.
In a document titled, “Exposure of proposed new rule and sundry amendments to the rules and regulations of the commission,” posted on its website, the new amendment showed that a broker would be required to pay N3 million naira as a registration fee against N300,000 currently applicable.
With the new amendment, brokers/dealers would pay N5 five million, from N500,000 as registration fee. A broker/dealer is also expected to pay N100,000 each as processing fees and registration of sponsored individuals in the new rule.
The fee for Sub-brokers (digital) was increased to N1 million from N200,000; sub-brokers (corporate) to N1 million from N200,000 and inter-dealer brokers to N5 million from the current N500,000.
“All CIS fund managers shall pay annual supervisory fees of 0.2 per cent of the net asset value of the CIS under management not later than January 31 of every year to the commission,” SEC said.
It added that for failure to comply with the guideline, the fund manager shall be liable to a penalty of N100,000 and a further sum of N5,000 for every day of default.
The commission said with the new amendment, public companies and capital market operators would disclose penalties and sanctions imposed on them by SEC in their audited financial statements.
“They shall continue to report outstanding penalties and sanctions in their subsequent annual reports by way of notes to the accounts until all penalties owed the Commission are fully paid and sanctions fully complied with.
“The commission shall publish on all public channels, including the SEC website or any other medium, the list of public companies and capital market operators with unresolved regulatory issues.”