bill seeking to compel private firms with assets and turnover in excess of N80bn to quote on the Nigerian Stock Exchange passed second reading at the House of Representatives on Wednesday.
The bill requires such companies to go public by getting their shares listed on the NSE.
The sponsor, Mr. Chris Azubogu, argued that the bill, when passed into law, would promote the growth for both the affected companies and the Nigerian capital market.
He added that a major advantage would be the availability of cheap funds at the capital market to further develop the companies and the Nigerian economy.
The proposed law applies to companies whose shareholders’ funds exceed N40bn or have an annual turnover of over N80bn.
The title of the bill reads, “A Bill for an Act to provide for private companies whose shareholders’ funds exceed N40bn or their annual turnover exceeds N80bn or their total assets exceed N80bn, to convert to public liability companies and get their shares listed on the stock exchange, thereby promoting growth for both the companies and the Nigerian capital market and other related matters.”
Azubogu noted that by being listed on the Exchange, there would be proper regulation of the companies, with the ultimate goal of promoting micro-economic growth.
He cited the examples of the telecommunications, power and oil sectors, where he said the players were not well regulated.
“The bill will help these companies and many others to even have access to cheap funds from the capital market. The aim here is to transform them into strong institutions that will outlive their original owners”, the lawmaker added.
The House Deputy Majority Leader, Mr. Leo Ogor, and Mr. Nicholas Osai, supported the bill.
Ogor said the bill would help to check capital flight from Nigeria.
He stated that most companies spinning billions of naira in the country did not want to contribute anything to the welfare of Nigeria beyond making their money and “taking it out as it pleases the owners.”
However, Mr. Fort Dike kicked against the bill and advised the House against passing it.
Dike raised his objection on the grounds that the proposed law would conflict with the spirit of enterprise.
According to him, the issue of where and how to raise funds should be left to the entrepreneurs to decide voluntarily and not through compulsion by legislation.
He also noted that it would be out of place to force foreign firms to quote on the NSE if they did not desire to do so.
Dike argued further, “This bill is in conflict with the spirit of enterprise in Nigeria and all over the world. Raising capital is voluntary and not by compulsion.
“It is anti-business to force individuals to go to the stock market once their share capital exceeds N40bn. This bill will be in conflict with the general environment of investment.”