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In a notice issued today, the Nigerian Stock Exchange (NSE) has disclosed that it would begin the implementation of the nominal transfer rules effective tomorrow 11th of  July 2018.

The rules are contained in section 15.34 pg 87 of the NSE rulebook.

Here are highlights of the rules.

  • No security listed on The Exchange shall be bought or sold outside the facilities of The Exchange.
  • Any securities holder that wishes to transfer his securities by way of a nominal transfer shall apply to The Exchange through his Stockbroker for transfer of the securities.
  • The Stockbroker shall carry out the requisite Know-Your-Client (KYC) enquiries on the securities holder and the proposed Transferee.
  • The Exchange shall review the application and the supporting documents submitted by the Stockbroker to determine whether the relationship between the proposed Transferor and the proposed Transferee is sufficient for the transaction to be classified as a nominal transfer.
  • In reaching a decision to classify a transaction as a nominal transfer, The Exchange shall: (1) With regard to a nominal transfer between corporate entities, consider whether a Party directly or indirectly controls the other Party, or both Parties are under common control.
  • A Party shall be deemed to control another Party if it holds or is beneficially entitled to hold, directly or indirectly, more than fifty per cent (50%) of the total voting rights in the other Party, its total income, or issued share capital.

Connections between corporate entities include but are not                limited to the following:

(A) holding companies, subsidiaries and sister subsidiaries,

(B) a joint venture and a special purpose vehicle created for the purpose of the joint venture;

Regarding nominal transfer between individuals, the NSE shall consider the following connections:

(A) Whether there is a familial relationship between Transferor and Transferee including but not limited to spouse, brother, sister, father, mother, child or step‐child; 88 Part I: Dealing Members’ Rules

(B) Whether the Transferor is acting as trustee of any trust or as the personal representative administering any deceased person’s estate; and the Transferee, is:

(i) a beneficiary of such trust or estate who has a familial relationship with the settlor of the trust or the deceased such as being a spouse, brother, sister, father, mother, child or step‐child; or

(ii) a body corporate in which the beneficiary under sub-rule (i) above is a shareholder, or

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(iii) a trust whose terms confer a power on the trustees that may be exercised for the benefit of the beneficiary under sub-rule (i) above.

(3) With regard to a nominal transfer between an individual and a corporate entity, consider whether the individual is a beneficial shareholder of the corporate entity.

(e) The Parties shall comply with such directions as may from time to time be provided by The Exchange with regard to completing the transaction.

The Exchange shall charge a fee as may from time to time be determined and published by it as approved by the Commission.

Where the transaction is eligible for approval by The Exchange, the Transferee shall execute an indemnity in a form to be prescribed by The Exchange.

DOWNLOAD A COPY OF THE  NSE RULEBOOK 2015

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Onome Ohwovoriole has a degree in Economics and Statistics from the University of Benin and prior to joining Nairametrics in December 2016 as Lead Analyst had stints in Publishing, Automobile Services, Entertainment and Leadership Training. He covers companies in the Nigerian corporate space, especially those listed on the Nigerian Stock Exchange (NSE). He also has a keen interest in new frontiers like Cryptocurrencies and Fintech. In his spare time, he loves to read books on finance, fiction as well as keep up with happenings in the world of international diplomacy. You can contact him via onome.ohwovoriole@nairametrics.com

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