The Nigerian Stock Exchange (NSE) may have indirectly halted a proposed private placement by NEM Insurance Plc. The Exchange had earlier this week slammed a fine of N575,505.00 being 50% of its listing fee for contravening Rule 19.3 of its Rulebook.
The rule pertains to giving proper notice to shareholders before holding an Annual General Meeting (AGM).
Some shareholders namely Eaton Acquisitions Limited, Premium Green Limited, Starvest Limited, Three Sea Investment Limited, and Oluwaseyilola A. Ojo had sent a petition to the NSE stating that:
- The Company did not dispatch the Notice of the 48th AGM and Annual Reports to the shareholders at least 21 days before the date of the meeting.
- 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.
Failure to pay before November 7, 2018, would lead to a further fine of N300,000.00 in addition to N25,000.00 per day for the period of the violation.
How it all started
Nairametrics had earlier this year exclusively reported a planned private placement by the firm. The company during its Annual General Meeting held on the 20th of June this year at Ibadan obtained approval from its shareholders to raise N2.64 billion in a Private Placement.
NEM Insurance was to issue 1,056,000,000 ordinary shares of 50 kobo each, at N2.50. The company did not state who will be buying the shares, neither did it state what it wants to use the money for.
A private placement is a sale of stock directly to an investor or group of investors, rather than as part of a public offering.
Some shareholders, however, kicked against the exercise, stating that they did not receive notice of the meeting, the proposed special resolutions, proxy forms and audited financial statements as required by the Corporate and Allied Matters Act (CAMA).
They also alleged that the exercise was a ploy by some key shareholders to increase their stake in the firm, as the company was not in dire need of capital.
What could happen next?
Should the company intend to proceed with the private placement, it may have to call an Extra Ordinary General Meeting (EGM) of which it will issue an adequate notice of twenty-one days to shareholders.
The company’s shares could witness increased trades going forward as several key shareholders angle to increase their stake.
NEM Insurance is trading at N2.96 in today’s trading session on the NSE, unchanged from the prior day. Year to date, NEM is up 78.3% and is the best performing stock in the insurance space.