Acting Director-General. SEC, Mary Uduk

The Securities and Exchange Commission (SEC) appears to have woken up from its slumber, as it has decided to modify two rules which pertain to shareholders.  

The rulesThe commission has proposed sub rules 4 and 5 which are additions to Rule 602 ( miscellaneous rules} 

  1. Public companies shall not distribute gifts to shareholders, observers and any other persons at Annual General Meetings/Extra-ordinary General Meetings.


  1. Public companies shall not convene any meeting with select group(s) of shareholders prior to an Annual General Meeting/Extra-ordinary General Meeting.


Penalty: Companies that breach the rules (if passed) will also suffer heavy fines.  


Any company that violates the provisions of (4) and (5) above shall be liable to a penalty of not less than N10,000,000 (Ten million naira only). 


Reasons for the amendmentThe commission also gave reasons for the proposed amendment  

Public companies spend a significant amount of money on corporate gifts at AGMs/EGMs and this has a great impact on their profitability. Few of the companies are making reasonable profits and even fewer can afford to pay dividends. If the amount budgeted for gifts at AGMs/EGMs can be reserved for other relevant operational or administrative expenses, it would positively impact on their earnings per share.

In addition

Deal book 300 x 250

  Furthermore, it has been observed that some companies arrange meetings with select groups of shareholders ahead of general meetings to discuss proposed resolutions and agree on strategies which are often detrimental to the interest of other shareholders.

Expect a pushback: While the commission has given valid reasons for the proposed amendments, retail investors may decide to push back. Many of them see the token gifts as a reward in the absence of companies not paying dividends.

Shareholder associations, may also lash at one of the amendments, which would lead to them losing a key part of their relevance.




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


  1. Why is the SEC interfering with gift disbursement at AGMs and EGMs? They should leave that to the discretion of the companies rather than impose unnecessary rules.

    Then again, there may be more to the story


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