About 19 years after initiating the process to demutualise the Nigerian Stock Exchange, the bourse is close to achieving the goal. Without any doubt, the management of the exchange would be happy that the feat was achieved now, not only because the market is 60 years but also that it happened in the lifetime of one of its founders, Pa Akintola Williams.
Members of the Nigerian Stock Exchange on Tuesday passed requisite resolutions for the demutualisation of the Exchange at a Court-Ordered Meeting and an Extraordinary General Meeting.
At the Court Ordered Meeting, members voted and assented to the re-registration of the Exchange as Nigerian Exchange Group Plc (); the transfer of its securities exchange licence and other assets required to carry out the securities function to the Nigerian Exchange Limited.
Details: The members approved the establishment of a separate subsidiary company to be charged with the regulatory functions of the Exchange’s post-demutualisation to be called the NGX Regulation Limited with a total share capital of N1,250,000,000, comprising 2,500,000,000 ordinary shares of 50 kobo each to be registered with the Corporate Affairs Commission.
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Prior to the determination of the ownership structure of the Exchange, 2% of its authorized share capital was set aside to settle outstanding claims arising from the demutualization.
All assets, liabilities, and undertakings, including real property in relation to the trading business of the Exchange, are to be retained by NEXG. The securities exchange license of NSE, along with all assets and existing contracts required to carry out securities and exchange functions would be transferred to NEXG. The regulatory function of the NSE along with all assets and existing contracts that will be required to carry out regulatory function would also be transferred to NEXG.
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At the court-order meeting, which was covered by Nairametrics, Oscar Onyema OON, the CEO of the new NEXG, disclosed that the group would move from having a council to having a board of directors with about 5 to 6 independent directors coming on board. He added that the new structure and offerings of the group should encourage big corporates to list on the exchange.
“With the separation of the regulatory activities from the business activities, we would begin to see a different type of organization, an organization that is really driven for profit, hitting on all cylinders.
“While the regulatory company will provide all the regulation that needs to happen to ensure that we are running according to global best practices which should be attractive to large corporates that are looking for a well ran exchange to list their companies,” Onyema said.
Also speaking at the event, just before the constitution of the board of the NEXG, Otunba Abimbola Ogunbanjo, chairman of the board, disclosed that as a result of the demutualization, the first transformation which will be noticed is the decoupling of membership and ownership rights adding that NEXG will run with a board of 12 people.
Speaking about the benefits of demutualization, he said, “So when you operate as a profit entity the first thing that you are going to see is enhanced performance, competition, deepening of the market, foreign investors looking at the Nigerian Stock Exchange to invest, flexibility in the products and much more.
“We will be operating as a public entity now a for-profit entity so the first transformation that is going to happen will be the decoupling of the membership rights and ownership rights. Prior to this demutualization, you had only the dealing members and the ordinary members, now that is going to be different,” Ogunbanjo said.
According to Ogunbanjo, the report and result of the court-ordered meeting are to be filed with the Securities and Exchange Commission (SEC) in order to obtain the final copy of the scheme, thereafter, the necessary petition will be made to the Federal High Court to sanction the scheme. Once sanctioned by the court and registration done with the Corporate Affairs Commission, demutualization is effective.