SEC DG, Arunmah Oteh
Worried by the threat posed by the activities of some shareholders’ associations, the Securities and Exchange Commission (SEC) is considering a new strategy to regulate the associations in the Nigerian capital market.
A senior official of the SEC told THISDAY last week in Abuja that the activities of some of the associations, are making some listed companies to contemplate delisting while new ones are feeling reluctant to list on the Nigerian Stock Exchange (NSE).
Consequently, the apex regulator, the official said, was working out a new strategy to curtail the excesses of such associations and their members.
Pursuant to Section 8(y) of the Investments and Securities Act (ISA) 1999 to make provisions for the conduct of members of Shareholders’ Associations during general meetings of public companies and their relationship with public companies outside the general meetings and for other purposes , SEC issued a code of conduct for shareholders’ associations.
The code is intended to ensure the highest standard of conduct amongst association members and the companies with whom they interact as bona fide shareholders.
One of the major requirements of the code is that all the association must be registered with Corporate Affairs Commission (CAC).
However, apart from the fact that many of them are yet to be registered, they are violating other provisions of the code.
“When we tried to discourage them, they claim that they have the right of association. But their conducts are becoming a threat to efforts to attract more companies to list and are even a threat to the already listed ones. We are therefore looking at new strategy to check their excesses. This will become effective in the new year,” the SEC source said.
According to source, the commission is considering regulating the associations through the companies.
“Since we cannot stop the shareholders from associating, we may regulate their activities through the companies by sanctioning any company that has any dealing with an association that is not registered or has not complied with the code of conduct. We will encourage the companies to report to the commission any association that is making unlawful demands from them. Besides, our officials will be made to report the conduct of associations at annual general meetings (AGMs),” the source said.
The source disclosed that many companies had complained to SEC about the activities of the most of these associations, which they described as “irritating.”
The SEC code provides that a body of not less than 50 shareholders of public companies may be established for the purpose of advancing the interest of its members and influencing the standard of corporate governance to optimize shareholders’ value. It also provides that such a body of shareholders shall be registered with the CAC with not less than five persons as trustees.
It also stipulates that shareholders should conduct themselves with decorum during Annual General Meeting (AGM) or Extraordinary General Meeting (EGM) of their companies. Shareholders’ associations and their members should not be manipulated at pre-AGM/EGM meetings.