Task Before SEC Board

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Stakeholders in the capital market have pointed out what the new board of the Securities and Exchange Commission should do to restore confidence in the market, writes Goddy Egene

Staff and management of the Securities and Exchange Commission (SEC), operators and investors in the nation’s capital market heaved a sigh of relief on Monday, when the federal government eventually inaugurated a board for the market regulator.

The board, which is headed by a lawyer and, former company secretary of United Bank for Africa Plc (UBA), Mr. Olufemi Lijadu, came in over four years after the last board of commission was sacked by President Muhammadu Buhari.

While Lijadu, who is from Ogun State would be the chairman, other non-executive commissioners are: Mr. Lamido Yuguda from Gombe State, Mrs Rekiya Ladi (Kaduna), Mr. Okokon Ekanem, representing the Ministry of Finance, and Dr. Alvan Ikoku, representing the Central Bank of Nigeria.

The acting Director-General, SEC, Ms Mary Uduk; Acting Executive Commissioner, Corporate Service, Mr. Henry Rowlands, other members of the board from SEC are Acting Executive Commissioner (Operations), Mr. Isyaku Tilde, and acting Executive Commissioner (Legal and Enforcement), Mr. Reginald Karawusa, are also members of the board.

The constitution of the board came after persisted calls by market stakeholders.
The Permanent Secretary, Federal Ministry of Finance, Mahmoud Isa-Dutse, who is also overseeing the office of the Minister of Finance inaugurated the board.

Speaking at the inauguration ceremony, Isa-Dutse said the inauguration of the SEC board came at a time when many players in the market were displaying weak corporate governance practices that could potentially dampen investor confidence and undermine the steady gains achieved since the 2008 stock market crash.
He, therefore urged the board members to play their own part as crucial enablers in the industry towards advancing a common vision for the growth and revitalisation of the market.

He added that Nigerian capital market was still growing and evolving, noting that to sustain its growth and eventually transform to a world class capital market, transparency and investor confidence were desirable.
He said like world markets across the globe, the Nigerian capital market should be characterised by high levels of liquidity, depth, breath and sophistication with a strong domestic investor base.

He added: “It should be innovative, transparent due to robust investor base. It should be innovative, transparent due to robust disclosure regimes, and efficient both in price discovery and in the allocation of capital.
“We must have it in mind that world-class capital markets do far more than provide access to capital. They are enablers of socio-economic development because they hasten the rate of capital formation, foster a meritocracy and promote good corporate governance, innovation and entrepreneurship.

“Thus, our capital market should broaden access to economic prosperity by enabling the emergence of financially responsible citizens, accelerating wealth creation and wealth distribution, providing capital to small and medium scale enterprises (SMEs), and catalysing housing finance.”
“The administration of President Muhammadu Buhari is committed to transparency and accountability in corporate governance. To this end, I must emphasise that the role of governing board is to provide effective oversight and strategic adversary to management team.

“I would therefore like to advise all concerned to study and strictly adhere to laid down laws that have clearly defined the roles and responsibilities of the board members” he added.
Responding, Lijadu emphasised that capital markets are very important in the socio-economic development of any nation as it plays a critical role in attracting investments.

“As we all join hands together to build our country, we need investments and the capital market plays a critical role in that respect. We need to see how we can move forward to have a more orderly market, a market that is fair and transparent and can attract investments to build Nigeria. We need a market that is attractive to investors, both local and foreign

“We need a capital market where the rules are enforced and where the public who invests are all protected. We need to re-inforce the public trust. I therefore enjoin everyone to help us towards building a capital market that this country deserves”.

Also speaking, Uduk expressed delight at the inauguration of the board which she said would assist in moving the capital market forward. She welcomed the new members and expressed optimism that they would bring their wealth of experience to bear in the running of the commission and the market.

Agitation by stakeholders
Before now, the Chairman, Association of Securities Dealing of Houses of Nigeria (ASHON), Chief Patrick Ezeagu, had stressed the importance of a board for SEC.
“SEC, which is regulating a market of several trillions of naira should have a board to enable a smooth running. It is disheartening to know that most of the laudable projects espoused in the master plan are being affected by lack of a board, which is statutorily mandated to take some major decisions in that direction.

“Apart from not having a board, the DG and the commissioners are all in acting capacities. This does not send good signals to investors out there. Appointing a board for the commission and confirming the officers would significantly boost investor confidence, thereby restoring some level of stability to the market,” Ezeagu had said.

Speaking on why SEC urgently needed a board urgently, a senior market operator and lawyer had said the commission could not be an arbiter over corporate governance of listed companies whereas it does not have a board.

According to him, “can you give what you do not have it. You cannot be superintending over what you do not have.”
He added that SEC is signatory ‘A’ member of International Organisation of Securities Commissions (IOSCO), explaining that being a signatory ‘A’ member requires that the commission should have an institution in place and the head of that institution is the board.

“In terms of market dynamics, information is key and the timeliness of information is pivotal. For information, which is key and timely you must have a board that quickly take decisions because as it is today, the Ministry of Finance serves as a board.

“For any decision to be taken, the ministry, which is already saddled with the running of the economy, and over-burdened with such, what time will it have to attend to the commission. Though the ministry supervises the commission, what capacity with specific reference to capital market that the ministry to be able to give a guided advice to the commission,” he added.

Also, the Chairman of Ibadan Zone Shareholders Association of Nigeria (IZSAN), Mr. Eric Akinduro, had said constituting a board for SEC would enhance confidence in the market.
“The market is very sensitive. Anything that is not positive can easily drag the market down. Therefore, the best thing for the government is to take proactive step by ensuring that the board is constituted so that the growth the market is recording now can be sustained,” Akinduro said.

Similarly, the National Coordinator, Independent Shareholders Association of Nigeria (ISAN), Mr. Adeniyi Adebisi had said people bearing the brunt of what was happening in SEC were the shareholders.
“The government should constitute board so that things can move in the right direction,” he Adebisi said.

Stakeholders task board
Reacting to the inauguration of the board, President, Association for Advancement of Rights of Nigerian Shareholders (AARNS), Dr. Faruk Umar, expressed delight over the appointment of the new chairman, who he described as knowledgeable and has a lot of integrity.

“My immediate advice to the board is that SEC should try as much as possible restore the credibility of organisation because we have never seen a situation, less than two years you have three DGs. It is not healthy for corporate governance.

“This happened because there was no board. The commission must quickly, bring back the credibility in issues in the market, especially issue regarding Oando Plc.

“What has happened in Oando Plc is not giving the market a good image in the eyes of the international investors. Ministry will intervene, court will come and all these have not been good for the market,” Umar said.
He added that the new chairman should concern himself with issues that would move the market forward instead issues that are very inconsequential.

“They should be concerned with developing the market. They should come out with policies that attract investors instead of meddling into affairs of companies and talking about gifts at annual general meetings (AGMs) and companies interacting with shareholders. These are minor issues that SEC should not interfere,” he added.

Also speaking, the founding National Coordinator, Independent Shareholders Association of Nigeria (ISAN), Sunny Nwosu, said Lijadu was a company secretary of a quoted company and should know more about the attitude of SEC to issues.

“The first thing he and other board members should do is to sit down and look at the management of SEC and do the needful to encourage the people to work by confirming those that need power to move ahead and do the job.

“And then, they should look at the relationship with those that there regulating and the shareholders. The outcry of the shareholders must not be ignored. This is very important because of the shareholders that have regulators. It is shareholders that continue to sustain the regulators.

“If you look at it from every angle, it is the shareholders’ contributions that sustain the market and everything must be considered before a decision is taken,” Nwosu said.
He said the board should also look at the issue of Oando Plc because it has the capacity to impact negatively on SEC, shareholders and investment terrain.

“A just decision must be taken. Either to start all over again on the issue and regain the credibility of SEC because the credibility of SEC is in doubt due to the political interference on everything about SEC.
“The capital market is a capitalist market and does not require office of Chief of Staff or Presidency to continue to micromanage SEC. Micromanaging does not help. Rather it creates problem.

“You see people who do not understand the regulation interfering and saying this is what we want to enforce on the people. Even we know that SEC DG is appointed by the Presidency, the appointment does not say the Presidency will now be managing SEC,” Nwosu said.
On his part, Akinduro said the board should work towards ensuring that all policies in the 10-year capital market master plan are implemented.

“Also, the investments of investors should be paramount and the board should listen to the views of minority shareholders which are the back bone of the market,” he said.

In his opinion, the National Chairman, Progressive Shareholders Association of Nigeria, Mr. Boniface Okezie, said the board should ensure the management is made up of technocrats and professionals to run its affairs and not mere political appointees.
According to him, the crop of staff in SEC may not be able to take the commission to the level people expect it to be.

“I believe the government is eager to take the economy back on track and the capital market regulated by SEC has a vital role to play. There is the need to have strong management in SEC. That is the only option to restore investor confidence give hope investments in the Nigerian capital market,” he added.

A market operator said one key issue the board should look at is how to resolve executive matters raised by the Ministry of Finance by the panel that looked at the allegations made against Mounir Gwarzo.

Irrespective of what the courts have said, there are fundamental issues that panel report pointed and should be addressed and settled by the board to ensure discipline and strong governance in the commission,” he said.
He said the commission should also intensify its market development function by organising enlightenment programmes through workshops/seminars,town hall meetings among others.

“SEC should look at its market development functions as contained in 13(e) (f) (i) (j) of the ISA No. 29 of 2007 so as to ensures that all stakeholders including investors, academic community, market operators, law makers, professional bodies, government functionaries are appropriately educated on the activities and initiatives of the commission in order to deepen the market,” he said.