Members of the Nigerian Stock Exchange (NSE) yesterday approved the process to conclude the demutualisation of the exchange to become a profit-making, limited liability entity.
The approvals were given at a court-ordered meeting (COM) and an extra-ordinary general meeting (EGM) held separately in Lagos.
Demutualisation is the conversion of not-for-profit entity limited by guarantee into a profit-making, public limited liability company owned by shareholders.
At the COM, the members assented to the registration of the exchange as Nigerian Exchange Group; the transfer of its securities exchange licence and other assets required to carry out the securities function to Nigerian Exchange Limited and the establishment of a separate subsidiary company to be charged with the regulatory functions of the exchange post-demutualisation to be called NGX Regulation Limited.
The members equally approved the transfer of the assets of NSE Consult Limited, NSE Nominees Limited and Coral Properties Limited – existing subsidiaries of the NSE – to the Nigerian Exchange Group Plc.
They also approved that the exchange will have a total share capital being N1,250,000,000 comprising 2,500,000,000 ordinary shares of 50 kobo each to be registered with the Corporate Affairs Commission (CAC).
The members equally gave assent to the allotment of 1,964,115,918 ordinary shares to dealing members and ordinary members on the basis of a ratio of 78:22, respectively.
A Claims Review Shares totalling 40,083,999 ordinary shares, representing two per cent of the issued shares of Nigerian Exchange Group, will be set aside for allotment to parties who are adjudged as being entitled to shares in the demutualised Exchange was also set aside.
At the EGM, members appointed a board of directors of the demutualised exchange with Otunba Abimbola Ogunbanjo, who is the current President of the NSE Council, emerging as the chairman. Mr. Oscar Onyema will remain as the chief executive officer and managing director. Others are: Dr. Umaru Kwairanga; Mrs. Fatimah Bintah Bello-Ismail; Mr. Oluwole Adeosun;Mr. Chidi Agbapu; Mr. Patrick Ajayi, all members and non-executive directors.
Dr. Okechukwu Crescent Itanyi, Mrs. Nimi Akinkugbe, Prof. Enase Okonedo were appointed independent directors while Mr. Ikpobe Apollos Oghooritsewarami and Mrs. Ojinika Nkechinyelu Olaghere were appointed independent non-executive directors.
Speaking at the EGM, Ogunbanjo, said: “I feel elated that 19 years after initiating the process to demutualise and on the 60th anniversary of the exchange, we are close to achieving the goal. The successful demutualisation of the exchange was one of my main objectives when I assumed the presidency of the exchange and I am particularly happy it has been achieved during the life time of one of its founding fathers, Pa Akintola Williams.”
He commended the efforts of the management and staff of the exchange, exchange members, members, professional advisers, the federal government, the Securities and Exchange Commission (SEC) and other capital market stakeholders for making the demutualisation a success story.
On his part, Onyema said: “Today’s meetings move the demutualisation process significantly forward and the positive outcomes affirm the great interest from members to support the pivotal restructuring of the exchange to become globally competitive.”
According to him, in furtherance of their plans, they will move to file the necessary resolutions from the COM and all other required documents at the CAC and SEC, obtain the court order sanctioning the scheme, complete all necessary registrations and seek the final approval from the SEC to ultimately demutualise.
Onyema explained that members of the exchange had approved the demutualisation scheme of the exchange in March 2017.
This was followed by the signing of the Demutualisation of The Nigerian Stock Exchange Bill into law in August 2018. In December 2019, the SEC in a no-objection letter, gave its consent to the NSE to hold the COM and EGM that would facilitate its conversion from a not-for-profit entity limited by guarantee into a profit-making, public limited liability company owned by shareholders.
Also commenting on the successful meetings, former Director General of NSE, Prof. Ndi Okereke-Oyiuke said she was satisfied with the outcome, noting that demutualisation was good for the whole Nigerians.
She said: “Though we started it, it did not happen; but we have been following through to ensure it happens. It is good not only for stockbrokers and investors, but for the whole Nigerians. It is good to have a demutualised exchange in Nigeria.
“I feel that people have come to understand what the stock exchange really means. With this demutualisation, a lot of people will come into the exchange since we have already gone through the process of teaching Nigerians how to be shareholders in quoted companies.”
According to her, with demutualisation, the exchange can attract further highly experienced staff as well as foreign investors, foreign stockbroking firms and foreign direct investment.
“With this demutualisation, anybody in any part of the world can have access, the exchange will have a lot of money to execute high level plans that they have and people that will invest in the exchange will also make money.
It is the best thing that will happen to the Nigerian economy. It will definitely move the country forward because it is the engine room of the economy and now more people will be interested in investing in the stock exchange, they will bring in their money and it will be in Nigerian economy.
“It is just few people that will cash in and cash out but majority, 95 per cent of people that invest will keep their money here,” she said.