Stakeholders Advocate Review of New CAMA to Revive Market

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Goddy Egene

Stakeholders who converged for the Chartered Institute of
Stockbrokers (CIS) annual conference in Lagos yesterday called for
the amendment of some sections of the new Company and Allied Matters
Act ( CAMA) as a precondition for revival of the Nigerian capital
market. The new CAMA had been under attack by different stakeholders
over some of its sections that they said are anti-Investment.

Speaking at the conference, one of the stakeholders , Co-founder,
Banwo and Ighodalo, a law firm and Chairman, Sterling Bank, Mr
AsueIghodalo, who made a critique of the new CAMA in its presentation
on “Rebirth of CAMA: Implications for the Capital Market Ecosystem”,
explained that much as it contains many sections that would enhance
the growth and development of the capital market, there was a need to
review some new sections that could inhibit market growth.

He said:“ Whilst CAMA 2020 amends and addresses a number of the
loopholes and problem areas in the Repealed Act, and also tried to
revise our companies’ statute to bring same in tune with the 21st
century, it would appear that the introduction of some oversight
provisions and concepts suggest an overregulation of companies and
company practices. Some of these excessive regulatory provisions
actually impede transactions in the market.

“Section 142 of the Act provides that a company shall not in any event
allot newly issued shares unless they are offered in the first
instance to all existing shareholders of the class being issued in
proportion as nearly as maybe to their existing holdings. The
applicability of this provision does not distinguish private and
public companies. The implementation of this provision will pose
significant problems for public companies seeking to raise capital by
the issuance of new shares. In undertaking such capital raising
transactions, public companies would not be able to make public offers
or undertake private placements without first making an offer to all
their shareholders.”

According to him, this amendment has raised concern amongst operators,
corporates and investors, and is a significant deviation from the
provision of the Repealed Act which only specified preemptive rights
for private companies.

“ I align with these concerns as this provision may restrict public
companies intending to undertake equity capital raise and restrict (or
at best delay) the admission of strategic investors, because the
offensive provision implies that companies will not be able to
undertake public offer transactions or private placements without
first going through the process of formally making an offer to their
shareholders,” Ighodalo declared.

According to him, the sections on dematerialization of shares and
share certificates, powers of companies to allot shares and
proscription of irredeemable preference shares have dire consequences
on the market growth and should be reviewed.

In his welcome address, the President, CIS, Mr. Olatunde Amolegbe,
explained that finding solutions to Nigeria’s economic problems was at
the heart of this year’s conference objective. Amolegbe noted that
Nigerian stockbrokers had skills and competencies that positioned them
to assist the government in providing solution to funding
infrastructure deficit.