By Michael Eboh
….To peg nominal share value at N1
The Nigerian Stock Exchange (NSE) has called on the Central Bank of Nigeria (CBN) to review its decision on the uniform year-end for banks in the country, urging it to instead, adopt a double year-end for the banks.
Speaking during a town hall meeting with Chief Executive Officers of quoted companies, the Director-General of the NSE, Professor (Mrs.) Ndi Okereke-Onyiuke disclosed that the adoption of a uniform year end by all the banks in the country would negatively impact on their performance and on the economy, as it would put pressure on the banks, the accounting firms to audit the accounts of the banks and also on activities in the Nigerian capital market.
She said, “The uniform year-end being proposed by the CBN for banks in the country is really not recommendable, considering the peculiar situation of the Nigerian economy. It will pose serious challenges for banks as they will be struggling to meet up with deadlines and regulatory requirements, thereby putting pressure on the few auditing firms in the country and on their activities. It will also affect activities on the NSE, as the approach of the year-end and the attendant expectations by investors would buoy activities in the market, while a lull would be recorded after the period. To this end, it would be advisable for the CBN to make it a double year end, instead of a uniform year end, maybe June 31 or December 31.”
She disclosed that it has concluded arrangements to parley with the CBN and other regulatory authorities, to advise them on the impact of the policy on the banks and the economy, and also inform them of the need to consider adopting a double year end for the banks.
The NSE boss also advised companies on the need to undertake share reconstruction, so as to reduce the number of their issued shares to a manageable level that will not impact negatively on their earnings in the long run.
To this end, she disclosed that the NSE is considering reviewing the nominal value for shares, from 50 kobo per share to N1 per share, nothing that this will help and guide quoted companies in the reduction of their shares, especially with regards to share buyback and share reconstruction.
Okereke-Onyiuke noted that it hopes to carry the Securities and Exchange Commission (SEC) and the Corporate Affairs Commission (CAC) in the review of the nominal value, to ensure that the companies are not made to pay any fees in the change to the N1 minimum nominal value.
He called on banks and other quoted companies to adopt share buyback and share reconstruction in their quest towards the reduction of their shares to a meaningful portion.
She said, “It is a known fact that quoted companies are facing enormous challenges servicing their huge volume of issued shares, especially with regards to the distribution of dividends and bonus shares to their shareholders. The number of issued shares by some of the quoted companies are enormous, posing serious challenges for these companies. There is the need for them to reduce their shares to a meaningful and manageable level that will not pose serious challenges for them. It is to the end, that we are considering pegging the nominal value of shares at N1 per share, instead of 50 kobo per share. We intend to carry along the CAC and SEC in this regard to ensure that the companies are not charged any fees.”
Jimmy and Steve are really neither analytical nor factual in their views. As for Ndidi and her last ditch attempt to save her pets in the banking sector, she should be told it won’t work with this CBN gov. Maybe she should tell us how things work in the Us and other places where not just banks but most other big companies share the December year end. Anyway this policy was first declared by Soludo last year, reversed (under pressure from the whited sepulchres that couldn’t make it) and then reinstated in the last days of his admin. So why didn’t the ethnic warriors crucify Soludo then?
We really should accept that good quality manpower can come from any part of Nigeria / religion. I personally look forward to Sanusi serving out his 5 years at the CBN and then moving into Aso Rock to deliver us from the hands of the crooks in high places. I am a southern xtian but I have listened to this guy in a public forum and conversed with him privately and he ticks all the boxes for me.
Mallam Sanusi has started playing the laid down role. That is just it. Nigerians should watchout for black market racketeers
Here The Banks Can Ignore Sanusi
The Governor of the CBN cannot order the banks around outsider the Company and Allied Matters Acts. Most of what Sanusi directed here have no any legal effect. The Company and Allied Matters Acts prevail over the regulations of the CBN especially if the regulations contradict what the Acts say.
In as much the CBN may prescribe the quality of persons that may be employed by the banks as their Chief Executive, the CBN Governor has no any authority to sack such executive on any ground. The executive is not the employee of the CBN nor the banks are owned by the CBN. What the Governor may be able to do is to report such executive to his/her employer. Neither can the CBN force the Banks to publish the names of their loan debtors but may only be able to obtain the total debts and how the loans perform.
With the Company and Allied Matters Acts the banks as incorporated entities have got the right to determine their own year ends provided it is not more or less than twelve months apart from the first year of trade. The Taxation Acts also stated this. Whatever the regulation or order of the CBN on the banks year-ends does not bind them if they chose to ignore the CBN. The Banks can afford to ignore Sanusi in these directives.