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Foreign conglomerates threaten to delist from stock exchange

Peter Egwuatu
Indications have emerged that foreign conglomerates are threatening to delist from the Nigerian Stock Exchange (NSE) following the crisis that rocked the Exchange which led to the sack of erstwhile Director General, Professor Ndi Okereke-Onyiuke by the Securities and Exchange Commission (SEC).

*Arunma Oteh

Vanguard gathered that three blue chip companies, one from the Breweries sub sector, one from Food Beverage sub sector and the last one from Conglomerates sub sector are putting plans in place to delist from the NSE.

According to the information gathered,  loss of confidence, crisis in the Exchange and market meltdown were among the reasons why these companies are threatening to pull out from the stock exchange.
Although attempt at confirming the proposed plan to delist from the Stock Exchange by the three alleged companies proved abortive as all the companies’ corporate affairs unit declined comment.
Also the Head of Corporate Affairs unit of the NSE, Mr. Sola Oni declined comment as no reply was received from the text message sent to confirm or refute whether the Exchange has received notice regarding delisting notice from any company.

It would be recalled that in the first quarter of this year the stock market started showing sign of recovery after the global financial  meltdown which saw some stock exchanges around the world crashing.

The NSE was not speared as market capitalisation nose-dived from an all time high of N13.5 trillion in March 2008 to less than N4.6 trillion by the second week of January 2009. Besides, the All-Share Index (a measure of the magnitude and direction of general price movement) also  plummeted from about 66000 basis points to less than 22000 points in the same period.

Since then many investors have  lost confidence in the Nigeria capital market and preferred to convert their naira to foreign currencies, especially the dollar and hold them through their domiciliary accounts. This has in part led to worsening exchange rate against the naira.

There were mega losses by investors in the capital market whose total losses are not below 2/3 of their investment before the meltdown. In other words, most of the investors in the stock market  have less than one third of the value of their investments before the free-for-all fall.

Only recently, another crisis emerged at the Exchange with its President, Alhaji Aliko Dangote accusing the management of the NSE led by Prof. Okereke-Onyiuke of financial mismanagement.

This accusation and other accumulated internal issues affecting the NSE made the Securities and Exchange Commission (SEC) to sack Okereke-Onyiuke as DG, just to safeguard the market and protect the interest of common investors.

Ms. Arunma Oteh, Director General of the Commission had explained that the Investments and Securities Act (ISA)2007 vests the unalloyed responsibility for safeguarding the interest of the public and protecting the investors.

According to her,” the Commission has closely followed the developments in the NSE, particularly with respect to inadequate oversight of the Exchange, ongoing litigations, allegations of financial mismanagement, governance challenges, and the inordinate delays in the implementation of the succession plan for the Exchange. In following the developments, the Commission has at all times carefully deliberated on the implications and ramifications of a direct intervention in the affairs of the Exchange.

In this deliberation, the Commission weighed the consequences on the market of a direct intervention set against the broader goal of safeguarding the interest of the public and protecting the investor.

“The Commission has decided that it is in the interest of the public and necessary to protect the investor to issue the following directives.

That the: Council member elected as President of the Exchange in defiance of the Court order cease acting as the President pending the outcome of the ongoing litigation; Council Members elected in defiance of the Court order cease acting as members of the Council pending the outcome of the ongoing litigation; that the current Director-General of the Exchange, Professor Ndi Okereke-Onyuike, be removed from the office of Director General/Chief Executive Officer of the NSE”.


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