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Dematerialisation: Stockbrokers call for review of CAMA

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By Michael Eboh
Stockbrokers have expressed their support for a review of  the Companies and Allied Matters Act (CAMA), in order to accomodate the dematerialisation  programme being championed by the apex capital market regulator, Securities and Exchnage Commission (SEC).

Dematerialisation is a paperless driven  system , in which  investors’ holdings in a  company is reflected electronically.
Speaking in an interview with Vanguard, Mr. David Adonri, Managing Director, Lambeth Investment and Securities Limited, disclosed that for any meaningful success to be achieved in the pursuit of the dematerialisation programme of the SEC and the Nigerian Stock Exchange (NSE), certain provisions of CAMA relating to the acceptance of share certificates as a valid evidence of share ownership should be reviewed to conform with modern day realities.

He stressed the need to review CAMA to conform to changes in both the local economy and international economy, ensuring that it corresponds with advancement in information and communication technology.

He said, “There is the need for the review of CAMA, especially as it has to do with the issue of share certificates and the dematerialisation of share certificates. CAMA still sees share certificates as the prima facie evidence of ownership of shares of public companies.

“Due to advancement in information technology and the fact that we are in a paperless world, it is now important to amend that section, such that shares documents kept in books and also in online documents or soft copy can be seen as sufficient evidence of ownership of shares of a company. This will now make the proposed dematerialisation exercise in the market to be in compliance with the laws of the country.”

Speaking in the same vein, Mr. Amaeze Olisaemeka, disclosed that CAMA should be reviewed to reflect investors’ decision to keep their holdings in a company in an electronic format instead of keeping a share certificate.

“If an investor is buying shares for the first time or entering the CSCS system for the first time, he is required to fill a form which is called the ‘Particulars of Shareholders Form’ or ‘Waiver Form’. In other words, if he fills that form, he has waived his right to a share certificate.

“Under the Company and Allied Matters Act 1990, the share certificate is the prima facie evidence of ownership of shares, but by filling that particular form, it means that the investor is deliberately waiving his right to a share certificate, indicating that he can accept a printout from the Central Securities Clearing System (CSCS) as evidencing his shareholding in any quoted company.

“There should be an amendment to that relevance section of CAMA such that share certificates will not be the only prima facie evidence of ownership of shares, but also allowing an electronic printout or CSCS statement to equally be included, that whoever has that can also be said to be a shareholder of a quoted company, as it can also be said to be a prima facie evidence of his holding in the quoted company.”

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