By Peter Egwuatu
LAGOSâ€”CALLS for the resignation of Senator Udoma Udo Udoma, Chairman of the Board of Securities and Exchange Commission took a new turn, weekend, as the Chairman, Committee for the review of the capital market structure and processes, Adedotun Sulaiman, said such removal will truncate the ongoing market reforms and damage attempts to restore confidence in the capital market.
Sulaiman said: â€œThose calling for Udoma to be removed as Chairman of SEC have based their call on the perception of conflict of interest arising from Udoma being on the boards of three public quoted companies, namely: UACN Plc, Linkage Assurance Plc and Unilever Plc. Their argument is that his position as chairman of SEC will conflict with his role on the board of companies since SEC is a regulator of publicly listed companies.
Their position is based on a wrong understanding of the role of SEC vis-a-vis public companies and I will like to make two clarifications.â€
Stressing that SEC was not a regulator of public companies, Sulaiman said the Commission was a regulator of the capital market as the bulk of the processes on which rules were based, as well as the regulator of capital market operators, such as stock and commodity exchanges, brokers, dealers, securities traders, issuing houses, registrars, clearing and settlement and depository institutions.
He said: â€œA publicly quoted company has dealings with SEC only when it is raising capital from the public or doing any sort of restructuring of that publicly sourced capital. SEC, therefore, is not any more a regulator of UACN, Unilever or Linkage than the CBN which is a regulator of companies that borrow money from the banks.
The SEC is to capital market operators what the CBN is to banks, NAICOM is to insurance companies, PENCOM is to Pension Fund Administrators (PFAs) or, for that matter, what NAFDAC is to pharmaceutical or food companies.
â€œHere we are talking of the regulator of a regulated industry. The point of conflict or potential conflict would have been real or valid if Senator Udoma took on the chairmanship or directorship of an issuing house, a registrar or a stock-broking company while he is the chairman of SEC.â€
Petition by Senate committee chairman
Sulaiman added: â€œit is not uncommon for the part time, non executive chairman or directors of financial regulators to hold other directorships, as is the case in the UKâ€™s FSA,â€ noting, however,Â that his committee did recommend that the Investment and Securities Act (ISA) be amended to make the position of chairman of SEC a full time, executive one rather than part time, but unfortunately it was turned down by the SEC Board.
The call for Udomaâ€™s resignation as chairman of Securities and Exchange Commission, the apex regulatory body of the capital market, arose following the petition by chairman of the Senate Committee on Capital Market, Senator Ganiyu Solomon to the Minister of State for Finance,Â Remi Babalola asking him to prevail on Senator Udoma to resign his position as SECâ€™s chairman ifÂ he must retain his present appointment as chairman of UACN Plc.
The petition said that Udoma, who recently emerged chairman of UACN Plc and Vice Chairman of Linkage Assurance Plc, should resign his chairmanship of the Commission if he wants to continue to occupy his position in the two quoted companies.
Reacting to the call for Udomaâ€™s resignation as chairman of the Board of SEC, Sulaiman said: â€œI feel the need to speak up, because I fear the ongoing review of reform of the capital market in the last four to five months of myself and 14 other members of the Committee on review the capital market structure and process was in danger of being truncated with the effort at rebuilding confidence in the Nigerian capital market.â€