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SEC worries over proliferation of dormant shareholders’ groups

By Peter Egwuatu
The proliferation of dormant shareholders associations in the absence of regulation may have become a source of concern to the Securities and Exchange Commission (SEC,) as it has mandated all shareholders association to be registered with the Corporate Affairs Commission (CAC).

Professor (Mrs.) Ndi Okereke-Onyiuke, Director-General/Chief Executive Officer, Nigerian Stock Exchange (NSE) and Mr. Musa Elakama, former Assistant Director-General, NSE, at the formal pulling out ceremony of Elakama from the NSE.

Some stakeholders in the market are of the opinion that some shareholders= associations have become more of praise singers sponsored by corporate organisations for the smooth flow of their Annual General Meeting (AGM).

The SEC has explained the need for shareholders= groups in the country to file in their Corporate Affairs Commission (CAC) registration with the Commission if they want to get recognition as part of stakeholders in the Nigerian capital market.

The spoke=s person of SEC, Mr. Lanre Oloyi confided in Vanguard that any shareholders= group that does not file in their CAC registration with SEC will not be recognised by the Commission as part of stakeholders in the market.

According to him, A The Investment and Securities Act (ISA) mandates the Commission to register stakeholders and operators in the Nigerian capital market. So we are encouraging all shareholders associations in the country to register with the CAC and thereafter file them with the Commission so that they can be carried along in protecting their interest in the market.

Continuing he said, A It is in the best interest of the shareholders associations to get registered so that SEC can always parley with them since the shareholders have roles to play towards the development of the capital market.

The shareholders are important stakeholders in the market and we cannot afford to play with them However, we may not be in a position to force them to register but through moral suasion we encourage them to register with the CAC. We encourage shareholders to form associations so that the Commission can interact with them as group. We expect shareholders to be organised and be able to follow the code of conduct for shareholders as prescribed by SEC .
A code of conduct is meant to guide the organisation and operation of shareholders associations in the country.
Oloyi, further disclosed that the code of conduct for shareholders became imperative considering the fact that there is a need to chart a way forward towards entrenching good corporate governance in quoted companies regulated by the Commission.

The introduction of code of conduct, he noted arose from the code of the corporate governance for quoted companies introduced in Nigeria some years back.

A The aim is to give activities of the shareholders a sharper focus on all the important task of enhancing shareholder values. Oloyi added.

He urged shareholders leaders to see the introduction of the code of conduct for shareholders associations in Nigeria as one of the ways through which the commission seek to improve the standard of corporate governance of quoted companies and by implication the shareholders= value of investments in Nigerian quoted companies.

Meanwhile, recently, SEC confirmed that only seven shareholders groups in the country have file with it their CAC=s  registration certificates as required by ISA.

Meanwhile, some of the highlights of the code of conduct for shareholders  include the establishment and membership of shareholders associations, attendance of yearly or extra ordinary general meetings, and membership of audit committees.
On the establishment and membership of shareholders associations, the code provides that membership of a shareholders group must not be less than 50 shareholders of public companies and duly registered with the Corporate Affairs Commission (CAC), among others.

Besides, the code also bars members and officers of shareholders associations from attending yearly general meetings or extra ordinary general meetings of companies in which they are not shareholders, except with a legitimate proxy.
It also limits the tenure of membership of audit committee to a one term of three years, only subject to good performance, while equally placing burden of ensuring that members elected into audit committees have basic knowledge of accounting

The Director General of SEC, Ms. Arunma Oteh at an interactive session with the shareholders recently said, A and the essence of the registration with the CAC is to be able to identify the various leaderships of the Associations, their membership and to bring them under regulation.

The seven shareholders= groups that have filed in their registration with the SEC include: Lagos Zone Shareholders Association, Renaissance Shareholders Association, Association for the Advancement of the Rights of Nigerian Shareholders, Dynamic Shareholders Association of Nigeria, Nigerian Shareholders Solidarity Association, Proactive Shareholder Association of Nigeria, and Pace setter Shareholders Association of Nigeria.

SEC DG further stated that records had shown that there are 19 shareholders associations in Nigeria. The 12 Associations that are yet to provide evidence of their registration with SEC include: Association of Corporate Investors of Nigeria, Ibadan Zone Shareholders Association, Onitsha Zone Shareholders Association, Port Harcourt Shareholders Association, Jos Zone Shareholders Association of Nigeria,  Kaduna Zone Shareholders Association of Nigeria, Kano Zone Shareholders Association of Nigeria. Others are : Independent Shareholders Association of Nigeria, Shareholders United Front, Progressive Shareholders Association of Nigeria, Ekiti Zone Shareholders Association of Nigeria, and Pragmatic Shareholders Association.


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