By Peter Egwuatu
Criticisms have continued to trail the recent pronouncement of the Central Bank of Nigeria (CBN) that banks operating in the country would be made to use one Registrar for their share registration, a development that operators in the capital market said contradict the SEC’s anti competitive practices.
•Arunma Oteh Dr. David Ogogo, Registrar/Chief Executive, Institute of Capital Market Registrars(ICMR) revealed to Vanguard that bank equities currently accounts for about 66 per cent of the market capitalisation of the Nigerian Stock Exchange (NSE), and to that extent, ceding all banks equities to a single entity would create monopoly, which runs contrary to the SEC’s direct responsibility to guide against anti-competition practices in the capital market.
Continuing he said, “Over time, Registrars have been encouraged to contribute to the development of the Nigerian capital market by developing the capacity; human, material and financial, to service the growing number of shareholders and quoted companies in Nigeria. The effect of stripping the bank securities from Registrars will be the immediate creation of redundant capacity, ultimately resulting in shrinkage of registrars’ branch network, staff and other service complement.”
The importance of Registrars upgrading their infrastructure to meeting global standards cannot be overemphasised.
Professional share registration is the business of creating and maintaining the register of shareholders of public and private companies in the Nation’s Capital Market.
The creation of the register of shareholders start from the primary market while the maintenance of the register takes place in the secondary market. The primary market is the market for fresh securities and the secondary market is the market for existing securities.
Because of the crucial role of these unique professionals in the Nigerian capital market the Institute of Capital Market Registrars was established to introduce true professionalism.
The Institute was established on 4th November, 2004 with the following objectives: To regulate and control the practice of share registration; To organise and conduct professional examinations in share registration leading to the award of Associate of the Institute of Capital Market Registrars (ACMR); To regularly organise evening and weekend classes for student members preparing for the Institute’s examinations; To organise lectures, seminars and conference on Share Registration and related fields; To publish in-house journals and professional Share Registration textbooks.
Operationally the Registrars do most of the job leading to every successful public offer.
The end result of all – parties meetings for every offer is the offer documents. The Registrars have the responsibility of dispatching all offer documents to receiving agents across the length and breath of the Federation. This they do using courier service providers.
The completed application forms are returned to the various receiving agents by the investors. The Receiving Agents in turn forward all received application forms to the Registrars. The Registrars do the collating and sorting into valid and rejected applications. Application forms can be rejected for any of the following reasons: Improper completion, Printed signature, Lack of address. etc
Using the valid application forms the Registrar key in the forms to form a tentative register of shareholders to determine whether or not the offer is over subscribed. If the offer is oversubscribed the Registrars produce basis of allotment for consideration by the Issuing House and subsequent approval by Securities and Exchange Commission (SEC).
When a basis of allotment is eventually approved by Securities & Exchange Commission, that will be used for creating the Register of shareholders by the Registrars. Thereafter the Registrars will produce and mail out share certificates. Shortly thereafter money returned cheques are prepared and mailed out to those having refunds due to partial allotment of shares applied for.
In recent times, Registrars find it difficult to mail out share certificates on time. The reason is that as a result of the increase in the awareness of the investing public, most people are now aware of the obvious advantages of investing in shares. Consequently, the volume of application forms registrars must have to grapple with is unprecedented. In some offers, the forms are up to one million. On the average however most offers attract as many as 600,000 forms.
Another challenge to the registrars is the sending out of money returned cheques within the time frame stipulated by Securities & Exchange Commission. In most cases, the Issuing House delays giving the registrar the total amount to be refunded. Registrars can only prepare money returned cheques when they are in possession of the funds.
The role of Registrars in the secondary market involves the totality of job having to do with updating of shareholders data base in the register of shareholders.
The address of shareholders change from time-to-time for whatever reasons. When the shareholder visits in person or write a letter! the Registrar will adopt the following procedure; Verify the Signature of the shareholder; Confirm the old address of the shareholders; Effect the change in the computer system i.e. the electronic register.
The Registrar also update the register of shareholders after doing the following: Obtain an affidavit of change of name if the change is due to any other reason other than marriage; Obtain from the shareholder a marriage certificate if the change is due to marriage, Request and obtain a newspaper cutting evidencing the advert of the change, Obtain a bankers confirmation of the new signature, Confirm the signatures on the bankers confirmation, Collect the physical share certificates for endorsement, Effect the change in the name in the electronic register of shareholders.
Registrars also help in transfer of shares. Share Certificates and transfer forms of shareholders who want to sell off their shares are sent to the Registrars for verification. Registrars verify the signatures and attached share certificates. The verified items are sent to the Central Securities Clearing Systems in electronic form who in turn uses the information to update the data in their custody. Ultimately, the CSCS sends to the Registrars in electronic format the required data to enable the Registrar update the register of shareholders.
With so many persons becoming more and more aware of the wealth potentials of the capital market, the Registrars have to grapple with an unprecedented increase in the number of transactions. The truth is that some stockbrokers now reject collecting certificates of lower value meant for sale as they are too many.
When a shareholder dies,the Registrars will only update their records after obtaining the following documents in respect of deceased shareholder :
The original death certificate for sighting; A letter of administration (when there is no will) and a probate letter where there is a will ; Bankers confirmation of the signatures of the named administrators or executors; The physical certificates for endorsement ; Update the register of shareholders.
5. Other functions of Registrars include: Officiating at Annual General Meetings/Extra-Ordinary General Meetings, payment of dividends/interest, etc