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Investors express views on shares buy back

By William Jimoh

Mr. Augustine Anono, National Chairman, Nigeria Professional Shareholders Association
That issue of shares buy back is based on different reasons. The first is that a company may decide to buy some of its shares back in order to give robust dividend for its shareholders. Or if the company feels that its share capital is too big and may not be able to service it with dividend. They will have to embark on buying back some of the shares so as to be able to cater for the others. But this is always done when the price of the shares is very low.

Another reason why a company may decide to buy back its shares is if it feels that what it is paying to the registrar per-account is too much, then with share buy-back they will be able to trim the unit and the account of that company.

But on a good day, other companies do it because they want to reposition themselves, in terms of liquidity and the number of shares they have in the market. Just as we all know that the capital market like any other markets is determined by the forces of demand and supply, therefore, if they do not want much of their shares on the floor of the market, they will  buy them back and with that the price of the remaining shares will rise. This may negatively impact on the shareholders if not properly managed.

I will not say that the regulator has done enough, because when this companies are in the market to seek funds, SEC and NSE are the platforms through which they access shareholders’ money but whenever they are delisting or they want to buy back their shares it is the regulator that they are going to liaise with and the interest of the shareholder who gave their money in the first place may not be given priority as required.

So if any of thes processes is to take place, the regulator should ensure that the interest of the shareholders is considered first. This can only happen when the regulator has gone extra miles to ensure that the companies did not play on the intelligence of shareholders.

Shehu Mallam Mikail, National President Constance Shareholders’ Association of Nigeria
In  respect of share buy back, there are more to it than I think the shareholders understand. Because it is an impression at which most of the directors think they can bring back some of the lost glory of their companies in order to facilitate the growth and activities of the company.  To me it is a way of reenergizing the business. It should also serve as an eye opener that the policies with which most of the regulatory authorities are working with are currently yielding results.

So companies that may want to embark on share buyback will think twice and know that there are rules and regulation that cannot be boycotted, and this will also help them to get the proper standing as well as provide return for the investors.  Share buy back is another ideal way of bringing back the glory of any company that may want to go for it and before any company can do this, that means that such a company has been doing well for its shareholders in terms of dividend declaration and other activities in the market.

There is a legal backing for this. If any company decides to go for this option, then they must follow the entire necessary rule attached to it. And if it is properly done, then other companies that are thinking of coming into the capital market will know that this is a market where whatever they have to do have to be done in a right wayand in the right perspective and not just for the interest of the company’s director.

On the issue I cannot foresee any disadvantage that such process should cause for the shareholders if the rules are followed to the letter. Because any investor that is diligent will know and say to himself this is the time I am putting my money in long term investment and not just for short term.This is also a time that an investor or a shareholder will know how to properly tackle whoever that is likely to be on the board of any company’s  directors in order to ensure that the future of their investment is not being eroded.

So for the shareholder that knows how to invest, I mean those that know how to manage their investment, there will be no problem. And I can tell you that based on the policies that are now in place, it will be very difficult for any company to rob the minority investors, most especially those who are watchful.

Engineer Hameed Ogundipe
First and foremost, I must let you know that I have  over N10 million in shares between 2008. But now, because those shares that were selling for about N60 dropped to N5 which is a capital loss, I have been very careful in my investment in the capital market.

One thing I always tell anybody that is just coming to invest in the market is that you should try and ensure that you buy the good ones, except if you think you can afford to burn your fingers. Then there is no problem with how you deal in the market and the type of shares you buy.

Talking about the share buy back, since there are regulations backing every activity in the market, there should be no problem with it. If any company think that he can now own the entire shares that were sold to minority shareholders, it is okay with me as long as the proper steps are taken and the shareholders will get their money back with the interest.

COMPLAINTS AND INVESTIGATIONS

No communication from First Bank, Finbank
My money is tied up in shares I bought in FINLAND Bank PLC and FIRST Bank PLC about three years ago. The offensive part of it all is that up till now I have never been notified or given a certificate for the shares bought. I acquired the shares in the primary market. What do I do? (Hon. Austine Eguakun, Edo State)

Investors Forum
The last public offer conducted by First bank was in 2007, and Finbank was 2009. So you could not have bought their shares through the primary market three years ago. Meanwhile, Finbank has been acquired by First City Monument Bank PLC. Our advice is that you contact the registrars of the two banks to ascertain the genuineness of the shares you bought and from where you bought them. For First Bank, contact First Registrars at Plot 2 Abebe Village Road, Iganmu or call 01-773086, 774309, 270178, 2701079. For Finbank contact City Securities at Primrose Tower, 2nd Floor, and 17A Tinubu Street, Lagos. Tel: 234-1-2641298, 234-1-7924462.

How long does it take for brokers to sell shares?
Please how long does it take for a broker to sell shares and pay the owner? (Saint Paul, Port Harcourt)

Investors Forum
It depends on a lot of things. The conditions you gave the broker i.e. if you insist they should sell at a certain price. It also depends on availability of people willing to buy the shares (demand). Also if what you gave the broker is the share certificates, which means the shares would have to be verified and registered in a CSCS account created in your name. This can take up to three months.

How do I sell my shares?
I want to sell my GTBank shares but don’t know how to proceed. (Ojevwe Koloko, Warri).

Investors Forum
You need the services of a stockbroking firm to do this. Meanwhile you will have to submit the share certificates to the stockbroking firm for verification, and registration in a CSCS account created in your name. This can take up to three months. For the list and addresses of licensed stockbroking firms please visit http://www.nse.com.ng/Regulation/ForBrokers/Pages/Dealing-Members.aspx.

I want to join a shareholders’ Association
I live in Onitsha, Anambra state and I want to join a progressive capital market shareholders’ association. Please help me.

Investors Forum
There are many shareholders’ Associations but we can’t recommend any to you. The best time to encounter any of these associations is during the annual general meeting (AGM) of quoted companies. At the AGM, you will meet their officials and you can introduce yourself and willingness to be a member.

How do I cash Ecobank dollar dividend?
Sir, I could not pay in Ecobank dividend into my account because it is in  dollars, and I have no dollar account. I also have expired dividend warrants. Please help me.  (Ikechukwu Okonkwo).

Investors Forum
You can cash the Ecobank (or Ecotransnational) dollar denominated dividend warrant through any of the branches of Ecobank. Take the warrant to their branches and they will give you the naira equivalent in cash. With respect to the expired dividend warrants, take them to the company’s registrar and they will renew or revalidate them for you.

I need information on Mega Equities Limited
Please help me to find out about Mega Equities Limited. They are my stock broker but their office in Port Harcourt has been shut down. However their worker told me that they are still in operation but was closed due to some financial constraints and the office will soon be re open.  I am confused please help to investigate the company for me.  (Great .A.)

Investors Forum
We contacted Mega Equities, and were told the Port Harcourt office is not closed. You call 08033761505 to speak with one of their brokers.


Disclaimer

Comments expressed here do not reflect the opinions of vanguard newspapers or any employee thereof.