In this interview, the Ag. Director General, Ms. Mary Uduk, said the current management of the SEC will continue to pursue the initiatives laid down by the CMC and former management of SEC for the progress of the market, including commencement of electronic Initial Public Offerings (e-IPOs). Excerpts.

By Nkiru Nnorom

THE Securities and Exchange Commission, SEC, just concluded its first quarter 2018 Capital Market Committee (CMC) meeting. What were some of the high points of the meeting?

During the meeting, the new executive management solicited the support of all stakeholders and acknowledged the enormous challenges before us and expressed our commitment to ensure that we deliver on the mission and vision of the Commission. We discussed the Commission’s efforts in collaboration with the National Educational Research and Development Council (NERDC) to institute a stand-alone capital market curriculum for basic and senior secondary education in the country. To this end, trade groups made commitments at the meeting to support this initiative.

Mary Uduk,

Technical committee

Further, the technical committee working on developing a vibrant commodities market for Nigeria presented its report at the meeting and we agreed that the report will be exposed to the public to elicit comments and inputs from all stakeholders.

The Commission also updated the market on the status of its database registration exercise for Capital Market Operators (CMOs). The SEC website now has a list of all CMOs and their functions. Stakeholders were also informed that the Commission has issued a new set of registration certificates to operators without expiry dates and these are available at our head office and Lagos Zonal Office.

Increase in delisting by public companies was highlighted; this poses a threat to the growth and development of the capital market in view of the fact that quite a number of them are highly capitalised companies.

We are expecting that Committee on Listings will come up with strategies to attract new listings.

The CMC noted that the distribution of electronic annual accounts of public companies has commenced. However, we also received feedback on concerns from some shareholders’ associations. It was resolved that the market will deliberate further on the matter while the pilot period of one year would be allowed to go on.

The Commission, some time ago, issued a directive that public liability companies that are not listed on the Nigerian Stock Exchange, NSE, should find their way to the NASD OTC Plc, but up till now, some companies, even the ones that have delisted from the Exchange, are not listed on any exchange at all. What is the SEC doing about this?

In as much as the capital market will like to attract as many companies as possible, the decision to be listed rests with the individual companies. All we do is to encourage companies and let them see the benefits of being listed. However, all public companies, whether listed or not, are expected to register their securities with the Commission.

Approved platforms

We also have rules stipulating that shares of public companies can only be transferred on SEC approved trading platforms/exchanges. Thus, even when a company delists, its shares can still be traded on, say, NASD OTC Plc. In addition, the Commission is liaising with the Corporate Affairs Commission, CAC, to ensure that companies comply with registration of their securities and exchanging such securities only on SEC approved platforms. We are even trying to make illegal for any company to transfer its securities on non SEC-approved exchange.

What are the terms of reference of the Committee on Listing?

The mandate of the Committee is to drive advocacy and other activities towards increasing the number of listed companies on our exchanges. Their broad terms of reference are to propose strategies to attract listings from target sectors, undertake relevant advocacy as well as other activity that may be relevant to the achievement of this mandate. New mandate given to that committee is to find out why a number of companies are delisting. Are there regulatory issues; is it that they are having issues with compliance with our regulations? We have given them a mandate to come up with recommendations so that if we need to amend our rules to attract more listing we will look at international best practices and do that. If we have to talk to other government agencies and stakeholders, we will equally do so.

What would the new SEC management do differently to boost investors’ confidence?

Members of the new management team have worked in the Commission for many years with experiences in different departments of the Commission and aspects of the capital market. We have always been part of the Commission’s efforts at improving investors’ confidence and implementing the Capital Market Master Plan.

The Master Plan will continue to be our working document and we shall continue to implement initiatives that will promote investors’ confidence such as e-dividend registration, Direct Cash Settlement, dematerialization, Complaint Management Framework, financial literacy and Investors’ Protection Fund, among others.

What are the effects of the closed window on free e-dividend?

It is important to state that e-dividend registration has not ended. It is free registration that ended on 31 March 2018. Before the deadline, the Commission was bearing the cost of registration, but the new direction now is that banks and Nigeria Interbank Settlement System, NIBSS, along with registrars will charge a token sum of N150 per mandate. We are still soliciting for co-operation from the public to key into electronic dividend payment as this is what will address the fundamental issue of unclaimed dividend.

What is the total number of approved mandates?

As at end of March, 2018, the total approved mandates was 2.49 million translating into 466,000 unique investor accounts.

What is SEC doing to promote electronic IPOs?

Globally, capital markets are moving towards Electronic IPOs (e-IPOs) and the Nigerian capital market is working to adopt this trend. A committee was set up during the meeting comprising of the SEC, NSE, Association of Issuing Houses of Nigeria (AIHN), Association of Stockbroking Houses of Nigeria (ASHON), Central Securities Clearing System (CSCS), Institute of Capital Market Registrars (ICMR), Capital Market Solicitor Association(CMSA), Fund Managers Association of Nigeria (FMAN), and NIBSS has been set up to work on modalities for issuance of e-IPOs.

What is the latest on multiple subscriptions and forbearance?

On multiple subscriptions and forbearance for shareholders with multiple accounts, the forbearance window has now been extended to September 2018. Registrars have acknowledged that investors have started coming forward but there are still some challenges in the process.

Non-Interest capital market

The CMC deliberated and recommended the appropriate Technical Committee to seek input and come up with recommendations to address these challenges. Therefore, we encourage all affected investors to come forward and take advantage of the window before the new deadline.

What other issues did the CMC consider?

The Technical Committee on Non-Interest capital market also presented its report and noted that the first sovereign sukuk which was issued in 2017 had about 1,600 retail investors that invested N5 billion in the instrument. The Committee’s next level of engagements is to work with supra-national entities (such as International Finance Corporation, IFC and African Development Bank, AfDB), state governments, institutions (such as Federal Mortgage Bank of Nigeria and Nigeria Mortgage Refinance Company Plc, NMRC, to include sukuk options in their capital investment plans.