By Nkiruka Nnorom

SHAREHOLDERS under the aegis of Independent Shareholders Association of Nigeria, ISAN, have faulted the Securities and Exchange Commission, SEC, over the planned ban of companies’ pre-Annual General Meeting (pre-AGMs).

The association berated the Commission for not seeking the input of ‘critical’ stakeholders in the capital market before  presenting the Draft Amendment to the public. Along with the proposed ban of Pre-AGMs, the Commission said it is planning to create a sub-rule to regulate the conduct of AGMs.

The floor of Stock exchange

The new sub-rule specifically seeks to reduce the cost of organising shareholder meetings by making the distribution of gifts to shareholders, observers and any other persons at annual and extraordinary general meetings illegal.

SEC also proposed a N10 million fine against any company that flouts the rule on pre-AGM/ pre-EGM and gift distribution. But in a statement to Vanguard, Adeniyi Adebisi, National Coordinator, ISAN, disagreed with the Commission on the proposed action, saying that AGMs and EGMs are established and administered by the provisions of the Companies and Allied Matters Act, CAMA.

He noted that SEC has no mandate over these important meetings and is expected to observe proceedings at AGMs and EGMs like other observers. SEC does not define what constitutes a gift or a pre-AGM/pre-EGM.

He stated: “This is opening the whole exercise to abuse if the rules become operational. Anything, even a bottle of water given to a shareholder at an AGM can be interpreted as a gift. In like manner, a meeting of two or three persons can be construed as a pre-AGM/pre-EGM. Worse still, there are no judicial processes to ascertain liability. SEC will be the accuser and the judge, a clear breach of natural justice.

“It is our belief that no responsible board will allow such amendments as the ones being proposed to be ratified let alone expose them to the public. A few public companies permit some rowdiness to occur especially during distribution of gifts. It is the duty of such companies to get their acts together and do things properly.

“This does not call for any regulatory action. After all, it’s not all companies that distribute gifts at the AGM/EGM,” he added.

He said that SEC should not be seen as waging war on shareholders under any guise.