By Naomi Uzor

The Lagos Chamber of Commerce and Industry, LCCI, has faulted the proposed mandatory listing of companies under the Private Companies Conversion and Listing Bill, saying, the Bill would do the business environment in the country no good.

The Bill seeks to provide for the private companies whose shareholders funds exceed N40 billion or its annual turnover exceeds N80 billion or its total assets exceed N80 billion, to convert to public liability company and get its shares listed in the stock exchange market thereby promoting growth for both the company and the Nigerian capital market.

In a position statement made available to Vanguard by the Director General of LCCI, Mr. Muda Yusuf, the chamber called for the immediate withdrawal of the Bill from the National Assembly, arguing that the proposed Bill would negatively impact on local investment and the broader economy and would lead to considerable loss of revenue to the government and break up of companies to circumvent the requirement of the Bill.

According to LCCI, companies should be allowed to be listed on the NSE on their own volition based on objective, empirical, investment/market considerations, and not forced.

Also, LCCI said the Nigerian Stock Exchange may not have the depth and liquidity needed for the investment arising out of the mandatory listing of these companies, adding that, it would negatively affect the business environment by creating undesirable and unnecessarily cumbersome regulation and scrutiny on the companies under CAMA, SEC and NSE rules and regulations.

Moreover, the procedure for going public is expensive and onerous and not every investor or would-be investor whether local or foreign has the temperament for such.

“The Companies and Allied Matters Act, 1990 (“CAMA”) should be amended as no amendment has been made to the Act in 24 years. Also, the Corporate Affairs Commission should be strengthened with appropriate legislation to discharge the responsibilities placed on it by CAMA.

The regime of the Bill should be made voluntary and providing sufficient tax incentives to encourage and not mandate companies to become public or be listed at the stock exchange” he stated.

Muda said the penalty regime created by the Bill is unduly harsh and will create a material risk and huge deterrence to businesses investing in Nigeria.

“The Bill has no stipulation for the minimum percentage of the share capital to be offered to the public. It could lead to loss of absolute shareholder and Board control of the company. One of the arguments proposed by the proponents of the Bill is that it will provide employment.

However, this Bill does not necessarily create employment opportunities as many foreign investors have expatriates in their employment.