Nigerian Stock Exchange ex-council members still owe N1.48 billion

NSE DG, Oyema

Only N609.5 million out of N2.09 billion distributed to certain ex-council members of Nigerian Stock Exchange (NSE) as share of surplus from 2006 to 2008 has been refunded.

BusinessDay learnt from the consolidated financial statement and account of the Exchange that the N609.5 million so far received is now being maintained in an escrow account, while part of the outstanding balance of N1.480 billion is subject of litigation on account of dispute over the basis of payment.

The Securities and Exchange Commission (SEC) had directed the Nigerian Stock Exchange to recover the money from the ex-council members involved because this payment is against section 26(3) of Companies and Allied Matters Act 1990.

Also, from the financial statement made available to stakeholders in the capital market at the 51st annual general meeting (AGM) of the Exchange last Friday, between 2004 and 2009 tax assessment years, the Nigerian Stock Exchange owed the Lagos State Internal Revenue (LIRS) the sum of N367.913 million.

Notes to the financial statements showed that a tax investigation was carried out on the NSE by the LIRS and the N367.913 million tax liability in the five-year period relates to tax liability payable on Pay As You Earn (PAYE), Development Levy, and Withholding Tax.

“The charge for income tax in these financial statements is based on the provisions of the Companies Income Tax Act, CAP C21 LFN 2004 (Laws of the Federation of Nigeria CAP 60) as amended. The Exchange in 2004 exercised its rights under section 23(1) of Companies Income Tax Act, CAP 21, LFN 2004 (as amended) to apply for tax exempt status.

“The Federal Board of Inland Revenue upheld that the income of the Exchange is not liable to tax since it is a company limited by guarantee. As a non-profit making organisation its profit is not distributed but is applied solely towards the promotion of the objectives of the Exchange,” the financial report qualified by Akintola Williams Deloitte indicated.

The Exchange has three subsidiaries namely NSE Consult Limited, Coral Properties Plc, and Naira Properties Limited. The group’s balance sheet showed that fixed assets dropped from N5.653 billion in 2010 to N5.135 billion in 2011. Investment in associated companies rose from N3.188 billion in 2010 to N3.256 billion in 2011.

Investment in securities dropped to N206.914 million in 2011 from N333.893 million in 2010. The group’s operating expenses dropped from N1.99 billion in 2010 to N1.128 billion in 2011. The group’s statement of cash flow shows that gross income dropped from N4.79 billion to N3.98 billion. The NSE invested N600 million in managed investments (equities) while the sum of N401,000 was invested in 12.5 percent FGN development Stock 2011.

“A tax investigation for the 2010 and 2011 tax assessment year is ongoing by the same state tax authority, LIRS,” the annual report indicated.

 
Source: Business Day