Don't Miss


Home   >   Nigerian Stock Exchange   >   Firms with N80bn assets must list on NSE – Reps

Firms with N80bn assets must list on NSE – Reps

By on July 4, 2014

A bill seeking to compel private firms with assets and turnover in excess of N80bn to quote on the Nigerian Stock Exchange passed second reading at the House of Representatives on Wednesday.

The bill requires such companies to go public by getting their shares listed on the NSE.

The sponsor, Mr. Chris Azubogu, argued that the bill, when passed into law, would promote the growth for both the affected companies and the Nigerian capital market.

He added that a major advantage would be the availability of cheap funds at the capital market to further develop the companies and the Nigerian economy.

The proposed law applies to companies whose shareholders’ funds exceed N40bn or have an annual turnover of over N80bn.

The title of the bill reads, “A Bill for an Act to provide for private companies whose shareholders’ funds exceed N40bn or their annual turnover exceeds N80bn or their total assets exceed N80bn, to convert to public liability companies and get their shares listed on the stock exchange, thereby promoting growth for both the companies and the Nigerian capital market and other related matters.”

Azubogu noted that by being listed on the Exchange, there would be proper regulation of the companies, with the ultimate goal of promoting micro-economic growth.

He cited the examples of the telecommunications, power and oil sectors, where he said the players were not well regulated.

“The bill will help these companies and many others to even have access to cheap funds from the capital market. The aim here is to transform them into strong institutions that will outlive their original owners”, the lawmaker added.

The House Deputy Majority Leader, Mr. Leo Ogor, and Mr. Nicholas Osai, supported the bill.

Ogor said the bill would help to check capital flight from Nigeria.

He stated that most companies spinning billions of naira in the country did not want to contribute anything to the welfare of Nigeria beyond making their money and “taking it out as it pleases the owners.”

However, Mr. Fort Dike kicked against the bill and advised the House against passing it.

Dike raised his objection on the grounds that the proposed law would conflict with the spirit of enterprise.

According to him, the issue of where and how to raise funds should be left to the entrepreneurs to decide voluntarily and not through compulsion by legislation.

He also noted that it would be out of place to force foreign firms to quote on the NSE if they did not desire to do so.

Dike argued further, “This bill is in conflict with the spirit of enterprise in Nigeria and all over the world. Raising capital is voluntary and not by compulsion.

“It is anti-business to force individuals to go to the stock market once their share capital exceeds N40bn. This bill will be in conflict with the general environment of investment.”

 

 

[Punch]

One Comment

  1. Mikey

    July 4, 2014 at 11:34 am

    This is total nonsense. How can we force a company to go public. This goes against private enterprise as a concept. Many private organizations thrive around the world. Focus on regulators doing a proper and thorough job and not taking back handers when doing their investigations. Stop over inflating contracts or forcing companies to transact at rates that cannot allow them to do a thorough job and the difference will be clear. Let CBN put a cap on the margins charged by banks to allow growth of the real sector. Let the. NSE and SEC streamline listing requirements and ensure that Corporate governance and risk standards are actually implemented by companies that are listed and the difference will be clear. Many companies on the exchange are close to bankrupt and should be delisted.

    ANYWAY in short this proposed law is NOT GOING TO WORK and will only result in such companies failing as shareholder groups start forcing their interests on such companies.

    Please do think about this. This is the least efficient way of increasing confidence in a market that really has little depth.

    Have our law makers nothing better to do. Most failing companies are either in such positions as a result of outright theft or total mismanagement and due to the fact that instead of building enabling infrastructure we put the onus on our businesses to survive and to make our political class fatter.

    Please think this strategy is very shortsighted. Do we really want to continue to ignore common sense and continue to run our country into the ground. Are you that selfish? Build roads, give us power, ensure security and keep your hands out of our businesses and you will surely see a healthy business community.

    Stop wasting agriculture funds by letting micro Finance banks manage such funds. Agriculture is a trillion $ business and yet we keep mismanaging such funds and giving said funds to the wrong ppl, to those who are not efficient farmers, most of their crops die in the ground, during harvest, or when being transported. It is not a kobo kobo business.

    WAKE UP AND STOP RAPING THE COUNTRY.