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Capital market operators back compulsory listing of top firms

By on August 2, 2014

Capital market operators have expressed support for a bill seeking to compel top private firms to list their shares on the Nigerian Stock Exchange.

According to the operators, who spoke to our correspondent, such a bill is long overdue.

The bill, sponsored by a member of the House of Representatives, Mr. Chris Azubogu, applies to companies that have an annual turnover exceeding N80bn or whose shareholders’ funds surpass N40bn.

The bill is entitled: ‘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’.

It passed the second reading stage at the House of Representatives in June.

The Chief Executive Officer, Lambert Trust and Investment Limited, Mr. David Adonri, said such a bill had become necessary because efforts to get the companies to list voluntarily had not yielded the desired result.

“We have discovered that several persuasive strategies have been put in place in the recent past and the response has not been too encouraging. That underscores the need for legislation to compel major enterprises in this economy to be publicly quoted,” he said.

According to him, as it is, the contribution of the Nigerian capital market to the rebased Gross Domestic Product is just about 15 per cent or below, whereas in several other emerging markets and advanced economies, the contribution of their capital markets to GDP is far higher.

“That is why our own market lacks the absorptive capacity and any credit boom in the economy drives it into a bubble. So, it is a welcome development and we support it,” he said.

Adonri, who noted that various legislations such as the indigenisation decree had contributed to the growth of the market in the past, insisted that legislation was still vital in developing the market.

Asked whether foreign investors would not be scared off by the bill, he said, “If those companies are antagonistic to Nigerians sharing in their wealth – one of the purposes of being publicly quoted is to enable the citizens of the country to share in the wealth that they are helping the companies create – then, they can go to other countries.”

Adonri said as the largest economy in Africa, many investors were itching to come to Nigeria, adding that the bill was not likely to deter them.

The Managing Director and Chief Executive Officer, Fortright Securities Limited, Mr. Bode Ashogbon, called for the bill to be passed into law as soon as possible.

He said, “I believe the bill is long overdue. These companies came here to make money and they can repatriate the entire profits. So, of what benefit will it be to the host nation if they come here to do that?

“I don’t see anything wrong with the bill. My hope is that it is passed into law as soon as possible so that Nigerians can benefit from their own sweat.”

Like Adonri, he said there was no need to worry about whether foreign investors would shun the country or not as a result because the return on investment was very attractive.

“Even with the level of insecurity in the country, they are still coming. Why are they coming? It implies that there is a market for their products and services,” Ashogbon said.

He, however, called on the regulators to ensure that if the bill was passed, companies would not manipulate their accounts to avoid listing their shares on the NSE.

On his part, the Chief Executive Officer, Enterprise Stockbrokers, Mr. Rotimi Fakayejo, said the move would put an end to complaints by investors that the market lacked depth.

He said, “Dangote Cement, for instance, accounts for about 27 to 28 per cent of the market. But by the time we have a lot of other stocks that are highly capitalised; whenever transactions take place on the floor of the Exchange, it is going to give a true reflection of the market.”

 

[Punch]