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Rep explains bill compelling companies to list

By on October 1, 2014

The Deputy Chairman, Capital Market Committee of the House of Representatives, Mr. Chris Azubogu, has said his decision to sponsor a bill seeking to compel top companies to list on the Nigerian Stock Exchange is influenced by the provisions of the country’s constitution.

Another reason for sponsoring the ‘Private Companies’ Conversion and Listing Bill 2013’, according to him, is to ensure that the country has stronger companies that are well run and supported.

Azubogu, who spoke in Lagos, also said that by listing on the NSE rather than mop up the limited funds available at the banks, the top companies would have increased access to funds, leaving the banks to cater for the funding needs of the real sector.

Specially, the bill is “for An Act to provide for the private companies whose shareholders’ funds exceed N80bn, or their turnover exceeds N80bn, or the total assets exceed N80bn, to convert to a public liability company and get their shares listed on the stock exchange market, thereby promoting growth for both the companies and the Nigerian capital market and related matters.”

The bill, which has already passed the second reading stage at the House, has, however, led to a debate among experts about whether it was good for the country or not.

Azubogu insisted that not only was it in the best interest of Nigerians, the capital market and the country at large, it was also in tune with the provisions of the Constitution.

He said if passed into law, “The bill will give us room to have what is called complete financial inclusion, to move away from the informal sector to formalise our economy and to account for the strength of economic activities going on in the country.

“For instance, with the rebased GDP of Nigeria at $500bn, the market capitalisation of the Nigerian Stock Exchange is less than $100bn. So, if our GDP ratio to the market capitalisation is less than 20 per cent, it means that over 80 per cent of our economy is in the informal sector; it will be difficult to account for productivity and for the government to put basic things in place.

“Also, if government decides to privatise all the businesses and they are not complying with the laws of the land, how can government even confirm that they are collecting the right tax? The tax collection to GDP ratio is weak because we don’t have strong institutions.”

He explained that his action was specifically influenced by the provisions of Section 16 of the Constitution, which provides, among other things, that a body shall be set up by the National Assembly, which shall have powers to review from time to time the ownership and control of business enterprises operating in Nigeria and make recommendation to the President on same; and administer any law for the regulation of the ownership and control of such enterprises.

Azubogu also said the goal was to help the country build strong institutions.

He stated, “One of the reasons why we have not fared very well is that we are a large country and if we don’t have strong institutions that will regulate what we are doing to make us comfortable and comply with rules, it becomes difficult for us to grow well. If there are loopholes in our laws, we must correct them; if not, anyone can come into the country and exploit those laws and abuse our system.

“Over time, government has tried to divest from the key areas of the economy, but services provided by companies in those sectors are so entrenched that if government does not regulate them very well, they will not help the economy. Laws are dynamic and they are changing every day, and every loophole that people find, they will abuse it and who pays the ultimate price? It is Nigerians.”

Azubogu, who said a public hearing on the bill would come up within the next 45 days, expressed optimism that with the support of Nigerians, the proposed legislation, which also provides for tax and listing waivers for companies, would be passed into law.