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LCCI, OPS fret over Private Companies Conversion Bill

By on January 29, 2015

The Lagos Chamber of Commerce and Industry (LCCI) and the Organised Private Sector (OPS) have once more expressed concerns over the proposed bill to compel private companies to convert to Public Limited Companies (PLC), noting that the bill is likely to impact local, foreign investment and the broader economy at large.

The president, LCCI, Alhaji Remi Bello explained that the move to convert private companies to PLCs may also lead to considerable loss of revenue to the government and break up of companies to circumvent the requirement of the bill.

Bello who was represented by the deputy president, LCCI, Mrs. Nike Akande at a stakeholders’ forum on private companies’ conversion and listing bill in Lagos, said the bill under consideration, which seeks to force private companies whose shareholders’ funds exceed N80 billion, or whose annual turnover and total assets exceed N80 billion to get their shares listed on the Nigerian Stock Exchange (NSE) had undergone its second reading and if successfully passed into law, would become an act that will oblige private companies to convert  to PLCs as prescribed in the bill.

“Our preliminary review of the proposed bill shows that it will likely impact on local and foreign investment and the broader economy. Also the NSE may not have the depth and liquidity needed for the investment arising out of the mandatory listing of these companies,” he said.

In her words: “The purpose of this forum is to articulate the views and prospective of industrialists, foreign investors and the business community, with a view to harmonise the position of the OPS on the bill. A communiqué will be issued, published in national dailies and memorandum sent to the National Assembly to further influence the direction and content of the bill before it is passed into law.”

Also speaking at the event, the head, Corporate Service Division, NSE, Mr. Kola Adeeko stated that the bill is not sponsored by the NSE, but stressed that it revealed some elements, which the NSE quite subscribes to as regards to its vision and objectives.

According to him, the bill would enhance corporate governance and also create bets opportunities for every company to participate in a democratic way.

“We totally disagree about the whole concept of compulsion. For us, we believe that every company must operate or convert as it suits them,” he added.

He also said the penalty for companies that do not get listed on the stock exchange is totally absurd, saying  it poses a potential road block on companies’ sustainability.

He stated that private companies have the lowest compliance rate to tax, saying that the bill will afford private companies a time bound waiver for five years of their corporate tax rate if they get listed on the NSE.

“The flip side is that you a pay a higher tax rate of 40 or 60 per cent if you decide not to get listed. There is a big opportunity based on the tax structure of the economy,” he said.

The Chairman, African Capital Alliance, Mr. Dick Kramer, noted that Nigeria is likely to experience a repeat of the aftermath of the indigenisation bill if the bill is passed, saying that the bill will drive away foreign investment.

“This is not the time to play with private investment. If you pass the bill, the downturn of the economy will get much worse for the next two years. The Nigerian investment industry is in its early stages, what is needed is to create an enabling environment for private businesses to thrive and also develop an attractive private sector,” he said.

A Director with the British American Tobacco, Nigeria (BATN), Mr. Shola Dosumu in his remarks, said going forward, private investments are totally against the bill, and called for group campaign plan to oppose the bill.

“It serves no purpose for private companies. I do not see the bill coming into light. This is a private members’ bill and not a federal government bill. We are totally against the bill,” he said.

 

[ThisDay]