By Taofik Salako
*FHC sanctions scheme
*CAC, SEC to give final approvals
*Shareholders eye first dividend
*Aggrieved operators file complaints
The ongoing process to convert Nigerian Stock Exchange (NSE)
from a non-profit, member-owned mutual company limited by guarantee
to a public limited liability company with issued share capital and
shareholders has scaled a major hurdle with the approval of the
scheme of arrangement for the conversion by the Federal High Court
(FHC).
The scheme of arrangement sets out the comprehensive details
about the nature and terms of the conversion, otherwise known as
demutualisation.
Members of the NSE had successively at a court-ordered meeting
and extraordinary general meeting in March 2020 approved the scheme
of arrangement and major changes in the organisational structures
of the post-demutualisation NSE, including composition of board of
director and top management.
Responding to enquiries by The Nation, the NSE at the weekend
confirmed that the Federal High Court, Lagos has granted an order
sanctioning the scheme of arrangement.
With this, the NSE will move to the final stages of
re-registration as a public limited liability company with the
Corporate Affairs Commission (CAC) as well as notification of its
share capital and final approval of its new status by the
Securities and Exchange Commission (SEC).
Sources in the know of the processes said the court sanction was
the major hurdle as the subsequent processes are traditionally
seamless. SEC had earlier issued a “No Objection” to the
demutualisation process.
Market sources however noted that some aggrieved capital market
operators have lodged complaints with the NSE over non-allotment of
shares to them despite completing full registration with the
Exchange.
The sources said many of the affected operators were firms that
hold combined licence as broker-dealers and issuing houses, noting
that the firms had paid the required registration fees as issuing
houses and as such entitled to shares based on the capital
contribution and their roles in the development of the NSE.
A source meanwhile said the demutualisation process has inherent
complaint-resolution mechanism. Under the scheme of arrangement, a
total of 40.08 million ordinary shares, representing 2.0 per cent
of the proposed issued shares of the post-demutualisation entity
will be set aside for allotment to parties that may lay claims to
entitlement to shares in the demutualised Exchange. This was
pursuant to the provisions of the Demutualisation Act 2018.
Chief Executive Officer, Nigerian Stock Exchange (NSE), Mr Oscar
Onyema, in a statement made available to The Nation, said the
demutualisation process is moving ahead in line with the expected
sequence of events.
“Understandably, in current circumstances, some of the legal and
regulatory steps required have taken a little longer than
originally expected, but today we have received court sanction for
the results of the EGM, in particular the Scheme of Arrangement and
we are looking to secure the re-registration of the Exchange as
well as the approval of the Securities and Exchange Commission
within the coming months,” Onyema said.
Under the approved scheme of arrangement, the NSE will transit
into a holding company, Nigerian Exchange Group (NEG) Plc, which
will be the parent company for the Nigerian Exchange Limited, the
successor that will carry on the securities trading business of the
Exchange, and other subsidiaries. Shareholders will own shares in
NEG Plc while NEG will own the main company and other
subsidiaries.
According to the scheme of arrangement for the conversion, the
post-demutualisation shareholders’ base will consist of 255
institutional shareholders and 177 individual shareholders.
The post-demutualisation shareholding arrangement was arrived at
by converting the existing dealing members of the Exchange to
institutional shareholders and ordinary members to individual
shareholders.
Shareholdings will be on equal basis in the immediate conversion
period with each institutional shareholder holding 6.01 million
ordinary shares of 50 kobo each while each individual shareholder
will hold 2.44 million ordinary shares of 50 kobo each.
Thus, each institutional shareholder will hold 0.3 per cent
equity stake while each individual shareholder will hold 0.1 per
cent equity stake, in line with the current membership-share
conversion ratio of 78 per cent for dealing members and 22 per cent
for ordinary members.
The NSE will transit into a non-operating holding company with
an authorised share capital of 2.5 billion ordinary shares. About
2.0 billion ordinary shares of 50 kobo each are expected to be
issued in the immediate period of the conversion.
The NSE will transfer its securities exchange licence and other
assets necessarily required to carry out the securities exchange
function; which will include human resources, securities exchange
function related contracts, the trading facilities comprising of
the trading floors, work stations, telephones and other office
equipment such as cabinets and others, quotation board, stock price
electronic display device, stock printers, inquiry display
equipment and other assets to Nigerian Exchange Limited pursuant to
the scheme.
According to the scheme, the demutualised NEG will take off with
authorised share capital of N1.25 billion comprising of 2.50
billion ordinary shares of 50 kobo each, which will be registered
with the Corporate Affairs Commission.
The NEG will subsequently set aside 2.0 billion ordinary shares
of 50 kobo each as issued share capital, which will be registered
with the SEC.
A total of 40.08 million ordinary shares, representing 2.0 per
cent of the proposed issued shares of NEG will be set aside for
allotment to parties that may lay claims to entitlement to shares
in the demutualised Exchange. This was pursuant to the provisions
of the Demutualisation Act 2018.
The apportionment of 2.0 per cent as the claims review shares is
based on an analysis of the probable quantum of shares that would
be required to settle each claim.
However, each claimant will be expected to provide irrefutable
evidence of membership or circumstance that confers such claim of
ownership.
However, in the event the claims review shares are insufficient
to satisfy successful claims, additional shares will be allotted
from the demutualised Exchange’s authorised share capital.
A total of 1.96 billion ordinary shares, representing 98 per
cent of the issued shares, the balance of the issued shares
following the reservation of the claims review shares, will be
apportioned between dealing and ordinary members on the basis of a
ratio of 78:22, respectively.
With the approval of the scheme, all assets, liabilities and
undertakings including real property and intellectual property
rights of the NSE- with the exception of the securities exchange
licence and all assets and appurtenances in relation to the
securities trading business of the NSE – shall be retained by
NEG.
The NSE will set up a separate company, NGX Regulation Limited
(NGX Regulation) that will be charged with the regulatory functions
of the Exchange after demutualisation pursuant to an arm’s length
agreement. This is in order to safeguard the neutrality of the
regulatory system.
With demutualisation, the Memorandum and Articles of Association
of the re-registered Exchange will be amended to indicate the new
name, NEG, the authorised share capital and all requisite
provisions for a public company limited by shares.
President, Nigerian Stock Exchange (NSE), Otunba Abimbola
Ogunbanjo, was appointed as the first chairman of the board of the
demutualised Exchange while Onyema was reappointed as the first
chief executive officer of the demutualised Exchange.
Other non-executive members of the new board of the demutualised
Exchange approved at the EGM included Dr. Umaru Kwairanga, Mrs.
Fatimah Bello-Ismail, Mr. Oluwole Adeosun, Mr. Chidi Agbapu, Mr.
Patrick Ajayi, Dr. Okechukwu Itanyi, Mrs. Nimi Akinkugbe, Prof.
Enase Okonedo, Mr. Ikpobe Oghooritsewarami, and Mrs. Ojinika
Olaghere.
Members of the NSE had earlier approved the demutualisation of
the Exchange at an extraordinary general meeting in March 2017.
This was followed by the signing of the Demutualisation of the
Nigerian Stock Exchange Bill into law in August 2018.
In December 2019, SEC in a “No Objection letter” gave its
consent to the NSE to hold the court-ordered meeting and
extra-ordinary general meeting that would facilitate its conversion
from a not-for-profit entity limited by guarantee into a
profit-making, public limited liability company owned by
shareholders.
The Federal Government, through the Bank of Industry (BOI), many
state governments including Adamawa State and several prominent
Nigerian businessmen and policy experts are among a total of 432
individuals and institutions that will hold shares in the immediate
period of the demutualised Exchange.
Under the scheme, the Exchange will allocate shares to all
members with shares due to deceased ordinary members and expelled
or liquidated dealing members being allocated to their legal
representatives.
A list of post-demutualisation shareholders included Mr Akintola
Williams, late Senator Theophilus Adebayo Doherty, late Sir
Odumegwu Ojukwu, late Alhaji Shehu Bukar, late former President
Umaru Yar’Adua, late Bashorun MKO Abiola, late Dr Abdul Lateef
Adegbite and late Mr Gamaliel Onosode among others.
Other individual shareholders will include Chief Ernest
Shonekan, Alhaji Aliko Dangote, Alhaji Abdul Rasaq, Alhaji Aminu
Dantata, Mr Tony Elumelu, Mr. Oba Otudeko, Mr. Pascal Dozie, Chief
Bayo Kuku, Chief Christopher Ogunbanjo, Dr Christopher Abebe, Mr
Goodie Ibru, Alhaji Isyaku Umar, Otunba Adekunle Ojora, Mr Phillip
Asiodu, Rear Admiral Allison Madueke, Rabiu Gwadabe, Mr Raymond
Obieri, Senator Udo Udoma and Senator David Dafinone among
others.
Institutional shareholders will include GTI Securities Limited,
CSL Stockbrokers Limited, Capital Assets Limited, Cowry Asset
Management Limited, Meristem Securities Limited, APT Securities and
Funds Limited, Capital Bancorp Limited, Centre-Point Investments
Limited, Chapel Hill Denham Securities Limited, Emerging Capital
Limited, Stanbic IBTC Stockbrokers Limited, Trust Yields Securities
Limited and Vetiva Capital Management Limited among others.
The NSE was established as the Lagos Stock Exchange on September
15, 1960 under the provisions of the Companies Ordinance 1922, with
a share capital of £5,000 divided into 500 ordinary shares of £10
each. At incorporation, each of the original subscribers subscribed
to five shares in the Exchange.
Subscribers at incorporation included C. T. Bowring & Co.
(Nigeria) Limited, Senator Chief Theophilus Adebayo Doherty, John
Holt Nigeria Limited, The Investment Company of Nigeria Limited,
Sir Odumegwu Ojukwu, Akintola Williams and Alhaji Shehu Bukar.
The share capital of the Exchange was subsequently increased to
N20,000 consisting of 1,000 ordinary shares of N20 each, pursuant
to an ordinary resolution dated December 2, 1977.
The name of the Exchange was then changed from the Lagos Stock
Exchange to the Nigerian Stock Exchange on December 15, 1977.
However, following the enactment of the Companies and Allied
Matters Act 1990, now referenced as C20 Laws of the Federation of
Nigeria 2004, companies limited by guarantee were prohibited from
being registered with a share capital; and all such existing
companies were mandated to re-register without a share capital.
The NSE was re-registered on December 18, 1990 as a company
limited by guarantee and the then existing share capital of N20,000
was cancelled; and the equity rights of the initial subscribers
extinguished.
Thus, from then till now, the NSE operated as a mutual company
limited by guarantee with no issued or paid-up share capital; as
such no individual or corporate entity had equity-based ownership
rights.
The Federal Government, which holds stake as a founding member
of the Exchange, also voted in favour of the conversion at the
court ordered meeting.
To achieve the demutualisation, not less than three-quarters of
the interests of members present and voting either in person or by
proxy must vote in favour of the scheme.
Voting at the meeting was by poll with each member representing
one interest or one vote for or against the resolution.
Also at the extraordinary general meeting held after the
court-ordered meeting, members of the Exchange also approved the
first board of directors for the demutualised Exchange as well as
endorsed Employee Share Ownership Plan (ESOP).
Culled from Thenation
By Taofik Salako
*FHC sanctions scheme
*CAC, SEC to give final approvals
*Shareholders eye first dividend
*Aggrieved operators file complaints
The ongoing process to convert Nigerian Stock Exchange (NSE)
from a non-profit, member-owned mutual company limited by guarantee
to a public limited liability company with issued share capital and
shareholders has scaled a major hurdle with the approval of the
scheme of arrangement for the conversion by the Federal High Court
(FHC).
The scheme of arrangement sets out the comprehensive details
about the nature and terms of the conversion, otherwise known as
demutualisation.
Members of the NSE had successively at a court-ordered meeting
and extraordinary general meeting in March 2020 approved the scheme
of arrangement and major changes in the organisational structures
of the post-demutualisation NSE, including composition of board of
director and top management.
Responding to enquiries by The Nation, the NSE at the weekend
confirmed that the Federal High Court, Lagos has granted an order
sanctioning the scheme of arrangement.
With this, the NSE will move to the final stages of
re-registration as a public limited liability company with the
Corporate Affairs Commission (CAC) as well as notification of its
share capital and final approval of its new status by the
Securities and Exchange Commission (SEC).
Sources in the know of the processes said the court sanction was
the major hurdle as the subsequent processes are traditionally
seamless. SEC had earlier issued a “No Objection” to the
demutualisation process.
Market sources however noted that some aggrieved capital market
operators have lodged complaints with the NSE over non-allotment of
shares to them despite completing full registration with the
Exchange.
The sources said many of the affected operators were firms that
hold combined licence as broker-dealers and issuing houses, noting
that the firms had paid the required registration fees as issuing
houses and as such entitled to shares based on the capital
contribution and their roles in the development of the NSE.
A source meanwhile said the demutualisation process has inherent
complaint-resolution mechanism. Under the scheme of arrangement, a
total of 40.08 million ordinary shares, representing 2.0 per cent
of the proposed issued shares of the post-demutualisation entity
will be set aside for allotment to parties that may lay claims to
entitlement to shares in the demutualised Exchange. This was
pursuant to the provisions of the Demutualisation Act 2018.
Chief Executive Officer, Nigerian Stock Exchange (NSE), Mr Oscar
Onyema, in a statement made available to The Nation, said the
demutualisation process is moving ahead in line with the expected
sequence of events.
“Understandably, in current circumstances, some of the legal and
regulatory steps required have taken a little longer than
originally expected, but today we have received court sanction for
the results of the EGM, in particular the Scheme of Arrangement and
we are looking to secure the re-registration of the Exchange as
well as the approval of the Securities and Exchange Commission
within the coming months,” Onyema said.
Under the approved scheme of arrangement, the NSE will transit
into a holding company, Nigerian Exchange Group (NEG) Plc, which
will be the parent company for the Nigerian Exchange Limited, the
successor that will carry on the securities trading business of the
Exchange, and other subsidiaries. Shareholders will own shares in
NEG Plc while NEG will own the main company and other
subsidiaries.
According to the scheme of arrangement for the conversion, the
post-demutualisation shareholders’ base will consist of 255
institutional shareholders and 177 individual shareholders.
The post-demutualisation shareholding arrangement was arrived at
by converting the existing dealing members of the Exchange to
institutional shareholders and ordinary members to individual
shareholders.
Shareholdings will be on equal basis in the immediate conversion
period with each institutional shareholder holding 6.01 million
ordinary shares of 50 kobo each while each individual shareholder
will hold 2.44 million ordinary shares of 50 kobo each.
Thus, each institutional shareholder will hold 0.3 per cent
equity stake while each individual shareholder will hold 0.1 per
cent equity stake, in line with the current membership-share
conversion ratio of 78 per cent for dealing members and 22 per cent
for ordinary members.
The NSE will transit into a non-operating holding company with
an authorised share capital of 2.5 billion ordinary shares. About
2.0 billion ordinary shares of 50 kobo each are expected to be
issued in the immediate period of the conversion.
The NSE will transfer its securities exchange licence and other
assets necessarily required to carry out the securities exchange
function; which will include human resources, securities exchange
function related contracts, the trading facilities comprising of
the trading floors, work stations, telephones and other office
equipment such as cabinets and others, quotation board, stock price
electronic display device, stock printers, inquiry display
equipment and other assets to Nigerian Exchange Limited pursuant to
the scheme.
According to the scheme, the demutualised NEG will take off with
authorised share capital of N1.25 billion comprising of 2.50
billion ordinary shares of 50 kobo each, which will be registered
with the Corporate Affairs Commission.
The NEG will subsequently set aside 2.0 billion ordinary shares
of 50 kobo each as issued share capital, which will be registered
with the SEC.
A total of 40.08 million ordinary shares, representing 2.0 per
cent of the proposed issued shares of NEG will be set aside for
allotment to parties that may lay claims to entitlement to shares
in the demutualised Exchange. This was pursuant to the provisions
of the Demutualisation Act 2018.
The apportionment of 2.0 per cent as the claims review shares is
based on an analysis of the probable quantum of shares that would
be required to settle each claim.
However, each claimant will be expected to provide irrefutable
evidence of membership or circumstance that confers such claim of
ownership.
However, in the event the claims review shares are insufficient
to satisfy successful claims, additional shares will be allotted
from the demutualised Exchange’s authorised share capital.
A total of 1.96 billion ordinary shares, representing 98 per
cent of the issued shares, the balance of the issued shares
following the reservation of the claims review shares, will be
apportioned between dealing and ordinary members on the basis of a
ratio of 78:22, respectively.
With the approval of the scheme, all assets, liabilities and
undertakings including real property and intellectual property
rights of the NSE- with the exception of the securities exchange
licence and all assets and appurtenances in relation to the
securities trading business of the NSE – shall be retained by
NEG.
The NSE will set up a separate company, NGX Regulation Limited
(NGX Regulation) that will be charged with the regulatory functions
of the Exchange after demutualisation pursuant to an arm’s length
agreement. This is in order to safeguard the neutrality of the
regulatory system.
With demutualisation, the Memorandum and Articles of Association
of the re-registered Exchange will be amended to indicate the new
name, NEG, the authorised share capital and all requisite
provisions for a public company limited by shares.
President, Nigerian Stock Exchange (NSE), Otunba Abimbola
Ogunbanjo, was appointed as the first chairman of the board of the
demutualised Exchange while Onyema was reappointed as the first
chief executive officer of the demutualised Exchange.
Other non-executive members of the new board of the demutualised
Exchange approved at the EGM included Dr. Umaru Kwairanga, Mrs.
Fatimah Bello-Ismail, Mr. Oluwole Adeosun, Mr. Chidi Agbapu, Mr.
Patrick Ajayi, Dr. Okechukwu Itanyi, Mrs. Nimi Akinkugbe, Prof.
Enase Okonedo, Mr. Ikpobe Oghooritsewarami, and Mrs. Ojinika
Olaghere.
Members of the NSE had earlier approved the demutualisation of
the Exchange at an extraordinary general meeting in March 2017.
This was followed by the signing of the Demutualisation of the
Nigerian Stock Exchange Bill into law in August 2018.
In December 2019, SEC in a “No Objection letter” gave its
consent to the NSE to hold the court-ordered meeting and
extra-ordinary general meeting that would facilitate its conversion
from a not-for-profit entity limited by guarantee into a
profit-making, public limited liability company owned by
shareholders.
The Federal Government, through the Bank of Industry (BOI), many
state governments including Adamawa State and several prominent
Nigerian businessmen and policy experts are among a total of 432
individuals and institutions that will hold shares in the immediate
period of the demutualised Exchange.
Under the scheme, the Exchange will allocate shares to all
members with shares due to deceased ordinary members and expelled
or liquidated dealing members being allocated to their legal
representatives.
A list of post-demutualisation shareholders included Mr Akintola
Williams, late Senator Theophilus Adebayo Doherty, late Sir
Odumegwu Ojukwu, late Alhaji Shehu Bukar, late former President
Umaru Yar’Adua, late Bashorun MKO Abiola, late Dr Abdul Lateef
Adegbite and late Mr Gamaliel Onosode among others.
Other individual shareholders will include Chief Ernest
Shonekan, Alhaji Aliko Dangote, Alhaji Abdul Rasaq, Alhaji Aminu
Dantata, Mr Tony Elumelu, Mr. Oba Otudeko, Mr. Pascal Dozie, Chief
Bayo Kuku, Chief Christopher Ogunbanjo, Dr Christopher Abebe, Mr
Goodie Ibru, Alhaji Isyaku Umar, Otunba Adekunle Ojora, Mr Phillip
Asiodu, Rear Admiral Allison Madueke, Rabiu Gwadabe, Mr Raymond
Obieri, Senator Udo Udoma and Senator David Dafinone among
others.
Institutional shareholders will include GTI Securities Limited,
CSL Stockbrokers Limited, Capital Assets Limited, Cowry Asset
Management Limited, Meristem Securities Limited, APT Securities and
Funds Limited, Capital Bancorp Limited, Centre-Point Investments
Limited, Chapel Hill Denham Securities Limited, Emerging Capital
Limited, Stanbic IBTC Stockbrokers Limited, Trust Yields Securities
Limited and Vetiva Capital Management Limited among others.
The NSE was established as the Lagos Stock Exchange on September
15, 1960 under the provisions of the Companies Ordinance 1922, with
a share capital of £5,000 divided into 500 ordinary shares of £10
each. At incorporation, each of the original subscribers subscribed
to five shares in the Exchange.
Subscribers at incorporation included C. T. Bowring & Co.
(Nigeria) Limited, Senator Chief Theophilus Adebayo Doherty, John
Holt Nigeria Limited, The Investment Company of Nigeria Limited,
Sir Odumegwu Ojukwu, Akintola Williams and Alhaji Shehu Bukar.
The share capital of the Exchange was subsequently increased to
N20,000 consisting of 1,000 ordinary shares of N20 each, pursuant
to an ordinary resolution dated December 2, 1977.
The name of the Exchange was then changed from the Lagos Stock
Exchange to the Nigerian Stock Exchange on December 15, 1977.
However, following the enactment of the Companies and Allied
Matters Act 1990, now referenced as C20 Laws of the Federation of
Nigeria 2004, companies limited by guarantee were prohibited from
being registered with a share capital; and all such existing
companies were mandated to re-register without a share capital.
The NSE was re-registered on December 18, 1990 as a company
limited by guarantee and the then existing share capital of N20,000
was cancelled; and the equity rights of the initial subscribers
extinguished.
Thus, from then till now, the NSE operated as a mutual company
limited by guarantee with no issued or paid-up share capital; as
such no individual or corporate entity had equity-based ownership
rights.
The Federal Government, which holds stake as a founding member
of the Exchange, also voted in favour of the conversion at the
court ordered meeting.
To achieve the demutualisation, not less than three-quarters of
the interests of members present and voting either in person or by
proxy must vote in favour of the scheme.
Voting at the meeting was by poll with each member representing
one interest or one vote for or against the resolution.
Also at the extraordinary general meeting held after the
court-ordered meeting, members of the Exchange also approved the
first board of directors for the demutualised Exchange as well as
endorsed Employee Share Ownership Plan (ESOP).
Culled from Thenation