By Chinenye Anuforo and Chinwendu Obienyi

Related News

Nigerian shareholders have threatened to challenge the Securities and Exchange Commission (SEC) if it goes ahead to move shares belonging to some of its members to Nigerian Capital Market Development Fund (NCMDF).
Their outburst came after SEC said the shares and accruing dividends of shareholders who use non-existing identity in making multiple subscriptions will be forfeited and transferred to the Nigerian Capital Market Development Fund (NCMDF).
According to the SEC Director General, Mr. Mounir  Gwarzo, who made the disclosure yesterday in Lagos during the post-briefing of  first quarterly Capital Market Committee (CMC) meeting,  explained that, “with regard to the use of non-existent identity in making multiple subscription of shares, the committee resolved that investors who joggled their names for the purpose of multiple subscription should be given a forbearance period of six months within which they can lay claims to both their shares and accruing dividends subject to establishment of their identity and a verification process by the SEC, failing which such shares and accruing dividends shall be transferred to the NCMDF; that the shares and accruing dividends of non-existent shareholders be forfeited and transferred to the NCDMF.”
He added that multiple subscriptions of shares by a shareholder during Initial Public Offer (IPO) is illegal and that going forward, any person who engages in such act shall be prosecuted.
But reacting to the SEC boss plan, shareholders warned the commission to ensure that the above initiative was within the ambience of law. Speaking to Daily Sun, founder, Independent Shareholders of Nigeria (ISAN), Sunny Nwosu, said, “I don’t think ghost shareholders exist now but the only reason it existed in the past was because the allotment of shares were just given in the form of 20-20 shares to those who had the money. In another case, you also have those ones who used it to launder money. What you have to do is prosecute them and not divert the money.”
Another shareholder, Bayo Adeleke, explained that the multiple accounts probably came from merged banks of shareholders due to negligence of duty of an individual, maintaining that SEC had no right to divert non-existent shareholders to NCDMF.
Speaking on Direct Cash Settlement (DCS), Gwarzo pointed out that by September 1, 2017, it will be mandatory for every investor in the Nigeria capital market.
He said, “you will recall that last year we introduced the DCS. Initially it was introduced to be voluntary but when we saw some of the recent events in the capital market, the Capital Market Committee (CMC) came together and said the best way to do it is to make it mandatory so that everybody will key into it. It is only when you don’t want to key into it, you can now opt out.
“The CMC set up a committee and the committee has done a very robust work and we have now agreed that by September 1, 2017, DCS will be mandatory for every investor, meaning that any investor in the capital market will be keyed in unless that investor decides to opt out. So, DCS will commence fully on a mandatory basis by September 1, 2017.”