By Taofik Salako, Deputy Group Business Editor
Members of the Nigerian Stock Exchange (NSE) yesterday voted for the listing of the Exchange after its conversion to a public limited liability company.
At the 59th annual general meeting (AGM), which is expected to be the last before the conversion to a shareholders-owned company, members of the NSE overwhelmingly voted for the listing of the Nigerian Exchange Group Plc (NGXG) on the Nigerian Exchange Limited (NGX) once the demutualisation of the NSE is completed.
Under the resolution passed by the AGM, subject to the receipt of requisite approvals of relevant regulatory authorities, following the conversion and re-registration of NGXG, the group is authorised to undertake a listing by introduction of its shares on NGX. Consequently, the NSE will no longer be wholly owned by its dealing and non-dealing members.
Also, following the conversion and re-registration of the Exchange as Nigerian Exchange Group Plc, the powers of the National Council of the Exchange will be devolved upon the board of directors of the group. Otunba Abimbola Ogunbanjo was also re-elected as a member of the National Council of NSE.
President, Nigerian Stock Exchange (NSE), Otunba Abimbola Ogunbanjo said yesterday’s resolution cleared the way for the listing of NGXG and for a new structure that would enable the Exchange to realise its vision of becoming Africa’s leading exchange hub.
According to him, NGXG Plc will be expected to realise all the benefits of demutualisation for its stakeholders and the capital market at large.
“The National Council welcomes the strong endorsement by the members of the Exchange for our listing plans. On behalf of the Council we wish to thank the Exchange’s management for their outstanding work in the previous year, when they have faced unprecedented challenges such as the Coronavirus pandemic. It is a tribute to their efforts that the Exchange has continued to work effectively and at the same time has made significant progress in pursuing its strategic development through listing and other steps,” Ogunbanjo said.
Chief Executive Officer, Nigerian Stock Exchange (NSE), Mr Oscar Onyema, commended members of the Exchange for their overwhelming support for the listing plans.
He said the resolution marked the beginning of the Exchange’s transformation into a listed company with flexibility to raise additional equity and debt capital.
“It is our aim that under this new structure, the Nigerian capital markets will be able to play a role that is commensurate with Nigeria’s status as Africa’s biggest economy. We believe we can become a financial hub for Africa and with the backing of our stakeholders and their continued use of our services this objective can become a reality,” Onyema, who is the Group CEO Designate of NGXG Plc, said.
According to the plan, the emergent holding group, Nigerian Exchange Group Plc, will list its entire issued share capital of 2.0 billion ordinary shares of 50 kobo each by way of introduction on the Nigerian Exchange Limited, which will take over the trading function currently being done by the NSE.
Under the rules at the Exchange, immediate post-demutualisation shareholders of the emergent holding group may need to make initial shares available to create liquidity in the stock. Listing by introduction is a listing method for companies that desire to list its primary share capital on the Exchange, without prior public issuance.
The Nation had reported exclusively that government’s corporate regulatory agencies were in the process of final approval for the conversion, otherwise known as demutualisation. The Federal High Court (FHC) had in May 2020 sanctioned the scheme of arrangement for the conversion after shareholders 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.
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.