Participants at the ongoing 2020 conference of the Chartered Institute of Stockbrokers (CIS), have called for an amendment of some sections of the new Company and Allied Matters Act (CAMA), as a prerequisite for the revival of the Nigerian capital market.
The first hybrid Conference, themed: “Navigating through the Storms-Reenergizing the Economy through the Capital Market,” commenced Wednesday, with an array of indigenous and international experts, who discussed various issues affecting the local bourse.
The new CAMA has been under criticism by various stakeholders over provisions in some of sections that are regarded as a disincentive to investment.
One of the key speakers, a Co-founder, Banwo and Ighodalo and Chairman, Sterling Bank, Asue Ighodalo, said much as CAMA contains many sections that will enhance the market growth and development, there was a need to review some new sections that could inhibit its growth.
He said while CAMA 2020 amends and addresses a number of the loopholes and problem areas in the repealed Act, and revised companies’ statute to align with the 21st Century, some oversight provisions and concepts suggest an overregulation of companies and its practices.
Ighodalo, in his critique of the new CAMA in a presentation on, “Rebirth of CAMA: Implications for the Capital Market Ecosystem,” argued that these excessive regulatory provisions actually impede transactions in the market.
He cited that: “Section 142 of the Act provides that a company shall not in any event allot newly issued shares unless they are offered in the first instance to all existing shareholders of the class being issued in proportion as nearly as may be to their existing holdings. The applicability of this provision does not distinguish private and public companies.”
To him, the implementation of the provision would pose significant problems for public companies seeking to raise capital by the issuance of new shares.
He argued that in undertaking such capital raising transactions, public companies would not be able to make public offers, or undertake private placement without first making an offer to all their shareholders.
“This amendment has raised concern amongst operators, corporates and investors, and is a significant deviation from the provision of the Repealed Act, which only specified pre-emptive rights for private companies.
“I align with these concerns as this provision may restrict public companies intending to undertake equity capital raise and restrict (or at best delay) the admission of strategic investors, because the offensive provision implies that companies will not be able to undertake public offer transactions or private placements without first going through the process of formally making an offer to their shareholders,” said Ighodalo.
According to him, the sections on dematerialization of shares and share certificates, power of companies to allot shares and proscription of irredeemable preference shares have dire consequences on the market growth and should be reviewed.
The President, CIS, Olatunde Amolegbe, explained that finding solutions to Nigeria’s economic problems was at the heart of this year’s conference objective.
Amolegbe noted that Nigerian stockbrokers have skills and competencies that position them to assist the government in providing a solution to funding infrastructure deficit.AdvertisementnullAdvertisement
He said: “I should at this juncture inform the general public that the scope of stockbroking, or the skill content of chartered stockbrokers goes far beyond the traditional and popular securities trading activity typically associated with them. Stockbrokers are all-round investment experts.
“The Institute has also made it possible for our students to specialize in specific areas of the profession if they so desire. So, our young entrants today can choose to focus on fixed income dealing, commodity trading, custodianship, equity dealing, or financial advisory services.”
“CIS is fully recognized by our counterparts worldwide. Our working agreements with the Chartered Institute for Securities & Investment, United Kingdom (CISI UK) and the Association of Certified International Investment Analysts (ACIIA) ensure that our members can practice in more than 35 countries around the world,” he added.
The Chairman, House Committee on Capital Market, Babangida Ibrahim, expects the conference to add value to the search for a fruitful and rewarding economic template that would bring about sustainable growth and development in Nigeria.