CBN, SEC, others endorse demutualization of Nigerian Stock Exchange

The Central Bank of Nigeria, Ministry of Finance and other financial institutions have endorsed plans by the National Assembly to demutualized the Nigerian Stock Exchange.

The bill, entitled: “Demutualization of the Nigerian Stock Exchange( 2017),” is to enable the conversion and re-registration of the Exchange from a company limited by guarantee to a public company limited by shares.

Speaking in support of the bill during a one-day public hearing organised by the Joint Committee of the National Assembly on Capital Market,‎ the Governor of the Central Bank, Godwin Emefiele, said the demutualization of the NSE would bring it within the league of 56 out of 64 members of World Federation of Exchanges which have de-mutualised.

Emefiele, who was represented by Adedeji Lawal from Legal Department of the CBN, said dynamism presented by demutulised exchange would augment Nigeria’s debt profile and capital raising capabilities by providing a number of attractive vehicles for foreign and domestic investors.

The CBN submitted that the Capital Market and Money Market are dependent on each other, therefore efforts aimed at improving the operations of the Market would invariably make a positive impact on the money market.

Also, in his presentation, the ‎Chief Executive Officer, Nigerian Stock Exchange, Oscar Onyeama, who enumerated ‎the benefits of demutualizing the NSE in Nigeria, said the proposed bill would facilitate the development of Nigeria’s Capital Market by enabling the conversion and re-registration of the NSE from a company by limited guarantee to a public company limited by shares.

Onyeama ‎added that NSE believed demutualization of the NSE through this bill is the great game changer the country needs.

Part of the benefits of demutualization, according to Onyeama, are facilitation of the development of the Capital Market, improved Corporate Governance, Resources for Capital Investment and increased global brand and visibility of the Exchange.

Also, the Ministry of Finance and the Association of Stock Brokers of Nigeria welcomed the planned bill, pointing out that it will provide access to global capital market.

Declaring the public hearing open, ‎the Senate President, Dr. Abubakar Bukola Saraki, who was represented by Senate Deputy Whip, Francis Alimikhena, said the bill is one of the instruments the 8th National Assembly hopes to use to stimulate Nigeria’s economic growth.

The Minority Leader, House of Representatives, Senator Leo Ogor, who represented the Speaker, Yakubu Dogara, pledged the commitment and total support of the National Assembly for the bill, which he said would scale up the efficiency of the NSE.

Addressing the gathering, Chairman, Senate Committee on Capital Market, Foster Ogolar, said demutualization holds the key to develop and strengthen the capital market.

“The Nigerian Stock Exchange plays a major role in the in Nigeria’s financial market and its conversion and re-registration into a public company by shares is essential to develop and strengthen the Nigerian capital market,” Ogolar said.

The NSE was incorporated in September 1960 as a private company limited by guarantee and having share capital.

It was re-registered as a company limited by guarantee with no share capital in 1990.