The Nigerian Stock Exchange (NSE) is at the verge of crossing a major huddle in its Demutualisation process.
Informed sources at the National Assembly (NASS) told BusinessDay that the Senate and House of Representatives joint committee on capital market and institutions is planning for Thursday July 27, 2017 a one day public hearing on Demutualisation of the Nigerian Stock Exchange Bill.
The Bill is to facilitate the development of Nigeria’s Capital Market by enabling the conversion and re-registration of the Nigerian Stock Exchange from a Company Limited by Guarantee to a Public Company Limited by shares and for other related matters.
Already, the Bill has gone through a second reading at the Green Chamber while it has gone through first reading at the Red Chamber.
“This implies that the Exchange is moving towards actualisation of the Demutualisation. The joint public hearing is a major huddle and they have to cross it. Though, I am sure they will”, an informed source at the Green Chamber told BusinessDay on phone.
The members of the Exchange had at its Extra-Ordinary General Meeting (EGM) unilaterally approval for the Exchange to convert from a member-owned mutual organisation to shareholder-owned public limited liability company (PLC) that aligns with global best practices.
The members also authorized that the National Council and Management of the Exchange to do all such things and exercise all such powers as may be necessary or incidental to achieve the objective specified in the first approved, subject to applicable laws and regulations and obtaining the approvals of Members and the relevant regulatory authorities.
Until the early 90’s, majority of the world’s stock exchanges were non-profit, member-owned, mutual organizations with monopoly power.
However, beginning in 1993 with the Stockholm Stock Exchange, leading stock exchanges including the Australian, London, NASDAQ and New York Stock Exchanges began to undergo demutualization.
In Africa specifically, out of the 27 exchanges who are members of ASEA, seven (7) namely the Johannesburg, Nairobi, Mauritius, Seychelles, Rwandan, Casablanca stock exchanges and BRVM are demutualized with several others including the NSE in the process of demutualizing or considering taking on this initiative.
In Nigeria, efforts to demutualize the Exchange achieved milestone following the appointment of a consortium of financial, legal and tax advisers on the demutualization initiative.
South African bank, FirstRand, and local investment firm, Chapel Hill Denham were appointed to guide the NSE through the process of becoming a listed company.