NSE delists Newrest ASL, market capitalisation loses N141bn

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…As SEC proposes N10m fine against companies that give gifts at AGMs***

The Nigerian Stock Exchange (NSE) opened for the week on Monday on a bearish note, and delisted Newrest ASL from three official list, even as the Security Exchange Commission (SEC) proposed a N10 million fine against any company that will give corporate gifts at AGMs.

Specifically, the All-Share Index declined by 1.26 per cent or 363.37 points to close at 28,484.44 compared with 28,847.81 achieved on Friday.

Also, the market capitalisation shed N141 billion, representing a dip of 1.30 per cent to close at N10.701 trillion against N10.842 trillion on Friday.

This followed the delisting of Newrest ASL 634 million entire share capital from the daily official list of the Exchange.

Market performance was influenced by price depreciation in medium and large capitalised stocks, among which are, Mobil Nigeria, Stanbic IBTC Holdings, Guinness Nigeria, Guaranty Trust Bank and PZ Cussons Nigeria.

Anaysts at APT Securities and Funds Limited said “equities continue in negative band as bearish trend continues and the ASI now down to 28,000 threshold.

“All sector indices closed in red led by the Financial services sector on massive sell-offs. We expect further moderation of the ASI to be diluted by value investors position for long term.”

Market breadth remained negative with 11 gainers against 30 losers.

Neimeth International Pharmaceuticals and Okomu Oil recorded the highest price gain of 10 per cent, each to close at 55k and N77, respectively.

AG Leventis & Company followed with a gain of 8.33 per cent, to close at 26k per share.

Africa Prudential appreciated by 7.91 per cent to close at N3.82, while Japaul Oil & Maritime Services went up by 7.69 per cent to close at 28k, per share.

On the other hand, Chams and NEM Insurance led the losers’ chart by 10 per cent, each to close at 36k and N2.25, respectively, while United Capital followed with a decline 9.38 per cent to close at N2.32, per share.

Goldlink Insurance declined by 8.70 per cent to close at 21k, while Jaiz Bank down by eight per cent, to close at 46k, per share.

The volume of shares traded closed lower with an exchange of 214.68 billion units, valued at N2.78 billion, and exchanged in 3,856 deals.

This was in contrast with a turnover of 235.23 million shares worth N1.36 billion traded in 3,130 deals on Friday.

UACN dominated trading activity with 41.29 million shares valued at N289.05 million.

Guaranty Trust Bank followed with 37.98 million shares worth N1.18 billion, while United Bank for Africa (UBA) traded 15.96 million shares valued at N96.83 million.

Sterling Bank traded 13.03 million shares worth N34.5 million, Transcorp transacted 12.25 million shares valued at N14.19 million.

Meanwhile, the Stock market operators on Monday expressed mixed reactions to plans by the Securities and Exchange Commission (SEC) to regulate conduct of Annual General Meetings (AGMs) and pre-AGMs.

The operators who spoke in Lagos highlighted that the new sub-rule seeks to reduce the cost of organising shareholder meetings, by eliminating  distribution of gifts to shareholders, observers and any other persons at annual and extraordinary general meetings.

Mr Moses Igbrude, Publicity Secretary, Independent Shareholders Association of Nigeria, maintained that the reasons given by SEC for the rule were not strong, stressing that the money spent on corporate gifts to shareholders could not be compared with amount spent on corporate social responsibilities, penalties and taxes, among others, by quoted companies.

He said that none of the shareholder groups had compelled any company to give corporate gifts or to hold pre-AGM meetings.

According to him, food and water given to shareholders at meetings cannot be quantified as corporate gifts.

“Yes, there are issues in crowd management and distribution of gifts or food to shareholders at AGMs, that doesn’t mean SEC have to criminalise giving of gifts or pre-AGMs.

“SEC should find better ways of addressing the issues rather than to punish  shareholders and their companies,” he said.

Mr Boniface Okezie, National Coordinator, Progressive Shareholders Association of Nigeria, said that the commission should not regulate conduct of meetings but could assist the companies where things could get out of hands.

Okezie said that the law permitted that the commission should attend AGMS as observers on invitation by quoted companies.

He said that SEC could not stop companies from conducting pre-AGMs organised for shareholders by the owners of the business so long they did not compromise.

Okezie said that the fora afforded shareholders opportunities to evaluate companies’ performances and activities in the past year.

On the ban on AGM gifts, the shareholder activist said that sharing of gifts at AGMs had created a lot of problems to many companies.

Okezie noted that some shareholders  failed to conduct themselves in an orderly manner.

He, however, said that there was no need for fining companies for sharing gifts at AGMS, urging that SEC should be more concerned with critical issues in the market such unclaimed dividends and inability of companies to post annual reports to shareholders within 21 days.

“It does not call for fine of any sorts; unclaimed dividends are still there for the regulatory body to tackle as well as posting of annual reports to shareholders within 21 days, which many companies have failed to comply with,” Okezie said.

He said that sharing of companies’ products at separate meetings with shareholders should not be discouraged as long as there would be decorum.

Mr Ambrose Omordion, the Chief Operating Officer, InvestData Ltd., however, described the SEC move as  good, saying that it would help companies to conserve funds to boost their operations.

“Entertainment at the meetings is good, but should not go as far as buying corporate gifts or giving cash to few shareholders to influence their comments at AGMs, leading to praise-singing even where the company dividend payout is low compared to share price,” Omordion said.

He said that some shareholders failed to set agenda to directors and management of their companies due to unnecessary gifts.

“Many companies have continued to post losses and investors are deprived of dividends,” Omordion stated.

He said that SEC should educate shareholders to know their rights and how to defend them to protect their investments.