Demutualisation: NSE releases sharing formular for members

Demutualisation: NSE releases sharing formular for members

Tuesday, February 11, 2020 10:35 pm


The Nigerian Stock Exchange (NSE) on Tuesday released the distribution formula for the allotment of shares for the post-demutualised Nigerian Exchange Group Plc on the ratio of 78:22 between dealing members and ordinary members.

The exchange stated this in a notice posted on its web site ahead of its Court-Ordered Meeting slated for March 3 where members are expected to consider and approve an allotment of the shares.

Demutualisation of a stock exchange is a process by which a non-profit, member/brokers owned mutual exchange is converted into a profit seeking shareholder corporation, open to members of the public.

Demutualising an exchange, therefore, transforms it from being owned by members or brokers, to one with a different governance structure where members of the public can buy shares.

Consequently, according to the notice published on its website, a total of 1,964,115,918 ordinary shares in the demutualised and re-registered Nigerian Exchange Group Plc will be allotted to each dealing member firm (stockbroking firms).

“Following extensive consultations with respective stakeholder groups – and the careful consideration of the contributions of members to the development of the exchange, the national council of the exchange unanimously proposed and approved a share allocation of 78 per cent and 22 per cent, respectively, as between dealing and ordinary members based on the distribution rationale.

“Prior to the allotment of the Scheme Shares, two per cent of the issued share capital (‘’Claims Review Shares’’) will be reserved for the purposes of allotment to parties who are adjudged as being entitled to shares in the demutualised Exchange, pursuant to the provisions of the Demutualisation Act 2018.

“Pursuant to the conversion of the Exchange to a public company limited by shares, the share capital of the company will be duly registered at the CAC and the shares to be issued shall be registered at the SEC.

“On the basis of the Distribution Rationale and based on the Scheme, the issued shares of Nigerian Exchange Group Plc shall be split – in the ratio of 78:22 – to the Dealing and Ordinary members respectively,” the exchange said.

It explained that the company would have authorised share capital of N1.25 billion dividend into 2.5 billion ordinary shares of 50k each.

The exchange noted that members at the meeting would also approve the shares allotment ratio of 78:22 for dealing members and ordinary members respectively.

The News Agency of Nigeria (NAN) reports that stockbroking houses are dealing members, while individuals that are not stockbrokers buy on the council are ordinary members.

The scheme also stated that members would similarly approve the transfer of the regulatory functions of the exchange to a new entity to be known as NGX Regulation Limited.

“At the court-ordered general meeting, members of the NSE will approve the conversion of the exchange from a company limited by guarantee to a company limited by shares and it will be re-registered in the name of Nigerian Stock Exchange Group Plc,” it added.

Speaking on the benefits of NSE demutualisation, Mr Oscar Onyema, NSE Chief Executive Officer, said that it would bring the Nigerian capital market at a par with other international jurisdictions.

Onyema added that it would result in enhanced governance, transparency and visibility whilst attracting strategic partners, investors and good quality issuers.

“The demutualisation will lead to an agile exchange thereby consolidating its innovativeness and strengthening its leadership both at local and international levels whilst also adding value to its stakeholders.

“As a demutualised entity that is profit-seeking, the NSE will be in a better stead to capitalise on new income opportunities, free from any limitations arising from conflicting member interests and existing laws and more importantly be able to better support the economic growth of Nigeria,” Onyema said.

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