Ag. Director-General SEC, Mary Uduk.
By Barnabas Esiet.
The Securities and Exchange Commission, SEC, has made clear its position on the sharing of gifts at Annual General Meetings as contained in Rule 602 (4) of its Rules and Regulations.
According to the SEC, the rule states that “public liability companies shall not distribute gifts to shareholders, observers and any other person at Annual General Meetings/Extra-Ordinary General Meetings’’
In a statement, the Commission says it considers it necessary to clarify that ‘’light refreshment’’ are not construed as ‘’gifts’’.
The commission last year amended its Rules and Regulations to stop listed companies from distributing gift items at AGMs after it discovered that such public companies spend a significant amount of money on corporate gift items which had great negative impact on their bottom lines.
“Few of the companies are making reasonable profits and even fewer can afford to pay dividends, If the amount budgeted for the gifts at AGMs/EGMs can be reserved for other relevant operational or administrative expenses, it would positively impact on their earnings per share” the statement read.
Specifically, the rule provides that. “public companies shall not distribute gifts to shareholders, observers and any other persons at AGMs/EGMs. Public companies shall not convene any meeting with select group (s) of shareholders prior to an AGM/EGM.
The commission has warned that any company that violates the provisions of the rule shall be liable to a penalty of not less than N10 million.