Nigeria’s Securities and Exchange Commission, SEC, says it is perfecting plans to create sub rules that would enhance the capital market and regulate the conduct of corporate Organizations at Annual General Meetings, AGM.
In a statement, the capital market regulator explained that the new measure is targeted at protecting investors’ interest in shoring up their earnings per share and ensuring they get more value for their investments.
The commission is proposing sundry amendments to its Rules 42 on Half-Yearly Returns, Rule 6 on Individual Sub-broker and Part N, Rule 602 on Miscellaneous.
According to the statement, the proposed amendment to Part N Rule 602 on Miscellaneous seeks to create a Sub-rule 4 and 5 that would deal with organization and conduct of annual general meetings.
SEC expressed concerns about excessive expenditure of funds by public companies on corporate gifts at AGMs which depletes their bottom lines and investors’ earnings.
“The new sub-rule specifically seeks to reduce the cost of organizing shareholder meetings, by making illegal the distribution of gifts to shareholders, observers and any other persons at annual and extraordinary general meetings.” The statement added.
According to SEC the new rule is also seeking to bar public companies from holding any with select group of shareholders before an Annual General Meeting or Extraordinary General Meeting.
The commission noted that “some companies arrange meetings with select groups of shareholders ahead of general meetings to discuss proposed resolutions and agree on strategies which are often detrimental to the interest of other shareholders.”
The new rules would require Public Companies to disclose some minimum corporate governance information on their websites including governance structure, composition and structure of the board, shareholding and Dividend analysis among others.
The sector regulator warned that any company in Nigeria that violates the proposed new provisions shall be liable to a penalty of not less than N10m.