Stakeholders Back Demutualisation of Nigerian Stock Exchange
Stakeholders have expressed support for the proposed demutualisation of the Nigerian Stock Exchange (NSE), describing it as a crucial step towards boosting liquidity and growth of the economy.
The National Assembly is currently promoting a bill to demutualise the NSE from a company limited by guarantee to a company limited by shares.
Demutualisation refers to the transition from a mutual association of exchange members to a limited liability company which is accountable to shareholders.
The concept typically separates ownership and voting rights from the right of access to trading on an exchange.
At a joint public hearing organised by the Senate and House of Representatives Committees on the Capital Market on a bill for an Act to facilitate the development of Nigeria’s capital market by enabling the conversion and re-registration of the NSE from a company limited by guarantee to a public company limited by shares and for related matters, 2017, stakeholders agreed that the move was long overdue in order to stimulate liquidity in the system among other things.
Leading deliberations on the legislation, the sponsor, Senator Foster Ogola, who is the acting Chairman, Senate Committee on Capital Market, said the NSE plays a critical role in the country’s financial market, arguing that the conversion and re-registration into a public company limited by shares is essential to developing and strengthening the market as well as enhancing the formation of capital for the expansion of the economy.
He said: “It is anticipated that the demutualisation of the NSE will reinforce the continuous growth and development of a dynamic, fair, transparent and efficient capital market and thus significantly contribute to Nigeria’s economic development.”