SEC Proposes Fiscal Incentives for Listed Firms to Deepen Market Participation

Fears it may become docile if firms turn away from capital market

The Securities and Exchange Commission (SEC) has advocated some measure of fiscal incentives for listed companies on the Nigeria Stock Exchange (NSE) to mitigate their cost burden and encourage more entities to list shares on the bourse.

Warning that if companies failed to list their stocks on the stock exchange, it might be out of business with no one to regulate, the SEC said apart from the reduction of costs, the incentives could translate to huge investment benefits to shareholders.

It added that this could equally position the quoted companies to contribute more to national development through improved capacities and job creation potential.

A statement from the commission yesterday in Abuja, quoted its acting Director General, Ms. Mary Uduk, to have made this proposal on the sidelines of an event organised by the Alliance Law Firm in Lagos.

Uduk, the statement explained, also believes that the creation of some form of fiscal incentives for listed entities would add further mileage to ongoing efforts to improve corporate governance in the country.

She was however represented at the event by the Director Zonal Offices Coordinating Department, (ZOCD) of the commission, Mr. Edward Okolo.

She reportedly cited the experiences with some investors in the manufacturing sector who claimed that despite fulfilling their fiscal obligations, Nigeria’s public procurement and contractual processes had continued to favour foreign companies to their disadvantage.

“Our case for fiscal incentives for listed companies on the NSE is actually based on experience. What we are saying is that Nigerian companies doing the same business these foreign companies are doing if they are listed should be encouraged in terms of public procurement or whatever government is doing,” she said.

Uduk noted: “We don’t want to keep taking from them because they incur a lot of costs and you cannot reduce the costs more than a limited amount of percentage. The best is to begin to give them some incentives and with that you have more companies coming to the market, you have more jobs and then people will have dividends of investing. You must have companies to regulate and if people are not coming to the market, then who are you going to regulate?

“The market will create jobs. If you go to Brazil, you go to Asia you see small-scale companies coming to the market. You see fund managers and others playing the roles they are supposed to play. So, we need those incentives to encourage them to come to the market.”

She explained that Nigerians would eventually get the value in terms of dividend payout if the company were listed.

Uduk also said there should be incentives for companies coming to get listed as alternatives to savings by Nigerians.

Uduk equally said the level of compliance with SEC’s Code 2011 on corporate governance has remained low even as provisions relating to independent directors’ roles in companies were being violated by some listed companies.