Exposure Of Sundry Amendments To The Rules And Regulations Of The Commission
All comments and input should be forwarded by e-mail to the Secretariat, Rules Committee of the Commission, at firstname.lastname@example.org or by letter addressed to the Director-General, SEC, not later than two (2) weeks from date of publication.
- Proposed amendment to Rule 42 (2)- Half-Yearly Returns
- Proposed amendment to Rule 67(2)- Individual Sub-broker
- Proposed amendment to Part N Rule 602 – Miscellaneous Rules
Details of the proposals are as follows:
- PROPOSED AMENDMENT TO RULE 42 – HALF-YEARLY RETURNS
Full Text of the Existing Rule 42:
- Public companies shall file annual returns on corporate governance in the prescribed manner. The returns shall contain the following:
- General information;
- Corporate Governance issues;
- Material disclosures;
- Audit Committee;
- Certification by the company secretary, chief internal auditor, financial controller, managing director, board chairman and chairman of audit committee confirming the reliability of the information provided.
Companies shall notify the Commission in writing immediately the following events occur:
- Changes in controlling shareholding;
- Resignation of directors or senior management;
- Election/appointment of directors;
- Appointment of senior management;
- Amendments of articles of incorporation or bylaws;
- Change of financial year;
- Amendment to code of ethics or corporate governance charter;
- Completion of acquisition or disposal of major assets and cost associated with the transaction;
- Material impairments;
- Entry into and termination of a material definitive agreement;
- Bankruptcy or receivership;
- Changes/resignation in listed company’s independent external auditors;
- Other events considered to be of importance to shareholders.
- The completed form shall be returned to the commission on or before January 31st following the year under review, hard or electronic copy.
Proposed amendment: Creation of Sub-rule 190 (3) as follows:
- Public companies shall disclose the following minimum corporate governance information on their websites.
SECTION A – GOVERNANCE STRUCTURE
- Extracts of Board and Board Committee Charters/Terms of Reference:
- Duties of the Board and Board Committees
- The roles of the Chairman and the Chief Executive Officer
- Directors Nomination and Appointment Process
- Induction and Continuous Training
- Annual Board Plan, Evaluation Report of the Board, Board Committees and Individual Directors.
- Statement of compliance with the requirement of established Codes of Corporate Governance
SECTION B – THE BOARD
- Composition and Structure of the Board
The composition and structure of the Board shall consist of the following information:
- Names of Board members
- Number of years on the Board
- Date of birth
- Profile of Directors
A tabular representation of the profile of Directors containing the following:
- Educational and Professional Qualifications
- Date of Appointment
- Committee Membership
- Board Committees, Its Composition and Structure
A tabular representation of Board’s Committee comprising the following information:
- Names of the Board Committees
- Names of members
- Number of Years in the Committee
- Board and Board’s Committee Meetings and Attendance
A tabular representation of the information is to be disclosed under the following headings:
- Names of Board Members
- Total Number of meetings held with dates
- Number of meetings attended by members
Board Committee Meetings
- List of Board Committees
- Names of Members
- Dates of meetings
- Total Number of meetings held
- Number of attendance at meetings by members
SECTION C – SHAREHOLDING AND DIVIDEND ANALYSIS
- Shareholders’ holding of 5% percent and more of the Issued and Fully Paid Share Capital
This section should provide specific information on shareholders holding 5% or more of the issued and fully paid share capital of the Company as at the end of the financial year and should disclose the following:
- Name of Shareholders
- Number of Shares Held
- Percentage of Shareholding
- Directors and their Interest in Share Holding
The interest of all Directors (and persons connected with them) in the share capital of the Company as at the financial year end should be disclosed under the following headings:
- Names of Directors
- Direct Holding as at current year end
- Indirect Holding as at current year end
- Total Holding as at current year end
- Direct Holding as at immediate preceding year end
- Indirect Holding as at immediate preceding year end
- Total Holding as at immediate preceding year end
SECTION D – OTHER GOVERNANCE PROCESS
In keeping to the highest standard of governance, Companies would be required to disclose detailed information as it relates to:
- Internal Control Policy
- Risk Management Policy
- Staff Development Programme (Training) Policy
- Insider Trading Policy
- Communications Policy
- Whistle Blowing Policy
- Code of Ethics for Directors
- Sustainability Issues, including Gender Analysis
As part of the Corporate Governance Scorecard implementation strategy, companies are expected to disclose a Minimum Corporate Governance Report on their websites. The information is expected to be structured to contain reasonable Corporate Governance information on the public companies.
- PROPOSED AMENDMENT TO RULE 67(2)- RE-INSTATEMENT OF INDIVIDUAL SUB-BROKER FUNCTION
Full text of existing Rule 67 (2):
(2) Individual Sub-Broker
(a) An application for registration as an individual sub-broker shall be filed on Form SEC 2 as provided in schedule III of these rules and regulations and shall be accompanied by the following:
(i) Certified copy of certificate of registration of business name (where applicable);
(ii) Evidence of minimum net worth of N500,000;
(iii) Sworn undertaking to comply with the provisions of the Act and the rules and regulations as may be required from time to time by the Commission;
(iv) Evidence of compliance with rule 20(4);
(v) Sworn undertaking to keep proper records and render returns.
(b) Rule 83(3) and (4) shall, with all necessary modifications, apply in case of denial or suspension of registration of a sub-broker.
The deletion of Rule 67 (2) in November 2017 generated a lot of comments from the Nigerian Stock Exchange (NSE) and Association of Stock Broking Houses (ASHON), who thereafter requested for the reinstatement of the function. The Rules Committee revisited the issue and the Commission agrees that reinstatement of Individual Sub – broker function will help in enhancing financial inclusion, deepening the market, and attracting more retail investors as well as enable the Sub – brokers have more presence at the grass root level.
- PROPOSED AMENDMENT TO PART N RULE 602- MISCELLANEOUS RULES
Full text of existing Part N Rule 602:
Attendance at General Meetings of Securities Exchanges/other S.R.O.s, public companies, collective investment schemes, court–ordered meetings in mergers and take-overs.
- All general meetings and completion meetings shall be held only on business days.
- All public companies, collective investment schemes, securities exchanges/other S.R.O.s, issuers of public securities and merging companies shall officially invite the commission to their general meetings
- the notice of such meeting shall reach the commission not later than twenty (21) days before the date of the meeting;
- the Commission may send two representatives to the general meetings of the public companies and unit/ investment trust schemes;
- the representative of the Commission shall ensure proper conduct of the meeting and may intervene at the meeting to make clarifications on regulatory issues and matters touching on the Act and the rules and regulations.
- All issuers of securities shall as a matter of policy invite the Commission to the completion board meeting for the signing of offer documents.
- the notice of such meeting shall reach the Commission not later than three (3) working days before the date of the meeting;
- the Commission shall send two representatives to the completion meeting for the purpose of monitoring compliance with the rules of the commission;
- the representative of the Commission shall ensure proper conduct of the meeting and intervene at the meeting to make clarifications on regulatory issues and others touching on the Act and the rules and regulations.
Proposed amendment: Creation of Sub-rule 4 and 5 as follows:
- Public companies shall not distribute gifts to shareholders, observers and any other persons at Annual General Meetings/Extra-ordinary General Meetings.
- Public companies shall not convene any meeting with select group(s) of shareholders prior to an Annual General Meeting/Extra-ordinary General Meeting.
Any company that violates the provisions of (4) and (5) above shall be liable to a penalty of not less than N10,000,000 (Ten million naira only).
Justification Public companies spend a significant amount of money on corporate gifts at AGMs/EGMs and this has a great impact on their profitability. Few of the companies are making reasonable profits and even fewer can afford to pay dividends. If the amount budgeted for gifts at AGMs/EGMs can be reserved for other relevant operational or administrative expenses, it would positively impact on their earnings per share.
Furthermore, it has been observed 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.