• Investors seek speedy resolution, payment of proceeds
• Unresolved crises, poor regulation weighing on market confidence
• We will address challenge in due course, SEC insists
About N130 billion accruing to shareholders after the delisting of Dangote Flour, First Aluminium, and Coronation Insurance is still trapped in the coffers of the registrars, Ministry of Finance, and the Securities and Exchange Commission (SEC) years after the companies were delisted from the capital market .
Registrars, who are accessible to the disgruntled shareholders, claimed the funds are in the custody of SEC and its supervisory ministry, who are yet to issue a directive on how the money could be accessed.
Head of Corporate Communication of SEC, Efe Ebelo, in a telephone conversation yesterday, confirmed that the Commission was aware of the issue and that the new leadership was working to address it and other crises in due course.
Coming at a time when banks and other companies are knocking on the doors of shareholders for public offers and the right issues, stakeholders are worried that the unresolved crises could potentially affect the success of the fund-raising plans.
Dangote Flour and First Aluminium were delisted from the trading list of the defunct Nigerian Stock Exchange (NSE) in 2019. The total money funds belonging to minority shareholders was N130 billion, with an unconfirmed sum said to have been paid.
Shareholders of Dangote Flour were to receive the sum of N120 billion after Olam International Limited offered to buy all outstanding shares, and issued shares in Dangote Flour Mills for N120 billion in April 2019.
First Aluminium and Coronation Insurance were expected to settle minority shareholders with the sum of N284.5 million and N4.53 billion, in that order.
Coronation Insurance made its delisting plans public last year. ALUCON Holdings S.A. holds roughly 75.48 per cent of Coronation Insurance shareholding while the minority shareholders hold 24.52 per cent.
First Aluminium was delisted at 55 kobo. Minority stake was 25 per cent of the company’s two billion shares amounting to about N284.5 million.
However, this money has been locked up since the delisting of the companies, leaving shareholders stranded. Investigations revealed that Dangote flour had paid off its minority shareholders in accordance with the buyout plan, while the money is currently locked up in the coffers of the Ministry of Finance and the Securities and Exchange Commission (SEC).
The Guardian also learnt that shareholders have written to SEC severally to release the money but they were referred to the registrars, who are not in custody of the fund.
A source close to The Guardian said: “For Dangote flour, some shareholders have collected their money but a good number of them have not, due to issues like name change, and they were denied access to the money when they were ready to take it. The money is between the Ministry of Finance and the SEC.”
Delisting processes have ended, why is the money not with the registrar? SEC will ask shareholders to write letters, and after that they will refer them to the registrars, who are helpless,” he lamented.
He said Coronation Insurance traded as high as 92 kobo, but wanted to pay back holdings by minority shareholders at 67 kobo, which was rejected because the rule states that the pay must be the same as the peak at a given period.
Hence, SEC withheld approval. Recall that the rules of the Exchange say the highest amount at which the shares of the company sold on the floor of the exchange within six months before the approval of the voluntary delisting by the general meeting of the company should be paid to existing shareholders.
However, majority shareholders in most cases have failed to play by the rules and resorted to cutting corners and paying minority shareholders peanuts.
Experts said these unwholesome practices have eroded investors’ confidence and further depressed the market. Data from the exchange showed that the appetite for stocks from both foreign and local investors has waned significantly in recent years. Managing Director of Crescent Registrar Limited, Prisca Enwe, confirmed that the trapped shareholders’ fund is currently in the custody of the SEC.
According to her, shareholders were given until 2021 to claim their money after the company was delisted from the exchange in 2019. “Some collected their money while others did not. At the expiration of the time given, we returned the money to the SEC. The money is with the SEC. All the shareholders are aware that the money is with the SEC.
“The only thing we do now is to mandate accounts. No further instructions have been given to us concerning the money; we do not even know whether, we are the one that will handle the money again or not. As I said, no further instructions have been given concerning the money since we returned it to the commission,” she said
Shareholders wondered why the apex capital market regulator has refused to release the money to the owners after five years, despite a series of letters written to the commission by the heads of the shareholders association.
National Coordinator of Progressive Shareholders Association, Boniface Okezie urged the new SEC board to wade into the matter and ensure that it is settled as a matter of urgency.
“The real truth is that Dangote Flour has paid but some shareholders are yet to access it because the SEC took the money away from the registrar stating that they will pay the owners when they come around, but many of them have been going to the register’s to claim their money, which is their principle investment and their right but unfortunately the registrars’ concern has failed to pay them.
“We have been in contact with the former SEC leadership through letters and WhatsApp messages, and they said they are going to return the funds to the registrars for onward disbursement to the owners but up till now, it has been one story or the other.
“On First Aluminium, up till now, nobody has been paid. I do not know whether the SEC has given them the approval on what they propose. They took a very few people to Kano State to conduct their meeting where the approval for the delisting arrangement was to be made, so I think the SEC has not given them approval due to the way the process was conducted without fairness to minority shareholders,” he said.
A member of the Independent Shareholders Association of Nigeria, Oladimeji Adeleke, lamented the ordeal Nigerian shareholders have been facing in the hands of majority shareholders.
According to him, whenever firms plan to delist, they would first present the company as if the profitability is already depressed by macroeconomic woes, after which they will no longer declare a dividend to shareholders.
“A good example is the IHS, a company that is doing business with MTN, such telecom giant did not pay dividends to shareholders for a very long period, only for us to hear that they are planning to delist from the stock market.
“The regulators and companies are not fair to minority shareholders on the issue of delisting. Dangote Flour was delisted from the exchange and after five years of payment, investors could not claim their money. The registrar said the money is with the SEC and it said we should go to the registrar, you see the problem we are facing.
“First Aluminium ran to Kano state to hold their ‘Kangaroo’ meeting and up till now, shareholders have not been paid. Coronation Insurance was a healthy company until the management planned to delist it and since last year, the money has not been paid. This act has made shareholders lose interest in the capital market.”
President of the Pragmatic Shareholders Association of Nigeria, Bisi Bakare, urged the new SEC leadership to tackle perennial issues bedevilling the market over the years, especially the frequent delisting of quoted companies from the exchange.
President of the Ibadan Zone Shareholders Association, Eric Akinduro, urged the new board to introduce policies that would protect minority investors.
Akinduro claimed that shareholders have lost their investments due to unfavourable government policies, stressing the importance of finding a lasting solution to the increasing level of delisting from the market.
With the capitalisation of banks around the corner, there are concerns that the unresolved crises in the market could affect the success of public offerings and dampen the already low confidence level.
The latest edition of the NGX Report on domestic and foreign portfolio participation in equities for April revealed that domestic transactions decreased from N3.6 trillion in 2007 to N3.2 trillion in 2023 while foreign transactions fell from N616 billion to N411 billion over the same period.
Further breakdown of the report showed that total transactions at the nation’s bourse as of 30 April 2024 decreased by 35.7 per cent from N538.5 billion on March 5, 2024, to N346.23 billion on April 6, 2024.
