SEC clarifies ban on sharing of gifts at AGM

The Securities and Exchange Commission (SEC) has clarified its position on the sharing of gifts at Annual General Meetings (AGM) as contained in Rule 602 (4) of its Rules and Regulations.

According to the SEC, “Rule 602(4) states that ‘’public companies shall not distribute gifts to shareholders, observers and any other person at Annual General Meetings/Extra-Ordinary General Meetings’’

“The Commission considers it necessary to clarify that ‘light refreshment’’ are not construed as ‘’gifts’’.

The SEC had last year amended its Rules and Regulations to stop listed companies from distributing gift items at AGMs.

Justifying the Rule, the Commission said public companies spend a significant amount of money on corporate gift items at AGMs/EGMs which 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 the gifts at AGMs/EGMs can be reserved for other relevant operational or administrative expenses, it would positively impact on their earnings per share” It explained.

Specifically, the rule provides that. “pubic companies shall not distribute gifts to shareholders, observers and any other persons at AGMs/EGMs. Public companies shall not convene any meeting with select group (s) of shareholders prior to an AGM/EGM.

SEC stated that any company that violates the provisions of the rule shall be liable to a penalty of not less than N10 million.

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By Iheanyi Nwachukwu • April 14, 2020

Iheanyi Nwachukwu

Iheanyi Nwachukwu, is a creative content writer with almost two decades journalism experience writing on banking, finance, capital markets, and tax. The multiple awards winning journalist is Assistant Editor, BusinessDay. Iheanyi holds BSc Degree in Economics from Imo State University; Master of Science (MSc) Degree in Management from University of Lagos. Iheanyi has attended several work-related trainings including (i) Advanced Writing and Reporting Skills (Pan African University, Lagos); (ii) News Agency Journalism (Indian Institute of Mass Communication {IIMC}, New Delhi, India); and (iii) Capital Markets Development and Regulations (International Law Institute {ILI} of Georgetown University, Washington DC, USA). Other trainings Iheanyi attended include: Economic/Political Risk Analysis (By Thomson Reuters Foundation); International Financial Journalism (IFJ) (By PMA Media Training, UK); Effective Business Writing Skills (By Phillips Consulting); Reporting on Corporate Governance (By International Finance Corporation (IFC) & Thomson Reuters Foundation UK); etc. In addition, he has participated in high-level economy & markets events in Dubai, South Africa, Morocco, and other African countries like Zambia, Ghana and Gambia.