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Group questions Onyema’s dual role ahead of NGX Group listing

… It is to preserve collective knowledge, institutional memory, others, says NGX Group

A rights and transparency group, Nigeria for All Nigerians (NAN) has called on the concerned regulatory authorities to stop violation of the Nigerian Investments and Securities Act.

This call to regulators comes ahead of the forthcoming Listing by Introduction of the shares of Nigerian Exchange Group (NGX Group) on the main Board of Nigeria Exchange Limited with effect from October 13, 2021.

The proposed listing comes on the back of the successful completion of the demutualisation and restructuring of the Nigerian Stock Exchange (the former name of NGX Group) and its operations.

The concern of NAN relates to the likely infringement of SEC Rule 184(2)(a) on the status of Oscar Onyema as the Chief Executive Officer of Nigerian Exchange Group while also serving as a Non-Executive Director of Nigerian Exchange Limited.

Rule 184 (2) states that a securities exchange shall have a code of conduct for its council members or Board which shall be approved by the Commission and shall contain provisions that the council members or Board shall not be staff of a quoted company and its subsidiaries.

According to the group, “The purpose of this provision is to forestall a situation where a Council or Board member of an Exchange would be in a position to extend special privileges or exercise undue influence towards a listed company which he/she works for.”

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“The impending listing by introduction of the shares of NGX Group on the main Board of NGX Limited with effect from October 13, 2021 vis-a-vis Mr. Onyema’ s portfolio in the two companies will be a violation of Rule 184(2)(a) on the status of Mr. Oscar Onyema as the CEO of NGX Group while also serving as a Non-Executive Director of NGX Limited,” according to a statement from Dele Ajanaku, NAN’s Secretary General.

Furthermore, in line with the practice of demutualized exchanges, NGX Group will be listing on the operating Exchange to support liquidity and enhance transparency. The proposed listing of the shares of NGX Group is expected to occur following the fulfillment of all regulatory requirements and the approval of NGX Regulation Limited. A total of 1,964,115,918 shares are expected to be admitted to trading and the shares will trade under the ticker NGXGROUP.

In the scenario under review, by virtue of his position as CEO of NGX Group, Mr. Onyema is a staff/employee of the company. Given that he also serves a non-executive on the NGX Ltd, the Exchange on which NGX Group is set to be listed, Mr. Onyema would (if permitted to hold both portfolios), be in contravention of Rule 184(2).

“On the basis of the foregoing, NAN concluded, “it is recommended that the Commission should request Mr. Onyema to relinquish one of the portfolios he is currently occupying so as to comply with Rule 184(2).”

Meanwhile, rising from its Facts Behind The Listing on Monday October 11, the NGX Group in a statement noted that the GMD/CEO of NGX Group, Onyema, also serves as Non-Executive Director of NGX. “This Board membership seems to preserve collective knowledge and institutional memory, as well as retain stakeholder confidence and maintain market stability.”

“Our research has shown that this approach is also being used by the holding companies of leading international exchanges, including the Intercontinental Exchange (popularly known as ICE) which is listed on the New York Stock Exchange (NYSE) which it owns, and the Japan Exchange Group (popularly known as JPX) which is listed on the Tokyo Stock Exchange (TSE) which it owns.

“NYSE is the largest stock exchange in the world by market capitalization, whilst TSE is the third largest stock exchange in the world by the aggregate market capitalization of its listed companies, and is the largest in Asia. It would therefore seem that NGX Group stands in good company and has benchmarked in line with leading integrated capital market infrastructure groups globally, and leading exchanges in the world”, the NGX Group said.

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