… say banks handing over shareholders registers to staff, drivers, and receptionists
Nigeria’s stockbroking community has accused banks that have raised or currently raising fresh capital from the stock market, saying they are aiding a repeat of 2005 recapitalisation infractions by bypassing them as receiving agents.
During the offer period, the receiving agent acts as the primary point of contact for accepting subscriptions to the new securities from the various investors.
The stock market has seen deals value rise by about 44 percent or N941.62 billion in seven months as banks recapitalisation exercise intensifies.
Banks like Fidelity Bank, GTCO, Access Holdings have concluded their capital raising programmes on the Bourse while FCMB Group and Zenith Bank are still in the market for their share sales.
The Central Bank of Nigeria (CBN) on March 28, 2024 announced a two-year bank recapitalisation exercise, which commenced on April 1 and is expected to end on March 31, 2026.
Association of Securities Dealing Houses of Nigeria (ASHON) in a position paper sent to BusinessDay titled “Need for issuers and investors to comply with capital markets rules and established practices”, said “these banks have handed over their Shareholders Registers to their staff, including drivers and receptionists to issue and receive share subscriptions forms to investors thereby bypassing stockbroking firms who are the registered Receiving Agents. Such completed Offer Forms are then passed directly to the bank, its branches and subsidiaries (including Registrars).”
Read also: Stock deals jump 44% on banks’ recapitalisation
ASHON said it fears the likelihood of abuse of the process, making reference to the 2005 bank recapitalisation where stockbrokers ‘were wrongly blamed for infractions committed by banks”.
In the paper signed by Sam Onukwue, chairman, ASHON and Athan Ogbozor, Executive Secretary, ASHON, the Stockbrokers said it has come to their notice that “in a desperate move to mobilise funds to comply with the new capital requirement as directed by the Central Bank of Nigeria (CBN), some banks have devised means of bypassing Stockbrokers as Receiving Agents”.
“In addition, they have opened unapproved dedicated portals as a marketing strategy to mine investors’ information and constrain Investors to domicile their accounts with their subsidiaries instead of their Stockbrokers. By these devices, opportunities for fair marketing has been denied stockbrokers.
“This act is at variance with the acceptable procedure where stockbrokers have the primary duty to market shares and offer investment advice to investors.
“The ongoing unorthodox channels of share subscription deny innocent investors of opportunity of making appropriate investment decisions in line with their investment objectives, risk tolerance, time horizon, and source of fund amongst others”, ASHON said.
“We hereby advise issuers and investors to deal directly with Trading Licence Holders who are members of ASHON in order to be availed sound professional advice ahead of any share subscription. The firms are duly registered and regulated by the SEC and licensed by recognised securities market platforms.
The list of recognised Trading License Holders or dealing -member firms is available on the website of Securities and Exchange Commission (SEC); www.sec.gov.ng; Nigerian Exchange Limited (NGX); www. ngxgroup.com and ASHON; www.ashonng.org”, ASHON further said.
