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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