Some shareholders on Monday said the new par value approved by the Securities and Exchange Commission (SEC) would affect the growth of the nation’s bourse if implemented.
They said in Lagos that the policy should be dropped due to developments in the nation’s economy and free fall of equities.
Sunny Nwosu, National Coordinator, Independent Shareholders Association of Nigeria (ISAN), said the policy should not be implemented because of the free fall of equities and persistent drop of naira at the foreign exchange market.
Nwosu said that SEC and the Nigerian Stock Exchange (NSE) should pursue policies that would turnaround the market and should not contribute to the market downturn.
He said that foreign investors would continue to dominate the equities market if the policy becomes operational in the face of sustained drop in the nation’s currency value.
He said that regulators must collaborate with all capital market stakeholders before introducing any policy.
Nwosu said that market regulators should not contribute to the market downturn with negative policies that would dampen investors’ confidence.
He said that some insurance and banking stocks would experience free fall with the implementation of the policy to the detriment of minority shareholders.
“Minority shareholders that are hopeful that insurance companies will experience turnaround will have their hope dashed with the policy,’’ Nwosu said.
Boniface Okezie, National President, Progressive Shareholders Association of Nigeria, also said the policy would contribute to the market downturn.
Okezie said that the policy would not solve the problem in the market but would encourage more companies to seek delisting from the NSE.
He also recalled that shareholders had rejected the initiative about one year ago when they were consulted by NSE on the issue only for it to be approved in 2015.
Okezie said that market regulators should work with listed companies to shore up their operational abilities.
SEC had on June 2 approved the one kobo new par value rule submitted by the National Council of the Nigerian Stock Exchange (NSE).
The exchange, in a statement issued to stockbrokers, said that “notwithstanding its par value, the price of every share listed on the stock exchange shall be determined by the market, save that no share shall trade below one kobo per unit’’.
It added that the par value of the company shares traded on the NSE floor had been revised downwards to one kobo from the previous 50k.
Par value is the nominal value of a share as stated in the Memorandum of Association of an Issuer.
(NAN)
