The Nigerian Stock Exchange has pledged that it will protect the rights of investors to dividends in line with one of its core strategic pillars for enhanced market performance and growth via sustaining a “strong investor protection” framework.
In doing this, the NSE said it would not hesitate to enforce a five per cent sanction on any issuer that failed to pay dividends to its shareholders within the time specified in the resolution passed by the shareholders at the annual general meeting at which such dividends were declared.
The NSE explained in a statement by its Head, Corporate Communications, Mrs. Nwando Ajene, and the Public Relations Executive, Mr. Joseph Kadiri, that “the sanction is not a new proposal but part of the already existing General Undertaking in the Exchange’s listings requirements.”
According to the Head, Legal and Regulation Division, NSE, Ms. Tinuade Awe, before securities are approved for listing on the Exchange, every issuer has to execute a document known as the General Undertaking.
She said, “The General Undertaking sets out the obligations imposed on an Issuer.
“These commitments include the obligation to notify the Exchange prior to taking certain corporate actions; the obligation to seek the Exchange’s approval before publishing certain information; the obligation to comply with the Exchange’s listings rules; the obligation to comply with the directives of its shareholders in the event of declaration of dividends.”
Awe explained that the Exchange had before now published Securities and Exchange Commission-approved amendments to the rules and the sanctions provisions of the listing rules in order to remind issuers of their obligations and the corresponding sanctions under the rules.
The Exchange’s Head of Listings Regulation, Mrs. Josephine Igbinosun, was quoted as saying there were several reasons why the Exchange might penalise specific conducts.
In the instant case, she explained that there were two primary reasons – to encourage a change in unacceptable behaviour and to act as deterrent against engaging in conduct which violated applicable rules.
The statement added, “By imposing the five per cent sanction set forth in section 14(e) in the event of a breach regarding the payment of dividends as directed by shareholders, the Exchange is enforcing the payment of dividends to shareholders, in line with their resolution to receive same on a specific date.”
According to it, in essence, section 14(e) sends a reminder to the directors of the issuer that the directives of the shareholders in general meetings must be obeyed.
Igbinosun added, “The Exchange wishes to draw the attention of the investing public to the SEC rule (2013) Part B, rule 44(1) on payment of dividends which also imposes an obligation on issuers to ensure payment of dividends declared to shareholders not later than seven working days after the AGM at which the dividend was declared.”
She called on all issuers to enhance their internal systems and controls in order to avoid engaging in conducts prohibited by the listings rules. – Punch.
