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SEC Bans Pre-AGMs, Distribution of Gifts

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  • SEC Bans Pre-AGMs, Distribution of Gifts

The Securities and Exchange Commission has banned the meeting of public companies with select group(s) of shareholders prior to an Annual General Meeting/Extraordinary General Meeting, as well as the distribution of gifts at AGMs.

SEC said in a statement on Sunday that the move was in a bid to ensure that investors got more value for their investments and that they saw a positive impact on their earnings per share.

In a draft Exposure of Sundry Amendments to the Rules and Regulations, SEC said it was seeking to create a sub-rule to regulate the conduct of AGMs.

It said the sundry amendments were the proposed amendment to Rule 42 (2)- Half-Yearly Returns, proposed amendment to Rule 67(2)- Individual Sub-broker and proposed amendment to Part N Rule 602 – Miscellaneous Rules.

The statement read in part, “Proposed amendment to Part N Rule 602 – Miscellaneous Rules seeks to create a Sub-rule 4 and 5 pertaining to the organisation and conduct of Annual General Meetings.

“The new sub-rule specifically seeks to reduce the cost of organising shareholders’ meetings by making illegal the distribution of gifts to shareholders, observers and any other persons at annual and extraordinary general meetings.

“Should the rule be agreed on, public companies shall not convene any meeting with select group(s) of shareholders prior to an annual general meeting/extraordinary general meeting.”

Justifying the proposed rules, SEC observed that some companies arranged meetings with select groups of shareholders ahead of general meetings to discuss proposed resolutions and agree on strategies, which it said were often detrimental to the interest of other shareholders.”

“Companies that violate these provisions shall be liable to a penalty of not less than N10m,” SEC said.

In the draft, SEC lamented the huge amount spent by such public companies on corporate gifts at AGMs/EGMs, which it said was greatly impacting on their profitability.

It argued that at a time when few companies were making reasonable profits and even fewer could afford to pay dividends, the latest move would positively impact on earnings per share of many if the amount budgeted for gifts at AGMs/EGMs could be reserved for other relevant operational or administrative expenses.

SEC added that the proposed amendment to Rule 42 would lead to the creation of sub-rule 190 (3), which states that “public companies shall disclose some minimum corporate governance information on their websites including governance structure, composition and structure of the board, shareholding and dividend analysis among others.”

Justifying the amendment, SEC said as part of the corporate governance scorecard implementation strategy, companies were expected to disclose a minimum corporate governance report on their websites and the information was expected to be structured to contain reasonable corporate governance information on the public companies.

On the proposed amendment to Rule 67(2) – reinstatement of individual sub-broker function, SEC said the deletion of Rule 67 (2) in November 2017 generated a lot of comments from the Nigerian Stock Exchange and the Association of Stock Broking Houses, who, thereafter, requested the reinstatement of the function.

The statement read in part, ‘The Rules Committee revisited the issue and the commission agrees that reinstatement of individual sub-broker function will help in enhancing financial inclusion, deepening the market, and attracting more retail investors, as well as enabling the sub-brokers to have more presence at the grass root level.”

Reacting to the new rules, the National President, Constance Shareholders’ Association, Shehu Mikali, described the banning of gifts at AGMs as a nice move by SEC but insisted that the pre-AGMs should not be banned because it had to be on the companies’ decision.

He said, “SEC rules should depend on how the companies have been doing and the kind of the stakeholders the companies want to brief. But in other to sanitise our AGM system, we are in support of the ban on the distribution of gift items at AGM venues so that serious-minded shareholders can come to the meetings and contribute meaningfully.

“This will also reduce the tension and rowdiness at AGM venues.”

CEO/Founder Investors King Ltd, a foreign exchange research analyst, contributing author on New York-based Talk Markets and Investing.com, with over a decade experience in the global financial markets.

Finance

Nasdaq Set To Launch Options Trading For Coinbase Global

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Less than a week after the largest crypto exchange in the U.S. Coinbase was listed, Nasdaq is set to start trading options for Coinbase Global.

According to Reuters, a representative for Coinbase stated that the COIN.O options will start trading on Nasdaq on Tuesday, April 20.

The launch of equity options will offer a new way for investors to bet on the fortunes of Coinbase. Equity options represent the right, but not the obligation, to buy or sell a stock at a certain price, known as the strike price, on or before an expiration date.

The news follows Coinbase’s direct listing, which saw the firm’s stock fluctuate between a valuation of $429.54 and $310 on its first day of trading.

It was reported that the Chief Executive Officer of Coinbase, Brian Armstrong sold less than 2% of his holdings which worth about $292 million in shares on COIN’s first day of trading. According to filings made with the U.S. Securities and Exchange Commission, Armstrong sold 749,999 shares in three batches at prices ranging from $381 to $410.40 per share for total proceeds of $291.8 million.

It was also reported that insiders dumped nearly $5 billion in COIN stock shortly after it was listed. Filings on the Coinbase Investor Relations website showed a total of 12,965,079 shares were sold by insiders, worth over $4.6 billion at COIN’s $344 share price at close on Friday.

Yahoo Finance reported the stock has slumped 22.5% from a high of $429.54 on April 14 to a current after-hours trading price of $332.75 where it appears to have settled after Monday’s trading session.

On April 20, Coinbase Pro announced that will add support for new trading pairs for Basic Attention Token (BAT), Cardano (ADA), Decentraland (MANA), and USDC from April 20. The four assets will be paired with three fiat currencies (USD, EUR, GBP), BTC, and ETH, with limited trading functionality to be made available while market liquidity is assessed at launch.

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Banking Sector

Unity Bank Grows Asset by 67.90% to N492.02 Billion, As Gross Earnings Hit N42.71 Billion in FY 2020

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Unity Bank Plc grew its assets base to N492.02billion representing a significant increase of 67.90% from the N293.05 billion of total assets value recorded in 2019. This is even as the agric-focused lender declared gross earnings of N42.71 billion within the period under review.

A review of the Bank’s audited results for full-year ended 31 December 2020, released to the Nigerian Stock Exchange, showed that the Bank improved its bottom line marginally as Profit After Tax, PAT stood at N2.09 billion. Profit Before Tax, PBT closed at N2.22 billion, in a year that was defined by the unmitigated impact of global pandemic characterized by disruptions in business activities and the general downturn that resulted in revenue/returns dip in major leading sectors globally.

The lender substantially grew its customers’ deposit portfolio to N356.62 billion, up from N257.69 billion in the corresponding period of 2019, representing a 38.4% growth. This affirms positive market uptake of the Bank’s product offerings, as well as the lender’s growing customer base to its recent aggressive push with agile customer-centric products, which has played a role in deepening financial services penetration, especially to a wider world, an underserved spectrum of the retail market.

Other major highlight of the audited financial statement relates to growth in its net operating income which rose to N25.46 billion from N23.21 billion in the corresponding period of 2019, representing a 9.71% increase. This is even as the net interest income recorded a significant jump, as it rose by 7.60% to N17.75 billion from N16.49 billion in the corresponding period of 2019. Earnings per Share closed at 17.85 Kobo.

The Bank’s gross loans portfolio increased by 92.9% to N206.2 billion in December 2020 from N106.9 billion in December 2019. The Bank’s lending strategy was specially tailored to support the nation’s food agenda. This had the added advantage of improving food security across the country, providing employment to thousands of youths and entrepreneurs, contributing to the conservation of FX stocks and mitigating security challenges by ensuring adequate empowerment of citizens and deepening skills acquisition across the value chain.

Commenting on the result, Unity Bank’s Managing Director/Chief Executive Officer, Mrs. Tomi Somefun stated that the results showed the resilience of the Bank during unprecedented times of uncertainties and our ability to innovate and focus on key balance sheet items that will enable us to maintain the growth trajectory.

She further opined that: “Consequently, for the year under review, the opportunities to significantly create more quality assets for the business, thought to have a sustainable impact, informed part of choices made and we have seen some encouraging market uptake in this regard, apart from the benefits to the enterprise bottom-line that have also started trickling in. Other key performance indicators especially on the liability side of the business were equally not left out. The Bank deployed new product features and augmentation supported by omni-channel, USSD promotions and other channels to enhance services delivery efficiency, drive income generation capacities and enhance steady balance sheet growth for the year”.

Looking ahead, Somefun stated: “we will latch on targeted strategies to deploy significant investment in technology in order to ride the waves of the COVID-19 pandemic. On the back of this, the Bank focuses on achieving major efficiency gains, deepening its retail footprints and penetrating identified cluster market segments, as bulwarks to tapping into various youth markets platforms, in addition to the mass market would get a further boost”.

While laying an outlook for the future, the Unity Bank’s Chief further stated: “The Bank is also looking to consolidate on the gains from its core business areas and niche in the agribusiness sector. The Bank has solidly financed over one million farmers over the past three years. These farmers cut across several primary crop production such as rice, maize, cotton, wheat, sorghum, etc coupled with their rich value chains, and we hope to continue to expand on this as we play our part in driving the country’s quest for self-sufficiency in food production.”

Analysts are of the view that has made an appreciable impact in the agribusiness and its value chains consistently, the market is excited that the current year performance and different initiatives of the Bank show that the agribusiness is bankable not only as a differential positioning but also for sustainable business performance and profitability.

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Banking Sector

Access Bank To Acquire BancABC Botswana

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Access Bank Plc on Monday disclosed that it had entered into a definitive and binding agreement with ABC Holdings Limited to acquire 78.15 per cent shareholding in African Banking Corporation of Botswana Limited (BancABC Botswana).

The transaction, which is subject to regulatory approvals and customary conditions precedent, is expected to close before the end of this quarter.

ABC Holdings is a subsidiary of London Stock Exchange listed group – Atlas Mara Limited.

Access Bank disclosed this in a statement signed by its Company Secretary, Sunday Ekwochi.

Bostwana is renowned for its quality sovereign credit rating and stability. Access Bank’s market entry is expected to further solidify its strategy as, “a strong banking partner in key verticals across retail and corporate banking, including especially supporting trade in payments across southern Africa and Sub-Saharan Africa more broadly.”

Commenting on the deal, the GMD/CEO, Access Bank, Herbert Wigwe, said: “We remain committed to a disciplined and thoughtful expansion strategy in Africa, which we believe will create strong, sustainable returns for our shareholders and stakeholders at large, over the medium and long-term.

“The establishment of Access Bank through this acquisition in the Republic of Botswana will position the bank to deliver a more complete set of banking solutions to its clients active in and across the SADC and COMESA regions.

“This transaction complements our recent strategic growth acquisitions in South Africa, Zambia and Mozambique. We are building a bank of the future that Africans across Africa and the world would be proud of and look forward to welcoming the employees, customers and other stakeholders of BancABC Bostawana to Access Bank.”

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