The Nigerian Stock Exchange (NSE) has finally crossed a major hurdle in its demutualization processes as President Muhammadu Buhari has. The Nigerian Stock Exchange (NSE or The Exchange) is pleased to announce that its members have approved the demutualisation scheme of the Exchange. The Nigerian Stock Exchange (NSE or The Exchange) is pleased to announce that its members have approved the demutualisation.
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It was re-incorporated as a company limited by guarantee in December and has operated as such ever since. Foreign demutaulisation are significant players in the equities market often dictating the pace of market activity.
NSE restructures ahead of demutualisation plans. The demutualization of the Exchange will bring the Nigerian capital market on a par with other international jurisdictions, result in enhanced governance, transparency and visibility whilst attracting strategic partners, investors and good quality issuers.
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Glaringly, a significant part of the current problem with the capital market is low confidence especially on the part of the domestic investors. Exchanethings appeared to be moving forward, as the NSE issued requests for proposals from local and foreign financial advisers to assist with demutualisation.
Amid bearish results, hope rises for stock market with demutualisation
Mutual organisations are not organised along the line of profit making as they exist strictly to serve the interest of their members. Similarly, the All-Share Index lost 7, The NSE is currently registered as a company incorporated by guarantee. The President assented to the bill on the 29th of Augustaccording to documents seen by BusinessDay.
Technological advancement in the financial world over the last two decades, has significantly increased competition among stock exchanges globally and this competition has pressured many exchanges to adopt business models, which have greatly improved their efficiencies and effectiveness.
According to data from the World Federation of Exchanges, more than 70 per cent of members have transformed their legal structure from non-profit mutual Exchanges into demutualized organizations. Mazi Okechukwu Unegbu, former President, Institute of Bankers of Nigeria CIBNsaid security issues and the social environment were responsible for the negative sentiments in the capital market.
The financial sector has always been excited by new technology. As a business responding to competition from other exchanges, there is an ever present need to stay ahead of the game on the technological front. In Nigeria, efforts to demutualize the Exchange achieved milestone following the appointment of a consortium of financial, legal and tax advisers on the demutualization initiative. Local institutional investors such as pension funds and mutual funds are less active in the equities.
The bill is currently awaiting assent by President Muhammadu Buhari. These, in a nutshell, are the benefits of a demutualised securities exchange. Leave a Reply Cancel reply Your email address will not be published.
NSE demutualisation process reaches final stage – Vanguard News Nigeria
Demutualieation confidence reforms naturally attract foreign investors. Notify me of new posts by email. The challenge lies with the governing law dealing with corporate matters in Nigeria.
By Chinenye Anuforo and Chinwendu Obienyi. The NSE effectively becomes part regulator and part profit making company. That the engagement of financial advisers, legal advisers, tax advisers and any other adviser that may be required for the Demutualisation of The Exchange be and is hereby ratified and approved.
NSE Demutualisation Crosses Major Hurdle As Buhari Signs Bill
It is therefore the case that a demutualised exchange, apart from providing the benefit of increased liquidity, raises the possibility of the NSE being owned by foreign investors. Those who have endorsed the bill so far include; the Finance Minister, Mrs.
As a demutualised entity that is profit-seeking, the NSE will be in a better stead to capitalise on new income opportunities, free from any limitations arising from conflicting member interests and existing laws and more importantly, be able to better support the economic growth of Nigeria.
You would be the first to know the latest happenings around the Financial Market on Markets. Up till the early s, most of world stock exchanges were non-profit, mutual organizations limited by guarantee and monopolized by members and stock brokers. Demutualisation leads to lesser influence of trading members of the NSE on corporate decisions, as their board representation diminishes.
Wale Lawal Modern Lines: Indeed, there is an urgent need for regulators to attract more investors to the market and boost participation. In addition to what is highlighted at the beginning, a demutualised NSE will be in line with global best practice.
Demutualisation then is the process by which a mutually-owned organisation transforms to a shareholder-owned entity. Follow us on social media: To enable commenting and other interactive features, please switch to the more advanced.
Exchanges demutualise in reaction to competition and technological innovations. It allows the conversion of private companies into public companies and vice versa.