CMC advocates Dematerialization of shares of Unlisted Companies
Given the success recorded by the dematerialization of shares of listed companies in the capital market, the Capital Market Committee, CMC, is advocating that the exercise be extended to shares of unlisted companies.
This was part of the deliberations at the Q1 CMC meeting held in Lagos weekend.
Acting Director General of the Securities and Exchange Commission, SEC, Ms. Mary Uduk who briefed newsmen on the outcome of the meeting, said this is necessary in a bid to further deepen the market.
Uduk said it was acknowledged that the Dematerialization exercise was successful, however, the implementation of this initiative was restricted to shares of listed companies. Consequently, the CMC is advocating for the extension of the exercise to shares of unlisted public companies as this would enhance liquidity and ease market processes, enhances market dynamism, and decision making in securities investment, among others.
According to Uduk, “Dematerialization is the process of converting physical shares into electronic format. The Investor surrenders his physical shares and in turn gets electronic shares in his demat account.
“The advantages of dematerialization are many: it enables the investor to trade at any time without necessarily passing through the bottlenecks of verifying the share certificates any longer, because the shares are now domiciled with CSCS, he can give a mandate to his broker at any time and the broker accesses the Exchange that same day and trade for him.
Uduk also disclosed that the market advocated for the Commission to take strong actions against Company secretaries who aid the trade of shares of unlisted public company outside a SEC recognized platform as required by the law.
“The market was also informed of some successes recorded so far in the regularization of multiple share subscription. Through this exercise, some Nigerian investors in diaspora have been able to consolidate their shareholding accounts. Similarly, several local investors with numerous accounts have also been able to consolidate their investments.
“We therefore enjoin the general public to take advantage of this initiative to regularize their shareholding accounts before the December 31, 2019 deadline. We crave the indulgence of the ladies and gentlemen of the press to sensitize the public on this initiative.
We continue to seek the support of the media and the collaboration of the entire market as we strive to build the capital market of our dreams” she stated
The CMC was mainly established to serve as a medium for exchange of ideas among market stakeholders as well as for feedback to SEC on how to continuously improve the market activities and regulation.
It is an industry-wide committee comprising members of the commission, representatives of capital market operators and trade groups and other stakeholders. The CMC meets every quarter to deliberate on various issues affecting the market and other policy matters.