Proposed Scheme Of Arrangement Between The Nigerian Stock Exchange And Its Members


Wednesday, February 12, 2019 10:43 AM / By NSE / Header Image Credit: NSE 


You will recall that the members of The Nigerian Stock Exchange ("NSE" or "The Exchange") passed a resolution at an Extra-Ordinary General Meeting of The NSE held on March 30, 2017; specifically authorising The National Council to commence the process that will culminate in The Exchange being demutualised. Consequent upon the approval, The Exchange has worked assiduously with the mandated advisers - Chapel Hill Denham Advisory Limited and Rand Merchant Bank Nigeria Limited who are the Financial Advisers, Aluko & Oyebode and Pedabo as Legal Advisers and Tax Advisers respectively ("Advisers") - and the regulatory Demutualisation Advisory Committee to achieve the various milestones that will now culminate in our Exchange being demutualised. C&F Porter Novelli was responsible for managing The Exchange's strategic communications, corporate positioning and reputation management.


Demutualisation has been on the agenda of the Nigerian Capital Market since 2001, although there was no traction in advancing the process until 2011. In 2011, demutualisation was discussed again having been reflected in a paper presented by The NSE titled "The Roles and Expectations of Regulators in the Demutualisation Process". Furthermore, a 21-member technical committee was inaugurated - also in 2011 - by the Securities & Exchange Commission ("SEC") and charged with developing a legal framework for the demutualisation process. The committee had three months to complete its work and were required to review the structure and ownership of The NSE, examine the regulatory, ownership, management, operational, governance and financial issues in demutualisation of exchanges, review various demutualisation models and experience including valuation models for demutualisation.


In 2014, the SEC issued draft Rules on Demutualisation of Exchanges in Nigeria. The final rules on demutualisation were released by the SEC on April 27, 2015 ("the Demutualisation Rules" or "Rules"). Despite these Rules, the completion of demutualisation was stalled as the existing company laws and regulations did not have provisions that could be applied to achieve a demutualisation of our Exchange. The enabling framework for the demutualisation of The Exchange is the Demutualisation of The Nigerian Stock Exchange Act, 2018 (No 14 of 2018) ("the Demutualisation Act" or "the Act"), which was enacted on July 29, 2018 following the receipt of Presidential Assent.


The Demutualisation Act provides the regulatory and legal framework that will enable us to achieve a demutualised Exchange. Under the provisions of the Act, the conversion and re-registration of The Exchange to a public company limited by shares - from the current status of a company limited by guarantee - will be concluded. In particular, Section 1 (2) of the Act empowers The Exchange to adopt any process, procedure, structure or plan as may be required by the National Council for the purpose of demutualisation, provided that the prior authorization of the SEC has been obtained and all procedures and requirements of the Demutualisation Rules have been complied with.


Download Here Scheme of Arrangement

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