Monday, March 09, 2020 / 3:00 PM / Nifemi Taiyese for WebTV / Header
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With the court-ordered meeting and extra-ordinary general meeting of the Nigeria stock exchange, NSE on its planned demutualization. The Capital market is bracing up for what will be a transformed local Stock Exchange.
One area that would be critical to the effective transition of the NSE from an institution limited by guarantee to one limited by shares or demutualization would be the improved quality of corporate governance.
Already demutualized Exchanges across the globe like the New York Stock Exchange (NYSE), London Stock Exchange (LSE) and Johannesburg Stock Exchange (JSE) demonstrate the highest levels of transparent corporate governance, with an understanding of the governance issues critical to their survival.
In a recent interview with Mr. Aigboje Aig-Imoukhuede, board member, NSE, the issues around corporate governance was discussed.
Mr. Imuokhuede highlighted the fact that a demutualized Exchange creates the avenue for driving better corporate governance and accountability.
According to him "A mutual organization whether its run for profit or not for profit is essentially, almost like a club where from amongst the members of that club you appoint those who are going to govern you. But the problem is that, that's all well and good for the societies and for a club. But when it comes to an exchange which is a public interest organization, now its members may serve the public and may try to govern themselves, and essentially that's how most Exchanges evolve".
Speaking further he said "When you think about the larger economy and the ramifications for those who are serving the public, being those who are governing an institution that provides an integral and fundamental service to the larger public; then the concerns about conflict of interest will arise".
Looking at it from a government policy standpoint, he said one of the primary reasons why countries and even the users of the stock exchange services, embrace demutualization is that it is an opportunity to bifurcate membership of the exchange from the governance of the exchange.
The Founder and Chairman of the Africa Initiative of Governance (AIG) lauded the NSE for taking the bold step at the court-ordered meeting for demutualization or the conversion of the exchange from a company limited by guarantee to a company limited by shares with shareholders.
He noted that the board will move from being constituted by members selected from within the existing capital market organizations, to individuals who are independent.
Giving further insight into the outlook for the Exchange post-demutualization, he was of the view that over the next three years as the transition takes place, a time will come that people will look at the board of the NSE and it would probably reflect people who have had no history of dealings with the Exchange, achieving the independence the market has yearned.