NSE Releases Draft Rules Relating to Board and General Meetings of Issuers

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Thursday, September 26, 2013 / NSE


I. Introduction

Directors of Issuers or Trustees of a Bond are responsible, collectively and individually, for ensuring that listed Issuers comply with the Exchange’s rules as they apply to their undertakings and as they relate to their meetings. The Exchange requires Directors and Trustees to fulfil fiduciary duties and duties of skill, care and diligence to a standard at least commensurate with the standards established by law.

The Exchange hereby introduces the new Listings Rules titled “Rules Relating to Board Meetings and General Meetings of Issuers”. The objective of the rules is to establish certain reporting requirements in respect of specific meetings; and institutionalize best Corporate Governance practices at such meetings.

Summary of the Amendments

A summary of the draft rules is as follows:
1 Board Meetings

This section of the draft rules contains provisions on certain corporate actions which must be notified to The Exchange within forty eight hours of the board meeting at which such actions were considered. The draft rule also identified matters which must be reported to the Exchange such as preliminary results for any year, comparative figures in respect of profits before taxation and after taxation; dividend or bonus recommendation and other distributions, rights or scrip issues, particulars of proposed change in the Issuer’s capital structure etc.

2. General Meetings of Members

The draft rules state the importance of an Annual General Meetings (“AGM”) as a forum which provides securities holders with opportunity to make enquiries from Directors and Management on an Issuer’s accounts and reports, which are presented at the AGM.

2.1 Responsibility of the Directors / Trustees in relation to General Meetings

This section sets out the responsibilities of the Directors of an Issuer or the Trustees of a Bond. It provides that they must perform their duties practically, and shall convene and hold general meetings in a businesslike manner and within the periods stipulated in the relevant Rules and Regulations. The section indicates persons who must attend general meetings, reports to be presented at AGMs and the required time to hold an AGM. It also states the manner of dealing with securities holders’ enquiries at the meetings.

2.2 Notice of Meeting

This section deals with the notice of a general meeting. It lists persons entitled to receive notices, contents of the notice and the proxy form. The draft rule makes it mandatory for each Issuer to submit to the Exchange for review, a draft copy of the notice of meeting, circulars and annual reports including press releases that will be issued to holders of listed securities. Copies of all supporting documentation to be considered at the meeting must accompany the notice. Responsibility for accuracy of the information provided is placed on the Directors and Trustees.

The draft rule provides that the approval of the Exchange must be obtained before making changes in the contents of the notice. Where it becomes necessary to postpone or cancel a meeting, the Issuer must make an announcement in at least two national daily newspapers and explain the reasons for such decision.

Upon receiving the approval of the Exchange, Issuers must immediately publish on their website the approved notice of meeting, circulars, annual reports, scheme documents and any other documents that will be considered at the general meeting.

2.3 Venue of Meeting

This section provides that in selecting a venue, Issuers must consider the convenience of securities holders in order that they are not disenfranchised. The venue of the meeting must be accessible by all securities holders including physically challenged persons.

2.4 Date of Meeting

This section prohibits the scheduling or holding of a general meeting on a day declared by the Federal Government of Nigeria as a public holiday.

2.5 Right of Attendance

The draft rules provide under this section that only those persons entitled to receive notice of the meeting in accordance with the provisions of Section 219 of the Companies and Allied Matters Act Cap C20 LFN 2004 or their proxies or representatives have a right to attend general meetings.

2.6 Conduct of Proceedings at General Meetings

The draft rules provide under this section that the Chairman and the Directors of Issuers or Trustees of a Bond are responsible for ensuring that proceedings at general meetings are conducted in an orderly manner and without disruptions. The Chairman must give securities holders ample opportunity to contribute to deliberations at meetings. The section also provides for the manner of passing resolutions at the meetings.

It is further provided that where an adjournment is necessary for the safety of persons attending; the Chairman must immediately adjourn the meeting. The Issuer must make an announcement in that regard within three days of the meeting and a report shall be submitted to the Exchange within twenty four hours of the meeting.

2.7 Meeting Convened to Obtain Securities Holders Approval

The draft rules provide for instances where a transaction requires the approval of securities holders. The draft rules prohibit certain categories of securities holders from voting in respect of such transaction or accepting appointments as proxies unless specific instructions as to voting are given.

Voting Procedure: the draft rules also cover voting at general meetings and permit the use of electronic voting devices or by any other means prescribed by law.

Announcements: announcement must be made by publication of such announcements in at least two daily newspapers with nationwide circulation. Provided that The Exchange shall be notified prior to publication.

3.0 Sanctions

The draft rules contain different forms of sanctions to deter violation.

III. Invitation for Comments

The Exchange is pleased to invite your participation in the rule making process. You are requested to participate by reviewing and commenting on the draft rules. The draft rules may be viewed through the link provided here. The Exchange views your participation as important for the following reasons:

1. To create public awareness and solicit the public’s feedback on the draft rules

2. To improve the draft rules where necessary and thereby have a robust, well-written set of rules.4

We are involving as many stakeholders as possible in this rule-making exercise in order to achieve the aforementioned goals. Please be assured that we shall strive to take as many of the comments as possible into consideration during the process.

IV. Response and Timeline

We would be grateful to receive your comments within two weeks of this notification and in any event, not later than close of business on Wednesday 9 October 2013. Your comments should be sent by email to Mr. Oluwatoyin Adenugba of the Rules and Interpretation Department of The Exchange at oadenugba@nse.com.ng


V. SEC Approval

Please note that the draft rules are subject to the approval of the Securities and Exchange Commission.


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