FEBRUARY 16, 2015
AWARDS - From left, Mr Demola Kolade, Executive Director, Mr Thompson Ajayi, Chief Accountant, and Mr Paul Omekwe, National Sales Manager, all of Brian Munro Limited, and Mr Okey Akpa, Managing Director, SKG Pharma Limited, during the 2014 Distributor Awards held by Brian Munro Limited, last Wednesday in Lagos. PHOTO: Kehinde Gbadamosi.
Industry leaders move against mandatory listing on NSE zManufacturing, oil and gas sectors to be worse hit zWe disagree with compuslory listing - NSE BY FRANKLIN ALLI & NAOMI UZOR
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NDUSTRY LEADERS in the country are making frantic efforts to halt passage of the Private Companies Conversion and Listing Bill into law by the National Assembly. They said the bill being sponsored by the Deputy Chairman of the House of Representatives Committee on Capital market, Hon. Chris Emeka Azubogu, would not help the business climate in Nigeria and should be withdrawn.
The draft bill which is premised on the provisions of Section 16(2) (a) (b) and (c) of the Constitution of the Federal Republic of Nigeria 1999 has passed the second reading on the floor of the House of Representatives as at the last quarter of 2014. The Industry leaders drawn from multinational corporations like PricewaterHousecoopers (PWC); Shoprite, British America Tobacco; Shell and Chevron, FrieslandCampina including leaders of the Organised Private Sector (OPS) have unanimously kicked against the Bill and are now harmonising their
position ahead of the Public Hearing of the Bill. Financial Vanguard learnt that the sponsors of the Bill had advanced the following arguments to justify the introduction of the bill: “Conversion to public companies and listing on the Stock Exchange would increase the hitherto private companies' access to long term funding from the capital market , leaving the banks to cater for the funding needs of the real sector. “The Bill will boost operations at the Stock Exchange and increase the sector ’s contribution to the
GDP which is considered smaller compared to other emerging economies. The sponsors also argued that the Bill will promote financial inclusion and move the economy from the current dominance by informal sector to formal sector. Also, section 1 of the Bill provides that existing private companies that should convert to public liability companies and be listed in the Stock Exchange market within 12 months of their conversion, shall have shareholders’ funds in excess of N 40 billion, annual turnover in excess of N40 billion and total assets in excess of N80 billion. According to the bill, the asset value of a private company shall be determined based on the gross values of the company’s assets as recorded in its balance sheet at the end of the last audited financial year, while the annual turnover shall be based on the gross revenue of the company from income, into or from Nigeria, arising from the sale and rendering of goods and services, and the use of the company’s assets in a manner that yield interest, royalties and dividends. The bill, however, makes no provision for the minimum percentage of the share capital to be offered to the public but seeks to grant tax incentives to companies caught by the bill. The tax incentive, which is for five years after listing, varies with the percentage of shares listed by the qualifying companies. The proposed tax incentives offered by the bill are “(a) companies that list at least 40 percent of the issued share capital shall be eligible for a tax incentive at a rate up to one-third of its applicable income tax. (b)Companies that list 30 percent of its share capital shall be eligible for a tax incentive up to one-fourth of its applicable income tax; (c) Companies that list 20 percent of its share capital shall be eligible to a tax incentive at a rate up to one-eight of its applicable income tax. Qualifying companies will also be entitled to tax deductible expenses on: “All expenditure incurred by the companies for the purposes of listing on any securities and 60 percent of Securities and Exchange Commission related fees for listing. It was also learnt that Section 8 of Continues on page 22 C M Y K