The Nigeria Employers’ Consultative Association (NECA) has accused the Securities and Exchange Commission (SEC) of allegedly frustrating efforts by quoted firms to embark on new investments.
In a petition dispatched to the Vice President, Prof Yemi Osinbajo, Minister of Finance, Mrs Kemi Adeosun and members of the Economic Management Team (EMT) and obtained by www.citybusinessnews.com, NECA alleged that SEC was frustrating growth and new investments through alleged too much emphasis on revenue generation and “Gun- To – The – Head Approach To Regulation”.
Director- General of NECA, Olusegun Oshinowo, who issued the petition onbehalf of members said: “There is the need for SEC to treat without delay the applications of companies trying to expand their capital base through new investment without the conditionality to pay up the disputed and unfair penalty imposed on them”.
Explaining further, NECA said: “In the light of the foregoing, we appeal to you Honourable Minister and the Economic Management Team (EMT) of the Federation to request SEC to support companies to survive this period of recession by making the capital market attractive to them. We are available to provide further insight into the contents of this letter”.
A highly placed source at SEC who spoke with City BusinessNews (www.citybusinessnews.com) on condition of anonymity on Tuesday denied the allegation, noting that “We (SEC) will respond at the appropriate time”.
According to NECA, “Payment of humongous penalties imposed on quoted Companies may trigger the delisting of several companies from the Stock Exchange and their conversion from public to private companies, which the economy does not require at this time of economic recession, as it will send a bad signal to potential foreign investors.
“We hereby bring to your notice that while the processing of applications to raise funds from the capital market by companies are currently suspended by SEC due to its insistence that affected companies must first pay the penalties for failure to file Q4 financial statements, some of our members are scared of approaching the capital market due to these controversial penalties and conflicting regulations. This is not good for the development of the capital market at this challenging period.
NECA was formed in 1957 to provide a forum for Government to consult with private sector employers on labour and socio-economic policy issues.
In the petition, the group also lamented its inability to thoroughly engage the leadership of SEC due to the absence of a board.
Part of the petition read: “As agreed at the said 22 June 2016 meeting between the top leadership of SEC and NECA, SEC should amend its rules to clearly provide that a public company that can file audited results within 60 days after the financial year need not file its Q4 interim unaudited results.
“However, if a public company feels that it would not be able to file its audited resultswithin 60 days after the year end, then, it must file its Q4 unaudited results.
“Our members were served with demand notices in various very huge sums as penalties for alleged failure to file Quarter 4 interim unaudited results for a number of years with threats of enforcement. The default by member-companies was not deliberate but based on the regulations and practice in the capital market on this issue.
“By virtue of Rule 19.6 of the attached Nigerian Stock Exchange (NSE) which was approved by SEC as the apex regulatory authority in the capital market in Nigeria, Q4 financial statements are not required to be filed with the regulatory authorities by companies.
“For emphasis, NSE Rule 19.6 states that “An Issuer shall announce the financial statements for each of the FIRST THREE QUARTERS of its financial year immediately after the figures are available, but in any event not more than 30 days after the relevant financial period”. Pages 1 and 12 of the NSE Rules are relevant to this issue. This is the reason why companies file their unaudited financial statements for the first three quarters and file audited financial statements within 90 days after the end of the year. It is our view that SEC should not in
one regulation exclude the filing of Q4 financial statements and subsequently decide to penalize companies for not filing the same returns without any express communication to the stakeholders mandating them to file Q4 financial statements. This is because SEC cannot have two conflicting regulations in the capital market on the same issue, as it would create avoidable confusion”.