Due to the diverse shareholding of public companies, a well regulated environment is paramount for efficient operation and adequate protection of investors’ funds, however, the Securities & Exchange Commission (SEC), the apex regulator for the capital market (CM), the Bulkpost Ventures (BPV) of the Nigerian Postal Service (NIPOST), the courier operators and ultimately, the shareholders, are expected to play the game according to the industry’s rule, to avoid losses.

The lingering issue resonated at the Bulkpost Venture Customers’ Forum/Dinner Night held in Lagos recently, where the regulator, the operators and the shareholders sat to discuss on the topic, “Cost Saving Measures And The Capital Market Rules: The Role Of Securities And Exchange Commission In The Dispatch Of Annual Reports And Notices To AGM To All Shareholders”.

However, shareholders and courier operators are of the view that whatever measures reeled out must contain provisions for the protection of the minority or the shareholders in the industry, while upholding their fundamental rights.

Essentially, stakeholders have over the years used the Forum to throw up, brainstorm on and address critical issues that touch the basics of capital market, while professionals have discussed issues ranging from mail-handling, mail-security, addressing system, crime and its prevention, conversion of warrants, safe delivery of capital market mails, among others.

This year’s forum was no difference as arguments swung from left to right, with SEC seeking for safety from literal ‘missiles’ emanating from shareholders, courier companies and even NIPOST.

The Issues:

Setting the ball rolling, Mallam Mori Baba, postmaster general of the Federation (PMG), said the Service chose to take up its responsibility primarily in the best interest of the Capital Market and the shareholders in general.

Mori Baba represented by Dr. Simon Emeje, senior assistant postmaster general and head of Courier Regulatory Department (CRD), said that the topic for the day was a true reflection of the concern of the Venture as a key player, about the happenings in the CM, and their effects on the general well-being of all the industry and shareholders.

He said, “This is more-so as we, corporate entities and/or individuals, are all in one way or the other affected by this measure either as regulators, operators and/or shareholders. Consequently, some fundamental questions the theme for this year’s programme has thrown up and hopefully would be addressed by the chief regulator of the capital market should include but not limited to should cost saving measure result in breaking established statute rules with impunity? In whose interest is the cost saving measure if shareholders are denied access to information concerning their companies?”

The PMGF also sought to know, “Is provision not made for the printing and dispatch of the reports and notices in the company’s account? What happens to such fund afterwards? Is this cost saving measure not an infringement on the fundamental rights of the shareholders? What is the effect on the shareholders, especially the capital market mail delivery chain? Why has the regulator no punished erring companies as a deterrent?”

He also said that, “SEC should in the interest of fair play, justice and equity address the mind boggling issues once and for all”.

Dispatch Of Annual Reports & Benefits: SEC’s Role

Ms Arunma Oteh, director general of SEC (Nigeria) DG represented by Mrs  Molokwu Uche head, SEC, Lagos Zonal Office, admitted that given the diverse shareholding of public companies, a well regulated environment is required for efficient operation and adequate protection of investors funds.

She added that “Governments worldwide set up various regulatory bodies to enhance performance”.

In Nigeria, SEC is the apex regulator for the capital market, Corporate Affairs Commission, Financial Reporting Council, Nigerian Stock Exchange (NSE) a Self regulatory body amongst others.

She said that, the responsibility for evolving specific cost savings strategies for optimal performance, however, lies with individual corporate organisations.

Taking solace on SEC and CAC Rules as regard dispatch of reports and benefits, Molokwu, invoked ISA No.29 of 2007 where SEC was charged to focus “on  adequate disclosure from market participants to enable informed  decision making while Corporate Affairs Commission (CAC) as empowered by Companies & Allied Matters Act (CAMA)2004 has responsibility for ensuring adequate framework for corporate organizations in Nigeria (incorporation and winding up as well as provisions with respect to meetings, procedures, financial statements, shares etc.)

“CAMA 217 Notice of meetings – twenty one days from the date on which the notice was sent out. CAMA 220 Service of notice: A notice may be given by the company to any member either personally or by sending it by post to him or to his registered address.

Challenges And Global Trends On Cost Saving

The keynote speaker said that, “SEC rules support cost saving measures by allowing electronic dispatch of documents to shareholders. The rules are not static but are subject to amendment as issues deserving consideration are brought up. Inputs from stakeholders are solicited and deliberated upon before finalization”.

Other challenges she mentioned are, reoccurring problems with mail distribution system; sharp practices of some courier companies still with many undelivered mails; compact disks’ now in use  for companies annual reports; website for Information  sharing – a growing trend.

She added that SEC’s key responsibility is shareholders’/investors’ protection hence   empowered by ISA  it has the responsibility of releasing rules that are fair, objective and in the interest of investors  in particular .

“The Commission is poised to provide an enabling environment for an efficient capital market in Nigeria. All hands however must be on deck for the actualization of a growing market where   efficient performance through adequate cost saving measures is the watch word”.

In spite these explanations, Mr Bayo Adeleke, general secretary, Independent Shareholder Association of Nigeria (ISAN), said SEC’s regulatory framework has been skewed against the shareholders, especially those with fewer units of shares in companies.

He wondered why SEC thinks digitalization of annual reports is the ultimate hence majority of the shareholders cannot be able to afford the gadgets that will aid them in digesting the minutes, like laptops, or tablets.

To him, the agenda is for the rich among them; hence connectivity is still a big issue with regards website postage of annual reports.

To save cost, Adeleke suggested that nobody is allowed to buy less than 100, 000 unites of shares during the public offers; this is to curtail the printing of over 500 pages of annual report for individuals with as low as seven unites of shares.

Reacting on the debates, particularly on late delivery of mails, Dr, Mike Umo, general manager, Bulkpost Venture (BPV) and the host, said, “What they are saying is not correct. The problem is that the concerned authorities are not sticking to the 21 days as spelt out in the law. We want revenue, so whenever they bring the mails, especially the annual reports, we will collect and deliver them. The fact remains that we do no keep any mail more than 24 hours.

“Most times, we even employ people from outside. They will always want to hide under Bulkpost, when they cannot give reasons for not delivering”.

On the shortage of annual reports, he said, “It is an obvious situation that companies do not print annual report to go round the shareholders. What SEC representative said that any infraction should be reported and addressed; the thing is an obvious situation, whether CD or hardcopy, it is the same story. As the GM of Bulkpost, I have no right to go and report to SEC, rather the shareholders.

Nodding in agreement, Mr. Okey Ubah, managing director and chief executive officer of Ebony Express Limited, said that, the cost saving measures been brandished by the SEC can only be applicable when issues concerning the profitability of stakeholders in the sector are taken into cognizance.

He cited the ban on commercial motorcycles in States like Lagos, Port Harcourt, among others, as inimical to their operations.

He asked, “Why is that certain policies and laws been put in place by the Government and the Agencies do not look into the cases of certain stakeholders or practitioners in the industry. With the ban on commercial motorcycles and heightened by operations of overzealous security agencies; that aside, SEC should know that before adopting any cost saving measure, it should not be skewed against practitioners like courier companies. Remember, we are talking about job cut, because when companies cannot see jobs to deliver they will resort to downsizing”.

According to Ubah, for the issues to be addressed, they should be more engaging platforms where representatives of the regulator, the operators and the shareholders can discuss on way forward.  

Since Bulkpost Venture debuted in year 2000 as a marketing outfit of NIPOST, it has continuously organized the Forum, meeting its social obligations to the teeming customers.

BPV uses the opportunity to reward individuals and organizations and bring up issues that are germane for academic discussion.