Stakeholders have questioned the Nigerian Stock Exchange’s (NSE) ability to protect minority shareholders of listed companies on the Nigerian bourse.
This call was made by the Chairman of Progressive Shareholders Association of Nigeria, Boniface Okezie, at the Investors’ Clinic organised by the NSE, recently.
He said this while making reference to the issue of capital reduction that was recently embarked upon by Cadbury Nigeria Plc.
He noted that most of the local shareholders (Nigerian shareholders) opposed the capital reduction despite claims by Cadbury Nigeria that the decision for the capital reduction was approved by all the shareholders’ of the company, therefore was a consensus.
Okezie said: “When they called us to intimate us about their plans, what they told us was that they had excess capital. Nobody is opposing restructuring, if you are restructuring, you are supposed to pay the market privileged price, not lower than what it was sold. That was where the agitation came from. They paid us N9.50 while the share price on the NSE at that time was about N59.”
He also noted Cadbury Nigeria continued with the meeting despite that about 80 per cent of the shareholders walked out of the meeting in protest of the share reduction.
“ Most shareholders walked out of the hall; the majority shareholders voted by proxy. The resolution they sought was not gotten from shareholders.”
He also said that he made a phone call to the Chief Executive Officer of the NSE who told him that he would act on the feedback brought to him by the NSE delegates at the meeting.
Okezie lamented that he was disappointed when he had that Cadbury was coming to the NSE for its ‘Facts Behind the Reduction.’
It is in this light that he questioned the NSE’s ability to protect minority shareholders of listed companies.
He noted that if nothing was done to protect the rights of minority shareholders, listed companies would continue to take advantage of this lapse.
“What we are talking about is the role of regulators in protecting minority shareholders. The case of Cadbury is a daylight robbery on the minority shareholders,” he stated.
On his part, the Chairman of Evergreen Shareholders Association of Nigeria Incorporated, Mr Godwin Edeh, said: “Unfortunately, most of the shareholders said there is no reason for the reduction. The price they were proposing was not what we bargained.”
He noted that Cadbury’s case was a foul play as the minority shareholders were short-changed.
“Unlike IHS which was a fair deal, Cadbury was a foul play,” he added.
Although Onyema promised to look into the issue, stakeholders and shareholders still expressed doubts of the regulator in protecting the rights of minority shareholders.
It will be recalled that at an Extra Ordinary General Meeting (EGM) held in December 2013, Cadbury Nigeria had sought to reduce its capital base by about N12 billion.
Under the capital reduction plan, Cadbury Nigeria was expected to return excess capital of N11.9 billion to its shareholders by cancelling two, out of every five ordinary (2 to 5) shares, currently held by shareholders.
Consequently, the reduction was aimed at reducing the share capital account by an amount equivalent to the par value of the cancelled shares and share premium accounts by about N11.27 billion.
Also, it is expected that each shareholder will receive returned capital per cancelled share at N9.50 per share.
It was also reported that the company was to use the 30-day volume weighted average price of the stock at the NSE to pay for fractional shares that may arise from the transaction.