The Securities and Exchange Commission (SEC) has advocated some measure of fiscal incentives for listed companies on the Nigeria Stock Exchange (NSE) in order to mitigate their cost burden and encourage more entities to list shares on the bourse.
Apart from reduction of costs, the measure, according to the SEC, will translate to huge investment benefits to shareholders and also further position the quoted companies to contribute more to national development through improved capacities and job creation potential.
The Acting Director General of the commission, Ms. Mary Uduk, who advocated the fiscal necessity at the sidelines of the Alliance Law Firm’s Maiden Lecture Series, Luncheon and Book Presentation event with the theme ‘Contemporary Corporate Governance Issues in Nigeria’ in Lagos, also believes that creating some form of fiscal incentives for listed entities will add further mileage to ongoing efforts to improve corporate governance in the country.
Represented at the event by the Director, Mr. Edward Okolo, the investment expert cited experiences with some investors in the manufacturing sector, who claimed that despite fulfilling their fiscal obligations, the nation’s public procurement and contractual processes had continued to favour foreign companies to their disadvantage.
She explained: “Our case for fiscal incentives for listed companies on the NSE is actually based on experience. For example, we have a company that is into electrical cables and they are a listed entity and they came to us and said look, the government is patronizing China in terms of electricity cables.
“So, we just feel that governance and being listed is not a business decision because shareholders and Nigeria are both involved in sharing the risks and the reward. So, what we are saying is that Nigerian companies doing the same business these foreign companies are doing if they are listed should be encouraged in terms of public procurement or whatever government is doing.
“If we keep taking from them because they incur a lot of cost and you cannot reduce the cost more than a limited amount of percentage, the best is to begin to give them some incentives and with that you have more companies coming to the market, you have more jobs and then people will have dividends of investing. You must have companies to regulate and if people are not coming to the market, then who are you going to regulate?
“The market will create jobs. If you go to Brazil, you go to Asia you see small scale companies coming to the market. You see fund managers and others playing the roles they are supposed to play. So, we need those incentives to encourage them to come to the market.
At the end of the day, Nigerians will get the value in terms of dividend payout if the company is listed. But the foreign companies they transfer these dividends and profits out of the country. So, I think there should be incentives for companies coming out to get listed so that there could alternatives to savings by Nigerians”, Uduk added.
Speaking earlier as one of the panelists at the forum on the level of observance of corporate governance code by listed companies, the SEC boss disclosed that level of compliance with the SEC Code 2011 remained low even as provisions relating to independent directors’ roles in companies were being violated by some listed companies.
In addition, the SEC boss lamented that access to critical indices by which companies’ compliance with the SEC Code could be measured remained difficult as many companies were either unwilling to comply or lack understanding of the importance of corporate governance to their entities’ survival and profitability.
