Shareholders seek more scrutiny of companies

Shareholders have called on capital market regulators to step up efforts aimed at ensuring that companies avoid corporate governance breaches and provide accurate financial information to investors.

According to them, while there have been major improvements in the regulation of the capital market over the years, there are still issues that bother investors, which need to be addressed.

“We want regulatory authorities to still step up their investigative powers on these companies. Investigate most of these companies, put them on their toes, and let them do the proper things,” the President, Renaissance Shareholders Association, Mr. Olufemi Timothy, told our correspondent on the telephone.

According to him, some companies are still taking actions that are detrimental to the capital market, especially with regards to corporate governance.

He said, “When you look at the audit committees of companies, we still have executives in the audit committees, which is wrong. There are some companies where we have MDs as members of the audit committees, we believe all these practices are wrong and we are telling the regulators to actually look into these issues and put things in the proper shape.”

Olufemi, who said shareholders were not fully satisfied with the level of scrutiny on companies, however, stressed that the reaction of the regulators to complaints had been positive.

He said, “We have been talking with them and good enough, the regulatory authorities, especially the Securities and Exchange Commission, have been responding very well.

“They have actually acknowledged that we, shareholder activists, are the whistleblowers and that we should be able to inform them if we notice any unbecoming activities in our companies, especially those activities that we know will affect our interest, the capital market and the economy.”

According to him, shareholders also have a major role to play in ensuring that their companies are properly run as they, being on the ground, may spot problems better than the regulators.

The President, Progressive Shareholders Association of Nigeria, Mr. Boniface Okezie, said in ensuring that companies uphold corporate governance rules, there was a need for the regulators to determine such things as whether a company had manipulated its results.

“These are things that will help us the investors. If we are talking of corporate governance, let us pinpoint exact problems,” he said.

Like Olufemi, he said while the level of regulation was much better, he was not totally satisfied, especially with the regulation of companies when it comes to share restructuring and share buyback.

For instance, he said it wasn’t until shareholders complained that the regulators intervened and eventually caused GSK Plc to suspend its proposal to increase its stake in the Nigerian subsidiary, GSK Consumer Nigeria Plc.

He, however, said it was commendable that the minority shareholders were considered in that instance.

A professor of Economics, Sherrifdeen Tella, said SEC was supposed to be the one to ensure that the companies were run in the best interest of the shareholders.

However, Tella, who said across the world some companies sometimes did not present accurate results to shareholders and the public, stressed that to properly investigate results and figures being presented by the companies, the commission would require a lot of manpower.

Overtime, SEC, the NSE and other regulatory bodies have introduced policies to encourage transparency and strong corporate governance in the capital market.

In the process, suspensions and bans have been placed on such errant firms, including the withdrawal of their operating licences in some cases.

 

Source: Punch (by Simon Ejembi)

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