By Dipo Olowookere

In order to make shareholders enjoy the benefits of demutualisation and maximize returns, the Nigerian Exchange (NGX) Group Plc is currently undertaking some financial planning activities.

These steps are being engineered by the Group CEO of the organisation, Mr Oscar Onyema, and they include the possibility of mergers and acquisitions, private equity investments, treasury management, capital allocation and fundraising.

According to Mr Onyema, the company is well-positioned to achieve these goals, going by its financial performance in 2020, expressing optimism that these strategies would make the organisation’s shares attract investors when they are eventually listed on the NGX Limited.

“As the group progresses its plans to list on Nigerian Exchange Limited, there are exciting days ahead. The financial performance of the Group in 2020 showed strong resilience and prospects for growth.

“The group ended 2020 in a sound financial position with net asset growth of over 10 per cent to N31.28 billion and income and resulting surplus after tax valued at N6.02 billion and N1.84 billion respectively.

“In the context of COVID-19 pandemic, we maintained tight cost controls, which reduced expenses by 13 per cent despite investments in technology that allowed remote operations with zero downtime,” he had said.

On Thursday, September 9, 2021, the NGX Group held its Annual General Meeting (AGM) in Abuja. It was the first yearly shareholders’ gathering after the demutualisation of the Nigerian Stock Exchange (NSE).

At the meeting, shareholders approved all the resolutions proposed by the board, including the re-election of the non-executive directors who were retiring by rotation; the election of the members of the audit committee; the proposed remuneration for the board and non-executive members of the erstwhile national council of the NSE; and the introduction of equity-based incentives to employees’ remuneration, including an Employee Share Ownership Plan (ESOP) and a Performance-Based Long-Term Incentive Plan.

NGX Group, leading by example as a new corporate entity, is committed to the highest governance standards, recognising its role in critical capital markets infrastructure.

Much like leading exchanges in the world today (London Stock Exchange Group, Intercontinental Exchange, Singapore Exchange, Japan Exchange Group) and other African exchanges such as Johannesburg Stock Exchange and FMDQ, the demutualised NSE gave rise to a group structure with attendant benefits.

Today, NGX Group stands as the non-operating holding company with three (3) subsidiaries – the operating Exchange, Nigerian Exchange Limited led by Mr Temi Popoola, as the Chief Executive Officer (CEO); the independent regulatory company, NGX Regulation Limited led by Ms Tinuade Awe as the CEO; and the real estate company, NGX Real Estate with Mr Gabriel Igbeka serving as Acting CEO. Each of these entities is governed by independent boards, the composition of which was not only strategic but in line with acceptable practices.

At an Extra-Ordinary General Meeting (EGM) of the then members of NSE in March 2020, a resolution was passed pertaining to the appointment of the inaugural board of NGX Group, post demutualisation.

The process relating to the selection of council (board) members was duly followed and the identified candidates were taken through a rigorous due diligence exercise before passing through the internal governance process, being submitted to the Securities and Exchange Commission for approval and thereafter, presented to previous members at the 2020 EGM.

The members agreed to the importance of maintaining continuity and preserving The Exchange’s collective knowledge and learned experience (institutional memory) as well as retaining stakeholder confidence and maintaining market stability.

It was, therefore, agreed that the composition of the Boards would comprise individuals selected from the erstwhile National Council and external candidates. This understanding was contained in the Scheme of Arrangement dated 20 January 2020 between the NSE and the dealing and ordinary members of the NSE in respect of the demutualisation of the exchange (the Scheme).

The scheme was approved at the Court Ordered meeting held on 3 March 2020. The approved Scheme of Arrangement was sanctioned by the court on May 14, 2020, and filed at the Corporate Affairs Commission (CAC) on June 1, 2020, and it became effective on the date it was filed at the CAC.

NGX Group’s board currently has 11 members and out of the 11 directors, five have direct or indirect shareholdings in the company providing strong representation for the company’s shareholders.

In addition, going above the statutorily required minimum that a public company shall have at least three independent directors (S.275 (1) CAMA 2020), NGX Group went with four independent directors.

Transition agreements expected to last for 18 months were also agreed and it was recognized that subsequent composition of the Board following this transition period will evolve in line with existing rules and regulations, market standards, competitive realities and succession planning policies.

The composition of the inaugural board – comprising some members of the erstwhile council and new members – was approved at the EGM, on the condition that their appointment would become effective post demutualisation.

The market continues to repose confidence in NGX Group evidenced by the statement from the Chairman, Association of Securities Dealing Houses of Nigeria, representing the largest shareholder group in the company, Mr Onyewenchukwu Ezeagu, who stated prior to the recent 60th AGM, “As major shareholders, we were involved in all the processes of demutualisation.

“We are comfortable with the agenda of the meeting as we have been part of the whole process. The proposed resolutions had been made public in the course of the demutualisation. The meeting will bring about a renewed relationship between the NGX Group and its stakeholders.”