SEC Clarifies Ban on Gifts Sharing at AGMs

The Securities and Exchange Commission (SEC) has made clarification on its position on the sharing of gifts at Annual General Meetings (AGMs) of companies, emphasising that “light refreshment’ is not in any way construed as “gifts” under its rules and regulations.

The apex capital market regulatory agency backed this up by citing Rule 602 (4) of its Rules and Regulations, which states that, “Public companies shall not distribute gifts to shareholders, observers and any other person at Annual General Meetings/Extra-Ordinary General Meetings.”

In 2019, SEC amended its Rules and Regulations to stop listed companies from distributing gift items at AGMs.

Justifying the Rule, the commission said public companies spend a significant amount of money on corporate gift items at AGMs/EGMs which has a great impact on their profitability.

“Few of the companies are making reasonable profits and even fewer can afford to pay dividends. If the amount budgeted for the gifts at AGMs/EGMs can be reserved for other relevant operational or administrative expenses, it would positively impact on their earnings per share,” it had explained.

SEC reminded listed companies that the violation of the provisions of the rule will attract a penalty of not less than N10 million.