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Securities and Exchange Commission To Creat Rules For Cost Of Hosting AGM 

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The Securities and Exchange Commission, SEC is about creating a sub rule to regulate the conduct of Annual General Meetings, AGM’s in a move aimed at ensuring that investors get more value for their investments and thereby positively impact on their earnings per share.
This among others is contained in a draft Exposure of Sundry Amendments to the Rules and Regulations published by the SEC.
The sundry amendments are: Proposed amendment to Rule 42 (2)- Half-Yearly Returns, Proposed amendment to Rule 67(2)- Individual Sub-broker and Proposed amendment to Part N Rule 602 – Miscellaneous Rules seeks to create a Sub-rule 4 and 5 pertaining to organization and conduct of annual general meetings.
The new sub-rule specifically seeks to reduce the cost of organizing shareholder meetings, by making illegal the distribution of gifts to shareholders, observers and any other persons at annual and extraordinary general meetings.
Should the rule be agreed on, “public companies shall not convene any meeting with select group(s) of shareholders prior to an Annual General Meeting/Extraordinary General Meeting.”
Justifying the proposed rules, the SEC observed: “that some companies arrange meetings with select groups of shareholders ahead of general meetings to discuss proposed resolutions and agree on strategies which are often detrimental to the interest of other shareholders.”
Companies that violate these provisions, the SEC warned, “shall be liable to a penalty of not less than N10m.”
The SEC in the Draft, lamented the huge amount spent by such public companies on corporate gifts at AGMs/EGMs, which greatly impact their profitability.
It argued that at a time when few companies are making reasonable profits and even fewer can afford to pay dividends, the latest move would positively impact on earnings per share of many if the amount “budgeted for gifts at AGMs/EGMs can be reserved for other relevant operational or administrative expenses.”
“Public companies spend a significant amount of money on corporate gifts at AGMs/EGMs and this 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 gifts at AGMs/EGMs can be reserved for other relevant operational or administrative expenses, it would positively impact on their earnings per share” the Rule stated.
Furthermore, the Proposed amendment to Rule 42 will lead to the Creation of Sub-rule 190 (3) which states as follows, Public companies shall disclose  some minimum corporate governance information on their websites including governance structure, composition and structure of the board, shareholding and Dividend analysis among others.
Justifying this amendment, the SEC said as part of the Corporate Governance Scorecard implementation strategy, companies are expected to disclose a Minimum Corporate Governance Report on their websites. The information is expected to be structured to contain reasonable Corporate Governance information on the public companies.
On the Proposed Amendment to Rule 67(2)- Re-instatement  of Individual Sub-Broker Function the SEC said the deletion of Rule 67 (2) in November 2017 generated a lot of comments from the Nigerian Stock Exchange (NSE) and Association of Stock Broking Houses (ASHON), who thereafter requested for the reinstatement of the function.
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