Angry investors in the Nigerian capital market have demanded the probe of leaders of some independent shareholder groups over allegations of mis-conduct during Annual General Meetings and corrupt collaboration with corporate executives, among others.
The investors’ agitation indicates a vote-of-no-confidence in both leaders of the groups and the management of the apex regulatory agency of the market, the Securities and Exchange Commission.
The investors became worried after some of the leaders of the groups allegedly used their positions to enrich themselves at the expense of their members and that of the investing public.
The proliferation of these associations and the absence of measures to regulate their activities have become their undoing.
Aggrieved investors have therefore threatened to sue the leadership of some of these associations if the coordinators and other executives fail to desist from what they have described as “their corrupt collaboration with some corporate executives.”
A member of Corporate Shareholders’ Forum, who preferred to be addressed as Mr. Gbenga, disclosed that he had reservations about the Chief Tayo Oyerinde-led management.
He accused the national coordinator of the group of paying frequent courtesy visits to the management of quoted companies, instead of effectively monitoring their managers, especially at the audit committee level.
He said, “I stopped going with him to meetings two years ago, when he praised the management of a company that suffered a drop in its profit without giving any major reason for the development. Our leaders and some shareholders’ associations have turned praise singers sponsored by corporate organisations for the smooth flow of their Annual General Meetings.
“That is embarrassing to all shareholders in the capital market because many of us joined the association because we thought the leader, being an economist, would be able to scrutinise the annual report of the companies and dig out errors in their books.’’
Another shareholder, Mr. Sam Awoh, also frowned at how shareholder activists demand financial gratification from companies, especially during events like AGM, Investors’ forum and Emergency General Meeting, among others.
He stressed, “Some of them demand about N100,000 for transport fare or accommodation fee, depending on the proximity of the venue of the AGM to their base. Such demand from the management they are supposed to criticise constructively is a slap on the faces of all shareholders of the companies.
“They champion negative causes inspired by their paymasters to the detriment of the market. They distort the growth and development of the market by attempting to foist the whims of their paymasters as inviolable market norms.”
THEY’RE HYPOCRITES- EXPERTS
A lawyer with expertise in investment crimes, Ayo Biobaku, told The Point that most investors in Nigeria had become laid back as they allowed the so called ‘shareholders’ activists’ to represent them at meetings.
Biobaku explained that shareholder associations came under various guises and were driven by different actors and interests, adding that they had different effects on target firms.
To him, most of the activities of these groups smack of hypocrisy and greed.
He said these unfortunate characteristics had made them handy and pliable tools in the hands of influential Nigerians seeking for self-enrichment.
Biobaku urged the ‘activists’ to emulate the founder of Independent Shareholders Group in Nigeria, Late Akintunde Asalu, who formed the Nigerian Shareholders Solidarity Association in 1985.
“He was an astute investor who understood the rudiment of the market, unlike some of the rabble rousers who parade themselves as activists now,” he said.
Another lawyer, who was a member of the Investment and Securities Tribunal, Mr. Amos Ojo, urged shareholders to be proactive and ensure that their leaders were those who could add value to the company and their stakes, and not the other way round.
Ojo agreed with the shareholders that it had become imperative for SEC to design stronger regulatory functions to curb the excesses of the ‘activists’.
He added that a corrupt collaboration between activist/bully shareholders and board/managers had evolved to silence genuine activism.
“Shareholder activism has indeed taken a negative turn in the country. For example, executive members of many of the shareholder associations now maintain close and personal relationships with the executives of the firms they are meant to check. This impedes their activism and further enables them to participate in several executive corrupt behaviours to the detriment of the shareholders they ought to represent,’’ Ojo said.
ALLEGATIONS ARE BASELESS- ACTIVISTS
While shareholders place a vote of no-confidence in the leadership of the associations, based on the allegations levied against them, the activists believe they are still relevant to the capital market and cannot be kicked out.
They argued that the allegations were baseless and false.
The National Coordinator, Independent Shareholders Association of Nigeria, Sir Sunny Nwosu, explained that the purpose of forming associations was to improve the relationship between the emerging shareholders population and the corporate world.
Nwosu argued that the groups had been living up to expectations.
“Ordinarily, a shareholders’ association must have a mission and vision, which it intends to achieve for the good of the investing public. Now that the population of shareholders has grown to more than 20 million people, there is the need for their needs to be met, knowing full well that in a situation where a company has 50,000 or more shareholders, the AGM may not have more than 200 shareholders present, and it is this 200 people that would have to present a case for the other shareholders,” he added.
Speaking in the same vein, the President, Shareholders Renaissance Association, Mr. Olufemi Timothy,disagreed with those who said that there had been a proliferation of shareholders association, saying that with the increasing number of investors in the stock market, it became imperative for shareholders’ groups to also multiply.
But contrary to Nwosu’s claim that no group had been demanding financial gratification from companies, the economist disclosed that some mushroom investors’ groups made such demands from companies.
He described such groups as ‘bad heads’ in the Nigerian capital market.
Like some experts, Timothy urged SEC to ensure such mushroom groups were shown the way out of the market.
“Our work is to protect shareholders and that is what we are doing, except for the illegal ones in our midst. As far as our association is concerned, we remain committed to protecting the interest of our members and we will not compromise on that,” he added.WE’RE INVESTIGATING THEIR OPERATIONS – SEC
SEC Spokesperson, Mr. Yakubu Olaleye, said that the commission was aware of the existence of some shareholders’ groups that had not registered with either the Corporate Affairs Commission or SEC.
Olaleye accused the leaders of some of the groups of using the companies to pursue their personal interests.
Also, a highly placed source at the apex regulatory body told The Point, “Some stakeholders have sent several reports to us complaining about irrelevant questions some of them ask during AGM and how they seek financial gratification from the boards of directors. The management of SEC is set to impact moral and professional fervor to save the markets and soon embark on holistic reform for the capital market.’’
Going by SEC’s plans, it may no longer be business as usual for some of the ‘activists’.
Part of its sanitisation agenda will be an audit of purported shareholder associations to generate frameworks, operating guidelines and standards for their activities. The SEC’s code for shareholders is an attempt to address observed negative practices of shareholder associations in the capital market.
Like in every reform, the apex regulator has encountered some stumbling blocks. A source disclosed that some of the activists “now go overboard in their activities by trying to regulate the regulator; displaying vile activism instead of trying to shape corporate decision-making.”
He, however, explained that the regulator had devised means to ensure that all shareholder associations complied with the rules of the market.