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Who are the owners of
The Nigerian Stock Exchange?
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The owners
(shareholders) of The Nigerian Stock Exchange are financial firms and
institutions. In exceptional
cases, individuals with integrity and experience in finance and business
are also accepted as shareholders.
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How is The Nigerian
Stock Exchange Governed?
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It is governed by a team of shareholders elected at
an Annual General Meeting. The Council is presided over by a President, and the administration by the Director
General.
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What are the Duties of
the Council?
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*
Makes policies
* Enforces
discipline among members
* Makes Rules and Regulations for Dealing Members
(Stockbrokers)
* Grants
Quotation and Listing for Securities
* Protects
the interest of the investing public
* Considers complaints about
and among the members.
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How do I get in touch
with The Nigerian Stock Exchange?
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LAGOS:
The
Nigerian Stock Exchange,
Stock
Exchange House,
2/4 Customs Street
(8th & 9th Floors)
P. O. Box 2457, Lagos.
Tel:
234-01-2660287, 2660305, 2660335
Fax:
234-01-2668724, 2668281
E-mail:
nse@nigerianstockexchange.biz
Website:
www.nigerianstockexchange.com
ABUJA AREA OFFICE:
The
Nigerian Stock Exchange,
Maina Court
(Pent House), 3rd Floor,
Plot
252A Herbert Macaulay Way,
Central
Business District, Abuja.
Tel:
234-09-2349150, 2349368.
KADUNA:
The
Nigerian Stock Exchange,
2nd
Floor, Broad Bank Building
Plot
C8, Intercity Drive,
Mogadishu Layout, Kaduna
Kaduna
State.
Tel/Fax:
234-062-388888, 240992, 08033054414;
Telex:
71604.
PORT-HARCOURT:
The
Nigerian Stock Exchange
10, Ikwerre Road,
Port Harcourt,
Rivers State
Tel:
234-084-234977
KANO:
The
Nigerian Stock Exchange,
(2nd
Floor), African Alliance
House
F1 Airport Road Kano,
Kano
State.
Tel:
234-064-645612.
ONITSHA:
The
Nigerian Stock Exchange,
2, Old Cemetry Road,
Ogbomanu,
P. M.
B. 1769, Onitsha,
Anambra
State.
Tel/Fax:
234-046-412090
IBADAN:
The
Nigerian Stock Exchange,
Omolabake House,
57/61 Lagos Road,
Molete,
P. O. Box 24113,
Mapo Hall,
Ibadan, Oyo State.
Tel:
234-02-2316817
YOLA:
The
Nigerian Stock Exchange,
Investment
House,
42, Galadinma Aminu Way,
Yola,
Adamawa
State.
Tel:
234-075-625396, 625387.
BENIN:
The
Nigerian Stock Exchange,
Edo State Library Complex
Sapele - Warri Road,
Benin City, Edo
State.
Tel:
234-052-257485.
UYO:
Plot
18, Riing Road 2,
Bank
Layout,
Udo Udoma Avenue,
Uyo, Akwa Ibom State.
Tel:
234-085-200615, 201014, 7773781, 7773782.
ILORIN
11, Muritala
Mohammed Way,
Ilorin,
Kwara
State.
Tel:
234-0834494841.
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Who are the principal
agents of The Nigerian Stock Exchange?
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They are
the Stockbrokers and the Issuing Houses.
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Who is a Stockbroker?
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A firm or a person who buys and sells securities on
behalf of investors for a commission called “brokerage”. The commission charged is regulated
by The Stock Exchange.
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What is an Issuing House?
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As a member of The Stock Exchange, it is
a dealing member that helps to prepare prospectuses, to sell new securities
offered to the public by companies and governments.
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What are Securities?
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Securities are written or printed financial documents
by which the claims of holders in specified property are secured. They
could be stocks, shares, bonds and debentures traded on a Stock Exchange.
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What are Stocks and Share?
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Stocks and Shares represent ownership interest in a
business.
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Who is a Registrar?
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A registrar in common parlance is a keeper of records
in respect of quoted stocks and shares.
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What are Bonds and Debentures?
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They are other kinds of securities. They are legal documents
representing a promise by the company or by Government (in case of a bond)
to pay back a loan plus certain amount of interest over a definite period of
time.
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Who is an investor?
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A person or an institution who
uses his savings or borrowings to buy securities.
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How are stocks and
shares bought on The Stock Exchange?
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Stock and Shares are bought and sold on The Nigerian
Stock Exchange through Dealing Members known as Stockbrokers.
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Who should buy shares?
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Anyone who is 21 years and above qualifies to buy
shares in Nigeria. Parents who may want to buy shares
for their children are supposed to buy such shares in their own names and
later transfer them to the children when they attain the legal age of 21 by
nominal transfer.
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With how much money
should venture into the Stock Market?
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Most income levels can venture into stock
market. Some wealthy people and
institutions invest thousands or even millions of naira but lower investors
can participate with as little as fifty naira.
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Can shares be transferred?
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As stated above, an investor may transfer part or all
of his shareholding to a relation, wife, son, daughter or brother etc. Where they all bar the same surname
the transfer is known as Nominal transfer. However, it is also possible for an
investor to transfer some or all his shareholding to a daughter who has got
married or even his son-in-law.
To effect this transfer, the investor
should contact a stockbroker.
Even in the case of a dead shareholder his shares can be transferred
to his children or sold as the case may be.
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Which Stocks should I choose?
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That depends on what you want from your
investments. The stocks quoted
(or listed) on The Nigerian Stock Exchange range from Government stocks to
ordinary shares and their dividends vary from low to high. The important thing is to determine
your own objectives first, discuss with a stockbroker and then invest
accordingly.
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What are scrip or bonus shares?
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These are new shares made fully-paid by the
capitalization of reserves and allotted free of charge to ordinary
shareholders in proportion to their existing holdings. In this process, fractions of shares
sometimes arise and are often aggregated and sold, after which a cash
payment in respect of the fraction is made to every shareholder entitled to
it.
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What does “Xsc”
mean?
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It is a financial expression for “without the
scrip”. A stock that is
purchased during the without the scrip period will not earn a scrip
declared in that period for its new owner.
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How are any of these securities bought?
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By filling an application form contained in a
prospectus or through a Stockbroker.
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What is the evidence of
the purchase of shares and stocks?
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If purchased through a prospectus receipts are seldom
issued, but cheque stubs and counterfoil of
Postal Orders can serve the purpose.
If bought through a Stockbroker, a contract note in lieu of receipt
is issued.
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What does a Stockbroker
charge for his Services?
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A Stockbroker charges a commission called
“Brokerage”. The
charges vary, depending on the kind of services provided: however, charges
by Stockbrokers are controlled by the Council of The Nigerian Stock
Exchange.
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What
does an investor gain by buying shares?
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* dividend which is part of company’s profit
* bonus shares - i.e. extra
shares fully paid out of reserve which are distributed to existing holders.
* capital appreciation as
market prices of shares increase.
* right to attend meeting of
shareholders and participate in its deliberation as voting members.
* use of share certificate as collateral for bank
borrowing.
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Can an investor come to
buy and sell on The Stock Exchange?
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No. He can only do so through Stockbrokers who are
licensed to represent investors and trade daily on The Stock Exchange.
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What other services do
Stockbrokers provide?
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* provide professional advice on the selection and
management of investments.
* act as Issuing Houses and
Portfolio Managers.
* assist project
sponsors to raise money on the Capital Market.
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How are the activities
of Stockbrokers controlled?
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As members of The Nigerian Stock Exchange, they agree
to and are regulated by a body of Rules and Regulations which dictate their
relationship with The Stock Exchange, their clients and other members.
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Why are
Stockbrokers’ activities regulated?
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The regulating
of Stockbrokers activities is done to protect the investing public and
maintain public confidence in the buying and selling of securities.
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How are the current
prices of securities traded on the Nigerian Stock Market known?
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The Nigerian
Stock Exchange publishes a “Daily Office List” which gives full
information on the changes in the prices and earnings of the Listed
Securities.
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Who do I approach when
I have problems with a share certificate or dividend?
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The Registrar of the Company.
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What are duties of a
Company Registrar?
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* act as Agents to the
Companies who appoint them.
* register the shares and the names of the owners in
the members’ (shareholders) register.
* prepare share certificates and send them to the
shareholders.
* pay-out approved dividend to shareholders.
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What is the Emerging
Market and how is it different from other Securities Listed on The Stock
Exchange?
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All Securities traded on the Stock Exchange are
listed Securities. The Emerging
Market was introduced to assist small and medium sized companies that are
unable to meet the requirements of the first-tier market in raising
long-term capital.
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When was the Emerging
Market introduced to the Market?
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The Emerging Market was introduced in April, 1985.
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How
much can a company raise through the Emerging Market?
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The amount that a company can raise through the
Emerging Market may not exceed N100 million.
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What
percentage of shareholding can an individual own
under the Emerging Market?
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An individual can not have more than 75% of the total
shares under the Emerging Market requirements directly or indirectly.
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How
does a company get listed on the Emerging Market?
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By approaching one of the Dealing Members
(Stockbrokers) or Issuing Houses of The Stock Exchange.
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What
is the relationship between Investor and Stockbroker?
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For the Capital Market to be vibrant, effective and
Investor-friendly, the relationship between the Investor and Stockbroker
cannot be over-emphasized. In this context, the Stockbroker must know his
Client/Investor very well because great reliance and trust will be placed
on the decisions he takes on behalf of his Client/Investor. It cannot be
gainsaid, therefore, that the Stockbroker must of necessity command the
confidence of his client. On this foundation, rest the success and growth
of any Capital Market.
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What is Short-Selling?
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Short-Selling
occurs when a stockbroking firm sells a quantity
of a particular security on the Trading Floor in excess of the quantity
deposited with the CSCS Depository. However, the tightly coupled interface
between the ATS and the CSCS does not allow for this possibility any more.
Dealers can only sell what they have.
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What is Buy-in Market?
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This
is a forum where short-sold securities are offered by stockbrokers and sold
at a premium. It is moderated by The Stock Exchange. Note that the premium
price will in no way affect the price and volume of the Security on the
Trading Day during which the default occurred and thereafter. However, the
defaulting stockbroking firm has the opportunity
to supply the short-fall before the regular call-over session on the
working day following the Transaction Day.
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What is Buy-In?
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This
is the process by which The NSE causes the defaulting stockbroker to buy the
short-sold security from the Buy-in Market at a premium. Note that The NSE
is at liberty to debit the Premium amount of the securities from the
Security Deposit Account of the stockbroking firm
with The NSE. This sanction notwithstanding, The NSE is not precluded from
applying other sanctions it deems fit to apply in the circumstances. Any
deal therefrom, must be concluded within the
settlement period of T+3.
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What is Over-Trading?
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This
occurs where a stockbroker buys securities in excess of funds in its Trading
Account with the Settlement Bank. When this occurs, the difference is
settled from the Trade Guarantee Fund.
Sanction: Over-Trading will attract sanctions from The NSE.
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(a) What is CHN?
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* CHN
represents Clearing House Number assigned to every shareholder at the first
point of entry into CSCS system by completing CSCS - R005 shareholders
particulars.
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(b)
How many times are shareholders required to complete the shareholders particulars
form?
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* Shareholders
are required to complete the form only once. They are to provide the same
CHN to all subsequent stockbroking firms they
have transactions with for ease of reference.
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(c) What
are account numbers and how are they obtained?
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* This
is CSCS computer generated account number allocated to a new shareholder. It is unique to each stockbroking firm. A shareholder can have as many accounts
as the number of stockbroking firms he uses but
one account per
house.
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Can an investor withdraw his/her certificates before or after
trading?
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Once
a certificate is deposited with the Depository, it is immobilised
and can therefore not be withdrawn.
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When the stockbroker deposits the
investor’s share certificate with the Depository, what does he get in
return as evidence of the lodgment?
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He
gets a receipt/acknowledgment.
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If the new investor wants to sell, what is
the procedure?
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He/she
instructs his/her stockbroker to sell from the stockholdings in CSCS
system. He/she executes a transfer form which his/her stockbroker will
forward to the CSCS along with the allotment forms after trading.
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Can an investor change from one stockbroker
to another under the CSCS operations?
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Yes.
The investor is free to change from one stockbroking
firm to another. A stockbroker should ask his/her client if he/she has
bought shares through CSCS before completing shareholders particulars which
should be completed only once. The shareholder should give subsequent
Houses he deals with the Clearing House Number (CHN) assigned to him at the
first point of entry into CSCS system.
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(a) Can a client (shareholder) take the CSCS statement to another stockbroking firm?
(b) How frequent will the
statement of stock position from CSCS be issued?
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Yes, he can.
Statement
of stockholdings is issued every quarter to all shareholders free of
charge. Any request for statement outside the quarterly statement which
attracts a fee of N100.00 can be obtained as and when requested.
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Can a shareholder request for the statement
of his stock position directly from the CSCS?
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The
stockbrokers are expected to request for their clients’ stock
position. However, since transparency is one of the cardinal focus of CSCS, a shareholder can request for his
statement of stockholding from CSCS in writing by attaching a fee of N100.
The shareholder’s name and account number must be specified in the
letter. At the point of collecting the statement of stock position, the
shareholder will be required to show proof of ownership.
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(a) What is the relationship between The NSE and CSCS?
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CSCS
is a subsidiary of The NSE, but an independent company. All shares to be
traded on The NSE floors must be deposited with the CSCS, which does
clearing and settlements of trades for The NSE.
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Will the Nigerian environment not impact on
the effective functioning of the CSCS system?
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Measures
have been taken to ensure effective performance of CSCS system. There is
computer back up system, also there are 4 lines of power; - NEPA, The
Nigerian Stock Exchange, Anchor Technologies Limited (Premises Managers) and CSCS power generating plants.
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What are the measures put in place to ensure
the success of the T+3?
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The
banks carry out settlement through Nigerian Interbank
Settlement System (NIBSS) and Managers’ cheque.
There is a trade guarantee fund from which trades would be settled in the
event of overtrading, and Clearing and delivery are done by means of book
entry after securities are deposited and traded on.
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Will the benefit of using shares as
collateral for raising loan not be eroded under the system?
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No.
The lender can make enquiry from the Depository as to be shareholding of
the investor and upon the grant of loan, advise that a lien be put on the
affected security. Indeed, many shareholders have taken advantage of using stockholdings
in CSCS as collateral for loans.
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How do you intend to handle the issue of
share certificates for now to enable shareholders trade with them without
any inhibition or apprehension?
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Investors
are to give certificates to stockbroking firms
for verification and then deposit them in CSCS Depository at least 24 hours
before Trading. Stockbrokers will be issued acknowledgment as evidence of
the deposit in CSCS.
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When do you plan to go completely certificateless?
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Immobilisation of certificates is scheduled to take about 2 years and Dematerialisation about 5 years at the end of which
there will be no certificates. However, regulatory bodies like SEC and The
NSE will have final say on this.
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What becomes of the intermediate buyers?
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The
Inter-mediate buyers like other shareholders are free to request for
certificates (at the point of purchase) which for administrative reasons
are issued once a year usually at the closure of registers.
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How do we process new issues in relation to
certificates?
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New
issues and bonus issues will continue to have certificates as an option to
investors who now receive their allotments in electronic form -
e-bonus/e-IPO.
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Will the company registrars be willing to
disclose shareholding information to The Nigerian Stock Exchange? Have they
been carried along?
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The
Nigerian Stock Exchange is empowered to call for the authentic register of
members from registrars of Quoted Companies. Furthermore, the registrars
are represented in the review of CSCS Operations and are therefore carried
along in the developmental process. The registrars and CSCS complement each
other.
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How is the last transaction batch meant for
the closure of register handled?
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The NSE marks securities on
their closure dates.
* Once again, settlement cycle
is T+3 (Transaction day plus three working days). ONLY settled transactions
are forwarded to the registrars for processing.
An Example:
If a quoted company, say NIGERIA
PLC is to close on June 19, 1998 it follows that:-
* The NSE will mark the
security on June 19, 1998
* The last Cum-Div/SCRIP
transaction day will be June 18, 1998.
* Settlement day for the
last CUM-DIV/SCRIP transaction becomes June 18 plus 3 working
days. This translates to June 25, 1998.
* The earliest time the
transaction can get to the registrar for processing is
June 26, 1998.
From
the above analysis, the company secretaries/registrars are advised to
accommodate the transaction advice by ensuring that the registers are
closed for at least eight (8) days. Indeed, secretaries/registrars have
been advised to allow for 10 working days after closure of register before
paying dividends.
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What happens in respect of partial sale? Is
it possible for shareholders to get certificates for balance of shares?
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(a) Where
partial sale occurs, the balance is recorded in electronic book- form in
CSCS system. The shareholder can give instruction to his stockbroker to
sell. Until such instruction is given, the balance will continue to reflect
in CSCS statements issued quarterly to all shareholders free of charge
or at the instance of the shareholder
which attracts a fee of N100.00.
(b) It is possible for a shareholder to get a
certificate not only for the balance but for any holding in the CSCS
system. Indeed, CSCS de-emphasises the issuance
of certificate through gradual immobilisation of
certificates (2 years) and Dematerialisation
scheduled for a period of about 5 years.
CSCS
for administrative reasons emphasises the
issuance of certificates once a year i.e. after the opening of register
usually after AGM for those who specifically request for them. However, if
a shareholder wants a certificate before the close of company register,
CSCS will communicate the instruction to the registrar with the relevant
information. It is pertinent to emphasise that no
trading on shareholding in CSCS system is allowed a shareholder who has
specifically requested for a certificate until the shareholder brings a
certificate issued by the relevant registrar to back the book entry in the
CSCS system. To allow trading will lead to distortion in the shareholder’s stockholdings.
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What is the procedure to request for certificate?
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The
shareholder fills out Certificate Request Form (CSCS CRF1) through his
stockbroker requesting for a certificate which will be passed on to the
registrar with relevant details such as CSCS Clearing House Number (CHN)
stockholders system generated account number. These are distinct features
which must be on the certificate.
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