THE SECURITIES & EXCHANGECOMMISSION, NIGERIA

MARKET REPORT

CAPITAL

www.sec.gov.ng

An SEC NigeriaPublication

3rd quarter 2011 edition

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ABSTRACT

The SEC quarterly is an in-house publication published by the Research and Planning Department of the Securities and Exchange Commission.

The main thrust of this publication is to disseminate capital market information and enlighten the public on the activities of the Commission, following the activities of various operational Departments and Zonal Offices.

Indeed the publication takes a holistic view of the Commission’s functions and activities as stated in the Securities and Investment Act (ISA 2007).

• The feature article for the quarter took an incisive look at the imperatives of the proposed Demutualization, of the Stock Exchange, jurisdictional experiences benefits and challenges.

• The performance of the activities of the Primary and Secondary segments of the market within the quarter were reviewed and analyzed. The new issues market recorded the issuance of eleven (11) securities involving two (2) equities and nine (9) FGN bonds worth N210.00 billion. However, transactions on the secondary segment and market indices were not quite impressive in the quarter. The dwindling demand for equities resulting from the banking crisis, intervention by NDIC in the rescued banks and increases in interest rate etc were some of the factors that affected the market.

• Seven cases were forwarded for enforcement actions and other cases considered to criminal were forwarded to the EFCC and police unit for further action.

• A number of issues on legal opinions, litigations, and rules as it affects market activities were reviewed.

• Twelve companies adjusted their equity prices for dividend and/or bonuses and Thirty –three (33) applications for renewal of registration were concluded.

• For Matters bothering on new issues/derivatives (bonds) and other investment businesses. Five (5) shelf registrations, six (6) offer for subscriptions (Bonds), One special placement, Three(3) Rights Issues, Three(3) existing Securities, Seven (7) bonus issues and Three(3) allotments were approved and cleared .

Also two hundred and twenty seven (227) quarterly returns from broker/ dealers were received.

There were on site inspections to ensure full compliance with anti money laundering/ combating of financing of terrorism (AML/CFT) requirements.

• Half yearly returns were analyzed to ensure full disclosure and compliance with the Code of Corporate Governance, CAMA, ISA 2007 and the IFRS following which Seventeen (17) quoted companies returns were reviewed, and observed lapses were communicated to the affected Companies.

• Inputs from the various Zonal offices, are duly reported. • Recent developments in both the International and Domestic scenes as they affect the Nigerian

financial sector and the economy in general, are briefly highlighted.

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FEATURE ARTICLE

IMPERATIVES OF STOCK EXCHANGE DEMUTUALIZATION

INTRODUCTION

Capital market has been acknowledged worldwide as a barometer to measure the strength of economic activities. Its role in efficient mobilization and channeling of long term capital to fund critical sectors of the economy cannot be over emphasized. This function is central to capital formation required for sustained economic growth and development.

The stock exchange, an integral part of the capital market, provides the platform for buyers and sellers of securities to trade and hence, assures liquidity from investors. Consequently, the stock exchange is central to the existence of an efficient capital market and the economy at large. It is required to function efficiently to facilitate the socio economic development of the nation. However, the capacity of the capital market to effectively mobilize the needed funds appeared to have been threatened by the 2008 -2009 global financial crises.

Spurred by the lessons of the global financial crisis, capital market regulators are now focused on robust regime of oversight that will, among other things ensure full disclosures and openness in financial dealings. These developments are seemingly at the centre of the efforts by markets around the world to reform and restructure the market to win back investors’ confidence. Since the world is now a global village where capital has no national boundaries, stock exchanges globally have to dig deeper to remain very competitive in attracting both issuers and investors from all over the world. One sure strategy of gaining advantage and winning the confidence of investors and issuers alike is by adopting demutualization of stock exchanges - a strategy which encourages openness as opposed to the opaque nature of a mutual exchange which breeds mistrust.

Given this feature of transparency, the concept of demutualization is increasingly gaining acceptance. A number of stock exchanges all over the world, have been demutualized and others are in the process of demutualizing to remain competitive as a market. According to IOSCO EMC April 2005, “in the fifteen years since the first exchange demutualization took place in 1993, twenty-one (21) exchanges in developed markets have demutualized – representing almost 40% of the membership of the World Federation of Exchanges.

The objective of this article is to expose readers to the concept and types of demutualization, imperatives and benefits of demutualization, as well as

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jurisdictional experiences. It also considers the challenges of and key factors for stock Exchange demutualization.

THE CONCEPT OF DEMUTUALIZATION: Demutualization refers to the whole process of changing the legal structure of any organization, including stock exchanges, from a non-profit member-owned mutual organization into a for-profit corporate shareholder organization. S.O. Onyuma and Shem A.O. (2007) defined it as the process by which Stock Exchanges streamline governance issues relating to ownership and management, improve and expedite decision-making, and raise new capital. Principally, the aim of demutualization is to replace the mutual governance structure of an exchange with a corporate and business like structure that will operate on sound corporate governance principles.

TYPES OF DEMUTUALIZATION: Demutualization of an organization can take different forms: Full, sponsored and mutual holding company. In full demutualization, the mutually owned organization completely converts into a corporate company, and passes on its newly issued stock and shares to the new members. There is no attempt made to preserve mutuality in any form. The Sponsored demutualization on the other hand is similar to full demutualization, because the mutual company is fully demutualized and its policy holders or members are compensated, the only difference however, is that the mutual company or exchange is fully bought up by a corporate company that will in turn issue its own share. Instead of receiving stock in the formerly mutual company, stock in the new parent company is granted.

The MUTUAL HOLDING COMPANY (MHC) is a hybrid concept, partly stock company and partly mutual company. Technically, the broker members still own over 50% of the company as a whole; consequently, they are generally not significantly compensated for what would otherwise be viewed as loss of property. (This is also why many jurisdictions, including Canada, disallow the formation of MHCs.) The core participants are treated as a special segment of the company, still viewed as “Mutual”. The rest is a stock company which might be publicly traded or held as a wholly owned subsidiary until such time that the organization chooses to go public.

IMPERATIVES OF DEMUTUALIZATION

The wind of globalization, as well as increasing cross-border activities have made it extremely imperative for stock exchanges to be managed profitably and efficiently in areas of decision making processes. From available literature, it is revealed that in the 17TH century, stock exchanges evolved from the meeting of brokers in coffee shops, where only few people/brokers participated in the markets with prices determined in a manual open outcry system. Then, broker-members knew one another and had every justification to own their exchanges mutually. However, in this 21st century this can no longer be the case with

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modern exchanges with diverse remote brokers, issuers and investors who all have diverse interests. It is only a demutualized exchange that can guarantee that these competing interests are balanced.

Demutualization allows outside shareholders (i.e. none trading members) of the exchange to have a board representation to help balance the decision making processes. Demutualization of a Stock exchange usually helps in improving the competitive edge of the exchange in winning patronage from anywhere within the global village. The affairs of a demutualised exchange are handled by the best professionals who will operate and make decisions to optimize returns to the diverse shareholders with different interest as opposed to the slow and cumbersome decision making process of mutual model. This view is supported by (Sam Mensa PhD 2005) when he stated that “...The mutual governance model (of exchanges) is slow and … unable to respond quickly and decisively to changes in the market (while the demutualized) profit-oriented corporate model will enable management to take actions that are in the best interest of customers and the exchange itself “

A publicly owned stock exchange allows for the participation of all stake holders in the affairs and running of the exchange for the benefit of all. Listed companies, investors (institutional, retail investors, foreign and domestic) - all will have opportunities to own shares of and have a say in the running of the exchange. Participation of all is made possible by separating trading rights from ownership rights. In a mutual structure, ownership and management rights are mostly restricted to only broker dealers / promoters of the exchange.

It is easier for a demutualized entity to raise capital by issuing its shares or to borrow money from the banks to embark on business expansion, I.T deployment e.t.c as it deems fit in order to remain competitive. This will not be possible with an exchange limited by guarantee that depends on its guarantors for funds.

Generally speaking, the best professionals and technology would be easily available to the profit based demutualized exchange compared to a non-profit mutual exchange which is run on mutual basis.

The value and the full potential of the exchange would therefore be better optimized with the best hands taking the right decisions without the hindrance or limitations imposed by capital.

Mutual ownership of exchanges would normally allow for the exclusive interests of the broker-owners to rank higher to the detriment of the other stake holders in the capital market.

In view of the foregoing, it could be summarized that: the drivers of demutualization include the following:

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• Competition for global flow of funds; • Regional and global competitiveness of markets; • Quest to foster the growth and development of stock exchange

particularly, in the area of technology • Access to funds with a view to de-emphasize over reliance on trading and

listing fees; • Reformation of the exchange’s governance structure

According to Rueben Lee (2003) “…. It would now be impossible to deny that the securities community has reached an implicit consensus that demutualization maximize efficiency incentives and is critical to the survival of international exchanges”.

JURISDICTIONAL EXPERIENCES

Demutualization has featured prominently in many countries of the world during the last two decades especially during the early 1990s, however the global financial crisis and the attendant governance concerns are compelling many mutually owned exchanges to demutualise.

Available literature revealed that the concept of demutualization actually stated with insurance companies but has now been adopted in many other industries including the savings and loans, agricultural co-operatives and stock exchanges. The Stockholm Stock Exchange was the first stock exchange to be demutualized in 1993. Since then many other exchanges have demutualized. In 1999 the merger of the Stock Exchange of Singapore (SES) and the Singapore International Monetary Exchange (SIMEX) led to the existence of Singapore Exchange Limited (SGX), the Asia pacific’s first exchange to demutualize and its shares were listed on the Exchange on Nov.23 2000.

Similarly the Hong Kong exchange (HKEX) was created in 2000 from the merger of the Hong Kong Futures Exchange (HKFE) and Hong Kong Securities Clearing Company (HKSCC) and in June 27, 2000 and its shares were listed on its own exchange.

Euro next also emerged as a demutualized exchange from the merger of the national exchanges in France, the Netherlands, Belgium, and Portugal.

Other exchanges that have demutualised include the Japan’s Nikkei and New York’s NASDAQ, the Chicago Mercantile Exchange which was demutualized and became a shareholder – owned public corporation in 2000 through a public offering. The Chicago Mercantile Exchange had its IPO on December 6, 2002. Each of these exchanges has gained global recognition and patronage since they went public.

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A survey by IOSCO, of some emerging markets have shown that while some exchanges have demutualised, others have made substantial plans to demutualise as shown in the table below:

Jurisdictions Considered Status

Brazil No Not demutualized

China No Not demutualized

Poland No Not demutualized

Sri Lanka Yes Not demutualized

Thailand Yes Not demutualized

India Yes In the process

Indonesia Yes In the process

Pakistan Yes In the process

Turkey Yes In the process

Chile Yes In the process

Hungary Yes Demutualized

Malaysia Yes Demutualized

Philippines Yes Demutualized

Chinese Taipei Yes Demutualized

South Africa Yes Not demutualized

Source: IOSCO EMC WG2Surveys (2005)

The Nairobi Stock Exchange, Kenya and Nigerian Stock Exchange (NSE) are among the emerging markets planning to demutualise (not captured in the table). Recently, the SEC Nigeria constituted a 21 Man Committee to provide it with the technical advice on how best to demutualize the NSE. The report of the Committee is being expected.

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BENEFITS OF DEMUTUALIZED EXCHANGE

There are many benefits for all players, when an exchange is demutualized; some of the advantages include the following:

• Enthronement of governance and management structure that is less susceptible to members’ vested interests and conflicts between classes of members that are not subject to cumbersome decision-making and strategic gridlock.

• Creation of a valuable structure that is able to develop international strategic alliances with other exchanges.

• Existence of a governance and management structure that is more active, flexible, and swift in its ability to respond professionally to industry and market conditions.

• Unlocking members’ equity and buy out the vested interest of traders.

• Ensuring that market participants, which provide majority of businesses to the exchange will have a proportionate say in its control.

• Diffuse the concentration of ownership power in a particular group of exchange participants for their exclusive mutual gains.

• Access to funds to modernize IT infrastructure leading to improved operations.

• Helps to spread ownership risk in the exchange.

• Business oriented operations and income generation for the owners.

• Rewards new market participants in equity, thus giving them a financial incentive to bring business to the exchange.

• Allows for imposition of market discipline on management.

• Helps to catalyze the pursuit of new business strategies for profit growth.

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• Provides both a valuation benchmark and liquidity for investors.

• Improves financial decision-making by ensuring that resources are allocated to business initiative and venture that enhances shareholders value.

It cannot be overemphasized that all players in the Nigerian Capital market would benefit once the NSE becomes fairly and fully demutualized. The above benefits notwithstanding, demutualization of a stock exchange in any jurisdiction is associated with some challenges.

CHALLENGES OF DEMUTUALIZATION AND ALLOCATION OF SHARES:

I. Conflict of interest may arise in the allotment of the shares of the demutualized NSE to the different interest groups, where openness and transparency are not involved in the process especially in the following areas:

Ø Negligence or inadequate attention to its regulatory functions as a Self Regulator Organization (SRO).

Ø Abuse of its monopolistic power to increase prices or offer lower quality of service or products.

Ø Acting in a bias manner by treating its competitors unfairly.

Ø Restriction of share ownership limit.

Ø Redefining the regulatory role of the exchange and its relationship

with its regulators.

Ø Balancing commercial interest and regulatory objectives. A major concern would be whether the profit motive will becloud the decision making processes at the exchange with respect to issues surrounding membership, pricing, licensing, surveillance, enforcement etc. The conflict here is that given the profit motive of the exchange its primary objective would be to maximize profit and other revenue matrix for its owners.

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These issues not withstanding ,with sound regulatory oversight by the SEC, will be nipped on the bud. The SEC and NSE council will be guided by international best practices to work out the legal and regulatory structures that would ensure a balance. Different models exist that can be leveraged to contain the challenges (the self regulatory role of the exchange was out sourced, in the USA, where The National Futures Association was performing the SRO role for many exchanges. The NASDAQ created two subsidiaries, NASD Regulation as the regulatory arm and NASDAQ Stock Market as the commercial trading arm).

II. Cost of Conversion: Cost must be involved in converting an exchange from mutual to a demutualized status. The conversion of the Nigerian Stock Exchange (NSE) from a company limited by guarantee into a demutualized corporate Nigerian Stock Exchange must therefore involve cost. Legal structure, transfer ownership as well as the necessary documentation would require some levels of costs.

KEY FACTORS FOR SUCCESSFUL DEMUTUALIZATION

Onyuma and Shem (2007) observed that there is no single path to fully facilitate successful demutualization of an exchange. However, they opined that the following, among others, must be considered to achieve a successful stock exchange demutualization:

§ A strategic plan with probably four (4) years-vision for the exchanges § A defined objective of reorganization and restructuring § Existence of appropriate corporate structure § Method of listing (private placement of members or an IPO) § Equity allocation/ ownership structure (which entities, how much shares

they receive and limits on shareholding) § Restructuring of the Management framework (e.g Board representation,

Voting rights, Management selection processes, their duties and rights, methods of deciding their remuneration).

§ Qualification of board members, their tenure, member of executive and non-executive directors.

§ Mechanism for dealing with issues around conflicts of interest § Formulation of retention policy (reserve distribution, sharing of amount

to be kept versus amount to be distributed to owners of the capital) § Duration of the demutualization process § Sources of funding; Internal or External and the cost implications § A detailed stage by stage process must be put in place

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CONCLUSION

The stock exchange is at the heart of capital market processes; this implies that it must be managed transparently and professionally in line with global best practices. It is against this background that effort is being made to see to the successful demutualization of the Nigerian Stock Exchange in the near future. This will no doubt enable the proposed demutualized exchange to exercise its role efficiently and be relevant in the global arena.

References:

1.) IOSCO Emerging Markets Committee (2004) Exchange Demutualization in Emerging Markets, IOSCO Annual Conference (pp. 3- 42) Amman, Jordan: IOSCO.

2.) Aktar S (2002), Demutualization of Stock Exchanges: Problems, Solutions and Case Studies, Asian Development Bank, (pp. 3- 32)

3.) Karmel Roberta. Demutualization of Exchanges as a Strategy for Capital Market Regulatory Reform. Inter-American Development Bank (2002a)

4.) Karmel R. (2000) Turning Seats into Shares: Implications of Demutualization for the Regulation of Stock and Futures Exchanges. Working Paper. Brooklyn Law School.

5.) LSE (2007, May) Demutualization, LSE Newsletter.

6.) Ruben Lee. Hanging Market Structures, Demutualization and the Future of Securities Trading. 5th Annual Brookings/IMF/World Bank Financial Markets and Development Conference (2003, April)

7.) S.O. Onyuma, A.O. Shem (2007): Reorganizing Corporate Governance Structures in African Stock Exchanges

8.) Exchange Demutualization in Emerging Markets, by Emerging Markets Committee of the IOSCO (April 2005).

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ACTVITIES OF THE PRIMARY AND SECONDARY MARKETS

PRIMARY MARKET

NEW ISSUES

The new issues market recorded the issuance of eleven (11) securities worth N215.54 billion, involving two (2) equities of N5.54 billion and nine (9) FGN bonds worth N210.00 billion, as shown on Table 1. In the preceding quarter, seventeen (17) securities valued at N1, 756.05 billion were issued, including the three tranches of the first series of AMCON bonds worth N1,500.00 billion executed in April, 2011 which were not captured in the second quarter report.

However, not fewer than five (5) issuers were granted approval by the Commission to hold Completion Board Meeting in the quarter for the issuance of bonds aggregating to N116 billion, all of which are expected to be issued in the fourth quarter.

TABLE 1: SUMMARY OF NEW ISSUES (JULY– SEPTEMBER, 2011)

Mode of Offer No. of Issues Value of Shares

(N’ m)

Subscriptions 0 0.00

Rights 1 867.29

Special Placement 1 4,674.60

Preference Shares 0 0.00

Total Equities 2 5,541.89

Corporate Bonds 0 0.00

Sub-national Bonds 0 0.00

FGN Bonds 9 210,000.00

Total Debt 9 210,000.00

Overall 11 215,541.89

Source: SEC, DMO

Details of the issues floated during the quarter are given below:

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GT BANK PLC

The bank privately placed N4.67 billion, with the creation of about 290.53 million ordinary shares of 50k each at N16.09 per share through private placement to enable it finance the following;

o Branch network expansion – 60% o E-distribution channels – 40%

SOVEREIGN TRUST INSURANCE PLC

The insurance firm issued about 1.735 billion ordinary shares of 50k each at N0.50 per share to its existing shareholders by way of rights. The proceed from this offer, amounting to about N867.29 million would be utilized in the following proportion after deduction of cost of offer;

o Enhancement of working capital – 31.25% o Fortifying investment asset – 37.50% o Development of retail market business – 25.00% o Upgrade of ICT platform - 6.25%

FGN BONDS

Table 2 below gives the details of the nine (9) FGN bonds auctioned in the third quarter, three (3) each in a month. The bonds were all oversubscribed to the tune of N471.57 billion, indicating excess subscription of N261.57 billion (124.56%) over the allotted amount of N210.00 billion.

Date Auctioned/Maturity Tenor

(Yrs)

Amount Auctioned (N’Billion)

Level of Subs

(% )

Amount Subscribed (N’Billion)

Amount Allotted

(N’Billion)

Marginal Rate (% )

July 20, 2011/March 18, 2014*

3 30.00 219.80 65.94 30.00 10.50

July 20, 2011/April 23, 2015*

5 15.00 308.80 46.32 15.00 4.00

July 20, 2011/May 30, 2018*

10 25.00 182.88 45.72 25.00 10.70

August 17, 2011/March 18, 2014*

3 30.00 150.03 45.01 30.00 10.50

August 17, 2011/April 23, 5 15.00 285.80 42.87 15.00 4.00

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Table 2: AUCTION SUMMARY OF FGN BONDS FOR THE THIRD QUARTER OF 2011

Source: Compiled from DMO Reports

* Re-opened

REGISTERED BONUS ISSUES

In the third quarter, the Commission registered seven (7) bonus issues, involving over 9.50 billion shares with nominal value of N4.80 billion, as shown on Table 3 below. In the preceding quarter, three (3) bonus issues of 6.96 billion shares and nominal value of N3.48 billion were recorded.

Table 3: REGISTERED BONUS ISSUES IN THE THIRD QUARTER OF 2011

Company Volume (Unit) Nominal Value (Naira)

Date Registered

Bonus Ratio

United Bank for Africa Plc 6,466,938,739 3,233,469,369.50 12/07/11 1 for 4

Friesland Campina Wamco Plc

97,633,574 97,633,574.00 02/08/11 1 for 4

Union Diagnostic & Clinical Service Plc

592,189,755 296,094,877.50 03/08/11 1 for 5

Onward Paper Mills Plc 99,999,999 49,999,999.50 06/09/11 1 for 7

Nestle Nigeria Plc 132,109,376 66,054,688.00 09/09/11 1 for 5

Oando Plc 452,542,314 226,271,157.00 12/09/11 1 for 4

2015*

August 17, 2011/May 30, 2018*

10 25.00 170.20 42.55 25.00 10.70

September 14, 2011/March 18, 2014*

3 25.00 304.40 76.10 25.00 10.50

September 14, 2011/April 23, 2015*

5 20.00 283.55 56.71 20.00 4.00

September 14, 2011/May 30, 2018*

10 25.00 201.40 50.35 25.00 10.70

Total 210.00 471.57 210.00

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Unity Bank Plc 1,664,358,862 832,179,431.00 12/09/11 1 for 20

Total 9,505,772,619 4,801,703,096.50

Source: SEC

REGISTERED EXISTING SECURITIES

The Commission during the quarter registered five (5) existing securities, involving about 4.79 billion ordinary shares with nominal value of N2.52 billion, as shown on Table 4 below. None was recorded in the preceding quarter.

Table 4: REGISTERED EXISTING SECURITIES IN THE THIRD QUARTER OF 2011

Company Volume (Unit) Nominal Value (Naira)

Date Registered

Property Gate Dev. & Investment Plc

240,150,000 240,150,000.00 18/07/11

Pinnacle Point Group Plc (R0.0001/share)

2,426,839,598 1,213,419,799.00 25/07/11

Austin Laz & Co. Plc 1,079,860,000 539,930,000.00 10/08/11

Onward Paper Mill Plc 700,000,000 350,000,000.00 06/09/11

Starcomms Plc 343,923,905 171,961,952.50 28/09/11

Total 4,790,773,503 2,515,461,751.50

Source: SEC

ALLOTMENT CLEARANCE

Issuer

Offer Price

Volume of Securities

Value (N) Level of Subs.

Amount capitalized (N)

Approval Date

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The commission cleared three (3) allotment proposals during the third quarter. The issues, which were fully subscribed, involved one (1) right offer, one (1) special placement and one (1) corporate bond. In all, the total of N13.55 billion was allotted during the quarter.

Table 5: ALLOTMENT CLEARANCE IN THE THIRD QUARTER OF 2011

SECONDARY MARKET

Transaction on the secondary segment and indices performances were not impressive in the third quarter. This was due to the dwindling demand for equities, resulting from the banking crisis and the recent intervention by the NDIC in some of the rescued banks, increase in interest rate, insecurity in the country and slow recovery of global economy, among others.

Details of activities and performance of indices are as follows;

Trading Activities on the Nigerian Stock Exchange

When compared with the figures in the second quarter, the number of deals, volume and value of traded equities declined by 12.14%, 32.28% and 23.63% respectively. As shown on Table 6 below, 16.49 billion ordinary shares worth

N

Rights:

Premier Breweries Plc

1.00 869,680,940 869,680,940.00 100.00% 869,680,940.00 19/09/11

Bond:

DANA Group of Companies Plc

1.00 8,010,000,000

8,010,000,000.00 100.00% 8,010,000,000.00 08/07/11

Special Placement:

GT Bank Plc

16.90 290,528,278 4,674,599,993.02 100.00% 4,674,599,993.02 09/08/11

Total 9,170,209,218

13,554,280,933.02

13,554,280,933.02

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N121.50 billion exchanged hands in the third quarter as against 24.35 billion ordinary shares valued at about N159.10 billion which were traded in the second quarter.

Table 6: COMPARATIVE SUMMARY OF TRADING STATISTICS FOR SECOND AND THIRD QUARTERS OF 2011

Source: Compiled from reports supplied by The NSE

Sectoral Trading Analysis

Out of the overall volume of shares traded, the Banking, Insurance and Conglomerate sectors accounted for 13.29 billion (80.63%) while twenty nine (29) other sectors accounted for the balance of 3.19 billion (19.37%), as shown on Table 7. Two (2) sectors, Footwear and Machinery (Marketing), were dormant during the quarter.

In terms of trading values, the Banking sector controlled N68.08 billion (56.03%) of the total turnover value followed by Breweries and Food, Beverages & Tobacco sectors with N16.14 billion (13.28%) and N9.93 billion (8.17%) of the total value of transactions respectively. These top three sectors thus accounted for 77.49% of the total value of transactions during the quarter.

SECURITIES

SECOND QUARTER, 2011 THIRD QUARTER, 2011

Deals Volume (M) Value (N’M) Deals Volume (M) Value (N’M)

Government Bonds

0 0 0.00 0 0 0.00

Corporate Bonds/Pref. Shares

0 0 0.00 0 0 0.00

Equities

326,513

24,345,054,349

159,098,034,729.36

286,879

16,486,984,176

121,502,874,447.23

TOTAL

326,513

24,345,054,349

159,098,034,729.36

286,879

16,486,984,176

121,502,874,447.23

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TABLE 7: SECTORAL TRADING STATISTICS FOR THE THIRD QUARTER OF 2011

Sector Number of Deals

Volume

(unit of shares)

Value (Naira)

2nd-Tier Securities 66 74,754,759 48,251,216.95

Agriculture/Agro-Allied 1,369 58,334,403 455,356,225.07

Air Services 3,424 42,772,790 246,114,404.28

Automobile & Tyre 1,106 37,032,647 38,048,481.77

Banking 162,667 10,007,098,406 68,083,209,061.39

Breweries 13,392 166,626,994 16,136,730,495.72

Building Materials 8,123 138,682,844 7,845,571,204.39

Chemical & Paints 2,161 30,569,114 403,726,776.31

Commercial/Services 1,378 173,317,816 226,014,606.98

Computer & Office Equipment

117 2,177,386 5,660,845.17

Conglomerates 13,005 925,411,015 5,014,671,396.33

Construction 1,617 70,849,880 546,243,905.06

Engineering Technology 249 4,838,373 7,471,030.46

Food/Beverages & Tobacco 22,598 427,321,496 9,931,705,435.31

Footwear 0 0 0.00

Healthcare 3,116 255,365,824 713,507,712.83

Hotel & Tourism 886 325,902,639 1,108,249,480.56

Industrial/Domestic Products 1,111 27,194,718 159,453,345.95

Information & Communication Technology

865 211,004,339 317,103,532.65

Insurance 11,715 2,361,524,511 1,936,420,336.37

Leasing 436 24,715,940 23,246,352.19

Machinery Marketing 0 0 0.00

Maritime 4,624 208,565,357 199,601,522.92

Media 375 291,124,813 148,053,360.73

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Mortgage Companies 694 148,537,725 84,592,878.10

Other Financial Institutions 567 36,405,309 29,662,988.08

Packaging 11,178 119,567,686 273,666,821.05

Petroleum(Marketing) 15,943 178,848,069 5,690,562,904.25

Printing & Publishing 1,089 21,791,304 94,179,080.74

Real Estate 855 16,049,284 281,240,170.39

Real Estate Investment Trust 81 4,099,110 371,106,000.00

Road Transportation 203 14,430,833 7,282,880.13

Textiles 103 2,332,415 1,486,628.68

The Foreign Listings 1,766 79,736,377 1,074,683,366.42

Total (Equities) 286,879 16,486,984,176 121,502,874,447.23

Debt Securities 0 0 0.00

Overall Total 286,879 16,486,984,176 121,502,874,447.23

Source: Compiled from reports supplied by The NSE

Top Twenty (20) Transactions by Volume

The most traded equity during the quarter was the shares of GT Bank Plc, controlling over 1.29 billion shares (7.83% of the overall volume traded) executed in 36,101 deals. This was closely followed by Zenith Bank Plc with over 1.27 billion shares traded in 19,428 deals. Other major deals as shown on Table 8 included the shares of Access Bank Plc (1.02 billion), UBA Plc (975 million) and First Bank of Nig. Plc (925 million).

On the whole, the top 20 companies by volume of transactions, as shown on Table 8, accounted for 71.61% or 11.81 billion units of shares traded in the quarter in 157,899 deals while the balance of 28.39% (4.68 billion shares) were the total units of shares involving one hundred and sixty three (163) companies.

TABLE 8: TOP 20 TRANSACTIONS BY VOLUME IN THE THIRD QUARTER OF 2011

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S/N Equities Deals Volume (units)

% of Total

1 GT Bank Plc 36,101 1,290,134,024 7.83

2 Zenith Bank Plc 19,428 1,274,101,249 7.73

3 Access Bank Plc 10,016 1,020,383,155 6.19

4 UBA Plc 14,491 975,019,449 5.91

5 First Bank of Nigeria Plc 35,993 925,782,538 5.62

6 Transnational Corporation Plc

3,535 794,505,584 4.82

7 Fidelity Bank Plc 9,215 705,276,757 4.28

8 Fin Bank Plc 1,642 661,243,207 4.01

9 Diamond Bank Plc 4,202 538,049,801 3.26

10 Guaranty Trust Assurance Plc

1,121 522,122,129 3.17

11 NEM Insurance Plc 1,343 437,982,612 2.66

12 SKYE Bank Plc 6,929 430,401,760 2.61

13 FCMB Plc 2,907 291,253,834 1.77

14 Gold Insurance Plc 331 287,819,209 1.75

15 Afromedia Plc 69 287,806,633 1.75

16 Intercontinental Bank Plc 2,323 285,347,082 1.73

17 Unity Bank Plc 1,803 284,086,770 1.72

18 Oceanic Bank Int’l Plc 3,149 282,073,660 1.71

19 StanbicIBTC Bank Plc 2,806 263,781,688 1.60

20 Continental Reinsurance Plc 495 249,837,882 1.52

Market Capitalization

Total market capitalization ended the third quarter of 2011 lower at N10.174 trillion, recording a decline of 12.59% when compared to the value of N11.639

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trillion in the second quarter. This poor performance was mainly due to the fall in equity market capitalization, which recorded a significant decline of 18.65% to close the quarter at about N6.50 trillion from N7.991 trillion in the preceding quarter. Meanwhile the debt market capitalization appreciated marginally by 0.69% to N3.673 trillion from N3.648 trillion in the second quarter.

This dismal market performance of the equity market is not unconnected with the banking sector crisis, intervention and the taking over of three banks, Afribank Plc, Bank PHB Plc and Spring Bank Plc, by Asset Management Corporation of Nigeria (AMCON) and the subsequent de-listing of the banks from Official List of The NSE. During the quarter, four (4) companies, Nampak Plc and the above mentioned banks, were de-listed while SIM capital Alliance Value Plc was listed under other Financial Institutions, bringing the total number of listed companies to two hundred and three (203) from two hundred and six (206) in the second quarter. The number of listed debt securities stood at forty six (46) from forty seven (47) in the second quarter.

Sectoral Market Capitalization

As shown on Table 9, seven (7) sectors recorded appreciation in their respective market capitalizations, twenty five (25) sectors recorded declines and two (2) sectors remained unchanged. The sectors which recorded appreciations included Hotel & Tourism, Other Financial Institutions, Agriculture/agro Allied, Leasing, Industrial/Domestic Products, Textile, Real Estate Investment Trust and 2nd Tier Securities.

In value terms, the most declines recorded was from the Banking sector capitalization which depreciated by N527.44 billion. Building Material sector was second with depreciation of N504.65 billion in its capitalization followed by Food, Beverages and Tobacco, Breweries and Petroleum Marketing sectors with declines of N207.52 billion, N97.45 billion and N57.97 billion in their respective market values.

Notwithstanding the declines recorded by the Banking, Building Material and Breweries sectors, they maintained their leadership as the most capitalized sectors, controlling 29.09%, 26.44% and 14.53% of equity market capitalizations respectively at the close of the third quarter. While the Banking sector closed with capitalization of N1.891 trillion, the Building Material sector followed closely with N1.719 trillion and Breweries sector ended at N0.945 trillion. Food, Beverages and Tobacco and Conglomerate closed the quarter at the fourth and fifth positions with capitalization of N0.727 trillion and N0.313 trillion respectively.

TABLE 9: SECTORAL MARKET CAPITALIZATION

Sector Market Capitalization as at %

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September 30, 2011 June 30, 2011 Change

2nd Tier Securities 4,100,123,674.36 4,041,386,864.20 1.45

Agriculture/Agro-Allied 18,936,312,159.00 17,586,654,868.00 7.67

Airline Services 8,471,456,250.00 10,895,935,625.00 (22.25)

Automobile And Tyre 3,837,170,318.00 4,425,276,559.50 (13.29)

Banking 1,891,123,264,814.37 2,418,568,048,708.93 (21.81)

Breweries 944,696,149,067.95 1,042,147,316,250.64 (9.35)

Building Materials 1,718,509,143,268.54 2,223,161,104,411.52 (22.70)

Chemical And Paints 18,831,086,882.63 28,607,675,537.43 (34.17)

Commercial/Services 8,352,896,316.79 9,502,034,139.98 (12.09)

Computer/ Office Equipments

4,081,941,736.00 4,180,857,936.00 (2.37)

Conglomerates 312,573,454,897.35 332,118,335,400.86 (5.88)

Construction 85,732,789,307.90 103,543,695,314.90 (17.20)

Engineering Technology 3,101,461,361.70 3,471,292,209.34 (10.65)

Foods Beverages And Tobacco

726,638,722,910.60 934,161,794,533.04 (22.21)

Footwear 244,170,935.76 244,170,935.76 0.00

Health Care 37,951,590,110.87 42,171,088,312.12 (10.01)

Hotel & Tourism 23,952,049,763.04 16,270,109,403.57 47.22

Industrial/ Domestic Products

14,699,271,300.75 14,211,495,740.38 3.43

Information, Communication & Telecommunications

45,331,732,915.88 46,570,002,915.88 (2.66)

Insurance 138,964,316,997.74 148,947,448,601.99 (6.70)

Leasing 1,694,537,020.80 1,082,261,140.00 56.57

Machinery (Marketing) 1,290,520.00 1,290,520.00 0.00

Maritime 5,135,415,407.12 6,763,717,853.28 (24.07)

Media 6,017,748,630.00 6,058,103,626.57 (0.67)

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Mortgage Companies 20,881,690,540.00 21,212,690,540.00 (1.56)

Other Financial Institutions

14,543,739,778.28 10,419,641,759.22 39.58

Packaging 23,948,322,385.29 28,760,909,052.86 (16.73)

Petroleum(Marketing) 227,136,354,561.74 285,106,225,921.69 (20.33)

Printing And Publishing 6,717,801,961.38 8,072,346,110.50 (16.78)

Real Estate 16,775,000,000.00 27,500,000,000.00 (39.00)

Real Estate Investment Trust

14,500,989,050.00 14,440,989,050.00 0.42

Road Transportation 813,780,000.00 858,990,000.00 (5.26)

Textile 716,791,320.95 497,537,575.93 44.07

The Foreign Listings 151,824,193,689.92 175,520,868,650.72 (13.50)

Equities Market Capitalization

6,500,836,759,854.71 7,991,121,296,069.81 (18.65)

Debt Capitalization 3,673,129,656,074.00 3,648,129,656,074.00 0.69

Total Market Capitalization

10,173,966,415,929.00 11,639,250,952,144.00 (12.59)

Top Twenty (20) Companies by Market Capitalization

Oando Plc and Dangote Flour Mills Plc that occupied the nineteenth and twentieth positions on the table of top twenty (20) companies by market capitalization during the second quarter were displaced by Total Nigeria Plc and Fidelity Bank Plc respectively, which occupied the eighteenth and twentieth positions in the third quarter. Sixteen (16) of the companies, including one (1) of the two (2) newly admitted companies recorded declines in their respective market values while the other four (4) recorded marginal appreciations, which resulted to significant decline of about N1.191 trillion in the capitalization of the top 20 aggregating to N5.199 trillion in the third quarter compared to N6.390 trillion in the second quarter. However, these companies controlled 79.97% of equity market capitalization while the other one hundred and eighty three (183) companies had the capitalization of N1.301 trillion or 20.03% of equity market capitalization.

The first four companies on the table maintained their respective positions as in the second quarter with Dangote Cement Plc leading followed by Nigerian Breweries Plc, Zenith Bank Plc and GT Bank Plc as shown on Table 10. First bank was pushed to the sixth position while Guinness which was at the sixth position advanced to the fifth in the quarter under review. Other companies also switched

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positions with the exception of Nestle Nig. Plc which remain on the seventh position like in the preceding quarter.

Table 10: TOP TWENTY (20) COMPANIES BY MARKET CAPITALIZATION AS AT SEP 30, 2011

S/N Equity Market Capitalization (Naira)

% of Equity Market Capitalization

1 Dangote Cement Plc 1,549,401,966,800.00 23.83

2 Nigerian Breweries Plc 604,853,735,953.20 9.30

3 Zenith Bank Plc 389,630,487,884.26 5.99

4 GT Bank Plc 378,190,653,054.10 5.82

5 Guinness Nigeria Plc 321,460,016,866.05 4.94

6 First Bank of Nigeria Plc 318,815,464,177.66 4.90

7 Nestle Nigeria Plc 317,855,156,651.00 4.89

8 Stanbic IBTC Bank Plc 172,687,500,000.00 2.66

9 UBA Plc 125,135,264,591.91 1.92

10 Lafarge Wapco Plc 120,094,016,160.04 1.85

11 PZ Cussons Nigeria Plc 119,193,720,890.90 1.83

12 Ecobank Transnational Incorporated

118,483,374,804.00 1.82

13 Flour Mills Nigeria Plc 111,906,995,160.30 1.72

14 Unilever Nigeria Plc 104,040,646,875.00 1.60

15 Access Bank Plc 100,531,973,311.98 1.55

16 Dangote Sugar Refinery Plc 84,000,000,000.00 1.29

17 First City Monument Bank Plc 69,152,566,858.50 1.06

18 Total Nigeria Plc 67,904,367,400.00 1.04

19 Skye Bank Plc. 67,418,606,847.60 1.04

20 Fidelity Bank Plc 58,239,342,016.23 0.90

Top 20 Market Capitalization 5,198,995,856,302.70 79.97

Other 183 Equities 1,301,840,903,551.98 20.03

Equity Market Capitalization 100.00

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6,500,836,759,854.71

Source: Compiled from reports supplied by The NSE

The All-Share Index

The All-share index closed the third quarter lower at 23,373.00 points to record a decline of 18.44% when compared to the 24,980.20 points it ended with during the second quarter. In the preceding quarter a marginal appreciation of 1.46% was recorded.

The indicator reflected a continuous downward trend as shown on Table 11, which captured the index positions in the beginning, middle and end of July, August and September 2011. In August, though a marginal increase of 0.38% was recorded, the indicator was worst-off by the middle of the month with significant decline of 5.68%, which further dipped by 4.71% to close the month at 21,497.61 points, indicating a net decline of about 10.0% in August alone.

TABLE 11: NSE ALL-SHARE INDEX MOVEMENT (JULY – SEP, 2011)

DATE INDEX % Change

30/06/11 24,980.20 -

01/07/11 24,696.81 (1.13)

15/07/11 23,832.14 (3.50)

29/07/11 23,826.99 (0.02)

01/08/11 23,916.90 0.38

15/08/11 22,559.07 (5.68)

29/08/11 21,497.61 (4.71)

01/09/11 21,299.55 (0.92)

16/09/11 21,106.67 (0.91)

30/09/11 20,373.00 (3.48)

Source: Daily Official List of the NSE

Note: The Index were for the beginning, middle and end of the months under consideration

PRICE PERCENTAGE GAINERS AND LOSERS

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Of the two hundred and three (203) listed companies, only eighteen (18) were captured on the gainers list in the third quarter, including the newly listed company which was admitted in September 2011. While companies with static prices stood at eighty seven (87), the losers dominated, numbering ninety eight (98). In the preceding quarter, there were thirty six (36) gainers, eighty four (84) losers and eighty six (86) companies with static prices.

Gainers

Capital Hotel Plc and Ikeja Hotel Plc, all of the Hotel & Tourism sector, led the gainers chart, occupying the first and second positions with price appreciations of 123.21% and 54.11% respectively. The duo was followed by United Nigeria Textile Plc on the third position with price appreciation of 44.07%.

The other eight (8) companies not captured on Table 12 below recorded appreciations ranging between 0.11% to 3.09%.

TABLE 12: TOP TEN (10) PERCENTAGE PRICE GAINERS IN THIRD QUARTER OF 2011

S/N Equity Price as at 30/06/11

(Naira)

Price as at 30/09/11

(Naira)

Absolute Gain

(Naira)

Gain (%)

1 Capital Hotel Plc 3.36 7.50 4.14 123.21

2 Ikeja Hotel Plc 1.46 2.25 0.79 54.11

3 United Nigeria Textiles Plc 0.59 0.85 0.26 44.07

4 Roads Nigeria Plc 3.47 4.65 1.18 34.01

5 Okomu Oil Palm Plc 16.00 20.39 4.39 27.44

6 Costain (WA) Plc 2.46 2.66 0.20 8.13

7 Eterna Oil & Gas Plc. 4.75 5.12 0.37 7.79

8 Abbey Building Society Plc 1.37 1.44 0.07 5.11

9 Champion Breweries Plc 4.25 4.46 0.21 4.94

10 Premier Breweries Plc 0.93 0.97 0.04 4.30

Source: Compiled from the NSE Reports

Losers

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On the losers chart, Dangote Flour Mills Plc registered the most percentage price decline in the quarter followed by Chemical & Allied Products Plc and Oando Plc at the second and third positions respectively. These top three losers recorded price declines of 57.44%, 47.68% and 46.29% respectively.

The other eighty eight (88) losers which were not captured on Table 13 recorded price depreciations ranging from 1.96% to 34.51%.

TABLE 13: TOP TEN (10) PERCENTAGE PRICE LOSERS IN THIRD QUARTER OF 2011

S/N Equity Price on 31/03/11

(Naira)

Price on 30/06/11

(Naira)

Absolute Loss

(Naira)

Loss

(%)

1 Dangote Flour Mills Plc 16.00 6.81 9.19 57.44

2 Chemical and Allied Products Plc

34.12 17.85 16.27 47.68

3 Oando Plc 42.80 22.99 19.81 46.29

4 Forte Oil Plc 19.28 10.44 8.84 45.85

5 Dangote Sugar Refinery Plc

12.87 7.00 5.87 45.61

6 Neimeth International Pharmaceuticals Plc

1.70 0.95 0.75 44.12

7 First City Monument Bank Plc

7.15 4.25 2.90 40.56

8 UACN Property Development Co. Plc

20.00 12.20 7.80 39.00

9 Flour Mills Nigeria Plc 95.00 59.55 35.45 37.32

10 Trans Nationwide Express Plc

5.78 3.63 2.15 37.20

Source: Compiled from the NSE Reports

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ENFORCEMENT AND COMPLIANCE Enforcement Actions During the period under review the following were forwarded to the Commission for enforcement actions. S/N Name Nature of Violation Penalty

1 Esebemen Xervia Omeima and Jiya Ndako vs Supra Commercial Limited

Unauthorised/fraudulent sale of shares belonging to Esebemen Xervia Omeima and Jiya Ndako

Suspended on June 14, 2011. Suspension still in force.

2 Rosemary Asemota vs Colvia Securities Ltd.

Failure to pay Rosemary Asemota the sum of N2, 770,379.03 being the proceeds of sale realized from the unauthorized disposal of her 280,000 units of First Bank Plc shares.

A fine of N1000 per day as penalty for the period was imposed for non compliance within the time directed by the Commission after payment of investment sum and interest to investor.

3 Late Alhaji Shehu A. Musa vs Core Trust & Investment Ltd.

Trading on shares of Late Alhaji Shehu A. Musa without authority.

A fine of N3,252,000 was imposed as penalty pursuant to Rule 182A(5) of SEC Rules & Regulations.

4 Dr. S.O. Ajayi vs Trust Yields Securities Ltd.

Suspended for failure to comply with the directive of the Commission to resolve complaint lodged by Dr. S.O. Ajayi on non allotment of 50,000 units of Skye Bank Plc shares.

Suspended on September 1, 2011 but suspension now lifted.

5

Makun Abdulmalik & Associates on behalf of Mr. Pam Bot-Mang vs

Breach of contractual obligation against Oceanic Capital Co. Ltd. in respect

• The Operator was penalized by the

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Oceanic Capital Company Ltd.

of a margin facility agreement.

Commission for breach of contractual obligation.

• The

Commission also compelled it to refund to the Complainant the sum of N30,600,000 being the money he deposited as equity contribution.

• Following full compliance by the Operator, the matter is resolved.

6 APT Securities Ltd. vs FBN Capital Ltd.

The Complainant alleged refusal by the Operator to refund the sum of N39m being the money it deposited with the Operator for the purchase of Food Concepts and Entertainment Ltd. shares.

• The Operator complied fully with the directives of the Commission by paying the outstanding money and the accrued interest to the complainant.

• Following full

compliance by the Operator, the matter is resolved.

7 Ofodile C. Ojiakor vs First Registrars Ltd

Nonpayment of interest and unlawful withholding

• First Registrars Limited was

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of dividend warrants for 1,356,268 units of NBL Plc shares.

directed to pay the interest for a period of 145 days which it complied with.

• Following full

compliance by the Operator, the matter is resolved.

COMPLIANCE ACTIVITIES

The Commission recently received the following decisions of the APC and was taking steps to ensure the restitution of investors:

• 63 complaints were against Davandy Finance & Securities Ltd • 37 complaints against Empire Securities Ltd • 266 complaints against Alliance Capital Management. Ltd • 129 complaints against Proforte Investment Ltd

Following the non-compliance of some of the Operators to the APC decision, the Commission forwarded the following matters and companies to the EFCC and Police Unit for possible criminal investigation. 1. Alliance Capital Management 2. Proforte Investment Ltd.

• Longterm Global Capital Ltd Vs. Stanbic IBTC Asset Mgmt. Ltd.

Stanbic IBTC has paid the accrued cash dividend, but are yet to transfer GTB, DGR which was the substance of the complaint. The Department was working with the parties to reach a final resolution of the complaint.

Non-rendition of Quarterly Returns by Capital Market Operators • The Commission was in the process of revoking the registration of

twenty-two (22) capital market operators who have failed to comply with the Commission’s directives.

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• The profiles of the Directors and sponsored individuals involved were forwarded to the CSCS Ltd. with a directive that their accounts be placed on caution.

Penalties in respect of Anti-Money Laundering/Counter-Financing of Terrorism Violations

• The Commission penalized forty-two (42) operators for violating the AML/CFT requirements, out of which nine (9) Operators fully complied with the directives of the Commission, while two of the Operators started making installmental payments.

• A meeting was held with the Operators at the Lagos Zonal Office. A report was being prepared for Management.

LEGAL DEPARTMENT

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EDO STATE GOVERNMENT OF NIGERIA - N25 BILLION 14% FIXED RATE INFRASTRUCTURE DEVELOPMENT BOND 2010-2017 – REQUEST FOR ALLOTMENT CLEARANCE The Commission received a letter dated June 28, 2011 from AFRINVEST W.A., the lead issuing house on the proposed N25 billion Fixed Rate Infrastructure Development Bond 2010-2017 requesting the Commission to approve the allotment proposal to enable investor’s trade their instruments and to close the transaction finally. The Department observed that there was currently a law suit against the Commission concerning the Bond and among the reliefs sought by the Plaintiff was that the Commission lacked the powers to approve the bond without the constitutional approval of the State House of Assembly. The Department therefore advised that the Commission should not take any action on the issue until the matter in court was settled. COMPLAINT OF NON VERIFICATION OF NIGERIAN BREWERIES PLC SHARES BY NEW DEVCO FINANCE LTD The Kaduna Zonal office (KDZO) requested for advice on the complaint that New devco Ltd had charged a fee of 1.5% of the value of the shares contained in the share certificates it verified on behalf of the Complainant.

Sequel to this, the Legal Department made enquiries from four (4) different Registrars; First Registrars, Zenith Registrars, GTB Registrars and Union Registrars about how much they charged for verification/dematerialization of share certificates. The response from the Registrars showed that they did not charge fees for verification or dematerialization of share certificates. The Department therefore advised that in view of the fact that Registrars do not charge for verification of certificates, the company’s (New Devco) attention should be drawn to the fact that their fee of 1.5% was outrageous since they were not being charged any fee by the Registrars.

The Legal Department also opined that KDZO should advise the complainant to approach another stock broking firm for share verification, if it wished to.

APPROVAL FOR A NO OBJECTION FOR A NAME CHANGE: PLURAL SECURITIES LTD

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A memo dated 12th July 2011 was sent from Registration & Recognized Investment Exchanges (RRIE) Department requesting for legal opinion on change of name by a company, Plural Securities Ltd to Cardinal Stone Securities Ltd, a name similar to that of another company Cardinal Stone Partners both of which had the same parent company. The Legal Department opined that the company should be advised to go to Corporate Affairs Commission (CAC) to effect its change of name.

The Legal Department also advised that whatever name that was approved by CAC should be accepted by the Commission since CAC would have carried out its due diligence before registering the name. REQUEST FOR EXTENSION OF TIME TO SUBMIT 2011 AUDITED ACCOUNTS –NEIMETH INTERNATIONAL PHARM. AND AVON CROWNCAPS & CONTAINERS NIG. PLC Memos dated July 14, 2011 and July 21, 2011 were received by the Legal Department from Financial Services & Corporate Governance (FS&CG) Department sequel to letters by Neimeth International Pharmaceuticals and Avon Crowncaps & Containers Nig. Plc requesting for extension of time to enable their auditors conclude their audit before filing same with the Commission.

The Legal Department reviewed the requests and was of the opinion that the companies did not give any compelling reason for the request other than the fact that their auditors needed more time to conclude the audit exercises.

The Legal Department further advised that the Companies should give more information on when the audit process commenced including when their auditors were engaged to enable the request to be appropriately considered.

The Department noted that although the Commission is empowered under Section 313 of the ISA to waive the application of provisions of the Act or rules to any transaction, waivers should not be granted in order to avoid setting a bad precedent. NOTIFICATION OF PROPOSED ACQUISATION OF GTBANKS HOLDINGS IN GUARANTY TRUST ASSURANCE BY ASSURE AFRICA HOLDING LTD

A memo dated August 22, 2011 was received from Securities & Investment Services (SIS) Department requesting for the opinion of the Legal Department on the above matter.

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The GTBank Plc is a public company and holds 67.68% of Guaranty Trust Assurance Plc shares. GTBank has arranged to dispose its holding in the insurance company to Assurance Africa Holding Ltd (AAH) based on the CBN new guideline.

The question was whether the proposed sale would not be contrary to the provision of section 131 of ISA 2007.

The Legal Department opined that the law (section 131 of the ISA 2007) would not permit AAH to purchase more than 30% of the shares without a takeover bid. And any addition to 30% must be through takeover bid, if after the takeover bid, AHH gets up to 50% or above, then they would be free to purchase more, even up to 100%.

IMPLEMENTATION GUIDIANCE ON SECTION 33 OF THE CODE OF

CORPORATE GOVERNANCE

A memo dated August 4, 2011 was received from Financial Services & Corporate Governance (FS&CG) Department requesting for the opinion of the Legal Department on the above subject matter.

The Legal Department opined that the laws and rules do not operate or apply with retrospective effect; so that nobody would be punished for an offence committed before the existence of the law itself. Furthermore, the code in question was not a law since no sanction or punishment was associated with it. The code only served as guidance to all public companies to be observed willingly for the improvement of the capital market.

There was therefore a need for the Commission to clarify the application of section 33 (2) of the code in the best interest of the stakeholders and capital market.

REQUEST FOR GUIDIANCE ON SECTION 19 OF THE REVISED

SECURITIES AND EXCHANGE COMMISSION CODE OF CORPORATE

GOVERNANCE

A memo dated August 2, 2011 was received from Financial Services & Corporate Governance (FS&CG) Department requesting for legal opinion on the request for clarification by Ecobank as to whether clause 19 of the code applied to non- executive directors as well as executive directors.

The Legal Department opined that clause 19 of the code applied to all directors and that for better understanding, clauses 19 and 37 should be read together.

BRIPAN- PROPOSAL FOR A TRAINING DEVELOPMENT SCHEDULE

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FOR MANAGEMENT STAFF OF SEC.

A memo dated September 5,2011 was sent to the Director-General of the Commission stating the proposal of Business Recovery and Insolvency Practitioners Association of Nigeria (BRIPAN).

The 2-day in-house programme, was designed for professionals who wanted to develop their skills and confidence in insolvency matters. The course objective was to equip participants with the analytical and practical skills to apply to insolvency situations.

The Legal Department opined that the Commission needed to build capacity in all areas that affect entities over which it had regulatory oversight. It also recommended that the Commission trained its management staff in that area, to enhance knowledge, skills and enable it carry out its supervisory and regulatory role in the Nigerian Capital Market.

STATUS OF MORGAN TRUST AND ASSET MANAGEMENT LIMITED

A memo dated September 1, 2011 was received from Monitoring & Investigation (M&I) Department requesting the Legal Department to conduct a search for form C 07 of the above mentioned company.

The Legal Department conducted its search, and found out that the company was formally known as IMB MORGAN PLC. with RC No. 35867, but changed its name to Morgan Trust & Assets Management Plc.

REQUEST FOR ENDORSEMENT OF INITIATIVES ON PERFORMANCE

EVALUATION

A memo dated July 19, 2011 was received from Financial Services & Corporate Governance (FS&CG) Department seeking opinion on endorsement of initiatives on performance evaluation.

LSC Consult Ltd had by a letter dated May 2, 2011, requested the Commission’s endorsement of their initiative towards improved corporate governance and increased capacity of company directors in Nigeria.

The Legal Department opined that LSC Consult did not need the Commission’s endorsement as long as it operated within the laws, rules and regulations.

PETITION ON FRAUD BY MOLPRA INVESTMENT LTD

A memo dated July 19, 2011 was sent from Monitoring & Investigation (M&I) Department for opinion on the above subject matter.

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Based on the complaint received on Molpra Investment Ltd, the Commission in the course of investigating the complaint realised that the agreement signed by the parties stated that the expert had declared categorically to the investors that it was not registered with the Commission and that was confirmed by Registration & Recognized Investment Exchanges (RRIE) Department.

The Legal Department opined that the company was in violation of section 13(g) of ISA 2007 which provided that the Commission shall register and regulate corporate and individual capital market operators.

Therefore, whether the investor was aware of the company’s registration status or not was irrelevant and would not absolve it of liability. The Department also advised that the matter should be referred to the police unit for further action after the investigation must have been concluded.

LITIGATION SUIT NO.FHC/L/CS/2791/1999 MIDAS MERCHANT BANK PLC VS KS FUND MANAGERS & 3 OTHERS

The substance of the claim was that 15,960 units of shares of Afroil Plc covered by shares certificate was used as security for a loan. The loan was repaid and the creditors claimed to be entitled to the shares. The said creditors asked the court to bind the regulators including the Commission who was not a party to the suit and was at the instant time taking administrative actions against the 2nd & 3rd creditors.

The matter came up on September 16, 2011 but the court did not sit. The matter was consequently adjourned to 13th October, 2011 for hearing of a motion to set aside the judgment of the court delivered against the Commission on 8th June, 2011.

SUIT NO.FHC/ABJ/CS/354/07 AYO AKADIRI VS SEC

The Applicant filed this action challenging the investigation of the Commission into the misstatement in the published account of Cadbury Plc.

The matter came up on September 14, 2011 for hearing of a preliminary objection filed by the Commission’s Solicitor challenging the suit but could not proceed because the Court did not sit. The matter was consequently adjourned to 31st October, 2011 for adoption. SUIT NO. IST/OA/05/11 -ABDUL HAKEEM MOHAMMED VS SEC & 2 OTHERS

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The Applicant Abdul Hakeem Mohammed filed an action at the Investment & Securities Tribunal (IST) against Energy Co. Nig Plc, the Commission, with Meristem as 3rd Respondent. The Applicant is claiming for an order of the Tribunal directing the 1st Respondent to refund the amount of money he invested in the private placement made by the first Respondent. Secondly, an order of the Tribunal directing the 3rd Respondent to cancel Certificate No. 597 for 750,000 units of shares belonging to the Applicant.

The matter came up on September 28, 2011 for mention and was further adjourned to October 18, 2011 for adoption of addresses on the issue of jurisdiction raised by the Tribunal to hear and determine the suit.

SUIT NO. IST/APP/09/10 APPEAL NO. CA/B/CS/317/11 FINBANK (FIRST

INLAND BANK PLC)VS SEC & TIMOTHY NDUBUISI MENAKAYA

The case arose out of a loan of N190, 000,000 obtained by Mr. Menakaya from Intercontinental Bank Plc for the purpose of investing in the capital market. Mr. Menkaya applied for N20, 000,000 units of Finbank Plc shares during the banks IPO for which he paid the sum of N190, 000,000. He applied to the IST for the refund of the money relying on the Commission’s directive after an all parties meeting instructing Finbank to refund the money.

An External Solicitor was engaged to defend the Commission in the matter and the case was slated for October 17, 2011

SUIT NO. IST/APP/01/10ZACCHEAUS IDUNORBA VS PLATINIUM

CAPITAL

Mr. Idunorba engaged the service of Platinum Capital Ltd to invest in shares. He deposited the sum of N50 Million with the company. Mr. Idunorba thereafter lodged a complaint with the Commission and after an all parties meeting it was decided that Mr. Idunorba was free to take possession of his shares.

Platinum capital Ltd filed an appeal to the IST, praying to set aside the Commission’s decision. The Tribunal dismissed the case on the grounds that the Commission was not a court. Platinum capital further appealed to the court of appeal against the ruling of the tribunal.

While the appeal was still pending, Mr Idunorba filed a garnishee proceeding at the IST which ordered the respondent including the Commission to show cause

36  

 

why the funds and shares of Mr. Idunorba in possession of the garnishee should not be used to satisfy the Judgment debt.

The Legal Department had prepared and filed an affidavit at the IST Lagos, stating that the Commission was not in possession of any shares or fund belonging to Platinum Capital.

SUIT NO. FHC/L/CS/786/2011 CORE TRUST & INVESTMENT LTD VS

SEC

The above suit was filed against the Commission at the Federal High Court Lagos.

The Plaintiff was amongst others seeking for the following reliefs:-

(a) An order of interlocutory injunction to restrain the Commission from

directing the Applicant to pay the stated sum pending the determination of the suit.

(b) An order restraining the Commission from suspending the Plaintiff’s

license as a stockbroker and a member of NSE pending the determination of the suit.

An external Solicitor was appointed to defend the Commission in the suit but hearing date was not fixed. SUIT NO. IST/APP/02/11 FIDELITY BANK PLC VS SEC The Commission was served with court processes in a suit by Fidelity Bank Plc praying for an order to set aside the decision of the Commission where it held that an alleged shareholder (Chief. Godwin Emeka Ene & Ors) were deemed to be lawful owners of disputed shares and directed Fidelity Bank to release the shares plus the accruals to the shareholders.

An external Solicitor was appointed to defend the Commission in the suit but hearing date was not fixed.

SUIT NO. CA/A/109/07 UNION BANK OF NIGERIA VS SEC

This was an appeal against the decision of the IST which found the Applicant liable and to compensate investors for the losses suffered as a result of the fraudulent sale of Nestle Foods/Unilever shares.

In the course of the appeal, the Applicant brought an application for amendment of their notice of appeal. The application was challenged on behalf

37  

 

of the Commission on the ground that the appeal sought to be amended contained mixed facts and law contrary to the provisions of law.

The matter was thereafter adjourned to 22nd October, 2011 for hearing.

SUIT NO.FHC/L/CS/550/11 CHIEF RAYMOND IHYEMBE VS SEC

The Plaintiff Chief Raymond Ihyembe filed an action at the Federal High Court Lagos against the decision of the Commission which disqualified him from being a director of a public company in Nigeria.

An external Solicitor was appointed to defend the Commission in the matter but hearing date was not fixed.

SUIT NO. IST/OA/07/11 IBRAHIM YUSUF VS ENERGY COMPANY NIG

LTD & 3 OTHERS

The Applicant filed an action at the IST against the Commission, seeking for an order directing the first Respondent to refund the amount of money he invested in a private placement and an order directing the 3rd Respondent to cancel the 75,000 units Energy Co of Nig. Shares belonging to him.

The matter came up on September 28, 2011 and the Tribunal directed that parties should address her on its jurisdiction to hear and determine the matter.

The matter was slated to come up on October 18, 2011 for addresses on jurisdiction.

REGISTRATION AND RECOGNIZED INVESTMENT EXCHANGES

38  

 

STOCK EXCHANGE ACTIVITIES

DIVIDEND/BONUS ADJUSTMENTS During the period under review, twelve (12) equity prices were adjusted for dividend and/or bonuses as recommended by their Board of Directors. These are:

NAME OF COMPANY DIVIDEND

ADJUSTMENT BONUS ADJUSTMENT

HoneyWell Flour Mills Plc

N0.13

University Press Plc N0.35 Royal Exchange Plc Nil 1 for 8 Access Bank Plc N0.20 Aluminum Extrusion Industries Plc

N0.05

Other equity prices adjusted for dividend and/or bonuses include:

• Courteville Investments Plc was adjusted for dividend of N0.045 per share.

• Presco Plc was adjusted for dividend of N0.50 per share

• Trans-Nationwide Express Plc was adjusted for dividend of N0.05 per share and a bonus of 1 for 2.

• Prestige Assurance Plc was adjusted for dividend of N0.06 per share and bonus of 1 for 6.

• Longman Nigeria Plc was adjusted for dividend of N0.25 per share also NCR Nigeria Plc was adjusted for dividend of N3.00 per share.

• Law Union & Rock Insurance Plc was adjusted for dividend of N0.05 per share

New Listing

The Edo State Government N25 billion 14% Fixed Rate Infrastructure Development Bond 2017 of N1,000 at par was admitted on the Daily official List on Thursday, July 21, 2011. By this action, the number of listed State Government Bonds increased to 11 with market value of N249 billion. The 32, 096,786 units in favour of SIM Capital Alliance Value Fund Plc of N100 per unit and N103.50 per unit were admitted on the Daily

39  

 

Official List of the trading floor of the exchange by way of introduction. This is a tradable close-end fund. Supplementary Listing A total of 66,273,255 shares were added to the issued shares of Trans-Nationwide Express Plc following the bonus of 1 for 2. The issued shares of the company increased to 198,819,765 shares. Also, a total of 358,330,776 shares were added to the issued shares of Prestige Assurance Plc following the bonus of 1 for 6. The issued shares of the company increased to 2, 508, 315,436 shares. A total of 571,707,786 shares were added to the issued shares of Royal Exchange Plc following the bonus of 1 for 8. The issued shares of the company increased to 5,145,370,074 shares.

Non Rendition of Audited Financial Statements for the year ended December 31, 2010 On 19 July, 2011, The NSE reinstated that out of the list of forty eight (48) companies whose share prices were placed on technical suspension for non rendition of Audited accounts on July 1, 2011, twenty (20) companies had so far complied, while the share prices of the remaining twenty eight (28) companies would STILL REMAIN ON TECHNICAL SUSPENSION pending the receipt of all outstanding renditions.

COMPANIES WITH NO SUBMISSIONS DURING THE PERIOD S/NO COMPANY SECTOR YE 2010 1 FTN Cocoa Processors Plc Agriculture/Agro-Allied December 2 Ipwa Plc Chemical & Paints December 3 Premier Paints Plc Chemical & Paints December 4 Omatek Ventures Plc Computer & Office

Equipment December

5 Transnational Corporation Plc Conglomerates December 6 Nigerian Wire & Cable Plc Engineering Technology September 7 P.S. Mandrides & Co Plc Food/Beverages & Tobacco September 8 Dangote Flour Mills Plc Food/Beverages & Tobacco December 9 Union Dicon Salt Plc Food/Beverages & Tobacco December 10 Lennards Footwear September 11 Morison Industries Plc Healthcare December 12 Ikeja Hotels Plc Hotel & Tourism December 13 Aluminium Man. Co. Of Nigeria

Plc Industrial/Domestic Prd December

14 Vono Products Plc Industrial/Domestic Prd December 15 Etranzact Plc Info Comm & Telcomm December 16 First Assurance Plc (Equity Assr.) Insurance December 17 African Alliance Insurance Plc Insurance December 18 Great Nigeria Insurance Plc Insurance December 19 Guinea Insurance Plc Insurance December 20 Standard Allance Plc Insurance December 21 Mti Plc Info Comm & Telcomm December

40  

 

22 Invesment & Allied Assurance Insurance December 23 Daar Communication Plc Media December 24 Resort Savings & Loans Plc Other Fincl Institution December 25 W.A Glass Ind. Plc Packaging December 26 Forte Oil (African Petroleum) Petroleum(Marketing) December 27 Afroil Plc Petroleum(Marketing) December 28 UNTL Textiles December

Fresh Registration

A total of forty-one (41) new applications were received from potential capital market operators to register for the third quarter ended September 2011:

S/N APPLIED FUNCTION NO OF APPLICANTS

% OF TOTAL

1 Solicitors 18 43.90

2 Broker/Dealers 4 9.76

3 Custodian 1 2.44

4 Reporting Accountants 6 14.63

5 Estate Surveyors & Valuers

3 7.32

6 Fund/Portfolio Management

4 9.76

7 Trustee 1 2.44

8 Issuing House 1 2.44

9 Underwriter 1 2.44

10 Investment Advisers 2 4.87

TOTAL 41 100

Renewal Registration

Thirty-three (33) applications and other requests were concluded, while thirty-four companies’ fidelity bonds were renewed during the quarter under review.

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COLLECTIVE INVESTMENT SCHEMES (CIS) UNIT TRUST

There was no new application received for registration of Unit Trust Scheme during the period, however two (2) applications were approved. These were:

1. Stanbic IBTC Balanced Fund: Approval was granted for the Registration

and Authorization of 5,000,000 units at N1,000.00 per unit.

2. SunTrust Real Estate Investment Trust Scheme (REITS): Approved to convene Completion Board Meeting

Applications under processing:-

1. FBN Money Market Fund: This was an application for registration and

authorization of 50,000,000 units of N100.00 each at par in the proposed Initial Public Offering of the FBN Money Market Fund. The objective of the Fund was to achieve a high level of income obtainable from investments in short term securities that is consistent with prudent investment management, the preservation of capital and maintenance of liquidity. Status – Under Review.

2. FBN High Yield Fund: This was an application for registration and authorization of 10,000,000 units of N1, 000.00 each at par in the proposed Initial Public Offering of the FBN High Yield Fund. The objective of the fund was to achieve capital preservation of its assets and to maximize investment Returns on Capital Employed, by investing in a diversified and selected portfolio of high quality bond securities and Money Market instruments. Status – Under Review.

3. New Gold Exchange Traded Fund: This was an application for approval of the proposed secondary listing of the Gold Bullion Debentures (NewGold) on the Nigerian Stock Exchange. New Gold was an Exchange Traded Fund which enable investors to invest in a debt instrument, the value of which tracks the price of a commodity (Gold Bullion). Status – Under Review.

42  

 

4. Habitat Value Fund: This was an application for registration and

authorization of 50,000,000 units of N50 each in the proposed Habitat Real Estate Investment Trust Scheme. The objective of the Fund was to achieve long-term capital appreciation of assets by investing in a portfolio of high-quality real estate and real estate related (mortgage) assets.

Status – Under Review.

5. Lifetrade Fund Nigeria: This was an application for registration and authorization of a Feeder Fund in Nigeria. The Feeder Fund offers 1,000,000 units at $100 per unit. The primary objective of the Fund was to collate investments of professional Investors in Nigeria and proffer same to the Master Fund. It was an investment vehicle for the purposes of obtaining funds for investment. The Professional Investors would have shares in the Fund that would mirror the shares to be issued to them in the Master Fund. Status – Incomplete Documentation.

6. The Lead Fund: This was an application for registration of a Unit Trust Fund and an IPO of N1,000,000 units of N1.00 each. The objective of the Fund was to optimize the returns potentials of the fund by investing in high quality equities and money market instruments.

Status – Under Review.

7. Legacy 50 Exchange Traded Fund: The application was filed by FCMB Capital Market Limited for 1,000,000,000 units at N1.00 each at par. The LEGACY 50 ETF was an initiative designed to reflect the performance of the largest capitalized stocks on the Nigerian Stock Exchange. The Fund was intended to act as a bellwether for the entire market and promote passive index investing. The objective of the LEGACY 50 ETF capital appreciation.

Status – The application was reviewed based on new rules and deficiencies observed were communicated via a letter dated 9th March 2011. The Fund Manager wrote to notify the Commission that they were currently modifying the Fund to suit current market conditions and target investors.

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8. Legacy Index 50 Fund: The application was filed by FCMB Capital Market Limited for 500,000,000 units at N1.00 each at par. The Fund aimed to promote an indexation as an investment strategy using The NSE ASI as its universe. The index constitutes proportionate investments in the 50 most capitalized stocks listed on the floor of The NSE. The index would be reviewed bi-annually to ensure consistency with the volatile market conditions. The objective of the Fund was capital appreciation. Status – Under Review.

9. Vetiva Griffin Fund: This was an application for registration of 1,000,000 units of the Fund at N100 each at par. The objective of the Fund was to provide retail investors’ access to a diversified equity portfolio. Status – Under Review.

10. Vetiva NSE 30 Index ETF: The application was filed by Vetiva Capital Management Limited for 100,000,000 units of VNSE 30 Index ETF at a unit price equal to 1/100 of the value of the NSE 30 Index as at the date of listing. The VNSE 30 Index Securities were designed for and offered to investors seeking attractive returns through market exposure to the constituents of the NSE30 Index. The objective was to hedge its constituent obligations to deliver basket of shares to holders exercising the delivery right to track the NSE Index. Status – Under Review.

11. Core Investment Scheme (COINS): This was an application for registration of an IPO of 1,000,000,000 units of N1.00 each at par. The Fund was to maximize returns on capital employed. Status – Incomplete documentation.

12. Resuscitation of Consortium Resources Investment Note

(CRIN): ARM applied to the Commission for approval to resuscitate and restructure the Fund to an Islamic Fund, whereas the Commission gave approval for it to hold an EGM for the purpose of obtaining the requisite Unit holders approval /resolution for the restructuring.

Status - The Commission approved the restructuring and conversion of the Consortium Resources Investment Note Fund to an Islamic Fund called ARM Ethical Fund.

44  

 

Suspended applications pending submission on proposed structure

in view of new banking guideline

1. GTB Balanced Fund Status – The processing of the application was put on hold pending the provision of relevant information on the proposed structure of the Fund Manager in the light of CBN’s new Banking Guidelines. 2. Skye Shelter Fund (Tranche II)

Status – Skye Bank Plc was written to provide the Commission with the profile of the proposed Fund Manager (SFS Capital Limited). Additional deficiency was communicated to the Issuing House on July 11, 2011. Awaiting their response.

3. Skye Islamic Fund Status – The processing of the application was put on hold in the light of CBN policy reversing the Universal Banking Model. Successors of Skye Bank’s Fund Manager Function may subsequently apply to proceed with the application. 4. Skye Guaranteed Income Fund Status – The processing of the application was put on hold in the light of CBN policy reversing the Universal Banking Model. 5. Diaspora Investment Fund Status – Further processing of the application was stalled awaiting a confirmation of the new structure of the Fund Manager following the new CBN Banking model, vide a letter dated April 28, 2011 the Fund Manager was requested to provide a status report on the Fund within one (1) month failing which their application would be deemed as withdrawn. 6. PHB Equity Fund Status – Application was put on hold in view of the new Banking model. 7. PHB Guaranteed Returns Fund

45  

 

Status – Application was put on hold in view of the new Banking model.

Applications for Unit Trust Schemes approved but yet to convene Completion Board Meeting

1. Diamond Capital Balanced Fund: Issuing house was directed to update

offer documents due to lapse of time.

2. Legacy BNK Fund: The Fund manager applied to the Commission to reduce the Fund size and the request was granted. Issuing house was directed to update offer documents due to lapse.

S/N Name of Fund Fund Manager

Financial Year End

Date of AGM Dividend Declared per unit

1 ARM Discovery Fund Asset Resources & Mgt. Co.

31st December, 2010

17th August, 2011

N3.30 per unit

2 ARM Aggressive Growth Fund

Asset Resources & Mgt. Co.

31st December, 2010

17th August, 2011

Nil

3 Stanbic IBTC Nigerian Equity Fund

Stanbic IBTC Asset Mgt. Ltd.

31st December 8th September, 2011

N115.00 per unit

4 Stanbic IBTC Ethical Fund

Stanbic IBTC Asset Mgt. Ltd.

31st December 8th September

N0.05 per unit

5 Stanbic IBTC Guaranteed Investment Fund

Stanbic IBTC Asset Mgt. Ltd.

31st December 8th September

N1.00 per unit

6 Stanbic IBTC Money Market Fund

Stanbic IBTC Asset Mgt. Ltd.

31st December 8th September

Nil

7 Stanbic IBTC Bond Fund

Stanbic IBTC Asset Mgt. Ltd.

31st December 8th September

Nil

46  

 

Inspected funds and highlights of observations

On-site inspection was carried out on Thirty (30) registered Funds during the quarter under review.

Annual Accounts Approved: - Nineteen (19) annual audited accounts were approved during the period under review.

Annual General Meeting (AGM): During the period under review, seven (7) Funds held their AGM as follows:

Number of Quarterly Returns received for the quarter ending June 30th 2011

Thirty six (36) quarterly returns were received for the period of April – June 2011.

Highlight of observations from the review of returns analyzed were:

1. Violation of asset allocation 2. Un-invested cash in current account 3. Non submission of schedule of investment

Action taken - Observations were communicated to the Fund Managers.

OTHER MATTERS:

Custodial Services for Registered Collective Investment Schemes:

Custodian was introduced and all Fund Managers that registered Unit Trust Schemes were directed to comply within three months (i.e. July – September 2011).

VENTURE CAPITAL

No venture capital fund application was received for registration during the period.

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Pioneer Management & Business Ventures LLP (Private Equity Fund): This was an application for registration and authorization of a Private Equity Fund. Inspection

1. On-Site Inspection: On-site inspection was carried out on Three (3) Venture Capital Fund Managers during the quarter under review, namely: - SME Managers Limited - IBTC Ventures Limited - Amalgamated Capital Fund Limited

2. Off-Site Inspection: The following companies submitted their quarterly returns:

Analysis of Equity Investment by Venture Capital Fund Managers in SMES as at 30th September 2011

S/N

Name of Company

Amount Under Management (N)

Amount Disbursed in Previous Quarter (N)

Amount Disbursed in Present Quarter (N)

Variance %

1. First Fund Limited

4,008,620,312.93

1,772,643,799.92 Nil Nil Nil

2. SME Managers Limited

3,942,640,909.00

435,030,848.87 435,030,848.87 Nil Nil

3. IBTC Ventures Limited

500,000,000.00 1.338,567,000.00 1,342,050,000.00 3,483,000.00

0.26

4. DVCF Oil and Gas

1,040,818,289.00

Nil 712,027,432.00 Nil Nil

5. Diamond Capital

4,999,998,800.00

687,449,569.00 Nil Nil Nil

6. Cowry Asset Mgt.

1,475,837,000.00

342,111,085.96 Nil Nil Nil

48  

 

Limited

7. Unique Venture Capital

2,382,837,000 1,915,606,092.41 2,056,628,631.00 141,022,538.59

7.36

TOTAL 18,350,752,310.9

6,491,408,396.16 4,546,191,911.87

(1,945,216,484.29)

29.97

49  

 

Issuer Issue Type Value Opening/Closing Date

Date Registered/ Approved

Coupon/Maturity

(Bond)

Issuing House

Niger State Govt. N/A

Shelf Registration

N30,000,000,000 N/A 26/9/11 N/A BGL Plc

Lafarge Cement (WAPCO) Nig. Plc

N/A

Shelf Registration

N50,000,000,000 N/A 16/9/11 N/A Chapel Hill

National Aviation Handling Co. Plc

N/A

Shelf Registration

N5,000,000,000 N/A 16/9/11 N/A Chapel Hill

Issuer Offer Price (N)

Value (Amount to be raised) (N’B)

Purpose Closing Date

Date Registered/ Approved

Coupon/ Maturity (Bond0

Issuing House

Niger State Govt. 1000 9B Construction of Roads

N/A 26/9/11 14%

Coupon

2011-2018

BGL Plc

Lafarge (WAPCO ) Nig. Plc 1000 20B Refinancing of the existing facilities

N/A 16/9/11 2011-2014 Chapel Hill

National Aviation Handling Co. Plc

1000 2B Refinancing and repayment of the existing facilities, procurement of equipment, acquisition of ground of handling assets, building of

N/A 16/9/11 2011-2016 Chapel Hill

N/A

Shelf Registration

N100,000,000,000 N/A 29/9/11 N/A Access Bank Plc

50  

 

SECURITIES AND INVESTMENT SERVICES (SIS)

INVESTMENT ACTIVITIES

The following applications were approved and cleared during the period under review.

1. Five (5) Shelf Registration valued at N4,685,000,000,000

2. Six (6) Offer for subscriptions ( Bonds) valued at N1,937,000,000,000

3. One (1) special placement of 290,528,278 ordinary shares valued at N4,674,599,993.02

4. Three (3) Right issues of 3,377,739,187 ordinary shares valued at N3,332,023,025.5

5. Three (3) existing securities of 3,746,849,598 ordinary shares

6. Seven (7) Bonus Issue of 9,505,772,619 ordinary shares valued at N4,801,703,096.5

7. Three (3) allotments of 9,170,209,218 shares valued at N13,554,280,933.02 cleared

warehouse, ITC and working capital

UBA Plc 1000 35B Expansion of distribution channels and Loan growth

N/A 28/9/11 14%

Coupon

2011-2018

UAB Capital and others

Delta State Govt.

1000 N50B Finance developmental projects

N/A 29/9/11 14%

Coupon

2011-2018

Access Bank Plc

Delta State Govt.

51  

 

A. Shelf Registration

B) Subscription (Bond)

C) Special Placement (Equities)

D) Rights Issues ( Equities)

ISSUER ISSUE TYPE

OFFER PRICE (N)

VOLUME (UNIT)

VALUE

(N)

DATE REGISTERED/ APPROVED

OPENING DATE

CLOSING DATE

ISSUING HOUSE

Sovereign Trust Insurance Plc

Rights Issue

0.50 1,734,585,755

867,292,877.5

19/7/2011 25/7/2011

22/8/2011 Vative Capital Management Ltd

Neimeth International

Rights Issue

1.50 821,576,716

1,232,365,074

10/8/2011 4/10/2011

10/11/2011

Meristem Securiti

ISSUER ISSUE TYPE

REGISTERED SECURITIES

NOMINAL VALUE

OFFER PRICE

VALUE

(N)

DATE REGISTERED/CLEARED

OPENING DATE

CLOSING DATE

Guaranty Trust Bank Plc

Special Placement

290,528,278 50 16.09 4,674,599,993.02

6\7/2011 7/7/2011 8/7/2011

52  

 

Pharmaceuticals Plc

es Ltd

E) Existing Securities

F) Bonus Issues

Issuer Issue Type Registered Shares

Nominal Value (N)

Date Registered/Cleared

Issuing House

Property Gate Development & Investment Plc

Existing Securities

240,150,000 1 18/7/2011 N/A

Pinnacle Point Group

Existing Securities

2,426,839,598

R0.0001 25/7/2011 Goldbanc Management Association Ltd

Austin Laz and Co. Plc

Existing Securities

1,079,860,000

.50k 10/8/2011 Deap Capital

Onward Paper Mill Plc

Existing Securities

700,000,000 50k 6/9/2011 N/A

Starcomms Plc Scheme Shares

343,923,905 50k 28/9/2011 Vetiva Capital

ISSUER ISSUE TYPE

REGISTERED

SHARES

NOMINAL VALUE

VALUE DATE REGISTERED/APPROVED

BASIS OF BONUS ISSUE

United Bank for Plc

Bonus 6,466,938,739 N50K N3,233,469,369.5

12/07/11 1:4

Friesland Campina

Bonus 97,633,574 N1 N97,633,574 2/8/2011 1:4

53  

 

G) Allotment Cleared

ISSUER OFFER TYPE

NUMBER OF SECURITIES OFFERED

OFFER PRICE

N:K

VALUE BASED ON THE LEVEL OF SUBSCRIPTION (N:K)

ALLOTMENT CLEARENCE DATE

SUBSCRIPTION LEVEL (%)

ISSUING HOUSE

Dana Group of Companies Plc

Bond 8,010,000,000

1 8,010,000,000 8/7/2011 100 Dunn Loren Merrifield

Guaranty Trust Bank Plc

Special Placement

290,528,278 16.09 4,674,599,993.02

19/8/2011 100 Guaranty Trust Bank Plc

Premier Breweries Plc

Right issue

869,680,940 1 869,680,940 19/9/2011 100 Cowry Asset Mgt Ltd

Wamco Plc

Union Diagnostic and Clinical Service Plc

Bonus 592,189,755 .50K N296,094,877.5

3/8/2011 1:5

Onward Paper Mill Plc

Bonus 99,999,999 50k N49,999,999.5

6/9/2011 1:7

Nestle Nig Plc Bonus 132,109,376 50K N66,054,688 9/9/2011 1:5

Oando Plc Bonus 452,542,314 50k N226,271,157 12/9/2011 1:4

Unity Bank Plc

Bonus 1,664,358,862 50k N832,179,431 12/9/2011 1:20

54  

 

MONITORING AND INVESTIGATION OFF-SITE INSPECTION Broker Dealers During the quarter under review, the Commission received and reviewed two hundred and twenty seven (227) quarterly returns from Broker/Dealers’ segment of the Capital Market Operators.

Subsequent analysis of the returns revealed the following:

ANALYSIS OF KEY INDICATORS

S/NO INDICATORS 1ST QUARTER 2ND QUARTER % CHANGE

1 Shareholders’ Funds 100,400,415,908

90,679,809,671 9.7%

2. Indebtedness to banks 204,629,338,507

101,827,817,771 50%

3 Investment in quoted securities

220,201,378,134

214,864,296,929 2%

4 Loans to CMO’s Clients 34,848,889,431

31,911,139,069 8%

Aggregate Shareholders’ Fund for 227 returns submitted by Broker/Dealers showed a decrease from N100,400,415,908 to N90,679,809,671, representing 9.7% decrease. However, 194 out of 227 of the firms reported positive shareholders’ funds i.e. statutory N70m and above, while 23 Operators had their shareholders’ funds below N70m. Ten (10) had eroded their capital. The level of indebtedness to banks reduced significantly by 50%. This improvement may be attributed to the taken over of most banks’ toxic assets by Asset Management company of Nigeria (AMCON).

Audited Accounts

55  

 

230 Capital Market Operators (CMOs) submitted their 2010 Accounts within the period under review. Analysis of the Audited accounts revealed as follows:

1. Total Operators that eroded their shareholders’ fund 23 2. Aggregate Total Asset Value 1,143,077,383,991.66 3. Aggregate Total Liability Value 923,145,562,951.57 4. Aggregate Net worth/Shareholders Funds 219,931,821,040.09 5. Aggregate Net Income 122,104,246,999.25 6. Overall Net-Worth to Total Asset 0.1:1 7. Aggregate Total Liabilities to Total Asset 0.8:1 8. Aggregate Net worth to Total Liability 0.2:1

Fund/Portfolio Managers Ninety-Seven (97) fund/portfolio managers submitted their returns during the period under review. Out of which, 56 were active, while 41 had zero returns. Further analysis of the returns revealed as follows: Total Funds being managed 227,291,383,252 Investment in Capital market 153,782,977,449 Investment in Others 59,421,009,489 Un-invested Funds 7,368,544,137 Utilization of Issue Proceeds The Commission conducted verification inspection of the following Bonds within the period under review:

1. Verification Inspection On the Utilization of Issue Proceeds of Access Bank Plc Offer of Year 2007;

2. Verification Inspection on the Utilization of Issue Proceeds of Custodian and Allied Insurance plc;

3. Niger State Government of Nigeria N6 billion 14% fixed rate redeemable infrastructure development bond 2009/2014;

56  

 

4. Fidelity Bank Plc 2008 offer for subscription of N5,501,100,421 ordinary shares of 50k each at N8 per share and the rights issue of N498,899,579 Ordinary Shares of 50k each at N8 per share.

Trustees Twenty Nine (29) returns on Trustees were received and analyzed during the period under review. Registrars Analysis of returns received from 25 registrars during the period under review revealed as follows:

• Current Dividend paid : N 3,180,662,173.72 • Unclaimed Dividend : N39,355,423,253.67 • Surplus/Return monies : N 1,139,821,547.49 • Unclaimed share certificate : 966,775

Issuing House Seventy-nine (79) returns were received for the third quarter of the year. Analysis of the returns revealed that 10 Companies had concluded their offer, while 9 are still ongoing. Investment Adviser Forty-seven returns (47) were received and analyzed within the period. (Anti-money Laundering/Combating the Financing of Terrorism (AML/CFT) Related Issues

• Ninety (90) Capital market operators were inspected within the First and second quarters of 2011 in order to ensure compliance with all AML/CFT requirements. The reports were collated and analyzed.

• The Commission received the final report of the technical assistance programme on Risk-Based Supervision from the International Monetary Fund (IMF) which was held from June 20-July 01, 2011.Action plan and recommendations were forwarded for management consideration.

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• 34 CMOs forwarded their weekly returns in respect of AML/CFT foreign

exchange transaction reporting, analysis of the returns revealed that all the returns were zero transactions.

• The Commission was represented at the Regional workshop on Anti-

money Laundering/Combating the Financing of terrorism for non- bank regulators and supervisors at Banjul and Gambia.

FINANCIAL STANDARD AND CORPORATE GOVERNANCE (FS&CG)

DISCLOSURE AND COMPLIANCE

1. Half Yearly Return Reports

The half yearly return forms of seventeen (17) quoted companies were reviewed to determine the companies’ compliance with the Code of Corporate Governance, CAMA and the Investment Securities Act 2007.

The following lapses were observed:

Ø None disclosure of succession plan. Ø Internal control breaches and lapses not properly communicated Ø Non- commencement of E- dividend. Ø Lack of policy for newly appointed directors to receive orientation and

formal training in furtherance of their duties. Ø Inadequate Board committees e.g. Remuneration Committee and Risk

Management Committee. Ø Non certification of the return forms by officers concerned. Ø Audit committee not meeting with the Board and Internal Audit as

required. Ø Irregular Board meeting. Ø Engagement of External Auditors for a long period. Ø Notices of AGM sent to shareholders falling short of 21 minimum working

days requirement of the Code of Corporate Governance.

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The observed lapses were communicated to the companies, some had responded while others were still being awaited. The lapses were communicated to address the observations and to serve as a guide to the companies in their subsequent returns.

Unclaimed Dividend As at September 2011, the Commission recorded a total figure of N42, 620,587,571.80 as unclaimed dividends.

The top five companies with unclaimed dividends are:

Union Bank Plc N12, 200,330,118.80

First Bank Plc N 5,544,615,936.34

Access Bank Plc N 3,779,661,895.12

GTBank Plc N 3,371,590,767.98

Intercontinental Bank Plc N 2,947,724,640.01

MANDATORY SIGNING OF THE NEW CODE OF CORPORATE GOVERNANCE

A total of one hundred and thirteen (113) Public quoted companies signed the New Code of Corporate Governance.

ANNUAL GENERAL MEETING

AGM of twenty-four (24) Public companies were attended. The reports of the AGM were reviewed and all issues of interest to the Commission were communicated to the companies to comment and address appropriately.

CUMMULATIVE PENALTY

The Commission received letters from 7 companies requesting for the breakdown on Penalties imposed for non/delay in filing of quarterly, half yearly and annual returns.

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FINANCIAL SERVICES

A total of 85 Annual Accounts and Reports were received in the quarter and were reviewed. Major findings from the review of financial reports were: a. Companies continued to fail to certify their accounts as required by section 60 (2) of the ISA. b. Late filing of audited accounts by most companies.

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ACTIVITIES OF ZONAL OFFICES

IBADAN ZONAL OFFICE

OPERATIONS ACTIVITIES Monitoring of trading activities on the floor of Ibadan Stock Exchange was carried out, with at least three (3) days of visitation in a week. Establishment of Capital Market Club in Secondary School: The Ibadan Zonal Office launched the Capital Market Club in four schools namely:

Ø St. Annes School (Molete), Ø Methodist School (Bodija), Ø Queens School (Apata), Ø Government College, Ibadan.

INVESTIGATION AND ENFORCEMENT The Ibadan zone received Eighteen (18) complaints during the quarter under review Cases Resolved: Ten (10) complaints were resolved during the quarter under review Cases forwarded to Head Office Six (6) cases were forwarded to the Head Office for Enforcement action Investigation was on-going in respect of (18) eighteen complaints against various companies Unregistered/Illegal Capital Market Operators: Numerous complaints were received in respect of Unregistered/Illegal Capital Market operators operating within Ibadan and its environs.

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KANO ZONAL OFFICE OPERATIONAL ACTIVITIES

Trading activities on the floor of the Nigerian Stock Exchange in Kano were monitored with no abnormality observed. The Zonal Office received a total of 131 complaints during the period under review. 82 of the complaints were Registrars’ related while 14 were stockbrokers’-related and 35 were multiple complaints which bordered mostly on non-verification of share certificates

REGISTRARS RELATED CASES

S/N NATURE OF COMPLAINT NO. OF CASES

1 Non-receipt of Share certificate 39

2 Non-receipt of dividend 15

3 Non-receipt of Bonus 17

4 Non-receipt of return money 11

Total 82

STOCKBROKERS’ RELATED CASES

S/N NATURE OF COMPLAINT NO. OF CASES

1 Unauthorized sale of shares 8

2 Non execution of Investor mandate 4

3 Non-payment of sales proceeds 2

Total 14

MULTIPLE COMPLAINTS CASES

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S/N NATURE OF COMPLAINT NO. OF CASES

1 Non verification of share certificate 35

Total 35

The Zonal Office was able to resolve 38 cases during the reporting period. 13 resolved cases were Stock-Brokers related while the remaining 25 were Registrars’ related cases.

ONITSHA ZONAL OFFICE

OPERATIONAL ACTIVITIES

COMPLAINTS:

During the period under review, the Onitsha Zonal Office received a total of Two Hundred and Thirteen (213) complaints from investors, out of which Twenty Three (23) were Registrars’ related while one hundred and Eighty Nine (189) were Stockbroker related and one (1) an illegal Capital Market Operator.

However, amongst one hundred and eighty-nine (189) complaints received about stockbrokers, one hundred and fifty-eight (158) complaints were against Mega Asset Managers Ltd

A total of twenty two (22) complaints were resolved and closed. Fifteen (15) were Registrar Related while Seven (7) were Stockbrokers related.

ENFORCEMENT

Three (3) case files were referred to the Head Office for enforcement action against Capital Market Operators.

ROUTINE MONITORING OF THE NIGERIAN STOCK EXCHANGE

During the reporting period, trading activities on the floor of the Onitsha branch of the Nigerian Stock Exchange was low due to the fact that most

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stock-broking firms with branches in Onitsha trade from Lagos branch of the Exchange.

ALL PARTIES MEETINGS

During the period under review, the Onitsha Zonal Office convened the following all parties meetings:

S/N PARTIES NATURE OF COMPLAINT

DATES PRESENT POSITION

1. Engr. Okeoma C. Agu

VS

Amyn Investments Ltd

The complainant alleged delay in the remittance of proceeds from the sale of shares and refusal to summit the complainant subscription of 33,000 units of Access Bank Plc during its 2007 public offer, until in December 1, 2009 when it bought 75,133 units of Access Bank Plc shares from Secondary Market.

October 20, 2010.

Friday July 29, 2011

After the deliberation at the all parties Meeting, the Commission directed Amyn Investment Ltd to pay interest on the sum of N236, 222, 01 at 8.79% for 51 days being the period for which it failed to remit proceeds from the sale of the complainant’s shares.

Pay dividend on 33,000 units of Access Bank Plc shares from 2008-2009

Restitute the 2009/2010 bonus of 1 : 10

2. Boniface Onwubualili

Vs

City Securities Ltd

The complainant alleged unauthorized purchase and sale of shares by CSL Securities Ltd

April 4, 2011

Thursday August

25,2011

An all parties meeting was held. Resolution arising from it was yet to be communicated to the parties, since the office was still carrying out some investigations.

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PORT HARCOURT ZONAL OFFICE

OPERATIONAL ACTIVITIES:

INVESTIGATION AND ENFORCEMENT

A total of forty-two (42) complaints from shareholders/investors were received during the period under review. The zonal office resolved twenty-eight (28) of these cases through correspondences, All-Parties Meetings, phone calls and directives to affected operators. Breakdown of the resolved cases are:

Non-receipt of share certificates 12

Non-receipt of Dividends and Return Monies Warrants 4

Non-Receipt of Bonus Certificates 4

Non-Verification of Share certificates 5

Miscellaneous issues (change of Postal Address, Re-issuance of Missing Certificate

3

Total 28

FRESH REGISTRATION

During the period under review, no firm applied for registration.

ANNUAL GENERAL MEETINGS

During the period under review, PHZO attended five (5) annual general meetings.

MARKET DEVELOPMENT

PHZO hosted Investors and Issuer Education Outreach in Port Harcourt from Wednesday 27th to Friday 29th July, 2011. It was a programme jointly sponsored by the Commission and the Rivers State Government.

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LAGOS ZONAL OFFICE REGISTRATION ACTIVITIES

One Hundred and forty two (142) registration forms and Ninety (90) clearance forms were issued to prospective capital market operators while Eighty seven (87) other forms were issued to existing operators. Annual General Meetings (AGMS)/EGM/CMB for the quarter

A total of forty-nine (49) meetings were attended by the zone, they are:

Annual General Meeting - 42 Extra-Ordinary General Meeting - 3 Completion Board Meeting - 2 Court Ordered Meeting - 2

The LZO monitored trading activities of the NSE, some of the observations are as follows: Observations from NSE Trading

S/NO DATE COMMENTS 1 5/07/11 FIRST CITY MONUMENT BANK PLC - The Bank has

notified the NSE of the appointment of Mr. Bakre Nojeemdeen Olufemi as Executive Director in the bank, effective, January 3, 2011.

2 5/07/11 UNITED BANK OF AFRICA - The Bank notified the NSE that upon Central Bank of Nigeria’s approval, it would commence operations in Congo Brazzaville, effective July 1, 2011.

3 6/07/11 NIGERIAN STOCK EXCHANGE - The NSE lifted the technical suspension earlier placed on the following companies, having submitted their Audited Annual Accounts: Airlines Services & Logical Plc, Studio Press Plc, Cornerstone Insurance Plc.

4 19/07/11 FIN BANK PLC - The company notified the NSE of its Transaction Implementation Agreement (TIA) with First City Monument Bank Plc (FCMB) in respect of recapitalization of Finbank Plc. The parties would commence the process of a scheme of arrangement, which would be subject to the approval of Finbank and FCMB shareholders, Central bank of Nigeria, The Securities and Exchange Commission, The Nigerian Stock Exchange and The Federal High Court.

5 19/07/11 IHS NIGERIA PLC - The company notified the NSE of its

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strategic partnership with Visafone Communications Limited. The strategy was a long term partnership involving the sale and leaseback of Tower Assets of Visafone aimed at optimizing their operational efficiencies.

6 19/07/11 PZ CUSSONS PLC - The company notified the NSE of the appointment of Mr. Alex Goma and Ms. Joyce Folake Coker into the Board of the Company, effective July 5, 2011.

7 21/07/11 DIAMOND BANK PLC - The Bank notified the NSE of its executed Share Purchase Agreement (SPA) with NSIA participations S.A Holding (NSIA) in respect of the sale of the Bank’s 96.15% equity stake in ADIC Insurance Limited to NSIA. This was in furtherance of the Bank’s decision to divest from all its non-banking subsidiaries in compliance with the repeal of the Universal banking Guidelines by the Central Bank of Nigeria and its subsequent directive to all deposit taking banks in Nigeria to divest from all non-banking businesses. The SPA which was executed on Friday, 8 July, 2011, articulates the terms under which the sale was consummated with the NSIA.

8 21/07/11 ECO BANK PLC - The Bank notified the NSE of the appointment of the Director, Mr. Kingsley Aigbokhaevbo and resignation of the Directors; Mrs. Morenike Adepoju, Ms. Esijolone Okorodudu and Mrs. Ibironke Wilson.

9 28/07/11 ACCESS BANK PLC - The bank notified the NSE that Mrs. Kemi Ogunmefun has been appointed as a Non-Executive Director on its Board, effective April 28, 2011.

10 2/08/11 NIGERIAN STOCK EXCHANGE - The NSE was notified of the proposed acquisition and financing agreement between Oando and Exile Resources Inc.

11 2/08/11 The following Companies were placed on full suspension for non-rendition of their Annual Financial Statements: IPWA Plc, Premier Paints Plc, Nig Wire & Cable Plc, Dangote Flour Mills Plc, Union Dicon Salt Plc, Lennards Plc, Morison Industries Plc, Ikeja Hotels Plc, Aluminium Man. Co, E-tranzact Plc, First Assurance Plc (Equity Assurance), African Alliance Insurance Plc, Great Nigerain Insurance Plc, Standard Alliance plc, MTI Plc, Investment & Allied Assurance, DAAR Communication Plc, Resort Savings and Loans plc, W.A Glass Industry, Afroil Plc. The following companies were placed on technical suspension for non-rendition of their Annual Financial

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Statements: Hallmark Paper Plc, Costain (W.A) Plc & Cappa Plc, Roads Nig Plc, Neimeth International Pharm. Plc, Aso Savings & Loans, Union Homes savings & Loans, Poly Products (Nig) plc.

12 8/08/11 AFRIBANK, BANK PHB AND SPRING BANK - The shares of these Banks were placed on full suspension as a step towards their delisting from the Daily official List.

13 8/08/11 INTERCONTINENTAL, OCEANIC, UNION, AND FIN BANK - The shares of these Banks were placed on technical suspension until the completion of their recapitalization exercise.

14 8/08/11 The NSE marked down the price of the following companies for dividend payment: Northern Industry Flour Mills (N0.90), Nigerian Bags Manufacturing Co. (N0.13), Flour Mills Of Nig. Plc (N2.00).

15 12/08/11 MAY & BAKER NIGERIA PLC - The company notified The Exchange that at its Board meeting held on July 26th, 2011, Mr. Ezekiel Odulami Ibidapo and Mrs. Gloria Ijeoma Odumodu were appointed as Directors of the Company, effective July 26, 2011.

16 12/08/11 GREAT NIGERIA INSURANCE PLC - The Company notified The NSE of the appointment of George Ikponmwosa Imade on its Board with effect from June 30, 2011.

17 12/08/11 STERLING BANK PLC - Transaction Implementation Agreement The Bank notified The NSE that Sterling Bank Plc (“Sterling”) and Equitorial Trust Bank (“ETB) had entered into a formal Transaction Implementation Agreement (TIA) which would lead to the recapitalization of ETB and merger of both financial institutions. The TIA reflected the main commercial terms of reference on which agreement was reached in principle by the Boards of both financial institutions in close consultation with the Asset Management Company of Nigeria (AMCON). The Bank further stated that the complementary strengths of both institutions underscored the compelling merit of the transaction and would provide enhanced growth prospects as well as attractive financial returns for all shareholders.

18 22/08/11 PZ CUSSONS PLC & NEM INSURANCE PLC - The price of PZ Cussons Plc was marked down for a dividend payment of 86 kobo and scrip of 1 for 4 while Nem Insurance Plc price was marked for a dividend of 5 kobo.

19 23/08/11 FLOUR MILLS OF NIGERIA PLC - This company presented

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its Facts behind the Figure to the NSE, its dealing members and the press. During the session, the group Managing Director presented the success story of the company with particular emphasis on the group’s 16% increase in turnover, the proposed dividend of N2.00 per share and the need to raise fresh funds by way of Rights Issue to existing shareholders, primarily to finance capital projects in furtherance of the Company’s investment in food and agro-allied, cement and to strengthen its working capital.

20 1/09/11 NIGERIAN STOCK EXCHANGE - The new MD of CSCS (Mr. kyari Abba Bukar) was introduced to the brokers.

21 1/09/11 GUARANTY TRUST BANK - The Bank announced the relocation of its headquarters from Oyin Jolayemi Str, Victoria Island, to Akin Adesola Str, Victoria Island, Lagos.

22 6/09/11 AFRIBANK, SPRING BANK, & PLATINUM PLC (BANK PHB) - These companies were delisted from the Official List of the NSE.

23 6/09/11 HONEYWELL FLOUR MILLS PLC, UNIVERSITY PRESS PLC & ROYAL EXCHANGE PLC - The prices of the following companies were marked down for a dividend payment/bonus: Honeywell Flour Mills Plc (13 kobo), University press Plc (35 kobo) & Royal Exchange Plc (1 for 8)

24 22/09/11 ECOBANK NIGERIA PLC - The bank notified the NSE of the appointment of Mr. Oladele Alabi as an Executive Director, Finance & Risk, effective, September 7, 2011.

25 29/09/11 PINNACLE POINT GROUP LTD - The Company notified the NSE that the Directors of Pinnacle Point applied to the NSE for suspension of its securities with immediate effect, following the notice of motion received by the company on Monday 26, September 2011 as announced on NSE. Shareholders were advised that provisional liquidation was granted on Tuesday 27, September 2011.

26 30/09/11 UBA PLC - The Bank notified the NSE of the resignation of Mrs. Faith Teudar-Matthews, a former Deputy Managing Director of the Bank

27 30/09/11 TRANSCORP PLC - The company notified the NSE of the appointment of 3 new Directors with effect from September 29, 2011. The Directors are: 1. Mr. Stanley Lawson 2. Mrs. Angela Nwabuoku 3. Mr. Obinna Ufudo

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LEGAL AND INVESTIGATION

During the third quarter of the year, fifty-four (54) new complaints were received, while one hundred and seventeen (117) files were treated. Out of which, three (3) were successfully resolved and four (4) were referred for enforcement action.

Reviewed files forwarded for enforcement action: 1. Name of File: Afribank Trustees and Asset Management Company Limited Vs. Futureview Financial Service Limited

Subject Matter: Complaint on refusal to refund outstanding sum on Guaranteed Investment Portfolio

Action Taken: The matter was investigated through exchange

of correspondences and convening of all parties meetings. During the last meeting held on 15th September 2011, reconciliation of account was done and N211, 701,989.10 was determined as the outstanding balance.

Thereafter, the operator was directed to pay the outstanding balance on installment basis to which the investor agreed.

2. Name of File: Ogebe Ogebe on behalf of (Usen Udoh) Vs. Prime Wealth Capital Limited

Subject Matter: Complaint on non allotment of 1,000,000.00units of African Alliance Insurance Company Limited (private placement).

Action Taken: This matter was also investigated through

exchanges of correspondences and convening of all parties meeting. The Operator offered the said stocks to the investor at a premium price of N2.30k and as at the last meeting, the total number of the investor’s and the volume of shares subscribed through Prime \wealth Capital Ltd were not known.

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During the last meeting, no agreement/resolution could be reached as the operator did not see anything wrong in its action and also could not account for the investor’s N2,300,000.00. It claimed the company was having cash flow problems and not therefore, could not refund the investor its money. The matter was referred for enforcement action.

3. Name of File: Ambrose Onwusonhye Vs Dependable Securities Limited

Subject Matter: Request for certified True Copy of petition

Action Taken: The matter was long ago handled by LZO, which was concluded and closed. The Operator complied with the directive given by the Commission by forwarding the cheque for outstanding sum due to the investor. The investor collected the cheque since July 24, 2008, although under protest as stated by him on the photocopy of the said cheque.

4. Name of File: Mr. Abubakar Olasewere vs. Riggs Securities Limited

Subject Matter: Refusal to liquidate the outstanding balance of N57 Million

Action Taken: The Commission had earlier carried out initial

investigation into the activities of the operator before proper investigation started. Investigation commenced through exchanges of correspondences and convening of all parties meetings. The Commission then gave its directive for the operator to draw up a repayment plan which it did, and was shown to the complainant and accepted by him.

Following further complaints received from the

operator, the Commission scheduled an all parties meeting for September 2, 2011. At the

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meeting, the operator could not substantiate its claims with documentary evidences.

Standing by its previous directive, the operator

was given one week from the date of the meeting to forward the cheque of N2 million being the 2nd installment failing which enforcement action would commence against him. The operator did not comply.

The matter was forwarded for enforcement action.

KADUNA ZONAL OFFICE

OPERATIONAL ACTIVITIES

Complaints by investors and action taken by the Zone

During the period under review, the Kaduna Zonal office received a total of Fifty Five (55) complaints out of which Forty Seven (47) were registrars’ related while Eight (8) were brokers’ related.

A total of Thirty Five (35) complaints were resolved, some of these complaints were received in the previous quarter, out of which Five (5) were brokers’ related complaints, while Thirty (30) were registrars’ related complaints; Twenty Six (26) complaints were still in various stages of investigation.

Trading activities on the Kaduna floor of the Nigeria Stock Exchange (NSE)

Trading Activities on the Kaduna floor of the Nigerian Stock Exchange was active during the period under review.

Application for registration by prospective Capital Market Operators in the Zone

One (1) Investment Adviser applied for registration.

MARKET DEVELOPMENT ACTIVITIES

Enlightenment Programmes

The Zone introduced an educative article with the New Nigeria Newspaper, titled “Response to Investors’ Enquiries”. Eighteen (18) editions were published within the quarter on a weekly basis.

The Zone also paid a courtesy visit to Zazzau Emirate Council.

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Radio/TV Sensitization Programme

The Head, (KDZO) was “guest of the week” with Kaduna State Media Corporation (KSMC). Issues on Capital Market Investments were discussed.

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DEVELOPMENTS IN THE DOMESTIC SCENE

SEC to establish Investor Protection Trust Fund The Securities and Exchange Commission (SEC) has proposed to the establishment of Investors Protection Trust Funds (IPTF) that would provide ready assistance to investors who might lose some investments in the event of any unforeseen bubble bursts in the capital market.

The establishment of the IPTF was necessary to quickly come to the aid of ordinary investors in the event of reoccurrence of the recent bubble burst in the capital market.

(Curled from Daily Champion Newspaper of September 22, 2011.)

SEC sets up demutualization committee

The apex regulator of the Nigerian capital market, Securities and Exchange Commission (SEC), had approved the constitution of a Demutualization Committee.

The committee, which was set up at the 61st meeting of the Board of the Commission was held on September 20, 2011, and was mandated to make recommendations for the demutualisation of the Nigerian Stock Exchange (NSE).

The Committee headed by Mr. Asuelime Ighodalo, a renowned practitioner of commercial law had been inaugurated.

(BusinessDay Newspaper of September 22, 2011.)

CBN, SEC, DMO discuss alternative finance for infrastructure

The Central Bank of Nigeria (CBN), Securities and Exchange Commission (SEC) and Debt Management Office (DMO) met to discuss on how to develop alternative finance modes for infrastructure development in the country.

According to the CBN Governor, Mallam Sanusi Lamido Sanusi, infrastructure development projects are usually capital intensive while funding of such projects from historical perspective is 100 per cent government financed. This,

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he said had proved insufficient resulting in inefficient allocation of resources that give rise to white elephant and abandoned projects. He noted therefore that private sector funding through Private Public Partnership and other mechanisms were potential sources of alternative finance. He further said Islamic finance in some parts of the world had served as an alternative financing mode.

The CBN realised, as many regulatory authorities all over the world do, the potential of this alternative form of finance.

“We view it as not only having the potential of providing much needed funds for infrastructure development through foreign direct investment, but also of developing the critical mass needed for a capital market that will offer products and instruments for the investment and liquidity management needs of institutions that are coming on stream to offer alternative form of financial intermediation,’’ he said.

(From Daily Trust Newspaper of July 12, 2011.)

Banks takeover: NSE directs stockbrokers to open new accounts

The Management of the Nigerian Stock Exchange had directed stock broking firms that had accounts with the nationalized banks to open new accounts.

Specifically, firms that maintained settlement accounts with Spring Bank Plc, Bank PHB Plc and Afribank Plc were advised to open new accounts with other quoted banks on the Exchange.

The Chief Executive Officer, NSE, Mr. Oscar Onyema, stated this in a meeting with stockbrokers. He said this was imperative following the fact that the three nationalised banks no longer existed.

A broker, who was part of the meeting, said that Onyema told them to move their settlement accounts from those banks to other public limited banks in line with the policy of the Exchange. After an effective processing, the shares of the three banks were to be delisted by the NSE.

The Federal Government had announced the takeover of Spring Bank, Bank PHB and Afribank for failure to recapitalise in line with the Central Bank of Nigeria’s directive.

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These banks, along with Union Bank Plc, Intercontinental Bank Plc, Finbank Plc and Oceanic Bank International Bank Plc, were given up till September 30 to recapitalise or face liquidation.

(Daily Trust Newspaper of August 9, 2011.)

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DEVELOPMENTS IN THE INTERNATIONAL SCENE

IOSCO tasks members on OTC derivatives’ data reporting

THE Committee on Payment and Settlement Systems (CPSS) and the Technical Committee of International Organisation of Securities Organisation (IOSCO), released for comments, a report on the requirement for Over-The-Counter (OTC) derivatives data reporting and aggression.

Comments on the report, according to IOSCO were invited from all interested parties and should be sent by September 23, 2011, adding that: after the consultation period, the CPSS and IOSCO would review all comments received and publish a final report by the end of 2011.

According to IOSCO, the report should be collected, stored and disseminated by trade repositories (TRs), adding that by collecting such data centrally, it would provide the authorities and the public with better and timely information.

IOSCO explained that the resolve was expected to make markets more transparent, help to prevent market abuse, and promote financial stability.

Explaining further, IOSCO in a statement said, that the proposed requirements and data formats would apply to both market participants reporting to TRs and to TRs reporting to the public and to regulators.

The report also finds that certain information currently not supported by TRs would be helpful in assessing systemic risk and financial stability, and discusses options for bridging these gaps.

Issues relating to data access for the authorities and reporting entities were discussed, including methods and tools that could provide the authorities with better access to data. Public dissemination of data as noted, promotes the understanding of OTC derivatives markets by all stakeholders, underpins investor protection, and facilitates the exercise of market discipline.

The report also covered the mechanisms and tools that the authorities would need to aggregate OTC derivatives data. It advocates a system of standard legal entity identifiers (LEIs) as an essential tool for aggregation of such data.

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Finally, the report recommended that CPSS-IOSCO or the FSB makes a public statement calling for timely industry-led development, in consultation with the authorities, of a standard classification system for OTC derivatives products.

(Curled from the Guardian Newspaper of September 1, 2011.)

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EXCURSION VISITS

In furtherance to its developmental functions, the commission during the period under review hosted a total of four hundred and seventy five (475) students from the following institutions:

• Nigerian University of Accounting Students’ Association Kogi State University.

• National Association of Polytechnic Accountancy Students: Federal Poly Bida (NAPAS).

• National Association of Banking and Finance Students: Federal Poly Nasarawa.

• National Association of Polytechnic Accountancy Students (NAPAS) Federal Poly Kauran Namoda.

• Faculty of Social Sciences, Ebonyi State University.

• National Association of Business Administration Students’ Delta State University.

• Maurid Institute of Management and Technology, Nasarawa State.

• Nigerian Economics Students Association, Nasarawa State University.