The Nigerian Stock Exchange has expressed concerns about a section of the Asset Management Corporation of Nigeria’s Act, 2010 (Amendment) Bill, 2014, which it says exempts AMCON from being regulated by the Investment Securities Act.
The NSE made its position known in a memorandum (dated February 14, 2014) to the Senate Committee on Banking, Insurance and Other Financial Institutions.
According to the NSE, Section 6 of the AMCON Amendment Bill, which proposes to amend Section 60 of the AMCON Act, appears to ensure that AMCON’s activities as it relates to the Nigerian Capital Market will not be regulated by the ISA.
The NSE explained that while Section 60 of the AMCON Act ensures that AMCON is exempted from capital gains tax, the Companies Income Tax Act and the Stamp Duties Act, the proposed amendment to Section 60 seeks to exempt AMCON not just from the taxes and transaction fees imposed pursuant to the ISA, but from complying with the entire provisions of the ISA.
It said, “This total exemption is not advisable because the ISA makes a provision for the rules and laws that govern and regulate the capital market.
“AMCON is an issuer primarily in bonds and is also potentially a major participant in securities lending as stipulated by the AMCON Act, both of these activities are extensively regulated by the provisions of the ISA.
“Part XV of the ISA deals with borrowing by the federal, state and local governments and their agencies and regulates activities involving bonds. Part X of the ISA deals with the conduct of securities business, under which securities lending is regulated.”
According to the Exchange, exempting AMCON from the provisions of the ISA will mean that the bonds issued by AMCON will not be regulated by any legislation since the AMCON Act does not have provisions regulating the issuance and dealing in bonds.
It added, “The exemption will also make it difficult for the capital market players to deal in AMCON bonds since the capital market players will be subject to the ISA while AMCON will not. This could lead to conflicting policies regarding actions that can be taken in respect of the AMCON bonds.
“This is the same situation with securities lending, as this is governed by the ISA and there are rules issued in respect of securities lending by both the Securities and Exchange Commission and the Exchange.”
It suggested that considering the issues it raised, the specific areas in the ISA, such as transactional costs, tax and regulatory fees, which AMCON wants to be exempted from, should be explicitly stated in Section 6 of the AMCON Amendment Bill rather than a blanket exemption from the ISA.
The NSE explained that the objective of the memorandum was not just to fault the bill, but to enable the committee to make an informed decision that will positively affect capital market stakeholders at a critical time in its recovery.
It also stressed that AMCON, through its activities such as the forbearance it offered to 84 stockbrokers, played a part in the recovery of the capital market from the economic crisis.
“Aside from our above comments, we would like to attest to the fact that the AMCON Amendment Bill has its benefits as it will give further clarity to the structures already created by the AMCON Act,” the NSE said.
Source: Punch (by Simon Ejembi)
