Shareholders of Nigerian Exchange Group (NGX Group or The Group) Plc gathered in the Federal Capital Territory, Abuja, on Thursday, September 9, 2021, for its first Annual General Meeting (AGM) after the demutualization of the Nigeria Stock Exchange (NSE).
Amid other critical issues proposed for a shareholder vote, the NGX Group Board of Directors presented the audited financial statements for 2020, showing the resilience of NGX Group in turbulent and difficult market conditions. The shareholders approved all the resolutions proposed at the meeting, including the re-election of the non-executive directors who are stepping down on a rotating basis; the election of members of the Audit Committee; the proposed remuneration for the board of directors and non-executive members of the former National Council of the NSE; and the introduction of stock-based incentives for employee compensation, including an employee share ownership plan (ESOP) and a long-term performance-based incentive plan.
The NGX Group, which leads by example as a new corporate entity, is committed to the highest standards of governance, recognizing its role in the critical infrastructure of capital markets.
Much like today’s major global stock exchanges (London Stock Exchange Group, Intercontinental Exchange, Singapore Exchange, Japan Exchange Group) and other African exchanges such as Johannesburg Stock Exchange and FMDQ, the demutualized NSE gave birth to a structure group with the resulting advantages. Today, the NGX group is the non-operating holding company with three (3) subsidiaries – the operating stock exchange, Nigerian Exchange Limited headed by Mr. Temi Popoola, CFA, as CEO; the independent regulatory firm, NGX Regulation Limited, headed by Ms Tinuade Awe as CEO; and the real estate company NGX Real Estate with Mr. Gabriel Igbeka as interim CEO.
Each of these entities is governed by independent boards of directors, whose composition was not only strategic but in accordance with acceptable practices.
At the extraordinary general meeting (EGM) of then NSE members in March 2020, a resolution was adopted regarding the appointment of the first board of directors of NGX Group, after demutualization. The process for the selection of board members has been duly followed and the identified candidates have been subjected to a rigorous due diligence exercise before going through the internal governance process, being submitted to the Securities and Exchange Commission for approval and subsequently presented to previous members at EGM 2020.
Members agreed on the importance of maintaining continuity and preserving the collective knowledge and experience gained from The Exchange (institutional memory), as well as maintaining stakeholder confidence and maintaining market stability. It was therefore agreed that the composition of the Councils would include people chosen from the former National Council and external candidates.
This Agreement was contained in the Scheme of Arrangement dated January 20, 2020 between the Nigeria Stock Exchange and the Trading and Ordinary Members of the Nigeria Stock Exchange with respect to the demutualization of the Nigeria Stock Exchange (The Exchange) (the Scheme) . The plan was approved at a court ordered meeting held on March 3, 2020.
The approved Scheme of Arrangement was sanctioned by the Court on May 14, 2020 and filed with the Corporate Affairs Commission (CAC) on June 1, 2020, and entered into force on the date of its filing with the CAC.
The board of directors of NGX Group currently has eleven (11) members and of the 11 directors, five (5) hold direct or indirect stakes in the company, which ensures a strong representation of the shareholders of the company.
In addition, exceeding the minimum required by law according to which a public company must have at least three (3) independent directors (S.275 (1) CAMA 2020), NGX Group has opted for four (4) independent directors.
Transition agreements that are expected to last 18 months have also been concluded and it was recognized that the subsequent composition of the board after this transition period will evolve in accordance with existing rules and regulations, market standards, competitive realities and succession planning policies.
The composition of the inaugural office – comprising some members of the old Council and new members – was approved at the EGM, provided that their appointment becomes effective after demutualization.
The market continues to have confidence in the NGX group, as evidenced by the statement of the chairman of the Association of Securities Dealing Houses of Nigeria, representing the largest group of shareholders in the company, Chief Onyewenchukwu Ezeagu, who said before the recent 60th AGM,
“As major shareholders, we have been involved in all the demutualization processes.
We are comfortable with the meeting agenda because we have been part of the whole process. The proposed resolutions had been made public during the demutualization. The meeting will lead to a renewed relationship between the NGX Group and its stakeholders ”.
In order to align the interests of internal stakeholders with those of shareholders in creating long-term value, the creation of ESOP was also approved at the 60th AGM, following approval by special resolution at the the March 2020 EGM granting authorization to directors and subject to regulatory members / shareholder approvals.
The creation of an ESOP for the benefit of employees (who will pay a reduced contribution per share) was proposed by the Membership Verification Panel and the Demutualization Advisory Committee in 2016.
The Group held several stakeholder engagement sessions regarding resolutions to be presented at the court-ordered meeting and EGM, and these sessions addressed concerns raised so far against one of the proposed resolutions. . As such, the decision to establish an ESOP was obviously based on the authority given to directors by members at the EGM in 2020.
Following this authorization, the Board began the process of establishing the ESOP by undertaking a robust Request for Proposal (RFP) and RFP which resulted in the appointment of a seasoned external consultant (the Consultant). following a rigorous selection process. The ESOP draft which was developed by the consultant was not only benchmarked against global best practices, but also underwent careful scrutiny by the former National Council and Board of Directors of NGX Group Plc, before it was released. ‘a revised version would only be approved by shareholders at the recent AGM.
It was also clarified during the meeting that the authorization requested from members is to issue and allot existing ordinary shares of the authorized share capital of Nigerian Exchange Group Plc for ESOP. No new action is created for this purpose
Clearly, the NGX Group has already started to realize the benefits of demutualization, including aligning stakeholder interests with the value created by the new Group under a revised corporate governance framework. With its new structure, HoldCo, NGX Group, sits at the top of several organizations and is responsible for the implementation of value-creating strategic initiatives and services that strengthen the Group. Under the leadership of Mr. Oscar N. Onyema, OON, the Group is better positioned to realize its vision of being the leading integrated capital markets infrastructure group in Africa.
Some of the key activities that Mr. Onyema undertakes include overseeing the financial planning activities of the Group, including the allocation of Group capital as well as the investment activities of the Group with an emphasis on cash management, ‘capital allocation, fundraising, private equity investments, mergers and acquisitions as well as overseeing integration processes to maximize returns. Onyema’s contributions to the development of Africa’s capital market are not lost on stakeholders as he has just been elected to the board of directors of the World Trade Federation.
Recently, Mr. Oscar N. Onyema, Group Managing Director and Chairman and CEO of NGX Group Plc, said: “As the group progresses with its listing plans on Nigerian Exchange Limited, exciting days lie ahead.
The Group’s financial performance in 2020 showed strong resilience and growth prospects. The Group ended 2020 in a healthy financial position with net asset growth of more than 10% to 31.28 billion naira, and the resulting after-tax income and surpluses estimated at 6.02 billion naira and 1.84 billion naira respectively.
Against the backdrop of the COVID-19 pandemic, we have maintained strict cost control, which has reduced expenses by 13% despite investments in technology that have enabled remote operations without any downtime “.
With this in mind, the capital markets are delighted to explore this new phase of growth for the benefit of all.