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NSE Completes Demutualisation Process, April

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All is now set for the final conversion of the Nigerian Stock Exchange, NSE, to a public liability company as the process for the demutualisation of the Exchange would be concluded on April 24.
This follows the Court-Ordered Meeting and Extra-Ordinary General Meeting scheduled to hold on March 4, 2020, where members of the Exchange are expected to sanction the planned demutualisation and also approve the appointment of the inaugural Board of Directors.
According to the scheme of arrangement for the demutualisation, the final approval for the demutualisation would be obtained from the Securities and Exchange Commission (SEC) on April 22, 2020.
If the proposed exercise is approved, the Exchange would become the 57th exchange to demutualise among the 70 members of the World Federation of Exchanges.
According to the Scheme of Arrangement between the Exchange and the shareholders/dealing member firms, each dealing member would get 6.01 million ordinary shares, while each ordinary member would get 2.44 million units post-demutualisation.
Following the demutualisation, N1.25 billion comprising 2.5 billion ordinary shares and 2.0 billion ordinary shares of 50kobo each, representing the issued share capital of newly demutualised Nigerian Exchange Group Plc would be registered with the Corporate Affairs Commission (CAC) and the Securities and Exchange Commission (SEC) respectively.
The Scheme of Arrangement showed that a total of 40.83 million ordinary shares, representing two percent of the issued shares of Nigerian Exchange Group, would be set aside for allotment to parties who are adjudged as being entitled to shares in the demutualised Exchange, pursuant to the provisions of the Demutualisation Act 2018.
“The apportionment of two percent as the Claims Review Shares is based on an analysis of the probable quantum of shares that would be required to settle each claim. This was determined given the rigorous and robust process undertaken to verify and confirm the names on the Register,” the Exchange said.
Additionally, 1.96 billion ordinary shares representing about 98 percent of the issued shares and the balance of the issued shares following the reservation of the Claims Review Shares would be distributed between the dealing and ordinary members on the basis of a ratio of 78:22 respectively allotted on equal basis between the dealing and ordinary members.
Post-demutualisation, the Exchange will be better positioned to implement commercial strategies to improve its role as a trading arena and undertake improvements to facilitate more competition. Improvements will allow for efficient, effective and more competitive trading, while improved global trading facilities will maximize economies of scale and scope and increase the Exchange’s accessibility and market reach.

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COVID-19: CBN Grants Two-Week Market Holidays To BDCs

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The Central Bank of Nigeria (CBN) has granted a two- week market holidays to the Bureaux De Change operators.
This followed a request by the Association of Bureaux De Change Operators of Nigeria to the CBN for the regulator to grant it market holidays, given the ongoing challenges faced in local and global economies due to the impact of the Coronavirus (COVID -19) pandemic.
In a notice  to BDC operators and directors,  ABCON President, Alhaji Aminu Gwadabe, said the CBN’s approval meant that sales of foreign exchange to BDCs is now suspended till further notice.
Gwadabe also advised the  public not to go into panic buying, hoarding  and partronasing  the street traders as  the CBN has enough reserves to sustain supplies when the BDCs return to operations.
The CBN had also acknowledged the contributions of BDCs in promoting stable exchange rate in recent months despite challenging circumstances facing the Forex market due to drop in crude oil prices.
Gwadabe advised members to observe strict guidelines on the preventive measures on the dangers of the COVID 19, wear their mask, gloves, and frequent washing of hands.
“We also want to advise members to  strictly  comply with their regulatory obligations on their daily operation. If you are trading, be cautious not to fall under the hand of security agencies. Don’t be involved in giving black market rates,street trading  as doing so might create regulatory breach,” he said.
Gwadabe said that  CBN/NFIU were tracking large movements of funds within the financial sector and noted the need to be cautious.
“Once again, accept our continuous assurances on serving you better as we continue to ponder on lasting solutions to the growing challenges facing our operations amongst them, crowd management, expansion of scope of our buisiness, lesser penalties, automation, among others,” he stated.

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…Suspends Cheque Clearing Amidst Lockdown

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The Central Bank of Nigeria (CBN) has suspended clearing of cheques until further notice following the lockdown in Lagos, Ogun  and FCT to contain the spread of COVID-19 pandemic.
The suspension was announced in a circular to Deposit Money Banks and the Nigeria Interbank Settlement System (NIBSS) by the Director of Banking Services at CBN, Mr Sam Okojere.
President Muhammadu Buhari had, on Sunday ordered a lockdown in Lagos, Ogun and the FCT with effect from 11 p.m. on Monday, March 30 FCT), as a response to contain the coronavirus (COVID-19) pandemic.
The bank explained that in view of these developments and in furtherance to the Bank’s effort to ensure hitch-free clearing and settlement activities, the CBN had therefore suspended it until further notice.
The apex bank further stated that the clearing of cheques instruments in the Nigerian clearing started from March and for the avoidance of doubt, no fresh cheque instrument would be allowed to pass through March 31.
The CBN noted that only returned cheque would be treated on the said date.
“However, settlement activities for electronic instruments will continue to hold during this period of suspension”, it said.

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Nigeria’s Economy Fragile Before COVID-19 Pandemic –Finance Minister

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The Minister of Finance, Budget and National Planning, Zainab Ahmed, has said that prior to the outbreak of the coronavirus pandemic, the Nigerian economy was already fragile.
She said this in a statement issued by her Special Adviser on Communication, Mr Yunusa Abdullahi, on Monday in Abuja.
Ahmed, according to the statement, said this during her meeting with the leadership of the National Assembly where she spoke on implications of the global economic crisis on Nigeria.
The coronavirus pandemic had led to unprecedented disruptions to global supply chains, a sharp drop in global crude oil prices, turmoil in global stock and financial markets, the lockdown of large swath movements of persons in many countries, among others.
These outcomes have had severe consequences on households’ livelihoods and business activities, resulting from drop in global demand, declined consumer confidence and slowdown in production.
But the finance minister said that prior to the outbreak which had led to decline in crude oil prices, the Nigerian economy was already fragile, vulnerable and deteriorating.
She said the global economic downturn had forced international oil prices to drop to as low as $22 per barrel.
The minister said international travels and trade had been severely disrupted, while demand for goods and services is deteriorating as a result of the social distancing policies.
This, she said had led to financial markets uncertainty which had resulted into capital flows’ reversal from emerging and frontier markets such as Nigeria.
She said, “Increasing pressure on the naira and foreign reserves as the crude oil sales receipts decline and the macroeconomic outlook worsens.
“Central Bank of Nigeria, just as in other countries, has resorted to quantitative easing, by reducing interest rates to support economic activity and governments announcing fiscal stimulus plans for healthcare and social safety nets.”
She said the government was working on a fiscal stimulus package to cushion the impact of the crisis on the most vulnerable individuals and communities.

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