Some shareholders have urged the national assembly to enact a law making it mandatory for companies to pay interest on unsuccessful share purchase funds held for more than one month.

The shareholders in separate interviews in Lagos argued that the dynamics of the Nigerian capital market had made the promulgation of the law compelling. Chief Uzodima Anne said the decision of the First Bank Plc which recently paid interest on returned funds from their recent public offering underscored the need for the law.

When enacted, he said, the law would offer the investors value for their money and also aid faster growth of the country’s emerging capital market. While expressing reservations about the idea of over-subscription of public offerings, Anne said companies should be magnanimous enough to allow owners of the funds to benefit from accrued interest from the receiving banks.

“We are aware of what some of the companies, especially the banks deploy funds and we are prepared to challenge it,” Anne said. In his contributions, Alhaji Gadebo Olatokunbo, Publicity Secretary of the Nigerian Shareholders Solidarity Association (NSSA) said the law was necessary because part of the unsuccessful share purchase funds were from bank loans.

While not absolving companies from the allegation that they trade with investors’ funds without paying interest on them, Olatokunbo, however, blamed the delay in returning investors funds on the regulatory authorities. He said that he and his colleagues would be prepared to work with the national assembly to ensure that companies remain proactive and offer investors value for their money.
“There is need to set a time-frame for holding unsuccessful monies and a clear interest profile for defaulters outside the penalties of regulators,” he added. Mr Sunny Nwosu, National Coordinator of the Independent Shareholders Association (ISAN) said the legislation if enacted could make operators to have the confidence of the investors.

“We have suffered enough and because we pay interest on raised funds, companies that fail to return utilised funds within a stipulated time should pay interest on them,” Nwosu said. The ISAN coordinator said that the First Bank Plc action was an indication that the law would be practicable.

First Bank Plc recently paid interest on all unsuccessful funds from its recent public offering. According to the bank, the interest on annualised rate of 5 per cent is from Sept. 10 to Nov. 5. First Bank hybrid offering of 7,666,470,465 shares and its eventual listing on the market had shot up its shareholder base to above N320 billion with a market capitalisation of N850 billion.