Beginning from January 1, 2009, subscribers to public offers in the country's capital market would have their subscriptions credited online as the regulatory authorities have concluded arrangements to phase out the issuance of share certificates for public issues.

Prof. Ndi Okereke-Onyiuke, DG, NSE

The Director General of Nigerian Stock Exchange (NSE), Prof. Ndi Okereke-Onyiuke, disclosed yesterday at a press briefing in Lagos, that the exchange, in collaboration with the Securities and Exchange Commission (SEC), had fixed December 31, 2008 as the deadline for the total phase-out of share certificates for public issues. The measure, she explained, was aimed at eliminating complaints associated with dispatch of share certificates to investors. The e-certificate system is to be handled by the Central Securities Clearing System (CSCS) immediately after allotment of shares has been concluded.

According to the NSE DG, investors who already have CSCS accounts would be credited as soon as the public issue is concluded while fresh accounts would be opened for new users of the platform.
The NSE had during the introduction of the CSCS in 1997 pushed for a "certificateless" market while adopting dematerialisation of share certificates for share transactions in the secondary market.
But some key shareholders have kicked against the process because of their preference for share certificates as evidence of share ownership.

The Managing Director of CSCS, Onyewuchi Asinobi, who was also at the briefing disclosed that a total of 1.7 million share certificates were dematerialised in 2007 as against 1.1 million in 2006.
"From 1997 to 2007, CSCS has dematerialised 7.1 million share certificates, which represent 246.66 billion units of shares," he said. In 2007, 152 shareholders requested for share certificates as against 160 shareholders in the previous year.

Buttressing investors' preference for the CSCS platform, he said: "Since 1997 to December 31, 2007, only 8,358 shareholders have requested for share certificates. "Also, the number of shareholders in the CSCS system has increased by 81.81 per cent from 1.1 million in 2006 to two million in 2007."
The propelling factor for the current growth in CSCS activities include new equity listings, foreign investors' participation, growing and active local investor population as a result of awareness campaigns by the NSE, other regulators, operators and listed companies.

According to supporters of the e-certificate system, unlike the current system whereby share certificates are not delivered to investors for several months, the new system would enable them to take advantage of capital gains that usually follow the listing of a company after a public offering.
In another development, the NSE noted that it would soon create the NSE 30 stock index based on market liquidity and capitalisation.

According to Okereke-Onyiuke, the launch of the index should form the basis for the creation of index futures and exchange-traded funds in the country.