He knew that the stock market was an avenue to create more wealth and that was why David Osagbodje, a consultant, bought over 5,000 units of Union Bank’s shares during its public offer, December 2005. Osagbodje did so, as against buying in the secondary market, because the offer was discounted and because he reasoned that his certificate would be ready in less than four months. “My intention was to sell my shares five months after the offer and use the money for something else,” he said. However, Osagbodje waited for more than a year and watched with apprehension as the price of the stock rose. "I was afraid that the price would collapse before I get my certificate,” he told the magazine. Osagboje eventually received the certificate about 18 months after the offer. Fortunately for him, the price did not crash. “But my money was unnecessarily tied down for so long. I could have used the money to buy and sell shares three times over,” he said.

But Wale Akinyele, 26, was not that lucky. The young bachelor bought Transcorp shares during its public offer in January 2007, with the aim of selling them six months after. Akinyele, who is yet to receive his share certificate, watched with dismay as the unit price of Transcorp shares dropped from N9 to N3. “More than three-quarters of my investment has been lost. If I had received my certificate in time, I would have sold my shares before the price collapsed,” he griped. An investor who pleaded anonymity told the magazine that he borrowed N7.2 million at an interest rate of 22 per cent to buy the public offer of First Bank last July. According to him, he did so because the offer was discounted and because he thought that the certificate would be ready under three months. But six months after the offer, which was oversubscribed by 500 per cent, he is yet to receive either the certificate or the refund of his money. “I wonder how I will pay back the debt with such high interest,” he lamented to the magazine.

All over the country, investors are crying foul over delays in certificate dispatch after public offers. The magazine’s findings reveal that investors often have to wait several months and sometimes more than a year before they receive their certificates. The delay contravenes regulations guiding public offers, which stipulate that allotment shall be done six weeks after an offer and that certificates shall be dispatched to investors 15 working days after the allotment has been approved by the Securities and Exchange Commission, SEC. In the case of over-subscription, money shall be returned to investors five working days after SEC’s approval of the allotment. In other words, investors should receive their certificates or the refund of their money 10 weeks and eight weeks, respectively, after an offer has been concluded.

Sadly, no company has been able to keep within this deadline. This throws up a very important question: Is the deadline unrealistic? Many stockbrokers who spoke with the magazine believe so. Their argument is based on the premise that awareness of the Nigerian capital market is more widespread. Ahmed Mohammed, a stockbroker, told the magazine that the number of people participating in a public offer has increased tremendously since 2004. “Before 2004, less than 2000 persons sometimes patronised public offers. But, today, some offers are patronised by more than 250,000 persons. And in some cases, you have the same person using 1000 different forms to buy shares in the same offer,” he said. Mohammed submits that the deadline for certificate dispatch, in view of the tremendous awareness in the capital market, is not realistic.

Even so, investors claim that such excuses are lame. They insist that since all the parties to an offer — the issuer, the issuing houses, stockbrokers, registrars and regulatory authorities — are aware that participation in the market has increased, provision should be made to absorb such an offer. They also frown at registrars taking more companies than they can handle. “If a registrar has 20 companies and five of them are coming to the market at about the same time, how can it handle such?” Olufemi Timothy, president, Nigerian Renaissance Shareholders Association, queried. Many investors, however, allege that companies deliberately withhold dispatching the certificates so as to manipulate prices in the short run. “Companies do so because they know that by the time all investors receive their certificates, many will want to sell and this will cause the price of a particular share to fall,” Timothy alleged.

Registrars maintain that these allegations are not true. They blame bureaucracy of the Nigerian postal system and investors who write incorrect addresses on their application forms for the delay. “We do not derive joy in keeping certificates in our offices because they occupy space,” said a senior official of Intercontinental Registrars Limited. Shola Oni, senior manager, corporate affairs, Nigerian Stock Exchange, NSE, also believes companies have nothing to do with manipulating prices. “I don’t think any company will withhold certificates just because it does not want the price to fall,” he said. All efforts by the magazine to get SEC’s stance on the matter proved abortive.

The magazine’s findings reveal that the tremendous participation by investors in an offer has proved overwhelming for the registrars to cope with. For instance, the registrar handling First Bank’s offer, which was subscribed by over 1.2 million investors, has been working round the clock to make sure investors get their certificates on time. Investors, too, have their share of the blame, especially those who use multiple forms for the same offer. Also, investors often enter incorrect and inadequate information while filling the offer forms, which adds to the problems of the registrars. Furthermore, the need for regulatory authorities such as SEC and, sometimes, the Central Bank of Nigeria to verify allotments equally constitutes delay, while the inefficient postal service poses a stumbling block to speedy dispatch of certificates.

So, what is the way forward? Musa Al-Faki, director-general, SEC, in his New Year message to the staff of the commission, assured that monitoring of public offers would be intensified to ensure complete dispatch of share certificates and refund of money to investors in good time. However, the consensus by all stakeholders is that public offers should be done electronically. In other words, investors’ accounts with the Central Security Clearing System, CSCS, would be credited with the units of shares bought, instead of sending physical certificates to such investors. Oni strongly believes that this would ensure prompt allotment to investors. However, there are concerns that many investors who reside in the rural areas may not have CSCS accounts and so would be cut off from participating in offers. For instance, the intention of First Bank and Oceanic Bank to execute their last offer through CSCS accounts was thwarted because many investors do not have CSCS account numbers. And to get such, the services of a licensed stock-broking firm would be required. There are suggestions that stock-broking firms, usually concentrated in urban areas, should open branches in rural areas. Analysts are also of the view that by the time stock-broking firms shore up their capital base to N1 billion as mandated by the Ministry of Finance, through SEC, such funds could be used to finance new branches in rural areas. Perhaps, until then, the mandate of SEC that all public offers should be done electronically, through CSCS account, by the end of 2008 would be a mirage.