Business
Oscar Onyema under fire, as lawsuit, investment loss, poor earnings trail NGX Group
Oscar Onyema under fire, as lawsuit, investment loss, poor earnings trail NGX Group
The Nigerian Exchange Group (NGX) seems to be falling like a pack of cards under Oscar Onyema, and his 11 years leading the company is being called to question over alleged poor financial management and lack of value creation for shareholders.
For 10 years, Oscar led the Nigerian Stock Exchange between April 2011 to April 2021 as the Chief Executive Officer, however, when the Exchange completed its demutualisation on March 10, 2021, transitioning into the Nigerian Exchange Group, he became the GMD/CEO, a position he has held in the last one year and six months.
The demutualisation of the Nigerian Stock Exchange enable the public own shares in the entity that became NGX Group, after the exchange was separated to become a subsidiary.
After directing the affairs of NSE with little scrutiny for over 10 years, Oscar’s handling of the firm as a public entity in less than two years has led to some shareholders asking for the 54-year-old’s head on the chopping block, with axe in hand.
Since March 2021, when the Exchange went public, the board and management haven’t proposed or offered its over 400 shareholders dividends, which means investors that invested in NGX Group haven’t received necessary value for their investment.
However, a year before, the directors of NGX Group awarded themselves over 200.41 million ordinary shares, worth N5.57 billion (when pegged to the open listing price; N27.90kobo per share) as deferred bonus plan (DBP) to keep them in the company for a specified period.
Aside what the shares gifted to themselves at the 2020 Annual General Meeting, they also proposed that the sum of N126 million be approved by shareholders as payment to the Non-Executive Directors of the Nigerian Stock Exchange.
All these stock and cash rewards were made despite Onyema and other directors sitting on a poor financial performance in the same year 2020, suffering N93.96 million operating loss. Despite escaping from the grip of loss in FY 2021, with N281.84 million, the management spent 56.07% (N3.23 billion) of its N5.77 billion revenue on about 200 personnel within 12 months last year – but total expenses, N6.51 billion, surpassed the turnover.
Investors losing money and confidence in Onyema-led NGX Group management
With the management’s inability to curb expenses, spending more than it was generating, investors confidence in NGX Group is falling, reason the firm’s share is down to N19.4kobo as at September 2022, far below the N27.9kobo price it began listing with.
This means -30.4% of shareholders investment has been wiped off due to low interest for NGX Group share, which indicates investors in the stock market are snubbing the firm and taking their money to more profitable equities, as they have little or no confidence in the Onyema-led NGX Group.
Comparing NGX Group’s performance with the larger stock market, Ripples Nigeria analysis showed that the company was in fact trading in the opposite direction to the former, maintaining a bearish run of -30.4% decline in share value since it listed on October 15, 2021, in contrast to the 19.3% growth recorded by the Nigerian Stock Exchange within same period.
Investors ignoring NGX Group is understandable, considering the board hasn’t proposed dividend as earlier stated, which is a way shareholders get value for their investment, but instead, the firm is rewarding the directors for slow growth in revenue burdened by expenses.
Despite struggling to cure its expense headache, the management is also trying to add debt burden of N15 billion to its financial issue, a decision that has led some shareholders; Olayinka Olajuwon and Bamidele Ibironke, amongst others, to lawyer up against Onyema and the NGX Group.
Shareholders threaten lawsuit over impending resolutions by NGX management
In a document dated September 14, 2022, obtained by Ripples Nigeria, Olajuwon and Ibironke, representing a class of shareholders of NGX Group, through their solicitors, S.O.&C Legal, demanded that the management halt some resolutions it plans to ask for passage through proxy on September 30, 2022.
Part of the resolutions includes; to raise additional capital of N35 billion, with N15 billion of the amount expected to come from debt, N20 billion from the equity (stock).
The shareholders, through their counsel, are questioning why the management wants to borrow N15 billion when it has unissued shares, from which the sum can be raised. They also argue that NGX Group remains viable, so the loan is unwarranted.
NGX Group’s decision to borrow N15 billion raises eyebrow, as Ripples Nigeria notes that if the company was in dire need of capital, why did the management award itself the 200.41 million ordinary shares, worth N5.57 billion, which is a gift that would be collected in cash at a specified period, and also paid Non-Executive Directors N126 million.
The aggrieved shareholders also stated that the company hasn’t given evidence as to reason for seeking new capital. They also complained of the NGX Group abusing the right of shareholders by imposing proxy on investors to vote on the resolutions, whereas, shareholders are backed by law to make the decisions themselves.
They accuse the management of lying by using COVID-19 measures to defend reason proxy is preferred at the Annual General Meeting, instead of physical presence of shareholders. The solicitor said the COVID-19 measure, which bar gathering, had been lifted by the government.
They threaten to take the case to court if the management of NGX Group doesn’t halt the proposed meeting within seven days, starting from the day the letter was dated – the seven days intimation ended on September 21, 2022.
It described the Notice for resolutions as “ill-advised, fraudulent and fraught with illegalities and amounts to egregious abuse of privilege by the board of directors. The Notice is contrary to the Companies and Allied Matters Act (CAMA), Investment and Securities Act and other relevant capital market statutes and regulations. Also, the Notice and resolutions are contrary to the Board Charter of the Company:”
The solicitors also said, “TAKE NOTICE that if within 7 (seven) days of your receipt of this letter, we do not receive your formal withdrawal of the said notice, our Clients shall consider themselves to be at liberty to initiate necessary legal steps to seek redress, including injunctive orders to restrain holding of the meeting and/or set aside all illegal acts of the Company. In the event that this is so, this letter shall represent the requisite pre-action protocol. Do be advised accordingly.”
Read what shareholders told Onyema and his team
· Resolution 8(i) and (ii) in particular are contrary to section 142(2) of the Companies and Allied Matters Act 2020, under which the allotment of any newly issued share in a company is subject to the pre-emptive rights of a shareholder. The section DOES NOT give any power to any board to allot any share otherwise as stated in the section;
· By definition “capital” of a company refers to the total assets of a business or total amount or value of its stock, which in turn is partly a function of a company’s asset worth. It is unthinkable how incurring a debt burden of N15 billion for the company will translate to raising capital for the company that remains a viable, highly regarded entity in the capital market with unissued shares from which to raise capital;
· Section 340 of SEC Regulations provides, among others, that a public company seeking to offer securities by private placement must show evidence of dire need of fresh funds and shall satisfy the Commission that the private placement remains the only viable alternative…” No evidence has yet been put forward to show compliance with this provision;
· It is now public knowledge that directors of the Company recently paid themselves whopping sums of money under the guise of allowances and other perks of office. Evidently, this would not have been so, if the company was in dire need of funds. Meanwhile, no resolution has been proposed to authorise payment of any dividend to shareholders,
· The unissued shares of the company denote availability of shares for purchase for the purpose of raising capital as is the standard case. However, rather than offer the shares for sale, the board of directors seek to cancel the unissued shares and issue new shares to be distributed in breach of section 142(2) of CAMA;
· The right to appoint a proxy to attend and vote instead of him and the proxy need not be a member of the company… is a personal right that section 242(4) of CAMA guarantees to a shareholder. Therefore, it is illegal and amounts to violation of that right to attempt to choose or foist any proxy (named or unnamed) on any shareholder. By law, that right belongs fully to the shareholder. It is not shared with the company;
· The claim that the Corporate Affairs Commission (CAC), Lagos State Government and Federal Government COVID-1 9 Guidelines are the bases for insisting that shareholders shall only attend by proxy, is palpably false. There is no COVID-19 guideline that justifies insistence on shareholders attending AGM by prox(ies) only, let alone the selected proxies;
· The Company is a PLC. The Guideline issued by the Presidential Steering Committee on COVID-1 9 on 2nd April 2022, provides in relation to public gatherings that: “Limitation on number of persons attending informal and formal festivity events including weddings, conferences, congresses, office parties, seminars, end of year events has been lifted”, and
· Even if (which is not admitted) any CAC guideline permits holding a meeting by proxy, whether or not general, by proxy, such guideline is illegal and CANNOT stand in the face of the clear provisions of CAMA. CAC cannot by regulation remove a right conferred by statute.
ZENITH BANK SIGNS MOU WITH CFA INSTITUTE TO DEVELOP FINANCE AND INVESTMENT PROFESSIONALS
Zenith Bank Plc has signed a Memorandum of Understanding (MoU) with the Chartered Financial Analyst (CFA) Institute to promote efforts and activities that support the formation, training, and updating of human capital in finance and investment for the overall development of the Nigerian financial services sector. The MoU, was signed by the Group Managing Director/CEO of Zenith Bank Plc, Dr. Ebenezer Onyeagwu; the President/CEO of the CFA Institute, Margaret Franklin; and the President of CFA Society Nigeria, Ibukun Oyedeji on Tuesday, November 28, 2023.
Speaking at the MoU signing ceremony, the Group Managing Director/CEO of Zenith Bank Plc, Dr. Ebenezer Onyeagwu commended the CFA Institute and the CFA Society, Nigeria for their laudable programmes in developing finance and investment professionals in Nigeria. According to him, your Women in Investment Management Initiative, CFA Institute Research Challenge, CFA Society Nigeria Ethics Challenge and University Affiliation Program are very laudable, and Zenith Bank will continue to partner with the CFA Institute and the CFA Society Nigeria to ensure that young finance and investment professionals get the needed support for their career development. In his words, “As a good corporate citizen, Zenith Bank remains committed to furthering the economic, cultural and social development of the society. As such, we continue to support projects and initiatives that have long-term social and economic benefits for our various publics and stakeholders. Partnering with the CFA Institute and the CFA Society Nigeria is therefore a demonstration of our commitment to building professional excellence in the finance services industry in Nigeria”.
At the CFA Institute Africa Investment Conference, during the ‘Journey to the Top: A Discourse with CEOs’ segment, Dr. Onyeagwu inspired future finance and investment professionals to uphold the highest standards of integrity. He stressed the importance of making difficult yet high-quality decisions, building robust networks, and dedicating themselves to hard work for career success. In his words, “as upcoming professionals, the opportunities are immense for you. Africa doesn’t get bigger than Nigeria. There is scarcity of the right kind of people that have the talent, that have the character and the leadership to provide leadership in organizations. Make a decision to be one of those, make a decision to be different. You must be driven by your passion; you must delay gratification. In Zenith what is driving us is the strive for excellence. It is not about who you are and where you come from. We have the best class of talents you can think of anywhere in the world.” He assured the young finance and investment professionals that Zenith Bank will offer immediate employment opportunity to CFA Charter Holders and those who qualify as Chartered Accountants.
Also speaking on the MoU, the President/CEO, CFA Institute, Margaret Franklin reiterated the Institute’s commitment to the professional development of students and upcoming professionals. In her words, “there are many things that we do for students, we invest heavily in students and why is that? Because they are our future. The mission of the CFA Institute is to lead the investment industry with the highest standards of ethics, education and professional excellence for the ultimate benefit of society and that starts with our CFA programme”. She commended Zenith Bank for its continued support to the CFA Society Nigeria and sponsorship of the CFA Institute Research Challenge over the years. She also commended the bank for being one of the top employers of CFA members in the country. She expressed her admiration of the culture of excellence in Zenith Bank. Also speaking at the MoU signing ceremony, the President of CFA Society Nigeria, Ibukun Oyedeji commended Zenith Bank for its partnership with CFA Society Nigeria and its commitment to the development of young finance professionals in the country.
The the CFA Institute Africa Investment Conference is being hosted by the CFA Institute and CFA Societies from Ghana, East Africa, South Africa and Mauritius. The conference has representatives from over 20 universities in Nigeria (members of their investment clubs being supported by CFA Society).
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Abbey Mortgage Bank Host Sustainability Workshop with Non-Profit Stakeholders in Abuja
Geared towards boosting impactful investment opportunities for Non-profit organizations, a leading primary mortgage Bank in Nigeria, Abbey Mortgage Bank has organized a sustainable workshop for stakeholders of non-profit organizations to enhance financial sustainability and drive positive change within the civil society sector.
The event which was Tagged “Financial Management: A Sustainability Tool for Non-Profit Organizations” held on Wednesday 29th November 2023 in Abuja, is aimed at creating impactful investment opportunities to aid sustainability efforts in line with SDG 17 which supports the implementation and revitalization of Global Partnership for sustainable development in the civil society.
The workshop was attended by prominent guests including Jubril Shittu, CEO of PPDC; Dr. Ayodotun Olutola, CEO of CCCRN; Hamza Lawal, CEO of CODE; and Gideon Olanrewaju, CEO of AREAi among other guests.
Speaking at the event, The Group Head, Non-Profit Organizations at Abbey Mortgage Bank, Bukola Ewedairo, noted that, “Abbey Mortgage Bank is rightfully positioned to partner with institutions in the civil society by creating opportunities for long-term sustainable investment.
“We believe that Non-profit organizations need to be strengthened to achieve their mission and this workshop was our way of collaborating to ensure that they can thrive especially with the volatilities in our local economy.” She stated.
Also speaking at the event, the Managing Director of Abbey Mortgage Bank and a key speaker at the event, Mobolaji Adewumi, noted that, ” At Abbey, we are creating an ecosystem where non-profits can flourish, contribute meaningfully to society and drive sustainable change.
Adewumi further noted that “We are committed to helping individuals build wealth and attain financial empowerment and we are proud to collaborate with these distinguished leaders to make a lasting impact by supporting financial growth and empowerment” He stated.
The workshop had informative and interactive discussions, providing a forum for participants to share insights and explore collaborative opportunities. Attendees engaged in dynamic conversations, delving into strategies to enhance financial sustainability and drive positive change within the civil society sector.
Abbey Mortgage Bank reaffirms its commitment to fostering continued partnerships with NGOs, furthering its impact on the non-profit sector. The bank looks forward to ongoing collaboration, contributing to the achievement of sustainable development goals in Nigeria.
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