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By NBF News
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I want to begin by asking, in the AGM that was held  recently, the proposition was that you want to delist from the NSE  and my understanding is that this decision was because of the cost implication of remaining a public quoted company. Are there some other reasons for this or are those basically the reason why you want to delist.

I think that is one of the main reasons because many companies, especially for SME companies, the rigidity in regulation can be very stifling and they are not big enough to withstand all this rigidity. Invariably, most SME companies are family owned businesses and when they go public, in the area of publicity, it becomes difficult.

In any case, this company went public not on its own accord but by Federal governmen's declaration of the indigenization programme in 1978. So many people don't know that historical fact. When the federal government decreed that 50 to 60 per cent of Nigeria plastic industry must be sold to the public, that was when Poly Products Nigeria went public in the first instance; nothing more than that.

You see, some companies have grown very rapidly, some have not grown. It depends on your own nature to be able to know if you fit in the public limited liability arena or are safe in the private liability company. As you have heard, the company has had reasonable relationship with shareholders and here they are at this point. For me as an economist, looking at this, they have gone through various stages in life.

There was a time when the company was just simple plastic industry and they were producing Nylon bags and Plastic bags which is the lowest of all plastic products for the market. And that sector is not very particularly viable sector; it is very low value adding and the returns are not high.

Often times, not many understand the dynamics of such an industry. Overtime, they have shifted the product make. My own issue as an economist and I have been involved in private sector development is that you should be in the high value added sector, not in the low value added volume sector.

The plastic industry is very versatile and very progressive provided you know where you should be. So, slowly they have being trying to move in that direction.

Coming to the issue of stock exchange, it is very rigorous and unless you have the way withal, it will be difficult to meet up with certain demands. You have quarterly returns, half-yearly returns and all of that. For a company struggling to survive, you have to meet those obligations.

*Mrs. Funmi Ajayi-Tomori …It is very difficult for small companies to abide by what they are saying

It is very tough; it is very tough. The stock exchange is not a playing field for the embryos; it is for people whose cost of administration is minimal, who have all the manpower to meet all those obligations. We also support the development of the stock exchange, but it is not every Tom, Dick and Harry that should or can be there.

A lot of companies in the last thirty, fifty years have gone through very rigorous situation and a lot of companies are also growing. So, it is left on the people on the other side to make it attractive for those growing companies to be members. But for the time being, some need to withdraw, refurbish, re-make themselves and then may be, some other time go back to the stock exchange.

Does it then mean that you have plan of going back to the stock exchange in future?

I said some; I haven't said so, but if you are growing, if your company is growing, if you have been able to conquer the harsh business environment and your growth is rapid, then it may be justified because you may need more money to expand; then  you can go back.

The stock exchange is not something that you have to be there if you are not supposed to be there or you can afford to be out of it. No! It is a very dynamic market; the buying and selling of shares is quite dynamic, and if you think you are solid enough, strong enough, then you go to the stock market.

You see what is happening to Facebook; some go, some come in. You know, you can always go and come back depending…, but on its own, the stock exchange must make itself attractive; it must be able to attract investors to come to that exchange.

Talking about being attractive and attracting companies to the stock exchange, what can the Nigerian Stock Exchange precisely do so as to attract more companies.

Am sorry,I am not competent to say anything on that because I am not in the stock exchange.

Recently, the Nigerian Stock Exchange reviewed its listing rules and the listing and post-listing charges were brought down. They also brought down the annual listing fees for SMEs to about three hundred thousand. Is this still rigorous for SMEs to meet since there are still other benefits companies derive from stock market listing.

If you ask me, I don't think anybody should be particular about the SMEs coming to the stock exchange. The fact is that when you look at the entire private sector, if the sector is growing and the private sector is crucial in any economy; if it is growing, those growing companies will automatically come to the exchange.

So, it is not that SMEs must come or must not come. No, don't restrict yourself to the SMEs, when the stock exchange is very dynamic, when the economy is growing, when it is booming, more and more companies will come on their own. Infact, the concern of the Federal Government should be to attract investment, both local and foreign. There are issues that are affecting those companies.

The stock exchange is not a Fair. If the infrastructural cost is reduced, if the cost of doing business in Nigeria is very competitive, oh! The companies will be begging you to come from anywhere in world because Nigeria has a big market; it has the potential.

But for how long have we been talking of potential, we have been talking about Nigeria's potential for over thirty years. Until we are able to explore those potentials, our economy and the stock exchange will continue to crawl. Stock exchange is a place that automatically people will want to come there because they want to list; they want to mobilize fund for further growth, but if you are putting the horse before the cart, it will not work.

You know, the growth of the stock exchange is related to the growth of the economy in general; just not growth, but where the economic growth of a country generates employments, and it is all these private investors that generate employments. When you are spending 30 per cent of your profit in infrastructure, and then you have the problem of security; all these factors have enormous setback on the development of any economy.

Now that you are planning to delist from the exchange, what will be the fate of your shareholders, are you going to carry them along or are you disengaging them completely

Obviously, if you disengage, you have to carry them along.

I mean after disengaging, because there are still some limited liability companies that still have minority shareholders in their companies. Are you planning to carry your shareholders along?

Of course yes. You know the meaning of private limited liability company? Maximum Membership of about fifty (50) is what is required. That is the measure of a limited liability company.

What if you decide to have more than that?
No! You cannot if you are a limited liability company. Somebody covered that delisting plan very well. I don't know who wrote that article that says that out of eleven thousand shareholders in our company, over ten thousand have less than five per cent equity.

So, does that make sense? I have always asked them who drew up that shareholding structure for you. If you are a good investment vehicle, you don't do that. For ineffective minority shareholders of about ten thousand to have one hundred shares each, it is very cumbersome for anybody. If you see the whole list yourself, you can't even go through it.

I was even coming to that point you just raised now. I was worried when I looked at that shareholding structure. How come less than ten per cent of total shareholding is accruing to over 11,000 shareholders?  Are there not rules from SEC on shareholding?

As at that time the company went public, the Advisers and the consultants should have said, 'you should be able to work out your strategy.' Usually, when you are raising money from the stock market- you know in those days, I don't know what happened in this case-  the minimum you can buy…, I remember in 1978 when this indigenization process began and  people were going to the stock market, some companies said, 'you shouldn't buy more than a thousand shares or ten thousand at most.

Somehow in this case, that was not done; I don't know why it was not done.  You see, sometimes, as an economist, when you are reviewing everything, it is not nice for minority shareholders to be too weak or diverse. Usually, what the major investors want to achieve is 51 per cent, but for the other minority investors, if you have less than ten per cent, I tell you, you have no vote.

So, in order words, if you have three, four other major shareholders who have ten per cent each, then you have forty per cent minority but strong minority. If you have people with one hundred shares out of two hundred and forty million, does it make sense? And then the administrative cost of printing annual reports and sending out notices is much more than the worth of the shares.

This company has been quoted in the stock exchange since 1978. I tried to look through the analysis of returns to shareholders vis-a-viz dividend payment. The company looks a bit conservative. The returns have not being as impressive as I expected.  Was there any special reason for this?

I only joined this company three years ago. May be the MD will be in a better position to answer that. I don't want to answer it as an economist.

Now, going forward, what should the shareholders who have being with you all this while expect now that you are delisting

You know, the point is that when you talk about investment, some will win and some will lose. I have put money in RT Briscoe, I lost; I put money in Studio Press and I lost. Quite a number of companies like that; I look through them and the share certificates are worthless.

A company can go through that way of gradual bankruptcy, but in this particular case, the major shareholders are have all voted for the delisting. You were there when they said that the market price is about N1.05 and the company is saying that 'we will add some premium' which is yet to be decided, or which they are working on and have been negotiating with shareholders.

What do you do with companies that didn't pay at all? What do you do with their share certificates? Of course, you throw them away. That's the thing about the market, just as there are some others that have been paying dividend. In any case, in this particular case, shareholders will be adequately compensated.

Some minority shareholders are demanding for N5.00 compensation as an exit price. Do you think the demand is feasible?

Let me ask you, do you think that is possible?
You are an economist, that's why I am asking if it is possible

I am not an economist. I am only a director. Sometimes, journalists are more informed. If the market price is N1.05, would you be paying N5.00? I think they just put it as a wish. People are perfectly free to make a wish.

I am concerned about the economy, and I also know that you are concerned as well. What precisely do you think can be done to address this problem?

You see as she said and I repeat, we are not competent to comment on some things, but I want to comment on few things. One is that Regulatory body should not be profit-making body. Here we are making regulatory and monitory bodies as profit making bodies.

If it becomes a profit making body, its loyalty moves from regulating to supporting whosoever helps it to make money. We have seen recent publications on SEC and stock exchange in the Newspapers, it disturbs everybody. Because our regulatory bodies are not powerful, how can you be protected? Today, we read in Newspapers that companies should adopt IFRS. Federal government is now supporting it.

Why is the government supporting it? All over the world, small and medium industries are not subjected to all those things. Here we are bringing everybody under IFRS. It is very difficult for small companies to abide by what they are saying. Banks, yes; multinationals, yes, but small and medium scale industries whose turnover is few billion naira a year should be excluded from the IFRS.

In England, you don't even require audited balance sheet if your turnover is not in excess of five Pounds. What you need is only certified accountant report. Here we are, close to eight hundred thousand private limited companies are public companies.

Even this eight hundred thousand limited companies, let's say fifteen (15) per cent are in existence and those fifteen per cent are close to FGN requirement as IFRS required. Nobody will be monitoring all the report and nobody will be reading the report. The stock exchange should not be compared with Nestle, Cadbury, Coca Cola or Pepsi.

Nigeria has so many breweries. Is any brewery owned by small entrepreneur still alive? They are buying them off because they couldn't run them. So let's stop mixing things up and misguiding the public.