N/A canvasses private companies conversion, listing bill

By  PETER EGWUATU

The National Assembly, N/A has intensified plans to hold a public hearing on the proposed private companies conversion and listing bill.

The purpose of the bill is to compel private companies whose shareholders funds exceed N40 billion or whose annual turnover exceeds N80 billion or its total assets exceed eighty billion, to convert to public liability company and get its shares listed in the Nigerian Stock Exchange.

The Deputy Chairman, House of Representatives Committee on Capital Market, Hon. Chris Emeka Azubogu, weekend confirmed to Vanguard that the proposed Bill has undergone second reading, adding that when the Bill is passed into law, it would become an Act that will oblige private companies to convert to public liability company.

In his words.“If the private foreign companies are converted to public companies, Nigerians would own certain percentage of shares and this will help reduce capital flight and create employment opportunities.”

According to him “80 per cent of Nigerian economy is largely in the informal sector, but with the creation of this Act, many of the private companies would be captured in the formal sector and make them financially included in the system. Also, it will enhance Nigeria’s     tax collection.

Commenting on the incentive for the private companies to get quoted on the Stock Exchange, he said “There will be tax incentives and others. For a period of five years commencing immediately after the date of listing on a securities exchange, if the company lists at least- 40 per cent of its issued share capital, it shall be eligible for a tax incentive at a rate up to one-third of its applicable income tax .

If it lists 30 per cent of its shares capital, it shall be eligible for a tax incentive of up to one-fourth of its applicable income tax; and 20 per cent of its issued share capital, it shall be eligible for a tax incentive at a rate up to one-eighth of its applicable income tax.”

Continuing, he said “A company shall be entitled to tax deductible expenses on all expenditure incurred by a company subject to Clauses1 and 2 on for the purposes of listing on any securities exchange; stamp duty payable on increase in share capital for the purpose of conversion and listing under clauses 1 and 2 of this Bill; and 60 per cent of Securities and Exchange Commission related fees for listing.

On the issue of penalties for breach of the intended Act, Azubogu said “A person that contravenes any of the provision of the Bill commits an offence and shall be liable on conviction to imprisonment for a period not less than 2 years. Where the offence was committed by a body corporate, the body corporate shall be liable on conviction to a fine of 10 per cent of its annual turnover for each year of default.

- Culled from: http://www.vanguardngr.com