Concern Mounts over SEC’s Failure to Publish Accounts

Goddy Egene

The failure of the Securities and Exchange Commission (SEC) to publish its annual accounts since 2014, a development that violates the Investment and Securities Act (ISA) 2007, Code of Corporate Governance and extant rules at the capital market has continued to cause anxiety in the market.

But SEC has attributed the situation to the prolonged delay by the federal government in reconstituting a board for the commission, almost three years after the previous board was dissolved.

The ISA provides that the board of SEC is responsible for the financial management of the commission and requires the commission to, not later than three months after the end of each year, submit to the minister and the National Assembly, a report on the activities and administration of the commission during the immediately preceding year and, shall include in such reports, audited accounts of the commission and the report of the auditor on the accounts.

However, the regulator of the nation’s capital market has been without a board since 2015, a situation many market operators and investment analysts have continued to condemn.

The inability of SEC to render its accounts, which is traceable partly to lack of a board, is already casting a moral burden on the commission in the area of corporate governance.
Explaining the non-publication of its accounts, the Acting Director General of SEC, Ms. Mary Uduk, said recently that it was because they were yet to be signed.

“I want to say it here and very clearly that the accounts of the SEC, all the accounts have been well prepared and audited. But we have not placed it on our website for a reason and the reason is that they have not yet been signed. That is the only reason why the accounts are not placed on the website,” she declared.

THISDAY checks showed that more challenges are ahead for the regulator, given the thinking of some listed companies.
The chief executive officer of a listed firm told THISDAY that if the federal government continues to delay the composition of a board for SEC, which is in violation of its laws, then some of them would stop complying with sanctions that border on corporate governance issues.

“The way it is going, some of us (listed companies) will not comply with sanctions by SEC when it comes to issues that border on corporate governance because you cannot punish me if, for instance, I violate any corporate governance provision, where you who is imposing the sanction on me, has been in violation of that law for years,” the CEO said.
Already, the implementation of the 10-year Capital Master Plan by the commission is being affected by lack of a board. And Mohammed Garuba, who is an investment banker and co-founder of CardinalStone Partners recently told THISDAY that the issue of SEC board DGs must be fixed urgently.

He said, “We need to fix this because you know that once you put people there you would need to give them time to implement strategy. Once you call someone an interim DG there are limits to what that person can do. So, while this DG is competent, she is limited because she doesn’t know what will happen.

“So, there are many things she cannot start and that delays everybody. We need to take the capital market seriously because it is a structural issue where she has her strategies and she can communicate it properly and she can appraise herself and look at things whether on a periodic basis within her tenure.

“We already have a master plan strategy, so whichever DG comes in, you must take from that master plan and implement your own section. So right now, she is limited in her ability to execute. This must be fixed very quickly.”

Before now, another investment banker, who has been interfacing with both foreign and high net worth investors over the years in the market, had told THISDAY that if the capital market does not operate efficiently, there is no way the government and other corporate can raise money to grow the economy.

“We are talking about financing the budget, we are talking about infrastructure projects, and all these are better sourced from the capital market. But I can tell you that while the Nigerian market has potential to provide significant part of the funds, most investors are still reluctant to bring their money because they believe the absence of a board for SEC is highly discouraging,” he said.

Also, a senior stockbroker, who also spoke on the condition of anonymity, pointed out that the commission that had been talking about ensuring good corporate governance in the market and yet, does not have a board.

“The sanctity of the market is dependent on our governance. For the international community to see us as being serious, we must be seen to have a structure in existence and if we do not have a structure what is the moral justification to ask others to have structures. With good structures, international community will be assured of accountability and transparency in our financial system,” the broker said.

The operator added that without a board, any joint action SEC is having with other regulatory bodies in the financial system cannot be firm because most action taken by people on acting capacities are not regarded to be very strong and committed.