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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.

Read also: Nigerian govt borrowed N2.36trn from capital market in 2020 – Onyema

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 governemnt.

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 author ise 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.


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