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.