By Anthony Isaac
The Securities and Exchange Commission (SEC) on Sunday explained that light refreshment at Annual General Meeting/Extra-Ordinary General Meetings is not part of the ban placed on sharing of gifts by public companies at AGMs.
The Commission made the clarification in a statement in Abuja.
According to the SEC, “Rule 602(4) states that ‘public companies shall not distribute gifts to shareholders, observers and any other person at Annual General Meetings/Extra-Ordinary General Meetings’.
“The Commission considers it necessary to clarify that ‘light refreshment’ are not construed as ‘gifts’, the statement added.
The SEC had last year amended its Rules and Regulations to stop listed companies from distributing gift items at AGMs.
Justifying the Rule, the Commission said public companies spend a significant amount of money on corporate gift items at AGMs/EGMs which has a great impact on their profitability.
“Few of the companies are making reasonable profits and even fewer can afford to pay dividends. If the amount budgeted for the gifts at AGMs/EGMs can be reserved for other relevant operational or administrative expenses, it would positively impact on their earnings per share,” it explained.
Specifically, the rule provides that, “pubic companies shall not distribute gifts to shareholders, observers and any other persons at AGMs/EGMs. Public companies shall not convene any meeting with select group (s) of shareholders prior to an AGM/EGM.
SEC stated that any company that violates the provisions of the rule shall be liable to a penalty of not less than N10 million.