Shares’ Certificates: Intrigues, Power Play Stall Full Dematerialization

High-wire maneuverings by powerful shareholders in Nigeria opposed to dematerialization of shares’ certificates have led to delays in the full implementation of the system whereby all share certificates of publicly owned companies are issued and kept electronically without recourse to papers.
The shares are kept with the Central Securities Clearing and Settlement System (CSCS), which provides central depository for all the share certificates of quoted securities including new issues.
There are over 3 million individual’s investors and hundreds of institutional investors in the Nigeria capital market and only about half these number have their certificates dematerialized
Some shareholders who fear that by surrendering their shares’ certificates for dematerialization, their investments may be at risk, have intensified pressure on Securities and Exchange Commission (SEC), the apex regulatory body of the Nigerian stock market to halt moves to render all certificates not dematerialized with the central depository un-tradable at the Nigerian Stock Exchange (NSE).
NSE had last year said it will not to extend the December 31, 2008 deadline for dematerialisation of certificates but had to make a u-turn following a barrage of petitions from investors to SEC.
Dematerialisation of share certificates in capital market is expected to enhance speedy transactions.
With the CSCS, if an investor wants to sell, he simply instructs his/her stock-broker to sell from his/her stockholdings in the CSCS system.
 The broker sells the shares immediately and issues a contract note confirming the terms of the sales to the investor.
Investors complain that they have not been carried along and lacked vital information on the workings of the CSCS.
A top of official of the CSCS said that the company has carried investors along for 11 years and that the CSCS believes that  stakeholders now appreciate the contribution of dematerialisation to the growth of the Nigerian capital market.
The Central Securities Clearing System operates a computerized clearing, settlement and delivery system for transaction in securities listed on The Nigerian Stock Exchange.
 This feature has not only significantly enhanced the speed of buying and selling shares for investors, but also provides all investors a CSCS number (similar to a bank account number) which enables any investor to independently access any information regarding his investment directly from the NSE without necessary going through his/her stockbroker.
Central Securities Clearing System Limited is  a subsidiary of the Nigerian Stock Exchange which commenced operations on April 14, 1997.