Answer to Question #3035 in Economics of Enterprise for OLUCHI

Question #3035
What is demutualization and how can it contribute to the stock market of Nigeria?
Expert's answer
Okereke-Onyiuke who was asked to speak on the issue explained that the global
securities markets terrain is replete with cases of the transformation of
exchanges from not-for-profit-mutual- membership organizations to for-profit
limited liability companies. According to her, “Demutualization promises to
improve the governance and overall efficiency of stock exchanges and it was
proposed for implementation at the Nigerian Stock Exchange solely for these

The whole process of demutualization of the exchange is in its
infancy and still evolving. Therefore, to say that it is an arrangement for the
leadership of the exchange to corner the shares of the demutualized exchange is
baseless. The decision to demutualization was made by the council and approved
by members of the exchange (i.e. stockbroking firms, banks, state investment
companies and other financial institutions, and ordinary members) at the
Nigerian Stock Exchange annual general meeting of 2006. The general public, as
stakeholders in the stock market, have been duly informed of this development.

Therefore, anybody trying to portray it negatively is being unfair to
the exchange’s council and management”, she said. She continued:
“Demutualization is also part of the enterprise transformation programme of the
exchange which the council has commissioned an international consulting firm,
Acenture, to handle”. Otudeko capped the director-general’s submission on the
issue. He said, “The demutualization programme is on course and the exchange
does not want anything that will derail it”.

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