Judul : PenCom bans majority shareholding in multiple PFOs
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PenCom bans majority shareholding in multiple PFOs
New guidelines from the National Pension Commission have banned significant cross-shareholding in multiple licensed Pension Fund Operators.
In the guidelines, issued on Friday and which became effective immediately, the regulator stated that the move would promote transparency and good governance while protecting pension assets.
According to PenCom, significant cross-shareholding is a situation in which a significant shareholder in an LPFO thereafter a) acquires, or seeks to acquire, a significant shareholding in another LPFO; or b) otherwise becomes legally entitled, whether directly or indirectly, to hold such significant shareholding in another pension entity, by means including but not limited to the conversion of debt to equity, operation of law such as transmission on death, or any other form of vesting.
Secondly, significant cross-shareholding could arise from mergers and acquisitions outside the pension sector, which leads to individuals or entities holding equities of five per cent or more in multiple LPFOs.
Prohibiting such a situation, PenCom said, “No person shall hold, or continue to hold, or otherwise enter into any arrangement or agreement that would result in holding or continuing to hold a significant cross-shareholding.
For the purpose of determining whether a person holds a significant cross-shareholding, the Commission may aggregate the shareholdings of such person with those of its related persons.
“The restriction on significant cross-shareholding applies regardless of how the stake is acquired, whether through mergers, acquisitions within or outside the pension sector, direct investment, new licensing, or other means whatsoever. The goal is to ensure that no shareholder or applicant company holds a direct or indirect ownership/shareholding of five per cent or more in more than one LPFO. This includes affiliates, holding companies, subsidiaries, and related parties of the shareholder, as well as its directors, employees, spouses, and
family members of the shareholder or the new applicant company.”
For where significant cross-shareholding already exists, PenCom allowed a six-month transition period to comply with the new guideline.
According to the new rules, anyone possessing a substantial cross-shareholding on the implementation date has [six months] from that date to reduce their shareholding to meet the limitations on significant cross-shareholdings outlined in these guidelines. Furthermore, anyone who, due to legal reasons after the implementation date, acquires a significant cross-shareholding must, within [six months] of acquiring it, reduce their shareholding to comply with the significant cross-shareholding restrictions detailed in these guidelines.
PenCom also penalized non-compliant Pension Fund Operators (PFOs), declaring that any deal or setup leading to substantial cross-ownership would be invalid and unenforceable. Moreover, any shares supposedly obtained or possessed in violation of the regulations would not grant entitlements or advantages, such as voting power, dividend payments, or involvement in the management of the pension company.
“The LPFO in which such shares are purported to be held shall not recognise or record such shares in favour of the significant shareholder.
Appropriate administrative penalties shall be imposed for violation of the provisions of these Guidelines in line with the Commission’s Framework for Regime of Sanctions and Penalties,” added PenCom, which earlier also issued a circular on centralised or shared services.
PenCom issued a circular on Centralised or Shared Services Arrangements with Parent, Holding, Group Entities and/or other related Subsidiary Companies. Guidelines for PFOs are also a move aimed at incorporating good governance and ensuring that CSSAs are conducted at arm’s length with competitive pricing that reflects the services rendered and clearly defined roles and responsibilities.
Also, effective immediately, the circular allows PFOs to enter CSSAs with their Parent, Holding, Group Entities and/or other related subsidiary companies in the area of human resources, information security and other ICT services, marketing and communications, company secretariat and legal advisory services, administration/facilities such as office accommodation, cleaning & security services, etc., the procurement process, and any other services as may be approved by the Commission.
However, these CSSAs must comply with PenCom rules and in no way diminish the operational independence of the LPFO, create dependency risk or impair the fiduciary obligations to the RSA holders.
Meanwhile, PenCom has inaugurated the Pension Industry Leadership Council to deepen reforms and strengthen Nigeria’s pension sector.
Speaking at the inauguration in Abuja, PenCom’s Director-General, Ms. Omolola Oloworaran, explained that the council was designed to provide collective leadership and coordination, similar to the Bankers’ Committee in the financial system.
On the N758bn pension bond approved earlier in the year by the Federal Government to clear outstanding pension liabilities, The PUNCH reported that the Director of the Contribution and Bond Redemption Department at PenCom, Usman Musa, at a press conference disclosed that the process had already begun and was moving quickly following the approvals of the Federal Executive Council and the National Assembly.
Speaking at the press conference, Musa said, “As the DG has mentioned, the process of issuance of the N758bn bond has commenced. In fact, we have gone very fast. We are hopeful that by the end of this month, or at least the first week of October, we will start receiving the process. And once that is done, the bond is ready to go; we will commence payment.”
This would be a relief for pensioners who have been awaiting the payments since they were announced.
The N758bn bond, according to PenCom, will settle the shortfall in university professors’ pensions, ensuring they receive their rightful full salary as a pension, an issue that has lingered since 2017, and commit funds to the Pension Protection Fund, a statutory provision designed to augment pensions for low-income earners but left unfunded since its inception in 2014. Additionally, this intervention will clear all pension increases since 2007.
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