www.cscsnigerialtd.com

Full Dematerialization

TOWARDS ELECTRONIC SHARE LODGEMENT,
E-ALLOTMENT AND FULL DEMATERIALIZATION OF THE STOCK MARKET THROUGH THE CSCS

Towards successful implementation of full dematerialization, electronic share lodgement and e-allotments through the Central Securities Clearing System (CSCS) Limited in January 2009, shareholders are required to have the following:

CSCS Clearing House Number (CHN)
Stockbroking firm of choice

Shareholders are required to maintain uniqueness in the Nigerian Stock Market with only one CSCS Clearing House Number (CHN).

CSCS Clearing House Number (CHN) Versus Investor Account Number:

CSCS Clearing House Number (CHN)

This is Alphanumeric which starts with alphabet C and ends with two alphabets e.g. C36547AP. This number ties an investor to the CSCS.

Investor Account Number:

This is all NUMERIC (i.e. the digits are all numbers) e.g. 67898762. Unlike the Clearing House Number (CHN), Investor Account Number ties an invesotor to each stockbroking firm.

Always disclose your CSCS Clearing House Number (CHN) to your new Stockbroking firm to avoid multiple Clearing House Number (CHN).

Educational series:
In order to achieve the foregoing, some key issues are being further clarified as follows:

How do I open CSCS accounts?

A shareholder can open a CSCS Stock account through a stockbroking firm, registered by Securities and Exchange Commission (SEC) member of The Nigerian Stock Exchange (NSE) and Participant of CSCS Limited.
How do I get a Stockbroker?
A list of accredited stockbroking firms can be obtained from any branch of The Nigerian Stock Exchange (NSE) or their website: www.nigerianstockexchange.com.

How will E-IPO be credited to my CSCS account?
Share subscription forms have been designed to contain some vital information/data from investors such as the Clearing House Number (CHN) and Stockbroking firm of their choice for direct credit. In effect, all potential Initial Public Offer investors are expected to open a CSCS account through their stockbroking firms before completing the forms.

What will happen to my current share certificates?
Shareholders are being encouraged to submit their current share certificates to a stockbroking firm of their choice for processing into CSCS system.
What is the assurance that my certificates are safe with the Stockbroker? Accredited stockholding firms are governed by SEC and NSE Rules and Regulations which emphasize investment protection and the need to know their clients. They are obliged to adhere strictly to the rules and ensure that their client’s shares are well secured until required by the shareholder.

What is CSD (CSCS)?
The CSCS (CSD) is the Central Securities Depository (CSD) and Clearing House of The Nigerian Stock Exchange (NSE) which provides the infrastructure for Depositing, Clearing and Settlement of Shares/Bond within four working days (T + 3). The shares are processed in electronic book entry forms while CSCS stock statements are generated which provides evidence of the shareholding of any shareholder. In effect, the issuance of share certificates for shares are being phased out. This is likened to the process of depositing cash safely with banks until they are withdrawn.
CSD best practices.
In order to maintain CSD Best practice and global standard for shareholding, it is necessary to achieve full dematerialization which the Nigerian Capital Market is moving towards by the elimination of share certificate and adoption of electronic share lodgement in CSCS and provision of stock statement as evidence of shareholding. Dematerialisation facilitates the process of share transaction without stress.
What is the Transmission process?
If an investor is Deceased, his/her shares can be transmitted to his beneficiaries by their submission of the relevant documents such as copies of the Death Certificate, Letter of Administrator or WILL and the Administrators Bankers confirmation to the stockbroking firm, and the Registrar for adoption. The stockbroking firm is expected to notify CSCS for the Deceased client’s CSCS account to be titled an Estate account.
How secure is my stock/investment held in custody; is there any stock market investor protection mechanism, etc.
The regulatory authorities, Securities & Exchange Commission (SEC) and The Nigerian Stock Exchange (NSE) have the responsibility to assure investors of the protection of their investment by monitoring the operations of the stockbroking firms, instituting recoveries and penalizing the erring firms for violation of Rules. The Trade Alert Mechanism was also put in place for investors with mobile phones to be alerted of transactions in their account.

All shareholders are advised to consolidate/amalgamate/merge all their shareholdings in a particular register of members of listed companies at the Registrars office and then the CSCS. Kindly adhere strictly for successful implementation of full dematerialization.

Shareholders/Investors are enjoined to participate and take advantage of the benefits associated with the transformation to electronic share distribution in the Nigerian Capital Market through the CSCS by releasing your share certificates to your stockbroking firm for processing for certificateless environment to achieve international best practice/standard

Justification for Dematerialization (Certificateless Stock Market)
1.       The electronic system is the global standard for shareholding.

2.         It internationalizes the Nigerian Stock market operations.

3.         Electronic shareholding eliminates the stress involved in paper certificate processing.

No more unclaimed certificates
No more unclaimed dividends
No more verification cost
No more irregular signature during certificate verification.
No more Bankers confirmation
4.         Immediate value for your shares purchased or sold within 4 days (T+ 3).

No more undelivered share certificates/dividends.
No more undelivered/delayed Bonus shares
Direct crediting of your Bonus share.
It enables you to take advantage of capital gain on quoted stocks

5.         The electronic system offers you transparency, convenience, continuity and security.

It gives access to all market price movement to enable investors take position.
Total stock holding can be seen at a glance.
Easy shareholding reconciliation process.
It offers one-stop-shop for investors.

The electronic system is an initiative aimed at offering you a better and stress free life as an investor.

6.         It eliminates the risk of loss, theft or destruction of paper certificates. You can now sleep with all eyes closed.

7.         Electronic transactions are transparent and easily traceable (comprehensive audit trail)
.

8.         The electronic system affords the platform for easy access to your shares 24/7 no matter your location.

It offers a quick and convenient way of selling your shares
It makes stock transaction easier and faster.
The electronic system has become the global standard for shares ownership.
9.         Easier share transmission process

No more unauthorized claim of a deceased shareholder’s investment.
Faster channel to transfer your shares to your beneficiaries.
No more long wait for information on your share investment.
10.          It saves quoted companies unnecessary printing and mailing expenses.

Increased earnings
11.          It saves you the time and money wasted in replacing lost or destroyed paper certificates.

12.          The electronic system eliminates the cost of maintaining a secure place (vault) to keep certificates.

13.          The electronic system makes it easier for you to use your shares as collateral.

14.          The electronic system influences reduction of stock transaction cost thereby giving more value to investor.

Change of CHN

If you have existing accounts with different Clearing House Number (CHN) or different stockbroking firms with different CHN, you can request through your different Stockbroking firms to change your CHN (i.e CSCS Number, the number that starts with 'C') to a desired CHN you wish to maintain as an individual investor. By so doing, you'll have online access to all your accounts in different stocbroking firms without additional charges.

Among other advantages derived from maintaining a single CHN is that any change of address/name through one stockbroking firm is automatically reflected across others.

Also, your reconciliation with the Registrars is driven with the CHN.

Thank you.

Admin.
www.cscsnigerialtd.com

E-IPO

ELECTRONIC INITIAL PUBLIC OFFERING/ELECTRONIC
PUBLIC OFFERING
Towards successful implementation of the e-lectronic Initial Public Offering (e-IPO) or the e-lectronic Public Offering (e-PO) Subscription Forms have been redesigned to accommodate items needed for this change. The additional items are:

CSCS Clearing House Number (CHN)
Stockbroking Firm of Choice

e-IPO/e-PO requires an investor to supply:

CSCS Clearing House Number (CHN):

This is alphanumeric and begins with a “C” e.g. C36547AP. It is to be typed/printed to avoid ambiguity.

Name:

The name of the investor is to be supplied in the order of Surname, First Name, and other Names.

Stockbroking Firm of Choice where you obtained your CSCS Clearing House Number (CHN). This must be clearly stated on the subscription form.

Kindly note that:

Non-CSCS account holders should open accounts in CSCS through their chosen/mandated Stockbroking firm so as to obtain CSCS Clearing House Numbers (CHN) to be stated on the subscription forms.

Allotment schedule in respect of the e-IPO/e-PO as prepared by the Registrar of a Listed Company will be sent by Electronic Transfer to the CSCS Stock Accounts of all Allotees not later than 15 working days from the date of allotment.

Investors are advised to always state the name of their choice Stockbroking Firm as well as their CSCS Clearing House Number (CHN), in the spaces provided on the Subscription Forms.
Potential investors who fail to indicate their CSCS Clearing House Numbers (CHN) on the subscription forms may risk having their share allotments delayed.

All shareholders are advised to consolidate/amalgamate/merge all their shareholdings in a particular register of members of listed companies at the CSCS or through their Registrar. No shareholder will be allowed to have more than one stock account in a particular register of members of listed companies.

All Investors in the CSCS system are to obtain their statement of Stock Holdings from their stockbroking firms or through CSCS on-line website (www.cscsnigerialtd.com) only.

(Central Securities Clearing System Ltd) – The Clearing House of The Nigerian Stock Exchange (NSE).

Clearing House Number (CHN)

YOU NEED ONLY ONE CLEARING HOUSE NUMBER
IN
CENTRAL SECURITIES CLEARING SYSTEM (CSCS) LIMITED
THE CLEARING & SETTLEMENT HOUSE FOR THE NIGERIAN STOCK EXCHANGE

You are uniquely created. Maintain your uniqueness in the Nigerian Stock Market with only one CSCS Clearing House Number (CHN).

CSCS Clearing House Number (CHN) Versus Investor Account Number:

CSCS Clearing House Number (CHN):

This is Alphanumeric which starts with alphabet C and ends with two alphabets e.g. C36547AP.

Investor Account Number:

This is all NUMERIC (i.e. the digits are all numbers) e.g. 67898762.

Why must An Investor Have Two Account Number Types in CSCS?

Investor Account Number enables easy reconciliation of stock transactions with a particular stockbroking firm.

CSCS Clearing House Number (CHN) enables an investor to obtain a consolidated stock balance irrespective of the number of stockbroking firms used. (i.e. stock balances across stockbroking firms)

An investor needs to be uniquely identified; a CSCS Clearing House Number (CHN) is required for efficient management (e.g. corporate actions like dividends, bonus shares, etc.) of Registers of Members.

Thus, for each stockbroking firm an investor engages, he is assigned a new Investor Account Number BUT must maintain the same CSCS Clearing House Number.

Investor’s Obligation:

Ensure you know your CSCS Clearing House Number (CHN) and Investor Account Number.

Always disclose your CSCS Clearing House Number (CHN) to your new stockbroking firm to avoid multiple Clearing House Number (CHN).

Always maintain constant names arranged in the order of SURNAME, FIRST NAME, and other NAMES.

Stockbrokers Obligation:

Ask your client for his/her CSCS Clearing House Number (CHN).
Clients names should be forwarded to CSCS in the order of SURNAME, FIRST NAME, and other Names.

Problems Associated With Multiple CSCS Clearing House Numbers (CHN):

Stock investment reconciliation becomes a big burden.
You may not be alerted for all stock transactions since Trade Alert is for a CSCS Clearing House Number (CHN).
You cannot obtain a consolidated stock balance report from CSCS
Usage of your stock as collateral to obtain loan facility would have to be achieved with several requests/memoranda,
For on-line access to our website (www.cscsnigerialtd.com) you have to register as many times as your CSCS Clearing House Number (CHN).
Note that annual fee payable for website access is per Clearing House Number (CHN).

All Investors in the CSCS system are to obtain their statement of Stock Holdings from their stockbroking firm or through CSCS on-line website (www.cscsnigerialtd.com) only.

Management:

(Central Securities Clearing System Ltd) – The Clearing & Settlement House of The Nigerian Stock Exchange (NSE).