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Sunday, 02 February 2020
The Nigerian bourse recorded its worst trading week so far in 2020 this week as profit-taking cost the market a staggering N405 billion in five days.
 
There bear maintained its stranglehold on the market Monday through Friday, spurred in part by the underwhelming financial performance of a number of quoted companies as company results came in fast and furious.
 
60 companies released their financial results between Monday and Friday.
 
All the key market performance indicators depreciated. A negative market breadth was recorded this week as 17 gainers emerged against 44 losers. The All Share Index (ASI) grew marginally by 2.65% to 28,843.53 basis points. Market Capitalisation similarly grew by the same margin to N14.857 trillion.
 
Trade Volume of 1.561 billion shares worth N26.073 billion was recorded in 21,444 deals this week compared to the 1.237 billion shares valued at N22.762 billion posted in 21,156 deals last week.
 
On the Activity Chart, the Financial Services sector dominated trade with 1.154 billion shares estimated at N13.650 billion traded in 11,306 transactions. In other words, it contributed 73.93% and 52.35% to the total equity volume and value respectively. The Consumer Goods sector followed, trading 137.115 million shares worth N3.177 billion in 2,908 deals. The ICT sector came third, trading 94.464 million shares priced at N6.554 billion in 894 deals.
 
As regards Index Movement, all indices depreciated with the exception of NSE Insurance and NSE Consumer Goods, which grew by 0.90% and 0.09% respectively. The NSE ASem Index closed flat.
Published in Business

The governments of Eritrea, and Kyrgyzstan have both denounced the move by President Donald Trump of the United States of America to add both countries to its expanded travel ban list.

Reacting to the travel ban, Eritrean Foreign Minister Osman Saleh Mohammed said on Saturday that the government saw the ban as a political move that would hurt the country’s relations with the US.

“We find this move unacceptable,” he told Reuters news agency by telephone. “We will, however, not expel the US ambassador,” Mohammed said.

In the same vein, the government of Kyrgyzstan on Saturday condemned the immigration restrictions by the US that will restrict travel to the US from the ex-Soviet country, complaining they were applied selectively and had damaged relations.

Trump’s move to add Nigeria and six other countries to its expanded travel ban list has been condemned by civil organisations in the United States of America.

Reacting to the expanded list, Immigrant advocates and rights groups on Friday slammed the expansion of President Trump’s controversial travel ban, saying it weaponises “immigration law to advance [the administration’s] xenophobic agenda”.

The rights groups decried Friday’s announcement, saying the “Trump administration continues to push white supremacist and exclusionary policies that discriminate on the basis of faith, national origin, and immigration status”.

Published in Travel & Tourism

Hyundai Motor, South Korea’s largest automaker, suspended the domestic production of its flagship sport utility vehicle, Palisade SUV this weekend as a result of a supply disruption caused by the deadly virus outbreak in China.

The deadly virus that first appeared in the central Chinese city of Wuhan has resulted in 259 deaths and spread to more than two dozen other countries.

Hyundai’s decision was made following factory closures in China that have led to shortages of supplies, including the complete electrical wiring system of a vehicle, the Korean automaker said.

“We have cancelled overtime factory hours that had been scheduled for Saturday and Sunday to produce our Palisade vehicle,” Jin Cha, a Hyundai spokesperson, told AFP on Saturday.

The Palisade SUV was the only vehicle that had been scheduled for production this weekend, she added.

The firm is “carefully monitoring the ongoing situation” to make further decisions to cope with the supply disruption, the spokesperson added.

The spread of the respiratory illness has prompted businesses to shut down in China, and airlines around the world have cancelled flights, prompting concerns about the hit to China’s economy and beyond.

Markets have struggled in recent days as the World Health Organization declared a global health emergency over the virus, with analysts concerned about its impact on world economic growth.

Published in Business

A legal battle between Old Mutual, the South African-based pan-African investment, savings and insurance group, and its chief executive officer Peter Moyo has dominated news headlines in the country for the past eight months.

The drama has involved vitriolic public attacks, numerous court cases and claims and counter claims from both parties. It is seldom that such extensive publicity is given to the dismissal of a chief executive of a listed company and to the inner conflicts in a company. These matters are usually resolved internally.

The publicity given to the Moyo saga has brought to the fore some important lessons that should be noted by company directors. The first is about what it says about directors disclosing conflicts of interest. The second is about how tricky it is to reinstate a director once they have been dismissed. In my research I found a few cases where courts have indeed reinstated executive directors. But the process is complicated because relationships have invariably turned sour.

The other useful lesson is what the Old Mutual events tell us about the role of directors – even after they have been fired. Based on my research findings I argue that directors still owe certain duties to the company, such as loyalty, even after they are fired. And that sticking to company policies on engagement with the media is the wise thing to do.

How the saga unfolded

In the middle of last year Old Mutual dismissed Moyo as its CEO because of a breakdown of trust and conflict of business interest. The action was taken because of questions around a dividend payment by an investment firm co-founded and partly owned by Moyo.

A month later a judge ordered Moyo to be temporarily reinstated. But Old Mutual refused to allow him access to his office pending its appeal of this decision. Moyo then launched an application to hold the Old Mutual board in contempt of court.

Early this year a full bench of three judges held that Moyo had been properly dismissed.

The sorry saga isn’t over yet. Moyo is insisting on his reinstatement and is appealing the judgment. He is also continuing with an application for contractual and reputational damages, a contempt of court application and an application to declare the entire Old Mutual board delinquent.

The lessons

The Moyo saga highlights the importance of a director’s duty to disclose any conflicts of interests. The Companies Act sets out the rules relating to the disclosure of a director’s personal financial interests in the company’s business.

Directors stand in a fiduciary relationship to their company. This means that they must act with loyalty and in good faith. They must not put themselves in a position where their personal interests conflict with their duties to the company. If they have personal interests in a particular matter, they must disclose them to the board. And after disclosure they must not take part in board decisions relating to that matter.

Failure to comply could have serious consequences. For instance, it could render the entire transaction invalid.

Another lesson to be learned from the Moyo saga is that it’s complicated to reinstate executive directors. I did find cases in my research where courts had indeed reinstated executive directors. But the close relationship between a board and an executive director makes it tricky.

The position of a chief executive of a company requires a special relationship of trust and confidence. Old Mutual said that it has lost trust and confidence in Moyo because of his conflict of interest. Moyo in turn said that he lost trust and confidence in the chairman and the directors. He said publicly that he was taking action to have the entire Old Mutual board declared delinquent.

Because of the clear breakdown in trust and confidence, the court said that there was no realistic prospect of Moyo ever being reinstated.

In another case the Constitutional Court also did not reinstate two directors who had been unlawfully dismissed by the Minister of Defence and Military Veterans because it found that their relationship had disintegrated beyond repair.

A court will not readily order the reinstatement of a director where the relationship with the board has broken down. If directors wish to be reinstated after leaving, they must demonstrate that their relationship with the company is still viable.

The dos and don'ts, even after leaving

The other reason Old Mutual cited for losing trust and confidence in Moyo was that he’d given public interviews to the media after his suspension in which he criticised Old Mutual. The company said these negative statements breached its media policy and harmed its reputation. It also said that Moyo acted against its interests and that he had not acted according to the standards expected of a chief executive, even though he had been suspended.

Negative publicity about a company can discredit it, and harm the directors’ reputation. It can also affect the company’s share price. The negative publicity suffered by Old Mutual caused its share price to drop by as much as 9,3%.

As fiduciaries, directors must act in good faith and in the best interests of the company. South Africa’s corporate governance code – King IV – recommends that directors should act ethically, beyond mere legal compliance, and that directors should set the tone for an ethical organisational culture.

As I found, even after a director leaves his company, he still owes certain fiduciary duties to the company, such as a duty of loyalty.

Directors should be careful not to breach their company’s media policy – if there is one – even after they leave the company. They should exercise caution in the public statements they make about the company. Making negative statements can lead to the relationship breaking down even further, making their reinstatement impossible. It could also limit their chances of being appointed to other boards because of the fear that they may again harm the company’s reputation.The Conversation

 

Rehana Cassim, Associate Professor in Company Law, University of South Africa

This article is republished from The Conversation under a Creative Commons license. Read the original article.

Published in Business
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