The protest against fees and royalties paid to technical partners of some of the multinational firms quoted on the
It is not a surprise that in spite of the security challenges confronting
Until recently, when developments in
However, as successive administrations stepped up investment drive, foreign investors have continued to see
The Spread Today, such companies are found in virtually all the sectors ranging from manufacturing, healthcare, oil and energy sector and construction and they rank as some of the most profitable companies quoted on the
The Provision In order to protect their investments, it is expected that these foreign investors would have their representatives on the foreign institutions on the board and management levels of their Nigerian companies. And to justify their investment in terms of franchise, technical, research and development inputs, certain fees are set aside from the revenue accruing to the affected organisations.
According to the provision of the
Shareholders Grumble However, some shareholders of quoted companies have condemned the high charges foreign parent companies and technical partners impose on Nigerian companies in the name of royalties and technical fees, saying local shareholders are being cheated. The shareholders complained that many foreign companies charge royal fees for their brands being produced and marketed in
The shareholders, who explained that their grouse was not about the fees being collected, argued that the modality for charging the fees was favourable only to foreign partners. The payment for royalties are always made from revenue, while the payment for management services agreements are paid from profit before tax. According to the President,
"We tried to make them change the payment of technical fees on turnover but they have refused to change. We shall continue to demand this. It is wrong. Technical fees should be charged on profit after tax (PAT). We disapprove the system the way it is now," Timothy said. Also toeing this line is the National Chairman,
Dissenting Voices As far as the National Coordinator,
He said his association had taken the battle to the doorsteps of these foreign companies in
"It is not these companies that approve fees for themselves. NOTAB is an agency of the Federal Government. These companies submit their requests and NOTAB will take time to look into these requests and approve whatever they feel they are entitled to for them. Some of the shareholders who are complaining cannot put a fight like
"I have personally confronted the Director general of NOTAB that why was he approving that kind of fees for technical partners and he gave reasons that there were some yardsticks they look into in approving fees," he said.
Drawing a parallel between such fees and charges leveled on banks by the
"These are areas shareholders should start fighting to ensure justice is done. Two weeks ago, a company paid a dividend of nearly N4 billion and they paid N15 billion to AMCON. Even if they had paid half of that to AMCON they will still have N8 billion and they will increase the dividend to shareholders by 100 per cent, they will still have a reserve of N4 billion. Technical fee is sometimes one per cent net of profit which is still better for me as a shareholder than the 0.5 per cent of the balanced sheet size."
Another shareholder that came in defence of foreign partners is
"With my experience as a former director in one of the affected companies, I can say that if we put in too much pressure on these companies, they will move their interests to another country and the affected company in the country will face crisis since it is the foreigners that have the brand.
New Conditions "I believe what the Nigerian authorities should do is to ensure that any company that has come to establish itself in
There is need for my fellow shareholders to know that if the law says that a foreign company that has been established for some number of years should domicile their research and development here, it will address this problem," Olatokunbo said.
Power of the Majority However, Okezie still insisted that the Nigerian shareholders have been at the receiving end because foreign partners in most of these companies are in the majority and it is easy for them to sway votes during companies' annual general meetings. According to him, the only people who can rescue the Nigerian shareholders are the regulators.
"It would have been better to charge the fees on PAT and not on turnover but since they are the ones who control majority shares and provide technical services there is little minority shareholders can do. "When it comes to voting, the majority shareholders carry the day because of the number of their shares. I believe the regulators should be the ones to do something to stop this exploitation. They have not done well in this regard at all," Okezie said. While shareholders may wait for regulators to act, the National Coordinator of
"We are going to push this. My association will send a petition to the regulators on this issue. We have complained in the past but nothing has been done. It is only in
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