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Certified National Accountant Volume 18 Contents
From the Editorial Desk Obafemi Olusanya 3

Number 1

January-

~arch,2010

From the President's Suite

Francess I. Gafar

4

Articles Promoting An Efficient Banking Sector Through Effective Supervisory And Regulatory Framework Chicke Nwoha and M.S.K. Ifurueze

5

The Effect of Banking Reforms on the Soundness of Nigerian Banking System

Steve N.O. Ibenta

8

Share Reconstruction Scheme In The Nigerian Banking Industry - The Accountant's View

Emman I. Okoye and Cletus O. Akenbor

24

An Examination of Banking Crises On Nigeria And The Proposed Assets Management Company

Ikeora E. Jackson

30

Meeting The Challenges Of Globalisation: A Focus On Scarlite Industries Limited.

M.N. Okeke aiidA.N. Onuorah

39

Understanding Capital Accounts Liberalisation

Akongbowa Bramwell Amadasun

43

. Tax Evasion Problems In Nigeria

Sunday Alphonsus Anichebe

49

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JANUARY· MARCH, 2010

Electronic copy available at: http://ssrn.com/abstract=1788776

, SHARE RECONSTRUCTIQN SCHEME

"Share Reconstruction Scheme in the Nigerian Banking Industry ~The Accountant's View
Emma I. Okoye and Cletus O. Akenbor
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Abstract

This study investigated share reconstruction scheme in the Nigerian banking industry with emphasis on its impact on the share price of banks, and the banks' degree of compliance to the rules of share reconstruction scheme. For "thestudy, questionnaires were administered on a selected group ofpractising accountants and accounting lecturers in some Nigerian universities. The data were analyzed usingfrequencies and simple percentages. The study found that a share reconstruction scheme does not significantly appreciate the market value of bank shares. Also, there appeared to be a low level of compliance to the basicrules of share reconstruction scheme by Nigerian banks. The study recommended that banks should design "effective strategies to enhance their performance, and hence share price appreciation especially after a share reconstruction scheme. The study also recommended that regulatory authorities should ensure that share reconstruction scheme by banks conforms to the basic rules.
Introduction A well capitalized bank has the potential of attracting large deposits which prospectively increase its capacity to do more business and generate more revenues. Bank capitalization is an index of its risk profile. It is for this reason that the Central Bank of Nigeria (CBN) on" July 6,2004, directed that banks should raise their capitalization to N25 billion. The immediate". effect of the recapitalization exercise was the emergence of25 banks and the liquidation of 14 banks from a total of89 banks that were in operation during the pre-recapitalization era (Kolo, 2008). Few months after consolidation, some banks entered a second phase of re-capitalization through the capital market, such as First Bank - NIOO billion, Oceanic BankN56 billion, Access bank - N70 billion, Fidelity Bank - N48 billion, FtME - N75 billion, Afribank - NIOO billion, Bank PHB - N85 billion, and Zenith Bank - Nl50 billion. A financial analyst once asked one of the leading banks in the second phase of re-capitalization, "why are banks raising fresh funds few months after their initial public offer and consolidation?" The answer was that the first phase of the recapitalization was to meet up with the CBN directives without any evident opportunities, but the second phase was to enable them take advantage of possible opportunities in the economy arising from the various economic reforms. In this case, banks "went into re-capitalization not necessarily because of financial difficulties but for strategic positioning. At times, the share capital of a bank may be out of tune with the available assets. This may be as a result of accumulated tosses, fictitious assets, and under/over valuation of assets. Where substantial losses have been accumulated, the bank share capital will be grossly eroded with a potential for failure. Appropriate remedial measures will include injecting fresh funds into the bank to restore its capital base. Researchers, financial analysts, and bank experts recommend a scheme of share reconstruction as a viable option for this purpose (Henshaw and Smith, 2002). A share reconstruction is the" reduction of-the number of shares in a bank's issued share capital without any reduction in the market value of the shares. For instance, a bank with 10 billion units of ordinary shares of 50k each with a market price ofN5 can decide to reconstruct 2 shares into 1. This will reduce the bank's number of issued share capital, but not the value of shares held by shareholders. Bank share capital provides a blanket cover for unsecured creditors in the event of liquidation because unsecured creditors have the assurance that they have something to fall bank on. So increase in bank capitalization presupposes the security of unsecured creditors. Therefore, a bank is not permitted to embark on a share reconstruction scheme except the following basic rules are metIt must be authorized by its articles; It must be by a special resolution passed at a general meeting iii) The special resolution must specify the amount of reduction' iv) The scheme must be approved by the court by obtaining a court sanction v) The minutes of the meeting, copy of the special resolution and a copy of the court sanction must be filed with the corporate affairs commission. (CAMA, 1990, Section 105 (1)). The significance of the basic rules in a share reconstruction scheme is that it builds investors confidence as they perceive such exercise as being legal. But, in recent times, the share reconstruction scheme executed by some banks, for instance, Sterling Bank and Skye Bank raised doubts of whether banks conform to the basic rules in a share reconstruction scheme. To this end, the objectives of this study are to investigate whether share reconstruction scheme significantly appreciates the share price of banks and also to examine the degree of banks' compliance to the basic rules of share reconstruction scheme. To adequately address the above objectives, the following research questions were raised; i) Does share reconstruction scheme significantly enhance the share price of banks? ii) Do Nigerian banks conform to the basic rules in a share reconstruction scheme? The Concept of Share Reconstruction Scheme Share reconstruction scheme is usually construed to mean the same with other related terms, such as capital reconstruction, capital reflation, and capital re-organization. Capital reconstruction embraces capital re-flation, capital rei) ii)

SHARE RECONSTRUCTION

SCHEME

organization and share reconstruction. This is as illustrated in the diagram below: Figure 1: Capital Reconstruction Scheme

In a related development, the chairman of Access Bank PIc in the Access Bank prospectus for public offer stated that the benefits and effects of bank share reconstruction scheme are

I
W
Internal Capit~1Reconstruction

Capital Reconstruction
I

I
W

!

I

I

External Capital Reconstruction

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Share Reconstruction * Reduction in ordinary shares * Reduction in preference shares * Reduction in liabilities

!
Capital Re-flation

Capital Re-organization * Revision in shareholder's rights . ,* Debts restructuring

Business Combinations
* Mergers * Acquisitions * Take-overs

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* Issues of share * Issues of debentures
* Loan acquisition

As demonstrated in the diagram above, capital reconstruction is a scheme used to rebuild or renew a firm through changes in capital composition. It could be internal or external. Internal capital reconstruction takes the form of capital ~e-organization, share reconstruction, or capital re-flation. While capital reorganization is a rearrangement of capital, such as debt restructuring, and revision in shareholders' rights. Share reconstruction is a reduction in capital, such as reduction in ordinary shares, preference shares or liabilities; and capital reflation is an increase in capital, such as issues of shares and debentures and loan acquisition (Lewis and Pendrill, 1996). External capital reconstruction is" through business combinations, such as mergers, acquisitions and take-overs. According to Biosah (2006), share reconstruction also known as reverse stock split is a mechanism used by companies to reduce the number of outstanding shares and, increase their share price proportionately without affecting the total book value of those shares. For example, if a bank implements a onefor-three reverse stock split of their shares, a shareholder holding 3,000 shares would instead receive 1,000 shares. Each shareholder's proportionate ownership of ordinary shares outstanding would remain the same. The chairman of Unity Bank PIc, Akin Mabogunje inAnaro (2006) revealed that bank shares reconstruction results in the following:
i)

i)

ii) iii)

Reduction in number of the bank shares in issue; Proportional increase in the quoted share prices so that there will be no adverse effect on the value of shares held; Significant improvement in the bank's trading profit, distributable profit and other stakeholder value creation indices.

Biosah (2006) in her comparative study between share reconstruction and share buy-back highlighted some advantages and disadvantages of share reconstruction. According to her, the advantages of share reconstruction include: i) More acceptance of the company's shares by the financial community and investing public due to higher stock price; The higher stock price would probably attract institutional investors; Since the company did not use internal funds to buy back shares, they will have more funds to pay dividends.and invest in alternative projects that might generate more revenue and profit in the future.

ii) iii)

ii) iii)

iv)

Positions the bank for stability and profitability, as well as guarantee a good return on investment; Assures shareholders of the possibility of bonus shares under a moderate equity level; Assures shareholders that though the number of shares held by each shareholder would have been reduced, their percentage holding and value remain the same; Reduces the number of traded shares of the bank and enhance the value "f;" ':r
1

Some of the possible disadvantages are:i) The reduced number of shares resulting from the scheme could adversely affect the liquidity of the firm's common stock; , ii) It could result in a significant devaluation of a firm's market capitalization if the firm's stock price declines rather than increase afterwards; iii) It may leave certain shareholders with some "odd lots", which may be difficult to sell because there might be no incentives for the brokers to sell tl-> shares due the 10 t' commiss ,..,.
tf)

price. WIthout Increasing the capital structure of the

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'hare r const .•...,,,.,,"

Extinguish or reduce liabilities on any of its shares in respect of share capital not paid up; or ii) Either with or without extinguishing or reducing liabilities on any of its shares, cancel any paid-up share capital which is lost or unrepresented by available assets; or iii) Either with or without extinguishing or reducing liabilities on any of its shares, payoff any paid-up share capital which is in excess ofthe company's requirements. Lewis and Pendrill (1996) noted that a share reconstruction scheme for (i) and (iii) of the possible reasons listed above is extremely rare. With regard to (i), few companies now have partly paid shares in existence and hence there is invariably no liability in respect of partly paid capital, which could be reduced. With regard to (iii) although it might make good economic sense for directors to return 'permanent' capital to shareholders where better investment opportunities exist outside the firm than within it, most directors have been loath to relinquish their control over such resources and have usually found some ways to employ them within the company. Both options (i) and (iii) do of course, result in a reduction in the net assets available to creditors. Thus in (i), there is a reduction in the liabi ity of members and hence in the potential pool of net assets available to creditors on liquidation. In (iii), resources actually leave the company, so directly reducing the pool of net assets to which the creditors have recourse. For these reasons the court must give any creditors opportunity to object to the share reconstruction scheme and will usually only confirm the scheme if the debt of such a dissenting creditor is paid or secured. Option (ii) is the one commonly found in practice. In this case, a company has made losses in excess of previous profits and its net assets become lower than its permanent capital. Given that such a position has been reached it will often be sensible to recognize the fact by reducing the capital and writing off the losses so that a more realistic position is shown by the balance sheet and the company is allowed to make a fresh start. In particular, after such a scheme the company will be able to distribute realized profits without the need to.first make good the accumulated realized losses and, in the case of a public company, net unrealized losses. The principle of implementing a share reconstruction scheme is to reduce proportionately the nominal value of the ordinary shares outstanding. This has no effect whatsoever on the real value of the ordinary shareholders' interest since the same number of shares in the same company are held in the same proportions by the same people. Each shareholder has the same proportional interest in the net assets of the company after the scheme as before. This demonstrates the irrelevance of the par value and supports the argument that companies should be permitted to issue shares of no par value. Although share reconstruction will temporarily result in an increase in the market price of a firm's shares, the scheme may not permanently increase the market price of a stock in proportion to the reduction in number of shares if the bank's financial performance does not improve (Williamson, 2004).

i)

Moreso, share reconstruction by banks would not reflect the true value of the stocks being listed on the stock exchange following consistent fall in the share price of those banks at the secondary market. The ational Co-ordinator of the Independent Shareholders Association of Nigeria (ISAN) as reported by Biosah (2006), noted that if a stock is listed for N5 on the stock exchange after reconstruction, and the price drops to N2 after one month, it means shareholders' values have depreciated. A U.S. study found that only 14 (or 37.8%) of the 37 firms which executed share reconstruction strategy in the United States in 2002, witnessed share price appreciation above the post reconstruction price (Jacobs, 2003). On October 26, 2006, Access Bank PIc completed a 2 to 1 share reconstruction scheme. The bank's shares which previously traded at N3 were listed at N6 on the stock exchange pos.t reconstruction. Shortly after the reconstruction, the share price traded as high as N7.31, but on December 15,2006, the share price fell to N6.70. This implies that there was no sustainability in the post reconstruction price. The fact that share price increased immediately after reconstruction does not mean the appreciation will continue if there is a negative perception of the future earnings prospects of the bank by the capital market. The share price of Access Bank has not experienced any significant appreciation since the completion of the reconstruction. The non-performance of Access Bank shares after reconstruction is a proofthat shar-ereconstruction may not be a panacea for the shares of most banks (Biosah 2006). Bank Shares Reconstruction and the Basic Rules According to Aborode (2005), share reconstruction scheme is an illegal act, but can Delegalized by adopting the basic rules. * Being authorized by the company's article of association; * Approved by a special resolution ofthe company passed by majority of its members at a general meeting called for that purpose * The special resolution must specify the amount of reduction * Approved by the court by obtaining a court sanction * The minutes ofthe meeting, copy of the special resolution and a copy of the court sanction must be filed with the Corporate Affairs Commission (CAe). [CAMA, 1990, Section 105 (1)]. However, Uche (2008) revealed that some banks do not conform to the basic rules in their share reconstruction strategy. According to him, the Managing Director of Pros hare igeria substantiated this in a paper delivered at an investors' forum in Lagos by appealing to regulatory authorities (Nigerian Stock Exchange, Securities and Excbange Commission, and Central Bank of igeria) to ensure that companies implement share reconstruction exercise properly because investors were being fleeced when the strategies are not right. An independent market analyst expressed similar opinion when as an investor in Sterling Bank, he discovered recently that his portfolio had reduced considerably because of the irregularities in the process of reconstructing the bank's shares. He said "but how can they reduce the volume and also reduce the share price, this is not acceptable". A stock broker

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JANUARY· MARCH, 2010

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SHARE RECONSTRUCTION SCHEME

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in an interview with BusinessDay said "imagine what these people have done to me. J bought one million units of Sterling Bank shares with money borrowed from the bank which J am still paying interest". He further stated that it was unheard of that a reconstruction will be implemented by reducing the . number of shares and also reducing the share price, noting that the bank has shortcharged investors. Another investor lamented that. his Sterling Bank portfolio, which was valued at N8 million had been reduced to less than N2 million. According to him, his broker advised him that the only way to seek redress is through the court while describing the exercise as fraudulent (Biosah, 2006: 2). A review of the reconstruction of Skye Bank Plc done in November, 2006 showed that 1 for -3 ratios was adopted to reduce itsshares outstanding of 215 .billion which traded at 3.06. The bank had reduced the number of its shares to 7.5 billion at an adjusted post reconstruction price ofN6.83. For example, an investor with 6,000 shares pre-reconstruction at N3.06 per share had a portfolio valued N18,360 and by post reconstruction should have 2000 units at 9.18 per share with a portfolio valued at N 18,3 60 instead the reconstruction value will be N 13,660. Although investors later regained their losses. through price appreciation, but the fact remains that they felt shortcharged by the exercise. The Sterling Bank share reconstruction scheme of 1 for 2 implemented in September, 2008 to reduce its 24 billion shares outstanding to 12.6 billion shares equally ended with shareholders feeling being cheated as the share price was adjusted from current market price of 6.65 to . 5.36 as against NI2.70.Considering that this was happening at the time when the market was witnessing a meltdown, shareholders suffered enormous losses. Indeed, shareholder with a 10,000 units pre-reconstruction should have a portfolio valued at N66,500 while post-reconstruction the value dropped to N29, I04. Considering the above scenarios, it appears that the basic principle of share reconstruction (i.e reduce the volume and increase the price) is not well implemented by banks. Researchers are ·therefore wondering whether the basic rules as spelt out by CAMA, 1990 section 105 (1) are being adopted by banks in their share reconstruction scheme. The Accountant's Perception Of A Share Reconstruction Scheme In The Banking Industry The principles of accounting are based on several important underlying assumptions, 'one of which is the going concern assumption. The going concern assumes that a business entity must have perpetual existence. It is not anticipated that the business would be-sold time and as a result, the assets of the business are not stated in terms of their realizable value but rather at their, acquisition cost.

the bank assets may be less than the value of liabilities with the probable result that the bank will be unable to meet its debts as they fall due. It is imperative that the capital "lost" should be absorbed equitably by the various parties, (shareholders, debenture holders, and creditors). Hence a careful need to design a share reconstruction scheme . The accountant is involved significantly in providing expertise regarding share reconstruction scheme. Accountants may help in the discovery of assets and liabilities or in the determination of the impact of a share reconstruction. Prospective information also must be generated in order to determine the effect of a share reconstruction plan on future operations of the bank. Lewis and Pendrill (1996) argued that the writing-down or reconstruction of share capital removes such losses from the balance sheet and bring a greater likelihood of earlier future dividends, thus making the shares more attractive. The simplest way of carrying out such a share reconstruction scheme is to reduce proportionately the nominal value of the ordinary shares outstanding. This has no effect whatsoever on the real value ofthe ordinary shareholders' interest since the same number of shares in the bank are held in the same proportions by the same people. Each shareholder has the same proportional interest in the net assets of the bank after the scheme as before. This demonstrates the irrelevance of the par value and supports the argument that banks should issue shares of no par value. Uche (2008) argued that a scheme of share reconstruction results in availability of more funds to pay dividends and invest in alternative projects to generate more revenue and profit, reduction of the number of traded stocks for the enhancement of value of the stocks, and raising capital from the market in the future at a good price without increasing the capital structure. But Henshaw and Smith (2002) and Biosah (2006) posit that share reconstruction scheme does not automatically guarantee higher prices for bank shares, therefore management must not assume that because their paid-up share capital is reduced means increase in share price. Appreciation of the share price after a share reconstruction is a function of. the bank's future earnings prospects as perceived by the capital market. Share reconstruction scheme is a viable strategic alternative of reviving a failing bank as long as the bank gives due consideration to the following factors: i) Debenture holder secured and unsecured creditors, and all other liabilities should be settled or at least reduced. The debenture holders and creditors at times may be willing to convert their claims into shares. Debenture redemption involves capital reduction. ii) The reduction in preference shares must not be higher than ordinary shares. Preference shareholders may be willing to convert their claims into shares or waive the rights to the arrears:

any

Unfortunately, a bank may face some difficulties that cause the going concern assumption to be challenged. Accumulated losses for example, are capable of eroding the paid-up share capital of the bank. In such acase, the value of

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SHARE RECONSTRUCTION SCHEME

iii) Ensure that the ordinary shareholders should bear the major brunt ofthe losses as they are risk takers in the business. iv) At the end, ensure that the scheme is equitable to all affected parties. (Fischer, Taylor and Cheng, 2002; McDonald,2009). Share Buy Back Scheme-An Alternative To Share Reconstruction Scheme Though the focus of this study is not on share buy-back scheme, it would be out of place to end this discussion . without a few lines on share buy back scheme, which seems to be the alternative to share reconstruction scheme. Banks buy back shares ifthere is an existence of profits, a lack of other attractive investment options, and the desire to signal to, the market that their shares are undervalued. When a bank buys back her own shares, it reduces the amount of shares in circulation. Future profits then are spread across fewer shares to potentially increase earnings per share and the market value of shares. Share buy back scheme builds up investors' confidence and shareholders' loyalty; increases the return on equity, and debt-equity ratio through shifts in financing structure (Biosah, 2006; Agbolola, 2009). But the major weakness of a share buy-back scheme is that it reduces available cashflow that would have been used to generate more revenue, increase earnings, and pay dividends. For this reason, banks would prefer the scheme of share reconstruction whereas shareholders would prefer the share buy-back scheme (Biosah, 2006). RESEARCH METHODS The data for this study were generated through the administration of questionnaire on selected practicing accountants (designated XI) and accounting lecturers (designated X2) in Nigerian Universities. A total of one hundred copies of the questionnaire were administered on the respondents, out of which seventy-seven (77) copies were returned fully completed. The questions were designed on a five-point Likert-scale; strongly agree, agree, indifferent, disagree, and strongly disagree. DATA PRESENTATION AND ANALYSIS This section focused on a descriptive analysis of the data collected in this study. The respondents were asked to express their degree of agreement on whether share reconstruction scheme significantly enhances the share price of banks, and their respon_seswere presented in table 1below.

Table 1: Respondents' reconstruction scheme share price of banks. X,
xesponses

opinion on whether share significantly enhances the
,.

X2
i-ercentaqes rrequencies 10.00% 1
1 o.UU"/o
0

r-requencies

I"ercentages
2.70%
1".0170

Strongly 14 Agree Agree 10 Indifferent 5 Disagree 12 ~trongly Disagree 13 Total 40

12.50% 30.00% 32.50% 100%

3 16 12 37

8.11% 43.24% 32.43% 100%

Source: SurveyData, 2009. Analysis of the questionnaire revealed that 4(10%) of the practicing accountants and 1 (2.70%) of the accounting lecturers strongly agreed that share reconstruction scheme enhances the share price of banks; 6 (15%) and 5 (13.5%), agreed; 5 (H.50%) and 3 (8.11%) were indifferent; 12 (30%) and 16 (43.24%) disagreed; while 13 (32.50%) and 12 (32.43%) strongly disagreed. On the whole, 16 of the respondents agreed while 69 disagreed with the assertion. This implies that share reconstruction scheme does not' significantly enhance the share price of-banks. The respondents were asked to indicate their degree of agreement on whether Nigerian banks highly conform to the basic rules of share reconstruction scheme, and their responses were presented in table 2 below. Table 2: Respondents opinions on whether Nigerian banks highly' conform to the basic rules of share reconstruction scheme. . X, ResJ)onses Frequencies PercentagesFr.equenciesPercentages 5.41% Strongly 4 Agree 10.00% 2 Agree 9 22.50% 8 21.oz o Indifferent 1 2.50% 4 10.81% Disagree 15 37.50% 14 37.84% Strongly

x

u

/

Disaqree

Total

11 40

27.50% 100%

9 37

24.32% 100%

Soureee-Survey Data, 2009. The data presented in table 2 above showed that 4 (10%) and 2 (5.41 %) of the practicing accountants and accounting lecturers strongly agreed that Nigerian banks conform to the basic rules in a share reconstruction scheme; 4 (22.50%) and 8 (2l.62%) agreed; 1 (2.50%) and 4 (10.81%) were indifferent; 15 (37.50%) an~ 14 (37.84%) disagreed while 11 (27.50%) and 9 (24.32%) strongly disagreed. On the whole, 18 of the respondents agreed while 49 disagreed with the assertion. This implies that there is a low level of compliance to the basic rules in a share reconstruction scheme by Nigerian banks.

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Discussion Of Findings The results of our analysis show that share reconstruction scheme does not significantly appreciate the share price of banks. The works of other researchers- Henshaw and Smith (2002), Williamson (,2004), and Biosah (2006) lend credence to this finding because they all argued that share reconstruction does not automatically guarantee higher prices for bank shares. This is because appreciation in the price of banks shares after reconstruction does not depend on capital reduction alone but the perception of the future earning prospects of the bank by the capital market. A negative perception leads to depreciation in the value of banks shares even after a reconstruction scheme. It was equally observed that Nigerian banks do not highly conform to the basic rules in a share reconstruction scheme as provided by CAMA (1990) section 105 (1). This is in agreement with Uche (2008) who stated that the share reconstruction scheme implemented by some banks raises doubts as to whether banks actually conform to the basic rules. The share reconstruction schemes of Sterling Bank and Skye Bank indicated that no formal consensus between the banks and shareholders before a reconstruction scheme was embarked upon. This lack of consensus invalidates the basic rule in a share reconstruction scheme. • ConcIusionAnd Recommendations Based on our findings; it is very clear that share reconstruction scheme will temporarily result in an increase in the market price of bank shares, the scheme is not a guarantee that share price would continue to increase in .proportion to the reduction in the number of outstanding shares if the bank's financial performance does not improve. If the capital market and the investing public perceive that share reconstruction is just a window dressing exercise to increase the market value of banks, the share price would certainly decline and this would result in a loss of capital to existing shareholders. The low level of compliance to basic rules in a share reconstruction scheme by Nigerian banks hinders ihvestors' confidence as they perceive such exercise as being fraudulent. It boarders investors if the regulators in the capital market still have investors' protection as their watch-word having allowed such fraudulent act to go unchecked. In light of the above, the following recommendations were made:i) Banks should not embark on a share reconstruction scheme as a window dressing to increase the market value of their shares, as such "unfair deal" is tantamount to the future growth of the bank; ii) Banks must design effective strategic option to improve their financial performance after a share reconstruction scheme; iii) Banks should present and explain their plans to grow future revenues and earnings after reconstruction to the capital market and the investing public, if they must develop positive perception of the future earning prospects of the bank. iv) Capital market regulators (CBN, NSE, SEC) should ensure that share reconstruction exercise by banks conforms to the basic rules to uphold the sanctity of the market and boost investors confidence. References Aborode, R. (2005) A Practical Approach to Advanced Financial Accounting; Lagos: Master Stroke Consulting. Access Bank (2006) "A Proposal for Share Capital Reconstruction" Prospectus of Offer for Subscription, www.accessbankplc.com/downloadslrate/ Access; AUGUSTO CO; Anaro, B.(2006) "UnitY Bank Share Reconstruction Plan"; Business Day Newspapers; December is: Biosah, C. (2006) "Share Reconstruction may not be the Panacea for most Nigerian Banks"; www.investiq.net/wordpress;pp. 3. Biosah, C. (2006) "Share Reconstruction Versus Share Buybacks" Financial Standards: November. CAMA(1990) Section 105 (1). Fischer, P. M.; Taylor, W. L; and Cheng, R. H. (2002) Advanced Accounting; South-Western; Thomson Learning. Henshaw, I. and Smith, C. A. (2002) "Capital Reorganization. The Global Challenge for Banks in the 21 Century"; www.allbusiness.com; Retrieved on 3 August. Kolo, K. (2008) "Banking Sector Consolidation in Nigeria and the Need to Generate Superior Returns"; Labels Banking, Chukwumah C. Soludo, Consolidation, Nigeria, Reforms; May 20. Lewis, R and Pendrill D. (1996) Advanced Financial Accounting; London; Financial Times Pitman Publishing. McDonald, B. C. (2009) "Capital Reconstructions; Are They Really Necessary?" Accounting and Finance: Vol. 20; Issue 1;pp. 77-90. Jacobs, T. (2003) "An investigation of share reconstruction strategy in the United State"; Motely Fool; March. Uche, N. (2008) "Share Reconstruction and the Role of Regulators" Business Day Newspapers; www.businessdayonline.com; Retrieved on 4th August. Williamson, J. T. (2004) "Share Reconstruction and Banks Financial Performance in Emerging Market"; Journal .of Banking and Financial Management; Vol. 17,No.l,pp. 137-139.
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The authors are a senior lecturer, Department of Accountancy, Nnamdi Azikiwe University, Awka, Anambra State and an official of the Strategic Research Centre, Part Harcourt, Rivers State, respectively.

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