Nigerian investors had over the years raised concerns about government’s nonchalant attitude to their huge losses following regulatory-induced policies and inconsistent fiscal economic blueprints. To put their mind at rest, the Federal Government had assured retail investors of their safety, stressing that the government empathises with Nigerian shareholders over the situation of their portfolio investments.

The irony, however, is that while investors were hoping for greater protection following the assurances given to them by the regulators in the capital market, things took a different turn recently when the Nigerian Stock Exchange announced the delisting of some companies from its daily official list.

The NSE said it took the action because of the persistent failures of the companies to meet best corporate governance practices, as enshrined in the listing rules.

Some of the companies delisted include: IPWA Plc, G. Cappa Plc, West African Glass Industries Plc (WAGI), Investment & Allied Insurance Plc, Alumaco Plc, Jos International Breweries Plc, Adswitch Plc and Rokanna Plc.

Others include: Evans Medical Plc, P.S Mandrides & Company Plc, Nigerian Ropes Plc and Premier Breweries Plc.

Justification for delisting

The NSE management noted that the delisting was in pursuant to Clause 15 of the General Undertaking, Appendix III of the Rule Book of the Exchange, 2015, Part II, Issuers’ Rules, which referenced the obligations of quoted companies in terms of regular periodic submission of performance and financial reports, corporate governance and accountability. It said the delisting of the eight companies from the daily official list of the Exchange became effective from 18th May 2016.

“The Quotations Committee of the National Council of the Nigerian Stock Exchange (QCN) approved the delisting of the afore-listed companies,” the NSE management said.

In the view of Osar Onyema CEO of Nigeria Stock Exchange, good corporate governance will ensure the existence of solid companies in Nigeria.

According to him, the idea of forcing companies to list on the nation’s bourse may lead to infractions in the market, adding that a lot of energy has been committed in building the foundational aspect of the market in terms of transparency, orderliness, fairness, disclosure, and enforcement of rules and regulations.

“In the short term, you will see the huge volatility but that should not distract from those fundamental elements about good companies, making good money, running under a well governed Exchange structure and a well regulated market structure. These factors will combine to shore up investors’ confidence in these challenging times,” he stated.

Levels of delisting

A report obtained indicated that 18 companies have been slated for delisting, including 17 companies that have been earmarked for compulsory delisting and a company that had opted for voluntary delisting over its inability to comply with listing requirements.

Investigation showed that the delisting will lead to more than N33 billion capital flight from the market, thus implying direct loss of similar value to investors who may not be able to unlock such value in the absence of a regular stock exchange.

Already, the Quotation Committee of the National Council, which presides over listing and delisting of companies, has approved final delisting of seven of the companies while it has also approved final delisting process for other companies.

The final delisting approval implies that the Exchange has concluded and complied with the regulatory requirements in the delisting process, including issuance of necessary notices, forbearances, fair hearing and probation without any rectification from the affected company.

Recent data from the Exchange revealed that no fewer than 63 companies have been delisted from the NSE.

A review of the list showed that out of the 63 companies, seven chose to delist voluntarily; 47 delisted due to regulatory instruction; while 9 of these companies delisted due to reforms/expansion within the sectors they operated.

Why companies are delisting

Checks conducted by The Nation at the Exchange revealed that most of the companies that delisted voluntarily from the bourse had sited harsh economic climate and parent company buy-out as reasons.

A source in the know said the companies were being delisting for recurring and possibly irredeemable inability to comply with the listing requirements of the Exchange, especially in the areas of timely and accurate rendition of operational and financial accounts and other corporate governance issues.

Stakeholders’ concerns over companies’ delisting

The Independent Shareholders Association of Nigeria (ISAN) has bemoaned the delisting of listed companies by the regulatory authorities, saying it does not augur well for average investors and the nation’s capital market. The General Secretary of the association, Adeleke Adebayo urged capital market regulators to allow those listed companies that are not meeting the post listing requirements to remain a ‘public focus.’

He argued that institutional investors may develop interest in such companies and decide to invest in them. “We are losing a lot of money in the market. Nobody is thinking of giving forbearance to investors. We need to make some price adjustments not to continue to delist companies because it is not good for average investors. Let it remain a public focus. Some investors can develop interest and invest in these companies.”

NASD Plc to the rescue

The management of NASD Plc is making moves to get the eight companies delisted from the Nigerian Stock Exchange (NSE) last week to trade on the over-the-counter (OTC) market.

NASD Plc is the platform for the securities of all unquoted public companies in Nigeria. The platform, which commenced operations in 2013, has admitted 27 firms with efforts being made to attract more.

The Nation gathered that NASD Plc is making moves to attract the eight companies delisted by NSE. The companies include: IPWA Plc, G. Cappa Plc, West African Glass Industries Plc, Investment & Allied Insurance Plc, Alumaco Plc, Jos International Breweries Plc, Adswitch Plc and Rokanna Plc.

The stocks were delisted for failure to comply with listing requirements. It was gathered that NASD Plc sees some of the companies as very good candidates for the platform given the experience they have already had on the NSE.

“These companies have already been exposed to the requirements of an exchange and they have been on the NSE for many years before now. However, due to one challenge or other they could no longer meet the listing requirements. But that does not mean the companies cannot recover. Having been delisted from the NSE, they can be traded on the NASD Plc so that any of their investors wanting to exit can do that. Also, other investors who still have confidence in their future can enter,” a market source confirmed.

NASD Plc has been eying over 70 public companies that already have their securities registered with the Securities and Exchange Commission (SEC).

Confirming this development in an interview recently, the Managing Director/CEO of NASD Plc, Mr. Bola Ajomale, said efforts were being made to ensure that such public companies that are yet to have their shares traded on the OTC platform are made to do so.

According to him, various strategies are being adopted to achieve the listing of these shares so that the companies and their shareholders would enjoy the benefits of patronising NASD Plc.

Ajomale had explained that since the platform began operations it had been providing benefits to various stakeholders in the OTC market unlike before. (The Nation)

*ONOME, PLS SUE NIGERIAN STOCK EXCHANGE BUILDING

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