Why Nigerian Stock Exchange Suspends Six Companies

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Nigerian Stock Exchange (NSE) Logo.

 

The Nigerian Stock Exchange (NSE) has suspended trading in six companies over their inability to comply with corporate governance rules and best practices that mandate them to submit their financial statements within a specified period.

The suspended companies included FTN Cocoa Processors Plc, Medview Airline Plc, Niger Insurance Plc, R.T. Briscoe (Nigeria) Plc, Union Dicon Salt Plc and Capital Oil Plc.

The NSE suspended trading on the shares of the companies with effect from Tuesday September 1, 2020 over their failure to “file their audited financial statement for the year ended December 31, 2019”

Listing and regulatory rules at the capital market require all quoted companies to submit their annual audited report and financial statement not later than 90 days after the end of the financial year. More than 85 per cent of quoted companies including all banks, insurers, major manufacturers, oil and gas companies and conglomerates use the Gregorian calendar year ending December 31 as their business year. Thus, the deadline for the submission was Monday, March 30, 2020.

However, with the disruptions caused by the COVID-19 pandemic, both the NSE and Securities and Exchange Commission (SEC) extended the deadline for submission of annual report and accounts by 60 days, till May 29.

The NSE stated that the companies were suspended after the expiration of the “grace” period and many notifications demanding the submission of the financial statements.

“In accordance with the rules set forth above, the suspension of trading in the shares of the above listed companies will only be lifted upon the submission of the relevant accounts and provided the Exchange is satisfied that the accounts comply with all applicable rules of the Exchange,” NSE stated.

The NSE had in July 2020 warned investors to be wary when dealing with shares of 13 companies after they failed to meet regulatory deadlines for the submission of their financial statements without any explanation.

The 13 companies included Aso Savings and Loans Plc, Deap Capital Management & Trust Plc, DN Tyre & Rubber Plc, FTN Cocoa Processors Plc, Goldlink Insurance Plc, International Energy Insurance Plc, Medview Airline Plc, Resort Savings & Loans Plc, Staco Insurance Plc, Standard Alliance Insurance Plc, UNIC Diversified Holdings Plc, Union Dicon Salt Plc and Union Homes Savings and Loans Plc.

“Investors are advised to trade with caution on the securities of these companies in the absence of up to date financial information on them,” the NSE stated.

The Exchange warned that it may suspend trading on the shares of the companies if they fail to comply with extant rules within the specified period.

According to the Exchange, the deadline for submission of the unaudited financial statement of the companies became due on June 29, 2020, being the extended due date as granted by the Exchange.

By virtue of non-filing of the unaudited report by the due date, the companies violated extant rules at the NSE which provide that every company shall file its unaudited quarterly accounts not later than 30 calendar days after the relevant quarter, and publish it within five business days after the date of filing, in at least two national daily newspapers, and post it on the company’s website, with the web address disclosed in the newspaper publication.

The rules also required that an electronic copy of the interim financial publication shall be filed with the Exchange on the same day as the newspaper publication.

Head, Listings Regulation Department, Nigerian Stock Exchange (NSE), Godstime Iwenekhai stated that the NSE had issued deficiency filing notice to the companies notifying them of their violations and mandating them to make public disclosure regarding the violation, the reasons for the violation and possible date for publication of the outstanding financial statement.

According to the Exchange, the defaulting companies failed to comply with the directives in the deficiency filing notice.

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