The Nigerian Exchange Limited (NGX) has fined eight quoted companies N32.74 million for failure to file their unaudited financial statements after the regulatory due date.
An investigation by Nairametrics showed that the companies were sanctioned during the current year 2023 for their inability to meet the regulatory requirements during the first quarter of 2023.
The companies include Presco Plc, Ardova Plc, Briclinks Africa Plc, Universal Insurance Plc, Unity Bank Plc, Conoil Oil Plc, FBNH Plc, and Caverton Offshore Support Plc.
Further checks showed that Presco Plc with N9.4 million fine, Ardova, N7.2 million, and Universal Insurance Plc with N.4.7 million fine accounted for a cumulative fine of N21.3 million and represents 65.05% of the total fines levied on defaulters.
Market operators were unanimous in their submissions that the sanction for non-compliance with the rules of listing on NGX is a welcome development, as it will lead to more appropriate pricing of securities.
More quoted entities would be compelled to give information to the market on a timely basis.
The Managing Director, of Crane Securities Limited, Mr Mike Eze, while reacting to the development on an inquiry by Nairametrics, said the action of NGX would boost investor confidence in the market because it is sending a signal for the need for investors to get companies’ financial reports as at when due.
He added that investors needed to make informed decisions before choosing which stock to buy and this can only be achieved if there is adherence to good corporate governance by the quoted companies.
According to the founder of the Independent Shareholders Association of Nigeria (ISAN), Sir. Sunny Nwosu the affected companies were supposed to have ensured that they met the requirements and as such would help shareholders to understand their financial health for investment decisions.
“It is not a new thing, and it does not come to us as a surprise. We have constantly written to the exchange and raised the issue at annual general meetings that there is a need to know the status of these companies to enable us to take investment position,” he noted.
Also, the President, of Progressive Shareholders Association, Mr Boniface Okezie, said it was better for Nigerians to have a few companies that are ready to play by the rules than to have all the companies in the world that are not ready to satisfy post-listing requirements.
Okezie said that penalizing companies for non-compliance with the rules of listing on NGX was a welcome development, as it will lead to more appropriate pricing of securities.
He said more entities would be compelled to give information to the market on a timely basis, adding that investor confidence in the regulatory capacity of NGX and the market would be enhanced.
A founding member of Nigeria Shareholders Solidarity Association and one of the leading shareholder activists, Alhaji Gbadebo Olatokunbo said:
“We must always abide by the rules, sanctions would make the companies sit up and post their results as and when due, thereby providing investors, analysts, and stockbrokers the platform to predict the real value of the companies”.
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The Exchange in its X-Compliance report explained that the initiative was designed to maintain market integrity and protect the investors by providing compliance-related information on all listed companies.
The report thus stated that “Companies that are listed on the Exchange are required to adhere to high disclosure standards which are prescribed in Appendix 111 of the Listing Rules.
“Financial information which is periodic disclosure and ongoing material events disclosure should be released to The Exchange promptly to enable it efficiently perform its function of maintaining an orderly market”.