In this interview with PETER OBIORA of Investadvocate, Bola Adeeko, Chief of Staff/Head of Corporate Division of the Nigerian Stock Exchange (NSE) in Ijebu-Ode Ogun State; South West Nigeria at the Capital Market Correspondents Association of Nigeria (CAMCAN) 2011 Workshop organised for Capital Market Journalist talked on issues relating to listing on the NSE, their role as a Self Regulatory Organisation (SRO) and other related issues: Excerpts.

On prompt rendition of Accounts by Quoted Companies, don’t you think firms may bring up any result just to submit and avoid sanctions?

Our duty is not to ascertain the accuracy of the Financial Statements; that’s why Companies have Auditors that look at that. From Regulatory perspective, our rules require them to submit those Audited Statements and that’s where it ends.

On listing, you told us that about 400 Firms are willing to list; what about those ones listed and are moribund, what has Exchange done to know their problems and possibly proffer solutions to help them stay afloat; instead of threatening to delist them?

I think it is news to me the comment you just made now that we are trying to get moribund Companies de-list, we don’t have any concerted effort to get moribund Companies to de-list. I think as I mentioned in the question I was asked is the decision of the companies to come to the Exchange as well as to de-list. We certainly try to provide the environment where we get more Companies to list versus delisting. Specifically your question of what we plan to do; is probably more important than what we are doing to understand the reasons why Companies had not come to the Market as much as they have been; absolutely we have been doing that and we will continue to do that.

We are not focusing on just one Company; we are focusing on the different sectors. In my presentation, I talked about Oil and Gas been important; especially the upstream part that we want to attract more Companies. The rules we are having on the Book right now are not conducive for bringing Companies like that to the Market and we recognise that; so, if you go to our website, which I certainly encourage you to do; to educate yourself more, we do have the draft rules on it; that seeks to create more flexibility for Companies depending on where they are in terms of evolution to come to the Market.

What do I mean? Oil and Gas Companies especially on the exploration side, generally would not qualify on our rules today; because it forces them to have proven profitability for I believe it’s up to five year. A lot of these Companies are very Capital Intensive when they started off. Therefore, we created our different options under which they can qualify, so if it is not under profitability, they could qualify on the projected Market Capitalisation. Like I said earlier, if you want more details in terms of the specific changes we will be introducing shortly, I certainly encourage you to check those requirements online. But to summarise; you are absolutely right, the rules that exist today does not make it easy for Companies to list. And so, our goal is to hit the Market Capitalisation of $1.0 trillion in five years and convert as many of the 400 prospect Companies to get listed; it won’t happen without making these changes.

EDITOR’s PICK:

“The Nigeria’s Exchange proposed a new set of listing requirements, granting a number of waivers for Mining, Oil and Gas Companies and others with large Capital Base.

In a draft of the proposed rules Mineral Companies, comprising Mining, Oil and Gas Firms are exempted from fulfilling the requirements that a Company seeking listing on the Mainboard must be in operation for at least three years.

The NSE is also exempting Companies with Market Capitalisation in excess of N500 billion from meeting the requirements for Public Float, which stipulates that the Public shall hold a minimum of 20% of each class of Equity Securities of the Company.

What is the Exchange doing to help listed firms that are not doing well improve to make sure they give returns back to their investors?

I think to be honest with you, that questions is a little bit of a curious one, the Exchange’s job and business if I can indulge in some kind of, is not to help Companies manage their affairs. We have good and bad Companies. Where we can play a role is to make sure that there are full disclosures in what’s going on in their business; because ultimately, our job is to protect investors; not to protect Companies.

So, if Companies are doing the right things that they should be doing to be viable and profitable, absolutely we promote them, we have events throughout the course of the year; ranging from Bell ringing sessions; for Companies that are marking their anniversary, we invite them to the Exchange because they have a good story to tell; to come and showcase it; that’s when we reward good behaviour. We also give Companies the opportunity to do “Facts behind the Figures” I agree with you that for those Companies that are doing well, we need to promote and highlight them. But if a Company; irrespective of the sector they operate from are doing the wrong thing, and they are not been run efficiently, that is not within our jurisdiction to fix their internal workings to be profitable.

Pinnacle Point Group, South African Firm did a Cross-Border listing and they just issue a Cautionary Notice to the Exchange on the Shares; suggesting they are intending to delist, are you aware of that and furnish us with the status update on that.

I cannot tell you the status update on that at this point, but I am aware of the fact that they sort of gave an indication that they may de-list. I personally do not have the details as to the Pinnacle Point Group matter. We have a Group called the Listing Regulations Group; they are under the Legal Regulation Division; that deals directly with these Companies.  

FACTS CHECK:

“Thursday, 18 November 2010 The Company notified The Exchange that further to its letter dated September, 28, 2010 on its Cautionary Announcement notice vide our Market Bulletin-ISD/09/30/031; shareholders are advised that negotiations are ongoing and that they should continue to exercise caution when dealing in their securities until a further announcement is made.

The Company notified the Nigeria’s Exchange that its Directors have applied to the NSE for suspension of its Securities with immediate effect following the notice of motion received by the company on Monday, 26 September 2011 as announced on SENS. “Shareholders are advised that provisional liquidation was granted on Tuesday, 27 September 2011” the Notice said.

Related stories:Pinnacle Point Group issue cautionary notice

                  Pinnacle Point: South African Firm seeks share suspension from

                  Nigeria’s  Exchange

What plan is the NSE making towards the advocacy in some quarters for Firms; especially those in the telecoms sector to list on the Nigeria’s Exchange?

I my presentation, the approach we are taking is one of engaging directly with those Firms, we don’t make it a habit in the Newspapers everyday to tell you everyone we have talked to; but we have certainly had engaged in discussions with those Companies to demonstrate the value proposition that we have to offer them, the obvious one which is a platform for them to raise Capital at a lower cost if the need arises, it provides them visibility.

The second part is understanding that there has to be some additional push, it has been accident in the past few weeks that there has been a lot of headlines in the Press about Legislative and Executive Arms to find ways to encourage and give the right incentives for these Companies to come to the Market.

Again, I am going back to the example I have made before of the subscribers base just for MTN alone; I am not trying to isolate them; but we strongly believe that is the Sector that will continue to drive the Nigerian economy and the Capital Market needs to play a role in that.

NSE and the timeline of unveiling its new listing rules

The shortening of the listing is one of the outputs of what I will call an overhaul of the listing process. I mentioned earlier on, the draft rules that are currently on our website. We should be coming out with that before the end of the year. The process itself and understanding what we currently have in place now is not the one that get developed in a short time, it’s going to take time. But my expectation is that coming into the New Year, as you go around and talk to Companies that have engaged with us; what they desire is to list, that process get a lot more compressed; but I can’t give you an exact time. It is a continuous improvement process.

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