Some shareholders in the capital market have demanded better protection for investors in the country, following the disclosure by the Nigerian Stock Exchange that it is in the process of delisting 21 companies.
The shareholders, who lamented that investors, especially domestic retail investors, always suffered significant losses whenever companies were delisted, said there was the need for the Exchange to provide more information about how it arrived at its decision.
The NSE had in a notice of delisting posted on its website on Monday explained that it decided to delist the companies because of their failure to file quarterly and annual financial statements as required under the Listing Rules.
“This regulatory action is necessary in order to protect the investing public from trading in securities of entities with no current information regarding their financial status,” it added.
Compliance reports published by the Exchange over time show that the affected companies had failed to abide by aspects of their listing requirements for a while.
But the leaders of shareholder groups, who spoke to our correspondent on Tuesday, questioned why the Exchange that was trying to attract listing would delist more than 20 companies at once and fail to engage investors about the plan.
The Chairman, Progressive Shareholders Association of Nigeria, Mr. Boniface Okezie, said, “Unfortunately, the Nigerian Stock Exchange is not communicating with shareholders. If you go ahead and delist as they are planning to do, what is the fate of shareholders that they are meant to protect?”
Okezie argued that while the Exchange said it was protecting the shareholders, the move could be to the detriment of shareholders in the long run, especially if the companies were going concerns but were just having difficulties submitting their financials.
Okezie, who described the move as hostile said there were many questions left unanswered.
He said, “The NSE needs to go all out to find out the exact state of the companies. To find out if they can overcome their problems in a short while rather than taking the hostile decision to delist them.”
The National Coordinator, Independent Shareholders Association of Nigeria, Mr. Sunny Nwosu, said, “Yes, there are some (of the companies) that look dilapidated and there are some for which I think they (the Exchange) should have done a lot of consultation, especially with the shareholders because we have suffered a lot in the system.
“You just see people delisting and we have trustees and others that insured these companies when they came to the market.
“The trustees are not saying anything to the shareholders, the intervention fund is not saying anything to the shareholders and we have not heard anything from the NSE about what the shareholders will lose.”
When contacted, the Head, Corporate Communications, NSE, Nwando Ajene, explained that the notice was a first step and that no company had been delisted.
She explained that the move was also meant to keep the shareholders informed about what was going on in line with the NSE’s goal of encouraging transparency.
She added, “The notice is because they (the companies) haven’t complied (with regulatory requirement); some of them haven’t submitted results. We haven’t heard from some of them; we’ve gone to them, to knock on their doors.
So, it is in their (investors) interest. We are not just trying to delist companies, we are trying to be very transparent.”
On the fate of investors in the companies, Ajene said there were clear regulatory guidelines for such processes, which would take all parties into consideration.
Punch
