The Nigerian Stock Exchange (NSE), on Thursday released a new rule on how it would henceforth treat issues of free-float deficiency among listed companies, with the possibility of delisting delinquent companies should they fail to become compliant within a set timeframe.
The NSE, in an exposure draft said that should a company become free-float deficient (have 20% of its listed shares in the hands of shareholders outside of the directors, staff and those with up to 5% stake) at any time, it would be duly informed.
The process of delisting such company, the NSE said, would commence “if the issue fails to respond to the Exchange within 10 days of receiving its notification; or the issuer fails to product and submit an acceptable compliance plan to the Exchange within three months of the Exchange’s publication of its name on the Exchange’s periodic “X-Compliance Report” as operating “Below Listing Standard.”
Delisting process may also follow, the exchange continued, if such submitted compliance plan is not acceptable and the issuer fails to “submit an acceptable alternative plan within 21 business days of the Exchange’s rejection of the initial plan; or the issuer is unable to return to a state of full compliance with the Exchange’s Listing Standards within such period as is reflected in the issuer’s compliance plan approved by the Exchange.
The move may not be unconnected with report that a total of 13 listed companies reportedly failed bourse’s free float listing requirement and were trading below the minimum volume of shares required for retail shareholdings and general public trading on their shares.
Some of the companies in default include: Capital Hotel Plc, Chellarams Plc, The Tourist Company of Nigeria Plc, Interlinked Technology Plc, Caverton Offshore Support Group Plc, Ekocorp Plc and Champion Breweries.
Some others like Union Bank of Nigeria, Transcorp Hotels Plc, Infinity Trust Mortgage Plc, Great Nigeria Insurance Plc, E-Tranzact International Plc and AG Leventis (Nigeria) Plc got some waiver from the NSE.
UBN, Transcorp Hotels and Great Nigeria Insurance were given waiver till May 18, 2020, while AG Leventis, E-Tranzact International and Infinity Trust Mortgage were given up till October 19, 2020, May 17, 2019 and May 17, 2021 respectively.
Capital Hotel is the worst of the pack, with 2.62%; Infinity Trust Mortgage, 3.5%; Transcorp Hotels, 6%; UBN has a free float of 14.94%; Great Nigerian Insurance, 16%; Chellarams, 15%; AG Leventis, 11.64%; Interlinked Technology, 14.5%; and Ekocorp, 11.84%. Champion Breweries has 17.3% free float; Caverton Offshore Support Group, 17.4%cent; The Tourist Company of Nigeria Plc, 3.58% and E-Tranzact International Plc, 10.06%.