The Nigeria Stock Exchange has released the names of 13 companies trading below the minimum volume of shares required for retail shareholdings and public trading on their shares.
The NSE noted that the companies have free float deficiencies, a major infraction that may adversely affect the liquidity of its shares.
The affected companies are as follows;
- AG Leventis has a free float of 11.64 percent.
- Union Bank of Nigeria 14.94 percent.
- Capital Hotel has 2.62 percent.
- Great Nigerian Insurance 16.0 percent.
- Chellarams, 15.0 percent.
- Interlinked Technology, 14.50 percent.
- Infinity Trust Mortgage, 3.50 percent.
- Transcorp Hotels, 6.0 percent
- Ekocorp 11.84 percent
- Champion Breweries, 17.30 percent.
- Caverton Offshore Support Group, 17.40 percent.
- The Tourist Company of Nigeria Plc, 3.58 percent
- E-Tranzact International Plc, the free float of 10.06 percent.
What free float means
The free float, otherwise known as public float, refers to the number of shares of a quoted company held by ordinary shareholders other than those directly or indirectly held by its parent, subsidiary or associated companies, directors of the entity and their close family members and any single individual or institutional shareholder holding a statutorily significant stake, which is five percent and above in Nigeria.
Companies listed on the stock exchange are required to maintain a minimum free float for the set standards under which they are listed in order to ensure that there is an orderly and liquid market for their securities.
The free float requirement for companies on the Alternative Securities Market (ASeM) Board is 15% of market capitalization, Main Board is 20% of market capitalization while companies on the Premium Board is 20% of market capitalization or above N40 billion on the date the Exchange receives the Issuer’s application to list.
Likely Implications
The report indicated that the NSE had given the companies deadlines to restructure their issued share capital in a way to free the existing concentrated shareholdings of the core investors and allow more investments from the general investing public.
Failure by the companies to restructure their share capital at the expiration of the deadline or secure extension of the deadline may lead to the delisting of their shares from the NSE.
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