The Nigerian Stock Exchange (NSE) has instructed some listed companies to comply with the minimum free-float in line with the set standards under which they are listed. In stock market, free-float represents the portion of shares of a company that are in the hands of public investors as opposed to locked-in stock held by promoters, company officers, controlling-interest investors, or government.
It helps to better calculate the market capitalisation of companies because it provides a more accurate reflection (than entire market capitalisation) of what public investors consider the company to be worth. Companies identified by the NSE for being deficient in free-float of their shares are:
- Dangote Cement plc
- Transcorp Hotels plc
- Union Bank of Nigeria plc, Capital Hotel plc
- Great Nigerian Insurance plc
- Chellerams plc, Nigerian Ropes plc
- Aluminum Extrusion Industries plc
- A.G. Leventis plc
- Interlink Technology plc
- Infinity Trust Mortgage plc.
The NSE in its “X-Compliance Report” noted that companies listed on the Exchange must 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 in their securities.
The free float requirement for companies listed on the NSE main board is 20 percent, while for companies in the Alternative Securities Market (ASeM) is 15 percent. The NSE said the companies are expected to provide quarterly disclosure reports to the Exchange detailing their level of implementation of the compliance plans.
Dangote Cement plc has percentage free float of 9.07 percent and has been given compliance due date of October 26, 2016; Union Bank of Nigeria, which has percentage free float of 14.94 percent has till June 30, 2017 to comply.