Nairametrics| Every year, the Nigerian Stock Exchange (NSE) announces that it would fine companies who delay in submitting their results without any cogent reason. Companies are expected to submit their financial year-end result latest by 90 days after the end of each year. Quarterly results are also expected to be submitted at most 60 days after the end of each quarter. Fines for late submission of results vary from N30,000 to millions of Naira. Companies also risk suspension from trading and possible delisting. These announcements are becoming a ritual and it needs to stop!! The exchange needs to be firmer in the enforcement of its rules and regulations.
Most of the time, defaulting companies are made to pay paltry sums as fines, and while a lot more do not bother to pay fines levied on them, because there is usually no follow-up by the sanctioning body, the NSE. Sometimes the exchange remains silent, such as when Oando Plc delayed its 2014 results by several months, only to release it in 2015, with a loss of N183 billion, one of the largest in Nigeria’s corporate history.
Shareholders also need to pay closer attention. They are often concerned with dividends, bonuses and profits. The section in companies’ annual reports where fines are stated are usually not emphasized enough for shareholders’ attention. Also, many shareholders lack the rudimentary understanding of financial statements.
Beyond that, there must cooperation between all regulators, especially for firms that are subject to more than one regulator. The Central Bank of Nigeria (CBN) for example has mandated that banks should have December as a common year-end. Other industries should follow suit.
Perhaps it is also time for the NSE to increase the amount of fines it imposes. If the fines become significantly large, both shareholders and managements of companies will sit up. The NSE needs to be bolder by suspending some firms from trading due to late submission of results. That way the companies will take deadlines seriously. Tardy submission of results is another reason why investors don’t take the Nigerian stock market seriously.