Some aggrieved shareholders of companies listed on the Nigerian Stock Exchange (NSE) have asked the regulatory agency to consider sanctioning the directors of any company that fails to adhere to minimum listing standards, instead of placing such sanctions on the companies.
This is expected to help avert situations whereby the shareholders are made to bear the consequences of the ineptitude of companies’ directors whose function it is to ensure that all post listing requirements of the NSE are met as at when due.
Meanwhile, some insurances companies, who are constant defaulters in this regard, have cast the blame on the National Insurance Commission (NAICOM) whom they alleged always delay the approval of results.
The NSE has taken stiffer and consistent measures against offenders
The shareholders’ position follows stiffer measures taken by the Nigerian Stock Exchange towards curbing indiscipline in the stock market. As we reported, the NSE recently suspended all trading activities on the shares of seven insurance companies and one automotive/industrial goods provider as penalties for default on listing requirements.
Prior to this time, the regulatory agency already fined six more companies, including First Bank Nigeria Holdings Plc, Meyer Plc, Presco Plc, and Fidelity Bank Plc, etc.
Recall that back in April, the NSE X-Compliance Report showed that about 38 companies were fined the sum of ₦433 million over their failure to adhere to the minimum listing standards as regards the timely disclosure of their audited financial report for the year ended 2017.
As a result of the sanctions, more companies now submit their results on time. In Q1 2018 for instance, only five companies failed to submit their financial reports as at when due. This marks a 37.5% decrease compared to Q1 2017 when eight companies failed to submit theirs.
The NSE requires any companies who fail to submit their annual results on time the sum of N100,000 per week. This sum accrues until the day the result is eventually submitted.
“A listed company who contravenes any of the provisions of the Listing Rules and general undertaking and fail to pay the penalty imposed on it for such contravention on or before the due date shall be liable to a further fine of N300,000 in addition to N25,000 per day for as the violation continues.”– NSE
Unfortunately, when such sanctions are issued, it is the shareholders who often bear the brunt of it all. This is because their investments suffer. Owolabi Peter pointed out that company directors get their remunerations even when such companies are sanctioned by the NSE.
It is, therefore, in view of this that the shareholders are clamouring that the regulatory agencies should “sanction officers directly for failing in their responsibility.” Hopefully, this will force them to face their responsibilities in order to avoid subsequent penalties.