According to data obtained from the Exchange by Nairametrics, a total of 121 quoted companies have been delisted from the official list of Nigerian Exchange Limited (NGX) between 2002 to 2022 (20 years).
Investigation by Nairametrics showed that while some firms were delisted for violating post listing requirements or due to merger and acquisition, others however chose to delist voluntarily when they no longer have the capacity to continue to play in the capital market.
It was also found out that most of the companies delisted voluntarily from the stock exchange had cited harsh economic climate and parent company buy-out as reasons.
Some of these companies that have been delisted due to one reason or the other, that were cited by Nairametrics include Pinnacle Point Group Plc, Afroil Plc, Starcomms Plc, Big Treat Plc, Starcomms Plc, Nigeria Wire & Cable Plc, Nigerian Sewing Machine Manufacturing Plc, Stokvis Nigeria Plc, Jos International Breweries, West Africa Glass Industries Plc, Navitues Energy Plc, Nigerian Ropes Plc, P.S Mandrides Plc, African Paints (Nigeria) Plc, Afrik Pharmaceuticals Plc.
Others are Great Nigeria Insurance Plc, Diamond Bank Plc, New Rest ASL Nigeria Plc, First Aluminum Nigeria Plc, Skye Bank Plc, Fortis Microfinance Bank Plc, Dangote Flour Mills Plc, AG Leventis Nigeria Plc, Cement Company of Northern Nigeria, Continental Reinsurance Plc, Anino International Plc and Law Union and Rock Insurance Plc, among others.
Five companies were delisted during the year 2021 which include Portland Paints and Products Plc, Unic Diversified Holdings Plc, Nigerian-German Chemicals Plc and Evans Medicals Plc and 11Plc.
While Union Diagonistics and Clinical Services Plc and Studio Press Plc were delisted in January 2022.
However, the trend has continued following the approval of the shareholders of Greif Nigeria Plc at its Annual General Meeting which held on 31 January 2022. It authorized the commencement of the process of voluntary winding up of the Company and in accordance with Section 622 of the Companies and Allied Matters Act (CAMA) 2020. NGX last week suspended trading in the shares of the company effective to ensure a smooth winding up process.
Shareholders’ concerns
Reacting to the development, shareholders lamented the delisting of listed companies by the regulatory authorities, noting that it lacks the protection of shareholders’ funds.
The shareholders, who lamented that investors, especially domestic retail investors, always suffer significant losses whenever companies were delisted, said there was a need for the Exchange to provide more information about how it arrived at its decision.
The Chairman, Progressive Shareholders Association of Nigeria, Mr. Boniface Okezie, said, “Unfortunately, the Nigerian Stock Exchange is not communicating with shareholders. As they delist these companies, they don’t care for the fate of shareholders that they are meant to protect”
Okezie argued that while the Exchange said it was protecting the shareholders, the move has been to the detriment of shareholders in the long run, especially if the companies were going concerns but were just having difficulties submitting their financials.
Okezie, who described the move as hostile said there were many questions left unanswered.
He said, “The NGX needs to go all out to find out the exact state of the companies. To find out if they can overcome their problems in a short while rather than taking the hostile decision to delist them.”
Okezie said that market regulators must pursue friendly policies and initiatives to push the market forward.
He said that the bank’s nationalisation to a large extent affected investors’ confidence in the market.
He noted that the current leadership of the SEC and NGX have done well with the introduction of various initiatives and zero tolerance on fraudulent capital market operators.
Shareholders under the aegis of the Independent Shareholders Association of Nigeria (ISAN), who also bemoaned the delisting of listed companies by the regulatory authorities, said it does not augur well for average investors and the nation’s capital market.
National Coordinator Emeritus, Independent Shareholders Association of Nigeria (ISAN), Sir Sunny Nwosu said, “Yes, there are some (of the companies) that look dilapidated and there are some for which I think they (the Exchange) should have done a lot of consultation, especially with the shareholders because we have suffered a lot in the system.
He said that there was a need for friendly policies and regulations by capital market regulators.
Nwosu said that the lack of proper compensation to investors that lost their funds during the market meltdown contributed to poor investor confidence in the market, whereas brokers were given forbearance packages.
Requirements for delisting
- Just like other Exchanges across the world, before a company is listed on the Nigerian Exchange, there are certain requirements they must meet.
- Consequent to the listing, they must meet other standard requirements. These include among others, regular dissemination of information about the financial performances and any changes that can affect their operations.
- However, a company can be delisted either voluntary or involuntary which usually results when a company ceases operations, declares bankruptcy, merges, does not meet listing requirements, or seeks to become private.
What you should know
- Any Issuer that intends to de-list its shares from the Daily Official List of The Exchange shall convene a meeting of its Board of Directors, at which the Board shall consider a recommendation to the shareholders of the Issuer that the Issuer should be voluntarily de-listed, and pass a resolution in that regard.
- De-listing at The Exchange’s instance is the ultimate sanction that can be imposed on an Issuer for persistent non-compliance with the Listings Rules of The Exchange, or for failing to meet the financial requirements of listing on The Exchange.