28% companies quoted on the NSE to be sanctioned for late result rendition
The Nigerian Stock Exchange, NSE’s regulatory hammer is set to land on Conoil Plc, Wema Bank and 42 other companies quoted on the exchange for failing to meet up with the March 31, 2021 deadline to file their 2020 audited financial results.
According to the report, the affected companies which represent 28 percent of the companies listed on the NSE will be faced with a financial sanction based on the rule of the exchange.
In the list of defaulting companies are, Oando Plc, Wema Bank Plc, Okomu Oil Plc, Presco Plc, Thomas Wyatt Nigeria Plc, Deap Capital Management & Trust Plc, African Alliance Insurance Plc, Afromedia Plc, Briclinks Africa Plc, C&I Leasing Plc, Chams Plc, Cornerstone Insurance Plc, Coronation Insurance, E-Transact International Plc, Goldlink Insurance, Guinea Insurance, Japaul Gold & Ventures Plc, Lasaco Assurance, Medview Airline, Morison Industries Plc, Mutual Benefit Assurance, Niger Insurance, and NPF Microfinance Bank.
Others include R.T Briscoe Nigeria Plc, Royal Exchange Plc, Smart Product Nigeria Plc, Studio Press Nigeria Plc, Tantalizers Plc, The Tourist Company of Nigeria Plc, Unity Bank, and Universal Insurance Plc.
Of the 44 companies that breached the rule, 12 have been listed as inactive, and they include Roads Nigeria Plc, Nigeria German Chemical Plc, Aso Savings & loans Plc, Capital Oil Plc, Evans Medical, International Energy Insurance, Juli Plc, Resort Savings & Loans, Staco Insurance Plc, Standard Alliance Insurance Plc and Unic Diversified Holdings Plc.
The post-listing rules of the Exchange in respect of financial accounts submission stated: “An issuer shall announce the financial statements for the full financial year immediately after the figures are available, but in any event not later than ninety (90) days after the relevant financial period.”
Meanwhile, three of the defaulting companies – Cornerstone Insurance Plc, NPF Microfinance Bank Plc, and Deap Capital Management & Trust Plc have explained the reason for their failure to meet up the deadline. Cornerstone Insurance Plc said that it encountered some delay in completing the actuarial valuation audit review and assured that the 2020 audited accounts would be submitted to the exchange upon finalization and upon receipt of approval from its primary regulator – the National Insurance Commission (NAICOM).
In its own explanation, NPF Microfinance Bank stated that its failure followed the non-receipt of approval of its audited account by its primary regulator – the Central Bank of Nigeria (CBN).
According to the company, it is engaging the CBN to ensure that the required approval is secured and promised to make it public on or before April 20, 2021. Deap Capital Management & Trust, on the other hand, blamed its failure on the resignation of the entire Board of Directors on December 31, 2020, saying that the interim management appointed by the CBN is currently working with the Corporate Affairs Commission (CAC) to convene a general meeting where another Board would be constituted for the company.
“All regulatory filings will be effected as soon as a Board is constituted for the company,” the company said in a regulatory filing to the Exchange. Financial Vanguard’s analysis of the status of financial results filing as of March 31, 2021, indicated that a total of 112 companies, representing 72 percent of the 156 listed entities fulfilled the post-listing requirement within the stipulated timeline.
The Exchange affirmed that timely release of financial information, which is periodic disclosure, as well as on-going material information disclosures enable it to efficiently perform its function of maintaining an orderly market.
Meanwhile, shareholders in the market have frowned at the continued failure of companies to comply with the obligation of the post-listing rule, saying that it dampens investors’ confidence. President, New Dimension Shareholders Association (NDSA), Patrick Ajudua said: “It is unfortunate that despite the warning from NSE for companies to file their financial reports before the close of the window on March ending, some companies failed to meet the deadline.
“Timely submission of financial results helps us to understand the true financial state of our company and the future of our investments. And for the market, publication of financial results enables the stakeholders to either invest more in the company or take the exit door where there is uncertainty in expected returns.”
He said that the NSE should continue to wield the big stick against the directors of the companies by ensuring that apart from fines and other penalties, the directors are made to forfeit 50 percent of their emoluments for the financial year. According to Moses Ogundeji, member of Independent Shareholders Association of Nigeria (ISAN), the failure of the companies to comply with the post-listing obligation is not excusable in view of the fact that the companies are not new to capital market standards.
“They all have qualified personnel handling these functions, so why the perennial failure. “To some investors, this is a red flag that something is amiss and that calls for caution. If the directors of the defaulting companies are made to pay the penalties, things might change,” he said.
Also speaking, President, Distinct Shareholders Association, Comrade Lawrence Oguntoye said: “Investors do not have confidence in the market when companies keep defaulting in publishing their financial results.” According to him, constant payment of fines affects companies’ profitability, which in turn erodes shareholders’ dividends.