" />
Published On: Mon, Jul 17th, 2017

Shareholders panic as more companies may be delisted

OKEY ONYENWEAKU |

As anxiety looms over the continued listing of a number of companies on the Nigerian Stock Exchange (NSE) shareholders are raising questions over the status of their equities after the proposed companies are delisted. Referring to past experiences when companies had been delisted and small stakeholders had walked away with empty wallets, a growing number of agitated investors in poorly performing companies are asking to be compensated for their patience and loyalty even if the companies are to turn private.

Despite the fears of small investor’s managers of the NSE have insisted that for companies to remain listed on the local bourse they must meet with the minimum listing requirements prescribed at the time of their quotation on the market.

Sounding the new call by the market regulator a top official of the Exchange who declined to be officially quoted as he was not authorized to speak on behalf of the Exchange, noted that, ‘we have given more than adequate notice to these companies to act responsibly and meet the minimal requirements of listing on the Exchange. The Stock Market is administered by rules and not passion, the hazy notions of market pricing by traders is a far cry from the precision of policies executed by regulators’.  According to him, ‘the madness of the market is modulated by the sanity of its rules’.

 Stock traders explain that delisting is a process by which a company on the Exchange is removed and barred from trading. A company can voluntarily ask to be delisted to become privately owned or a particular stock may be removed from an exchange because the company is not in meeting the Exchanges post listing requirements.

Over the years many companies have been deliberately delisted by the NSE while others have sought voluntary delisting.

In the last 14 years, not less than 85 companies have been delisted from the Nigerian Stock Exchange. Some of the companies delisted based on regulatory violations include Dumez Nigeria, Atlas Nigeria, Ceramics, Beverages Nigeria Enpee, Tate Industries, Maureen Laboratory, Rietzcot Nigeria, Intra Motors Nigeria, Grommac Industries, Onwuka Hi-Tek, Nigerian Lamps, Nigerian Yeast & Alcahol, Security Associate, Footwear, Ferdinand Oil Mills, Christlieb, BCN, Liz-Olofin & Companies, Oluwa Glass, Asaba Textile Mills, Aboseldehyde Labouratory, Epic Dynamic, Fadmad, Afprint, Nigercem, Daily Times, Albarka Airline, Foremost Dairies ,Wiggins Teape Nigeria ,Okitipupa Oil Palm, First Capital Investment & Trust, Flexible Packaging, Newpak, Krabo Nigeria, Tropical Petroleum, Nigerian Bottling Company, Nampak, Abplast, Udeofosin Garment, Hallmark Paper Product, West African Aluminium, Nigerian Wire Industry, IPWA, G. Cappa, West African Glass Industries, Investment & Allied Insurance, Alumaco, Jos International Breweries, Adswitch, Rokanna, Lennards (Nigeria), P.S Mandrides & Company, Premier Breweries, Costain, Navitus Energy and Nigerian Ropes and the most recent, Ashaka Cement Plc.

 A number of companies were delisted voluntarily, they include; CFAO Nigeria Plc, Impresit Bakalori Plc, Nigerian Textile Mills Plc, Incar Plc , Nigerian Bottling Company (NBC) Plc, United Nigeria Textile Plc, Bank PhB. Plc, Spring Bank Plc, Afribank Plc, Intercontinental Plc Oceanic Bank Plc, Finbank Plc and Ecobank Nigeria ( Now absorbed into the ETI group structure)

According to the Nigerian Stock Exchange some of the firms were delisted for reasons ranging from voluntary, regulatory, nationalised, mergers or acquisition.

Investigations by Business Hallmark revealed that most of these firms have been delisted for reasons related to non- compliance with post listing requirements.

Shareholders have expressed discomfort over the rate of delisting of stocks on the Exchange (NSE). First, the market generally sees a delisting as a major negative sign that can damage investor confidence in the companies. Second, moving off one of the major exchanges can result in less interest from institutional investors, which can in turn result in lower volume and reduced liquidity for shares. Third, the company’s operations become private and are no longer subject to the scrutiny of a regulator.

Smaller shareholders have urged listed companies to make regulatory compliance a priority and avoid failure to pay annual listing fees and meeting other fiduciary (legal) responsibilities. ‘To avoid being delisted, the management of a quoted company should endeavour to comply with the NSE post-listing requirements’ a shareholder said.

However, it is still possible to trade delisted companies on the Over-the-Counter (OTC) market which has more relaxed rules compared to the major exchange, or on the Pink Sheets, which has almost no regulation or listing requirements.

Chief Executive Officer of the Nigerian Stock Exchange, Mr. Oscar Onyema had on May 20, 2011 enumerated the benefits to firms taking advantage of the bourse to trade securities.

According to him, listing of a company’s shares exposes it to a broader membership of the financial community and wider range of investors including market makers, stockbrokers, institutional investors, retail investors, unit trusts/mutual funds, hedge funds, etc.

While listing of one’s shares enhances investor relations through contact information made available through exchange listing, it creates source of capital leverage – listed companies can issue shares to the public or undertake right issues to existing shareholders

 Listing exercise ensures a free market for buyers and sellers to meet, assess and trade capital for ownership and vice versa and continuity is guaranteed after the promoter’s demise.

Market stakeholders argue that when a company gets delisted, it’s a result of bad things, not good ones. Companies can be (and frequently are) delisted for failing to maintain the requirements set forth by their exchange. Some of these requirements are based on a company’s ability to meet filing deadlines, while others relate to the company’s performance in the stock market.

On the other hand, there is yet a group that believe that getting delisted from a stock exchange isn’t a bad thing — that is, when the company delists by choice.

More often than not, when a company gets delisted, it’s as a result of bad things, not good things happening. Companies can be (and frequently are) delisted for failing to maintain the requirements set by their exchange. Some of these requirements are based on a company’s ability to meet filing deadlines, while others relate to the company’s performance on the market.

Timothy Adesiyan, President National Shareholders Association of Nigeria (NSAN) told Business Hallmark in a telephone conversation that delisting companies from the Nigerian stock Exchange has not been favourable to shareholders who have invested their hard-earned resources in the market.

”Delisting companies or firms from the Nigerian stock exchange is a punishment to shareholders and most times we hear that a company we have invested in has been delisted on the pages of the Newspaper. The worse of it is that directors of these companies a lot of times escape with our monies

”I must say the companies that delist voluntarily sometimes pay us something with which we acquire shares of other companies” said Adesiyan

In the same vein, National President, Progressive Shareholders Association of Nigeria,(PSAN) Mr. Boniface Okezie agrees that some of the companies that are delisted have paid shareholders off. Okezie disclosed that such delisted companies as Afprint Plc, Kaduna textile and others. He however, blamed the Securities And Exchange Commission for not following up on others that have refused to pay shareholders off after delisting. ”SEC is weak in this respect. SEC attends the meetings as an observer where some of these decisions are taken and it more often than not fails to follow through” said Okezie.

Livid are investors in the recently suspended 17 companies over their failure to comply with the corporate and extant post-listing requirements. These companies include;

Premier Paints, African Alliance Insurance, Equity Assurance, Fortis Microfinance Bank, Guinea Insurance, Resort Savings & Loans, Sovereign Trust Insurance, African Paints (Nigeria).

Also suspended are, EkoCorp, Evans Medical, Goldlink Insurance, Great Nigeria Insurance, Omatek Ventures, Union Dicon Salt and Union Homes Savings & Loans and Universal Insurance Company.

Shareholders of these firms are confused as to the future of their investments.

Leave a comment

XHTML: You can use these html tags: <a href="" title=""> <abbr title=""> <acronym title=""> <b> <blockquote cite=""> <cite> <code> <del datetime=""> <em> <i> <q cite=""> <s> <strike> <strong>

Most Shared

Recent posts

  • CBN ruins Black Market business, says Gwadabe

    Central Bank of Nigeria (CBN’s) foreign exchange management policies have begun to put severe pressure on Nigeria’s parallel foreign currency market as ‘Black marketers’ begin to see their trading margins disappear. Indeed with more stable supply of forex and growing investor confidence on rising oil prices (currently at $74 per barrel) , the business of […]

  • Manufacturers groan despite improved bank liquidity

    By FELIX OLOYEDE Nigerian manufacturers are still credit-starved despite the improved liquidity of the banking sector. Although credit to the private sector has been rising, manufacturers have claimed that access to funds still pose a serious problem. Broad money in circulation increased 8.14 per cent to N2, 401.91 trillion in February 2018 compared to N2, […]

  • MAN, LCCI disagree over CFTA

    By UCHE CHRIS President Buhari seems to be coming under increasing pressure from both home and abroad over his refusal to sign the Continental Free Trade Area treaty last month at the meeting African Union Heads of states and government in Addis Ababa, Ethiopia. Also Nigerians particularly the business community are sharply divided over the […]

  • Gov. Wike: More garlands for Mr. Projects

    By OBINNA EZUGWU On Sunday April 15, 2018 at the Civic Centre, Victoria Island, Lagos, Rivers State governor, Nyesom Wike was the cynosure of all eyes as he stood firm and composed to the cheering of the audience at the capacity hall to receive the prestigious Zik Prize for good governance. It was indeed an […]

  • The Sterling Bank spreadsheet… an uppity lenders burden

    By TESLIM SHITTA-BEY Despite not stirring excitement in recent years, Sterling Bank Plc has run a recession gauntlet and come out looking marvelous. The bank in 2017 grew its gross earnings by slightly under twenty per cent to 19.79 per cent between 2016 and 2017.  The banks gross earnings (a measure of its business volume) […]

  • Melaye released after being detained, police deny involvement

    Kogi West senator, Dino Melaye has been released from detention reports reaching Business Hallmark indicate. The Senator was released after being detained by officials of the immigration service at the Nnamdi Azikiwe International Airport, Abuja on his way to Morocco The officials allege that he was detained based on an order from Interpol. However, the […]

  • Breaking: Senator Dino Melaye arrested at Abuja airport

      Senator Dino Melaye on Monday morning arrested after checking in at the international wing of the Nnamdi Azikiwe Airport, Abuja. The embattled senator representing Kogi West on the platform of the APC, tweeted that he was picked up on his way to Morocco for an official engagement sponsored by the Nigerian government. Melaye was […]

  • Big Brother Naija 2018: Miracle claims N25m cash prize, brand new SUV

    Miracle Ikechukwu Igbokwe has emerged the winner of Big Brother Nigeria #BBNaija, reality show. Miracle beats one of the most controversial housemates, Cee-C to win the ultimate grand prize of N25million cash, a brand new SUV among other prizes. Miracle is a young pilot and also a model. A total of 170 million votes were […]

  • Economy: Nigeria receives massive vote of confidence – Adeosun

    …We will continue to build reserves and save for the rainy day – Emefiele From OKEY ONYENWEAKU, Washington D.C, USA Minister of Finance, Kemi Adeosun Saturday in Washington D.C, USA said Nigeria has been praised for her good economic outlook.  Speaking to Journalists during a combined briefing with the Governor, Central Bank of Nigeria, Mr. […]

  • Nigeria-US Investment Summit not included in our schedule, says Adeosun, Emefiele

    The Minister of Finance, Kemi Adeosun and the governor of the Central Bank of Nigeria, Godwin Emefiele, have explained the reasons why they were absent at the Nigeria-Us Investors Summit which was held in Washington, DC on Saturday. The summit is organised by the Embassy of Nigeria in the United State and the absence of […]

  • Nigerian banks must grow risk-weighted assets to remain competitive, says Coronation Merchant Bank report

    FELIX OLOYEDE Ability to create risk asset creation in the real sector would set apart leaders of the Nigerian banking industry over the next three years, a new report from Coronation Research, a part of Coronation Merchant Bank Group has stated. The report released last week claimed that while the quality of asset in the […]

  • Nigerian equities market sheds 0.28%

    The equities market closed negative last week as Nigerian Stock Exchange All-Share Index (NSE ASI) dropped by 0.28 per cent to 40,814.89 basis points. Similarly, all other indices finished lower with the exception of NSE Consumer Goods, NSE Premium, NSE-Main Board, NSE 30, NSE Banking, NSE Oil/Gas, and NSE Pension indices, which appreciated by 1.08 […]

  • SEC expresses worry over spate of delisting companies

    FELIX OLOYEDE The spate of highly capitalised companies delisting from the Nigerian Stock Exchange (NSE) calls for some concern, the Securities and Exchange Commission (SEC) has stated. The Acting Director General, Ms. Mary Uduk, while briefing pressmen on the outcome of the first Capital Market Committee (CMC) in 2018 on Friday, noted that this trend […]

  • Borno Mosque Attack: Four killed, eight injured Sunday morning

    Four people have been killed and eight others injured in a suicide attack on a mosque in Bama Local Government Council, Borno state. The State Emergency Managment Agency (SEMA) chairman, Yabawa Kolo, confirmed the death toll on Channels Television. The incident occurred when two suicide bombers, a male and female between the ages of  13 and 14 invaded […]

  • Buhari returns to Abuja from London

    President Muhammadu Buhari has returned to Abuja after his visit to the United Kingdom, where he held bilateral talks on Nigeria – British relations and also participated in the Commonwealth Heads of Government Meeting ( CHOGM). The President on April 9 left Abuja for London after he announced his intention to seek re-election in the […]

  • World Bank jacks up share capital by $13 billion

    World Bank shareholders have approved an increase in the bank’s lending capacity  after the United States backed a reform package that curbs loans and charges more for higher income countries like China. World Bank President Jim Yong Kim said neither China nor any middle income countries was happy about the prospect of paying more for […]