" /> Shareholders panic as more companies may be delisted | Hallmarknews
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.

READ  Lafarge names Alode new company secretary

 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.

READ  Profit taking drags equities market down

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>

Recent posts

  • 2017: Investors look back in defiance

    By TESLIM SHITA-BEY The year 2017 was not supposed to be a happy one. Inflation was 18.72 per cent at the beginning of the year, unemployment had jumped a few hoops to settle at 25 per cent for those between the ages of 18 and 25, while lending rates had gotten stuck in a band […]

  • Profit taking drags equities market down

    The All Share Index (ASI) of The Nigerian Stock Exchange (NSE) was down -1.00 per cent on back of profit taking by investors. The bourse closed at 38,534.64 basis points against Tuesday’s 38,924.63 and its year-to-date returns to stand at 43.39 per cent. The equities market hits the 39,000 mark last week and attained three […]

  • Lafarge names Alode new company secretary

    Lafarge Africa Plc has appointed Mrs Adewunmi Alode its new company secretary. In a release signed by the company’s group managing director, Michel Puchercos, which was sent to The Nigerian Stock Exchange on Wednesday, Lafarge Africa stated that her appointment takes effect from December 12, 2017. The new company secretary who had held several positions […]

  • OPEC production falls to six month low

    Oil market may not stabilize before end of 2018 despite Organization of the Petroleum Exporting Countries (OPEC) production reaching six month low in November as U.S. production continues to increase than expected. The Wall Street Journal quoted the oil cartel to have said Wednesday in its monthly oil report that production declined by about 133,500 […]

  • Breaking: 20 vehicles burn as tanker explodes in Festac

    No fewer than 20 vehicles and four commercial motorcycles were on Wednesday afternoon burnt when a tanker laden with petrol fell and spilled its content on the Festac Link Bridge in AwuwoOdofin LGA of Lagos State. The fire started at noon and raged for about an hour Vehicles burn as tanker explodes in Festac area […]

  • Gunmen break into Magu, EFCC chair’s home, shoot police officer dead  

      Some yet to be identified gunmen, Tuesday broke into to the Abuja home of the Acting Chairman of Economic and Financial Crimes Commission (EFCC), Mr Ibrahim Magu and shot dead a police sergeant attached him the Cable reports  The tragic incident was said to have occurred around 10pm. The attackers reportedly stormed the house […]

  • I fear Nigeria might break up- Awolowo-Dosunmu

      By Obinna Ezugwu Daughter of late sage, Chief Obafemi Awolowo, Dr. (Mrs) Tokunbo Awolowo-Dosunmu has expressed deep concerns about the survival of Nigeria, noting that the country may likely disintegrate if not restructured. “I don’t even want to imagine it (Nigeria not being restructured) because we have come to a breaking point,” a visibly […]

  • How Buhari tackled Jibrin over ‘budget padding’ scandal

      The Cable A simple question from President Muhammadu Buhari to Abdulmumin Jibrin, former chairman of house committee on appropriation, put paid to his allegation of “budget padding” against Yakubu Dogara, speaker of the house of representatives, a new book has revealed according to the Cable. Jibrin had alleged that the 2017 budget was padded […]

  • Lagos govt evicts GIG motors, Peace, GUO, other transporters from Jibowu

      Obinna Ezugwu Lagos State Government on Tuesday sealed off the premises of major transport companies including God is Good Motors, Peace Mass Transit, Chisco Transport, GUO Transport Ifesinachi and other companies in Jibowu area of Yaba, Lagos. Justifying the move, the Permanent Secretary, Ministry of Transportation, Olufemi Salami who acted on the approval of […]

  • World Cup: FIFA deducts points from Nigeria, fine NFF for fielding ineligible player in qualifier

    By Obinna Ezugwu Nigeria has come under a heavy hammer by the Federation of International Football Association (FIFA) disciplinary committee  for fielding an ineligible player, Shehu Abdullahi for the World Cup qualifier against Algeria on November 10, 2017, a statement by the committee said on Tuesday. The world football’s governing body fined Nigerian Football Federation […]

  • UPP commends PDP on successful convention, extend hand of fellowship

    By Obinna Ezugwu United Progressive Party (UPP) has congratulated the Peoples Democratic Party (PDP) on the successful conduct of its December 9 convention and tasked it to join hands with other credible opposition parties to deepen the country’s democracy This was contained in a statement signed by the founder and National Chairman of the party, […]

  • Nigeria lacks leaders with moral compass – Amb Keshi

    By Obinna Ezugwu Former Permanent Secretary, Ministry of Foreign Affairs, Ambassador Joe Keshi has decried what he called the lack of moral compass among Nigeria’s political elite, noting that poor leadership was the country’s biggest challenge. Keshi who bared his mind in a chat with BusinessHallmark in his Lagos home recently, regretted that virtually all […]

  • Non Yoruba in S/West inaugurate forum, vow to take rightful place in zone’s politics

    By Obinna Ezugwu Political and cultural leaders of various ethnic groups resident in the South West, Saturday last week at Ota, Ogun State, came together under the aegis of Non Yoruba Indigenes Empowerment Initiative, to seek ways of working together for a fair deal in the zone’s polity ahead of the 2019 general election. Various […]

  • Don’t celebrate yet, agitation for restructuring not over- Uko warns presidency

    By Obinna Ezugwu Founder, Igbo Youth Movement (IYM) and Secretary General, Eastern Consultative Assembly (ECA), Evang Elliot Uko has warned against any suggestion that the South East geopolitical zone has been “forcefully” and “violently” pacified as according to him, such is false. Evang Uko who is also the Deputy Secretary of Igbo Leaders of Thought […]

  • Nigeria’s Debt Service ratio falls to 45%

    Nigeria has made significant improvement in its debt-service-to-revenue ratio as it dropped from 66 per cent to 45 per cent. This is coming on the back of improved revenue mobilisation from both domestic and foreign sources. The government has been aggressively driving its tax reform with the introduction of Voluntary Assets and Income Declaration Scheme […]

  • Banks’ NPLs reach 10-month high in Q3

    FELIX OLOYEDE Non-Performing Loans (NPLs) in the Nigerian banking industry hit 10-month in September, latest data from the the Nigeria Deposit Insurance Corporation (NDIC) has shown. The report quoted by CNBC states that NPLs in the Nigerian banking sector reached N2.42 trillion at the end of Q3 2017, which is 10-month record high. Muyiwa Oni, […]


Visit us on Google+