Wema Bank gets next week deadline on free-float deficiency

The compliance due date the Nigerian Stock Exchange (NSE) gave Wema Bank plc concerning its free-float deficiency expires next week.

Free float represents the portion of shares of a corporation that are in the hands of public investors as opposed to locked-in stock held by promoters, company officers, or controlling-interest investors.

Companies listed on the NSE are expected to maintain a minimum free float for the set standards under which they are listed in order to ensure that there is an orderly and liquid market in their securities.

The free float requirement for companies listed on the main board is 20 percent, while that of Alternative Securities Market (ASeM) companies is 15 percent.

Contrary to this set standard, Wema Bank, which is listed on the main board, has free float of 19.64 percent, and has up to April 27, 2014, to make up, according to the NSE.

In addition to Wema, the Exchange identified two other companies – Dangote Cement plc and Union Bank of Nigeria plc – that have free-float deficiencies.

“These companies applied for waivers from the quotations committee of management, specifically provided compliance plans with tentative timelines to support their requests,” the NSE said.

Dangote Cement has only 4.93 percent free float and has been given up to October 26, 2014, to comply with the standard; while Union Bank of Nigeria, which has 14.94 percent free float has up to June 30, 2017, to comply with the 20 percent requirement.

“The Quotations Committee of Management considered and approved an extended timeframe for the companies to regain compliance with the listing requirement. The companies are however required to also provide quarterly disclosure reports to The Exchange detailing their level of implementation of the compliance plans,” the NSE said in its X-Compliance Report.