Free float deficiency: Dangote Cement, Union Bank, Wema get compliance deadlines

 

 

 

 

 

 

The Nigerian Stock Exchange (NSE) has given Dangote Cement plc, Union Bank of Nigeria plc, and Wema Bank plc deadlines to comply with a mini¬mum free float for the set standards under which they are listed.

Free float represents the portion of shares of a listed company that are in the hands of public inves¬tors and not locked-in by for example promoters, company officers, control¬ling-interest investors.

In context, it may refer to the entire market capi¬talisation of the company or all the shares outstand¬ing that can be publicly traded.

According to the NSE, Dangote Cement plc which has 4.93 percent of free float has up to Oc¬tober 26, 2014 to comply; Union Bank of Nigeria plc which has 14.94 percent of free float has up to June 30, 2017 to comply; while Wema Bank plc which has 19.64 percent of free float has been given up to April 27, 2014 to comply.

The NSE noted in its lat¬est X-Compliance report that the free float require¬ment for companies listed on the Main Board is 20 percent and 15 percent for Alternative Securities Market (ASEM) companies.

The Exchange said these companies compli¬ance becomes very impor¬tant to ensure that there is an orderly and liquid mar¬ket in their securities.

Free float is sometimes seen as a better way of cal¬culating market capitalisa¬tion because it provides a more accurate reflection rather than the entire mar¬ket capitalisation.

According to the X-Compliance report: “The Exchange has identified three companies that have free float deficiencies. These companies applied for waivers from the quo¬tations committee of man¬agement,” noting that they specifically provided com¬pliance plans with tenta¬tive timelines to support these companies’ requests.

“The quotations com¬mittee of management considered and approved an extended timeframe for the companies to re¬gain compliance with the listing requirement. The companies are how¬ever required to also pro¬vide quarterly disclosure reports to the Exchange detailing their level of implementation of the compliance plans,” the Exchange added.