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Why NSE slapped N429.5m fine on 38 companies

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The Nigerian Stock Exchange imposed a total of N429.5m in fines on companies that failed to file their financial statements as of and when due last year.

The latest data obtained from NSE’s X-Compliance Report showed that the fines were slammed on 38 companies for 52 offences at different times.

Top on the list of erring companies include Unity Bank Plc, FTN Cocoa Processors Plc, Academy Press Plc, Union Dicon Salt Plc, and Standard Alliance Insurance Plc.

Unity Bank got the highest fine of N79.7m, while FTN Cocoa Processors was slammed with a fine of N78.7m.

Unity Bank and FTN Cocoa Processors were penalised for failing to file their audited financial statements for 2017, the first quarter of 2018, half-year 2018 and the third quarter of 2018.

Academy Press was fined N35m for failure to submit its audited 2017 financial statement at the due date.

Union Dicon got the fourth highest fine of N30.8m for late submission of its first quarter and half-year 2018 financial statements.

Standard Alliance was fined N28.7m for failure to file its audited financial reports for 2017 and the first quarter of 2018.

The NSE noted that the sanctions were applied in accordance with the rules for the filing of accounts and treatment of default filing, rulebook of the Exchange (Issuers’ rules).

It said listing on the Exchange would provide listed firms with a strongly regulated operating environment, transparent transactions, competitive prices, access to a large pool of domestic and international investors, efficient and advanced trading platform and efficient investor protection regime.

The bourse added that post-listing on the Exchange required certain obligations to be met.

One of the obligations, according to the NSE, is the filing of financial statements as of and when due.

The report also revealed that five firms were delisted from the Exchange in 2018.

Three of them, namely Seven-Up Bottling Company Plc, Paints and Coatings Manufacturers Nigeria Plc and Great Nigeria Insurance Plc, left the Exchange voluntarily.

The other two firms, African Paints Nigeria Plc, and Afrik Pharmaceuticals Plc were delisted on regulatory grounds.

Great Nigeria Insurance said in December that its listing on the NSE brought no benefit to it or its shareholders.

In an explanatory note to shareholders on its voluntary delisting, the firm said over the last five years, there had been little or no trading activity on the shares held by the minority shareholders.

It said there had also been a considerable fall in trading volumes over the last 12 months with an average daily volume of circa 1,200 units during the period March 2017 to March 2018.

The note read in part, “Shareholders are not benefiting from the continued listing as they are not getting any exit opportunity and their investments have been locked up as they find it difficult to dispose of their shareholding.

“Neither has the company benefited from listing on the Exchange as the company’s shares continue to trade at a significant discount to the intrinsic value. Moreover, the company is bearing unnecessary cost in complying with its listing obligations.”

The firm said the voluntary delisting would enable its directors to exercise a regulatory provision that would shield it from any enforcement of action that the Exchange might effect, such as the outstanding free float deficiency.

The Chief Executive Officer, NSE, Mr. Oscar Onyema, said last month that the Exchange would reduce the compliance burden on listed firms.

Onyema said, “We are trying to make sure that we continue to give listed companies value. We recently sent letters to all chief executive officers of firms and encouraged them to engage with us.

“So, we cannot stop a company from leaving if they feel their listing on the Exchange is not in alignment with their business goals. However, we are mindful of the burden of compliance and we are trying to reduce it. We are not interested in issuing fines.”

 

OLUIFIKAYO OWOEYE 

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