Mass delisting at the Nigerian bourse imminent as companies fail to meet post-listing obligations

Mass delisting from the Nigerian Stock Exchange (NSE) is imminent as more and more companies quoted on the exchange are hard put to meet post-listing requirements due to the current harsh economic situation.

Businessamlive learnt that in the past year there has been more of voluntary delisting, which has raised concerns from the investing public, market watchers and participants.

Specifically, the investing public is apprehensive that the rate quoted companies are being delisted from the official list of the NSE could signify a bleak future for the market and the economy.

“The worrisome reality is that most of the companies that have delisted did so voluntarily, an indication that they were no longer capable of meeting their post listing requirements. Other companies that are not healthy are also considering the easy way out,” an analyst told Businessamlive.

To this end, market analysts are foreseeing mass delisting of companies in the New Year if nothing is done to arrest the situation especially by the regulators of the market. They are therefore calling for a review of listing requirements at the exchange to engender active participation of the listed companies while encouraging new ones to list.

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“As it currently stands, the exchange may not be a fair barometer for the economic well-being of the country and its businesses, the way things are unfolding,” investor said.

During the year, about seven companies listed on the exchange approached regulators and got their shareholders’ nod to raise N191 billion before the end of the year, while four firms successfully floated about N7.2 billion from rights issues, including UACN Property Development Company, UPDC Plc (N5.2bn), Portland Cement Plc (N1.02bn), Livestock Feeds (N750m), and Meyer Plc (N218m).

The seven companies that have gotten shareholders’ approval to raise about N191.3 billion this year include Guinness Nigeria Plc. N39.7 billion, Forte Oil N20.0 billion, UACN Plc. N15.4 billion, Union Bank Plc. N50 billion, Unilever Nigeria Plc. N63.0 billion, and May & Baker Nigeria Plc. N3.0 billion.

This year alone the stock market has lost 5.22 percent of its value year- to- date. Not even the banking sector, which is the dominant and most actively traded, could stop the haemorrhage.

The development is worrisome as several investors who seem to be looking for clarity in the market are faced with niggling volatility that reversed their hopes.

Naif Abdulsalam the suspended spokesman, for the Securities and Exchange Commission, (SEC), a few months ago said the regulator of the capital market is not unaware that some of the companies that have obtained approval from SEC to raise funds have not been able to do so.

Abdulsalam explained that raising money from the capital market was purely a business decision regarding the disposition of the firm involved.

He added that most of them could be looking at the disposition of the market to make a decision on the best time to ask the public for funds.

Sometime in 2011, Oscar Onyeama, the CEO of the Nigerian Stock Exchange, re-assured stakeholders that the exchange was putting in place measures that would discourage listed companies from ‘exiting and encourage new ones to enter the market’ with an indication emerging that the exchange could witness the listing of an indigenous manufacturing firm on its Daily Official List before the end of 2011.The promise has yet to be fulfilled.