The Nigerian Stock Exchange (NSE) is set to sanction 31 listed firms for failing to meet the deadline for filing their Audited Financial Statements (AFS) for the year ended December 31, 2017.
NSE’s regulatory filing calendar indicates that March 31, 2018 is the deadline for submission of annual reports for companies with Gregorian calendar business year ended December 31, 2017.
Thursday March 29, 2018, which was the last working day for the period, was effectively the deadline for submission of the reports in line with the traditional practice at the Exchange.
NSE, which tags and applies fines on companies that fail to meet earnings reports’ deadline, had on January 1, 2017 launched its new sanction regime for delay in the submission of companies’ results.
Under the new sanction regime, companies may pay fines that range from N100,000 to more than N100 million as penalties for delay in the submission of their corporate earnings reports.
Companies that also delayed their financial statements and accounts face threats of suspension and delisting in addition to the monetary fines.
The defaulting firms listed on the NSE X-Compliance report for the week ended April 13, 2018 include A.G Leventis Nigeria, African Alliance Insurance, Conoil, Cornestone Insurance, Diamond Bank, FBN Holdings, Fidelity Bank, Fortis Microfinance Bank, Great Nigeria insurance, Linkage Assurance, Meyer, Morison Industries, Multiverse Mining and Exploration and Mutual Benefit.
Others are Niger Insurance, Oando, Omoluabi Mortgage Bank, RT Briscoe, Royal Exchange, Skye Bank, Smart Products, Sovereign Trust Insurance, Staco, Standard Alliance, Sterling Bank, Equity Assurance, Union Bank, Unity Bank, VeritasKapital Assurance, Universal Insurance.
The NSE said the listed companies fell short of the minimum listing standards in terms of timely disclosure of their audited annual financial performance, with 20 of them having Missed Regulatory Fillings (MRF) and 10 companies in financial sector Awaiting Regulatory Approval (AWR) of their primary regulators.
The Exchange, in its X-Compliance report, explained that the initiative was designed to maintain market integrity and protect the investors by providing compliance-related information on all listed companies.
The report stated: “Companies that are listed on the Exchange are required to adhere to high disclosure standards, which are prescribed in Appendix 111 of the Listing Rules. Financial information, which is periodic disclosure and on-going material events disclosure, should be released to the Exchange in a timely manner to enable it efficiently perform its function of maintaining an orderly market.”
The NSE, in an effort to achieve a world-class capital market, has reiterated its commitment to maintaining zero tolerance posture on dealing with member firms and quoted companies on violations of rules and regulations.
The chief executive officer of NSE, Oscar Onyema, said recently that the Exchange will sustain a zero-tolerance stance on dealing with member firms and listed companies’ violations to help boost the confidence in the market.
Post-listing rules at the NSE require quoted companies to submit their earnings’ reports not later than three months or 90 calendar days after the expiration of the period.
Most quoted companies, including banks, major manufacturers, oil and gas companies, breweries and cement companies use the 12-month Gregorian calendar year, which terminates on December 31, as their business year.
Capital market operators said that the turnover of companies adhering to NSE rules has improved over the years, saying that timely submission of financial results or corporate information has the potential to boost and improve the performance of the capital market and shareholders who invested in those companies.
Managing director of HighCap Securities limited, David Adonri, said that the level of companies’ compliance to NSE rules is now on the high side.
He said, “Late filing has the potential of adversely affecting the market and their shareholders. It creates grounds for avoidable doubts regarding companies’ performances.”
The managing director of APT Securities and Funds Limited, Mallam Kurifi Garuba, said the action boosted investors’ confidence in the market because it was sending a signal that the NSE’s management understood the need for investors to get companies’ financial reports as and when due.
Kurifi said sanctions of erring companies were ways to tell the investing public that they really wanted to revive confidence in the market, adding that investors need to take informed decisions before choosing which stock to buy.
The president, Progressive Shareholders Association of Nigeria, Mr. Boniface Okezie, praised the management of the stock exchange for being strict on its compliance exercise, just as he pleaded for other measures to be used to punish erring companies.
Okezie lamented that the incessant penalties on companies were discouraging companies from seeking quotation on the nation’s bourse, thereby affecting the growth and development of the market.
He further said the market regulators must pursue friendly policies and initiatives to put the market forward.
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