The Nigerian Stock Exchange (NSE) has delisted 39 companies from its daily official list in five years.
Delisting involves removal of listed securities of a company from a stock exchange where it is traded on a permanent basis.
Reports from the NSE showed that a total 39 companies were delisted from 2013 to 2018. A review of the list showed that 25 delisted on regulatory instruction, 10 of the companies chose to delist voluntarily, three companies delisted on merger, while one company was delisted on acquisition.
Under a voluntary delisting window, a quoted company can decide to delist from the Exchange due to reasons such as merger/acquisition. On the other hand, the NSE can compulsorily delist a firm when it fails to meet up with post-quotation standards.
Checks conducted by LEADERSHIP revealed that most of the companies delisted voluntarily from the bourse had cited harsh economic climate and parent company buy-out as reasons.
In 2013, NSE delisted BACGO Bag and Crusader Nigeria following their merged with Flour Mills and Custodian & Allied Insurance, respectively. On regulatory instruction, West African Aluminium and Nigerian Wire Industry. In 2014, Big Treat, Afroil, Starcomms, Pinnacle Point Group, Poly Products were delisted on non-compliance with NSE rule, while Oasis Insurance was also delisted after been acquired by FBN Life Insurance.
In 2015, Cappa and D’Alberto left the NSE voluntary, Nigerian Sewing Machine Manufacturing, Stockvis and Nigeria Wire & Cable, while in 2016, IPWA, G. Cappa, West African Glass Industries, Investment & Allied Insurance, Alumaco, Jos International Breweries, Adswitch, Rokanna, Lennards Nigeria, P.S Mandrides & Company, Premier Breweries, Costain (W.A), Navitus Energy, Nigerian Ropes on regulatory decision. Vono Products Nigeria was delisted on merged with Vitafoam.
Beco Petroleum Products, MTECH Communications, MTI, UTC Plc were delisted by NSE, while Ashakacem, Avon Crown Caps and Containers, Avon Crown Caps and Containers, were delisted in 2017, while Seven-Up Bottling Company, African Paints (Nigeria), Afrik Pharmaceuticals, Paints and Coatings Manufacturers Nigeria were delisted in 2018, over non-performance and failure to meet the required post-quotation standards.
The chief executive officer of NSE, Mr. Oscar Onyema recently said that companies in their life cycle will list and some of them will delist over time, saying that is the reality exchanges around the world experience.
According to Onyema, our job is to make sure that we make it easy for companies to come in and if they want to leave, that they leave in an orderly manner. So, what we have tried to do with our listing rules in the last one to two years is that we have tried to enhance the rules to ensure that companies behave in an orderly fashion, especially companies that want to delist voluntarily and where there is a business purpose why they are delisting.
The managing director of Highcap Securities Limited, Mr. David Adonri, said there is free entry and free exit from the capital market by publicly quoted companies.
Adonri, however, said that delisting is not a good omen for the capital market, which is already adjudged to be shallow, saying that the capital market community is already advocating a legislation to make incentives available to encourage listing.
He added that “they are also advocating legislation to compel large companies to be listed and remain listed.”
Also, the chief operating officer of InvestData Consulting Limited, Ambrose Omordion said that it is highly important for companies to comply with the post-listing requirements of the NSE, and all other regulations guiding the capital market. That is the only way to ensure that shareholders’ investments are safeguarded.
He stated that in its determination to achieve a world-class capital market and guarantee investor confidence, the NSE has undertaken steps to penalize erring quoted companies who fail to adhere to its listing stipulations; including prompt disclosure.
In the same vein, a stockbroker with Calyxt Securities Limited, Mr. Tunde Oyediran, said the stock market was a barometer that gauges the mood of the economy.
He said the Nigerian stock market was established to serve as long term investment outlet and platform for raising long term capital by fund users.
Oyediran added that the market has achieved these objective to a modest extent. If the economy is to adequately create wealth and generate productive employment, more is expected from the Nigeria’s capital market.
According to him, raising fresh capital requires investors’ willingness to buy shares, and that quoted companies had to exercise caution in order not to risk under-subscription.
The former president, Chartered Institute of Stockbrokers (CIS), Mr. Oluwaseyi Abe, said that most of the equities were delisted due to their irredeemable inability to comply with the listing requirements of the Exchange, especially in the areas of timely and accurate rendition of operational and financial accounts and other corporate governance issues.
In order to avoid future reoccurrence, Abe urged investors to change their investment strategies and avoid falling victims of circumstances in cases where some quoted companies are delisted from the market. He added that despite the persistent lull in the nation’s capital market, investors should leverage on the current low prices of stocks to expand their portfolio.
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