- Introduce more friendly policies, investors demand
- No going back on anti-infraction policies – NSE
The Nigerian Stock Exchange has imposed N200 million penalties on 16 quoted companies on the floor of the Exchange, for failure to file their financial statements, according to the deadline set by the regulator, in 2017.
The Point’s investigations revealed that some of the companies were fined over their inability to submit their 2016 first and second quarter audited results.
Some of the affected companies are Universal Insurance Plc, African Alliance Insurance Plc, Great Nigeria Insurance Plc, Niger Insurance, Daar Communications, Conoil Nigeria Plc, Sovereign Trust Insurance, Staco Plc, Union Diagnose and Clinical Services Plc, Vitafoam Nigeria Plc, Afromedia Plc, Newsrest ASL Plc, Pharma-Deko Plc, Fortis Microfinance Bank Plc, Nigeria Enamel-Ware Plc, and Presco Plc.
While Universal Insurance paid N51.4 million for contravening the X-compliance rules in its 2017 financial year, African Alliance Insurance was fined N46 million between December 2014 and first quarter 2017 for the same default. Great Nigeria Insurance Plc was fined N24.8 million for contravening the X-Compliance rule in its first quarter audited result for the year 2017, and 2016 financial year, respectively. Niger Insurance Plc followed with a N16 million penalty in Q1 2017 and its audited financial statement of 2016.
In its own case, Daar Communication was sanctioned to the tune of N14 million for not meeting the Stock Exchange’s 90 days stipulated deadline in its Q1 financial result and the 2016 audited financial statement. Conoil Nigeria Plc followed with N13.5million sanction for defaulting the NSE’s rules in both its 2017 Q1 and the audited 2016 results.
Sovereign Trust Insurance paid N10.2 million fine in the Q1 of 2017 and in the audited financial statement of 2016. Staco Plc followed with a N7.5million sanction in both 2017 and the audited financial statement of 2016. Union Diagnose and Clinical Services Plc also paid N3.9 million penalties to the stock exchange in the Q1 of 2017 and the audited financial statement of 2016.
Vitafoam Nigeria Plc followed with a fine of N2.9 million in its audited financial statement for 2017, while Afromedia Plc paid N2million penalties for contravening the X-compliance rule in its 2017 Q3 financial statement. Newsrest ASL Plc bagged a fine of N2.4million and N100, 000 in both the Q1 and Q2 of 2017 and 2016 financial year.
Pharma-Deko Plc was fined N1.6 million for failing to file its 2017 audited financial statement, Fortis Microfinance Bank Plc paid a total of N1million for not meeting up with the stipulated deadline in the Q3 and Q1 of 2017, while Nigeria Enamel-Ware Plc was sanctioned N900, 000 for defaulting in its 2017 financial year. Presco Plc also paid N200, 000 in the 2017 financial year.
X-Compliance is a transparency initiative of the Exchange, which is designed to maintain market integrity and protect the investors by providing compliance related information on all listed companies.
management of the quoted firms deducted the fines from their shareholders’ funds and that created holes in our investments in the companies
INTRODUCE MORE FRIENDLY POLICIES, INVESTORS DEMAND
Though some shareholders who spoke with The Point in separate interviews praised the management of the stock exchange for being strict on its compliance exercise, they pleaded for other measures to be used to punish erring companies.
They frowned at the increasing sanction levies as they alleged that the management of the quoted firms deducted the fines from their shareholders’ fund, which to them, created holes in their investment pockets in the companies.
The President, Progressive Shareholders Association of Nigeria, Mr Boniface 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, adding that the market regulators must pursue friendly policies and initiatives to put the market forward.
The Secretary, Independent Shareholders Association of Nigeria, Mr. Moses Igbrude, said that the issue of penalties must be readdressed by market operators for confidence building.
He said that some companies had delisted from the Exchange due to penalties while new companies were afraid to list.
“The Securities and Exchange Commission and NSE should encourage the companies to embrace the share buyback initiative instead of approval share reconstruction for companies used in robbing investors,” he said.
sanctions in order – OPERATORS
Some analysts and market operators have, however, argued that the Exchange’s action will sanitise the capital market and boost investor’s confidence.
The Managing Director, Crane Securities, Mr. Mike Eze, 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.
Eze said sanctions of erring companies were ways to tell the investing public that they really wanted to revive confidence in the market, saying that investors needed to take informed decisions before choosing, which stock to buy.
An economist and capital market analyst, Mr. Emmanuel Badejo, urged all capital market participants to constantly adapt to new and rapidly changing economic, regulatory and business environments in order to perform their expected roles in the economic development of the nation.
“The infraction on zero tolerance stance of SEC dropped by 87.6 per cent in 2017 and the number of enforcement cases has also dropped from 49 to 30 within the same period, so the regulators have been fair enough,” he said.
NO GOING BACK ON INFRACTION PENALTIES- NSE
However, the Chief Executive Officer of the Exchange, Mr. Oscar Onyema, has re-affirmed the commitment of the stock exchange to zero tolerance for market infractions, adding that the NSE, being a self-regulatory organisation, maintains a body of rules to regulate the admission and supervision of its Dealing Members and all quoted companies.
He said, “The exchange will continue to evolve strategies to meet the needs of its valued customers to achieve the highest level of competitiveness. We operate a fair, orderly and transparent market that brings together the best of African enterprises and the local and global investor communities.”
On the increasing rate at which insurance firms fail compliance test, the Executive Director, Regulations, NSE, Ms. Tinuade Awe, said, “We have engaged NAICOM (National Insurance Commission) as well as the insurance companies since 2013 because we do realise we have a compliance problem if we are going to look at the sector on its own and find out the best way to deal with the problem.
“We have a number of things that the engagement has shown and we have been working out with the insurance companies to see whether they can overcome some of the issues. There are issues such as the multiplicity of the types of companies under one umbrella in an insurance company or an insurance holdings company and one of them should be listed on the
Exchange.”
