Stock Exchange slams N203.7m fine on Union Bank, others

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. Shareholders kick, seek urgent review of penalty

In a bid to strengthen corporate governance principle and ensure transparency in the nation’s bourse, the Nigerian Stock Exchange has penalised 18 quoted firms to the tune of N203.710 million, for failing to submit their accounts and operational reports in the 2018/19 financial year.

Sanctions are given to companies that file their audited and interim financial statements after the regulatory due date. Such default is marked out by the Exchange as a corporate governance failure which attracts monetary fines.

The companies, according to a recent NSE X-Compliance report, were not able to file their audited financial statements as required under the Exchange rules. X-Compliance report is a transparency initiative of the stock market, which is designed to maintain market integrity and protect investors, by providing compliance-related information on all listed companies.

Some of the affected companies are: Greif Nigeria Plc, Union Bank Nigeria Plc, Afromedia Plc, Conoil Plc, Lasaco Assurance Plc, Flour Mills of Nigeria Plc, Universal Assurance Plc, and Thomas Wyatt Nigeria Plc.

Others are Royal Exchange Plc, Access Bank Plc, R. T. Briscoe Plc, Guinea Insurance Plc, Niger Insurance Plc, Interlinked Technologies Plc, Anino International Plc, Notore Chemicals Industries Plc, and Vitafoam Nigeria Plc.

Expectedly, companies that are listed on the Exchange are required by law to adhere strictly to disclosure standards which are prescribed in appendix III of the listing rules. For instance, financial information which is periodic disclosure, as well as ongoing material events should be  released to the NSE in a timely manner, to enable it efficiently perform its functions of maintaining an orderly market.

 

SHAREHOLDERS FRET OVER INCESSANT SANCTIONS

Although some market operators expressed the belief that such fines should not be applicable to most of the fringe players listed above, others argued that it was important and necessary for the Exchange to enforce discipline and orderliness in the market.

Other shareholders, who complained on the issue of incessant penalties on quoted firms, said it could discourage companies from seeking quotation on the capital market, thereby affecting the growth and development of the market.

They, however, called on the Securities and Exchange Commission (SEC) and the NSE to review the various penalties in order to attract new listings and boost investor confidence at the Stock Exchange.

The National Coordinator, Pragmatic Shareholders Association, Mrs. Bisi Bakare, explained that the incessant penalties on quoted companies were not only affecting return on investments, but also discouraging companies from listing their shares on the Stock Exchange.

She, however, appealed to the regulatory authorities to come up with a strategy to control the infractions and make the management of banks to comply with the rules.

A stockbroker, Mr. Samson Akande, expressed displeasure over what he described as “unfavourable government policies and unreasonable fines,” calling for new strategic initiatives that would reverse the weak performance of the major market indicators.

He maintained that these factors were disincentives to investment, while suggesting that the Federal Government and the NSE should, as a matter of urgency, revive businesses of listed companies and encourage local investors by reviewing the fines attached to several offences.

A financial analyst, Mr. Adegoke Badejo, said a nation without rule of law cannot thrive, just as a capital market without sanctions cannot bolster investors’ confidence.

“Penalising erring companies is a way of sanitising the market, and that will keep other firms in check. All over the world, there are laid down rules guiding Stock Exchange. Remember that when you talk of capital market, you are talking about people’s investments, which must be protected,” he said.

Speaking further, 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.

 

ONYEMA INSISTS ON ZERO TOLERANCE STANCE

Chief Executive Officer of the NSE, Mr. Oscar Onyema, said the Exchange would sustain a zero-tolerance stance on dealing member firms and listed companies’ violations to help boost confidence in the market.

“The Exchange is monitoring the compliance status of these companies very closely and is engaging the affected companies accordingly. We encourage investors to always check the X-Compliance Report and Released Financials on the Exchange details of the compliance status of listed companies before making investment decisions,” Onyema said.

He explained that the exchange would 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,” he said.

 

ANALYSIS OF PENALTIES

A breakdown of fines imposed on the affected companies showed that Greif Nigeria Plc, paid N8 million for contravening the X-compliance rules in its 2018/2019 financial year; Union Bank Nigeria Plc was fined N2 million between December 2018 and April 2019 for the same default; Afromedia Plc was fined N4 million in 2018 and 2019 respectively.

Conoil Plc followed with N4 million fines for contravening the Exchange X-compliance rules in 2018, Lasaco Assurance Plc paid N1 million fines between 2018 and 2019. Flour Mills of Nigeria Plc was fined N1.2 million in 2019 and N3 million in the 1st Quarter of the 2019 financial year.

Others are Universal Insurance Plc which paid N3.6 million fines between 2018, N7 million in the 1st Quarter of 2019, and N7 million in the 2nd Quarter 2019 respectively. Thomas Wyatt Nigeria Plc paid N2.7 million and N2.2 million, in 2019, while, Royal Exchange Plc also paid N5.9 million and N3 million in the 2019 financial year.

In its own case, Access Bank Plc was sanctioned to the tune of N7 million for not meeting the Stock Exchange’s 90 day stipulated deadline in its 2nd Quarter of 2019. RT. Briscoe Plc paid N7.5 million

N19 million and N4.8 million as at the same period of 2018/19, respectively.

Guinea Insurance Plc followed with N8.2 million and N5.4 million between 1st quarter and 2nd quarter of 2018/ 2019, while Niger Insurance Plc was sanctioned to the tune of N8.6 million, N5.7 million and N5.5 million at the same period of 2018/2019 financial year.

Interlinked Technologies Plc followed with N2 million, Anino International Plc was sanctioned N41 million between 2018/2019. Notore Chemicals Industries Plc, and Vitafoam Nigeria Plc paid N2 million in 2019, respectively.