If
all the 21 companies are finally delisted, they will bring the total number of
companies delisted from the NSE due to regulatory action to 38 in four years
(2010 – 2014), and would have resulted in massive depletion in the market
capitalisation.
Meanwhile,
shareholders of the companies marked for delisting have kicked against the
move, saying that non-submission of quarterly or yearly financial accounts by
quoted companies could be a ploy by those that want to exit the market to force
the NSE to delist them on its own, thereby escaping the rigours of delisting
process, which they claim is cumbersome.
The
Exchange had late last month revealed
plans to delist 21 companies that are performing below its post-listing rules requirements.
plans to delist 21 companies that are performing below its post-listing rules requirements.
While
some of the companies are being delisted for failing to file their quarterly
and annual financial reports and accounts with the NSE, some others will face
the same fate for failing to regularise their listing status with the Exchange
after being given time to do so.
The
companies being delisted for non-rendition of their financial account include
UTC Plc, FNT Cocoa Processing Plc, G. Cappa Plc, Big Treat Plc, Mtech Plc, Daar
Communications Plc, Starcomms Plc, Nigeria Wire and Cable Plc and West Africa
Glass Industry Plc.
Others
are IPWA Plc, Rokana Industry Plc, Afroil Plc, Adswitch Plc, Pinnacle Point
Group Plc, Goldlink Insurance Plc and Investment and Allied Insurance Plc.
Those
being delisted for not regularising their listing status include Jos International
Breweries Plc, Golden Guinea Plc, Capital Oil Plc, Nigeria Sewing machine Plc
and Stockvis Plc.
As
at the date of publication of the intension to delist the companies on June 23,
2014, FTN Cocoa listed on agriculture sector under crop production sub-sector
contributes N1.100 billion to the NSE’s market capitalisation, which means that
investors will lose as much to its delisting.
The
delisting of G Cappa, a construction/real estate company listed under building
structure/completion sub-sector, will also wipe N1.808 billion from investors’
wealth.
Delisting
of another construction/real estate company, listed under real estate
development sector – Pinnacle Point Group Plc – will wipe N33.341 billion from
the market capitalisation; Golden Guinea Plc, listed in consumer goods sector
under beverages—brewers/distillers sub-sector will cost investors N193.234
million, while Jos international Breweries, another consumer goods listed
company’s delisting will deplete investors’ wealth by N1.523 billion.
The
delisting of Big Treat plc, listed in the consumer goods sector, under food
product sub-sector, will on its own deplete investors’ wealth by N1 billion,
while UTC, another food products listed entity will wipe N666.02 million from
the market capitalisation.
From
the financial services sector under Insurance Carriers, Brokers and Services
sub-sector where Goldlink Insurance and Investment and Allied Assurance will be
delisted, investors will lose combined N16.411 billion.
For
planned delisting of MTech Technology, ICT- Electronic Communications Services,
investors will as well lose N4.52 billion, while N3.544 billion will be wiped
out of the capitalisation for Starcomms’ delisting.
Investors
will also lose N257.07 million as a result of proposed delisting of IPWA Plc,
an industrial goods listed entity, while N900 million will be lost for
delisting of Nigeria Wire and Cable Plc, another industrial good company listed
under Electronic and Electrical Products sub-sector.
Delisting
of West Africa Glass Industry, on the other hand, will cost investors N131.43
million; N882, 000 (Eight hundred and eighty two thousand) will be lost to
delisting of Nigeria Sewing Machine Manufacturing Co. Plc; N408.520 (Four
hundred and eight thousand, five hundred and twenty naira) will be lost to
Stokvis Nig. Plc’s delisting; N2.599 billion will be lost to delisting of
Afroil Plc, an oil and gas company, while N4 billion will be lost to delisting
of Daar Communications, an media/entertainment company.
On
the Alternative Securities Market (ASem) equity market platform, a window that
allows upstart indigenous firms to access the Nigerian capital market, three
companies would be delisted.
Consequently,
investors will be losing N30 million if Rokana Industries Plc, a
personal/household products manufacturing company is delisted; N203.76 million
will be lost to planned delisting of Adswitch, an electronic and electrical
products listed entity, while N2.93 billion will be lost to the delisting of
Capital Oil Plc, an oil and gas company listed under petroleum and petroleum
products distributors’ sector.
NSE Explanation
Fielding
questions recently from newsmen at the last Capital Market Committee, CMC,
meeting in Lagos, the Chief Executive Officer, NSE, Mr. Oscar Onyema, said that
the publication only served as warning to those companies that the NSE was
ready to uphold its ‘continuing listing standard’.
“We
do have continuing listing standard and we will continue to enforce it. All we
have done is to indicate companies that are going to be delisted. It does not
mean that they have been delisted already, but it puts them on notice that we
are very serious about this,” he said.
“I
want to note that a number of shareholders have said that we are not protecting
investors by the delisting. In reality, we are protecting investors by making
it very clear that you cannot be a listed company and stay for two, three years
without providing your financial statement. On what basis are you trading?”
So,
that is why we are taking this stand; it is not a new thing; we have been
delisting companies. In fact, the life of any Exchange involves listing and
delisting as a normal thing. Even the human beings you see come alive and die.
So, it is just part of the realities of the capital market,” Onyema added.
Also,
in the notice announcing the delisting, the Exchange said that the decision was
taken pursuant to the provision of the Greenbook, (Listing Rules), specifically
Clause 15 of the general undertaking, adding that the action became necessary
in order to protect the investing public from trading in securities of entities
with no current information on their financial status.
Shareholders kick
Shareholders
who spoke to Financial Vanguard on the development said that delisting
companies at will has never solved any problem; rather it compounds retail
investors’ woes as they are usually left to the whims of the companies’
managers once they are delisted.
Though
they opined that moribund or dead companies should not be allowed to remain
listed, they said that such companies could be placed on full suspension long
before they are delisted, while the regulators consult on the best way to
either revive or help shareholders recoup part of their money.
According
to them, the action could send wrong signal about listed companies to foreign
investors who might be interested in investing in the market.
Reacting,
Mr. Abayomi Obabolujo, President, Avid Shareholders Association, said “The
stock exchange cannot be talking from two sides of their mouth. They keep
saying that they want to deepen the market by looking for more companies to
list and at the same time, they are also quick to delist the existing ones for
one reason or the other.
In
my opinion, I think that what they should rather do is to look for a better
method of making those companies comply. They should rather work with the
shareholders and the Securities and Exchange Commission, SEC, to determine what
could be done to ensure that those bad management and Board members of
non-performing companies are removed so that the companies can still continue
to operate.
“What
I am saying is that there is need for the Stock Exchange to call an all parties
meeting which will provide a broad based discussion. You cannot just sit in
your office and say because these companies have not submitted their reports,
they will be delisted. No, if you consult the shareholders, you might at the
end of the day be able to remove certain people from the Board of Directors of
those companies.”
“Okay,
a company that is not releasing its result when they are listed on the stock
exchange when they know that they are being monitored, what do you think they
will do when they are no longer listed and are not accountable to anybody,” he
queried.
Continuing,
he said, “The problem I have seen in the market is that there is no rule that
says that listed companies must make profit, and what I have seen in Nigerian
companies is that whenever they are making losses, they don’t what to release
their results which is against Nigerian Stock Exchange’s listing rules.
“That
is why instead of getting them delisted, they can adopt other positive
measures. This is important because once companies find out that delisting
companies that fail to submit their financial report is the custom of the
exchange, whenever they want to leave the market, all they need do is to stop
releasing their reports so that they will delist them on their own, thereby
leaving no room for court ordered meeting or what have you.”
Speaking
in the same vein, Ambassador, Olufemi Timothy, National President, Renaissance
Shareholders Association of Nigeria, said, “We have told the Nigerian Stock
Exchange times without number that they should always put the interest of the
minority shareholders at heart before they take such decision.
“Though
it may be the last resort for the regulator, still we believe that they should
have allowed the investors to decide what happens to companies that failed in
their responsibility and post listing requirement. It is not good enough and we
are not happy about it.”
He
reaffirmed Obabolujo’s position, saying that once companies are delisted, they
are no longer accessible to shareholders, adding that the development douses
investors’ confidence.
“What
happens to our capital investment? Company like Daar Communication has no
financial problem; the only problem is that it is finding it difficult to
perfect its account which is not enough reason for them to delist it. They only
need some adjustment to be able to meet the requirements of the stock
exchange.”
“While
they are in this kind of situation, there is no
way they will be able to send
report to the stock exchange. This is because if the authorities have not
approved the accounts, it cannot be made public,” he affirmed.
“The
Stock Exchange is not doing enough by delisting them. What they should always
do before any company is listed is to enter into agreement with them that if
they fail to summit their report within a period of two years or fail to hold
Annual General Meeting for a period of two years, the NSE will hold an AGM on
their behalf with the minority shareholders,” said Godwin Anono, President,
Standard Shareholders Association of Nigeria.
He
explained that considering the present situation, many of the companies
deliberately withhold their reports so that the NSE will get frustrated and
delist them, while the companies are reverted to their personal properties.
According
to him, no company that has been delisted ever calls for either AGM or EGM or
any other meeting of their shareholders.
He
regretted that the SEC allows companies to use minority shareholders to raise
cheaper funds in the guise of listing on the Exchange, only to abandon them
afterwards.
Vanguard
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