- Shareholders kick, task regulators on friendly policies, tax incentives
- We can’t prevent companies from delisting—Onyema
The Nigerian Stock Exchange has delisted 98 companies from its daily official list in 16 years.
Delisting is the removal of listed equities of companies from the stock exchange where they are traded on a permanent basis.
The Point’s findings revealed that a total of 98 firms were delisted from 2002 to 2018.
A thorough analysis of the stock market showed that 70 companies were delisted on regulatory instructions; 17 out of the 98 firms requested to be delisted voluntarily; six firms were delisted on merger basis; three were nationalised, one was on acquisition, while one other company was absorbed.
Voluntary delisting occurs when a company decides to purchase all its shares or move to an OTC market, while in full compliance with the Exchange. Typically, companies are notified 30 days before being delisted, and shares can plunge as a result. On the other hand, the NSE can compulsorily delist a firm when it fails to meet up with post-quotation standards.
However, most of the companies delisted voluntarily from the capital market had cited harsh economic climate and parent company buy-out as reasons for their decision.
Lamentation of shareholders
Some shareholders, who spoke with our correspondent, explained that, in a circumstance where companies came up to delist voluntarily, the shareholders were left in the lurch with no option but to tender their shares at whatever price.
This, they said, might be much lower than the actual value of the company.
The shareholders, therefore, called on the regulators to introduce policies that would enhance minority shareholders’ protection in 2019.
The shareholders, who spoke in separate interviews with our correspondent, also warned that such actions were a disincentive to market growth, and that regulators must review transaction costs, and grant tax incentives to listed firms to enable them enjoy the benefits of being listed as obtainable in the global market.
According to them, with the little signs of recovery and capital appreciation witnessed in the market in recent times, there is a need for the whole gamut of the market, including listed firms, to be cautious and avoid any actions and decisions that could erode investors’ confidence in the market.
The National Coordinator, Progressive Shareholders Association of Nigeria, Mr. Boniface Okezie, said, “The government and regulators are not doing enough by not protecting investors and the market as required.
He noted that all the benefits the listed companies should enjoy, such as reduced tax, among others, were not there.
“For instance, when Seven Up discovered that the Nigerian Bottling Company, after delisting, was better off, they also decided to do the same,” he said.
Okezie, however, advised that the capital market regulators should wake up from their slumber, and do the needful before all the companies would delist from the Exchange.
“They should be creative and introduce good packages for the benefit of the quoted companies. Also, we would try to vote against their delisting at the Extra Ordinary General Meetings,” he added.
Okezie also stressed the need for regulators to be very cautious of the procedures followed, opportunities provided to public shareholders, and the overall impact on investor confidence, while putting in place a complete check and control mechanism for the same.
Chairman, Shareholders Trustee Association, Alhaji Muktar Muktar, said the minority shareholders had lost their investments, owing to unfavourable government policies and forceful takeover of quoted companies.
He advised that the Securities and Exchange Commission and the NSE should map out strategies, aimed at protecting minority shareholders, to foster confidence and boost liquidity in the capital market, adding that the potential in the market was huge and could only be harnessed with friendly policies and good governance, aimed at addressing infrastructure deficit and security challenges.
The Managing Director, Highcap Securities Limited, Mr. David Adonri, said there was free entry and exit from the capital market by publicly quoted companies.
Adonri, however, said that delisting was not a good omen for the capital market, which was already adjudged to be shallow, saying that the capital market community was already advocating a legislation to make incentives available to encourage listing.
“We are also advocating legislation to compel large companies to be listed and remain listed,” he added.
Stockbroker identifies corporate governance issues
A former President, Chartered Institute of Stockbrokers, 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 recurrence, Abe urged investors to change their investment strategies and avoid falling victim of circumstances in cases where some quoted companies were 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.
Listing, delisting, stock market culture – Onyema
The Chief Executive Officer of the NSE, Mr. Oscar Onyema, while speaking on the recent delisting of some companies at the capital market, said companies in their life cycle would list and some of them would delist over time.
“That is the reality that exchanges around the world experience. Companies will delist for different reasons, from voluntary to regulatory delisting, mergers and acquisitions and other things that would cause them to delist,” he
said.
He explained, “Our job is to 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 three years is that we have tried to enhance the rules to ensure that companies are orderly, especially companies that want to delist voluntarily and where there is a business purpose, why they are delisting.
“We cannot prevent a company that freely listed on our platform from delisting, because it is not a prison. What we can do is to ensure that when they are leaving, there are certain things they must put in place for their shareholders and we believe that our current listing rules, which are bench-marked against other rules in other jurisdictions, do provide those
protections.”
