- Safety of investments depends on coys’ discipline – NSE
There are strong indications that shareholders of 10 delisted firms may have lost their N42.3billion worth of investment on the Nigerian Stock Exchange.
The companies are MTECH Communications, Beco Petroleum Products, MTI Plc, G-Cappa Plc, UTC Nigeria, Costain West Africa, Jos International Breweries, Chams Plc, Daar Communications and ETranzact International Plc.
The delisting of the aforelisted companies was approved by the quotation committee of the National Council of the NSE.
Delisting is the process by which a listed security is removed from the exchange on which it trades. A company can voluntarily ask to be delisted to become privately traded. A particular stock may also be removed from an exchange because the company for which the stock is issued is not in compliance with the listing requirements of the exchange.
LOSSES
Investigations have shown, for instance, that shareholders of MTECH Communications Plc, who either bought the shares of the company through Public Offer or in the primary market, appear to have lost their stakes worth N4.5 billion in the firm.
The delisting of 4.89 billion units of MTI worth of shares at 50 kobo each, which is the minimum value a share can be traded on the floor of the Exchange, also amounts to a total loss of N2.45 billion for the shareholders, as most of them alleged that the firm was moribund.
While shareholders of Beco Petroleum Plc lost about N1.9 billion after the firm was delisted, their counterparts at UTC Nigeria, E-Tranzact Plc, Daar Communication Plc, and JIB, also lost N616.7 million, N16.8 billion, N6 billion and N809 million, respectively.
Others are Costain WA, N542million; G-Cappa Plc, N1.807 billion, and Chams Plc, 4.696million shares at 50 kobo each, worth N2.348 billion.
REGULATORS NOT INVESTOR FRIENDLY – SHAREHOLDERS
President, Proactive Shareholders Association of Nigeria, Mr. Oderinde Taiwo, blamed the situation on the regulators of the market. According to him, the regulators, Securities Exchange Commission and NSE scare quoted firms with alleged fines, which are becoming counter-productive and frustrating for firms. This, he said, had made some of the firms to choose to be delisted voluntarily.
“The way regulators charge fees and impose fines on companies is becoming a big risk to our investments in the market. Many companies are delisting because of this development,” Taiwo said.
Speaking in the same vein, the Secretary, Independent Shareholders Association of Nigeria, Mr. Moses Igbrude, said rather than creating an enabling environment for more companies to thrive and list on the NSE, government agencies were stunting the growth of companies through their various fines and charges.
“To me, it sounds ironic that while government is making efforts to ensure that more companies access the capital market, its agencies saddled with the regulation of the market, for instance, are playing discouraging roles.
“Instead of using moral suasion in dealing with the valuation of some of the rules, these regulators use punitive measures and various fines. This is not only eating into our investments but it is also making some companies have a second thought, whether to remain listed or go private. Regulators have forgotten that our investments are forfeited,” Igbrude said. Mr. Boniface Okezie of the Progressive Shareholders Association of Nigeria berated the high charges paid by companies before listing. He said that it was very difficult for the capital market to rebound if enough incentives were not offered the firms. “Shareholders are always at the receiving end when these companies are delisted. Sometimes, shareholders are not compensated and the regulators don’t bother about investors’ funds in such companies, because, all they care for are their fees and charges,” he said.
‘LOOK BEFORE YOU LEAP’
President, Chartered Institute of Stockbrokers, Mr. Oluwaseyi Abe, said most of the equities were delisted, owing to their 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.
He said, “Some of the delisted companies are not as strong as they claim and that is why some investors fell victim of the occurrence.
Investors should avoid investing in all POs that come their ways and change their investment strategies in order to avoid becoming victims of circumstances when some quoted companies are delisted from the market.”
Managing Director, Highcap Securities, Mr. David Adonri, also advised investors to identify companies that have the potential of benefitting from economic policies, before buying their shares or public offers.
He explained that the stocks of such companies stood a chance of yielding good returns in the near future, adding, “investors needed to increase their participation in the market and stimulate the market for a rebound, especially for the prevailing lull witnessed in the market.”
WE’RE ONLY PROTECTING INVESTORS – NSE
Commenting on the development, Head, Corporate Communications, NSE, Mr. Olumide Orojimi, explained that delinquent companies were delisted from the Exchange’s official list because they failed to comply with post-listing rules of the Exchange, which specified that any breach would attract sanctions.
He revealed that the NSE had several engagements with companies before considering delisting them and it also ensured that investments of shareholders were protected. According to him, the Exchange has introduced several platforms to help revive several firms that are battling to keep their heads above waters.
Contrary to the allegation that shareholders of delisted companies have lost their investments after the process, the NSE’s spokesperson assured that such investors’ stakes should still be safe with the company, depending on the managements of the firm.
He said, “Some of the steps towards reviving the companies are ‘our facts’ behind restructuring platform, which give companies the opportunity to explain their situation to market operators, investors and then, seek advice.
“The firms incurred the wrath of the Exchange following repeated failure to meet the NSE’s corporate governance standards.”
