BY SEYIFUNMI LUMEKO
Nigerian Exchange Limited has disclosed that thirty-three companies have failed to file their financial statements at the Nigerian Exchange Limited NGX for the first half of 2021, H1’21.
The thirty-three companies were alleged to have defaulted, up by over 103 per cent in the past sixteen years.
Consequently, about eleven banks have paid N2.3 billion in penalties for various regulatory infractions in the financial year ended December 2020.
Findings from the Exchange, according to Financial Vanguard, showed that a total of N190.6 million was imposed as sanctions for flouting the post listing requirement this year as against N99.8 million last year, representing a 122 per cent increase.
It was gathered from the Exchange that the companies that missed regulatory filling of their results to the Exchange for full-year ended 2020 include seven active and 17 inactive companies.
The development implied that fewer companies are complying with the rule with the number of compliant companies dropping to 134 from 141.
The top five companies that were sanctioned by the NGX for the defaults include Niger Insurance Plc N42.2 million, FTN Cocoa Processors Plc N32.3 million, Union Dicon Salt Plc N18.3 million, R.T Briscoe Nigeria Plc N13.8 million and Lasaco Assurance Plc N9.0 million.
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”The Exchange has identified the companies listed on Schedule 3 as companies that fell short of the minimum listing standards in terms of timely disclosure of their audited annual financial statements and have Missed Regulatory Fillings (MRF) or are Awaiting Regulatory Approval (AWR) from their primary regulators.
“The sanctions for non-compliance with periodic financial disclosure obligations are clearly spelt out in the Rules for Filing of Accounts and Treatment of Default Filing, Rulebook of the Exchange (Issuers’ Rules).
“We are extremely proud of the early filers and will continue to showcase quoted companies that imbibe high corporate governance practices.”
Meanwhile, the banks that were penalised by the Central Bank of Nigeria, CBN, Securities and Exchange Commission, SEC and Nigerian Stock Exchange, NSE for regulatory contraventions in 2020 are FCMB Plc N183.4 million, Fidelity Bank Plc NN446.9 million, Stanbic IBTC N277.0 million, Wema Bank N23.4 million, UBA Plc 636 million, Zenith Bank Plc N11.0 million, First Bank Nigeria Plc N204.9 million. Others include Sterling Bank N34 million, Access Bank N464.2 million and Unity Bank Plc N35 million and Union Bank Nigeria Plc N10 million.
Commenting on this development, analyst and Managing Director, APT Securities & Funds Limited, Mallam Garba Kurfi, said: “Many companies are trying to meet up with releasing the timely report. That is why Flour Mills Plc is able to release their result in early June same with Honeywell Flour which before now takes a long time to release their results.
”However, fines are being slammed on those that fail to comply with the requirement. The timely release of the report raises the status of the Exchange like any other emerging market or advanced market since the market is information-driven as we are witnessing now.
”The release of results of Total Nigeria Plc, United Capital Plc, etc for Q2’21 are taking market up and those who are not able to meet up immediately notified the NGX the reason for the delay which keeps the market informed.”
Commenting on the sanction, he said: “When you have law without sanctions how will it be enforced? My only concern is that whatever money paid as sanction should not be part of the NSE income because that will encourage more sanctions but the money should be paid into a separate account for market development. Same with other regulators like Securities and Exchange Commission, SEC, CBN, Nigeria Pension Commission, PENCOM, National Insurance Commission, NAICOM, to mention a few.
“The capital market is built on trust and integrity. It is also information-driven. Without issuers, there will be no product to sell in the market.
”Similarly, investors are needed to buy the products subject to the safety and profitability of their investments. As a result, investors need to be constantly aware of the performance of issuers, to ascertain if trust and integrity still exist. ”This underscores the importance of regular corporate disclosures by listed companies in compliance with the post-listing requirements of the stock exchange.”
Also commenting another analyst, the Vice-Chairman, HIGHCAP Securities Limited, David Adonri, said: “Any listed company that fails to meet the post-listing requirements of the Exchange has fallen short of the minimum qualifications for continued listing. The first sanction is the payment of fine and if the contravention persists, the securities listed by the company run the risk of delisting.”
On the sanction to defaulting companies, he said: ”Fees paid as fine can also be channelled to market development. The increase in the number of derelictions may be connected to the disruption caused by the Covid19 pandemic.
”Subsequent renditions are expected to be more timely since the economy has opened up. It is not likely that the same anomaly will occur in the 2021 financial year and beyond. I do not think that market operators suffered the same fate as issuers in 2020 because their activities were mainly virtually conducted.
”The punishment meted out to affected issuers for dereliction is unfortunate and regrettable but necessary, to uphold sanity in the capital market and sustain investors’ confidence.”
In her comment, Mrs Bisi Bakare, Chairman of, Pragmatic Shareholders Association of Nigeria, said, ” My advice is that those officers of the companies assigned to process returns should do so as to at when due to avoid unnecessary penalties.
”Also, our regulatory authorities should know that the burden of consequences of penalty is borne by shareholders. This is because the aftermath effects are that topline and bottom line will definitely be affected and dividend proposed will decline and the working capital of these companies are also affected.
”On this note, I want our regulators to temper justice with mercy, by looking at other ways to punish them in such a manner that our investment will not be affected. The regulators in the banking, capital market and insurance sectors (CBN, SEC, NAICOM ) should be up and doing in their responsibilities because most times it is when one regulator or the other do not complete their work on time that it affects the prompt filling of results by companies to the NSE.
Commenting, Mr Boniface Okezie, Chairman, Progressive Shareholders Association of Nigeria, PSAN, said: “The NSE need to further carry out investigation on why these companies have failed to meet the regulatory requirement. Imposing of fine is not the best, as this action affects the owners of the companies (shareholders) and not the management.
”It is only when such action is taken and the company fails to provide a reasonable explanation that a fine could be imposed, and the fine should be imposed on all the officers responsible for turning in the results and not to the firm itself.
”Also, the Exchange and other regulators should compel companies to state reasons for late fillings of results in their annual reports. This will enable shareholders to tackle and hold the management responsible during Annual General Meetings, AGMs.”