NASD Operators Woo Firms Delisted from the Nigerian Stock Exchange

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Goddy Egene

Stockbrokers registered to trade on the NASD OTC Securities Exchange have started to woo some of the companies that were delisted from the Nigerian Stock Exchange (NSE) last week THISDAY checks have revealed.

The NSE last week delisted Lennards (Nigeria) Plc; P.S Mandrides & Company Plc; Premier Breweries Plc ; Costain (W.A) Plc; Navitus Energy Plc and Nigerian Ropes Plc for recurring non-compliance with the listing requirements of the exchange in the areas of timely and accurate rendition of operational and financial accounts. Some of the companies also had corporate governance issues. The delisting means that shareholders can no longer trade those shares on the NSE.

However, THISDAY investigation showed that some stockbroking firms that trade on NSE and also trade on NASD OTC have begun to approach shareholders of some of the affected companies to bring their shares to the OTC platform instead of completely losing out.
The NASD Plc provides the trading platform where all instruments not listed on the NSE but that are registered by the Securities and Exchange Commission(SEC), can be traded through licensed stockbroking.

Many of such securities not listed on the NSE are currently being traded on the NASD OTC. An operator on the platform confirmed to THISDAY that the shareholders of the delisted firms can have exit route if they bring their shares to the NASD.

“We know that some of the companies got delisted due to non-compliance in terms of timely information disclosure. However, while the NASD OTC also has rules that must be complied with, there is category under which the companies would not be under serious obligation for too much information disclosure,” the broker said.

He explained that companies that do not want high level of governance are placed in the pink category, unlike those that want high corporate governance that are placed in the blue category.

“Besides, if a security is brought to the NSAD OTC by an investor, who wants to trade shares, which is known as Admission to trade, the company does not have any obligation to provide the platform with information. I believe investors in the companies that were delisted by NSE can cross over to the NASD through any of this process and get their shares traded instead of getting stuck,” the broker added.

The NSE had delisted the six companies under its compulsory delisting rule. Under this rule, after completion of the delisting process and approvals, the NSE will delist the shares of the affected company without any further recourse to the position of the board or shareholders of the affected companies.

However, shareholders had faulted the delisting in the past called on the NSE ensure investors are protecting, saying that whenever the NSE delists a company, investors would suffer.

For instance, the Chairman, Progressive Shareholders Association of Nigeria, Mr. Boniface Okezie had advised that that going forward , regulators ensure proper scrutiny of companies before listing and their ability to adhere to post- listing requirement.
But the Chief Executive Officer of the NSE, Mr. Oscar Onyema had defended the action of the exchange, saying it is to protect shareholders.

“I want to note that a number of shareholders said that we are not protecting their interest; in reality we are protecting them. I am making it very clear that you cannot be a listed company and stay for two or three years without providing your financial statement to the public. On what basis are they protesting,” Onyema said.