NSE Defers Implementation of New Free Float Rule Indefinitely


Goddy Egene

The Nigerian Stock Exchange (NSE) yesterday said it has deferred the effective implementation date for the new rules governing free float which ought to have become effective yesterday, till further notice.

The NSE had last month disclosed that the Securities and Exchange Commission (SEC) approved some new rules and amended existing ones.

The rules were: Rules on securities transactions between dealing members of the NSE; Rules for listing on the Growth Board of the NSE, to be effective June 17; Rules on price stabilisation of securities, effective July 15 and Rules on release calendar for regulatory announcements and filings of listed companies, effective September 2, 2019 and Rules governing free float requirements for issuers listed on the NSE. While the rule of free float ought to be effective yesterday, the NSE, in notification to market operators, said the effective has been deferred indefinitely.

According to rule, free float means the number of shares that an issuer has outstanding and available to be traded on the exchange.

“ It includes all shares held by the investing public, and excludes shares held directly or indirectly by promoters, directors and their close relatives; strategic investors holding five per cent and above of the issued share capital or government,” it said.

The rule states that for any issuer seeking to list on the Premium Board, its free float shall be: (a) 20 of the Issuer’s issued share capital made available to the public and held by not less than three hundred (300) shareholders; or (b) valued at N40 billion or more, or any value prescribed by the exchange from time to time, on the date the exchange receives the issuer’s application to list.

For issuer seeking listing on the Main Board, its free float must be 20 per cent of shares held by not less than 300 shareholders or valued at N20 billion or more, or any value prescribed by the exchange from time to time, on the date the exchange receives the Issuer’s application to list.

For Alternative Securities Market (ASeM) Board, free float shall be 15 per cent of the shares and held by not less than 51 shareholders or valued at N50 million.

The rule provides that the exchange may grant extension of time to an Issuer to comply with the minimum free float requirements if: it believes that the market can operate fairly and in an orderly manner with the issuer’s existing level of free float.