To reduce the distortion of companies’ public information and market data, Nigerian Exchange Limited (NGX) has urged investors to disclose their substantial interest in listed companies not later than 10 business days after such a transaction.
According to NGX, sudden announcements of previously undisclosed interests breach the Exchange’s rules as well as other extant market laws.
The Exchange in a statement recently released disclosed that it was mindful of an upcoming trend by investors, adding that the disclosure obligations are provided under the Exchange’s rules, the Companies and Allied Matters Act (CAMA), 2020, and the Consolidated Rules and Regulations of the Securities and Exchange Commission (SEC or the Commission), 2013.
Specifically, Rule 17.13: Disclosure of Changes in Beneficial Ownership of Shares, Rulebook of the Exchange, 2015 (Issuers’ Rules) requires every issuer to notify NGX immediately on any transaction that brings the beneficial ownership in the company’s shares to five percent or more not later than ten business days after such transaction.
The Exchange in a statement said, “We also wish to reiterate the provisions of Rule 2.2 of NGX’s Rules Governing Free Float Requirements, which provides as follows: Each Issuer shall incorporate in its half-year financial statement filed with the Exchange its shareholding pattern, and also indicate whether or not its free float is in compliance with the Exchange’s free float requirements for the Board on which it is listed.
In making the requisite disclosures to the Exchange, listed companies are required to state in detail, the different categories of owners of their shares, including Directors, Substantial Shareholders, influential shareholders and other Insiders, indicating whether the holding is direct or indirect. This disclosure is also required during the annual report filings of all listed Companies.”
It added that the substantial shareholders and High Net worth investors have an obligation to be vigilant by monitoring their holdings, especially where their shares are held in different accounts and make honest disclosures in that regard.
According to NGX, this is to avoid breaching the disclosure obligations where the five percent reporting threshold is reached, creating the risk of failure of compliance.
“An investor who chooses to consolidate his/her holdings must comply with the aforementioned disclosure requirements immediately his/her combined holdings in an Issuer the five (5) percent threshold,” the statement said.
In view of the foregoing, the Exchange wishes to highlight options available to investors in the Nigerian capital market desirous of consolidating their holdings in an orderly and compliant manner. These options include NGX Nominal Transfer Window; CSCS consolidation of accounts with different permutations of investor names; and SEC-approved forbearance window on multiple applications.
NGX, thereafter, said upon receiving appropriate guidance in that regard, investors may adopt any of the above options to consolidate their holdings in order to ensure compliance with the relevant laws, rules and regulations.