The Nation Newspaper

Tag: delisting

  • PCMN’s shareholders vote on relapse to private status, delisting

    Shareholders of Paints and Coatings Manufacturers Nigeria (PCMN) Plc are scheduled to meet tomorrow to vote on sub-joined resolutions that will see the relapse of the company to a private limited liability company and the delisting of its shares from the Nigerian Stock Exchange (NSE).

    A Federal High Court had directed the company to convene a court-ordered meeting on February 15, 2018 in Lagos during which shareholders will deliberate and vote on the scheme of arrangement for the change in the status of the company and the delisting from the NSE. A new company-Paintcom Investment Nigeria Limited is proposed to emerge after the delisting.

    Authorities at the NSE have confirmed that the company had submitted application for scheme of arrangement between the company and holders of its fully paid up ordinary shares in furtherance of the delisting.

    The Asset Management Corporation of Nigeria (AMCON) recently sold the fourth largest equity stake in PCMN to Bizfeat Ventures Limited, a relatively unknown firm. AMCON, the bad-debt resolution corporation floated by the government, transferred its 7.4 per cent equity stake in PCMN to Bizfeat Ventures through a negotiated cross deal at the NSE.

    The block divestment involved transfer of a total of 58.66 million ordinary shares of 50 kobo each held by AMCON to Bizfeat Ventures at a negotiated price of N1.05 per share.

    The move by PCMN comes as leading soft drink company-Seven-Up Bottling Company, concludes the process to return to a privately owned company and delist it shares from the NSE. Avon Crowncaps had earlier delisted its shares.

    The NSE had delisted five companies in 2017 with four of them delisted under compulsory delisting due to infractions and poor corporate governance. The four companies delisted in 2017 included Beco Petroleum Products, MTECH Communications, Mass Telecommunication Innovation (MTI) and UTC.  Ashaka Cement, which merged with its parent company, Lafarge Africa, was delisted under voluntary delisting option.

    In December 2016, the Exchange had delisted six companies including Lennards (Nigeria) Plc, P.S Mandrides & Company Plc, Premier Breweries Plc, Costain (W.A) Plc, Navitus Energy Plc and Nigerian Ropes under compulsory delisting window. It had earlier in May 2016 compulsorily delisted eight companies including IPWA Plc, G.  Cappa Plc, West African Glass Industries Plc (WAGI), Investment & Allied Insurance Plc, ALUMACO Plc, Jos International Breweries Plc, Adswitch Plc and Rokanna Plc.

    The NSE operates two delisting windows-voluntary and compulsory delisting. Under voluntary delisting, quoted companies can opt to delist their shares from the Exchange due to various reasons including mergers and acquisitions, restructuring and private interests subject to fulfilment of the delisting rules and requirements.

    Under the compulsory delisting window, the NSE may opt to delist companies that have failed repeatedly to meet extant rules and best practices in line with the Exchange’s commitment to protect investors and ensure that listed companies comply with global best practices.

     

  • Stock Exchange locks up N807m as Avon Crowncaps prepares for delisting

    The suspension of trading on the shares of Avon Crowncaps & Containers (Nigeria) Plc has locked in more than N807 million in market valuation of shareholders’ holdings. The Nigerian Stock Exchange (NSE) had on August 31, 2017 suspended trading on the shares of Avon Crowncaps.

    The full suspension implies that there will be no trading and price change on the shares of the packaging company, locking up the N807.09 million market value of Avon Crowncaps. Avon Crowncaps has total issued and outstanding shares of 683.97 million listed on the main board of the NSE. The closing price for the company was N1.18 per share.

    The NSE stated that the suspension was “in compliance with the approved scheme of arrangement between the company and holders of its fully paid ordinary shares which will lead to the voluntary delisting of the company from the official list of the Exchange”.

    More than 80 per cent of Avon Crowncap’s equities are held by foreign core investors. Avon Crowncaps manufactures and sells drums, crowncaps, pilfer-proof caps, containers, metal printing, inks, colourants and pigment pastes amongst others.

    The decision to delist capped a long period of poor performance by the Avon Crowncaps, which had blamed inclement macroeconomic condition and cheap imports from Asia and Europe for its declining performance.

    The company had rued extremely difficult situation that was orchestrated by competitive threat to the company’s products from cheaper substitutes in the form of rigid as well as flexible plastic packaging.

    The company also blamed cheap imported products from Asia and Europe for the downtrend in the Nigerian market, adding that the operating environment was worsened by sluggishness in the economy on account of tight liquidity and high interest rates.

    Avon outlined that structural problems afflicting the macro economy and security situation prevailing in certain parts of the country as well as delays in receiving payments from customers compounded its poor performance during the period.

  • Firms face N100m fine, delisting over delayed results

    Companies  quoted on the Nigerian Stock Exchange (NSE) may pay fines that range from N100,000 to more than N100 million as penalties for delay in the submission of their corporate earnings reports under a set of new rules that will take effect at the stock market on January 1, 2017.

    Companies that delayed their financial statements and accounts face threats of suspension and delisting, in addition to the monetary fines.

    Under the regime, punishment for delay in filing of corporate earnings report for serial violators are within N5 million. Many companies have been known to delay the submission of their corporate earnings reports for upwards of six to 12 months and beyond. The new rules seek to strengthen existing rules on timely corporate earnings disclosure and set out processes for proper disclosure, as well as stronger deterrence to non-compliance.

    The new rules apply to all companies on the main and premium boards of the Exchange. Companies on the less-stringent Alternative Securities Market (ASeM) are exempted. The rules also apply to all securities, including all types of shares and other issuances. The new rules on filing of accounts and treatment of default filing have already been approved by the Council of the NSE and the Securities and Exchange Commission (SEC), after initial review by capital market stakeholders.

    Under the new rules, quoted companies will be required to file their unaudited quarterly accounts with the NSE not later than 30 calendar days after the relevant quarter, and publish it within five business days after the date of filing, in at least two national daily newspapers, and post it on the company’s website, with the web address disclosed in the newspaper publication. Also, an electronic copy of the publication shall be filed with the Exchange on the same day as the newspaper publication.

    Where the company chooses to audit its quarterly accounts, it shall be required to file such accounts not later than 60 calendar days after the relevant quarter, and publish it within five business days after the date of filing, in at least two national daily newspapers and post it on the company’s website, with the web address disclosed in the newspaper publications. Such a company will also be required to file electronic copy of the publication with the Exchange on the same day as the newspaper publication.

    For annual audited accounts, the new rules require companies to file their audited annual report and accounts with the Exchange not later than 90 calendar days after the relevant year end, and published in at least two national daily newspapers not later than 21 calendar days before the date of the annual general meeting, and posted same on the company’s website with the web address disclosed in the newspaper publications. Also, an electronic copy of the publication shall be filed with the Exchange on the same day as the publication.

    Under the new rules, late submission under the first instance of 90 days could attract N9 million, the additional period of 90 days will attract N18 million while such delay beyond the first 180 days to the next 180 days could attract as much as N72 million, bringing fines payable by a defaulting company within a year to N99 million.

    Besides, a defaulting company will be tagged with the “Below Listing Standard” (BLS) or any other sign or expression to indicate that the company has failed to submit its accounts within the stipulated period and this tag shall remain for as long as the company fails to file its accounts.

    Where a company fails to file its accounts after the expiration of the first 90 days, the NSE will send such a company a “second filing deficiency notification” within two business days after the end of the first 90 days. In addition, the Exchange will suspend trading in the company’s shares and notify the Securities and Exchange Commission (SEC) and the market within 24 hours of the suspension.

    In a more rigorous naming and shaming practice, such a company is expected to within three business days of receipt of the second filing deficiency notification and suspension of trading in its securities, inform the Exchange in writing of the status of the accounts, and issue a press statement, of not less than half a page, in at least two national daily newspapers, with the company’s web address indicated in the newspaper publication, and posted on the company’s website disclosing the status of the relevant accounts, reason for the delay in submission, and the anticipated filing date. An electronic copy of the publication shall be filed with the Exchange on the same day as the publication. The suspension of trading in the company’s shares shall only be lifted upon submission of the relevant accounts in line with the requirements of the NSE.

    Any company that fails to publish accounts in two national daily newspapers as required, or fails to provide proof of publication, and for each instance of non-compliance with any directives of the Exchange, shall also be required to pay a fine of 50 per cent of its annual listing fee and a fine of N25,000 for every day the company remains in default.

    Where a company fails to also file its accounts after the second additional period of 90 days, bringing the default days to 180 days, the Exchange may take further appropriate actions including cautioning shareholders that the company’s listing is under threat of delisting and eventual delisting.

    The new rules also empower the Exchange to delist a company within the first 90 days where the NSE determines that granting extended period is not necessary, especially where there are proven issues of financial fraud, gross corporate governance abuses and other illegalities.

    Under the new rules, all accounts, circulars, and press statrments to be published pursuant to the rules shall require the Exchange’s prior approval, and shall cover a minimum space of half a page per newspaper publication.

    The new sanction regime indicates that a late submission will attract a fine of N100,000 per day for the first 90 calendar days of non-compliance, another N200,000 per day for the next 90 calendar days and a fine of N400,000 per day thereafter until the date of submission.

    However, the new rules make provisions for companies that require extended period to complete, audit or get regulatory approval for their accounts. The new rules grant the Exchange the powers to grant waivers and extension to companies based on the peculiarities of each company upon request by such company. A company that requires regulatory approval of a primary regulatory agency, like the Central Bank of Nigeria (CBN) for banks, must however have filed its account with the primary regulator not later than 30 calendar days before the earnings submission deadline for audited annual accounts and 14 calendar days for quarterly accounts.

    A defaulting company shall be required to pay the fines notwithstanding remedial action taken after the earnings submission deadline. According to the rules, notwithstanding that a company takes the required steps during the cure periods or later complies with the provisions of the rules, any company that defaults in filing its accounts within the stipulated periods shall be liable to pay the applicable penalties stated above, except the affected company had received waiver or extension of time by the Exchange.

  • Stock Exchange mulls delisting rules

    Stock Exchange mulls delisting rules

    • Sets court-ordered meeting, 75% approval as new criteria for delisting

    With the number of delisting significantly higher than listing in recent years, the Nigerian Stock Exchange (NSE) is considering new rules and regulations that will equate voluntary delisting from the Exchange to the same level as major corporate changes such as mergers, acquisition and share capital structure.

    The main highlights of a new draft of rules and regulations on delisting from the daily official list of the Exchange include obtaining a court order for the convening of shareholders’ meeting for consideration of any scheme related to the delisting and the requirement of at least 75 per cent approval of the resolution for the delisting.

    According to the new rules, any issuer that intends to delist its shares from the daily official list of the Exchange shall convene a meeting of its board of directors, at which the board shall consider and pass a resolution recommending to the shareholders of the issuer that the issuer should be voluntarily delisted. The board will also pass a resolution on an annual general meeting (AGM) or extraordinary general meeting (EGM) at which the board’s recommendation will be considered by the shareholders for approval.

    Subsequently, the company shall notify the Exchange of its board’s recommendation to delist and shall submit a copy of the board’s resolution in that regard, a copy of the draft notice of the AGM or EGM and the request for approval to publish the notice of the AGM or EGM at which the shareholders will consider the board’s recommendation to voluntarily delist the company in at least two national daily newspapers, at least 21 days before the AGM or EGM.

    After receiving the Exchange’s approval, the company shall convene an AGM or EGM, during which a resolution for voluntarily delisting the issuer will be proposed and passed, if agreeable to the shareholders. The Exchange shall be invited to, and be represented at the AGM or EGM.

    “A resolution to voluntarily delist an issuer shall be validly passed if supported by at least seventy-five percent of members present and voting during the AGM or EGM, in person or by proxy,” the rules stated.

    Besides, the company’s board of directors shall appoint professional advisers who will provide all relevant professional support as well as obtain all relevant approvals with respect to the delisting.

    The company shall also apply for a court-ordered meeting of the shareholders to consider and if thought fit, approve where required, any scheme and other relevant matters. After receiving the court’s order, the issuer shall convene the court-ordered meeting of the shareholders, and the Exchange shall be invited to, and be represented at the meeting.

    After holding the court-ordered meeting, the company shall submit its resolutions passed at the meeting to the Court for sanction.

    At the Exchange, the dealing member concerned shall submit to the Exchange an application on behalf of the company, to delist its shares from the daily official list of the Exchange, and the application shall be submitted with a delisting fee as determined from time to time by the Exchange.

    The company is also required to set aside funds sufficient to purchase the interest of all shareholders who expressed their dissent to the resolution to delist the company, and the funds shall be domiciled with a Registrar or a Custodian duly registered by and in good standing with the Securities and Exchange Commission (SEC).

    “The share price at which the issuer purchases dissenting shareholders’ interests shall not be less than the highest price at which the Issuer traded in the six months immediately preceding the date on which the notice of the AGM or EGM at which the resolution to delist the issuer was issued,” according to the rules.

    The Registrar or Custodian is expected to open and publish a register of dissenting shareholders which shall be kept open for at least three years. The list of dissenting shareholders shall also be published on the company’s website for the same duration, and submitted to the Exchange within three months of the shareholders’ expression of their dissent.

    Thereafter, the entire listed shares of the company shall be delisted from the daily official list upon receipt of evidence from the Registrar or Custodian that the interests of all dissenting shareholders have been purchased by the company.

    However, except a period of three years has elapsed since the initial listing of its shares; the Exchange shall not consider a company’s application for delisting of its shares.

    Also, a delisted company can only seek to list its shares again on the Exchange after three years from the date of its delisting.

     

  • Companies rush to avoid compulsory delisting

    Companies that were recently earmarked for compulsory delisting by the Nigerian Stock Exchange (NSE) have been making overtures to the Exchange amid frantic efforts to address their corporate governance failures and avoid delisting from the stock market.

    Sources told The Nation that several companies have already reached out to the NSE with explanations on the reasons for their corporate governance failures and plans to address the concerns of the regulator.

    The NSE recently issued a notice of delisting on 21 companies that have failed continuously to meet the corporate governance standards at the stock market. The NSE said it decided on the delisting to protect investors from trading on securities with serious corporate governance failures.

    The affected companies included Investment and Allied Insurance Plc, Goldlink Insurance, Pinnacle Point Group, Adswitch, Afroil, Rokana Industry, IPWA, West African Glass Industry, Nigeria Wire and Cable, Starcomms, Daar Communication, Mtech, Big Treat, G.Cappa, FTN Cocoa Processing and UTC Nigeria.

    Others included Stockvis, Nigeria Sewing Machine, Jos International Breweries, Capital Oil and Golden Guinea. However, Adswitch had earlier filed for voluntary delisting while Pinnacle Point Group is in the process of being wound up.

    According to the Exchange, while the five of Stockvis, Nigeria Sewing Machine, Jos International Breweries, Capital Oil and Golden Guinea were being delisted because they failed to regularise their listing status, other companies were being delisted because they have failed to submit requisite financial and operational statements.

    “The regulatory action is necessary to protect investing public from trading in the securities of entities with no current information regarding their financial status,” the NSE stated.

    The NSE stated that the delisting of the companies would take effect in September, in line with three-month notice required for such action.

    All the companies slated for delisting had been dormant and mostly at their nominal values. Companies such as Big Treat, Starcomms, Capital Oil and Afroil have been subjects of regulatory investigations.

    The sources said some of the companies have started addressing some of the key concerns raised by the NSE, especially the non-availability of their financial statements and operational reports.

    One of the companies-FTN Cocoa Processing Plc has already released its two outstanding audited reports and accounts for the 2012 and 2013 business years.

    The sources indicated that the companies have been under pressure from shareholders, creditors and other stakeholders since the issuance of notice of delisting.

    NSE’s Head, Legal and Regulation Division, Tinuade Awe, confirmed to The nation that the Exchange has gotten overtures from some of the companies.

    “We are going to give these requests careful consideration,” Awe said.

    She explained that the notice of delisting was a notice of intention of the NSE and companies with commitments to redress the corporate governance failures can still avoid the regulatory hammer.

    A source in one of the earmarked companies said they were making all efforts to stave off the compulsory delisting, noting that the company values its listing on the NSE.

    The source blamed the harsh operating environment for the failures of the company adding that the management of the company was preparing detailed presentation to be made to the NSE.

    Many shareholders were against the delisting of the companies, noting that delisting would worsen shareholders’ fate. However, shareholders who spoke to The Nation recently had called on the capital market regulators to probe the utilisation of the funds earlier raised by those companies and the previous projections made by the companies.

    Chairman, Ibadan Zone Shareholders Association (IBZA), Chief Sola Abodunrin, said the delisting of the companies could discourage investors from future participation in new issues as most of them only came to the market to raise funds without returns to shareholders.

    According to him, the companies did not follow through with their purposes of the fund raising and mismanaged investors’ funds.

    Abodunrin, a member of the board of trustees of the Investors Protection Fund (IPF) of the NSE, said delisting would be worse for the investors in the companies as they won’t be able to retrieve their investments.

    He said the companies would not adhere to any iota of corporate governance after delisting and shareholders would not have any hope of holding the companies to account.

    National Coordinator, Independent Shareholders Association of Nigeria (ISAN), Sir Sunny Nwosu, also said the NSE and Securities and Exchange Commission (SEC) should go beyond the delisting to determine the extent of management’s culpability in the companies’ misfortunes.

    Another shareholders’ leader, Alhaji Gbadebo Olatokunbo, called for a thorough probe of the management of the companies.

    According to him, the regulators should be able to extricate failures that were due to environmental constraints from those due to managerial failures.