The delisting of four companies on the Daily Official List of the Nigerian Stock Exchange (NSE) has led to loss of about N9.5 billion by investors.
Pursuant to clause 15 of the General Undertaking, Appendix III of the Rule Book of the Exchange, 2015-Issuers’ Rules, which deals with the post-listing requirements and sanctions, the NSE said it delisted Beco Petroleum Products, MTECH Communications, MTI and UTC Nigeria.
The above organisations were accused of not meeting the corporate governance standards set by the capital market watchdog.
As a result of this, the delisting of the firms was approved by the quotation committee of the National Council of NSE on February 24, 2017 and finally delisted on May 2, 2017.
According to a report by Leadership, corporate governance standards set by the exchange include post-listing requirements on timely disclosures accurate rendition of operational and financial accounts as well as other corporate governance issues.
A breakdown of the losses incurred by investors through the delisting showed that investors in MTECH Communications will suffer the highest loss at N4.5 billion being its total market capitalisation as at date of delisting 4.96 billion shares at 91 kobo per share.
The delisting of 4.89 billion units of MTI at 50 kobo each amounted to a total loss of N2.45 billion, and 3.72 billion units of Beco Petroleum product’s shares with a unit price of 50 kobo per share also resulted in a loss of N1.9 billion. For UTC Nigeria, 1.23 billion shares of 50 kobo each were delisted, representing a loss of N616.7 million by investors
While investigations revealed that most of the companies delisted voluntarily from the nation’s bourse, citing unfriendly price mechanism and post-listing requirements, stockbrokers said the companies were being delisting for recurring and possibly lack of corporate governance.
The president, Chartered Institute of Stockbrokers (CIS), Mr Oluwaseyi Abe, said that most of the equities were delisted due to their irredeemable inability to comply with the listing requirements of the Exchange, especially in the areas of timely and accurate rendition of operational and financial accounts and other corporate governance issues.
In order to avoid future reoccurrence, the CIS boss urged investors to change their investment strategies and avoid falling victims of circumstances in cases where some quoted companies are delisted from the market. He added that despite the persistent lull in the nation’s capital market, investors should leverage on the current low prices of stocks to expand their portfolio.