Free float deficiency: NSE grants extension to erring listed companies



The Nigerian Stock Exchange (NSE) has once again extended the deadline of compliance for companies that have free float deficiencies.

The NSE requires that companies listed on its ASEM Board maintain a free float equivalent to 15 percent of market capitalization, while the requirement for Main Board listed companies is 20 percent of market capitalization. For companies on the Premium Board it is 20 percent of market capitalization or above N40 billion on the date the Exchange receives the issuer’s application to list.

According to the NSE, the regulation is required to ensure that companies maintain set standards under which they are listed in order to facilitate an orderly and liquid market for listed securities.

Union Bank and AG Leventis having failed to fulfil the regulatory free float requirement of the Nigerian Stock Exchange (NSE) in 2017 applied to the Nigerian Stock Exchange (NSE) seek- ing for an extension of their respective due dates in April 2018.

A review of the NSE’s compliance report on Friday, August 3, however, shows an extension of regulatory due date for Union Bank and AG Leventis by two years.

AG Leventis is now required to comply by 19th October 2020 while Union Bank has been granted a grace period till 18th May 2020. They are both listed on the main board of the NSE and have a free float of 11.64 percent and 14.94 percent, representing a deficiency of 5.06 and 8.36 respectively.

The report named 13 other listed companies that are in err of this regulation of which 11 are in danger of being sanctioned by the NSE.

Capital Hotel, Caverton Offshore Support Group and Interlinked Plc., all under regulatory watch-list, have free floats of 2.62 percent, 17.40 percent, and 14.50 percent respectively as against their regulatory requirements and with compliance due date of October 2017 long elapsed.

Also in violation of the NSE’s free float requirement is Champions Breweries Plc. The company has a free float of 17.30 percent but has obtained approval from the Quotations Committee of the NSE (QCN) and is currently

restructuring, with a likeli- hood of joining the ASeM board after the exercise, where the free float required is 15 percent.

Ekocorp and E-tranzact are also in violation, with a free float of 11.84 percent and 10.06 percent respectively, Ekocorp’s compliance due date long elapsed at 31st October 2017, but E-tranzact has secured an extension till 17th May 2019. Infinity Trust Mortgage also in violation at 3.50 percent of free float got a compliant due date extension of 17th May 2021.

Transcorp Hotels and Great Nigerian Insurance Plc., with 6 percent and 16 percent free float respectively as against the required 20

percent, have secured exten- sions till 18th May 2020.

The Tourist Company of Nigeria with a 3.58 percent free float has begun its delisting process while information regarding status of Portland Paints & products Nigeria Plc. with a 14.57 percent free float, Global Spectrum Energy Services Plc. with a 7.01 percent free float and CWG Plc. with a free float of 15.97 percent are not available.

The quotations committee of the NSE’s management noted in the report that it specifically provided compliance plans with tentative timelines to support the requests of companies that applied for waivers.

It said it considered and

approved an extended time frame for the companies to regain compliance with the listing requirement. The companies are however required to also provide quarterly disclosure reports to the Exchange detailing their level of implementation of the compliance plans.


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