LAGOS-THE Nigerian Stock Exchange, NSE, has given all quoted companies in the country two years to comply with its listing requirements or face expulsion from the stock market.
General Manager/Head, Listing, Sales and Retention, NSE, Mrs. Taba Peterside dropped the hint today while speaking at a briefing on the revised listing requirements, in Lagos. According to her the need to comply becomes necessary following the review of its listing requirements to international best practices.
She said the revised listing rules which came into effect, April 1, 2012, is part of its transformation agenda and was conducted after undertaking wide-reaching consultations with key stakeholders on the issue.
She stated further the NSE can not begin the enforcement of the revised rules immediately, hence it is giving the quoted companies two years to comply, after which , it would undertake a general appraisal, making necessary adjustments where needed.
She said after the two-year period, sanctions would be meted out to companies that fail to meet up with the minimum requirements.
She also stated that adjustments might be made, with some of the companies delisted or moved to other market segments.
Peterside declared that the review of its listing rules was primarily done to benchmark its operations against international best practices and ensure the growth of the Nigerian capital market.
She said the revised listing rules were benchmarked against key international standards, especially from stock exchanges around the world.
“For example”, she said, in other stock exchanges across the world, the operating track record rule stipulates that a company must have been in operation for at least three years. In Nigerian capital market, it was formerly five years; hence we decided to review it downwards to reflect international best practices.”
She expressed optimism that about 20 companies will list on the NSE in the current year, taking advantage of the revised listing rules.
Peterside further stated that the NSE is getting increased interest from a number of oil and gas companies, seeking to list in the secondary segment of the capital market.
She, however, said the oil and gas companies are expected to show their reserves in commercial quantity for them to qualify to benefit from the new listing rules.
According to her, some oil and gas companies will enjoy exemption from the three year track record requirement, noting however, that the company is required to produce a Competent Persons Report, CPR, describing nature and extent of the company’s rights of exploration, geographical characteristics of reserves, estimates of volume, expected extraction volume together with assumptions on forecast revenues and operating costs.
In the new rule, companies seeking to list are expected to meet the requirements for public float, which stipulates that the public shall hold a minimum of 20 per cent of each class of equity securities of the company.