Stakeholders query corporate governance status of firms’ suspended by NSE

Capital market experts have queried the corporate governance standard operational in the eight listed firms’ recently suspended by the Nigerian Stock Exchange (NSE), for failure to submit their 2017 audited report.

The stakeholders, who spoke in separate interviews with The Guardian, argued that such lapses could send wrong signals to foreign investors, who might be interested in investing in the market.
The NSE announced the suspension of trading on seven insurance stocks, and R T Briscoe, for failure to submit 2017 audited accounts and statements.

The Exchange in a notice to dealing members listed the insurance firms to include: African Alliance Insurance, Cornerstone Insurance, Royal Exchange, and STACO Insurance.

Others are Standard Alliance Insurance, Universal Insurance Company, and Veritas Kapital Assurance.

The Exchange explained that the suspension of trading in the shares of the affected companies was effective July 5, noting that it would only be lifted upon the submission of the relevant accounts.
The Managing Director, APT Securities and Funds Ltd., Garba Kurfi, pointed out that companies with December 31, 2017, financial year end were expected to submit their accounts in March, adding that four months after the year ended, the affected companies had still not submitted their accounts for informed investment decision.

NSE’s regulatory filing calendar indicates that March 31, is the deadline for submission of annual reports for companies with Gregorian calendar business year ended December 31, 2017. Thursday March 29, which was the last working day for the period, was effectively the deadline for submission of the reports in line with the traditional practice at the Exchange.

The Exchange, which tags and applies fines on companies that fail to meet the earnings reports deadline, had on January 1, 2017, launched a new set of penalties for delay in submission of companies’ results. Under the new regime, companies may pay fines that range from N100,000 to more than N100million as penalties for delay in the submission of their corporate earnings reports.

Companies that also delay their financial statements and accounts risk suspension and delisting in addition to the monetary fines.

Stakeholders argued that while late filing of results attract penalties inform of monetary fines, which have multiplier effects on companies bottom-line, profitability and dividend payout, timely submission of financial results or corporate information has the potential to boost market performance, and increase shareholders’ value.

The defaulting firms’ may also be delisted from the NSE’s official list which is inimical to market growth.

Therefore, they suggested that the erring companies must urgently comply with all applicable rules of the Exchange to avoid such penalties and other regulatory sanctions.

Specifically, the President, Institute of Chartered Accountants of Nigeria (ICAN), Razak Jaiyeola, applauded the management of the Exchange for being strict on process compliance, noting that disobedience raises issues corporate governance practice.