By Dipo Olowookere
The Nigerian Stock Exchange (NSE) has announced that the implementation for the new rules governing free float requirements of companies listed on its platform will begin on Thursday, January 2, 2020.
The NSE made this announcement in a circular to the investing public on Tuesday, December 24, 2019 and signed by Abimbola Babalola on behalf of the Executive Director in charge of Regulation at the exchange.
Business Post reports that the Rules Governing Free Float Requirements for issuers listed on the exchange were approved by the Securities and Exchange Commission (SEC) on Monday, May 6, 2019.
Under the regulations, firms seeking listing on the premium board must have 20 percent of its issued share capital available to the public and held by not less than 300 shareholders; or valued at N40 billion or more, or any value prescribed by the exchange from time to time, on the date the exchange receives the issuer’s application to list.
Also, in the new regulations, companies on the main board must have 20 percent free float held by not less than 300 public shareholders; or valued at N20 billion or more, while those on the Alternative Securities Market (ASeM) board must make 15 percent of its issued share capital available to the public and held by not less than 51 shareholders; or valued at N50 million or more.
For organisations on the growth board, the free float is always expected to be 10 percent at entry level held by at least 25 shareholders, while the standard segment must be 15 percent held by no fewer than 51 shareholders; or valued at N50 million or more.
However, the NSE said that under the new dispensation, where any issuer fails to comply, it would first send a notification and the issuer must within 10 business days initiate discussions on ways to meet up with the requirements.
It said within three months of receiving the notice, the company must produce and submit for consideration and approval, an acceptable compliance plan setting out a program for restoring itself to full compliance and immediately commence implementation of the plan.
It further said within 10 business days, the issuer must notify its shareholders in writing via a notice submitted through the NSE platform “that if it does not achieve the required free float within the stipulated timeframe, the exchange may suspend trading in its securities.”
The new rules said if listed companies further fail to comply after the grace periods, the NSE “will commence the process of delisting an issuer’s shares.”
However, this would be if the affect firm “fails to respond to the exchange within 10 business days of receiving the notification referenced in Rule 3.1 of these free float rules; or 4.2.2 the issuer fails to produce and submit an acceptable compliance plan to the exchange within three months of the exchange’s publication of its name on the exchange’s periodic X-Compliance Report as operating Below Listing Standard; or 4.2.3 the compliance plan submitted by the issuer is not acceptable to the exchange, and the issuer fails to produce and submit an acceptable alternative plan within 21 business days of the exchange’s rejection of the initial plan.”
Adedapo Adesanya