NGX Frowns at Non-disclosures of Substantial Interests by Investors

By Aduragbemi Omiyale

The Nigerian Exchange (NGX) Limited has kicked against the idea of investors not disclosing their substantial interests in companies trading their stocks on its platform, warning that this was against the rules.

According to the bourse, this act could undermine the integrity of the market, which could also affect the prices of equities on the stock exchange.

Recall that recently, the ‘sudden’ purchase of shares of two companies, one in the conglomerates and the other in the banking sectors, triggered a leadership tussle between the buyers and the majority shareholders of the firms.

The Divisional Head of Capital Markets at NGX, Mr Jude Chiemeka, while reacting to these issues, noted that NGX was fully committed to maintaining the integrity and transparency of the Nigerian capital market.

He emphasised that the bourse was committed to supporting the enforcement of regulations that enhance transparency in the capital market, reminding investors to comply with rules on disclosure of substantial holdings in listed companies.

“We urge all investors to comply with our rules and regulations regarding the disclosure of substantial interests in listed companies,” he stated.

Mr Chiemeka added that refusing to comply with these guidelines creates information asymmetry, distorts public information and market data, and undermines the confidence of investors in our market.

“The exchange will continue to take necessary actions to ensure compliance and promote a level playing field for all market participants,” he said.

Recall that a circular was recently issued to the market in which NGX stated that the lack of appropriate disclosures by investors was a breach of its rules and other extant market regulations.

According to NGX, the act also impacts market transparency and fairness as it creates information asymmetry. This, according to experts, could hamper price discovery, regulatory oversight and the accuracy of public disclosures.

The circular reminded investors of Rule 17.13 of the Rulebook of the Exchange, Issuers’ Rules, 2015, titled Disclosure of Changes in Beneficial Ownership of Shares, which requires every issuer to notify NGX immediately; about any transaction that takes the beneficial ownership of its shares to five per cent (5 per cent) or more not later than ten (10) business days after such transaction.

The circular also quoted the Rulebook’s section on free float requirements, Rule 2.2, which states, “Each issuer shall incorporate in its half-year financial statement filed with NGX its shareholding pattern, and also indicate whether or not its free float is in compliance with NGX’s free float requirements for the Board on which it is listed.”