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Economy

Nigerian Stock Exchange Fines 11 Companies N48m for Infractions

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Customs Street Nigerian Stock Exchange

By Dipo Olowookere

A total of 11 companies listed on the Nigerian Stock Exchange (NSE) have been sanctioned and asked to pay fines to the tune of N48 million in the first eight months of this year.

Most of the infractions committed by the affected firms were on the late submission of their financial statements to the exchange for the use of the investing public.

According to data obtained by Business Post from the NSE over the weekend, the first company to get into the book of wrongdoers was Access Bank Plc.

The lender was slammed with a fine of N2.2 million for N2.2 million for unauthorised publication of notice of board meeting and closed period. The issue involved the bank announcing a closed period and later cancelled it. When the closed period was reversed, its group managing director, Mr Herbert Wigwe, traded some of his shares in the company and this created rancour in the market.

Another company fined by the stock exchange was Greif Nigeria and this was for submitting its audited 2019 results for the year ended October 2019 in February 2020. The firm received a fine of N500,000 for this action.

Also, Deap Capital Management & Trust, which has its fiscal year ending in September, failed to file its audited 2019 reports on time and it was fined N3.8 million after doing the right thing in February, which the NSE believed was the wrong time. In addition, it received another N1.7 million fine for releasing its Q2 2020 results in July 2020, amounting to a total fine of N5.5 million.

Furthermore, Thomas Wyatt Nigeria received a fine of N700,000 for filing its third-quarter results for 2019 in February 2020, while Ellah Lakes was knocked with a N200,000 hammer for submitting its 2020 second-quarter results in March 2020.

In the period under review, African Alliance Insurance was punished by the NSE for filing its 2019 audited reports in July and this came with a N3.2 million fine. The underwriting firm was further fined N2.5 million for late submission of its first-quarter results for 2020, which it eventually did in July and another N400,000 for filing its Q2 2020 earnings in August.

Also, Conoil was hit with a sanction worth N400,000 for filing its Q2 2020 results in August.

Business Post reports that the NSE fined Universal Insurance N3.2 million for submitting its Q1 2020 earnings in July, another N3.2 million for submitting its Q1 2020 earnings in July and N400,000 for filing the Q2 2020 results in August.

Another company in the bad books of the NSE in the first eight months of 2020 was LASACO Assurance, which was fined N4.4 million for late submission of its audited 2019 reports. it got an additional N4.4 million fine for late filing of its first quarter of 2020 earnings and N1.7 million for filing the second quarter of 2020 earnings late. All the three results were submitted by the firm to the exchange in August.

Also, eTranzact International was slapped with a N1.9 million fine in the period under consideration for releasing its Q2 2020 earnings in August, while Royal Exchange was fined N5.4 million for filing its audited 2019 results in February, another N5.4 million for submitting its Q1 2020 earnings in February and N2.6 million for releasing its Q2 2020 results in August, amounting to a total of N13.4 million fine.

Dipo Olowookere is a journalist based in Nigeria that has passion for reporting business news stories. At his leisure time, he watches football and supports 3SC of Ibadan. Mr Olowookere can be reached via dipo.olowookere@businesspost.ng

Economy

Effective Internal Controls Vital to Investor Protection—SEC

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effective internal controls

By Aduragbemi Omiyale

The Executive Commissioner for Legal and Enforcement at the Securities and Exchange Commission (SEC), Mr Reginald Karawusa, has stressed that effective internal controls over financial reporting are very vital to ensure companies provide investors with accurate financial statements, which will, in turn, boost investor protection and confidence.

Speaking at a workshop on Internal Controls over Financial Reporting, an implementation of Section -60-63 of the Investment and Securities Act 2007, organised by the SEC in collaboration with the Nigeria Capital Market Institute in Lagos on Monday, Mr Karawusa stated that with the plethora of Ponzi schemes plaguing the nation, accurate financial statements are essential for the vitality of financial markets and by extension the economy.

“Once investors no longer have confidence in the accuracy and completeness of companies’ financial statements and other disclosures, they will naturally be unwilling to invest, and the financial markets will certainly suffer as is currently experiencing in our country,” he said.

The Executive Commissioner noted that following the approval of the framework, it became apparent that its implementation would require extensive improvements in the internal processes of some reporting entities leading to additional responsibilities placed on certain key persons within the entities.

He added that it was decided that efforts would be made to engage with companies and sensitize identified role holders on their responsibilities under the framework.

“As you may recall, the outbreak of accounting scandals in the 1990s and corporate frauds of the early 2000s highlighted the need for the development of a coherent framework of systems of control and policies to identify, measure, mitigate and disclose risks,” he stated.

According to him, “Securities regulators in a number of jurisdictions acted in lockstep with the United States by introducing requirements that would strengthen controls within companies and enhance the quality of financial reports issued by such companies.

“In line with this global effort, the Federal Government provided under Section 61(1) of the Investment and Securities Act 2007 that a public company shall establish a system of internal controls over its financial reporting and security of its assets, and it shall be the responsibility of the board of directors to ensure the integrity of the company’s financial controls and reporting.

“The International Organization of Securities Regulators (IOSCO) has noted that Internal Controls are intended to ensure the fulfilment of corporate goals. They also ensure an efficient deployment of corporate resources and assets, avoiding and mitigating operational deviations that could affect business continuity and the achievement of the company’s goals.

“Some of such boards lacked effective risk and audit committees, where members ought to have challenged management’s approach to risk. These officers neither have the means to ensure that board decisions and policies were effectively put in place, let alone to scrutinize decisions collectively taken,” Mr Karawusa said.

He disclosed that in response particularly to corporate scandals of the 1990s/early 2000s, the United States passed the Sarbanes-Oxley Act of 2002, which introduced significant auditing and financial regulations for public companies as safeguards to protect shareholders, employees and other stakeholders from accounting errors and fraudulent financial practices.

In his remarks, the Managing Director of NCMI, Mr Emomotimi Agama, said that the starting point to evaluate the sufficiency of an ICFR program should be with a financial statement risk assessment.

“The risk assessment, which includes specific financial reporting objectives and identification of risks to achieving those objectives, answers these fundamental questions: Which controls are necessary to address the company’s risks? How many controls does the company need? What is just enough for the company’s ICFR program?

“A risk assessment that integrates the right people, processes, tools, and techniques serves to identify the relevant risks of material misstatement (ROMMs). The risk assessment also includes the selection of controls and the evaluation of the design of the control; it’s through the risk assessment process that a company can report with confidence the number and types of controls necessary to have an effective ICFR system,” Mr Agama stated.

He said the management’s focus on ICFR should start with determining whether the company’s risk assessment process is sufficient to identify and assess the risks to reliable financial reporting, including changes in those risks.

Mr Agama listed proactive steps management can consider, including Refreshing the risk assessment program to incorporate the right people, processes, and technologies to unlock the hidden value. Integrating data analytics and visualization to improve the quality of the data analysed to support robust risk identification and report results succinctly to key stakeholders. This, in turn, can rationalize the risks of material misstatement to a level of granularity to focus on what could truly be a material misstatement.

“In all of this, Education is essential, and the essence of this program is to provide that education to help companies comply with Sec 60-63 of the ISA 2007,” he added.

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Economy

Afreximbank to Acquire Equity Stake in Geregu Power

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Geregu stocks

By Dipo Olowookere

The first power-generating company to list its shares on the Nigerian Exchange (NGX) Limited, Geregu Power Plc, is already attracting the attention of a fresh investor just two months after it joined the platform.

On Wednesday, October 5, 2022, the company listed on the stock exchange a total of 2.5 billion units of its shares at N100.00 per unit by way of introduction, increasing the market capitalisation of the exchange by N250 billion.

On that day, the share price of the organisation rose by a maximum of 10 per cent at the NGX as a result of a strong appetite for Geregu stocks, closing at N110.00 per unit and driving up its market capitalisation to N275 billion from N250 billion.

Business Post reports that two months after its listing, the share value is at N110.70 per unit after shedding 9.85 per cent on Monday, December 5, 2022.

However, the latest news from the firm is that it is already in acquisition talks with the Africa Export and Import Bank (Afreximbank) for the purchase of a part of its equities.

In a regulatory notice filed to the exchange, Geregu said the deal is to raise funds from the lender through one of its subsidiaries, Fund for Export Development in Africa (FEDA).

“Geregu Power Plc hereby notifies Nigerian Exchange Limited and the investing public of its discussions with the Fund for Export Development in Africa (FEDA) for the acquisition of a portion of Geregu Power Plc shares.

“FEDA is the impact development arm of the Africa Export and Import Bank (Afreximbank).

“The discussions are currently ongoing, and where these talks progress to a more advanced stage, the company will notify the exchange and the investing public in line with the rules of the exchange,” the disclosure signed by the company’s scribe, Mr Akinleye Olagbende, stated.

Geregu Power was acquired by billionaire businessman, Mr Femi Otedola, shortly after he sold his interests in Forte Oil a few years ago.

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Economy

Again, NASD OTC Exchange Records Weekly Loss

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Nigeria's Unlisted Securities Market Sheds 0.78%, NASD Shares up 8.31%

By Adedapo Adesanya

For another week, the NASD Over-the-Counter (OTC) Securities Exchange languished in the negative territory, losing 0.15 per cent in the 48th week of trading this year.

This shrank the NASD Unlisted Securities Index (NSI) by 1.08 points to 710.58 points from 711.66 points recorded in the previous week and drained the market capitalisation of the NASD OTC exchange by N1.41 billion to N933.71 billion from N935.12 billion.

The loss printed by the bourse in the week was driven by the decline in the share prices of the trio of UBN Property Plc, FrieslandCampina Wamco Nigeria Plc, and 11 Plc.

11 Plc lost 0.65 per cent to settle at N154.00 per share compared with the preceding week’s N155.00 per share, FrieslandCampina depreciated by 0.6 per cent to close at N66.63 per unit versus the previous week’s N67.00 per unit, while UBN Property Plc declined by 9.0 per cent to 91 Kobo per share from N1.00 per share.

They outweighed the 10 per cent growth recorded by the single weekly price gainer, Afriland Properties Plc, which closed at N1.38 per unit versus N1.25 per unit.

In the week, there was a 2.4 per cent decrease in the total value of transactions to N36.6 million from N37.5 million, the trading volume, however, increased by 123.6 per cent to 3.2 million units from 1.4 million units, as the number of trades jumped by 17.1 per cent to 41 trades from the 35 trades achieved a week earlier.

The most active stock in the five-day trading week by volume was UBN Property Plc with 2.7 million units, followed by FrieslandCampina with 395,132 units, 11 Plc exchanged 62,137 units, Afriland Properties Plc transacted 26,170 units, while Food Concepts Plc traded 25,000 units.

However, the most traded stock by value was FrieslandCampina with N24.5 million, 11 Plc followed with N9.6 million, UBN Property Plc posted N2.5 million, Afriland Properties Plc recorded N35,984, while Food Concepts Plc raked in N22,050.

In the year so far, investors have traded a total of 3.76 billion units of stocks worth N27.6 billion in 2,492 deals.

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