By Chinwendu Obienyi
For failing to file their financial statements after the regulatory due date in 2022, the Nigerian Exchange Limited (NGX) has slapped a fine of N93.92 million on 17 listed companies.
The companies were sanctioned during the financial year 2022 for their inability to meet the regulatory requirements between third quarter (Q3) 2021 and Q3 of 2022.
According to the X-compliance report obtained from the NGX’s website, the companies that defaulted include; Honeywell Flour Mills was fined N1.2 million for untimely filing of Q3, 2021 financial results.
For audited financial statement, Notore Chemical Industries, Union Bank of Nigeria, Japaul Gold & Ventures, Presco, Veritas Kapital Assurance, LASACO Assurance, FBN Holdings, Ardova Plc, C&I Leasing Plc, Coronation Insurance, Mutual Benefits Assurance and Royal Exchange were fined N900,000; N1.2 million; N2.8 million; N3.6 million; N4.9 million; N4.8 million; N5.3 million; N5.5 million; N9.7 million; N11.6 million; N9.8 million; N4.4 million; and N6.2 million respectively.
Others include; PZ Cussons Nigeria got N4.8 million fine for 2022 audited financials and Ecobank Transnational Incorporated (ETI) was penalized with N3.2 million fine for Q3 20221 results, resulting in a total of about N93.92 million
The Exchange in its X-Compliance report explained that the initiative was designed to maintain market integrity and protect the investors by providing compliance-related information on all listed companies.
The report stated that “companies that are listed on the Exchange are required to adhere to high disclosure standards which are prescribed in Appendix 111 of the Listing Rules.
“Financial information which is periodic disclosure and on-going material events disclosure should be released to The Exchange in a timely manner to enable it efficiently perform its function of maintaining an orderly market”.
NGX Regulation Limited (NGX REGCO) applied sanctions in accordance with the Rules for Filing of Accounts and Treatment of Default Filing, Rulebook of NGX (issuers’ rules)
Reacting to the development, market operators agreed that the sanctions were warranted, saying, such sanctions would compel more quoted entities to disclose their information to the market on a timely basis.
The Managing Director of Crane Securities Limited, Mike Eze, said, the action of NGX would also boost investor confidence in the market because it is sending a clear message on the need for investors to get companies’ financial reports as at when due.
He added that investors always need to make informed decisions about which stocks to buy and that they can only be able to do that if companies release their regulatory filings on time.
The founder of the Independent Shareholders Association of Nigeria (ISAN), Sunny Nwosu, also agreed that the companies deserved to be sanctioned.
Nwosu noted that the affected companies ought to have filed their earnings reports on time to help shareholders to understand their financial health for investment decisions.
“It is not a new thing and it does not come to us as a surprise. We have constantly written to the exchange and raised the issue at annual general meetings that there is a need to know the status of these companies to enable us to take investment positions,” he noted.
For his part, the National Coordinator, Progressive Shareholders Association (PSAN), Boniface Okezie said, penalising companies for non-compliance with the rules of listing on NGX was a welcome development, as it will lead to more appropriate pricing of securities.
He said, more entities would be compelled to give information to the market on a timely basis, adding that investor confidence in the regulatory capacity of NGX and the market would be enhanced.