NGX Suspension Of Eight Companies Highlights Market Integrity, Investors’ Confidence

The Nigerian Exchange Limited (NGX) recently took decisive action by suspending trading in the shares of eight companies due to their failure to file Audited Financial Statements for the year ended December 31, 2023.

This move, effected as of July 8, 2024, affected Guinea Insurance Plc, Lasaco Assurance Plc, Mutual Benefits Assurance Plc, C & I Leasing Plc, NPF Microfinance Bank Plc, Regency Alliance Insurance Plc, Secure Electronic Technology Plc, and Unity Bank Plc.

The suspension is grounded in Rule 3.1 of the NGX Rules for Filing of Accounts and Treatment of Default Filing. According to these rules, if a company fails to file its accounts by the end of the Cure Period, the NGX will issue a ‘Second Filing Deficiency Notification,’ suspend trading in the company’s securities, and notify the Securities and Exchange Commission (SEC) and the market within 24 hours.

Mr. Godstime Iwenekhai, Head of the Listings Regulation Department at NGX, reiterated this procedure in a statement: “Trading in the shares of the eight companies has been suspended from the facilities of Nigerian Exchange Limited (NGX) effective Monday, 8 July 2024, having failed to file their Audited Financial Statements for the year ended 31 December 2023. The suspension of trading in the shares of the above-mentioned companies will only be lifted upon the submission of the relevant accounts.”

Market operators and stakeholders have largely supported the NGX’s enforcement action, recognising its importance for maintaining market integrity and fostering investor confidence.

Mr. Mike Eze, Managing Director of Crane Securities Limited, stressed that this measure would boost investor confidence by highlighting the necessity of timely financial reporting from listed companies. He pointed out that good corporate governance is crucial for investors to make informed decisions about their investments.

Sir Sunny Nwosu, founder of the Independent Shareholders Association of Nigeria (ISAN), noted that the suspension was expected, stressing the need for companies to meet filing requirements to provide shareholders with a clear understanding of their financial health. This, in turn, facilitates better investment decisions.

Mr. Boniface Okezie, President of the Progressive Shareholders Association, praised the NGX’s decision, stating that it is better to have a few compliant companies than many non-compliant ones. This approach, he argued, leads to more appropriate pricing of securities and strengthens investor confidence in the NGX’s regulatory capacity.

The suspension of these companies underscores the NGX’s commitment to enforcing its listing regulations and ensuring transparency in the market. This action sends a clear signal to all listed entities about the importance of adherence to regulatory requirements, particularly in financial reporting.

Enforcing compliance through suspensions not only enhances the reliability of financial information available to investors but also reinforces the NGX’s role as a regulator committed to maintaining a fair and transparent market environment. This, in turn, fosters a more stable investment climate, where investors can trust the integrity of the market and the information provided by listed companies.

As the NGX continues to uphold stringent regulatory standards, companies are likely to become more diligent in their financial reporting practices. This will ultimately lead to a more robust and transparent market, benefiting all stakeholders. The NGX’s actions set a precedent for accountability and transparency, which are fundamental to the long-term health and attractiveness of the Nigerian capital market.

The NGX’s suspension of trading in the shares of these eight companies is a commendable step towards ensuring compliance and fostering a transparent investment environment. By holding companies accountable, the NGX not only protects investors but also enhances the overall integrity and stability of the market.