NSE indicts 92 companies for accounts audit default

A total of 92 companies fell short of the Nigerian Stock Exchange’s minimum listing standards between December 2012 and September 2013, our correspondent has gathered.

The companies operated below the listing standards of the Exchange in the course of the year for failure to disclose their audited annual financial statements and interim quarterly accounts on time and for non-disclosure of information, according to the latest X-Compliance report published by the NSE.

The report, which is a transparency initiative of the Exchange aimed at maintaining market integrity and protecting the investors by providing compliance related information on all listed companies, showed, among other things, that 51 companies defaulted in filing their audited accounts.

A breakdown of the figure revealed that as of September 6, 2013, a total of 41 companies had not rendered their audited financial statements for 2012.

It also showed that two more companies – G. Cappa Plc and Jos International Breweries Plc – did not render their audited accounts for three years.  While Jos International Breweries was indicted for the non-rendition of audited accounts for 2010, 2011 and 2012; G. Cappa Plc defaulted for 2011, 2012 and 2013.

In addition to this, Afrik Pharmaceuticals Plc and Nigerian Wire Cable Company Plc had not filed in their audited accounts for 2011 and 2012; Nigerian German Chemicals Plc and Union Homes and Savings Plc failed to render their audited accounts for 2012 and 2013.

Four other companies were said to have defaulted due to regulatory issues. For instance, the Exchange explained in the report that it suspended the trading of Goldlink Insurance Plc’s shares with effect from November 2, 2012 following the appointment of an interim management by the National Insurance Commission to oversee the affairs of the company.

According to the NSE, quoted companies on the Exchange are required to file their quarterly accounts within 45 days after the end of the quarter in accordance with Appendix 111 of the Listing Rules.

The X-Compliance report, however, showed that a total of 66 companies failed to file in their interim quarterly accounts for the first quarter of 2013; 30 of them had also defaulted in rendering their audited accounts.

In the second quarter of 2013, 13 companies defaulted, according to the report, with five of them having defaulted in other areas.

Rokana Industries Plc and West African Glass Industries Plc reportedly defaulted in filing their audited accounts for 2012 and interim quarterly accounts for the first and second quarters of 2013.

The report also showed that as of September 6, 2013, Sterling Bank Plc, Union Bank Plc and Dangote Cement Plc were operating below listing standards for non-disclosure of information.

Dangote Cement and Union Bank were said to have violated guidelines for non-rendition of free-float compliance report, while Sterling Bank was listed for non-disclosure of the material information to the regulator.

The NSE, which had initially fined Sterling Bank N1.323m for non-disclosure of bond issuance to the Exchange, said in the report that the bank had yet to comply with the NSE directives, consequently, “the financial sanction will continue to run until the bank complies.”

 Although many companies operated below listing standards in the period under review with some still doing so, the X-Compliance report showed that many other companies filed their audited accounts and interim quarterly accounts early.

For instance, the report showed that a total of 25 companies filed their interim accounts for the first quarter of 2013, while 49 quoted companies filed their interim accounts early for the second quarter of 2013.

When contacted about the development, the NSE explained in an emailed statement by its Head, Public Relations, Mr. Dante Martins, that companies could default in their obligations to the Exchange in several ways.

“It might be as a result of non-rendition of financials, free-float deficiency, unauthorised publications, etc,” the statement said.

To encourage compliance, the NSE explained that its rules “set forth consequences for each of these defaults.”

For instance, it said when there was a default, a BLS symbol was placed on such company until it complied.

In a case of non-submission of accounts, the NSE penalises the companies that file their accounts out of stipulated timeframe. All the companies mentioned above had the BLS symbol in the report, which was published in September.

Concerning the specific action the NSE had taken against the companies that defaulted, the statement said, “The NSE has several ways of ensuring that companies comply with its post-listing rules as contained in the general undertaking, which was executed by all issuers, prior to their listing on the Daily Official List.”

Since the crash witnessed in the Nigerian capital market in 2008, the management of the NSE and the Securities and Exchange Commission have carried out several reforms in the capital market with the aim of strengthening corporate governance and boosting investor confidence.

While some analysts have commended the regulators for the reforms and acknowledged the growth the market has witnessed in the last few years, others have called for more reforms.

During a visit to the NSE recently, the Chairman, Economic and Financial Crimes Commission, Mr. Ibrahim Lamorde, said, “I can confirm that the values of individual market infractions are fluctuating southwards in relation to the early years of EFCC intervention. It is possible that this may be on account of better corporate governance on the part of the market players and stricter regulation.”

Lamorde, who had visited the Exchange for the signing of a Memorandum of Understanding, which would see both organisations partnering to tackle capital market infractions, added that the measures taken by the market regulators had also boosted investor confidence.