The Nigerian Stock Exchange (NSE) has delisted a total of 79 companies over the past 14 years, lending credence to the fate of retail shareholders who have become weary of investing because of fear of delisting.
A report by the NSE further showed that while 79 companies have been delisted during the period, seven other companies are currently undergoing the delisting process which entails the companies being placed on full suspension to prevent loss by unsuspecting investors.
The report shows that since 2012, an average of six companies listed on the exchange failed to adhere to the regulatory requirement on annual basis and consequently delisted every year for the past 14 years.
Investigations reveal that delisting of companies from the NSE official listed started in 2002 with Dumez whose delisting arose by regulation. This was followed with the delisting of CFAO in 2007 and another set of 19 companies in 2008.
In 2009, the NSE deleted 11 companies from its official list. The tempo slowed in 2010 when only 2 companies were delisted, but gathered momentum again in 2011 as 20 listed companies were cleaned off the official register of the NSE.
In 2012, three companies were delisted; four companies in 2014, while 2015 recorded only one company which was cleaned off from the NSE official list.
However, 2016 recorded a higher rate of shoving listed companies off the exchange for failure to meet their post-listing rules. So far this year, nine companies have been cleaned off the book of the exchange for failure to adhere to post listing rules.
Analysis of delisting trend showed that while 54 companies were delisted based on NSE regulatory requirements, 12 others were affected voluntarily, with five insurance companies affected based on National Insurance Commission regulation.
Out of the 79 companies cleaned off the NSE official list in 14 years, three companies were merger-induced, one company was absorbed, three were nationalized, while one other company was acquired.
National coordinator, Progressive Shareholders Association of Nigeria, Mr. Boniface Okezie, speaking to Daily Times, blamed regulators for the high rate of companies delisted from the exchange, adding that regulators need to do more than collecting dues and imposing fines on listed companies.
He said that most of the delisting were regulatory-induced, which may portend that companies willingly flaunt post-listing rules in order for the regulator to commence the delisting process.
“The high rate of delisting shows a lack of confidence, the regulators are after delisting fees. They don’t know what is happening in the companies and what the companies are facing.”
He argued that some of them after opting out of the exchange have continued to record remarkable performance.
Okezie said that shareholders usually suffer whenever companies delist from the exchange, as they lose their investment value and even in cases of voluntary delisting, shareholders rarely get paid, “ Since Vono Products Plc delisted voluntarily, we have not been paid and the regulators, including the Securities and Exchange Commission, is not asking, why have you not paid your shareholders,” he said.