BY MICHAEL EBOH
The Central Bank of Nigeria, CBN, has backed the quest by the Nigerian Stock Exchange, NSE, to instill discipline in the Nigerian capital market, as it threatened to sack the Chairman and Managing Directors of banks that fail to submit their financial statements to the regulatory authorities at the appropriate time.
This was contained in the CBN’s Monetary, Credit, Foreign Trade and Exchange Policy Guidelines for Fiscal Years 2012/2013, signed by Mallam Sanusi Lamido, Governor of the apex bank.
The CBN action gave vent to the campaign by the Nigerian Stock Exchange, NSE, for the timely rendition of financial statements by quoted companies.
The CBN also threatened to bar the Managing Director or nominee of the defaulting bank from participating in the Bankers’ Committee.
On other sanctions to be meted out to the defaulting bank, the CBN said it will “Suspension the foreign exchange dealership licence of the affected bank and also forward its name to the Nigerian Stock Exchange, NSE, if the bank in question is a public quoted company.
“Removal of the Chairman and Managing Director of the affected bank from office if the accounts remain unpublished for twelve months after the end of the bank’s financial year.”
According to the guideline, banks shall continue, subject to the written approval of the CBN, to publish, not later than four months after the end of their financial year, audited financial statements — balance sheet and profit and loss account — in a daily national newspaper printed and circulated in Nigeria.
The CBN said it will continue to hold the Board Chairman and Managing Director of any defaulting bank directly responsible for any breach and shall impose appropriate sanctions on them.
The Nigerian Stock Exchange, NSE, has placed emphasis and adopted a strict posture on the timely rendition of financial statements by quoted companies. This led to its sanctioning of 13 quoted companies, in January 2012 for their failure to submit their December 2010 and March 2011 year end financial statements.
The NSE said failure of companies to submit their financial statements at the expiration of the accounting year, is a clear violation of the Post-Listing Rules of the NSE, as contained in Key Issue No. 5 (Annual Accounts Procedures), which states that ‘Audited annual accounts of companies ought to be submitted within three months of the year end.’
The NSE said this becomes essential due to the fact that the investing public and the authorities of the Exchange need timely financial information from listed companies in other to facilitate stock transactions that are based on market fundamentals.
It added that timely accounts rendition is critical for fair price discovery and investor confidence in the capital markets.