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15 companies flout NSE’s financial reporting requirements

.10 banks pay N624m fine to CBN
•Shareholders kick

By Peter Egwuatu

MORE companies quoted on the Nigerian Stock Exchange, NSE, flouted the post listing requirement of the Exchange as fifteen of them across the sub-sectors missed regulatory filling of their results to the Exchange in 2016 as against three in the financial year 2015.

This is coming even as 10 banks listed on the Exchange paid N624.2 million as penalties for infractions to the Central Bank of Nigeria, CBN, in 2016 financial year.

Meanwhile, the companies that missed regulatory filling of their results to the Exchange for 2016 include Skye Bank Plc, Royal Exchange Plc, Afromedia Plc, Conoil Plc, Austin Laz & Company Plc, Equity Assurance Plc, Fortis Microfinance Bank Plc, Guinea Insurance Plc, Linkage Assurance Plc. Others are Mutual Benefit Assurance Plc, Premier Paints Plc, Resort Savings & Loans, Sovereign Trust Insurance Plc, Standard Trust Assurance Plc and Standard Alliance Insurance Plc.

Quoted companies on the Exchange are required to file their quarterly and annual accounts within 30 days and 90 days respectively after the end of the quarter and end year respectively in accordance with the listing rules of the NSE.

Meanwhile, the early filers of their results to the Exchange in 2016 include Forte Oil Plc,  United Capital Plc, Nigerian Breweries Plc, Transcorp Hotel Plc, Africa Prudential Registrar, Zenith Bank Plc, and Dangote Cement Plc

Financial statements

Referring to these companies the NSE had stated: “We are extremely proud of these companies and will continue to show case quoted companies that imbibe high corporate governance practices.”

Early filers are companies that file their audited financial statements four weeks before the due date. Quoted companies on the Exchange are required to file their financial statements on a timely basis in accordance with the listing rules.

According to the NSE “Any late submission of accounts shall attract a fine of N100, 000 per week from the due date until the date of submission.  A listed company who contravenes any of the provisions of the Listing Rules and General Undertaking and fails to pay the penalty imposed on it for such contravention on or before the due date shall be liable to a further fine of N300,000.00 in addition to N25,000 per day for the period the violation continues.

Shareholders kick

Mrs. Bisi Bakare, Chairman, Pragmatic Shareholders Association of Nigeria, said “In my own opinion, those officers of the companies assigned to process returns should do so as at when due to avoid unnecessary penalties.

“Also, our  regulatory authorities should know that the burden or consequences of penalty is borne by shareholders. This is because the aftermath effects is that topline and bottomline will definitely be affected and dividend proposed will decline and the working capital of these companies are also affected. On this note, I want our regulators to temper justice with mercy, by looking at other ways to punish them in such a manner that our investment will not be affected.

“The regulators in the banking, capital market and insurance sectors (CBN, SEC, NAICOM) should be up and doing in their responsibilities because most times it is when one regulator or the other do not complete their work on time that it affect prompt filling of results by companies to the NSE.

“Imagine, during the year under review, 10 banks paid N623 million. Fidelity Bank alone coughs out N175 million, First Bank N101.5million.

“In fact, the details of the penalties are as follows Wema Bank N32 million, Fidelity Bank N175 million, Zenith Bank N16 million, Diamond Bank N31 million, First Bank N102.6 million, UBA N87.6 million, Sterling Bank N8 million, GTBank NILL, Union Bank N 27.7million, FCMB N88.8 million, and Access Bank N55.5 million. So, if GTBank can avoid being penalised, then other companies should work very hard to ensure that they avoid things that will attract penalties to owners of these companies.”

Mr. Boniface Okezie, Chairman, Progressive Shareholders Association of Nigeria, PSAN, said “The NSE need to further carry out investigation why these companies have failed to meet regulatory requirement. Imposing of fine is not the best, as this action affect the owners of the companies (shareholders) and not the management. It is only when such action is taken and the company fails to provide reasonable reason that a fine could be imposed; and the fine should be imposed on all the officers responsible to turn in the results and not to the firm itself.

“Also, the Exchange and other regulators should compel companies to state reason for late fillings of results in their annual reports. This will enable shareholders to tackle and hold the management responsible during Annual General Meetings, AGMs.”

Commenting as well, Mr. Moses Igbrude, Public Relations Officer, Independent Shareholders Association of Nigeria, ISAN, said “There are rules and regulation in our market and operators   must abide by them. So, management of companies should be aware of the rules and penalties involved. The management as our Association always tell them is to guide against being penalised.

Rules and penalties

“Another issue why some companies do not meet regulatory requirement, is because of the numerous regulators in our system. If one regulator delays a company from meeting the requirement of other regulators; should they be held responsible? No, I don’t think it is proper.

“So, the NSE should look at this issue critically before imposing fine to defaulting companies. Sanctions is not always the best as we normally advise. We think regulators should find a way of rewarding those that meet regulatory requirements; in that case others will learn and be attracted to get such reward subsequently.

“Again even when penalties are to be impose, the officers or directors responsible to turn in results should be punished. We frown at a situation where the entire company or shareholders bear the brunt of the negligence of some few officers. If that is done, you will see that the directors will sit up and do things that will not attract penalty to the company.”

Mr. Owolabi Peter, Chairman, Integrated Supreme Shareholders Association of Nigeria, said “In as much that sanction is necessary to make the companies sit up, it is still not the best form of punishment. It is the shareholders’ investment that suffer most. Whether there is fine or not directors are paid their money.   Also, the fee for these penalties are too much, the least fee you get from the CBN is N50million for one offence, why that much, it is killing. An offence, no matter how big is too much for N50 million. This money is shareholders’ fund. I think regulators should rather sanction officers directly involved for failing in his or her responsibility. In that way they will sit up to avoid unnecessary penalty.”

 

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