BY PETER EGWUATU

…As shareholders threaten to sue NSE
Controversies have continued to  trail the proposed delisting of alleged moribund companies on the Nigerian Stock Exchange (NSE), even as Proactive Shareholders Association of Nigeria (PSAN) threatened to sue the NSE if it goes ahead to delist the firms.

The NSE had announced its intention to delist nine companies that have not been meeting its post-listing requirements in November, 2012. To be delisted from the daily official list in November, this year, according to the NSE, are the shares of Aluminum Manufacturing Company of Nigeria Plc, Capital Oil Plc and W.A. Glass Industry Plc. Other companies are; Union Dicon Salt Plc, Hallmark Paper Products Plc, Nigeria Wire Industry Plc, Rokana Industry Plc, Lennards Nigeria Plc and Udeofson Garment Factory (Nig) Plc.

According to NSE’s notice to investors recently, the resolve to delist the companies was endorsed by its council on May 31, 2012, “due to their persistent non-compliance with the post-listing rules of the Exchange.”

Reacting to the proposed delisting plan, Mr. Oderinde Taiwo of Proactive Shareholders Association of Nigeria (PROSAN) said the action is tantamount to destroying the market.

According to him, “The NSE is poised to destroy the market through its obnoxious policies. Our group is set to sue NSE if it goes ahead to delist these companies. Delisting these companies is to destroy the efforts most of us are making towards attracting more investors to the market. We are calling on the Securities and Exchange Commission (SEC) not to approve such plan but to call the Exchange to order.”

DG/CEO, NSE, Oscar Onyema

He suggested that rather than delisting the companies, the Exchange should try to find out their problems and offer useful management tips that will help the companies meet the post-listing requirements. “The NSE needs to encourage those that are already listed so as to attract new ones that have growth potentials.”

According to him, “We, at PROSAN, have been spending our own money without government’s support to carry out enlightenment programme at the grassroots. Even at one of our enlightenment programmes, one investor who had invested over N2 million in equities threatened to withdraw his money from one of those companies flagged off for delisting this year.

“This is not good for our market. Furthermore, during our enlightenment programme in Ibadan where over 1,000 people were present, we even invited regulators to come and deliver speeches to the grassroots would-be investors but they did not show up. So, how is the NSE encouraging the existing shareholders?

“The NSE is just after the foreign investors; travelling round the world and spending investors’ money unnecessarily. It will be recalled that at the last public hearing by the National Assembly, it was noted that there was need for aggressive investor education and that is what the regulators should be doing.”

In similar manner, the Chairman, Progressive Shareholders Association of Nigeria (PSAN), Mr. Boniface Okezie, argued that delisting of companies would not improve the fortunes of the stock market. He said regulators should ‘first and foremost’ find out why these companies are defaulting in their respective post-listing requirements.

According to him, “they should know what is wrong with these companies before delisting them, but they don’t care what the companies are passing through; they care about money. They should go out and ascertain if it is government’s policy regime that is affecting these companies or whether there is any political interference and not to be in a haste to delist them because at the end of it all, we, the shareholders, will be the ones to suffer, not the Exchange.

He further said, “Let us try to use dialogue to resolve issues of this sort and not making haste to delist companies. It is not encouraging at all.”

In his reaction, the General Secretary, Independent Shareholders Association of Nigeria (ISAN), Mr. Adebayo Adeleke, said delisting had never been the best option and strategy to protect investors’ interest and encourage more patronage for the market.

“Is delisting the best option and strategy? Has it yielded positive results? Has it ever helped Securities and Exchange Commission and the NSE in protecting investors’ interest? This is not the best to do at the moment when there is already apathy in the market. These companies should be encouraged at this moment in whatever form,” he stated.

Meanwhile, the Chairman, Advancement of Rights of Nigerian Shareholders, Dr.  Farouk Umar, in an interview with Vanguard commended the move, adding that shareholders suffered losses during the global financial crisis due to failure on the part of the NSE to take proactive measure by delisting defaulting companies before the saga.

Explaining further, Umar said, “I commend NSE. I am in full support. We wouldn’t have lost money. They have a time limit to tell shareholders, even NSE, what they are doing but they failed. If they are delisted, it means they have a problem.”

The National Chairman, Supreme Shareholders Association, Mr .Owolabi Peters argued that majority of these companies lack good fundamentals. According to him,  “Most of the companies are no more in operations while those that managed to survive have continued to record losses in their financials.

“The way these companies are going, it is better for them to be de-listed. Most of them are not even producing again while others are not calling for yearly general meetings and these are companies where we invested our money. They are better de-listed and anybody that has issues with them should sort him or herself out.”