Why Nigerian Stock Exchange is delisting these 7 companies

At least seven companies have been on the delisting radar of the Nigerian Stock Exchange (NSE) for over two years (since December 2019).

They include Evans Medical Plc, Tourist Company of Nigeria, Unic Diversified Holdings Plc, Nigerian German Chemicals Plc. Others are Roads Nigeria Plc, Omatek Ventures and Deap Capital Management & Trust.

This was obtained from the NSE’s X- compliance report.

According to the report, the companies have been either in the process of delisting their issued shares from the bourse or on the delisting watchlist of the Exchange.

What NSE is saying

The Regulation Committee of the National Council of The Exchange (RegCom) has approved for the Exchange to proceed with the delisting process of Evans Medical Plc, Tourist Company of Nigeria, Unic Diversified Holdings Plc, Nigerian German Chemicals Plc, and Roads Nigeria Plc since last December.

On the other hand, Omatek Ventures and Deap Capital Management & Trust have been placed on the NSE’s delisting watch-list over their failure to comply with some post-listing requirements, including failure to file their quarterly and annual reports within a stipulated time.

Why it’s crucial

There are two main reasons why companies delist from the NSE or are forced to delist from the market. The first one entails punishment for companies that violate NSE’s listing rules.

The NSE periodically fines defaulting companies, whilst demanding that such companies address their corporate governance lapses.

The latest X-Compliance report showed that the NSE made as much as N154 million by imposing fines on defaulting companies.

But sometimes, fines are not enough. The NSE is often forced to voluntarily delist companies whose infractions have become persistent.

On the other hand, a good number of companies have also voluntarily delisted from the NSE for various reasons, including the desire to become privately owned entities.

What you should understand

In the case of Omatek Ventures, the company’s fate has been dwindling since the departure of its founder, Dr Florence Seriki. According to a development bank, the company has allegedly not been able to service the N5.81 billion which it obtained in 2012. The bank disclosed that several measures had been employed to ensure that Omatek kept to the loan agreement, all to no avail.

One of such efforts was the appointment of Ade Oyebanji as a receiver, who took inventory of all items located at Omatek’s premises at Plot 11, Kudirat Abiola Way, Oregun, Ikeja, Lagos, in January 2017.

Summary of the loan detail

In December 2012, the Bank of Industry loaned Omatek Ventures N5,808,429,033.95 in a term loan and working capital facilities agreement. The loan was disbursed to finance the procurement of assembly components for the production of laptops.

Also, as part of the requirements for obtaining the loan, the development finance bank said that it requested an Irrevocable Standing Payment Order arrangement with the defunct Skye Bank Plc in favour of BoI, all assets debenture, and an Irrevocable Personal Guarantee of the late Seriki.

Evans Medical

Evans Medical Plc is a Nigerian pharmaceutical company that was established in 1954 and listed on the Nigerian Stock Exchange in 1979. Over the years, the company has been plagued by many challenges, ranging from increasing competition to corporate governance lapses.

The latest NSE X-Compliance report indicated that the company has not submitted any quarterly financial statement from 2016 to 2020. At this rate, the NSE may have no choice but to forcefully delist the company.

Nigeria-German Chemicals Plc

Nigeria-German Chemicals Plc has also not been obeying the listing rules of the NSE. The latest NSE X-Compliance report also noted that the company had not filed any financial statement since Q3 2014 till date. It will not come as a surprise if the company is delisted from the Nigerian bourse any moment from now due to regulatory reasons.

Note that the company is a chemical/healthcare company that was incorporated in 1964. It was initially known as Nigerian Hoechst Plc before it rebranded and changed to its name in 1995. It was listed on the NSE in 1979.

The Exchange maintains a value-weighted All-Share Index formulated in January 1984 (January 3, 1984 = 100). Its highest value of 66,371.20 was recorded on March 3, 2008. The Exchange also uses the NSE-30 Index, which is a sample-based capitalization-weighted index, as well five sector indices. These are the NSE Consumer Goods Index, NSE Banking Index, NSE Insurance Index, NSE Industrial Index, and NSE Oil/Gas Index.