The Nigerian Stock Exchange (NSE) has sanctioned more companies for failing to meet the deadline for the submission of their audited report and accounts for last year.
A leading Nigerian bank will pay N2.1 million fine for the duration of its delay, Fidelity Bank Plc, which just released its results last week, N2.7million, Sovereign Trust Insurance Plc, N2.1 million, while Meyer Plc N2.1 million.
The Exchange also imposed sanctions on Presco and Sterling Bank, which were earlier found liable for the same act. Presco will pay N1 million fine for failing to submit its audited report within the deadline and another N300,000 for failing to submit its first quarter results for 2018. Sterling will pay another N1.3 million fine for the delay of its 2017 audited financial statements.
The sanctioned companies included Vitafoam Nigeria, N800,000; Academy Press, N35 million; International Breweries, N100,000; First City Monument Bank (FCMB) Group, N100,000; Abbey Mortgage Bank, N700,000 and Wema Bank, N800,000.
Post-listing rules at the NSE require quoted companies to submit their audited earnings reports, not later than three months or 90 calendar days after the expiration of the period. The deadline for submission of annual report for companies with Gregorian calendar business year ended December 31, 2017 was March 31.
Under the rules at the Exchange, late submission under the first instance of 90 days could attract N9 million, the additional period of 90 days will attract N18 million while such delay beyond the first 180 days to the next 180 days could attract as much as N72 million, bringing fines payable by a defaulting company within a year to N99 million.
A late submission attracts a fine of N100,000 per day for the first 90 calendar days of non-compliance, another N200,000 per day for the next 90 calendar days and a fine of N400,000 per day thereafter until the date of submission.
For the 2016 business year, companies paid more than N400 million as fines for late submission of accounts. The Nation’s check indicated that fines for the default filings for the 2017 business year may exceed N500 million.
Companies that had been marked for sanctions include Nigerian German Chemical, Roads Nigeria, Afromedia, AG Leventis Nigeria, African Alliance Insurance, Cornerstone Insurance, Diamond Bank, Fortis Microfinance Bank, Great Nigeria Insurance and Linkage Assurance.
Also on the list were Morison Industries, Multiverse Mining and Exploration, Mutual Benefits Assurance, Niger Insurance, Oando, Omoluabi Mortgage Bank, RT Briscoe, Royal Exchange, Skye Bank, Staco, Standard Alliance, Sunu Assurances Nigeria-formerly Equity Assurance, Union Bank of Nigeria, Unity Bank, VeritasKapital Assurance and Universal Insurance Company.
The Exchange started implementation of the rules on submission of periodic reports and results and the enhanced sanction regime on January 1, last year. Under the rules, quoted companies are required to file their unaudited quarterly accounts with the NSE not later than 30 calendar days after the relevant quarter, and publish it within five business days after the date of filing, in at least two national daily newspapers, and post it on the company’s website, with the web address disclosed in the newspaper publication.
Also, an electronic copy of the publication shall be filed with the Exchange on the same day as the newspaper publication.
Where the company chooses to audit its quarterly accounts, it is required to file such accounts not later than 60 calendar days after the relevant quarter, and publish it within five business days after the date of filing, in at least two national daily newspapers and post it on the company’s website, with the web address disclosed in the newspaper publications. Such a company will also be required to file electronic copy of the publication with the Exchange on the same day as the newspaper publication.
For annual audited accounts, companies are required to file their audited annual report and accounts with the Exchange not later than 90 calendar days after the relevant year end, and published in at least two national daily newspapers not later than 21 calendar days before the date of the annual general meeting, and posted same on the company’s website with the web address disclosed in the newspaper publications. Also, an electronic copy of the publication shall be filed with the Exchange on the same day as the publication.
Besides, a defaulting company will be tagged with the “Below Listing Standard” (BLS) or any other sign or expression to indicate that the company has failed to submit its accounts within the stipulated period and this tag shall remain for as long as the company fails to file its accounts.
Where a company fails to file its accounts after the expiration of the first 90 days, the NSE will send such a company a “second filing deficiency notification” within two business days after the end of the first 90 days. In addition, the Exchange will suspend trading in the company’s shares and notify the Securities and Exchange Commission (SEC) and the market within 24 hours of the suspension.
In a more rigourous naming and shaming practice, such a company is expected to within three business days of receipt of the second filing deficiency notification and suspension of trading in its securities, to inform the Exchange in writing of the status of the accounts, and issue a press release, of not less than half a page, in at least two national daily newspapers, with the company’s web address indicated in the newspaper publication, and posted on the company’s website disclosing the status of the relevant accounts, reason for the delay in submission, and the anticipated filing date. An electronic copy of the publication shall be filed with the Exchange on the same day as the publication. The suspension of trading in the company’s shares shall only be lifted upon submission of the relevant accounts in line with the requirements of the NSE.
Any company that fails to publish accounts in two national daily newspapers as required, or fails to provide proof of publication, and for each instance of non-compliance with any directives of the Exchange, shall also be required to pay a fine of 50 per cent of its annual listing fee and a fine of N25,000 for every day the company remains in default.
Where a company fails to also file its accounts after the second additional period of 90 days, bringing the default days to 180, days, the Exchange may take further appropriate actions including cautioning shareholders that the company’s listing is under threat of delisting and eventual delisting.
The rules also empower the Exchange to delist a company within the first 90 days where the NSE determines that granting extended period is not necessary, especially where there are proven issues of financial fraud, gross corporate governance abuses and other illegalities.
Under the rules, all accounts, circulars, and press releases to be published pursuant to the rules shall require the Exchange’s prior approval, and shall cover a minimum space of half a page per newspaper publication.
However, the new rules make provisions for companies that require extended period to complete, audit or get regulatory approval for their accounts. The new rules grant the Exchange the powers to grant waivers and extension to companies based on the peculiarities of each company upon request by such company. A company that requires regulatory approval of a primary regulatory agency, like the Central Bank of Nigeria (CBN) for banks, must however have filed its account with the primary regulator not later than 30 calendar days before the earnings submission deadline for audited annual accounts and 14 calendar days for quarterly accounts.
A defaulting company shall be required to pay the fines notwithstanding remedial action taken after the earnings submission deadline. According to the rules, notwithstanding that a company takes the required steps during the cure periods or later complies with the provisions of the rules, any company that defaults in filing its accounts within the stipulated periods shall be liable to pay the applicable penalties stated above, except the affected company had received waiver or extension of time by the Exchange.