To reduce the distortion of companies’ public information and market data, investors have been given at least 10 business days to disclose their substantial interests in listed firms.
The Nigerian Exchange (NGX) Limited issued this ultimatum, emphasizing that sudden announcements of previously undisclosed interests violate its rules and other market laws.
The bourse said in a statement that it was aware of an upcoming trend among investors and that the disclosure obligations are provided under the exchange’s rules, the Companies and Allied Matters Act (CAMA), 2020, and the Securities and Exchange Commission (SEC), 2013.
In particular, Rule 17.13: Disclosure of Changes in Beneficial Ownership of Shares, Rulebook of the Exchange, 2015 (Issuers’ Rules) requires every issuer to notify NGX immediately of any transaction that increases beneficial ownership in the company’s shares to 5% or more, no later than ten business days after such transaction.
“We also wish to reiterate the provisions of Rule 2.2 of NGX’s Rules Governing Free Float Requirements, which provides as follows: Each Issuer shall incorporate in its half-year financial statement filed with the exchange its shareholding pattern and also indicate whether or not its free float complies with the Exchange’s free float requirements for the Board on which it is listed.
“In making the requisite disclosures to the Exchange, listed companies are required to state in detail the different categories of owners of their shares, including directors, substantial shareholders, influential shareholders and other Insiders, indicating whether the holding is direct or indirect. This disclosure is also required during the annual report filings of all listed companies,” the statement clarified.
It added that the substantial shareholders and high-net-worth investors must be vigilant by monitoring their holdings, especially where their shares are held in different accounts and make honest disclosures in that regard.
According to NGX, this is to avoid breaching the disclosure obligations where the five percent reporting threshold is reached, creating the risk of compliance failure.
“An investor who chooses to consolidate his/her holdings must comply with the aforementioned disclosure requirements immediately his/her combined holdings in an Issuer the five (5) per cent threshold,” it stated.
Given the foregoing, the Exchange wishes to highlight options available to investors in the Nigerian capital market desirous of consolidating their holdings in an orderly and compliant manner.
These options include the NGX Nominal Transfer Window, CSCS consolidation of accounts with different permutations of investor names, and SEC-approved forbearance window on multiple applications.
NGX thereafter said upon receiving appropriate guidance in that regard, investors may adopt any of the above options to consolidate their holdings to ensure compliance with the relevant laws, rules and regulations.
