The Nigerian Stock Exchange (NSE) has warned the public to be cautious when investing in Aso Savings and Loans, Goldlink Insurance, Medview Airline Plc and 10 other companies trading their shares on the stock market. The red flag placed on the companies could lead to the suspension of the companies from trading in the stock market.
Aside from Aso Savings, Goldlink Insurance and Medview Airline Plc, other companies on the list are Deap Capital Management and Trust Plc; DN Tyre and Rubber Plc; FTN Cocoa Processors Plc; International Energy Insurance Plc; Resort Savings and Loans Plc; Staco Insurance Plc; Standard Alliance Insurance Plc; UNIC Diversified Holdings Plc; Union Dicon Salt Plc; and Union Homes Savings and Loans Plc.
The NSE moved against the companies due to their failure to submit their unaudited financial statements as and when due, as well as snubbing the listing rules to inform their shareholders and the investing public on reasons for the delay in submission of the financial statements.
NSE Listing Rules state that companies should submit their financial year-end result latest by 90 days after the end of each year - that's March. While for quarterly financial results, 60-days grace after the end of each quarter is given to companies.
In a statement obtained by AllNews, the NSE had extended the deadline to June 29, but the aforementioned companies still didn't meet up with the deadline and no reason was issued to the investing public.
While quoting Rule 1.1.2, Rules for Filing of Accounts and Treatment of Default Filing,Rulebook of The Exchange, the NSE stated that, “Every Issuer shall file its unaudited quarterly accounts not later than thirty (30) calendar days after the relevant quarter, and publish it within five (5) business days after the date of filing, in at least two (2) national daily newspapers, and post it on the company’s website, with the web address disclosed in the newspaper publication. An electronic copy of the publication shall be filed with The Exchange on the same day as the newspaper publication.”
But the companies violated the rule. This compelled NSE to issue Deficiency Filing Notice (DFN) to the thirteen companies, stating that, "Investors are advised to trade with caution on the securitiesof these companies in the absence of up to date financial information on them."
The NSE added that if the companies still fail to submit their unaudited financial statements within the next ninety days or before September 27, 2020, it will issue a second Deficiency Filing Notice within two business days after September 27, 2020, before it "suspend trading in the companies’ securities."
Note that the failure of the blacklisted companies to submit their unaudited financial statements would prevent shareholders or the investing public know the financial health of the companies, thereby, creating uncertainty and putting trading at risks - financial statements also guides investors decision when investing.
That's why the NSE advised the investors to be cautious when investing in these companies.
Also, the suspension will affect the investing public that are shareholders in the thirteen companies as their stocks will remain dormant, causing them to record losses, preventing them to gain from the stock market for the period of the suspension.
In essence, stock prices of the blacklisted companies will be stagnant - note that, as stock prices rises, so does the value of stocks as well.
Meanwhile, the companies could also suffer from the suspension, as it could provoke investors to dump their shares to more stable companies.