The latest tracker report on corporate governance, regulation and compliance obtained by The Nation at the weekend indicated that 44 companies have pending and unresolved compliance and governance issues that place them below the high standards required of quoted companies.
The report, however, underlined an improvement from the previous number of 49 companies to 44 companies.
The number of companies placed on red alert represents about a quarter of the total number of quoted companies at the NSE.
The report was based on the Compliance Status Indicator (CSI) of the NSE, which uses three-letter code to mark out companies that fall below the post-listing requirements at the Exchange. The tracker is updated regularly with addition of newly deficient companies and release of newly compliant companies.
The companies under the red-alert warning included Union Bank of Nigeria; Skye Bank; Transcorp Hotels; Resort Savings and Loans; Evans Medical; Academy Press; Nigerian-German Chemicals and Caverton Offsshore Support Group.
A breakdown of the compliance report indicated that about half of the companies were flagged for failure to submit their earnings reports within the scheduled timeline while others were tagged for free float deficiencies, delisting process, restructuring and other compounded regulatory issues.
The flagged companies included Capital Hotel; Chellarams; Interlinked Technology; Infinity Trust Mortgage; E-Tranzact; Omatek Ventures; Roads Nigeria; Multi-Trex Integrated Foods; Aso Savings & Loans; Ekocorp; Ikeja Hotel; Union Homes and Savings; Deap Capital Management & Trust; International Energy Insurance; Afrik Pharmaceuticals; Anino International; African Paints; Goldlink Insurance and Thomas Wyatt Nigeria.
Others included Golden Guinea Breweries; FTN Cocoa Processors; Austin Laz & Company; Daar Communications; Juli; Great Nigerian Insurance; Capital Oil; Union Dicon; Union Diagnostics; Universal Insurance; Premier Paints; Afromedia; Paints and Coatings Manufactures; Tourists Company of Nigeria; DN Tyres & Rubber and Smart Products Nigeria.
The NSE uses 10 codes to tag companies with regulatory and compliance issues in order to draw attention to the unresolved deficiencies as part of efforts to enhance market integrity and ensure investors have full and transparent disclosures to make their decisions
The code-Below Listing Standard (BLS) comprises all deficiencies regarding continuing listing standards. Missed Regulatory Filing (MRF) implies that the company missed regulatory filing deadline. Delisting Watch-list (DWL) relates to companies that have been served with a delisting notice but the delisting process has been put on hold because they have received a stay of action from the Exchange for a defined period during, which they undertake to cure the issues that led to the issuance of the delisting notice. If they fail to cure the issue within the defined period or any extension thereof, the hold on the delisting process will be lifted.
Also, Delisting in Progress (DIP) defines companies that are in the delisting process, mandatory or voluntary. Usually, the delisting process commences with a notice of intention to delist from The Exchange to an issuer, in the case of mandatory delisting, or to the Exchange from an issuer, in the case of voluntary delisting. Awaiting Regulatory Approval (AWR) implies that the companies that are awaiting the approval or no objection of their primary or another government regulator before releasing their audited financial statements.
Other codes included Restructuring (RST), which relates to companies that are in the process of restructuring; Below Listing Standard and Missed Regulatory Filing (BMF), companies that missed regulatory filing and were below listing standard; Below Listing Standard and Awaiting RegulatoryApproval (BAA), companies with below listing standard and awaiting regulatory approval; Below Listing Standard and Restructuring (BRS), below listing standard and restructuring; Missed Regulatory Filing and Restructuring (MRS), missed regulatory filing and restructuring; and Below Listing Standard, Missed Regulatory Filing and Restructuring (BMR), which defines companies with below listing standard, missed regulatory filing and restructuring codes.