INFRACTION: NSE fines Cornerstone Insurance, Sovereign Trust, 11 others N332.2m

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By Kayode Tokede

For non-compliance with post listing requirement, the Nigerian Stock Exchange (NSE) has sanctioned Cornerstone Insurance Plc, Universal Insurance Plc, Niger Insurance and 11 other insurance companies N332.2 million between 2015 and 2017.

According to Nigerian NewsDirect findings, the other Insurance companies sanctioned by the NSE are Sovereign Trust Insurance Plc, Great Nigeria Insurance Plc, Veritas Kapital Assurance Plc, Equity Insurance Plc, Staco Insurance Plc, Linkage Assurance Plc, African Alliance Insurance Plc, Royal Exchange Plc, Guinea Insurance Plc and Standard Alliance Insurance Plc.

Of the N332.2 million sanction by NSE between 2015 and 2017, Universal Insurance  and African Alliance Insurance contributed  21.3 per cent and 13.8 per cent when both firms were sanctioned N70.9 million and N46.1 million respectively.

Great Nigeria Insurance was also sanctioned N40.4 million for late filing of audited 2015, audited 2016, first quarter results of 2017 and first quarter results of 2018 in that order.

Findings revealed that the management of NSE sanctioned Universal Insurance for late filing of 2015, 2016.2017 and half year results of 2018 while African Alliance Insurance for late submission of 2015 and 2016 audited results.

Between 2015 and 2017, the Exchange sanctioned Cornerstone Insurance sanctioned N27.3 million; Veritas Kapital Assurance, N27.3 million; Niger Insurance, N30.4 million; Guinea Insurance, N22.3 million; Equity Assurance, N13.6 million; Royal Exchange, N17 million and Sovereign Trust Insurance, N12.3 million.

Others are Standard Alliance Insurance, N8.2 million; STACO Insurance, N7.5 million; and Linkage Assurance, N3.5 million.

Aside sanctions, most of the above insurance companies are often suspended on NSE over non-compliance with post listing requirement.

Of recent, the Exchange suspended trading on shares of Cornerstone Insurance, STACO Insurance, Standard Alliance Insurance and Universal Insurance Company.

The above insurance companies blamed National Insurance Commission (NAICOM) for prolonging the releasing of audited results to investing public.

The other companies suspended by NSE include African Alliance Insurance, Royal Insurance and Veritas Kapital Assurance.

The former Director-General, Nigerian Insurers Association, Mr. Sunday Thomas said, “the filing of insurance companies results by our own law is by June ending. For those that are quoted on NSE, it is March ending.

“Some insurance companies often submit their results two days to the deadline which is June.

“When these insurance companies do not submit early, there is no way approval can be granted by the commission. In fact, some of them submitted after the deadline of NSE. If we have such situation, there is nothing the commission can do.”

A stockbroker, and the Managing Director of High Cap Securities Limited, David Adonri, explained to Nigerian NewsDirect that listed companies are to abide by NSE post listing rules at which prompt filing of result is one of them.

He stressed that insurance companies were treating filing of results on time with levity and unconcerned about the impact on investing public and the nation’s economy at large.

According to him, “If these insurance companies are not complying with post listing requirement, they are indirectly hurting investors. A lot of insurance companies are not serious and careless about the importance of filing accounts on time.

“We all have seen the negative impact on these companies’ shares as most are traded below their intrinsic value.

“However, a few of them have strong corporate governance and robust fundamentals that required them of submitting accounts on time.”

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.

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.

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 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.

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