The latest X-Compliance report by the Nigerian Exchange Limited (NGX) has shown that five insurance firms were recently fined N41 million for failure to file their 2021 financial statements after the regulatory due date.
The companies include Royal Exchange Plc, Lasaco Assurance Plc, Coronation Insurance Plc, Veritas Kapital Assurance, and Mutual Benefits Assurance Plc.
Coronation Insurance Plc led with N14.9 million, representing 36.34 per cent of the total fines, followed by Royal Exchange Plc with a fine of N9.8 million. Mutual Benefits Assurance Plc was fined N6.2 million, and then LASACO Plc got a fine of N5.3 million while Veritas Kapital Assurance trailed with an N4.8 million fine.
Meanwhile, market operators have agreed that the sanctions were warranted. They opined that such sanctions would compel more quoted entities to disclose their information to the market on a timely basis.
The Managing Director of Crane Securities Limited, Mr Mike Eze, said that the action of NGX would also boost investor confidence in the market because it is sending a clear message on the need for investors to get companies’ financial reports as at when due.
He added that investors always need to make informed decisions about which stocks to buy and that they can only be able to do that if companies release their regulatory filings on time.
The founder of the Independent Shareholders Association of Nigeria (ISAN), Sunny Nwosu, also agreed that the companies deserved to be sanctioned. Nwosu noted that the affected companies ought to have filed their earnings reports on time to help shareholders to understand their financial health for investment decisions.
“It is not a new thing and it does not come to us as a surprise. We have constantly written to the exchange and raised the issue at annual general meetings that there is a need to know the status of these companies to enable us to take investment position,” he noted.
The President of Progressive Shareholders Association, Mr Boniface Okezie, argued that it would be better for Nigerians to have a few companies on the NGX that are ready to play by the rules than to have many companies that are not ready to satisfy post-listing requirements.
Okezie said that penalizing companies for non-compliance with the rules of listing on NGX was a welcome development, as it will lead to more appropriate pricing of securities. He said more entities would be compelled to give information to the market on a timely basis, adding that investor confidence in the regulatory capacity of NGX and the market would be enhanced.
A founding member of Nigeria Shareholders Solidarity Association and one of the leading shareholder activists, Alhaji Gbadebo Olatokunbo said:
“We must always abide by the rules, sanctions would make the companies sit up and post their results as and when due, thereby providing investors, analysts and stockbrokers the platform to predict the real value of the companies.”
The NGX said its X-Compliance report was designed to maintain market integrity and protect investors by providing compliance-related information on all listed companies.
Part of the report says: “Companies that are listed on the Exchange are required to adhere to high disclosure standards which are prescribed in Appendix 111 of the Listing Rules. Financial information which is periodic disclosure and ongoing material events disclosure should be released to The Exchange in a timely manner to enable it efficiently perform its function of maintaining an orderly market.”