With a yearís financials, under some circumstances, the NSE welcomes you
Category: Capital Market
Thursday, February 02, 2012 7:51 AM
The management of the Nigerian Stock Exchange (NSE) has begun moves to lower listing requirements which companies must meet, to qualify for enlistment on the floor of the Exchange.
The effort, BusinessDay learnt, is targeted at making the market attractive and easy for companies to come and raise new capital for growth.
Targeted in this fresh exercise, are telecommunication companies, international oil companies and private companies which have operated in the country for a certain period of time.
A senior official of the NSE who confided in BusinessDay, said the Exchange has applied to the Securities and Exchange Commission (SEC) for approval of the new terms, expressing confidence that it would be approved before the end of the first quarter of this year.
According to our source, one of the new conditions is that instead of a minimum five years financial records, companies can now be listed with three years of same.
For companies with strong foreign technical partners, the NSE will allow them, even if they have just one year financial record.
Besides, companies having a total of N300 million profit after tax (PAT) within three years of operation, or N600 million profit after tax (PAT) in one year, could be allowed for listing, the NSE boss said.
The flexibility in listing requirements, the source pointed out, would help enrich the market, as well as deepen penetration and enable more Nigerians benefit from the huge earnings of some of these multinationals, particularly the telecommunication companies, which have in the last ten years, repatriated huge profits from the country.
Commenting on the development, Kola Adedeji, deputy managing director, Niger Insurance plc, described it as a healthy development for the nation’s capital market.
Adedeji noted that any effort to deepen the capital market was worthwhile, because there is a need to bring back investor confidence to the market.
“Investors out there who had trusted the market so well before the economic crises, need to be convinced once more, that the market is back to viability, at least for the long term”.
Adedeji observed that it would give Nigerians the opportunity to share from the growth and profitability prospect of the country’s telecommunication and oil firms, given their records.
Before seeking the approval of SEC, the NSE had made available to operators in the capital market, a draft of the proposed rules, noting that mineral companies, comprising mining and oil and gas companies, were exempted from fulfilling the requirements that a company seeking listing on the main board, must have been in operation for at least three years.
The draft also proposes that the NSE should exempt companies with market capitalisation in excess of N500 billion, from meeting the requirements for public float, which stipulates that the public shall hold a minimum of 20 per cent of each class of equity securities of the company.
According to the NSE, mineral companies are exempted from the three year track record requirement. It notes however, that the company is required to produce a competent persons report (CPR), describing the nature and extent of the company’s rights of exploration, geographical characteristics of reserves, estimates of volume and expected extraction volume, along with assumptions on forecast revenues and operating costs.
The NSE however noted that the interests of the investing public remain paramount in its decision to grant or reject an application for listing.
Source: Businessday – originally published as “NSE to lower listing requirements to attract more firms into capital market”