February 27, 2012
The Securities and Exchange Commission (SEC) is considering waiving the requirement that compels listed companies to disclose their quarterly earnings forecast to the Nigerian Stock Exchange (NSE), THISDAY checks have revealed.
Section 64 of the Investments and Securities Act (ISA) of 2007 stipulates “that a listed company shall within 20 working days prior to the commencement of a quarter disclose to the relevant securities exchange its quarterly earnings forecast.”
Also, Section 65 of ISA stipulates that a public company that contravenes the provisions of the section above is liable to a penalty of not less than N1 million and a further penalty of N25,000 per day for the period the violation continues.
Listed firms have been complying with these provisions by furnishing the NSE with their quarterly forecast. However, THISDAY gathered that some of the companies have been kicking against the practice, saying the disclosure of their quarter forecast was unduly exposing them to competition.
“Some of the firms, especially the multinationals, have complained that the disclosure of earning forecast was tantamount to giving out trade secrets and was putting them at a disadvantaged position before their competitors. The Commission has received these complaints and is considering waiving the requirement,” a source said.
However, the source did not state the form the waiver would take or how soon it will become granted by the apex regulator of the nation’s capital market.
But some market operators hailed the move, saying it was a good development for the market. According to them, it indicates that regulators are now showing more commitment to the promise of working towards restoring investors’ confidence in the capital market.
The Director-General of the SEC, Ms. Arunma Oteh, last week reiterated the Commission’s support for the NSE in efforts to attract more firms to list in the market.
Before last week, the Chief Executive Officer of NSE, Mr. Oscar Onyema had said the listing rules of the Exchange had been reviewed so as to make it easier for more companies to access the Nigerian capital market and eventually list their shares.
“Our new listing requirements have reduced the required track record for a company wanting to list from five to three years and even below this is permissible if the company has a core investor with a strong track record,” Onyema said.
Speaking with particular reference to firms in the power sector of the nation, the NSE boss disclosed that the Exchange was in active engagements with the Bureau for Public Enterprises, which is in charge of the privatisation of the power distribution and generation companies.
The discussion is to ensure that the Share Purchase Agreements should have clauses that would ensure that those companies were listed on the Exchange.