Saturday, April 07, 2018 /07:28 AM / NASD Plc
The Apex regulator of the capital market in Nigeria, the Securities and Exchange Commission [“SEC”] reconfirmed that the code of corporate governance applies to ALLPublic Companies in Nigeria. During this week, SEC held a special orientation session for unlisted public securities that trade on NASD OTC Securities Exchange. The Code is intended to facilitate sound corporate practices and behaviour and be a dynamic document that defines minimum standards of expected corporate governance.
SEC highlighted the responsibility of the Directors in ensuring compliance with the Code but also enthusiastically encourages shareholders in public companies to assess the level of compliance of their company. In implementing the code and measuring compliance SEC specifically requires all public companies to submit:
1. A corporate governance score card within one month of year end. This essentially is a self-appraisal from each company’s compliance with the Code.
2. Quarterly (unaudited) financial statements within a month of the end of each quarter.
3. Annual audited financial statements within 3 months of the end of each financial year.
We at NASD heartily welcome the extension of this requirement to Unlisted public companies. Greater transparency into the governance and financial performance of public companies leads to more efficient price discovery and investor confidence.
Our preliminary check on OTC traded securities in November 2017 indicated that 12 out of the 36 companies scaled a basic test (tagged NASD BLUE stocks). A second review of compliance with The Code is due in April 2018 and we look forward to a greater number of companies meeting standards set.
The Week in Review
The NASD OTC Market ends the week in with a decrease in market metrics, as the NASD USI decreased by 1.09%, closing at 656.55 points (as against 663.82 points last Friday). Consequently, total market capitalisation shed 1.09% this week, closing lower at
N444.30 billion compared to N449.23 billion last Friday.
First Review of NASD OTC Securities to Hold In April 2018
Last year, we commenced a classification of NASD OTC admitted securities into categories that reflect the level of financial disclosure, adherence to corporate governance standards, dematerialization of shares and liquidity of the 36 securities trading on the OTC Market. At the end of this exercise, Twelve (12) Securities were ranked in the Blue Category, Eight (8) in the Pink Category, and Fifteen (15) were in the Red Category.
In line with efforts to promote transparency, NASD will conduct a first review of all securities on the OTC Market on Friday, 27 April 2018. This review will update the categorisation rankings in response to changes in compliance levels.
We believe that this service will enhance transparency on the inherent value in such companies, improve levels of investor confidence and also, improve activities on the OTC Market.
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