[su_dropcap]T[/su_dropcap]he Nigerian Stock Market(NSE) may sanction 35 companies for failing to meet the deadline for the submission of their audited reports and accounts for the immediate past business year. Post-listing rules at the NSE require quoted companies to submit their earnings’reports, not later than three months after the expiration of the period. Most quoted companies including all banks, major manufacturers, oil and gas companies, breweries and cement companies use the 12-month Gregorian calendar year as their business year. The business year thus terminates on December 31, The Nation‘s report.
NSE’s regulatory filing calendar indicates that the deadline for submission of annual report for companies with Gregorian calendar business year ended December 31, 2015 was Thursday, March 31.
While the Exchange had in many instances granted general extension to the earnings deadline, it has maintained silence on any general extension, six working days after the deadline. A source said the Exchange would not grant a general extension noting that the previous extensions were due to special circumstances such as the transition to the International Financial Reporting Standards (IFRS) and the general elections.
Investigation at the weekend indicated that at least 35 companies may be sanctioned by the Exchange. The NSE usually applies both the “naming and shaming” and monetary sanctions on earnings defaulters.
A report at the weekend indicated that the Exchange has so far this year imposed sanctions totaling N31.6 million on three companies. The companies included Great Nigeria Insurance, N11.3 million; DN Tyre & Rubber, N7.5 million and Daar Communications, which was slammed with N12.8 million.
The NSE had imposed 50 monetary sanctions on some 30 quoted companies in 2015 over their failure to meet the extended deadline for the submission of their audited reports and accounts for their business year. The fines ranged from N100, 000 to N6 million.
A report by on sanctions and fines for similar defaults in 2013 showed that the Exchange slammed about N105.9 million on 48 companies that delayed their results. The fines ranged from N200, 000 to N6.8 million. The NSE slammed N60.2 million as fines on 34 companies for failure to meet deadlines for 2011 audited reports. With a range of N3.8 million and N100, 000, the average fine for the year was N1.77 million.
While compliance within deadline is generally regarded as a measure of good corporate governance, NSE tags and applies fines on companies that fail to meet earnings reports’ deadline.
Under the corporate governance and rules compliance assessment report known as X-Compliance Report, NSE identified four different kinds of tags or symbols to alert investors about the status of each quoted company. These include below listings standard (BLS), the first degree alert level indicating a company that has not complied with post listing rules such as late submission of financial statements, unauthorised publication, and management failures, among others.
Also, financial services companies such as bank and insurance companies awaiting regulatory approval will carry the appropriate symbol of awaiting regulatory approval (ARA). Companies that are undergoing a capital reconstruction exercise including supplementary issue, share buyback, split, share reconstruction among others will be tagged with capital reconstruction exercise (CRE) while companies that have indicated that they will be delisting or companies that are being delisted at the instance of the regulator would be flagged with delisting in process (DIP) symbol.