The self-regulatory body in the Nigerian capital market said the decision was in line with its core strategic pillars for enhanced market performance and growth via sustaining a "strong investor protection" framework.
The NSE said it will not hesitate to enforce a 5 per cent sanction on any issuer that failed to pay dividends to its shareholders within the timeline specified in the resolution passed by the shareholders at the annual general meeting at which such dividends were declared.
The NSE made it clear that the sanction was part of the already existing general undertaking in the exchange's listings requirements, which was executed by every issuer before its securities were approved for listing on the NSE.
The Head of Legal and Regulation Division at the NSE, Ms.
The general undertaking, according to her, outlined the obligations imposed on an issuer.
These commitments include the obligation to notify the exchange prior to taking certain corporate actions; the obligation to seek the exchange's approval before publishing certain information; the obligation to comply with the exchange's listings rules and the obligation to comply with the directives of its shareholders in the event of declaration of dividends.
"These obligations kick in once an issuer executes the general undertaking. They are obligations of long standing, which remain binding for as long as an issuer is listed on the exchange. Section 14 of the General Undertaking, which is one of the listings requirements sets forth the sanctions for violations of the rules", she said.
Commenting on the issue, Mrs.
"In the instant case, there are two primary reasons, namely: to encourage a change in unacceptable behaviour; and to act as deterrent against engaging in conduct which violates applicable rules.
"By imposing the 5 per cent sanction set forth in Section 14(e) in the event of a breach regarding the payment of dividends as directed by shareholders, the exchange is enforcing the payment of dividends to shareholders, in line with their resolution to receive same on a specific date. In essence, Section 14(e) sends a reminder to the directors of the Issuer that the directives of the shareholders in general meetings must be obeyed".
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