News Column

Investments in Delisted Firms Not Lost, Says CIS Boss

August 6, 2014

Goddy Egene

The days of shareholders of delisted companies losing their money are gone. This is because such shareholders can now trade those shares in the over-the-counter (OTC) run by the NASD Plc.

The President of the Chartered Institute of Stockbrokers (CIS), Mr. Albert Okumagba, who stated this last Monday in Lagos, noted that contrary to the belief that once a company is delisted from the Nigerian Stock Exchange (NSE), the investment is lost, holders of the shares of delisted company can still trade the shares at the OTC market.

The OTC market for the securities of unlisted companies began operations July 2013.

Okumagba explained that once a company is delisted from the NSE, it automatically becomes tradable in the OTC market.

"Any company that is delisted from the NSE for not meeting listing requirement automatically becomes tradable on the OTC market. It is not correct to say that investors in companies delisted from the NSE would lose their money. Those investors still have an opportunity to trade these securities in OTC platform as they are moving out of the NSE. The market is a continuous process," he said.

He added: "And for all you know, they might get better value in that OTC platform because price movement in OTC platform is not as regulated as we have in the NSE. The rules are a bit more lax. And for some companies that are delisted, if you monitor them very closely, they can return back to the NSE. Similarly, those that are currently tradable at the NASD OTC, over time can also graduate to become listed on the NSE."

The CIS boss noted that the capital market now have more trading platforms for investors to carry on their transactions. According to him, going forward the CIS will begin to focus on all the platforms which include the NSE, NASD Plc, FMDQ OTC and Abuja Securities and Commodities Exchange.

The management of the NSE had given a notice to delist about 21 companies for non-compliance with listing requirements. While 16 of the companies are facing delisting for failure to file their quarterly and annual financial statements, five others are to lose their listing status for failure to regularise their listing status after being given time to do so.

However, leaders of two shareholders' associations had told THISDAY in separate interviews, the NSE should work with shareholders and rescue companies not meeting post-listing requirements instead of delisting them.

For instance, the National Coordinator, Independent Shareholders Association of Nigeria (ISAN), Sir Sunny Nwosu, and National Chairman, Progressive Shareholders Association of Nigeria, Boniface Okezie, said the NSE should not be in haste to delist the company because it would be counterproductive.

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Source: AllAfrica

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