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Some market operators have expressed the fear that shareholders’ investments in some sanctioned companies may be seriously affected if the companies are eventually delisted, following the recent warning given to them by the Nigerian Stock Exchange (NSE).

The NSE had, two weeks ago, placed 15 quoted companies on “full suspension” – meaning there will be no transaction on their shares – and directed that if by Monday, 11th October, the companies fail to render their arrears of audited and interim accounts, the Exchange will commence formal delisting process on them.

Meanwhile, only Stokvis Plc and Nigeria Wire & Cable Plc have complied.

David Amaechi, an executive member of the Shareholders Association of Nigeria, said, “In this kind of scenario (delisting of companies), our record shows that shareholders are always on the losing side.”

Mr. Amaechi said once the Exchange delists a company, “monitoring the activities of the company becomes very difficult for shareholders to deal with,” adding that investors who are not comfortable with the company’s performance “always find it hard to sell off their share holdings in the company.”

Class Action

A legal practitioner at The Market Ombudsman, Ope Banwo, said shareholders who lose out as a result of the delisting of their companies from the NSE for lack of corporate compliance “can file liability lawsuits against the individual corporate officers.”

Mr. Banwo also said that a ‘Class Action’ lawsuit against the officers by shareholders is also an option for damages caused by any delisting.

However, he said, “shareholders have a responsibility to hold their executives accountable and if they allow their executives to ignore the law, then they must pay the price for delisting. Once shareholders know that their interests will be compromised by actions of executives, they will be more vigilant to demand corporate accountability.”

‘Not a strong fear’

But Sola Oni, NSE’s head of corporate communications, said that the fear that shareholders may lose out if their company get delisted “is not a strong fear.”

Mr. Oni said delisting exercise to the NSE is a routine issue that is not new.

“We have given those companies deadlines within which they are supposed to regularise their standings. If a company has failed to do that until the deadline and the shareholders are looking, then the NSE will play its role,” he said.

“Now that we have published the names of the companies that flouted our rules, the duties of the shareholders is to rally round and impress on those companies’ managements to do the right thing,” he said.

Mr. Oni further said that if a company gets delisted after been placed on full suspension and failure to meet the deadline, investors who owned shares in the company can no longer use the Exchange’s trading platform to sell or buy the company’s shares again.

However, he explained that delisting a company from the NSE “does not mean that the company cannot operate again. The company should still remain in business, which doesn’t stop them from paying dividends to their shareholders.”