Rising number of companies with locked-in shares calls for worries

The number of listed companies on the Nigerian Stock Exchange (NSE) with shortage of their equities in hands of investing public (free float) has increased from just 15 in August 2018 to 24 as on August 23.

This increase, no doubt should be a source of concern to the Nigerian Bourse that requires them to maintain a minimum free float for the set standards under which they are listed.

Free float represents the portion of shares of a company that are in the hands of public investors as opposed to locked in stocks held by the promoters, company officers and controlling-interest investors.

In order to ensure that there is an orderly and liquid market for their securities, the free float requirement for companies on the Alternative Securities Market (ASEM) Board is issued and fully paid up shares or the value of its free float is equal to or above N40 billion on the date the Exchange receives the Issuer’s application to list.

Currently, these companies are deficient in their free float are Prestige Assurance Plc (18.95percent), Lafarge Africa Plc (16.13percent), Cement Company of Northern Nigeria Plc (2.97percent), Ellah Lakes Plc (13.83percent), Omoluabi Mortgage Bank Plc (1.96percent), and Skyway Aviation Handling Company Plc (19.39percent).

Others are Medview Airline Plc (14.16percent), Notore Chemical Industries Plc (10.02percent), Austin Laz & Company Plc (19.36 percent), Union Dicon Salt Plc (18percent), Aluminium Extrusion Plc (17.99percent), CWG Plc (15.97percent), Global Spectrum Energy Services Plc (7.01percent), and Portland Paints & Products Nigeria Plc (14.57percent).

For now, the maximum compliance time NSE has given to any of them on the list to comply is October 2020 which is for A.G. Leventis Plc. Disappointingly, while some of them have future compliance due dates, others did not meet the dates earlier given to them by the NSE to comply.

Though, the Exchange said it doesn’t have answers for some that decided to remain the way they are, it further noted that it is currently engaging them. For other that have their compliance due date expired, the NSE said that some of them have requested for additional extension, “which will be presented to the Council for approval.”

The long list free float deficient companies also includes Union Bank of Nigeria Plc (10.39percent), Transcorp Hotels Plc (6percent), The Tourist Company of Nigeria Plc (1.75percent), Infinity Trust Mortgage Plc (3.50percent), etranzact International Plc (17.77percent), Ekocorp Plc (12.64percent), Champion Breweries Plc (17.17percent), Caverton Offshore Support Group Plc. (17.30percent), Capital Hotel Plc (2.99percent), and A.G. Leventis Plc (11.80percent).

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