NSE Proposes Rule Requiring Companies To Trade Shares On Listing Day

Companies intending to list shares on the Nigerian Stock  Exchange will be required to make a reasonable amount of shares available for trading on the day they are listed, the NSE disclosed.

The NSE had said in 2019 that “Currently, no rule of The Exchange compels shareholders in a listed company to tender their shares for trading. Shareholders are at liberty to trade their shares at any time and price suitable to them. Thus, in order to stimulate trading in the shares of companies that List by Introduction, the NSE’s practice is to urge the company to make shares available on the day of listing. “

The comment was an address to  frustrations from retail and portfolio investors who were unable to buy MTN Nigeria shares on the listing day on May 16, 2019.

However,  on Thursday in a statement signed by, Tinuade T. Awe, Executive Director, Regulation, the NSE said that the issuers would be obliged to make available shares for trading, adding that the move was to “address concerns about availability of shares for trading on the day a company is Listed by Introduction.”  

“The Exchange has decided to introduce a rule that will require Issuers to make shares available for trading on the listing day,” the statement  said.

The proposed  amendments to the Listing Requirements of the Issuers’ Rules, would “provide a clearer description of Listing by Introduction, and impose an obligation on prospective Issuers of equity securities – excluding public offerings, to make a reasonable volume of shares available for trading on the day of listing,” the NSE said.

Other concerns addressed were the need for the issuers to provide adequate information of their financial position to prospective investors.

    
“Another concern is the need for sufficient information about the Issuer’s financial position on the day of listing, to give prospective investors a basis for trading in the Issuer’s shares.

“Consequently, additional amendments are being proposed to ensure that Issuers provide their Information Memorandum or SEC- approved Prospectus, as well as their latest financial statements to the market by publishing same on their websites at least forty eight (48) hours before the listing, in order to enable investors to make informed investment decisions regarding the Issuer,” the statement added.

The bourse called on stakeholders to participate in the rule-making process, adding that the “Proposed Rule Amendments are subject to  approval.”