Revised listing rules, not solution to market problems NSE, Wednesday, 04 Apr 2012  

(Vanguard) The Nigerian Stock Exchange, NSE, said the review of its listing rules was primarily done to benchmark its operations against international best practices and should not be seen as a solution to all the problems confronting the Nigerian capital market.Speaking at a briefing in Lagos, Mrs. Taba Peterside, General Manager/Head, Listing, Sales and Retention, NSE, said the review, which came into effect, April 1, 2012, is part of its transformation agenda and was conducted after undertaking wide-reaching consultations with key stakeholders on the issue.She said the revised listing rules were benchmarked against key international standards, especially from stock exchanges around the world."For example", she said, in other stock exchanges across the world, the operating track record rule stipulates that a company must have been in operation for at least three years. In Nigerian capital market, it was formerly five years; hence we decided to review it downwards to reflect international best practices."

She expressed optimism that about 20 companies will list on the NSE in the current year, taking advantage of the revised listing rules. Peterside further stated that the NSE is getting increased interest from a number of oil and gas companies, seeking to list in the secondary segment of the capital market. She, however, said the oil and gas companies are expected to show their reserves in commercial quantity for them to qualify to benefit from the new listing rules. According to her, some oil and gas companies will enjoy exemption from the three year track record requirement, noting however, that the company is required to produce a Competent Persons Report, CPR, describing nature and extent of the company's rights of exploration, geographical characteristics of reserves, estimates of volume, expected extraction volume together with assumptions on forecast revenues and operating costs.

In the new rule, companies seeking to list are expected to meet the requirements for public float, which stipulates that the public shall hold a minimum of 20 per cent of each class of equity securities of the company. The NSE is barring companies with loss in the last three years of their operations from seeking listing, stating that companies seeking listing in Alternative one of the Mainboard, should present a cumulative consolidated pre-tax profit of at least N300 million for the last three years, with a pre-tax profit of at least N100 million in two of those years, while those seeking listing based on its second alternative are expected to present a cumulative consolidated pre-tax of at least N600 million within one or two years. The companies are also expected to present their three year financial statements, prepared in the International Financial Reporting Standards, with the last audited accounts, not been later than nine months and a shareholders' fund of at least N3 billion.

The new rule is also proposing that companies seeking listing be registered as a Public Limited Liability Company; ensure that the promoters of the companies retain 50 per cent of the shares pre-Initial Public Offer, IPO, for 12 months and the securities be fully paid up at time of allotment in line with the Securities and Exchange Commission's, SEC, requirements for minimum threshold for a successful offer. In the Alternative Securities Market, ASEM, segment, the NSE is proposing that companies seeking listing in this category present medium term (two years) comprehensive business plan, must have been in operation for at least two years and the presentation of a short term forecast (one year) with the last audited accounts which must not be later than nine months. Other requirements for ASEM include, "The public shall hold a minimum of 15 per cent of each class of equity securities, promoters to retain 50 per cent of shares pre-IPO for 12 months; number of the public shareholders shall be at least 51 for equity shares among others."

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