NGX Free Float Requirements and Current Non-Compliant Companies
Overview:
The Nigerian Exchange Limited (NGX) mandates that listed companies maintain a minimum free float—the proportion of shares readily available for public trading—to ensure market liquidity and transparency. For the Premium Board, the requirement is either a minimum of 20% of issued share capital or a free float value of at least ₦40 billion.
Importance of Free Float Compliance:
- Market Liquidity: Ensures sufficient shares are available for trading, facilitating smoother transactions.
- Price Stability: Helps in accurate price discovery and reduces volatility.
- Investor Confidence: Demonstrates adherence to regulatory standards, fostering trust among investors.
Consequences of Non-Compliance:
- Regulatory Sanctions: Including fines or penalties imposed by the NGX.
- Trading Restrictions: Potential suspension of trading activities until compliance is achieved.
- Reputational Damage: Erosion of investor trust and market credibility.
Current List of Non-Compliant Companies:
| Company | Current Free Float (%) | Requirement |
|---|---|---|
| Abbey Mortgage Bank Plc | 19.54% | 20% |
| Notore Chemical Industries Plc | 16% | 20% |
| Union Bank of Nigeria Plc | 14.94% | 20% |
| Transcorp Hotels Plc | 6% | 20% |
| Nigerian Aviation Handling Company Plc | 17.3% | 20% |
| Capital Hotel Plc | 2.7% | 20% |
| AG Leventis Plc | 11.64% | 20% |
| Caverton Offshore Support Group Plc | 17.4% | 20% |
| The Tourist Company of Nigeria Plc | 0.14% | 20% |
| Academy Press Plc | 15% | 20% |
Deadline for Compliance:
The NGX typically provides a grace period for companies to rectify non-compliance issues. Specific deadlines are communicated to each company, and failure to comply within the stipulated timeframe can lead to enforcement actions.
Staying Informed:
For the most up-to-date information on free float compliance, refer to the NGX’s Compliance Report, which is regularly updated to reflect the current status of listed companies.
Maintaining compliance with free float requirements is essential for the health and integrity of the financial market, ensuring a fair and transparent environment for all participants.