Governance Failure: NGX Suspends Presco, Ardova, Five Others

Kayode Tokede

The Nigerian Exchange Limited (NGX) has suspended trading on Presco Plc, Ardova Plc, and five other companies for failing to comply with best corporate governance that requires them to submit their audited results within a stipulated time.

Others are: C and I Leasing, Royal Exchange, International Energy Insurance, Pharma Deko and Afromedia.

According to THISDAY investigations, the seven companies have failed to submit full-year financial result and accounts for period ended December 31, 2022 and first quarter ended March 31, 2023 unaudited results.

The full suspension implies that there will not be any transaction on the shares of the companies, including movement of share price and any trading of their shares.

A circular from the NGX indicated that the companies were suspended after they failed to submit their audited results and accounts for the year ended December 31, 2022.

According to the Exchange, the suspended companies failed to comply with rules on timely submission of results.

Timely disclosure is a cardinal principle of compliance at the stock market as the market operations and investor’s decisions depend on such disclosures.

The NGX noted that the companies were suspended under the market’s Rule 3.1, and the suspension will remain until proven compliance and submission of their results.

Extant rules at the stock market require quoted companies to submit their full-year audited results and accounts not later than 90 days after the end of the year. The due date for submission for the 2022 results was thus March 30, 2023.

Quoted companies are also required to submit their unaudited quarterly results not later than 30 days after the end of the quarter.

However, the rules allow NGX to consider a general extension of the deadline in case of a general issue militating against compliance or specific waiver for a company based on a proven challenge.

Suspension is the second highest form of sanction under the penalty regime for non-compliance. Where a company failed repeatedly to comply with the deadline after certain grace period and processes, the NGX can opt for compulsory delisting or total removal of the company from the market.