Union Bank, Transcorp Hotel, 11 others fail to comply with stock market free float requirement


Thirteen out of 169 companies listed on the floor of the Nigerian Stock Exchange (NSE) have failed to comply with free float requirement of the bourse.
A report by the NSE available to Oracle Today shows that, Union Bank of Nigeria with 14.94 percent, Transcorp Hotels with 6.0 percent, Champion Breweries with 17.30 percent and AG Leventis with free float of 11.64 percent are among the companies trading below the minimum volume of shares required for retail shareholdings and public trading on their shares.
Others are: Capital Hotel with 2.62 percent, Great Nigerian Insurance 16.0 percent, Chellarams, 15.0 percent, Interlinked Technology, 14.50 percent, Infinity Trust Mortgage, 3.50 percent, Ekocorp 11.84 percent, Caverton Offshore Support Group 17.40 percent and Tourist Company of Nigeria Plc with 3.58 percent and E-Tranzact International Plc with 10.06 percent.
The NSE noted that the companies have free float deficiencies, a major infraction that may adversely affect the liquidity of its shares.
The free float, otherwise known as public float is the number of shares of a quoted company held by ordinary shareholders other than those directly or indirectly held by its parent, subsidiary or associated companies, directors of the entity and their close family members and any single individual or institutional shareholder holding a statutorily significant stake, which is five percent and above in Nigeria.
Companies listed on the stock exchange are required to maintain a minimum free float for the set standards under which they are listed in order to ensure that there is an orderly and liquid market for their securities.
The NSE pegged the free float requirement for companies on the Alternative Securities Market (ASeM) Board is 15 percent of market capitalization, Main Board is 20 percent of market capitalization while companies on the Premium Board is 20 percent of market capitalization or above N40 billion on the date the exchange receives the Issuer’s application to list.
The report indicated that the NSE had given the companies deadlines to restructure their issued share capital in a way to free the existing concentrated shareholdings of the core investors and allow more investments from the general investing public.
Failure by the companies to restructure their share capital at the expiration of the deadline or secure extension of the deadline may lead to the delisting of their shares from the NSE.