A Review of the Nigerian Energy Industry

SEC approves NSE waivers for oil firms, others

Michael Eboh

12 March 2012, Sweetcrude, LAGOS — The Securities and Exchange Commission, SEC, at the weekend approved the Nigerian Stock Exchange, NSE, revised listing rules which seek to grant certain waivers for oil and gas firms, Small and Medium Scale Enterprises, SMEs, and other multinational companies.

In the new rules, mineral companies, comprising mining, oil and gas companies are exempted from fulfilling the requirements that a company seeking listing on the Main-board must be in operation for at least three years.

The rule is also exempting companies with market capitalisation in excess of N500 billion from meeting 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 revised listing rules, according to Mr. Oscar Onyema, Chief Executive Officer of the NSE, is borne out of the inflexibility in the former rules, which has helped in no small measure in serving as a major discouragement to listing.

He declared that the new set of listing rules is an essential prerequisite to attaining the NSE’s growth and developmental programmes and initiatives in the next couple of months.

“The requirement that companies must have a five-year financial and operating track record has been cited as hindrance to many companies that would have been listed on the NSE. Specifically, this is said to have led to the exclusion of some exploration and production companies which are not in a position to provide such records,” he said.

Also speaking, Mrs Taba Peterside, General Manager, Listings Sales and Retention, said the new rules determined quantitative criteria suitable for the Exchange from comparison with other Exchanges and an analysis of current listed companies over a three-year period.

According to the new rules by the NSE, companies seeking listing in the Alternative One segment 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; have a minimum of 300 shareholders for equity shares, with the promoters of the companies retaining 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 SEC’s requirements for minimum threshold for a successful offer.

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