03 July 2015, Lagos – The new par value rule that allows investors to trade shares below 50 kobo has been operative implying that over 40 companies that have been dormant on the Nigerian bourse will become active again.
The Securities and Exchange Commission (SEC), had on June 2, approved the par value rule submitted to it by the National Council of the Nigerian Stock Exchange. The rule revises the price floor of company shares traded on the exchange from 50 kobo to one kobo.
The implementation of the new rule has been put on hold by the exchange until now. However, those shares can be traded as the NSE has approved June 29 as the implementation date.
According to the NSE, draft Rule was considered by the Rules and Adjudication Committee of Council on October 21, 2014, and approved for exposure to stakeholders for comments.
The draft Rule was exposed for stakeholders’ comments from October 29 to November 12 2014; The RAC considered the draft Rule and stakeholders’ comments thereon at its meeting of February 17, 2015, approved it.
The NSE Council approved the draft Rule on February 26, 2015 and was submitted to SEC, which was approved on June 2, 2015.
According to the approved rule, “notwithstanding its par value, the price of every share listed on the Exchange shall be determined by the market, save that no share shall trade below a price floor of one Kobo per unit (N0.01).
Some capital market operators have said the modification of shares par value from would boost trading activities in dormant companies.
Over 40 companies have remained dormant as a result of the previous rule, which pegged the price floor at 50 kobo. Some of the companies include:DN Tyre & Rubber Plc, MultiTrex Integrated Foods Plc, Afrik Pharmaceuticals plc, Capital oil plc, Rak Unity Petroleum Company Plc, FTN Cocoa Processors Plc, UTC Nigeria Plc, African Alliance Insurance Company Plc, Cornerstone Insurance Company Plc, Equity Assurance Plc, Great Nigerian Insurance Plc, Guinea Insurance plc, Consolidated Hallmark Insurance plc, Investment and Allied Assurance plc, International Energy Insurance Company Plc, and Lasaco Assurance Plc, Law Union and Rock Insurance Plc, Linkage Assurance Plc.
Others are: Omatek Ventures plc, Chams plc, Mass Telecommunication Innovations Nigeria plc, First Aluminum Nigeria plc, IPWA plc, Nigerian Wire and Cable plc, Multiverse plc, Japaul Oil & Maritime Services plc, Beco Petroleum Product plc, Afromedia plc, Tantalizers Plc, Union Diagnostic & Clinical Services Plc, Courteville Business Solutions Plc, Mutual Benefits Assurance Plc, Niger Insurance Company Plc, Prestige Assurance Company Plc, Regency Alliance Insurance Company Plc, Sovereign Trust Insurance Plc, Aso Savings and Loans Plc Resort Savings & Loans Plc and Royal Exchange Plc.
Meanwhile, trading at the stock sustained bearish trend as the NSE All- Share Index declined by 0.4 per cent to close at 32,739.11, while market capitalization shed N42.4 billion to close at N11.2 trillion.
A total of 23 stocks appreciated compared with 29 stocks that depreciated. Also, volume and value of shares traded declined 42.3 per cent and 62.6 per cent to 186.7 million shares and N1.8 billion respectively.