THE NEW RULES GOVERNING LISTING

ON THE NIGERIAN STOCK EXCHANGE

AND POST-LISTING GENERAL UNDERTAKING
– Professor. MRS. NDI OKEREKE-ONYIUKE

1. It‟s my pleasure and privilege to present to you the new „Rules Governing
Listing on The Nigerian Stock Exchange”. After extensive public
consultation including dialogue with Operations of the stock market, The
Exchange has completed the Revision of its Listing Rules, the last review
being in 1975.

2. In reviewing the New Listing Requirements; we took into consideration the

recommendations made by the Securities and Exchange Commission, the
Central Bank Public Debts Office, Stockbrokers and comments received
from other operators of the market during the public consultation process.

3. As top executives of quoted and quotable companies, stockbrokerage firms

and other financial institutions, we do not intend to bore you with details of
the Listing Rules but to give you a brief overview in order that you may
better understand the operating guidelines of the unique Stock Exchange
“Club” which, you belong. The Exchange organised several workshops and
seminars in the 90‟s in which middle managers and company executives
were acquainted with details of The New Listing Requirements.

4. All companies seeking quotations must be introduced to The Stock

Exchange by a Dealing Member (Stockbroker) who acts as an intermediary
between the company and The Exchange. His duty includes, ensuring that
all aspects of the issue comply with The Listing Requirements of The
Exchange and other statutory provisions in the Investments & Securities Act
2007 and the Companies & Allied matters Act 1990.

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5. GENERAL REQUIREMENTS

FIRST-TIER MARKET (MAIN) SECOND-TIER MARKET (SSM)

1. Company must be registered as a 1. Company must be registered as a
Public Limited Liability Co. under Public Limited Liability Co. under
the provisions of the Companies & the provisions of the Companies
Allied Matters decree 1990. & Allied Matters Decree 1990.

2. Must submit to The Exchange 2. Must submit to The Exchange

financial statements/business financial statements/business
record of past 5 years. record of past 3 years.

3. Date of last audited accounts must 3. Date of last audited accounts

not be more than 9 months. must not be more than 9 months.

4. Amount of money that can be 4. Amount of money that can be

raised is unlimited depending on raised may not exceed N100
the borrowing powers of the million.
directors.

5. Annual quotation fees based on 5. Annual quotation fee is a flat rate

market capitalization. of N50,000.00.

6. At least 25% of share capital must 6. At least 15% of share capital

be offered to the public. must be offered to the public.

7. Number of shareholders must not 7. Number of shareholders must not

be less than 300. be less than 100.

8. After listing, company must submit 8. After listing, company must

quarterly, half-yearly and Annual submit half-yearly and annual
accounts. Accounts.

9. Securities must be fully paid up at 9. Securities must be fully paid up at

time of allotment. time of allotment.

10. Un-allotted Securities must be 10. Un allotted Securities must be

sold on NSE Trading floors. sold on NSE Trading floors.

11. Provision for issue of mergers, 11. No such provisions yet.

acquisitions, unit trust and mutual
funds.

6. It is pertinent to state here that both First and Second-tier securities are
subject to the same Dealing pattern on all Trading Floors of The Stock

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 Exchange and market prices of each company appears on the Daily Official
List of The Exchange.

POST-LISTING REQUIREMENTS
7. General/Listing Undertaking
A letter of compliance or General Undertaking is a pledge by the agents or
top management of the company or government agency to abide by the
Listing Requirements of The Exchange. This letter is normally brought in
signed by a Director and Secretary of the company to officials of The
Exchange who then brief the Company Secretary on the rights and
responsibilities of a publicly quoted company.

Returns to The Exchange

7.1 In the case of equities, the dictates of the General Undertaking
requires the company to make certain periodic returns such as:
Interim Accounts – i.e. quarterly and half-yearly for First-tier
companies and Second-tier companies, only semi-annual. Final
Accounts – Both First and Second-tier companies are required to
submit their Board approved final audited accounts to The
Exchange at the end of each company‟s financial year.

These accounts are subject to the scrutiny and approval of The

Exchange before they can be published. The submission of the
Accounts, which is made available to stockbrokers on the Trading
floors, enables them to react to the interim and final performances
of quoted companies.
7.2 In the case of Debentures/Bonds, no returns are currently made to
The Exchange. It is the functions of the Trustees to the Bond-Issue
to check on compliance with the terms and conditions of the
debenture/bond issue. At maturity, the Trustees must advice

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 The Exchange on redemption in order to effect De-Listing of the
Securities from the Official List of The Nigerian Stock Exchange.

8. Processing/Analysing Accounts for Approval & Merit Award

In looking at final accounts, we check for completeness/comprehensiveness
(please see “Criteria for selection of Merit Award Winners”). Apart from the
full text of the Audited Accounts, we require that Chairman‟s Statement,
sample proxy card, notice of meeting and five year summary of performance
be made part of the Annual Report. Also, dates of Annual General Meeting,
dividend payment and closure of Register would be included. As part of the
screening process, we take cognizance of extra-ordinary items, exceptional
items, forgiveness (from parent company or creditors), dividend payout and
consistency in the application of accounting standards (The NSE is a Board
Member of NASB).

8.1 In some instances, we may request for the source and details of the
items mentioned above and where written explanations are not
satisfactory, we invite top management or accredited representative
of the company where a compromise may be struck and approval
given for publication of the report.

8.2 We take each criterion listed above and the criteria listed in the
pamphlet distributed to you into consideration when shortlisting or
recommending quoted companies to the Council of The Exchange
for the Annual Merit Award.

8.3 One of the doyen of Company Secretaries, Chief Nollah Edun, had
asked me that in giving a Merit Award for Excellence why should
there be a tie-winning? May be the High Chief would like to ask the
question again during the discussion period so that the President of
Director-General/CEO of The Exchange could explain it better. By

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 my humble opinion as Secretary to the Merit Award Committee, is
that tie-winning occur only in very extenuating circumstances when
The Exchange had tried all several tie-breaking methods and failed
to come out with a clear winner; and you would agree that this
occur in the manufacturing and commercial sectors where there are
upwards of ninety companies competing for the award unlike the
financial, service and SSM sectors where there are less than
twenty companies competing.

9. Company Analysis/Monitoring
The Exchange conducts random evaluation, analysis and monitoring of all
the quoted companies in a bid to rationalize the prices being made on the
trading floors by stockbrokers, complement the companies that are not
performing up to standard. Sometimes we invite top executives of the
company for discussion if there is a persistent poor performance. Labour
unrest or other unusual circumstances, which we believe could affect the
performance of the company. Besides monitoring the factors (fiscal and
monetary policies) that could affect quoted securities and advice company
executives accordingly.

10. Post-Listing Orientation for Privatised Companies

The Board and Management will have to be oriented to the new order or
expectation after privatisation through series of consultations and grooming
on the long-term perspective of the company and the changes required to
meet the desired standard of quoted company as well as the desired
objectives of the company. Such changes might include operational
rationalization, streamlining of the management information system, changes
and adaptation of new technology etc to facilitate both allocative and
productive efficiency.

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11. Commentary (Conclusion)
For the benefit of the quotable companies, experience has shown that while
the cost of raising funds in the money market is some where between 25%
and 38%, the cost of capital on the stock market is between 4% and 9%
except net of dividend which is discretionary. Being profit maximizing and
cost minimizing, a rational entrepreneur should source his capital from the
cheaper available source. As a corollary, therefore a cost-effective
management must consider a quotation on the stock market as the viable
strategy for reducing the overall cost of capital to the enterprises. This will
enable you to imbibe the sense of prudent management via stock market
discipline necessary for achieving excellent financial results.

12. It is pertinent to point out that the duties of Issuing Houses and Stockbrokers
to the issue do not stop with the approval of quotation nor at the allotment
exercises. Issuing Houses tend to forget as soon as they collect their fees,
that their obligation to the company goes as far as the actual Listing of the
company on the Board and in the Daily Official List of The Nigerian Stock
Exchange.

13. Another point of note to Issuing Houses and Stockbrokers is that application
made to The Stock Exchange for approval of Quotation and to SEC for
pricing and, registration should be comprehensive with all the necessary
documents attached; that way processing, evaluating and approval time
would be significantly reduced. The Nigerian Stock Exchange is disciplined
and self-regulatory, therefore, all operators of the stock market should overtly
be seen keeping the results and regulations as well as adhering to the Listing
Requirements without being policed.