COVID-19 UPDATE – THE NIGERIAN STOCK EXCHANGE RELAXES RULES ON CERTAIN ENFORCEMENTS


Introduction

As one of the measures to ensure that listed companies are not adversely affected by the disruptions occasioned by the prevailing COVID-19 pandemic, the Nigerian Stock Exchange (NSE) issued a circular on 17 April 2020 granting:

  1. extension of time for filing of all audited financial statements (AFS); and
  2. waiver on enforcement of the provisions of Rule 20.8 of Index to Issuer’s Rules- the Rules governing transactions with related parties or interested persons.

Extension of time to file all audited financial statements

Sequel to the Circular of 23 March 2020 issued by the NSE which granted listed companies sixty (60) day grace period for the submission of their AFS for the year ended 31 December 2019, the Exchange has also extended the due date for the submission of the AFS for listed companies with 31 March year end by sixty (60) days from 29 June 2020 to 28 August 2020.

The NSE further granted a sixty (60) day extension to all listed companies for the submission of the Quarterly Financial Statement, with reporting timelines to comply with the Rules[1] during this period as follows:

Year-Ends  Reporting PeriodReporting Due DateRevised Due Date
31 March 30 June 30 September 31 December31 March 202030 April 202029 June 2020
30 April 31 July 31 October30 April 202030 May 202029 July 2020

Waiver on enforcement of rules governing Related Parties Transactions

The NSE also waived the enforcement of the provisions of Rule 20.8 of Index to the Issuer’s (Rules governing transactions with related parties or interested persons) (the Rule) to ensure that the operations of listed companies do not suffer inadvertent constrains at this time. Rule 20.8 provides that:

An Issuer may seek a general mandate from securities holders for recurrent transactions of revenue or trading nature or those necessary for its day-to-day operations such as the purchase and sale of supplies and materials, but not in respect of the purchase or sale of assets, undertakings or businesses. A general mandate is subject to annual renewal. “

All listed companies that enter into related party transactions within the purview of the Rule during this period when enforcement has been waived are required to:

  • include every resolution proposal setting forth specific details on related party transactions in the notice of board meetings and obtain the approval of the board before entering into any related party transactions, provided that no transaction’s term shall exceed one financial year; and
  • publish an announcement via the NSE’s Issuers’ Portal within twenty-four (24) hours of the board’s approval of each transaction, such announcement to describe each transaction with specific relevant details as may be required by the NSE; and

Disclose all such approved related party transactions as notes in its quarterly financial statements for the period in which they occur, and in the final accounts.

The information and opinions in this publication are provided for general information only. They are not intended to constitute legal or other professional advice. If you would like additional information, please contact the author at [email protected]

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