The Nigerian Exchange Group’s (NGX) default filing rule outlines several provisions for Oando’s compliance with financial reporting requirements:
- Cure Period: Companies have 90 days to file their Annual Financial Statement (AFS).
- If a company fails to file within this period, the NGX Regulatory Compliance (RegCo) will send a second notification of filing deficiency to the company within two business days after the cure period ends.
- The NGX RegCo will then suspend trading in the company’s securities.
- Finally, the NGX RegCo will notify the Securities and Exchange Commission (SEC) and the market within 24 hours of the trading suspension.
Oando’s share trading was suspended on the NGX due to failure to report its audited financial statements for the year ended December 31, 2023. On Thursday, February 24, 2024, the NGX RegCo officially disclosed Oando’s suspension for non-compliance with the exchange’s financial reporting rules.
When a company is suspended from trading, it always puts investors in an indecision state. Such as
1. **Loss of Liquidity*: Trading suspensions lead to a lack of liquidity, meaning that investors cannot buy or sell the suspended securities. This can potentially result in a decrease in the value of their investments.
2. **Uncertainty*: A suspension of securities places investors in a position of uncertainty about the company’s prospects. This can hinder their ability to make informed investment decisions.
3. *Forced Holding*: In many cases, investors must hold onto their assets as they cannot sell them while trading is suspended. This can be particularly frustrating for short-term investors hoping to sell their shares.
4. *Risk of Loss:* If the suspended company fails to rectify its issues and is ultimately delisted from the exchange, investors may face the risk of significant financial losses. This is a rare occurrence as companies often work with the exchange to resolve issues that might affect the listing of their shares and their compliance with the exchange’s listing requirements.
In conclusion, the suspension of companies from the NGX is a necessary action to ensure compliance with listing requirements. Investors should closely monitor the affairs of the companies in which they invest to track the status of their investments.
