The Nigerian Stock Exchange (NSE) has disclosed it would begin implementation of its new free float rules staring from the first trading day in 2020.
The new free float rules which had been approved by the Securities and Exchange Commission (SEC) since May 2019 were initially expected to take effect on Monday, June 3, 2019, but the NSE suspended it.
Free float, also known as public float, refers to the shares of a company that can be publicly traded and are not held by insiders. Insiders meaning parent, subsidiary or associate companies or any subsidiaries or associates of its parent company; its directors who are holding office as directors of the entity and their close family members and any single individual or institutional shareholder.
The new free float rules require all quoted companies to publish in their half-year reports the shareholding structure and level of compliance in relation with the minimum number of shares being held by all minority shareholders.
The new rules also mandate all quoted companies to undertake periodic self-assessment of their free float compliance and report any breach or shortfall to the Exchange. The new rules place priority on the investigation and compliance on the path of the companies, in addition to existing surveillance by the capital market authorities.
Failure to meet up with the new regulations mandates, the NSE would commence the process of delisting such company, either after failure to respond to a free-float rule default notice within 10 business days.