Since August 14, quoted companies at the Nigerian Stock Exchange have been battling with cleaning up the books of some of their infractions, which got some of their banking colleagues into troubles.
The Chief executives of some of these banks, about nine of them, are still paying for their sins one way or another. The great discovery made with the audit of the banks’ accounts is one the full stories may never be heard, but the little that was heard were enough to make the financial service regulators wake up from their slumber, during which they allowed the practice of “business as usual” to prevail in financial transactions.
But the story has since changed, and with the new policies on financial operations, operators have begun to appreciate the need for full disclosures, so that concerned parties can discover when things are going wrong on time, and possibly salvage the situation before it gets out of hand.
However, recognising that the battle is not yet won, the Central Bank of Nigeria, in conjunction with the Securities and Exchange Commission and the Ministry of Finance, all regulators of the financial services industry, are currently putting heads together on how to tighten the remaining loopholes that helped plunge the sector into crises thereby eroding public and investors confidence
in the capital market.
The
measures are expected to be made public in the next fortnight or so.
Commenting on the awaited measures, members of the Association of Stockbroking Houses of Nigeria, say this will further instill transparency in the financial system.
The association’s chairman, Ola Yussuff, who spoke to NEXT, said what the Central Bank aims to achieve with the Nigerian Stock Exchange (NSE) and the Securities and Exchange Commission (SEC) is “a good development that must be encouraged.”
Mr. Yussuff, who is also the chairman of Trust Yield Securities Limited, said he believes that the aim “is to improve on the existing requirements for all quoted companies at the Exchange and also increase the level of enforcing those requirements.”
Shunning responsibility
The chairman of the stockbroking association said every quoted company signed an undertaken with the NSE, which requires them to disclose information about themselves to the Exchange on a quarterly basis.
However, he said many companies have not been really complying with the agreement, while some are still struggling to meet the deadline given to them.
“We (market operators) need to tell those in authority to enforce requirements, and when they need to be strengthened, they should be strengthened,” Mr. Yussuff said.
Also confirming the legality of full disclosure, Oladele Odusanya, a member of the association and chief executive officer of Quantum Securities Limited, said account disclosure “is one of the main requirements of the Exchange for any company to be in the first tier market,” but many of the companies in this category do not obey the rule.
“That is why some companies get delisted from the Exchange when they continue to default,” he added.
Apart from failing to make quarterly disclosures, Mr. Odusanya noted that there are still many other ways companies hide information from the regulators. But he believes the CBN and other regulators can check these if they really wanted to.
Global change
As bad as it seems, financial impropriety is not restricted to the Nigerian economy alone, as the global financial crisis revealed that many issues needed to be reviewed. Analysts argue that there is the need for all corporate organisations to review bookkeeping methods in the light of the various developments in the economy, both locally and globally.
They added that policies, all over the world, are changing because development is occurring on a daily basis.
For the capital market to perform effectively this year, analysts said market requirements for must also be changed; because what companies are disclosing presently is relative to the requirement given to them in time past.
Mr. Yussuff said if any company thinks it has perfected its disclosure level, “it should think twice because things can happen tomorrow that will make such disclosure outdated.”
“No company can never at any time say it has gotten it all,” he said.
Central Bank’s promise
The CBN governor, Sanusi Lamido Sanusi, on Wednesday, said the bank is currently working on a number of guidelines to be issued in two weeks, to regulate information disclosure by quoted companies.
Mr. Sanusi said the bank was working with other regulators like the SEC and the NSE, “to prepare detailed information disclosure requirements for the banking sector and quoted companies to ensure that end of year figures to be published every December, are accompanied with enhanced information disclosures beyond the normal NSE requirements to help restore investors’ confidence.”
Broking firms also to disclose
Meanwhile, Daisy Ekineh, the acting director general of the SEC, recently directed stock broking firms to make full and immediate provisions for their capital adequacy, which should reflected in their latest accounts.
Ms. Ekineh also said that the commission conducted series of inspections on some categories of market operators to ensure transparency and accountability in the Market. She added that the scrutiny led to the suspension of a number of operators from market last year, while a few were referred to the Economic and Financial Crimes Commission.
“As a matter of fact, in the last 20 months, various enforcement actions including the suspension from participating in the capital market activities were taken against over 77 operators,” she said.
Source: Next.com
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