By Chukwuma Umeorah
The decision by MRS Oil Nigeria Plc to voluntarily delist from the Nigerian Exchange Limited (NGX) has elicited mixed reactions among shareholder groups and raised questions about the company’s motivations, its potential impact on liquidity, share valuation, investor confidence and the broader implications for Nigeria’s capital market.
On March 28, 2025, MRS reaffirmed its intention to voluntarily delist its 342,884,706 ordinary shares from the Nigerian Exchange Limited (NGX) and transition to the NASD Over-the-Counter (OTC) Securities Exchange. The announcement follows shareholder approval at an Extraordinary General Meeting (EGM) held on June 25, 2024. Despite the company’s robust financial performance in 2024 — highlighted by a 71.2 per cent revenue increase to N312.2 billion and a 62.2 per cent rise in profit after tax to N6.49 billion—stakeholders are questioning the rationale behind the move and its potential implications for shareholders.
MRS has outlined a structured process to facilitate the transition, including a share buyback and capital reduction program for dissenting shareholders. The payout window for those opting to exit runs from April 4 to July 4, 2025, with unclaimed funds reverting to the company and remaining shareholders’ holdings migrating to the NASD OTC platform. The effectiveness of this payout remains subject to the final approvals of the Securities and Exchange Commission (SEC) and NGX.
Shareholders react, opinions divided
The announcement has elicited a spectrum of responses from shareholders, ranging from cautious optimism to outright dismay. The National Coordinator of the Progressive Shareholders Association of Nigeria (PSAN), Boniface Okezie, expressed deep skepticism about the move. “It is not a good move. I don’t know what is prompting them to delist. This is an indigenous company. When they sold and divested in the past, it led to issues. Now that things are improving, they suddenly want to delist? I thought they had dropped that idea,” Okezie said.
His concerns center on the timing and motivation behind the decision. With MRS reporting a market capitalization of approximately N59 billion before the announcement—contributing to the NGX’s N63 trillion total market size, he questioned why a company benefiting from public confidence and active trading would seek to exit. “For many years, MRS didn’t pay dividends, and the share price wasn’t remarkable. Yet, shareholders remained patient. Now that they’re performing well, they want to leave? What exactly is the issue?” he queried.
Okezie further argued that the company’s access to petroleum products from Dangote Refinery should put it in a competitive position, making delisting unnecessary. “Their main business is retailing petroleum products, and if any marketer has access to Dangote’s products, it is MRS. They can get fuel at a competitive price and distribute effectively. So why are they delisting? What market are they running to? Do they no longer want to share profits with shareholders through dividends?”
In contrast, Sunny Nwosu, founder of the Independent Shareholders Association of Nigeria (ISAN), adopted a more pragmatic stance. According to him, the decision to transit to the NASD was not much of a concern, as long as shareholders retained the ability to trade their shares without restrictions. “We have various Exchanges in Nigeria. The management decided they want to be listed on another Exchange, and the shareholders overwhelmingly supported it at the EGM,” Nwosu said. “As a shareholder, what is most important is that you can place your shares for sale and get your money when needed. I don’t think there’s much problem as long as you can still sell your shares.”
Rationale for exit
MRS had highlighted regulatory obligations, administrative and compliance costs as reasons for the delisting. Others include emerging opportunities and projected long-term growth.
Reports suggest that compliance fees, regulatory reporting requirements, and administrative overheads have become burdensome, particularly in Nigeria’s challenging economic climate, marked by 24.5 per cent inflation (rebased) and a weakened naira as of March 2025. The company argues that transitioning to the NASD OTC will afford greater operational flexibility and cost savings, allowing it to focus on long-term growth strategies.
However, Okezie dismissed this rationale as inadequate. “How much are they even paying in compliance fees? If they’re not paying it to NGX, will they give it to shareholders instead?” he challenged. “Other companies are paying the same fees and are not complaining. These are not valid excuses. Maybe there are other reasons they are not making public. They should come out and state the real reason.”
Market analysts estimate that NGX listing fees, which include annual maintenance costs and transaction levies, can range from 0.3 per cent to 1 per cent of a company’s market capitalization, depending on trading activity and regulatory requirements. For MRS, with a valuation of N59.9 billion, this could translate to annual fees of around N177 million to N590 million. While significant, these costs are not unique to MRS, as other listed firms continue to bear them without delisting. This raises questions as some analysts believe that the cost of maintaining a listing on NGX as a reason to delist may not be entirely justified.
Liquidity, transparency and the future of MRS shares
One of the most pressing worries for shareholders is the potential impact on liquidity and stock price movement after the shift to NASD OTC. Unlike the NGX, where MRS shares closed at N174.9 on March 28, 2025, the NASD operates as an over-the-counter market with lower trading volumes and less visibility. “On the NGX, there is active price movement, buyers and sellers interact. On other platforms, equity prices tend to stagnate,” Okezie noted. “How liquid is the NASD? Will investors be able to easily sell their shares? That’s the reality in other platforms.”
Although MRS has assured investors that the transition will comply with Securities and Exchange Commission (SEC) rules on unlisted securities, and the board will ensure shares are admitted to NASD to meet shareholders’ trading needs. Yet, the lack of a robust secondary market on NASD could deter investors seeking quick exits, potentially depressing share value over time.
Transparency is another sticking point. Okezie argued that delisting could signal a desire to “operate in secrecy” as a private entity, free from the NGX’s stringent disclosure requirements. “In Nigeria, we need more transparency,” he said. “The Financial Reporting Council enforces accountability, and some companies may not like that level of scrutiny. But other listed companies comply, so why not MRS?”
Wave of delistings: implications for Nigeria’s capital market
MRS’s delisting is not an isolated event but part of a growing trend among Nigerian companies. Between 2021 and 2024, over 15 firms, including GlaxoSmithKline Consumer Nigeria Plc and Union Diagnostics, exited the NGX, citing similar challenges: high compliance costs, low trading liquidity, and macroeconomic instability.
Analysts warn that this steady exodus reflects structural issues within Nigeria’s capital market, potentially undermining investor confidence and the NGX’s ability to retain mid-sized and multinational listings.
They called for a halt to the delisting trend, emphasizing the role of indigenous companies in driving Nigeria’s economy. “Who builds the market? Who drives the economy if not indigenous companies? If every company starts delisting, will we still have a stock exchange in this country?” Okezie asked. “We need to stop this and demand better accountability.”