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Chinwendu Obienyi
Following concerns raised by market operators on the lack of the mandatory 20 per cent free float listing of listing of MTN Nigeria Communications Plc, the Nigerian Stock Exchange (NSE) has clarified that the telecom company met with the free float requirement of N40 billion.
The operators had on Monday blamed the NSE for approving the company’s listing without the mandatory free float and warned that the price of MTN Nigeria shares would continue to skyrocket due to their scarcity to the detriment of retail shareholders.
But in a swift response via an emailed statement to Daily Sun, the NSE noted that the rules for listing on the Premium Board (which is the board in which MTN Nigeria is listed) requires a company to have a minimum free float of 20 per cent of its issued share capital or that the value of its free float is equal to or above N40 billion on the date the Exchange receives the issuer’s application to list.
“There appears to be a misconception that a concession was given to MTN Nigeria on the minimum free float required for companies listed on the Exchange. According to Rulebook of the Exchange, free float is defined as the number of shares that an issuer has outstanding and available to be traded on the Exchange. It includes all shares held by the investing public, and excludes shares held directly or indirectly by promoters, directors and their close relatives; strategic investors holding five per cent and above of the issued share capital or government.
MTN Nigeria met with the free float requirement of N40 billion and the free float of MTN at the time of listing was in excess of N90 billion,” It said.
The Exchange further explained that where a company lists following an Initial Public Offering (IPO), shares are expected to be available for trading on the day of listing but in a listing by introduction, however, no shares have been offered for subscription by the company prior to listing.
“No rule of the Exchange compels shareholders in a listed company to tender their shares for trading. Shareholders are at liberty to trade their shares at any time and price suitable to them. Thus, in order to stimulate trading in the shares of companies that list by introduction, the NSE’s practice is to urge the company to make shares available on the day of listing. In the case of MTN Nigeria, the NSE had requested the company as part of the listing process to make shares available and the Exchange expects the company to do that. Since the listing of MTN Nigeria on Thursday, May 16, 2019, a total of 105,30 million shares valued at N12.231 billion have traded in three days. These trades were carried out by ten Dealing Member Firms in 134 cross deals/negotiated deals”.
