The Nigerian Stock Exchange (NSE) has said it would begin the implementation of its new free float rules from the first trading day in 2020.
Free float represents the portion of shares of a corporation in the hands of public investors as opposed to locked-in stock held by promoters, company officers, controlling-interest investors, or governments.
In a statement obtained from the NSE’s website, the Exchange revealed that in furtherance to an earlier announced notice of deferral of effective date of the Rules Governing Free Float Requirements for Issuers listed on its board, issued as at Friday, May 31, 2019, will now become effective on January 2, 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 was suspended by the NSE.
As of December 24, 2019, 23 companies had free float deficiencies, even as the NSE said companies listed were required to maintain a minimum free float for the set standards under which they were listed in order to ensure an orderly and liquid market for their securities. It said the free float requirement for companies on the ASEM Board was a minimum of 15 per cent of issued and fully paid up shares, while that of the Main Board was a minimum of 20 per cent of the issued and fully paid up shares.
According to the NSE, companies listed on the premium board are also required to have a free float of a minimum of 20 per cent of issued and the fully paid up shares or the value of its free float should be equal to or above N40 billion on the date the Exchange receives the issuer’s application to list.