The Nigerian Aviation Handling Company (NAHCO) risks being sanctioned by the Nigerian Stock Exchange following the secret suspension and subsequent reinstatement of its Managing Director/CEO, Adetokunbo Fagbemi, by the Board of Directors.
Fagbemi’s suspension was only brought to the attention of the investing public, in a statement, after the Board held an emergency meeting on Wednesday, February 24, to reinstate Fagbemi.
Recall that the board had suspended Fagbemi on January 27 during the board of directors meeting, but the suspension took effect on February 3. She had been suspended for the company’s failure to procure equipment from a vendor.
During Fagbemi’s suspension, Olumuyiwa Olumekun, NAHCO’s Group Executive Director for Corporate Services, took over her position as MD/CEO.
The suspension lasted for four weeks following the provision of the certified bill of lading for the equipment by Fagbemi on February 24. The bill of lading provides departure and arrival dates of the equipment.
The move, described as market abuse by the Nigerian Stock Exchange because for four weeks the suspension was kept secret without notifying the investing public.
According to Nigerian Stock Exchange (NSE) listing rules, listed companies are compelled to immediately reveal to the investors and the public all factors or corporate information that might affect investors’ interest (shares), but NAHCO took four weeks before informing the public of Fagbemi’s suspension.
And the company only revealed the suspension when it lifted it. The NSE listing requirements are placed under market abuse, and the suspension of Fagbemi had a material effect on stock market activity.
After the board agreed to suspend Fagbemi, Nahco’s share price value significantly declined, as the company lost N0.17kobo in share price in one day, to close the market at N2.18kobo on February 1, against the N2.35kobo it opened with.
Since then, NAHCO’s share price has been fluctuating, but trading below the price (N2.35kobo) it held prior to Fagbemi’s suspension. The share price recorded its biggest decline on February 11, as it plunged to N2.08 per share.
Between January 27 and February 24, the four weeks period NAHCO kept the information from investing public, NAHCO’s share price lost N0.13kobo, as it closed market at N2.22kobo per share on Wednesday, February 24.
According to the NSE’s rules, any company that fails to inform the NSE of a corporate information or development that has potential to impact on their company’s market performance will be fined 50 per cent of the annual listing fee.
“Publication of accounts, notices of Annual General Meetings, closure of register, payment dates, changes in directorate, changes in capital structure, alteration to memorandum and articles of association, changes in general character of the company, all corporate information/development with potential to impact on the company’s performance etc. without prior written approval of The Exchange shall attract a fine of 50 per cent of the annual listing fee.” NSE stated.
It is, however, unsure if NSE will hit the hammer on NAHCO, but according to the market authority, such breach of market requirement and directive attract a financial sanction.
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