The Nigerian Stock Exchange (NSE) has given Dangote Cement plc, Union Bank of Nigeria plc, and Wema Bank plc deadlines to comply with a mini¬mum free float for the set standards under which they are listed.
Free float represents the portion of shares of a listed company that are in the hands of public inves¬tors and not locked-in by for example promoters, company officers, control¬ling-interest investors.
In context, it may refer to the entire market capi¬talisation of the company or all the shares outstand¬ing that can be publicly traded.
According to the NSE, Dangote Cement plc which has 4.93 percent of free float has up to Oc¬tober 26, 2014 to comply; Union Bank of Nigeria plc which has 14.94 percent of free float has up to June 30, 2017 to comply; while Wema Bank plc which has 19.64 percent of free float has been given up to April 27, 2014 to comply.
The NSE noted in its lat¬est X-Compliance report that the free float require¬ment for companies listed on the Main Board is 20 percent and 15 percent for Alternative Securities Market (ASEM) companies.
The Exchange said these companies compli¬ance becomes very impor¬tant to ensure that there is an orderly and liquid mar¬ket in their securities.
Free float is sometimes seen as a better way of cal¬culating market capitalisa¬tion because it provides a more accurate reflection rather than the entire mar¬ket capitalisation.
According to the X-Compliance report: “The Exchange has identified three companies that have free float deficiencies. These companies applied for waivers from the quo¬tations committee of man¬agement,” noting that they specifically provided com¬pliance plans with tenta¬tive timelines to support these companies’ requests.
“The quotations com¬mittee of management considered and approved an extended timeframe for the companies to re¬gain compliance with the listing requirement. The companies are how¬ever required to also pro¬vide quarterly disclosure reports to the Exchange detailing their level of implementation of the compliance plans,” the Exchange added.
