The shareholders of Great Nigeria Insurance Plc (GNI) at its Extra-Ordinary General Meeting (EGM) held on Wednesday July 25, 2018 approved for the company to voluntarily delist its shares from the Nigerian Stock Exchange (NSE).
The company noted that minority shareholders who do not wish to be part of the unlisted company will have an opportunity to exit the company prior to its delisting from the Exchange.
According to the resolution of the shareholders sent to the Nigerian Stock Exchange, minority shareholders may exit the Company prior to the delisting by: trading their shares on the floor of the NSE through their nominated stockbroker; or receive consideration from the company in exchange for transferring their shares, a cash consideration of 50kobo per share.
Extract of the shareholders resolution shows that they also approved for the board of directors of the company to inform/notify other regulatory agencies as may be necessary in the course of the delisting process.
The Board of Great Nigeria Insurance Plc (GNI) had before the Extra-Ordinary General Meeting set a timeline of circa three months for the company’s voluntary delisting from the Nigerian Stock Exchange (NSE). GNI Plc anticipates that the delisting will take effect from October 23, 2018, according to a notice issued at the Nigerian Bourse.
Great Nigeria Insurance Plc has continued to struggle over the past years to meet up with NSE post-listing requirements which include not submitting its financial reports as required and inability to meet the free float requirement.
Over the last five years, there is little or no trading activity on the shares of the company held by the minority shareholders. There has also been a considerable fall in trading volumes over the last twelve 12 months with an average daily volume of circa 1,200 units during the period March 2017 to March 2018.
Through the Voluntary Delisting of GNI Plc, the Directors of the Company believe they will be shielding the Company from any enforcement action or sanction that the Nigerian Stock Exchange may impose, for example by way of a mandatory Regulatory Delisting and potential reputational damage to the Company. Also, they noted that the delisting will afford the company to carry an imminent Corporate Restructuring exercise to take advantage of emerging opportunities and may consider re-listing the company in the future if the market conditions are favourable.
The decision by the board to embark in voluntary delisting relates to their feelings that the shareholders of the company are not benefiting from the continued listing “as shareholders are not getting any exit opportunity and their investments have been locked up and they find it difficult to dispose of their shareholding. Neither the company has benefitted as the company’s shares continue to trade at a significant discount to the intrinsic value.”
Also, GNI’s Free Float currently stands at 16.03percent, significantly below the NSE’s minimum Free Float of 20percent. With this Free Float deficiency, the NSE could take enforcement action even though The Quotations Committee of the National Council of The Exchange (QCN) has extended the curing period to May 2020. The NSE regulatory requirements of companies listed on the main board of the Exchange is to have a minimum of 20 percent of their shares in the hand of retail minority shareholders, under a listing requirement known as free float.
GNI, which is listed on the main board, only has a free float of 16 percent. The company was recently given an extended deadline of May 18, 2020, to dilute its bloc shareholdings and free more shares for minority shares.
“We do not expect that this deficiency will be cured during that period and we expect the NSE to initiate a Regulatory Delisting,” shareholders were told.
Through the Voluntary Delisting of GNI, the Directors of the Company will be exercising a regulatory provision that will shield the Company from any enforcement action that the Exchange may effect which may arise as a result of the outstanding Free Float deficiency.
Furthermore, through the Voluntary Delisting process, the Company will be providing an Exit Consideration to minority shareholders who do not wish to remain in an unlisted company.
In 2016, the company sold a 75 percent majority equity stake to a consortium of investors known as Insurance Resourcery and Consultancy Services Limited (IRCSL). The deal was valued at N3.24billion. A total of 2.87 billion ordinary shares of 50 kobo each of GNI were crossed in a single deal to Insurance Resourcery at N1.13 per share through the negotiated cross deal window of the NSE.
Great Nigeria Insurance Plc commenced business in 1960 and following Central Bank of Nigeria (CBN)’s directive that required banks to either divest from non-core banking subsidiaries or form holding company to hold those subsidiaries; Wema Bank divested transferring its 75percent equity stake in GNI Plc to Insurance Resourcery and Consultancy Services Limited.
Through a voluntary delisting, the Board of GNI Plc proposes to delist all the ordinary issued shares of GNI Plc of 3,827,485,380 units from the Daily Official List and from trading on the Main Board of the Nigerian Stock Exchange. Part of the listing rules of the NSE is that listed Companies must have at least 20percent of its listed shares held by the investing public. GNI Plc is in violation of this Listing Rule and thus liable to be mandatorily delisted by The Nigerian Stock Exchange.
