The amendments concern the Trading License Holders Rules (Part XIIIA) pertaining to Block Divestments and Large Volume Trades. Notably, a trade will now be considered a block divestment if it involves a transfer of shares totaling five percent, reduced from the previous threshold of 30 percent.
Additionally, any transfer or acquisition of shares amounting to five percent or more of a company's total listed shares within one year from the initial transfer or acquisition will also be considered.
If the Exchange detects a pattern of transactions indicating a continued divestment process that exceeds the one-year limit, it may, at its discretion, classify these transactions as Block Divestments, subjecting them to the relevant rules and requirements.
Another proposed amendment states that any transfer or acquisition of shares totaling 80 million units or more, or a trade value of N800 million or greater within one year from the first transfer or acquisition, must receive prior written approval from the Exchange before proceeding with such large-volume trades.
The local exchange cautioned that if approval is not obtained and a pattern of transactions indicating ongoing large-volume trades beyond the one-year threshold is observed, these transactions may be classified as large-volume trades at the discretion of the Exchange, thereby subjecting them to the applicable rules and requirements.
Shobanjo articulated the reasoning behind the proposed regulations, noting that since their implementation on February 12, 2018, these rules have provided a framework for overseeing and reporting share transfers that could significantly influence the overall daily volume and value of trades executed on The Exchange, as well as any substantial alterations in the shareholding or control structure of the Issuer.
"Upon reviewing applications and monitoring these trades, The Exchange has identified that some market participants might be structuring transactions to evade the disclosure and compliance obligations set forth by the Rules. To address these concerns, The Exchange has proposed amendments in the second quarter of 2024 aimed at reducing the thresholds for Block Divestments and Large Volume Trades relative to a company's total listed shares.
"Additionally, The Exchange has conducted a further review of these amendments and is establishing clear parameters for cumulative trades that meet or exceed the specified thresholds, ensuring comprehensive disclosure regardless of whether the transfers occur as a single transaction or through multiple transfers.
"The Exchange is confident that these amendments will help eliminate loopholes that could facilitate non-compliant behavior, thereby enhancing transparency and accountability. The modifications are intended to guarantee that any significant share transfers are fully disclosed, thereby improving NGX’s capacity to monitor substantial changes in shareholder structure and uphold market integrity," he stated.