LAGOS — Nigeria’s capital market regulators have launched a comprehensive review of free-float requirements for listed companies, a strategic shift aimed at eliminating “tightly held” stock structures and deepening the nation’s equity market.
The Securities and Exchange Commission (SEC) and the Nigerian Exchange Group (NGX) are evaluating the current thresholds to ensure that a larger percentage of shares in listed entities are available for public trading.
NGX said the move is designed to enhance price discovery, attract more foreign portfolio investment, and minimize the extreme price volatility often associated with low-liquidity stocks.
Under current rules, companies on the NGX Main Board are generally required to maintain a 20% free float or a market value of at least N20 billion.
However, several of the market’s largest “heavyweights” currently satisfy the rule only via the value threshold, leaving a relatively small number of shares actually available for daily trading.
Regulators are now assessing whether these value-based exemptions remain appropriate as the market evolves.
“This includes assessing how we optimize existing free-float levels, ensuring the accuracy of free-float data captured by the exchange and evaluating whether current free-float requirements remain appropriate as the market evolves,” said Temi Popoola, Chief Executive Officer of NGX Group.
The enforcement drive is poised to yield results. Earlier this month, Champion Breweries officially exited the “Below Listing Standard” (BLS) watchlist after successfully meeting its public shareholding requirements.
Conversely, other entities like Multi-Trex Integrated Foods have recently been granted conditional extensions, some as long as 24 months–to restructure their shareholding or face potential suspension.
