About three weeks after removing 10 companies from its Daily Official List on September 19, the management of the Nigerian Stock Exchange, on Monday, added another nine firms to the list, for failure to meet its post-listing requirements. These include the timely rendition of un-audited quarterly and audited annual reports and other corporate information to investors through the exchange, to help proper pricing of their shares.

The affected companies are Intra Motors, Associated Development Company (ADC) Airlines, Grommac Industries, Nigerian Lamps, Niyamco, and Onwuka Hi-tek, which last submitted an audited result in 2004- barely 13 years after listing. By the end of that year, Onwuka Hi-Tek had a negative shareholders' fund amounting to N6.575 million, which translated to a loss per share of N13.71. Also, the last time the company's shareholders received a dividend was on August 22, 1994 when they were paid a final dividend of two kobo. Also on the list are Security Assurance, Sun Insurance and Nigerian Textile Mills.

The NSE had earlier de-listed 10 quoted companies, shortly after placing a total of 28 firms on full suspension, meaning that there would be no activities on their shares, in line with the outcome of a recent meeting between the Federal Government team with capital market stakeholders.

A breakdown of the earlier figure showed that the insurance sub-sector had three - Acen Insurance, Amicable Assurance and BAICO, which had before now failed to meet the industry recapitalisation requirement to remain in business, aside from failing to either find a merger partner or a willing suitor before the December 31, 2006 deadline. Others included Atlas Nigeria, Ceramics Manufacturing Company, Beverages (W.A.) Nigeria, and textile maker, Enpee, Tate Industries, Maureen Laboratories and Rietzcot Nigeria.

On the list of 28 quoted companies placed on full suspension, but marked for de-listing subsequently according to the NSE are: Aba Textile Mills; Abplast Products; Aviation Development Company; African Paints; Albarka Air; Amicable Assurance; Arbico; Asaba Textile Mills; Atlas; BAICO (formerly British American Insurance Company) Insurance; BCN; Beverages (West African);Ceramic Manufacturing Manufacturing Nigeria; Enpee; Epic Dynamics; Ferdinand Oil Mills; and Grommac Industries. Others are Intra Motors; Maureen Laboratories; Nigerian Textile Mills; Nigerian Yeast & Alcohol Manufacturing; Nigerian Lamps Industries; Oluwa Glass Company; Onwuka Hi-Tek Industries; Rietzcot Nigeria; Security Assurance; Sun Insurance; and Tate Industries. BAICO had earlier been placed on full suspension by the Exchange some weeks ago. The announcement of BAICO's suspension on July 27, according to a note from the NSE linked it to "notification from the National Insurance Commission (NAICOM) that the insurance company did not meet the minimum recapitalization requirement." The announcement immediately caused a stir of some sort in the market as observers and analysts wondered allowed why it has taken NAICOM, the primary regulator of the nation's insurance industry so long to discover this, almost two years after the industry's consolidation was concluded leading to the certification of 104 players' altogether.

The delisting also affected some entire sub-sectors, meaning that such would be removed from the official list since all the companies therein were affected. They include the textiles and machineries sub-sectors.

Some observers wondered at the weekend what parameters the Exchange used to single out the affected companies, while leaving out some others in the same condition like Foremost Dairies; Premier Breweries; Udeofson Garment Factory; Aboseldehyde Laboratories; Union Dicon Salt; Christlieb; Amicable Assurance; and Nigeria Sewing Machinery Manufacturing Company; Stokvis Nigeria.

Addressing a gathering of stockbrokers and the media on the Lagos trading floor after the Abuja meeting between the Presidency and stakeholders, including the Central Bank of Nigeria and the Securities & Exchange Commission (SEC), Ndi Okereke-Onyiuke, Director-General of NSE explained that that the proposed delisting was in line with the ongoing internal cleansing to strengthen and re-invigorate activities at the market.

De-listing these companies, she continued, has become inevitable, since most of their promoters, board members and shareholders associations had always treated the window of opportunity offered by the NSE to revive distressed companies for granted.

"We had anticipated that shareholders will use the provisions of the Companies and Allied Matters (CAMA) Act of 1990 to call an emergency general meeting to legally liquidate their ailing companies," she said.

Under CAMA, 15 shareholders of a quoted company can convene an emergency general meeting and all decisions taken at such meeting would legally become binding on all other stakeholders.

She argued that the NSE had observed due process in arriving at the decision to de-list the failed quoted companies, adding that "as an emerging market, we had quietly intervened by assisting some of the companies, which accepted our calls, shared their problems with us and today are doing fine."

When confronted in the past with the need to do the house cleaning, Mrs. Okereke-Onyiuke had cited cases of companies that had been left for dead only to resurrect with infusion of the much needed fresh management and capital that worked the much needed magic.

Aviation Development Company Airline, whose operating licence was withdrawn late 2006 after a fatal accident on the second leg of its Lagos-Abuja-Sokoto route that claimed the lives of over 100 passengers and crew members. As if that was not enough, the company's bid to re-engineer its processes from fresh capital raised from the market failed, necessitating the return of monies to those who had subscribed.

Shortly after the accident and withdrawal of its licence, NSE in November 2006 announced a suspension of "trading in the shares of this company (Aviation Development Company), following the suspension of the operating licence by of the airline as announced by the (federal) government."

The move, according to analysts, was to save one of its own from imminent death, aside from protecting investors. Many believe that the move was a ploy to stop the frenzy that could lead to huge capital depreciation as investors hurriedly gave their stockbrokers mandate to sell their holding in the company leading to more troubles for the company. Some others believe however, that there was no need for the suspension as there is no hot demand for the company's shares in the first place. As such, it is further argued that even where a deluge occurs as a result of the shares of ADC flooding the market, the lack of demand would keep the price stable.

The Sunday October 29, 2006 crash dealt a heavy blow on ADC, which was only just recovering from the shock of its first crash in Ejirin, near Ikorodu, Lagos on November 9, 1996. The crash claimed the lives of prominent Nigerians including the Sultan of Sokoto, his son (a senator) and grandson; Senator Yeri Ghandi; a deputy governor, among others.

Incidentally, one of the risks factors that militate against the industry, as listed in the offer prospectus, is the fact that the aviation industry is such that accidents caused by slight errors could have enormous human consequences.

But how soon that could take is what no one is willing to guess just yet. The directors in its prospectus noted the return of the goodwill the company enjoyed in the early days since its return to flight operations in February 2002. One question on many lips then was: if it took 10 years after the first crash for ADC to bounce back in real terms.

The offer was to enable the troubled company source a life line of about N2.4 billion to help it reinvent desires of its founders, through an offer for subscription of 1.2 billion ordinary shares of 50 kobo and 1.2 billion shares Floating Redeemable Preference Shares of 50 kobo, both at N1.00.

Among others, the offer which closed on September 29, 2006, exactly one month before the crash, was primarily to help ADC's shareholders fund out of the red. The company, according to the offer prospectus, had a negative shareholders fund and reserve of N1.46 billion and N1.64 billion respectively. This means that should its creditors withdraw their credit, the company could slip into insolvency.

According to the prospectus, the proceeds of the offer "is to be used to develop the company's aircraft fleet and routes, improve its working capital position and upgrade its information and communication technology, and on-line reservation system."

In view of the suspension of the airline's operating licence by the Federal Government, capital market apex regulator- Securities and Exchange Commission (SEC) directed Capital Bancorp Limited, the issuing house to the offer not to release the proceeds to the company.