Shareholders suggest how to stem regulatory fines on insurers

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Chuks Udo Okonta

Regulatory fines on insurance firms are punishments on investors and not officers that are directly responsible, hence should be reconsidered, shareholders have said.

They maintained fines do not really serve as deterrent, stressing that enforcing compliance doesn’t have to be monetary, as non monetary sanctions like suspension would raise immediate response from all stakeholders of the companies that contravened stipulated rules.


Managing Director Lancelot Ventures Limited, Adebayo Adeleke, who is also a prominent member of Independent Shareholders Association of Nigeria (ISAN), said companies that are quoted on the Exchange should abide by the rules of the Exchange, adding that there are however two issues about fines. “One, It is a punishment on shareholders and not the officers that are directly responsible. It doesn’t really serve as a deterrent.

“Two, enforcing compliance doesn’t have to be monetary. Non monetary sanctions like suspension would raise immediate response from all stakeholders of the Companies involved. When it’s monetary, very few Shareholders see it and see it very late in annual reports (probably after a year or more).”

He noted that monetary sanctions are part of reasons for companies delisting from the Nigerian Stock Exchange (NSE).


Chairman, Issuers and Investors ADR Initiative, Moses Igbrude, said: “Fines and penalties are imposed on companies when they failed to complied with certain regulations, the question then is, what are these regulations and why they didn’t complied? Where management fails to give satisfactory explanation they should be blamed or held accountable for their actions.

“The regulators should also know that fines and penalties are not the only ways to regulate and to make people to do right things. They should always try other means and formulas in implementing their rules and regulations in the industry, they should bear in mind that it is the shareholders, who bear the pains at the end of the day.

Igbrude, who is also a frontline member of the Independent Shareholders Association of Nigeria (ISAN), appealed to regulators to be lenient on companies especially now that they are working assiduously to meet the recapitalisation mandate which requires a lot of money.

Inspenonline has exclusively report that six insurance firms were fined N54.3 million by the Nigerian Stock Exchange (NSE) in 2019 for various contraventions.

According to the X-Compliance Report published on NSE website on July 10, 2020, the firm’s were sanctioned for contraventions ranging from default in filing 2018 audited financial reports; failure to file first quarter 2019 reports and unauthorised publication of annual general meeting notice.

The NSE posited that the X-Compliance Report is a transparency initiative which is designed to maintain market integrity and protect investors by providing compliance related information on all listed companies.

It maintained that companies that are listed on The Exchange are required to adhere to high disclosure standards which are prescribed in the Rulebook of The Exchange, 2015 (Issuers’ Rules), and other Rules of The Exchange, from time to time, stressing that financial information, which is periodic disclosure, as well as on-going material information disclosure should be released to The Exchange in a timely manner to enable it efficiently perform its function of maintaining an orderly market. The X-Compliance Report is updated every Friday at the close of market, it said.

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