In Nigeria’s evolving financial ecosystem, a critical lever for investor confidence and capital market development remains in jeopardy: timely corporate disclosure.
Despite regulatory frameworks in place, many listed companies continue to flout post-listing obligations, creating an environment of opacity, risk, and underperformance. Regulators are now taking decisive steps to enforce accountability and restore trust.
A robust disclosure regime is not merely procedural; it is the lifeblood of sound corporate governance. In mature markets, transparent reporting frameworks protect investors, support efficient capital allocation, and strengthen economic performance. But Nigeria’s capital market has often deviated from these ideals, exposing investors to unnecessary risk and delaying the market’s potential to drive national development.
Sound corporate governance helps to lower the cost of capital, and firms are encouraged to use resources more efficiently, thereby strengthening growth.
Meanwhile, the degree to which corporations observe basic principles of good corporate governance is an important factor for investment decisions.
However, in Nigeria, lapses in adherence to these principles have contributed majorly to the crisis in the Nigerian Stock Exchange, even as most countries have recovered from the global financial meltdown.
Over the years, many quoted companies have been violating this important obligation, thereby keeping investors in the dark about their financial health, among others.
Many ignorant investors have burnt their fingers by investing in some of the dormant companies, which do not furnish the market with their financials.
The need to institute a robust and sustainable corporate governance structure became imperative following the abuses of post-listing requirements by some quoted companies.
However, the Nigerian Exchange Limited (NGX) and the apex Securities and Exchange Commission have made various efforts to promote and ensure good corporate governance practices among the quoted companies and also reposition the capital market for development.
One of the measures which have helped in ensuring compliance was the introduction of X-Compliance in 2012, designed for quoted companies to provide timely disclosures to regulators, investors and other operators in the market.
Mounting Sanctions Signal Regulatory Resolve
For instance, in a clampdown on non-compliance, the Nigerian Exchange Limited (NGX) had fined nine listed companies a total of N76.8m for failure to file audited financial statements in accordance with regulatory deadlines. These include African Alliance Insurance Plc, FBN Holdings Plc, VFD Group Plc, Sterling Financial Holdings Company Plc, UPDC Plc, ABC Transport Plc, Presco Plc, eTranzact International Plc, and NCR (Nigeria) Plc.
The heaviest sanction-N48.6m-was imposed on African Alliance Insurance Plc for its failure to file its 2022 audited financials. Other firms were fined for similar delays in 2023. These penalties stem from violations of NGX’s X-Compliance initiative, a transparency framework introduced in 2012 to ensure that companies provide timely and accurate disclosures to regulators, investors, and the general public.
“Companies must understand that the integrity of the market depends on their transparency,” said one regulatory official. “Delayed filings conceal crucial financial information, leaving investors vulnerable to misjudgment and loss.”
X-Compliance and CSI Codes: Tools for Market Discipline
The NGX’s X-Compliance Report and Compliance Status Indicator (CSI) codes, launched in 2012 and 2016, respectively, are among the key instruments for monitoring disclosure behaviour. Through these, investors are informed of companies’ listing status and any deficiencies in corporate governance or financial reporting.
X-Compliance Report is a transparency initiative of the Exchange, which is designed to maintain market integrity and protect investors by providing compliance-related information on all listed companies. Companies listed on the Exchange are required to adhere to high disclosure standards, which are prescribed in Appendix 111 of the Listing Rules. Financial information, which is periodic disclosure and ongoing material events disclosure, should be released to the Exchange promptly to enable it to efficiently perform its function of maintaining an orderly market.
To this end, companies’ unaudited interim financial accounts are to be filed thirty (30) days after the relevant quarter and sent to all shareholders or published in at least two national daily newspapers with evidence of publication submitted to the Exchange, while audited interim accounts have sixty days after the relevant quarter to do the same.
However, audited financial results must be filed not later than ninety (90) days after the financial year end, with the necessary publications and filings done.
In a situation where a company is unable to file its audited or interim accounts before the due date, they can apply for an extension at least two weeks before the deadline with reasons while failure to comply within the extended due date will amount to a breach of the post listing requirements and applicable enforcement action will be taken with the Issuer’s name published in the X-Compliance report as performing “Below Listing Standard”.
Failure to comply or seek an extension results in being tagged “Below Listing Standard (BLS)” or placed on a Delisting Watch List (DWL). These tags are made public, allowing investors to make informed decisions based on the compliance standing of each firm.
According to Ms. Tinuade Awe, former General Counsel and Head of Regulation at the NGX, the initiative aligns with global best practices. “The compliance codes work in tandem with our weekly reports and are designed to promote market integrity and investor protection,” she stated.
The Cost of Poor Governance: A Historical Reflection
The consequences of weak corporate governance are not theoretical. In 2008, Nigeria’s capital market witnessed a catastrophic crash. Market capitalisation plummeted from N13tn in March to N6.9tn by December, and the All-Share Index fell from 66,371.20 to 31,450.78 points. At the heart of this collapse was reckless share price manipulation, weak disclosures, and widespread investor misinformation.
That crisis revealed the dangers of lax governance and prompted a series of regulatory reforms. Yet more than a decade later, lapses persist this time, under the guise of delayed filings, limited shareholder communication, and, in some cases, a complete information blackout by dormant firms.
SEC Steps Up Enforcement
The Securities and Exchange Commission (SEC), Nigeria’s apex capital market regulator, has reaffirmed its commitment to restoring confidence through strict enforcement. Under its new leadership, the Commission has adopted a zero-tolerance posture on infractions, targeting not just companies but also erring directors and operators.
“The days of regulatory loopholes and weak enforcement are over,” declared SEC Director-General, Dr. Emomotimi Agama. “Only ‘fit and proper’ individuals and entities will be allowed to operate in our financial markets.”
The Commission has intensified its surveillance operations, revoked licenses of defaulting operators, and launched crackdowns on unregistered platforms and Ponzi schemes. A new Investment and Securities Act (ISA) awaiting presidential assent promises stiffer penalties for financial misconduct and enhanced prosecutorial powers for the SEC.
“Transparency is non-negotiable,” Agama added. “Failure to provide full disclosures will be considered a direct violation of SEC regulations and will attract severe sanctions.”
Also, the NGX, in an effort to achieve a world-class capital market, has also continued to reiterate its commitment to maintain a zero-tolerance posture on dealing member firms and quoted companies on violations of rules and regulations.
This is on the back of the exchange’s determination to shift gears to drive innovations centred on increasing global visibility for the Nigerian capital market in the current year.
The NGX at different forums have said the exchange will sustain a zero-tolerance stance on dealing with member firms and violations by listed companies.
Investor Groups Support Regulatory Action
Shareholders and market watchers have welcomed the enforcement drive. President of the Progressive Shareholders Association of Nigeria, Mr. Boniface Okezie, described the NGX’s actions as a necessary step toward restoring investor confidence.
“It’s about time companies take their reporting responsibilities seriously. Investors need timely and accurate data to make informed decisions,” Okezie said.
Similarly, Alhaji Gbadebo Olatokunbo, a founding member of the Nigeria Shareholders Solidarity Association, stated: “This initiative will make the capital market more transparent, liquid, and accessible. The NGX is showing that it will no longer tolerate negligence.”
However, some shareholders urged a more nuanced approach. Pastor Adegoke Samson, an investor, called for regulatory warnings and phased enforcement. “Sanctions are necessary, but they should not drive companies out of the market. The Exchange must ensure that its disciplinary actions don’t become a disincentive to listing,” he said.
Moving Toward a World-Class Market
At the core of every developed capital market lies a culture of transparency, accountability, and rule compliance. These are not just checkboxes; they are the architecture upon which investor trust is built and sustained.
The NGX and SEC’s ongoing reforms are designed to align Nigeria’s capital market with global best practices. By tightening disclosure rules, strengthening oversight, and holding defaulting firms accountable, regulators aim to make the market a credible platform for both domestic and international investment.
Yet the burden of change also rests on the shoulders of corporate leaders. Boards of directors, chief financial officers, and compliance officers must embed disclosure discipline as a central component of their corporate governance framework, not as a legal burden, but as a strategic imperative.
Until that cultural shift takes root, the risk of poor governance and the cost to investors will remain high.
