Oando Crisis Deepens as Johannesburg Stock Exchange Suspends the Coy

The Johannesburg Stock Exchange, JSE, on Thursday suspended trading in the shares of Nigerian oil company, Oando.

The suspension came after an order by Nigeria’s Securities and Exchange Commission, SEC, prompted the Nigerian Stock Exchange (NSE), to suspend the embattled company on Wednesday.

According to a notice by the JSE seen by PREMIUM TIMES on Thursday, the suspension was effected based on a correspondence between the Nigerian bourse and JSE.

“The Company has received communication from its primary listing, the Nigerian Stock Exchange (NSE), that the Securities and Exchange Commission (SEC) have issued a directive to immediately suspend the trading of Oando shares, a directive to which the NSE has complied,” the JSE said in its notice.

“The JSE has accordingly suspended trading of the Oando shares with effect from 09:00 a.m. SA time, pending clarification following the review of subsequent correspondence received on 18 October 2017 from the NSE and SEC and will provide a full statement of the Company’s position as soon as possible.”

In its response on Wednesday to the suspension by the NSE, the management of Oando plc said it was still reviewing documents sent to it by the NSE, and SEC.

In its suspension notice, Tinuade Awe, General Counsel and Head of Regulation at the NSE, said the full suspension is effective for 48 hours from Wednesday to Friday, after which it would commence a technical suspension until further directive.

Ms. Awe also affirmed that in the 48-hour period commencing Wednesday, there will be no trading in the shares of Oando Plc, adding that from Friday, investors will be able to trade in Oando Plc’s shares but such trading will not result in any movement in the price of the shares.

On Wednesday, the Nigerian Stock Exchange had suspended trading on the shares of Oando Plc as directed by the apex regulator, the Securities and Exchange Commission. SEC also said it planned further investigation and audit of the firm.

Some shareholders of Oando, in separate interviews, called for the suspension of the management of Oando Plc following the recent findings by SEC that the company breached the provisions of the Investments and Securities Act 2007.

The Nigerian capital market apex regulator also said it suspected insider dealing, discrepancies in the shareholding structure of the company, related party transactions not conducted at arm’s length, and a breach of the SEC Code of Corporate Governance for Public Companies.

SEC had received two petitions from Alhaji Dahiru Mangal and Ansbury Incorporated. The commission said it carried out a comprehensive review of the petitions and made the above findings among others.

While reacting to the development, the National President, Constance Shareholders Association of Nigeria, Alhaji Shehu Mikail, called for a proper forensic audit of Oando’s activities, which he said, would be effective if the current management of the company was asked to step down in the interim.

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He said in a telephone conversation with our correspondent, “The audit process must be conducted by a first-class audit firm and there should not be any form of interference by the management of Oando.

“The current management should be asked to step aside if a thorough job must be done. This will make shareholders and other stakeholders in the company to have confidence in the exercise.”

SEC said its primary role as apex regulator of the Nigerian capital market was to regulate the market and protect the investing public.

It added, “The commission notes that the above findings are weighty and therefore need to be further investigated. After due consideration, the commission believes that it is necessary to conduct a forensic audit into the affairs of Oando Plc. This is pursuant to the statutory duties of the commission as provided in section 13(k), (n), (r) and (aa) of the ISA 2017.

“To ensure the independence and transparency of the exercise, the forensic audit shall be conducted by a consortium of experts made up of auditors, lawyers, stockbrokers and Registrars.

“To further ensure that the interest of all shareholders of Oando Plc is preserved in the course of the exercise, the commission directed the Nigerian Stock Exchange to place the shares of Oando Plc on technical suspension.

“However in view of the fact that it is not technologically feasible for the Exchange to effect a technical suspension except after 48 hours, the commission directed as follows: Effective for forty-eight (48) hours from today, October 18, 2017 to October 20, 2017, the NSE should implement a full suspension in the trading of the shares of Oando Plc; and effective from October 20, 2017 and until further directive, the Exchange should implement a technical suspension in the shares of Oando Plc.”

In a post, analysts at Vetiva Capital Management Limited, said the decision to suspend the shares of the company, by its understanding, was to ensure the independence and transparency of the forensic audit to be conducted on the company and to ensure that the interest of all shareholders of Oando Plc was preserved during the exercise.

Meanwhile, in a letter signed by the General Counsel/Head of Regulation, NSE, Tinuade Awe, the Exchange notified all dealing members of the SEC’s position.

In a report quoted The Punch, the letter read in part, “Effective for 48 hours from today, October 18, 2017 to October 20, 2017, the Exchange should implement a full suspension on the trading of the shares of Oando Plc; and effective from October 20, 2017 and until further directive, the Exchange should implement a technical suspension on the shares of Oando Plc.

“A full suspension is the halt of trading activities in a listed security for a period. A technical suspension is the interruption of price movement in a listed security for a period so that any dealings in the securities, which occur during the period of the suspension, will not result in any change in price.”

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It added, “In the 48-hour period commencing today, there will be no trading in the shares of Oando Plc. Thereafter, effective October 20, 2017, investors will be able to trade in Oando Plc’s shares but such trading will not result in any movement in the price of the shares.”

Oando Plc said on Wednesday it had received a communication from the NSE suspending trading in its shares, as directed by SEC, and that it was reviewing the correspondence.

Oando added that it would state its position as soon as possible as it was committed to acting in the interest of all shareholders.

Reacting to the suspension, the management of Oando plc said it was still reviewing documents sent to it by the Nigerian Stock Exchange, NSE, and the Securities and Exchange Commission, SEC, after the company was suspended on the Nigerian bourse Wednesday.

A statement signed by Ayotola Jagun, Chief Compliance Officer and Company Secretary at Oando said the oil firm had received communication from both regulatory agencies.

Similarly, Tinuade Awe, General Counsel and Head of Regulation at the NSE, said the full suspension is effective for 48 hours from Wednesday to Friday, after which it would commence a technical suspension until further directive.

Ms. Awe also affirmed that in the 48-hour period commencing Wednesday, there will be no trading in the shares of Oando Plc, adding that from Friday, investors will be able to trade in Oando Plc’s shares but such trading will not result in any movement in the price of the shares.

But in its reaction Wednesday evening, Oando said it remains committed to the interest of its shareholders, adding that it will review the documents and come out with its position soon.

“The company is currently reviewing subsequent correspondence received today October 18, 2017 from the NSE and SEC and will provide a full statement of the Company’s position as soon as possible,” the statement said.

“The Company remains committed to acting in the best interests of all its shareholders.”

Apart from the Nigerian bourse, Oando is listed in Johannesburg and Toronto. But the company has in recent time been enmeshed in crisis.