STOCK EXCHANGE DEMOTES DIAMOND BANK, NEM, CONTINENTAL RE
Authorities at the Nigerian Stock Exchange (NSE) have removed Diamond Bank Plc, NEM Insurance Plc and Continental Reinsurance Plc from its high-ranking corporate governance index. In a statement yesterday, the NSE stated that the companies would cease to be on its Corporate Governance Index (NSE CGI) with effect from today, January 1, 2019.
The Exchange indicated that the removal of the duo of Diamond Bank and NEM Insurance was due to observed corporate governance lapses while Continental Reinsurance is being removed due to the company’s quest to voluntarily delist its shares from the Exchange.
“The Index Governance Committee of the Exchange resolved to remove NEM Insurance from the NSE CG Index following the suspension of the CGRS rating of the company by the Steering Board of the CGRS on Monday, November 19, 2018. Additionally, in view of the recent governance issues with Diamond Bank, the Index Committee has decided to remove the bank from the NSE CG Index,” the Exchange stated.
The Corporate Governance Rating System (CGRS) is a joint initiative between the NSE and the Convention on Business Integrity (CBi). It was developed to rate the corporate governance and integrity practices of all companies listed on the Exchange. The CGRS was launched on November 3, 2014.
The NSE CG Index tracks the performance of CGRS-rated companies using their market capitalisation, free float and corporate governance rating scores. The Index is reviewed on a bi-annual basis during which other companies that have become CGRS-rated in the interim may be added to the Index or companies that have had their ratings suspended or withdrawn may be removed.
The NSE CG Index is expected to be an important tool for investors keen on investing in well-governed companies as well as corporates eager to distinguish themselves on the ground of governance.
FINANCIAL WATCH had earlier reported that the NSE had launched an engagement process to review the compliance of Stanbic IBTC Holdings Plc and Diamond Bank Plc to high-level corporate governance standards expected of top-rated quoted companies.
The review was sequel to the fines imposed on Stanbic IBTC Bank and Diamond Bank by the Central Bank of Nigeria (CBN) for complicity in alleged illegal repatriation of $8.1 billion by MTN Nigeria Communications Limited. Diamond Bank was also subsequently embroiled in boardroom squabble that saw resignation of some non-executive directors.
To be certified, the CGRS rates quoted companies through three processes including independent verification; self – assessment by the company; certification of director awareness of their fiduciary duties; and a corporate integrity assessment where perceptions of actual company behaviour are sought from internal and external stakeholders. A score of 70 percent and above for both the company and individual directors is required for certification.