NIC Uganda may be suspended from bourse

Monday July 11, 2011

UGANDA Securities Exchange (USE) has given the National Insurance Corporation (NIC) up to July 14 to publish its 2010 audited year-end results.

The USE listing committee met late last week over NIC’s failure to publish its audited financial statements, whose deadline was April 30, 2011.

All listed companies are required by law to publish their annual financial reports.

Joseph Kitamirike, the USE chief executive officer, pointed out that the stock market operator was concerned about the delay.

“It is a bit problematic. We expect those accounts to be published by July 14. If not, the company will be risking regulatory action,” said Kitamirike.

He noted that the most drastic action would be to suspend NIC from trading.

“We do not expect to get there in the case of NIC,” Kitamirike observed.

By close of business on Friday, NIC was trading at sh65 per share, a slight decline from the sh70 it has held onto for several months.

NIC publicist, Josephine Omunyide, said they were awaiting approval from the Uganda Insurance Commission (UIC), the sector’s regulator.

“We informed USE about the delay and we are awaiting the approval of UIC,” said Omunyide.

Japheth Kato, the chief executive officer of the Capital Markets Authority, the stock market regulator, disclosed that he would support any action taken by USE.

“It is a serious matter, but we will work with USE on this. We are all concerned,” Kato explained.

He, however, observed that the delay in the publication of the results should not erase confidence in the market because it is being addressed.

“Let’s look at things on a case-by-case basis. All the other companies have complied,” said Kato.

A stock analyst said the impact of suspending a stock would depend on NIC’s accounts performance.

“You cannot predict what if they announce very good results, yet the issues that are delaying them have nothing to do with the performance,” said the analyst.

Another analyst said the implication of a suspension from the market can be grave given that it affects the public’s perception of the company.

NIC recently issued a notice regretting the delay in publishing the audited financial statements as required by law.

“The process of obtaining the UIC’s approval is on-going,” Omunyide said.

By David Mugabe: The New Vision Newspaper