Nigeria’s capital market stakeholders are calling for stricter enforcement of the 20% free float rule, arguing that stronger compliance is essential to improve liquidity, strengthen price discovery, and restore investor confidence on the Nigerian Exchange (NGX). Despite ongoing efforts by regulators to deepen the market and attract more listings, shareholders say many of the country’s largest publicly listed companies still have only a limited number of shares available for public trading.
The renewed call comes as the Securities and Exchange Commission (SEC) and the Nigerian Exchange Limited (NGX) review existing free float requirements amid growing concerns about the low volume of tradable shares in some of the market’s biggest stocks. Shareholders believe that while the equities market has enjoyed a strong rally in recent months, inadequate free float levels continue to restrict market participation and limit trading opportunities for investors.
President of the New Dimension Shareholders Association of Nigeria, Patrick Ajudua, said the 20% free float requirement was originally introduced to encourage broader ownership, improve stock liquidity, and increase trading activity. According to him, weak enforcement has allowed several companies, particularly those on the premium board, to remain heavily controlled by a small group of dominant shareholders, leaving too few shares available to the investing public.
Ajudua warned that the concentration of ownership among core investors creates liquidity challenges because large portions of shares remain locked away from daily trading. He explained that investors often struggle to acquire the volume of shares they need, resulting in reduced market activity and less efficient price movements. He urged regulators to take a firmer stance on compliance to ensure the objectives of the free float policy are achieved.
Supporting the call, former President of the Ibadan Zone Shareholders Association of Nigeria, Eric Akinduro, and President of the Independent Shareholders Association of Nigeria, Moses Igbrude, described free float as a critical pillar of a healthy stock market. They noted that stronger enforcement would improve transparency, increase investor participation, attract both local and foreign investment, and ultimately make Nigeria’s capital market more competitive and efficient. As regulators review the framework, investors are watching closely for measures that could unlock greater market liquidity and strengthen confidence in the NGX.
source: The guardian
