The Nigerian Stock Exchange (NSE) has extended its full suspension on trading on LASACO Assurance Plc indefinitely after the company failed to complete its share capital reconstruction within the initial stipulated period.
In a circular, the NSE stated that the placement of full suspension on trading in the shares of LASACO Assurance was to determine shareholders eligibility for the share capital reconstruction as at the qualification date of January 29, 2021.
The NSE, however, noted that “the full suspension placed on trading in the shares of LASACO has been extended in order to enable the company complete the reconstruction exercise and to allot the reconstructed shares to eligible shareholders. The extended period of suspension is from February 15, 2021 till further notice”.
LASACO Assurance plans to cancel 5.5 billion ordinary shares of 50 kobo each, 75 per cent of its current issued share capital, under a massive share capital reconstruction plan.
The share capital reconstruction includes exchange of one new ordinary share of 50 kobo each for every four ordinary shares currently held by shareholders.
The reconstruction will lead to reduction of the paid up share capital of the company from its current N3.667 billion divided into 7.334 billion ordinary shares of 50 Kobo each to N916.793 million divided into 1.834 billion ordinary shares of 50 Kobo each at the end of the reconstruction.
Shareholders of LASACO Assurance had, at the 39th Annual General Meeting (AGM) on October 8, 2019 approved the share capital reconstruction.
Many insurance companies are adopting share capital reconstruction to create headroom for new capital raising as insurers strive to meet new capital requirements.
The National Insurance Commission (NAICOM) had in May 2019 released new capital requirements for insurance businesses with an initial 13-month compliance period for operators to shore up their minimum capital base to the required level.
The minimum paid-up share capital of a life insurance company was increased from N2 billion to N8 billion, non-life insurance from N3 billion to N10 billion, composite insurance from N5 billion to N18 billion while re-insurance companies were directed to raise their capital base from N10 billion to N20 billion. Several insurers have continued plans to meet the new capital requirements despite suspension of enforcement by NAICOM due to consideration for adverse effect of COVID-19 pandemic.