The stock market is considering a major amendment to its rules to checkmate boardroom intrigues and block information arbitrage that tend to confer advantages on companies’ directors.

The new rules also expand the scope and authority of corporate financial reporting while eliminating gaps that allow companies to sidetrack relevant rules in stage-managing corporate compliance.

The draft of the extensive amendments obtained at the weekend seeks to provide clarity and greater disclosures on directors’ trading in shares, corporate liability for accuracy and compliance of financial statement, dissuade bogus dividend payment and other boardroom’s maneuverings that tend to favour insiders.

The proposed amendments come on the heels of increased violations of rules on ‘closed period’, when directors are banned from trading in the shares of their companies. Rule 17.17 of the Nigerian Exchange disallows insiders and their connected persons from trading in the shares or bonds of their companies during the ‘closed period’ or any period during which trading is restricted. This period is mostly at a time of sensitive material information, like prior knowledge of financials, dividends or major corporate changes, which places directors and other insiders at advantage above other general and retail investors.

A review of the disclosure violations at the stock market at the weekend showed that all violations in 2021 were related to violation of Rule 17.17 on ‘closed period’. Also, two-thirds of violations so far this year were related to violation of ‘closed period’.

Under the amendments, in addition to the provisions of relevant accounting standards, laws, rules and requirements regarding preparation of financial statements, companies will now be required to include several specific declarations on securities transactions by directors, changes in shareholding structure, self-assessment on compliance with corporate governance standards and internal code for directors on securities transactions, among others.