The Securities and Exchange Commission of Nigeria (SEC) has taken a significant step towards strengthening the oversight of securities issuance and allotment by private companies. To achieve this goal, the SEC has implemented stringent new regulations that will effectively enhance transparency and accountability in the capital market.
The SEC has announced that any unauthorized issuance or allotment of securities will result in substantial penalties, with offenders facing fines starting at a minimum of N10 million, along with additional daily fines of N100,000 until compliance is achieved.
These regulations were outlined in a statement released by the SEC and shared with journalists on Thursday, outlining severe consequences for non-compliance.
According to the SEC, “Any person found to issue or allot securities without prior approval from the Commission, or violating any provisions of these rules, shall face a penalty of not less than N10 million in the first instance.” The Commission emphasized the seriousness of the sanctions.
To qualify for issuing securities, private companies must be duly incorporated with a minimum operational track record of three years, as mandated by the SEC.
Additionally, the SEC stipulates that securities must be listed on a registered exchange within 30 days post-allotment, ensuring transparency and accountability in the securities issuance process.
The regulations also impose a cap of N15 billion on the amount a private company can raise within a year. Issuing houses are required to submit a detailed post-allotment report within 21 working days to ensure transparency in the allotment process.
Furthermore, the SEC has placed restrictions on the use of proceeds from securities issues, prohibiting issuers from diverting funds for purposes other than those stated in the offer document without prior approval.
To promote stakeholder engagement and transparency, the SEC has invited public comments on the new rules. Feedback is encouraged to be directed to the Rules Committee within two weeks of publication on the SEC’s website.
These new regulations underscore the SEC’s commitment to upholding the integrity of Nigeria’s capital markets and safeguarding investors from unauthorized and potentially harmful financial activities.
