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Tag: SEC

  • SEC affirms June 2017 cancellation of dividend warrant

    Nigeria’s apex capital market regulator, Securities and Exchange Commission (SEC) has reaffirmed the commitments of capital market regulators and operators to stop issuance of dividend warrants as payments for dividends as from June 30, 2017.

    Director General, Securities and Exchange Commission (SEC), Mr Mounir Gwarzo, said shareholders will as from the second half of 2017 only receive their dividends through the electronic dividend (e-dividend) directly into their bank accounts.

    He urged investors to embrace the automated dividend payment in order to reduce their costs and ensure they get their dividends without delay adding that SEC will consider extension of the free registration period for the e-dividend.

    He noted that registration for the e-dividend can be done at any of the branches of Nigerian banks nationwide.

    “E-dividend is in the best interest of the retail investors, we are doing all these to encourage retail investors,” Gwarzo said.

    He pointed out that as part of the advantages of the e-dividend registration, investors have reclaimed N29.27 billion from outstanding unclaimed dividends within the past 12 months as increasing registration for electronic dividend payment allows investors to instantly reclaim backlog of unclaimed dividends.

    The reclaimed amount of N29.3 billion represents nearly one-third of the estimated total unclaimed dividends of N90 billion by November 2015.

    According to him, investors had between November 2015 and October 2016 collected N29.3 billion unclaimed dividends, which were directly credited into their bank accounts after registration for e-dividend.

    He pointed out that besides the advantage of ensuring that investors receive their future dividends directly and immediately into their bank accounts, the e-dividend has proven to be a useful system to reclaim backlog of unclaimed dividends.

    According to him, with the Bank Verification Number (BVN) providing authentication of account owners and dematerialization of most shares unto the electronic depository, e-dividend allows investors to reclaim outstanding unclaimed dividends of 12 years.

    Already, 1.4 million bank accounts have been mandated for the e-dividend payment. There are less than five million investors in the Nigerian stock market. Similar verification exercise in the banking system had shown that a person may own many accounts.

    He said the capital market has achieved 97 per cent conversion of share certificates into the electronic depository, otherwise known as dematerialisation, adding that the target is to achieve 100 per cent dematerialisation.

    Under the extended period, SEC would bear the cost of registration on behalf of any investor who registered. At the expiration of the grace period, subsequent registration of an investor would attract a fee of N100. The e-dividend management system was launched last year by the Commission in collaboration with the Central Bank of Nigeria (CBN) and Nigeria Interbank Settlement System (NIBSS) to enable investors have direct access to their dividends.

    Meanwhile, Gwarzo said the Commission was still considering setting up a special purpose vehicle (SPV) for unclaimed dividends that have remained unclaimed for more than 12 years. He however added that the a capital market stakeholders’ committee working on the review of the Companies and Allied Matter Act (CAMA) is also considering amendment of the provision which limits the lifespan of dividend to ensure shareholders or their beneficiaries could claim their dividend at any point in time.

    SEC had recently called for a consideration of a new rule that will set up the Nigerian Capital Market Development Fund (NCMDF) which will take custody of all unclaimed dividends of 12 years and above.

  • SEC, sole approving authority for local debts, says Adeosun

    SEC, sole approving authority for local debts, says Adeosun

    The Minister of Finance, Mrs. Kemi Adeosun, has said the sole responsibility for the supervision, regulation and approval of issuance of securities in the local market for Nigeria’s internal debt rests with the Security and Exchange Commission (SEC).

    The two circulars endorsed yesterday by the minister stated that “in pursuance of its powers as conferred by the Investment and Securities Act No. 29 of 2007(ISA) and the Rules and Regulations of the Securities and Exchange Commission made pursuant to the ISA (the SEC Rules), the Securities and Exchange Commission(SEC) shall continue to have and discharge the sole responsibility for the supervision, regulation and approval of the issuance of such securities in the local market by Federal, Government agencies, state and local governments, their agencies and corporations.”

    Adeosun added that “henceforth, all applications in relation to the issuance of such securities by any of the aforementioned entities shall be made to the SEC for review and approval.”

  • SEC defends N4.5b staff emoluments

    SEC defends N4.5b staff emoluments

    The Security and Exchange Commission (SEC) has said it has always been cautious on the renumeration of its workers following a reported payment of N4.5billion yearly  as staff salaries.

    Its Director-General, Munir Gwarzo, who appeared before the Tajudeen Yusuf – led House of Representatives Committee on Capital Markets, said the organisation’s recruitment drive was anchored on the peculiarity of the sector.

    While defending the N4.2billion staff emolument, he said the Commission judiciously utilised its resources.

    He said: “In every government institution , 70 per cent or more goes to personnel but we have been able to judiciously utilise ours.

    “The rationale behind it is that we are paying our workers their entitlements and allowances and like you know in every government institution, 70, 80 pern cent of the budget is spent on personnel cost even at the federal level.

    “But I think SEC should be commended because apart from doing that, we have also been vigorously pursuing our capital market mandate which is investors’ protection and capital market development, and you need resources. So even within that limited resources, we have been able to do that.

    “I am sure most of you followed our initiative from last year to this year with respect to electronic dividends, dematerialisatiom; we set up the national investment protection fund and we have paid 3000 beneficiaries; we launched the corporate governance  scorecard, we have set up committees to review all the laws in Nigeria and all these cost money.”

    He also defended the organisation’s recruitment structure saying it always goes for the best hands in the sub-sector.

    He said: “The head of our economic analysis holds a PhD in micro econometrics and we went round the universities to look for someone who specialise in micro econometrics.

    “You could have a PhD in economics specialising in agriculture economics or development economics but because we wanted someone who can be churning data from the market, someone who can do quantitative analysis , we emphasised on econometrics and we had to visit universities in Lagos, Ibadan, Ife and when we went there we said we were looking for that and we had eleven people that went through the process.

    “The assertion that we just got someone is certainly not so. We went through the process and one person became successful.”

    And then the risk management, as a SEC, it is very important for us to fortify our risk management division because we superintend over 1000 operators and each one of them have different risk profile.

    “You are dealing with a broker, with a register, an issuing house, you are dealing with a trustee. So you needed a robust risk management outfit.

    “We were lucky we got someone who had been in risk management for about 10, 15 years apart from being a chartered accountant and he is also a qualified CSA which is one of the most difficult and prestigious financial courses in this world. We also went and got him.

    “The other aspect is the Head of the Research department. Again we went for the best. Four people went through the process and eventually we go someone who has a first degree first class and has a PhD in econometrics.

    “To us we have gotten the best in this market and we brought all the relevant papers showing that we have engaged the federal character commission , they have given us certificate of compliance and they praised us based on the process we went through.

    “Even in the interview panel we had a member of the Federal Character Commission (FCC) which sent us a letter commending us for that.

  • ‘CBN, SEC, PTDF, others didn’t remit N450b’

    ‘CBN, SEC, PTDF, others didn’t remit N450b’

    The Central Bank of Nigeria (CBN), Petroleum Technology Development Fund (PTDF), National Agency for Food and Dr ug Administration and Control (NAFDAC), Nigerian Television Authority (NTA),  the Securities and Exchange Commission (SEC), among others have been accused of failing to remit about N450billion  operating surpluses.

    To recover this funds, the  Ministry of Finance has constituted a committee.

    The committee, led by the Accountant-General of the Federation, Alhaji Ahmed Idris, was mandated to reconcile the operating surpluses of 31 revenue-generating agencies of government between 2010 and 2015.

    A statement from the Ministry of Finance endorsed by Festus Akanbi, Special Assistant, media to the Finance Minister, Mrs Kemi Adeosun, explained that “the findings of the committee so far, have shown under-remittance of over N450 billion, which accrued within the period.”

    The Finance Ministry said  workers at the Office of the Accountant-General of the Federation have critically reviewed the accounting statements of the agencies. It added that the Committee will therefore be inviting the management of the affected agencies to explain why their operating surpluses were not remitted as mandated by the Fiscal Responsibility Act 2007.

    Some of these agencies, the ministry lamented, “have incurred huge expenses on overseas training and medicals, and huge expenses on behalf of supervisory ministries and/other organs of government involved in oversight or regulatory functions without appropriate approval.”

    Other infractions include payment of salaries and allowances to workers and board members, governing councils, and commissions which are outside or above the amount approved by the Revenue Mobilisation and Fiscal Allocation Commission (RMFAC) and the National Salaries, Income and Wages Commission.

    The list also includes unacceptable expenses incurred on donations, sponsorships, and others; unfavourable contract signed for revenue collection by a third party; granting of loans to workers that have not been repaid as well as sale and transfer of assets to board members, among others.

    According to the Finance Ministry, the overall effect of these practices is that operating surpluses of these agencies are lower than should be.

    As a result of this, Mrs. Adeosun has directed the Accountant-General of the Federation to issue a circular that will limit allowable expenses that can be spent as part of measures to ensure that these agencies face strict monitoring.

    This development, the statement explained, is part of the resolve of the minister to ensure that leakages are blocked.

  • We failed to remit N3.4b, says SEC

    But if the N13.7 billion it generated in three years (2010 to 2012) the Security and Exchange Commission (SEC) said it failed to remit N3.4 billion to the Federation Account.

    Its Director-General Mounir Gwarzo, made this known yesterday during a session with the House of Representatives Committee on Public Accounts.

    Seven queries were raised against the commission by the Hon Kingsley Chinda- headed Committee based on the report of the Auditor-General of the Federation for year 2013.

    Mounir however said due to the losses it incurred for the three years, the commission could not remit the N3.4 billion.

    While responding to why the Commission had to wait until end of the year to make the remittance, he said it was based on the provisions of the Fiscal Responsibility Act, which empowers SEC to remit at the end of each financial year.

    The committee members disagreed with him, saying an executive circular in November 2011, directed the commission, among other agencies, to remit 25 per cent of its internally generated revenue (IGR) monthly to the Federation Account.

  • SEC moves to open up stock market to small-scale investors

    SEC moves to open up stock market to small-scale investors

    The Securities and Exchange Commission (SEC) has launched a bid to simplify stock market’s account opening process and requirements for low-income and financially- excluded segment of the population.

    This is part of efforts to widen the domestic investors’base.

    Less than three per cent of the population invests in the  stock market, a situation that narrows the national capital formation process and subjects the market to extreme fluctuations of foreign portfolio investors.

    In a circular at the weekend, obtained by The Nation, SEC plans to introduce a new three-tiered account opening and requirements that allow financially excluded and low-income persons to start investing in the stock market. This will be done with simple identifications and with no specified minimum investment deposit.

    With these, any Nigerian that can provide basic information such as name, passport-sized photograph, place of birth, nationality, gender, home location and address and telephone number; directly or through an agent, will be able to open a stock market investment account with as little as the person can afford. There is no further provision of documentary evidence for verification.

    The proposed framework is, however, still subject to further scrutiny of stakeholders and approval by the board of SEC.

    Under the three tiered know-your-customer (KYC) requirements being introduced under the new framework, potential investors are categorised under the three headings of low-risk account, medium-risk account and high-risk account. Capital market operators are required to move accounts to the next level once they exceed the stated maximum cumulative balance for each level.

    For the low-risk account, no minimum investment amount is required for opening the account, which may be opened through an agent, at the stockbroker’s office or linked to a mobile phone. Under this category, investments can be made by account holder and third parties while redemption payments are restricted to account holder.

    This account applies only to Nigerian citizens or residents and there shall be no transfer of funds to other accounts and no foreign remittance can be credited to the account. A low-risk account is limited to only one account per person for each capital market operator and it shall be limited to a maximum single deposit amount of N20,000 and maximum cumulative balance of N200,000 at any point in time. It shall also be limited to a maximum daily redemption limit of N30, 000.

    To open a low-risk account, a prospective investor only need to provide basic customer information such as name, passport-sized photograph, place of birth, nationality, gender, home location and address and telephone number and all these may be sent electronically or submitted onsite to the capital market operator, its branches or agent’s office. There shall be no further request for documentary evidence of identity.

    The medium-risk account builds on the requirements for low-risk account by requesting for verification of the basic customer identification information. The medium-risk account may be operated by phone or through the capital market operator’s customer web site and portal.

    The medium-risk account is limited to a maximum single deposit of N40, 000, a maximum cumulative balance of N400, 000 at any point in time and a maximum daily redemption limit of N50, 000.

    In addition to these, a medium-risk account holder will be required to provide suitable referees, which may include village heads, trade groups, supervisors and employers among others.

    “Where verification of client’s identification documents is not complete the client shall not be allowed to operate the account,” according to the proposed framework.

    Under the high-risk account classification, capital market operators are required to obtain, verify and maintain copies of all the required documents for opening of accounts. Such accounts can only be opened at the capital market operator’s office or branch of its agent’s office face to face by the prospective customer and a minimum investment amount may be required for the opening of high-risk accounts. There shall be no maximum limit on single deposits and cumulative balance.

    The high-risk customers are required to comply with the KYC requirements contained in SEC’s Anti-Money Laundering and Combating the Financing of Terrorism Regulations, 2013. Besides, high-risk customer identification information and documents are to be verified against similar information contained in relevant data bases.

  • SEC, NSE scrutinise Ibru’s Ikeja Hotel’s investigative report

    SEC, NSE scrutinise Ibru’s Ikeja Hotel’s investigative report

    Nigeria’s capital market regulator, Securities and Exchange Commission (SEC), is scrutinising the investigative report on the boardroom crisis at Ikeja Hotel Plc.

    This is coming after the simmering ownership and management crisis within the Ibru’s family snowballed into a major onslaught by the Economic and Financial Crimes Commission (EFCC) last week.

    Reliable capital market sources at the weekend said the market regulators had dusted the reports on Ikeja Hotel to review the facts and proactively act to protect shareholders’interests.

    A source at SEC said the apex capital market regulator had received a comprehensive report from the Nigerian Stock Exchange (NSE), where Ikeja Hotel is quoted, and the Commission had started reviewing the report in line with the market’s complaint management framework.

    Ikeja Hotel, incorporated in 1972 and quoted on the NSE in 2007, controls a chain of hotels directly and through other subsidiaries and affiliates, including Tourist Company of Nigeria (TCN) Plc and Capital Hotel Plc.

    Ikeja Hotel owns Sheraton Hotel, Ikeja, Lagos. TCN owns Federal Palace Hotel while Capital Hotel owns Abuja Sheraton Hotel. The Ibru family owns the single largest individual shareholding.

    The EFCC last Wednesday declared Mr. Goodie Ibru, who chairs the chain of hotels, wanted alleging capital market fraud, stealing and money laundering, among others. The family of Mr.  Ibru immediately responded accusing EFCC of bias and mischief, stating that the public notice declaring Goodie Ibru wanted as scandalous, misleading and unfortunate.

    The Ibru family had ran the hotel chain without any notable wrangling until the demise of Olorogun Michael Ibru, which opened up family feud that has continued to haunt the hotel chain. While Goodie Ibru chaired the hotel chain, Olorogun Michael Ibru and other family members were on the board of Ikeja Hotel Plc.

    In earlier response to the attempt to oust him as chairman, Goodie Ibru had dismissed earlier claims of corporate abuses, noting that those opposed to him had rather ganged up to frustrate attempts to recapitalise the company. Goodie Ibru’s family in the counter-notice to the EFCC notice, reiterated his position that the Ikeja Hotel crisis “centres on family misunderstanding and boardroom politics.”

    Another capital market source said the investigations by capital market authorities would lay bare the core issues surrounding the Ikeja Hotel crisis, noting that by virtue of the Investment and Securities Act (ISA) and inherent expertise required, SEC and the NSE have the primary responsibility to determine capital market offences.

    The source said the decision of EFCC to launch an investigation into athe boardroom issue of a quoted company without going through the SEC and NSE bypassed the due process, adding that such sensitive information could hurt the interest of the shareholders which such investigation seeks to protect.

  • New CBN guidelines will boost Sukuk issuance, says SEC

    Securities and Exchange Commission (SEC) has praised the new guidelines for granting liquid asset status to Sukuk instruments issued by state governments issued by the Central Bank of Nigeria (CBN) as a major boost to the emerging domestic market for non-interest bonds, otherwise known as Sukuk.

    The apex bank’s guidelines granted liquidity status to Sukuk bonds issued by state governments, which will allow banks to invest in these non-interest bonds to a limit and use such as part of their liquidity ratio calculation.

    The apex capital market regulator described the guidelines as a major milestone for Nigeria, noting that it will catalyze the development of non-interest capital market products.

    SEC pointed out that with these new guidelines, Sukuk instruments issued by state governments can be discounted at CBN discount windows and can be applied by banks in their liquidity ratio computation, similar to conventional state bonds. This will facilitate the emergence of a vibrant secondary market that will encourage more issuances from state governments.

    According to SEC, the release of these guidelines follow diligent advocacy efforts from the Capital Market Committee (CMC) on the need to grant liquidity status to Sukuk in order to bolster its appeal as a product for both issuers and investors alike.

    “The guidelines will play a key role in broadening and deepening Nigeria’s financial system by catalyzing the development of non-interest products and enhancing financial inclusion. We wish to commend the CBN for this laudable step while appreciating the CMC sub-Committee on non-interest products for their dedicated work leading to the release of these guidelines,” SEC stated.

    Sukuk, the non-interest equivalent of bonds, is becoming increasingly attractive as a capital market instrument across the globe. Annual Sukuk issuances around the world have grown from $15 billion in 2008 to over $150 billion in 2015. As the Federal and state governments seek alternative funding sources for infrastructure, these new guidelines will make Sukuk one more available option.

    In 2013, the SEC had issued Rules on Sukuk Issuance in Nigeria following which the State Government of Osun raised N11 billion in Nigeria’s first Sukuk issuance which was oversubscribed. Since then, several state governments have been exploring issuing Sukuk to raise funds for infrastructure financing and other much needed public interventions. However, the absence of a liquid secondary market had been a key concern for investors like pension funds and other institutional investors. To address this constraint, the Capital Market Master Plan had highlighted the need to push for liquidity status for Sukuk. In implementing the Master Plan, the SEC and the capital market community closely engaged the CBN to develop and release guidelines for this purpose.

  • SEC plans to increase sub-brokers’ minimum capital requirements

    Securities and Exchange Commission (SEC) plans to increase the minimum capital requirements for various functions of sub-brokerage.

    A new amendment being considered by SEC, a draft of which was obtained by The Nation, indicated that corporate sub-brokers would now be required to have a minimum capital base of N10 million while individual sub-brokers would be required to have minimum networth of N1 million.

    SEC confirmed that it has registered some five sub-brokers. Under a new structure at the stock market, stockbroking firms are expected to choose from the four categories of operations including broker-dealer, the highest level; broker, the second level; dealer, the intermediate level and sub-broker, the lowest level similar to investment agent to without any trading privileges.

    A sub-broker functions under the broker primarily to market securities and solicit stockbroking business. In most jurisdictions, they have very minimal professional and regulatory requirements. They are not required to be a member of a stock exchange. They are not required to be an associate of the institute of stockbrokers, although some levels of capital market-focused studies are required to perform effectively.

    Each stockbroker is expected to screen, train, record and account for sub-brokers under it. There is no limit to the number of sub-brokers that a stockbroking firm can engage to help as its agents-primarily to interface with investors. The sub-broker helps the broker to market securities, collect investor’s mandate and documents and foster the agent-principal relationship between the broker and investor by facilitating securities trading and rendering of returns to the investor.

    The sub-broker makes his income from sharing in the stockbroking commission-the stockbroker’s fee, under a pre-arranged mutually exclusive contract between the broker and sub-broker. Besides the stockbroking commission, a sub-broker may share part of other incomes from other services relating to his clients including charges on share registration and management services such as dematerialisation and dividend collection and retrieval.

    SEC had earlier increased the minimum capital requirements for other capital market functions. SEC had in December 2013 announced major increases in minimum capital requirements for capital market functions under a new minimum capital structure that was initially scheduled to take off on January 1, last year. It however extended the deadline to September 30, last year

     

  • SEC gives operators October 31 deadline to join trade groups

    SEC gives operators October 31 deadline to join trade groups

    Securities and Exchange Commission (SEC) has directed capital market operators to register with their trade groups or associations by October 31 as it moves to strengthen the implementation of its new complaints management framework.

    In a circular to the operators, SEC said it would sanction those that fail to comply with the deadline.

    According to the commission, the directive was sequel to the decisions at the just-concluded Capital Market Committee (CMC) meeting held in Lagos earlier this month.

    SEC noted that as part of efforts to restore investor confidence in the capital market, it had developed rules on complaints management in February, last year.

    The rules outline a new and more responsive complaint management framework that requires the SEC,Self-Regulatory Organisations (SROs) and capital market Trade Groups/Associations to establish fair, impartial and objective complaints management policies for the handling of investor complaints. This new framework is expected to significantly improve dispute resolution within the market and ultimately reduce infraction rates as it streamlines the complaints management process.

    “Historically, the SEC had been receiving the overwhelming majority of complaints from investors even when such complaints could be addressed more swiftly at trade group level. In attending to such huge volumes of complaints, the SEC has had to allocate significant resources that could be better utilised in more effective market development and regulation.This informed the need to overhaul the complaints management mechanism in the capital market as encapsulated in the SEC Rules and Regulations which are available on the website,” SEC noted.

    According to the commission, to effectively delegate key complaints management functions to market operators, the SEC recognises the need to strengthen SROs and Industry Trade Groups/Associations to enable them play more prominent roles in the management and resolution of investor complaints.

    It noted that empowering SROs and trade groups to handle and resolve investor complaints is in line with best practice from both emerging and developed markets.

    However, the Commission pointed out that since the new complaints management framework was released by the SEC in February 2015, its implementation has been rather slow due to the inability of a few trade groups to develop their respective complaints management policies.

    The apex capital market regulator stated that a review of the framework’s implementation at the last CMC meeting revealed that a key constraint facing the trade groups is the non-compliance of some market operators who are yet to be registered with their relevant trade association.