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Tag: SEC

  • SEC, NSE may delist, reclassify 100 operators

    SEC, NSE may delist, reclassify 100 operators

    Securities and Exchange Commission (SEC) and Nigerian Stock Exchange (NSE) may delist and reclassify no fewer than 100 capital market operators in the first week of October.

    The action would follow the conclusion of the capital market regulators exit procedures for insufficiently capitalised operators.

    The Nation learnt that the  market regulators would undertake a final review of the compliance status of all capital market operators on September 30 and effect deregistration and reclassification of the operators on October 2.

    The capital market will wake up on October 5 with the list of compliant operators and renewed status of each operator, according to the sources.

    SEC, the capital market regulator, will trigger the deregistration and reclassification, prompting the NSE to automatically deregister or reclassify operators in line with SEC’s master list.

    Existing rules at the NSE make it mandatory for it to replicate SEC’s regulatory enforcement actions including suspension, revocation and reclassification.

    As lobby intensifies by operators, SEC has insisted that it will not grant further extension of the September 30 deadline for compliance with new minimum capital requirements for capital market operators.

    ItsDirector-General, Mounir Gwarzo, said any further extension would damage the integrity of the market.

    SEC last week extended the deadline for the notification of any possible changes in the status of any operator as a result of the new minimum capital requirement to August 31.

    Operators are expected to write the Commission on possible reclassification of function, reduction of functions or merger and acquisition while the Commission has also provided template for orderly reclassification of functions.

    Already, the NSE has launched its final expulsion process for stockbroking firms deemed to be inactive. The National Council of the NSE, late last month held inquiry for the first batch of stockbroking firms deemed to be inactive and in line for expulsion, unless they present substantial evidence to show otherwise.

    The first batch of stockbroking firms included 15 firms, which failed to activate their dealing licences.

    The 15 firms included Al-Pina Investment & Trust Co. Limited, BBL Asset Management Limited, Integrated & Allied Securities Limited, Standard Chartered Securities Limited, Translux Services Limited, Afro-Arab Investment Limited, Barakat Investment Limited, Bosson Capital Assets Limited, Dealers Assets Management Limited and Enabell Capital & Investment Limited.

    Others are First Express Limited, KFF Worldwide Solutions Limited, Kingdom Securities Limited, Silver & Gold Securities Limited and Williamson Capital Management Limited.

    A reliable NSE source had said the hearing was part of the expulsion process to ensure that the it complies with extant rules that provide for fair hearing to dealing members. The 15 firms are the first batch of what may be a long-running expulsion process.

    The inquiry was sequel to a new rule on the revocation of dealing licences and expulsion of inactive stockbroking firms, which came into effect on June 29 this year.

    The new rule and amendments on revocation of dealing licences was earlier approved by SEC last February, but the NSE had delayed the implementation.

    The Nation had then reported exclusively that the NSE might commence the process of revocation of dealing licences and expulsion of not less than 88 stockbroking firms, about one-third of the total number of registered stockbroking firms on Nigeria’s only stock exchange.

    This re-examination process of dealership might be the largest-ever cleansing of the Augean stable at the stock market. The total number of previously revoked licences stood at 13.

    The Nation’s check indicated that the NSE had already determined 88 out of the 308 stockbroking firms on its dealing members’ list as inactive. A status report on dealing members indicated that out of 308 existing stockbroking licences, 220 were active while 88 were inactive.

    A breakdown of the inactive licences included 50 operationally inactive firms, 20 inactive dealing firms deregistered by SEC and 18 licences that had been dormant and were not activated since issuance. All these fall within the purview of revocation and expulsion due to inactivity.

    SEC had late 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 by January 1, 2015. It however extended the deadline to September 30, 2015.

    Minimum capital base for broker and dealer was increased by 329 per cent from the existing N70 million to N300 million. Broker, which currently operates with capital base of N40 million, will now be required to have N200 million, representing an increase of 400 per cent. Minimum capital base for dealer increased by 233 per cent from N30 million to N100 million.

    Also, issuing houses, which facilitate new issues in the primary market, will now be required to have minimum capital base of N200 million as against the current capital base of N150 million. The capital requirement for underwriter also doubled from N100 million to N200 million. Trustees, rating agencies and portfolio and fund managers had their minimum capital base increased by 650 per cent each from N40 million, N20 million and N20 million to N300 million, N150 million and N150 million respectively. A  Registrar will now have a minimum capital base of N150 million as against the current requirement of N50 million. While the minimum capital base for corporate investment adviser remained unchanged at N5 million, individual investment advisers will have to increase their capital base by 300 per cent from N500,000 to N2 million.

     

     

     

  • SEC petitions NJC against judge in N11b BGL suit

    The Securities and Exchange Commission (SEC) has petitioned the National Judicial Commission (NJC) against Justice Saliu Saidu of the Federal High Court in Lagos over his alleged breach of the Code of Conduct for judges.

    In the August 3 petition, it was alleged that Justice Saidu has not shown impartiality in handling the case between BGL group and the commission.

    Pointing out that the whole BGL vs SEC episode is being closely monitored by large domestic and foreign institutional investors, the commission urged the NJC to investigate the judge’s conduct.

    The petition signed by the SEC Director General, Mounir Gwaizo was copied to President Muhammadu Buhari; Vice President, Prof. Yemi Osinbajo; Senate President, Bukola Saraki; Speaker House of Representatives, Yakubu Dogara; Chief Judge, Federal High Court, Justice Ibrahim Auta and Permanent Secretary, Federal Ministry of Finance, Mrs. Anastasia Mabel-Nwaobi.

    SEC had scheduled sittings of the Administrative Proceedings Committee (APC) for August 4 and 5,  2015 to hear cases related to investor complaints against BGL which alleged fraud totaling up to N5.8 billion. An official statement posted on the SEC’s corporate website however announced that SEC was “postponing” the sittings due to an ex parte court order issued by a Lagos Federal High Court.

    Not happy with the court order, SEC had petitioned the NJC against the trial judge, explaining that its decision was borne out of deep concern that judges were being used to undermine its clear regulatory authority as outlined in the Investments and Securities Act of 2007.

    “If the judges continue dishing out ex parte orders restraining SEC from protecting investors, future offenders will employ tricks from BGL’s playbook by approaching the courts to get injunctions in a bid to avoid accountability. On the other hand, if the SEC is allowed to appropriately sanction BGL and its executives for all infractions committed by them, a clear signal would be sent to the entire market that there shall be no sacred cows but only zero tolerance for wrongdoing”.

    The petition outlined investors’ complaints which SEC has been receiving against BGL since 2012, its detailed investigations of BGL’s activities and establishment of an interim management team to ascertain the financial health of the company and protect unsuspecting investors who might unknowingly continue to conduct business with BGL.

    The petition also gave details of BGL’s offenses, including questionable investments in unlisted/illiquid securities (in one instance investors’ money was recklessly risked in a firm already declared bankrupt).

    SEC had alleged that BGL was in a bad financial state and posed significant risk to investors, its customers and the entire market. “It was sustaining losses of about N48 billion for five years in a row and faced liquidity challenges making it unable to pay about N11 billion of investors’ funds that had matured.  And in the latest list of Debtors to First Bank Plc published in a national daily on August 4, 2015, BGL Securities is indebted to First Bank to the tune of N1.64 billion which matured since July 31st, 2012.

    “With these obvious red flags, one wonders why any judge would be interested in aiding and abetting such an operator to continue participating in the capital market and endangering other market participants. Justice Saliu Saidu rather seems to be comfortable performing this task. On 27th May 2014, he granted an ex parte motion filed by BGL restraining SEC from suspending BGL or investigating its activities. He refused to hear SEC’s motion on notice seeking to vacate that order, even when it came up for hearing on 11th June 2015. First, Justice Saidu adjourned the matter till 19th June 2015 and then to 9th July 2015. Yet on 29th June 2015, he was willing to hear BGL’s ex parte motion to abridge the time within which SEC could respond from the 7 days granted by the rules to just 2 days. Amazingly, those prayers by BGL were all granted on the same day. According to SEC’s petition against Justice Saidu, this action contravenes Rule 2(5) of the Code of Conduct for Judicial Officers which frowns at repeatedly granting ex parte applications”, it alleged.

    The commission said that when its case finally came up for hearing on July 9, 2015, Justice Saidu yet again refused to hear it, claiming that the case was not “ripe for hearing”.

    Yet on the same day, after SEC’s counsel left the court premises, he decided to hear the case and struck it out.

    SEC stated in its petition that its counsel conducted searches on the Federal High Court records and found no trace for the mysterious order bearing Justice Saidu’s signature. The petition equally flashes the spotlight on one Justice Mohammed B. Idris Kutigi of the Federal High Court, Lagos who issued the latest restraining order

    It will be recalled that when SEC set up an IMT to investigate further of the allegation and engaged the services of forensic auditors, the BGL Group obtained an ex-parte court order from the Federal High Court, Lagos Division, presided over by Hon. Justice M. N. Yunusa on 30th April, 2015 ordering the forensic auditors to vacate the premises, the SEC even though has an order from the IST complied.

    It said it has become very obvious that BGL seems to have hatched a well calculated antic to manipulate the judiciary to avoid answering for its actions.

    It said this explained why the commission took the  decision to report the matter to higher authorities who can strengthen the rule of law by investigating and punishing any wayward judicial officer.

  • SEC trims staff, offices in major restructuring

    SEC trims staff, offices in major restructuring

    Securities and Exchange Commission (SEC) has undertaken a major restructuring exercise that cuts its operations, workers and technology with a view to improving service delivery to all stakeholders.

    The restructuring entails both a review of the organisational structure as well as a voluntary retirement scheme to trim down the wage bill of the regulator.

    Under the restructuring exercise, SEC is closing four of its existing seven zonal offices. Under the previous organisational structure, SEC operated with a head office in Abuja and seven zonal offices in Kaduna, Kano, Ibadan, Lagos, Maiduguri, Onitsha and Port Harcourt. Under the new arrangement, SEC has decided to close down four of its zonal offices in Kaduna, Ibadan, Maiduguri and Onitsha in order to allocate both human and material resources to strengthen the remaining three in Kano, Lagos and Port Harcourt.

    In a statement yesterday, SEC said the decision to close the zonal offices was arrived at because it could leverage on technology and shift resources to the use of both print and electronic media for public enlightenment to achieve the primary objective of investors’ education.

    The Commission stated that its new complaints management framework will delegate first stages of complaints management to the operators and trade groups, which implies that less and less complaints will be handled by the SEC, further reducing the need for multiple zonal offices.

    “In essence, by closing the four zonal offices and strengthening the remaining three, SEC can do more at a lower cost, this will free up resources to be allocated to critical areas of the Commission’s mandate like investor protection and investor education,” SEC noted.

    It also noted that it intends to strengthen functions such as monitoring, investigation and registration at the Lagos zonal office which will enable operators to reduce their overhead cost.

    According to the Commission, the move to shift more roles and functions to the Lagos office will boost institutional capacity and increase efficiency while improving service delivery by reducing turnaround time for processing applications. In addition, SEC can reduce its overhead cost as well while taking full advantage of proximity to operators to discharge its responsibilities in a timelier manner.

    Another aspect of the structural reform at SEC as an institution is the composition of workers by ranking. The Commission had been operating at an unsustainably top-heavy structure with a lot more senior level staff and junior level ones. For example, as at January this year, there were over 30 Deputy Directors, more than 40 Assistant Directors and upward of 80 Senior Managers. This issue had direct effect on workers’ morale as well as motivation because it inhibited career progression.

    To address this situation, the SEC Board approved a voluntary retirement scheme proposed by the Executive Management to incentivise top-level staff above the age of 45 who had served the Commission for more than 10 years and a nearing their retirement to voluntarily retire. Through this exercise, at the end of July 2015, 43 very senior staff exited the Commission, some of whom had served for more than 20 years and had stagnated for up to 11 years on the same position due to the non-availability of vacancies.

  •  SEC retires 43 senior staff

     SEC retires 43 senior staff

    The Securities and Exchange Commission (SEC) on Wednesday said it had retired 43 senior members of staff and closed down its four zonal offices.

    A statement posted by the commission on its website named the offices as Kaduna, Ibadan, Onitsha and Maiduguri.

    It said that the commission was “undergoing a major restructuring of its operations to boost staff morale and improve service delivery to all stakeholders.”

    The commission said that the restructuring entailed a review of the organisational structure and voluntary retirement scheme to trim down the previously top-heavy ranking structure.

    It said that the commission decided to close down four of its zonal offices to allocate both human and material resources to strengthen the remaining three in Kano, Lagos and Port Harcourt.

    SEC said that the decision became necessary after a careful review of the operations and performances of all the zonal offices.

    “By strengthening the remaining three offices, SEC can do more at a lower cost, this will free up resources to be allocated to critical areas of the commission’s mandate like investors’ protection and investors’ education,” it said.

    The statement said that another aspect of the structural reform of the commission was the composition of staff by ranking.

    “The commission has been operating at an unsustainably top-heavy structure with a lot more of senior level staff and junior level ones.

    “For example, as at January, 2015, there were over 30 deputy directors, more than 40 assistant directors and upward of 80 senior managers.

    “This issue has direct effect on staff morale and motivation because it inhibited career progression,” it said.

    The statement said that the board had approved a voluntary retirement scheme incentive proposed by the executive management for top-level members of staff above the age of 45.

    “Through this exercise, at the end of July 2015, 43 senior staff exited the commission, some of whom had served for more than 20 years.

    “SEC is repositioning the institution to focus on the strategic objective of faithfully implementing the 10-year capital market master plan developed by the market,” the statement added.

  • SEC mulls removal of 12-year ceiling on unclaimed dividend

    Securities and Exchange Commission (SEC) might lead efforts to remove the 12-year ceiling on recovery of unclaimed dividends, paving the way for shareholders to be able to retrieve their unclaimed dividends irrespective of the time-line.

    Extant laws currently place a 12-year statute bar on unclaimed dividends, after which the shareholders forfeit the rights to the dividends and the unclaimed funds revert to the companies that made the payment.

    But SEC, as part of a basket of initiatives aimed at enhancing market integrity and deepening participation, especially by domestic investors, is considering a review of the 12-year limit.

    SEC is finalising the list of a highly influential advisory group that will serve as advocacy front to lobby for legislative and policy changes. The advisory council will be mandated to engage the National Assembly, Judiciary and the Federal Executive Council on key changes necessary to enhance the growth of the market.

    “It is something that we need to look at as we move forward,” director general, Securities and Exchange Commission (SEC), Mr Mounir Gwarzo said when asked about the 12-year limit on unclaimed dividends.

    He said the commission had earlier led an effort to change the statue bar because it believed that the 12-year bar is not good for the investors in the market and unclaimed dividend should be such that a shareholder should be entitled to claim his dividends if he comes around with evidence that he owns the shares.

    Unclaimed dividends currently stand at about N80 billion.

    SEC had recently taken several steps to address the issue of unclaimed dividends. The apex capital market regulators recently directed all registrars of public limited liability companies to return all unclaimed dividends, which have been in their custody for 15 months and above to the companies that paid the dividends.

    In a circular dated June 1, SEC gave the registrars up till June 30, 2015 to comply and file evidence of remittance of the unclaimed dividends to the companies with the Commission. SEC last week confirmed that about 70 per cent of the registrars have complied while the remaining registrars have written to seek for further consideration.

  • SEC objects to BGL’s suit over ‘unpaid’ N5.7b investments

    SEC objects to BGL’s suit over ‘unpaid’ N5.7b investments

    The Securities and Exchange Commission (SEC) yesterday urged the Federal High Court in Lagos to strike out a suit by BGL Plc, its subsidiaries and others over allegations that they are indebted to investors to the tune of N5.7billion.

    Some of the investors, including Rivers State government, had petitioned SEC over BGL’s alleged failure to return their investments at maturity.

    SEC, in the preliminary objection, said BGL is indebted to the investors to the tune of N5,769,993, 553.67 as at June 2.

    It added that BGL is having severe liquidity problems and has been running at a loss to the tune of over N48billion as at December 2014.

    According to SEC, BGL Asset Management Limited, contrary to its mandate, wholly transfers funds received from the investing public to BGL Plc without engaging in any form of Fund/Portfolio Management.

    But BGL obtained an order restraining SEC from “holding and or conducting any trial or hearing in respect of the alleged complaints against the plaintiffs…” pending the hearing and determination of the suit.

    The plaintiffs are BGL Plc, BGL Asset Management Limited, BGL Capital Limited, BGL Securities Limited, Mr Albert Okumagba, Chibundu Edozie, Teddy Okumakube, Loraine Awoonor-Renner, Ehime Alofoje, Joseph Ashley-Osuzoka, Andre Ewubare, Victor Obire and Nkechi Azubuike.

    They sued SEC, its Administrative Proceedings Committee (APC) and Mounir Gwarzo.

    Justice Mohammed Idris had ordered parties to maintain status quo ante bellum pending further orders.

    SEC had suspended BGL Asset, BGL Capital and BGL Securities from all capital market activities, withdrew the registration of BGL Plc as a capital market operator and directed that Okumagba should cease to be a registered Sponsored Individual with SEC.

    Dissatisfied, BGL sued SEC, challenging the suspension. The plaintiffs said the wide publicity SEC gave the suspension, including posting it on SEC’s website with worldwide access, has caused adverse effect on BGL and injured the plaintiffs in every conceivable manner.

    BGL said it is contrary to the rules of natural justice for SEC’s APC to adjudicate over the complaints which was the basis for its indictment and suspension.

    It urged the court to restrain SEC from making further media publication of the allegations of crime and unethical conduct, adding that “unless the defendants are restrained in the manner sought, no amount of monetary damages will adequately compensate the plaintiffs for the loss that continues to be incurred by them by the defendants’ conduct.”

    SEC, in the preliminary objection, is contending that the court lacks jurisdiction to entertain the suit on the ground that only the Investment and Securities Tribunal has the exclusive jurisdiction to adjudicate disputes between the commission and a capital market operator.

    Besides, the commission said the plaintiffs’ claim “is based on speculations and presumptions and has not raised any reasonable cause of action.”

    The plaintiffs’ counsel Adebowale Kamoru said he needed at least seven days to respond to SEC’s objection.

    Justice Idris adjourned to August 13 for hearing.

  • Arunma Oteh gets world bank appointment

    Arunma Oteh gets world bank appointment


    Arunma Oteh, former Director-General, Security Exchange Commission (SEC) has been appointed Vice President and Treasurer of the World Bank. The appointment was on Friday confirmed in a press statement issued by Jim Yong Kim, World Bank President of the World Bank. The statement reads: "I am pleased to announce the appointment of Arunma Oteh as VP and Treasurer of the World Bank. Arunma, a Nigerian national, was most recently the Director-General of the Securities and Exchange Commission of Nigeria. Appointed to a five-year term by the President of Nigeria in 2010, she led the transformation of the country’s capital markets industry into a major global presence. She was a member of the Board of the International Organization of Securities Commissions (IOSCO) and the Chairperson of the Africa Middle East Regional Committee of IOSCO. “Prior to joining the Securities and Exchange Commission (SEC) of Nigeria, Arunma was Group Vice President, Corporate Services, at the African Development Bank Group (AfDB). In this role, she oversaw a number of departments, including human resources, information and communications technology, and institutional procurement. From 2001 to 2006 she held the role of AfDB Group Treasurer, where she led AfDB’s fundraising and capital market activities across the world. Earlier roles at the AfDB, which she joined in 1992, included trading room management, investment portfolio coverage, and public sector lending. She also held other positions in capital markets and lending during the course of her career at the AfDB. Arunma began her career in 1985 at Centre Point, where she executed debt and equity offerings in the Nigerian capital markets. She earned her Bachelor of Science in Computer Science from the University of Nigeria and her Masters of Business Administration from Harvard University. As VP and Treasurer, Arunma will manage and lead a large and diverse team responsible for managing more than $150 billion in assets. Her top priorities will be to:

    • maintain the World Bank’s global reputation as a prudent and innovative borrower, investor and risk manager;
    • ) manage an extensive client advisory, transaction and asset management business for the Bank;
    • ) engage, in her capacity as one of the World Bank’s key representatives, with outside stakeholders including global private sector financial institutions, the financial media and the sovereign debt and reserve managers in client countries, as well as ratings agencies; and,
    • ) collaborate extensively with the Finance Partners throughout the WBG, including with IFC and MIGA, expanding shared approaches, in particular around innovative financing for development and for key new projects.
    Ms. Oteh was selected to this position through an international competitive search. Her appointment is effective as from September 28, 2015.

  • SEC holds Q2 CMC meeting

    SEC holds Q2 CMC meeting

    The Securities and Exchange Commission (SEC) will host this year’s Q2 Capital Market Committee (CMC) meeting in Lagos July 28.

    According to a statement, top on the agenda of the meeting would be the capital market master plan implementation.

    The 10-year master plan for the Nigerian capital market which is expected to refocus the market and help double its size over time and grow the economy was unveiled last year November.

    Its Director-General, Mournir Gwarzo had assured of his commitment to ensuring the implementation of the Capital Market Master Plan.

    “I have only one agenda for the market; my agenda for the market is to faithfully and religiously implement the 10-year Capital Market Master Plan. It will be recalled last year SEC set up three committees to drive market growth and the best brains in the market participated in the three committees and they worked tirelessly and came up with an excellent report which was launched last year, what we lacked in the country is the faithful implementation of reports,” he said.

    Invited to attend the expanded session of the meeeting are Chief Executive Officers (CEOs) of all registered capital market firms (Broker Dealer, Capital Market Solicitors, Custodians, Fund Managers, Issuing Houses, Rating Agencies, Registrars, Reporting Accountants, Trustees, and Consultants).

  • SEC mulls new regulatory framework for capital market

    THE Securities and Exchange Commission (SEC),  in a major paradigm shift in its regulatory framework, is considering substitution of the class minimum capital requirement with risk-based capitalisation approach.

    Reliable SEC and market sources at the weekend said the  regulator plans to progress from the minimum capital requirement framework, which new deadlines expires on September 30, this year to a more robust risk-based capital base.

    Under the class minimum capital requirement, SEC stipulates minimum capital requirements for all capital market functions. This mostly apply to all operators within each function, irrespective of assets size, operations and inherent risks. SEC had in December 2013 announced new minimum capital requirements for capital market operators with a compliance deadline of December 31, last year. The Commission however extended the deadline till September 30, this year. It has ruled out any further extension.

    With the risk-based capital adequacy framework under consideration, the capital market regulator will align assets’ risk, operations and segmental peculiarities to fashion out a graduated capital requirement scale for all operators, providing each operator with a clear capital guideline in line with its position.

    Sources at SEC said the regulator plans to introduce the risk-based capital adequacy framework to address the failure of the current minimum capital requirement, which does not align a firm’s capital with risk arising from operation, business and market activities.

    Besides, the sources added that SEC would strengthen its enforcement framework for corporate governance by building into the new regulatory framework a strong corporate governance and robust enterprise risk management provisions for all capital market operators.

    Recent events have strengthened the voices of several industry leaders that had called for risk-based capital approach. SEC was recently shocked by the failure of BGL Group, one of the biggest capital market firms, after the  regulator discovered that the firm was bankrupt and running several billion of naira in deficit and unremitted investors’ funds. BGL was categorised as having met the minimum capital base.

    A market source said the change in the regulatory framework would be akin to the 2010 change in banking regulatory framework. The Central Bank of Nigeria’s (CBN’s) Scope of Banking Activities and Ancillary Matters No 3, 2010 requires banks to fully concentrate on core banking functions. The new model requires banks to either sell all non-core banking businesses or form a holding company to hold such non-core banking businesses, including activities, such as insurance, asset management and capital market operations. It led to several divestment and asset sales by most banks while three banks – FirstBank of Nigeria, First City Monument Bank and Stanbic IBTC formed holding companies.

    The source noted that SEC might consider a raised-platform approach that uses the new minimum capital requirements, which take effect now on October 1, 2015, as the base for further derivation of the risk-based capital requirements

    The source said the new approach might receive wide acceptance in the industry and beyond. Most advanced and emerging capital market regulators use risk-based approach. The Chartered Institute of Stockbrokers (CIS), the statutory regulatory body for stockbroking practice, which members form the largest bulk of capital market operators, had also canvassed for risk-based approach. Capital market doyens including Mr. Olutola Mobolurin, chairman of Capital Bancorp Plc, were also in favour of risk-based approach.

    The new director general of SEC, Mr. Mounir Gwarzo, a chartered stockbroker and investment banker with extensive experience across private practice and regulation, has made implementation of the long-term capital market master plan, which entails stronger corporate governance, disclosures and enforcements as well as investors’ education and inclusive participation, as the cardinal programme of its administration.

    Under the new minimum capital requirements, minimum capital base for broker and dealer was increased by 329 per cent from the existing N70 million to N300 million. Broker, which currently operates with capital base of N40 million, will now be required to have N200 million, representing an increase of 400 per cent. Minimum capital base for dealer increased by 233 per cent from N30 million to N100 million.

    Also, issuing houses, which facilitate new issues in the primary market, will now be required to have minimum capital base of N200 million as against the current capital base of N150 million. The capital requirement for underwriter also doubled from N100 million to N200 million. Trustees, rating agencies and portfolio and fund managers had their minimum capital base increased by 650 per cent each from N40 million, N20 million and N20 million to N300 million, N150 million and N150 million respectively. A  Registrar will now have a minimum capital base of N150 million as against the current requirement of N50 million. While the minimum capital base for corporate investment adviser remained unchanged at N5 million, individual investment advisers will have to increase their capital base by 300 per cent from N500,000 to N2 million.

  • SEC gives firms July 31 deadline for mergers, acquisitions

    SEC gives firms July 31 deadline for mergers, acquisitions

    The Securities and Exchange Commission (SEC) has given all capital market operators planning mergers and acquisitions or any reclassification of their functions  a July 31 deadline to formalise such arrangement.

    The July 4 directive also applies to capital market operators  seeking to downsize from stockbroker to sub-broker, broker-dealer to either broker or dealer and from multiple functions to a single function, among others.

    The directive, according to a source at the Commission, is part of the compliance and enforcement process as the apex capital market regulator prepares to enforce the September 31 deadline for the new minimum capital requirements for capital market operators.

    Some capital market operators have been considering mergers and acquisitions to stave off liquidation.

    Market sources said there had been intense discussions around consolidation, a reference to mergers and acquisitions, in recent months as the new management of the apex capital market regulator insisted it would not rescind earlier decisions on the new minimum capital base.

    Sources said while some stockbrokers and other operators were considering raising funds through special placements, most deficient operators have started preliminary discussions on mergers and acquisitions. The Nigerian Stock Exchange (NSE) also recently released guidelines on the operations of sub-brokers.

    SEC in 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 by January 1, 2015. It however extended the deadline to September 30, 2015.

    Minimum capital base for broker and dealer was increased by 329 per cent from the existing N70 million to N300 million. The broker, which currently operates with capital base of N40 million, will now be required to have N200 million, representing an increase of 400 per cent. Minimum capital base for the dealer increased by 233 per cent from N30 million to N100 million.

    Also, issuing houses, which facilitate new issues in the primary market, will now be required to have minimum capital base of N200 million as against the current capital base of N150 million. The capital requirement for underwriter also doubled from N100 million to N200 million.