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  • SEC, operators discuss new capital requirements’ implementation

    SEC, operators discuss new capital requirements’ implementation

    Securities and Exchange Commission (SEC) and capital market operators have started discussion towards ensuring that the new minimum capital requirements for capital market operators set by the regulator are implemented in a less disruptive and more effective ways.

    The Nation gatherd at the weekend that the Commission and market operators have formed a joint implementation committee and are working on the key details of the new capital requirements.

    The joint committee, according to sources, included executives of the apex capital market regulator, stockbroking chiefs and dealers under the auspices of Association of Stockbroking Houses of Nigeria (ASHON), Nigerian Stock Exchange (NSE), Chartered Institute of Stockbrokers (CIS), which regulates the stockbroking practice and other key stakeholders.

    Sources said the committee is expected to deliberate on key implementation details including valuation methodology, the proportion and definition of liquid to illiquid assets, the status of stockbrokers’ equities in the proposed demutualisation of the NSE, the timeline for implementation of key compliance points, compliance evaluation methodology and possible incentives for operators among others.

    The committee’s deliberations are expected to form major part of the minimum capital status review that the market regulator has scheduled for June.

    SEC had extended the deadline for compliance with the new minimum capital requirements for various capital market functions from December 31, last year to September 30, this year. Before the extension, 262 capital market operators had met their various capital requirements.

    However, the larger segment of the market operators had called for a review of the minimum capital base arguing that it violated the principles of risk-based approach that should govern the capitalisation of multi-operators market.

    SEC had 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, this year.

    Minimum capital base for broker/dealer was increased by 329 per cent from the existing N70 million to N300 million. Broker, which 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.

    As part of its own stakeholders’ engagement process and positioning, ASHON this weekend held a one-day workshop for stockbroking firms on the minimum capital requirements. The workshop also discussed the minimum operating standards (MOS) being implemented by the Nigerian Stock Exchange (NSE).

    According to a source, the workshop collated stockbroking firms for onward engagement with the Corporate Affairs Commission

  • SEC reviews audit committee tenure policy

    The Securities and Exchange Commission (SEC) is reviewing its controversial three-year tenure policy for members of audit committee as part of ongoing efforts to realign the apex capital market regulator’s rules and operations with its vision of market development and integrity.

    A circular obtained by The Nation indicated that SEC has suspended the three-year tenure policy, otherwise known as Rule 42 (5)(e) of the Consolidated Rules and Regulations.

    According to SEC, the rule has been suspended for 90 days with effect from February 25, 2015. The suspended rule provides that “membership of an audit committee shall be for a term of three years, subject to good performance; provided, that such member shall not be eligible for re-election until the expiration of three years after his previous term”.

    SEC stated that the suspension was to allow the Commission sufficient time to enhance the provisions of the rule and align it with best practice. The suspension came on the heels of the meeting of the acting director general of SEC, Mounir Gwarzo with leaders of shareholders’ groups.

    Violation of the three-year tenure policy had carried sequential monetary sanctions. According to the rule, any public company that violates any provision of the rules and regulations on the audit committee shall be liable to a penalty of not less than N100,000 and a further sum of not more than N5, 000 for every day of default.

    Shareholders had roundly rejected the three-year tenure rule as a victimization of minority retail shareholders.

    They said the rule was in bad faith and was capable of adverse impact on the confidence of retail shareholders in the corporate governance structure.

    Shareholders said the restriction was targeted at independent shareholders, who are usually appointed to audit committees. The Companies and Allied Matters Act (CAMA) requires audit committee to be composed equally of directors and independent ordinary shareholders subject to a maximum of six members.

    Chairman, Onitsha Zone Shareholders Association, Bishop Goodluck Apore, had flayed what he described as SEC’s contemptuous attitude towards ordinary shareholders noting that shareholders own the stock market and should be treated as such.

    According to him, the tenure policy lacked general acceptability among shareholders and showed lack of consensus-building on the part of the market regulator.

    President, Independent Shareholders Association of Nigeria (ISAN), Sir Sunny Nwosu, had called on SEC to reconsider the new amendment and tenure policy pointing out that the restriction appeared targeted at retail shareholders than directors.

    According to him, since there is no rule currently restricting directors from consecutive terms of office, SEC should have ensured a level-playing ground by applying the rules on directors’ term of office to shareholders too.

    “SEC has not been protective of retail shareholders. They did not consult retail shareholders on this rule and they should go back and reconsider their obnoxious rules,” Nwosu had said.

    President, Nigeria Shareholders Solidarity Association (NSSA), Chief Timothy Adesiyan, described the new amendment as haphazard pointing out that SEC should have instead opted to finalise a comprehensive audit committee charter, which has been in the pipeline since 2008.

    He said any new tenure policy on audit committee’s members should apply to directors serving on the committee.

    Shareholders’ leader and activist, Alhaji Gbadebo Olatokunbo, in a position paper made available to The Nation said the new tenure policy would impinged on the competence and integrity of the audit committee.

    According to him, whether the new policy applies to all members of audit committee or not, it would have unintended negative impact on the performance of audit committee going forward.

    “l respectfully wish to observe on why it is not very good for the risk-management of our companies. Most of the companies don’t have enough directors to fill the three years gap, because the norm had been not to have a chairman, managing Director and in most instances executive-directors, as members of audit committee. So in the case where there were no more than two or three non-executive-drectors; what will then happen within the three years that they were supposed to stay out of office?,” Olatokunbo said.

    He noted that the restriction would not augur well for the experience and thoroughness required for retail shareholders to grasp the full details of a company’s operational framework and to effectively perform their oversight function.

    According to him, the first year in office for any new shareholder-member is usually for the familiarization with the company’s products, ethic and other things while training or sponsorship of audit-committee-members for more knowledge doesn’t usually commence within the same year of election due to the fact that most companies might like to understudy the new member’s capabilities and most importantly their trust on him because of the fear of leakages of important information to competitors. By the second year of a new shareholder-member, the issues of training, understanding and trust might have been achieved but there will only be one year left to be of services to the sponsored-company due to the proposed new rule of three-year tenure.

    “Most companies with small board-members will be discouraged on commitment to the audit committee’s work or make use of their executive-directors whose duties and responsibilities the same audit-committee is meant to oversee or they shall have to enlarge the board irrespective of the company’s size. That will therefore create an avenue for companies not to show much interest in equipping shareholder-members of audit committee with knowledge, knowing fully that they have short period to stay with the company while the same attitude shall be extended to new incoming shareholder-members, thereby not helping the audit committee to function properly,” Olatokunbo said.

    He outlined that prolonged stay on the audit committee tends to build capacity and trust as companies tend to relax more with known shareholder-members on trust and start to work with them more on the sharing of important-information.

    “With such cooperation, trust, understanding of the companies, the audit committee’s functions become easier and the cooperation of both the internal and external auditors will have no limit in moving the assignment forward; most especially information and report from internal-auditors, which were very important to the function of the committee.

    “I suggest that there is no need for the proposed new rule,” Olatokunbo concluded.

     

     

  • 598 capital market operators have expired fidelity bond, says SEC

    598 capital market operators have expired fidelity bond, says SEC

    Securities and Exchange Commission (SEC) has indicated that 598 capital market operators including several high-brow law firms, reporting accountants, banks, investment management firms and advisory firms are operating with expired fidelity bond, underlining potential risks to the system.

    A status review undertaken by The Nation on the condition of capital market operators showed that some 598 capital market operators pose potential risks to capital market operations by not providing fidelity bond against internal malpractices.

    Operating in the capital market without a valid fidelity bond is a contravention of the Investments and Securities Act (ISA) No. 29, 2007 and SEC Rules & Regulations.

    A fidelity bond is essentially is a form of insurance against internal fraud, malpractices and willful professional negligence. It provides cushion for various losses that might arise from employee’s dishonesty. In line with international best practices, the Nigerian capital market regulation requires operators to possess subsisting fidelity bond.

    The expiration of their fidelity bonds makes the functional registration of the companies and individuals as capital market operators incomplete.

    According to SEC, about 50 per cent of operators with expired fidelity bond, and as such incomplete registration, are solicitors including high-brow Senior Advocate of Nigeria (SAN) law firms. At least, 120 law firms registered as solicitors have expired fidelity bonds.

    Accounting firms are the second largest group of culprits with several well-known accounting firms, with registration as reporting accountants, operating with expired fidelity bonds.

    At least five banks, which were registered as issuing house or investment adviser, were listed among the defaulters while several fund managers, registrars and brokers were also listed in the search.

    A source in the know of securities regulation said the operators with deficient fidelity bond might not be allowed by SEC to handle transactions.

    The source said what the defaulting operators do is to rush to renew such deficiency whenever they have capital market transaction for regulatory approval cautioning investors, issuers and other users of capital market services to request for evidence of full clearance and subsisting complete registration before engaging the service of any operator.

    The deficiency in the registration of the operators violated SEC’s policy on fidelity bond, which requires operators to renew their fidelity bond annually, in line with the Gregorian calendar year.

    The fidelity bond policy requires that all registered capital market operators must maintain a fidelity bond which has a validity period from January to December of each year.

    The apex capital market regulator had indicated that any fidelity bond which falls short of full-year coverage will not be accepted. and its technical partner, Korea Electric Power Company of Nigeria (KEPCO), have promised to increase Egbin Power Plc’s capacity by 1350 megawatts (MW)  to bring its cumulative installed output capacity to 2670MW by 2019. The plant currently  has an installed capacity of 1320MW.

    Sahara Chairman Kola Adesina made the pledge last weekend when President Goodluck Jonathan commissioned the rehabilitated sixth steam turbine of the plant with 220MW capacity.

    Kola said: “We have commenced an ambitious plan to double the capacity of Egbin within the next four years, with the addition of 1,350MW Combined Cycle plant of which we have commissioned the Front End Engineering Design Study (FEED). All these have been possible because of your Excellency’s commitment to the power sector reforms and dogged determination to give our citizens a new lease of life through the provision of reliable power supply.”

    He said besides repairing unit 6, the company has also carried out the overhauling and retooling of Unit 4, which lost 20MW out of its 220MW capacity. Egbin is the largest power plant in West Africa comprising 6 x 220MW units of turbines with a total capacity of 1,320 MW. The Egbin Power Plant is critical to the nation as it accounts on a daily basis for about 20 per cent of the power generated in the country, he added.

    Adesina said: “Mr. President, the Unit that you are here to commission is an example of the benefits that privatisation of the power sector is bringing to our nation Nigeria.  The unit broke down in 2006 and for seven years could not be rehabilitated due to sundry challenges. On handover of the Egbin Power Plant to its new owners, KEPCO and Sahara Power Group in November 2013, we immediately made its rehabilitation a priority culminating in completion of the repair works.

    “Recognising the importance of commerce and industry to your transformation programme, Egbin unit 6 output is to be made available under an innovative bilateral commercial arrangement to Eko and Ikeja Electricity Distribution Companies to help improve power availability in Lagos and its industrial outskirts. We are indeed leading a new dawn in job creation within Lagos and its environs; and fostering gains in the gross domestic product of the economy and reduction in crime rates.

    “In addition, supporting the ideals of a cleaner and greener state, with reduced use of generators leading to healthier environment and improved quality of  life and also achieve the noble objectives and unravel the bottlenecks in the power supply value chain, we seek government’s help in terms of gas availability and expansion of the transmission network. In the light of paucity of funds faced by the government, the hands of the private sector need to be strengthened by allowing significant investment in both the transmission and gas infrastructure. With appropriate models and investment recovery mechanism, this holistic public, private partnership (PPP) approach will engender a faster, cheaper and more productive result in rapidly growing value chain.”

  • Demutualisation: SEC may defer new capitalisation deadline

    Demutualisation: SEC may defer new capitalisation deadline

    The Securities and Exchange Commission (SEC) might consider a deferral of the September 2015 deadline for the implementation of the new minimum capital requirements for capital market operators to enable stockbrokers and dealers accommodate their shareholdings in the proposed demutualisation of the Nigerian Stock Exchange (NSE) in their valuations.

    SEC, last weekend, released draft rules on the demutualisation of the NSE, a member-owned, limited by guarantee self-regulatory organisation (SRO), under which the membership rights of stockbrokers, dealers and other members will be converted into shareholdings in a demutualised Exchange.

    Sources in the know said the apex capital market regulator has indicated it might consider a deferral to allow stockbrokers and dealers at the NSE determine the actual values of their membership rights and use such as part of their valuation in any capitalisation measurement.

    The draft rules on the demutualisation, among others, require that a demutualising securities exchange should initiate a process for determining the accurate list of members of the Exchange and the process of demutualisation should include an exchange of membership rights for ownership of shares.

    According to the rules, application for demutualisation must include a valuation report of the securities exchange, the proposed authorised and paid-up share capital of the demutualised securities exchange with the number of shares to be issued, the names of members of the Securities Exchange proposed to be the initial shareholders of the demutualised Securities Exchange and the number of shares to be allotted to each shareholder.

    The rules stipulate that the trading participants who are shareholders of the securities exchange shall with effect from the date of demutualisation reduce their cumulative shareholdings in the demutualised securities exchange to not more than 10 per cent within five years.

    A large segment of the stockbroking community had kicked against the timeline for recapitalisation arguing that the proposed demutualisation should be done before the recapitalisation to give a more realistic valuation of the stockbroking firms.

    Sources said SEC is favourably disposed to the inclusion of the determined stockbrokers’ holdings in the NSE as part of the valuation of each stockbroking firm.

    The board of SEC had extended the deadline for compliance with the new minimum capital requirements for various capital market functions from December 31, 2014 to September 30, 2015. As at the last count, 262 capital market operators had met their various capital requirements.

    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 by January 1, 2015. Minimum capital base for broker/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 sets 5% maximum equity for demutualised Exchange

    SEC sets 5% maximum equity for demutualised Exchange

    • Releases rules on NSE

    HE Securities and Exchange Commission’s  (SEC) draft rules on the demutualisation of the Nigerian Stock Exchange (NSE), released at the weekend, bar individuals or entities from holding directly or indirectly more than five per cent of the issued shares or voting rights in a demutualised exchange.

    Demutualisation is the process of changing a member-owned stock exchange, otherwise known as mutual exchange, to a corporate entity owned by shareholders.

    In a mutual exchange, the three functions of ownership, management and trading are concentrated into a single group, hence the broker- members of the exchange are both the owners and the traders, as well as manages of the exchange.

    In a demutualised exchange, the three functions of ownership, management and trading are clearly separated. The draft rules by SEC simply defined demutualisation as “the separation of the ownership of the Securities Exchange from the right to trade on such Securities Exchange”.

    The Nigerian Stock Exchange (NSE) has been locked in intense grip of demutualisation with divergent views on the necessity, procedures and timing and other details of the exercise. The release of the draft ends a four-year exercise in the run-up to providing amenable template for the demutualisation.

    Established as Lagos Stock Exchange (LSE) in 1960, the stock exchange was conceptualised as a limited by guarantee not-for-profit organisation thriving on the goodwill, reputation and integrity of its members.

    While Nigeria’s doyen of accounting, Mr. Akintola William, is the only surviving initial signatory to the founding memorandum of the NSE, the membership list of the NSE has always included “the movers and shakers” of the  economy.

    Besides stockbroking firms and other capital market operators, members of the NSE included Alhaji Aliko Dangote, Chief Ernest Shonekan, Deacon Gamaliel Onosode, Oba Otudeko, Otunba Adekunle Ojora,  Pascal Dozie, Chief Phillip Asiodu, Rear Admiral Allison Madueke (rtd.) and Senator Udo Udoma, among others.

    Altogether, the NSE has some 360 individual and institutional members including some 255 active dealing members.

    Several State Investment companies are also institutional members of the NSE, giving the states input into the operations of the NSE.

    These included Adamawa Securities Limited, Kaduna Investment Company, Kano State Investment and Properties Limited, Katsina State Investment and Property Development Company Limited, Kwara State Investment Corporation, New Nigerian Development Company Limited, Niger State Development Company Limited, Sokoto Investment Company Limited and Yobe Investment Company Limited, among others.

    According to the draft of the demutualisation rules, obtained by The Nation, no single entity or person or related entities and persons should be permitted to own, directly or indirectly more than five per cent of the equity and or voting rights in the demutualised securities exchange.

    Besides, the rules stipulate that the aggregate equity interests of members of any specific stakeholder group such as stockbrokers and broker-dealer in the demutualised securities exchange should not exceed 40 per cent.

    The rules, made pursuant to section 313 of the Investments and Securities Act (ISA) 2007, the securities exchange should initiate a process for determining the accurate list of members of the Exchange prior to the commencement of demutualisation.

    The process of demutualisation of the Securities Exchange should include an exchange of membership rights in the Securities Exchange for ownership of shares in the demutualised Securities Exchange.

    According to the rules, strategic investors should be given equity interest in the demutualised securities exchange subject to establishment of the facts that the strategic investor has technical expertise through previous experience in managing other Exchanges and the aggregate number of shares to be offered to the strategic investors shall not be more than 30 per cent of issued and fully paid up capital of the securities exchange. However, if the Exchange is in dire need of funds, it could issue a higher number of shares subject to approval of the Commission.

    The rules stipulate that the trading participants who are shareholders of the securities exchange shall with effect from the date of demutualisation reduce their cumulative shareholdings in the demutualised securities exchange to not more than 10 per cent within five years.

     

    Application for demutualisation must include a valuation report of the securities exchange, the proposed authorised and paid-up share capital of the demutualised securities exchange with the number of shares to be issued, the names of members of the Securities Exchange proposed to be the initial shareholders of the demutualised Securities Exchange and the number of shares to be allotted to each shareholder, the number of shares to be allotted to and held directly or indirectly by the Government of Nigeria or its agencies in the public interest being at least 10 per cent of the total shareholding, the proposed Memorandum and Articles of Association (MEMART) of the demutualised Securities Exchange, the names and profile of council committee on demutualisation, the proposed time within which the board of the demutualised securities exchange shall be appointed and the proposed names of directors of the demutualised Securities exchange to be appointed at the first general meeting following the re-registration of the Securities Exchange.

    Other requirements included the proposed plan for the independent management of the commercial and regulatory functions of the demutualised securities exchange and timelines for implementation of necessary structures to ensure the functional separation of commercial and regulatory functions, a detailed five year business development plan for the demutualised Securities Exchange together with the capital expenditure estimates and the sources of finance for the five year period, the manner in which the rights and liabilities of the existing members shall be treated in the demutualisation, the procedure for the allocation of shares to the shareholders identified under subparagraphs (c) and (d) and a written declaration that demutualization shall not affect any rights and obligations of the Securities Exchange or render defective any legal proceedings by or against the Securities Exchange.

    Besides, the application must include the proposed timelines for the completion of operational manuals to guide the self-regulatory functions of the demutualized Securities exchange detailing the scope of regulatory functions to be performed by the demutualized Securities Exchange, the proposed rules of the demutualized Securities Exchange and the last audited financial statements of the Securities Exchange. However, the Commission may, in writing, require the Securities Exchange to provide any additional information which the Commission may require.

    The rules also stipulate the governance model, the resolution of the application and other details.

  • More firms to send reports electronically

    More firms to send reports electronically

    More companies are  opting to send their  annual reports and accounts in electronic copies to shareholders as companies seek to cut costs of shareholders’ relations.

    Many companies had used their previous annual general meetings to sensitise shareholders and seek necessary consents, prior to take-off of the e-reporting initiative.

    Shareholders of companies under the UAC of Nigeria (UACN) Group including UAC of Nigeria, CAP Plc, and UACN Property Development Company (UPDC) had at the yearly general meetings of the companies considered amendments to the articles of association of the companies to enable the companies send annual reports and accounts and other notices through compact disc, electronic mail or web publication in addition to existing option of hard printed copy.

    Cadbury Nigeria had earlier notified that it would now distribute its audited reports and accounts and other related documents in soft electronic format rather than in paper form.

    The company said the decision to use compact disc to distribute information to shareholders was part of its desire to ensure the sustainability of environment and align with international best practice.

    According to the company, to ensure fairness and equity, shareholders will be given the option of requesting for a paper copy of these documents by exception, if they determine that they do not want to receive same in a CD format.

    Nestle Nigeria has also said it was introducing electronic delivery of annual reports and other corporate documents to ensure quick and effective access to information.

    At its last general meeting, Nestle Nigeria provided shareholders with an electronic mandate form, which would legally allow the company to send soft edition of its reports online through email address or compact disc. Nestle Nigeria’s shareholders would also be able to download all the reports from web address to be provided by the company.

    Securities and Exchange Commission (SEC) has requested the National Assembly to amend the Companies and Allied Matters Act (CAMA) 1990 to allow electronic shares issuance, dematerialisation, electronic bonus and dividends among other initiatives.

    SEC has sought for amendments to section 117 of CAMA which gives companies the general powers to issue shares and section 125, which makes provisions relating to allotment of shares and issuance of share certificates to allow electronic issuance and allotment.

    According to SEC, these amendments would allow companies to electronically issue shares through CSCS accounts, which would enhance the dematerialisation of paper share certificates.

     

     

     

    SEC called for general review of sections 114 to 165 of CAMA.

    The apex capital market regulator also wanted the legislators to amend section 220 of CAMA, which provides for service either by giving the member personally or sending it to him by post or to his registered address to provide for service of notices electronically in the first instance where a member has provided an email address as a means of communication and the definition of registered address should include an electronic address.

    “Sections 83 and 84 should recognise the use of electronic registers as a mandatory backup and provide for a location of that register securely on independent servers or disks not in the premises of the company or the registrar,” SEC stated.

    SEC also called for amendment of section 379 on dividends to allow for electronic payment of dividends and subsequently full automation of dividend payment after expiration of a grace period.

     

  • SEC suspends Elyon’s Asset, Okoye, others

    Securities and Exchange Commission (SEC) has suspended Enugu-based capital market operator, Elyon’s Asset Management Limited and its directors and staff from all capital market operations. The suspension, which took effect on February 12, is indefinite.

    A circular released yesterday by SEC indicated that Elyon’s Asset was suspended for breach of extant capital market rules and regulations.

    With the suspension, Elyon’s Asset, its directors and sponsored individuals-staff registered for capital market operations, will not be able to undertake any activities relating to capital market until further notice.

    While the brief circular from SEC did not elaborate on the suspension, The Nation’s check that Elyon’s Asset had been operating with expired fidelity bond for the past six years among other breaches. The company was first registered on July 3, 2006 and its fidelity bond of N50, 000 expired on July 21, 2009.

    The Nation’s check also indicated that those that the directors of the firm that have been suspended included Mr. Obinna Okoye and a compliance manager, Mrs Anuili Ilechukwu. Elyon’s Asset was listed as a fund manager by the SEC website.

    However, Elyon’s Asset, which indicated it has four offices in Lagos, Abuja, Enugu and Awka, stated that the company operates comprehensive capital market operations including stockbroking services, portfolio management, personal fund management, equity research and financial advisory.

    The company’s website also indicated that it engages in several money market operations and other financing and training activities. According to the company, it offers tailor-made products and services across a broad spectrum of financial services including commercial paper investment, fixed tenor deposit, call investment, trade and commodity financing, asset-based lending, project management and property development, corporate consultancy, LPO and other short-term finance, training, fiduciary products and venture capital and joint venture operations.

    According to Elyon’s Asset, it provides equity participation for the purpose of investment in viable business organisations which are limited by inadequate funding.

  • SEC goes tough on mutual funds, compliance

    SEC goes tough on mutual funds, compliance

    The Securities and Exchange Commission (SEC) has directed all fund managers in the country to register with the industry’s trade group as the apex capital market regulator moves to enhance compliance with extant rules and regulations.

    In a circular, SEC stated that it is now compulsory for all fund managers to be register with the Fund Managers Association of Nigeria (FMAN), the umbrella trade association established for all registered fund and portfolio managers in Nigeria.

    According to the Commission, the directive is pursuant to the powers conferred on it by Section 13 of the Investments and Securities Act (ISA) 2007 and consistent with Rule 25(1) of its rules and regulations.

    SEC stated that it was partnering with FMAN to develop the funds and portfolio management industry in Nigeria through enlightenment and training and complaints resolution among others with a view to ensuring a sustained growth of the Nigerian investment management industry.

    “Henceforth, the Commission will use membership of FMAN as a requirement to appraise operators in this segment of the Nigerian capital market,” SEC stated.

    In another circular, SEC stated that all operators must comply with extant rules and regulations in all their filings with the Commission.

    SEC said all capital market operators and issuers to ensure that any application filed with the Commission complies fully with the requirements of its rules and regulations.

    “All supporting documents, in the approved format, shall accompany applications at the time of filing as any incomplete filing will be rejected outrightly. Consequently, all market operators and issuers shall ensure that deficiencies or queries raised on their applications are promptly addressed within a reasonable timeframe or as may be stipulated by the Commission,” SEC stated.

     

  • SEC canvasses for incentives to boost commodity exchange

    SEC canvasses for incentives to boost commodity exchange

    The Securities and Exchange Commission (SEC) has underscored the importance of incentives as part of measures to encourage active trading on the formal commodity exchange.

    Acting director general, Securities and Exchange Commission (SEC), Mr. Mounir Gwarzo, said the apex capital market regulator would make a case for incentives for the commodity exchange to the Ministry of Finance. Gwarzo spoke when a team from the Nigeria Commodity Exchange (NCX) visited him. The NCX metamorphosed from the former Abuja Securities and Commodity Exchange (ASCE).

    Gwarzo said SEC would collaborate with the NCX in a bid to make the commodity market in Nigeria more vibrant.

    The Commission also assured the management of NCX of its support in its bid to get NCX bill passed at the National Assembly and to do all within its capacity to get the commodity market on sound footing.

    “Migrating from being stock exchange to commodity exchange is a major feat and we are very excited about it. On our part, we will reach out to the Ministry of Finance so that we can make a case on some of the incentives that can encourage trading on the floor of the commodity exchange. We are very confident of the success of the exchange as the prospects are very high but a lot of things need to happen and you need to do more in that regard,” Gwarzo said.

    He said the Commission was ready to support NCX whenever there is public hearing on its bill at the NASS, but advised the management of NCX to do its networking very well before then.

    Besides, Gwarzo also advised NCX to be well positioned for competition as there were other commodity exchanges, like AFEX that will soon be competing with it.

    Gwarzo said that SEC was very keen on the growth and development of the exchange largely because of its important role in the economy.

    He added that since circulars were issued to companies to ensure their shares are traded on the stock exchange, it made a lot of difference in market transactions in the secondary market. He assured that once the warehousing receipt system and all other things were in place in the commodity exchange, the Commission will collaborate in any other area to ensure a very active market.

    Acting managing director, Nigeria Commodity Exchange (NCX), Hajia Zaheera Baba-Ami, lamented the non passage of the 2010 Warehouse Receipt Bill which is one of the issues hindering the growth of the exchange.

    Baba-Ami also advocated for incentives like excise and Export Duty rebate to encourage trading on the exchange. She appealed to SEC to assist in talking to end users and processors, like Nestle Nigeria,   Guinness Nigeria and Cadbury Nigeria to purchase commodities through the NCX to deepen the market.

    She noted that there was the need for proper legislation to regulate commodity trading in Nigeria and enhance liquidity and sustainability of the commodity exchange, adding that there was the need to compel companies to trade on the exchange, similar to what obtained in stock market

    According to her, adequate legislation has made Commodity exchange in Ethiopia to be ahead of others in Africa and made coffee a major foreign exchange earner for that country.

    She however disclosed that the exchange with the assistance of the Central Bank of Nigeria (CBN) is rehabilitating 22 warehouses that will assist in storing grains so that they are readily available to meet demands of processors and increase activities of the exchange.

     

  • SEC to review new minimum capitalisation requirements

    The Securities and Exchange Commission (SEC) has confirmed that it would review the new minimum capital base requirements for capital market operators.

    Acting director general, Securities and Exchange Commission (SEC), Mr. Mounir Gwarzo, said the apex capital market regulator would return to the recapitalisation issue in the next five months.

    Gwarzo told a team of the council and management of the Nigerian Stock Exchange (NSE) that visited him that the Commission was delighted that it has had a good collaboration with all stakeholders on the issue of the recapitalisation and it “will return to the exercise in the next five months”.

    The report confirmed earlier exclusive report by The Nation last week that the new management of SEC would review certain capital market policies and processes. SEC had also last week presented draft of new rules and regulations and amendments for public comment.

    Relying on an impeccable source, The Nation had reported that SEC may undertake extensive review of its policies and modus operandi with a view to aligning them with its core mission of investors’ protection and capital market development.

    The source had said the new management of SEC plans to review existing policies and frameworks for its operations to give a new verve to the operations of the apex capital market regulators.

    The erstwhile executive commissioner, operations, Securities and Exchange Commission (SEC), Mr. Mounir Gwarzo took over as the acting director general of the apex capital market regulator on Monday January 12. He succeeded Ms Arunma Oteh, who completed her five-year tenure on Wednesday January 7, 2015.

    It should be noted that SEC had extended the deadline for compliance with the new minimum capital requirements for various capital market functions from December 31, 2014 to September 30, 2015. Before the extension, some 262 capital market operators had met their various capital requirements.

    However, the larger segment of the capital market operators had called for a review of the minimum capital base, arguing that it violated the principles of risk-based approach that should govern the capitalisation of multi-operators market.

    SEC had 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. Minimum capital base for broker/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.