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Tag: SEC

  • SEC seeks amendment to capital market rules

    Securities and Exchange Commission (SEC) is considering  amendments to capital market rules and regulations’ that will empower it to suspend any public company that fails to submit its annual report within stipulated deadline.

    According to a draft amendment obtained by The Nation, the Commission is seeking to introduce a new rule, which will allow it to direct that trading on the shares of a company that fails to submit its annual report be suspended. The draft rule also empowers the Commission to “impose any other sanction as it deems fit”.

    “Suspension of trading may also apply where a company has been granted an extension, but fails to file at the expiration of the extension period,” according to the draft rule.

    The amendment further strengthens existing enforcement regime on submission of annual reports.  Under existing rules, any company that fails to file its annual report with the Commission is liable to a fine of N1 million and the sum of N25, 000 for every day the default continues.

    However, the draft rules allow any public company that fears it may not be able to meet the stipulated deadline to apply for extension of time to file its audited report, with such application for extension not later than 30 days before the due date. Such application for extension shall state the reasons for the inability to file within time and shall be supported with relevant documentary evidence.

    In granting the application for extension, the Commission may consider occurrence of an unforeseen circumstance, national emergency and intervention by a regulatory agency.

    According to the new draft, a public company whose application has been granted for extension of time to file its audited financial statements shall be required to publish a notification of its failure to file on the due date in a national newspaper and on the company’s website.

    The Commission noted that despite its zero-tolerance for late and non-filing of financial statements and annual reports by public companies, it is mindful that certain unforeseen circumstances may warrant the granting of time extension to a public company to file same.

    SEC, however, reiterated its commitment to take appropriate action by imposing sanctions that could include suspension of the trading of the shares of a public company whose financials are not released to the investing public as at when due.

    The draft amendments align SEC’s rules with existing rules at the Nigerian Stock Exchange (NSE), in furtherance to the ongoing efforts to standardise the rules across the markets.

    Under the existing rules, public limited liability companies are required to file their annual reports with the Commission not later than 90 days after the financial year end in line with the provisions of Companies and Allied Matters Act (CAMA).

    The annual report to be filed with the Commission shall in all material facts comply with the relevant accounting standard. It shall also make disclosures of its unclaimed dividend fund with respect to bank balance, investments and earned income by way of notes to the audited accounts and other periodic reports filed with the Commission.

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    The chief executive officer and chief financial officer or officers or persons performing similar functions in a public company, shall, in filing the annual account, attach a duly signed certification letter to the matters  while the external auditor to the public company shall be registered by the Commission.

    The auditor of a public company shall in his audit report to the company issue a statement as to the existence, adequacy and effectiveness or otherwise of the internal control system of the company, while the annual report shall state the level of compliance of the public company with the Code of Corporate Governance for public companies.

  • CBN, SEC green light for Access, Diamond merger

    The Central Bank of Nigeria (CBN) and the Securities and Exchange Commission (SEC) have approved the merger of Access Bank Plc and Diamond Bank Plc, the last major regulatory hurdle for the consummation of the business combination.

    Both banks at the weekend confirmed receipt of the final approval from the financial services authorities.

    The final go-ahead came on the heels of the recent approval of the merger by shareholders of both banks at a meeting specially convened by the order of the Federal High Court (FHC). The CBN and the SEC had earlier granted “approval–in-principle”, a no-objection approval, to the merger.

    With the final approval of the scheme, the banks will now submit the scheme of merger to the FHC for its judicial sanction, which seals the merger.

    Under the merger terms, Diamond Bank will transfer all its assets, liabilities and undertakings to Access Bank and the entire issued share capital of Diamond Bank shall be cancelled and Diamond Bank shall be dissolved without being wound up.

    In exchange, Diamond Bank’s shareholders shall receive a cash consideration of N1 per share and two ordinary shares of the enlarged Access Bank for every seven ordinary shares of Diamond Bank held as at the effective date.

    Access Bank will be the post-merger entity with its Group Managing Director Herbert Wigwe continuing to lead the post-merger management as chief executive. The business combination is expected to leapfrog post-merger Access Bank as Nigeria’s largest bank by total assets and one of Africa’s largest retail banks.

    At the separate court-ordered meeting in Lagos, shareholders had overwhelmingly approved the scheme of merger for the business combination and authorised the directors of the banks to take such actions as may be necessary to give effect to the scheme including listing of the scheme shares on the Nigerian Stock Exchange (NSE).

    Directors and management of the banks believed the merger will create significant values for all stakeholders, underlining the inherent synergies and value accretion in the business combination.

    The combination is expected to form a leading Tier 1 Nigerian bank and the largest bank in Africa by number of customers, spanning three continents, 12 countries, 3,100 Automated Teller Machine (ATM), more than 33,000 Point of Sales (PoS) terminals, 27 million clients and more than 10 million mobile customers.

    Diamond and Access bank share many of the same areas of focus, including women, youth, entrepreneurs and the financially excluded and will be able to further develop their positioning and market leadership in these growth sectors. Diamond Bank’s corporate customers will also be able to benefit directly from Access Bank’s corporate expertise in trade finance, cash management, treasury and corporate finance.

    Wigwe said the two banks share several common values and technologies that make the business combination a seamless one.

    According to him, the merger of the banks will create significant opportunities and benefits to customers, shareholders, staff and other stakeholders.

    He noted that the combination of Diamond Bank’s strong retail customer franchise and Access Bank’s proven risk and capital management expertise will create a post-merger bank with strong value creation potential.

    Wigwe pointed out that while the merger will lead to 19 per cent shareholding dilution, the business combina

  • SEC shuts Lagos firm over illegal activities

    A Securities and Exchange Commission (SEC) has sealed off the premises of Growing Circle in Lagos for allegedly engaging in illegal fund management activities.

    SEC stated that Growing Circle was shut down for carrying out investment operations that falls within fund management without registration with the Commission.

    According to the Commission, the company’s activities constituted an infraction of the Investments and Securities Act (ISA), 2007 as they do not have registration with the SEC. SEC has powers according to Section 13 (w) of ISA 2007 to shut down any company carrying out capital market activities without due registration.

    SEC stated that the closure was to end unlawful activities of the company against unsuspecting investors and therefore urged investors to ensure they only deal with fund managers that are registered with the Commission.

    The mode of operation of the company is that for a new entrant, registration is N10,000 and the person is not entitled to products while the second category has a registration fee of N16,000 that entitles the registrant to receive products.

    For anyone to come under the company, he has to come under an up liner since the company engages in networking business.  For the networking business, the least stage is a starter point with minimum registration of $50 with an incentive of $15 for a member who introduced two down liners.

    It was gathered that the company also engages in free seminars at its head office for people to learn more about the products and the money making business with an unbeatable compensation plan and huge bonuses.

    SEC disclosed that however, after registering, the members claim they do not get any products from the company and all efforts to retrieve their funds proved abortive, hence the complaint to the SEC.

    While the company claimed to have a factory in Ogun state, the said factory could not be located even though the products were on display at their Lagos office.

    “The accounts of the company have been frozen, the promoters have been arrested by the Nigeria Police Force and are undergoing interrogation. The Commission wishes to notify the investing public that the company is not licensed to carry out investments business of any type and as such its operations are illegal. The SEC therefore advises the public to exercise due diligence and caution in the course of making investment decisions adding that valid licence of lawful operators could be obtained on the Commission’s website by members of the public to confirm the licences of firms with which they intend to carry out investment activities,” SEC stated.

     

  • SEC relaxes primary market rules to stimulate new issues

    A Nigeria’s apex capital market regulator, Securities and Exchange Commission (SEC) has modified many rules on primary market issuance in a bid to enhance the efficiency of the issuance process and reduce regulatory bureaucracy.

    In a major review of approval requirements, the Commission reduced the number and procedure for filing consents for all issues as well as the approval process for documents relating to marketing and allotment. Part of the changes includes consent letters, adverts, posters, allotment advice and specimen certificates.

    Under the new rules, which took effect last week, only the Governor, the Commissioner for Finance, the Accountant-General and the Attorney-General of the State shall be required to be named in the offer document for a sub-national issue as against the previous practice of having all members of the state cabinet named in the offer document.

    Also, only the four of the Governor, the Commissioner for Finance, the Accountant-General and the Attorney-General of the State shall be required to sign or execute offer document. Consequently, consent letters shall only be required from the Governor, Commissioner for Finance, Accountant-General and the Attorney-General of the State.

    The Commission stated that it had evaluated the practice of having all members of a state cabinet consent to be named in the offer document and execute the prospectus and considered the practice unduly burdensome and not in line with the accountability structure of sub-national governments.

    Generally, consent letters of every person who consents to be named in the offer document or other documents in connection with a proposed offer, may now be filed either at the initial stage of a transaction or at the point of filing executed offer documents. This is a relaxation of the previous requirement of filing consent letters at the initial stage.

    However, the flexibility does not serve as an exemption to the complete filing directive of the Commission and it does not permit filing of consent letters in batches. As such, all consent letters are expected to be filed in one complete batch at the initial point of filing the transaction or at the point of filing the executed offer documents.

     

  • Mergers & acquisitions: SEC to realign rules as new Commission takes off

    Nigeria’s apex capital market regulator, Securities and Exchange Commission (SEC), will now restrict regulatory activities on mergers and acquisitions to public companies and change of shareholding of capital market operators.

    The modification of the regulatory purview of SEC comes on the heels of the February 5, 2019 signing into law of the Federal Competition and Consumer Protection Act by President Muhammadu Buhari. The law provides for the establishment of the Federal Competition and Consumer Protection Commission and the Competition and Consumer Protection Tribunal. The new law repeals sections 118, 119, 120, 121 (excluding S. 121(i) (d)), 122, 123, 124, 125, 126, 127 and 128 of the Investments and Securities Act (ISA), 2007, the enabling law for SEC.

    In a circular, SEC indicated it would undertake a review of its regulatory oversight on mergers and acquisitions as well as applicable fees and guidelines.

    With the Federal Competition and Consumer Protection Act, the role of SEC in relation to mergers will be restricted to mergers and acquisitions by or involving public companies as well as transactions involving a change of shareholding of capital market operators.

    However, if a private company is to be merged with or acquired by a public company, the public company still has a duty to obtain the “No Objection” approval of SEC.

    The review and approval by SEC on mergers will be restricted to primary objective of determining “whether all shareholders are fairly, equitably and similarly treated and given sufficient information regarding the merger”. The Federal Competition and Consumer Protection Commission on the other hand will consider the anti-competitive effects of a transaction in a relevant market.

    SEC will meanwhile continue to enforce compliance with the takeover provisions and monitor acquisition of shares of public companies as enshrined in the ISA, 2007.

    SEC will also continue to oversee corporate restructurings. Every public company undertaking a proposal, scheme, transaction, arrangement, or activity or issue of securities or offer for subscription or purchase of securities in relation to conversion of a public company or the reconstruction of it shares; a carve-out, spin-off, split-off or other form of restructuring of its operations; acquisition or disposal of asset which results in a significant change in the business direction or policy of a public company or any other listed entity whether or not in relation to any proposal, scheme, transaction, arrangement or activity; shall obtain the “No Objection” approval of the Commission.

    However, all completed applications currently filed with SEC prior to the effective date of the Federal Competition and Consumer Protection Act and for which appropriate processing fees had been paid would be continued and completed by SEC.

     

  • SEC shuts down Dantata ponzi scheme

    The Securities and Exchange Commission, SEC, has sealed off the premises of Dantata Success and Profitable Company, Kano for engaging in illegal capital market activities.

    According to a statement from the Commission, the company was shut down for carrying out investment operations that fall within fund management without registration with the apex regulator.

    According to SEC, “They do not have registration with the SEC and the Commission has powers according to Section 13 of ISA 2007, to shut down any company carrying out capital market activities without due registration.

    Nigerian laws provide that business activities in the country have to be regulated, in this case SEC is supposed to regulate them.”

    “The strategy of the company is to solicit for funds from unsuspecting members of the public by enticing them with returns of monthly interest on investment of between 25 per cent to 50 per cent depending on the nature and investment type.”

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    They also indicated a registration period of 5th February to 15th February in one of their numerous notices directing all prospective customers to make deposits into their bank accounts.

    The company sells its forms to prospective investors according to their investment plans ranging from N1,000 to N3,000. The minimum amount investable is N50,000 while the maximum is N5,000,000.

    The investment period of the scheme is pegged at a minimum of 30 working days to a maximum period of 12 months with offer of interest rates on short and medium-term basis.

    It claims to be involved in trading, general merchandise supply, oil and gas, transportation, import, export and general contract.

    The commission had established that the company’s activities also constituted an infraction of the Investments and Securities Act (ISA), 2007.

    The SEC Management said the closure was to end unlawful activities of the company against unsuspecting investors and therefore urged investors to ensure they only deal with fund managers that are registered with the Commission.

    “The account of the company have been frozen, the promoters have been arrested by the Nigeria Police Force and are undergoing interrogation.

    “The Commission wishes to notify the investing public that the company is not licensed to carry out investments business of any type and as such its operations are illegal.

    “The SEC, therefore, advises the public to exercise due diligence and caution in the course of making investment decisions adding that valid licence of lawful operators could be obtained on the commission’s website by members of the public to confirm the licences of firms with which they intend to carry out investment activities.”

  • Fidelity bond: SEC gives operators deadline

    The Securities and Exchange Commission (SEC) has directed all capital market operators to ensure they submit their updated fidelity bond on or before January 31.

    A fidelity bond is essentially 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 a circular to all capital market operators, SEC noted that by virtue of Rule 27 (1) of SEC Rules and Regulations, which was made pursuant to the Investments and Securities Act, 2007, every registered capital market operator is required to provide and maintain a bond or professional indemnity insurance policy.

    “In view of the foregoing, all registered capital market operators who have not updated their fidelity bond for the year 2019 are required to do so on or before January 31, 2019. All fidelity bonds submitted to the commission shall cover the period between January 1, 2019 and December 31, 2019,” SEC stated.

    The commission warned that failure to comply with the deadline would attract penalty as stipulated in extant rules and regulations.  Operators with deficient fidelity bond might not be allowed by SEC to handle transactions.

    SEC had in 2013 adopted the annual Gregorian calendar as duration for each fidelity bond. The change came on the heels of an exclusive report by The Nation that some 213 capital market operators including several high-brow law firms, reporting accountants, banks, investment management firms and advisory firms were operating with expired fidelity bond.

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

     

     

  • SEC advises shareholders to monitor investments

    • Regulator to tackle identity theft

    The Securities and Exchange Commission (SEC) has urged shareholders to monitor their investments in the capital market, assuring that the apex regulator will live up to its responsibilities on investor protection.

    Its Acting Director-General, Mary Uduk stated this in an interview in Abuja yesterday.

    She said the Commission has put in place a number of initiatives to protect investors as well as boost confidence including the e-dividend mandate management system, direct cash settlement, setting up a committee on identity management in the Nigerian Capital Market Regularisation of Multiple Subscription, Complaints Management Framework among others. She however enjoined investors to take ownership of their investments.

    She said: “Investors have to be able to monitor their investments, attend annual general meetings as well as read the annual reports sent out to them. On our part, we protect them through the National Investors Protection Fund (NIPF); risk based supervision that enables us to supervise the operators to ensure that they do not do what they are not supposed to do. And again, the Complaints Management Framework enables investors to know where to complain to and how long it takes for such complaints to be resolved.

    “We advise investors to get their financial advisers to advise them properly on where to invest. In this area, we advise retail investors to invest in Collective Investment Schemes and Mutual Funds because those are managed independently by professionals and they are diversified thereby reducing risks. We are committed to protecting investors in the work we do,” she said.

    Uduk said the Commission is working with other major stakeholders in setting up a committee that will look into to problems around identity management in the capital market.

    “So for instance, to boost the e-dividend mandate and Direct Cash Settlement initiatives, we are engaging NIBSS (Nigeria Inter-Bank Settlement System) on behalf of the capital market community to facilitate identity validation and account validation in an effort to enhance market processes,” she said.

    She also said the electronic distribution of annual accounts by public companies to shareholders continues to record tremendous success, as shareholders have largely accepted the new initiative and are willingly providing their email addresses.

     

  • SEC urges shareholders to monitor their investments

    The Securities and Exchange Commission, SEC, has urged shareholders to monitor their investments in the capital market, assuring that the Apex Regulator will live up to its responsibilities on investor protection.

    Acting Director General of the SEC, Mary Uduk stated this in an interview in Abuja Wednesday.

    She said the Commission has put in place a number of initiatives to protect investors as well as boost their confidence including the e-dividend mandate Management System, Direct Cash Settlement, setting up a committee on identity management in the Nigerian Capital Market Regularization of Multiple Subscription, Complaints Management Framework among others, but however enjoined investors to take ownership of their investments.

    According to her, “They have to be able to monitor their investments, attend Annual General Meetings as well as read the annual reports sent out to them. On our part, we protect them through the National Investors Protection Fund (NIPF) Risk Based supervision that enables us to supervise the operators to ensure that they do not do what they are not supposed to do. And again the Complaints Management Framework enables investors to know where to complain to and how long it takes for such complaints to be resolved.

    “We advise investors to get their financial advisers to advise them properly on where to invest. In this area, we advise retail investors to invest in Collective Investment Schemes and Mutual Funds because those are managed independently by professionals and they are diversified thereby reducing risks. We are committed to protecting investors in the work we do.

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    Uduk said the Commission is working with other major stakeholders in setting up a committee that will look into and proffer solutions to problems around identity management in the Nigerian capital market.

    “So for instance, to boost the e-dividend mandate and Direct Cash Settlement initiatives, we are engaging NIBSS (Nigeria Inter-Bank Settlement System) on behalf of the capital market community to facilitate identity validation and account validation in an effort to enhance market processes” she stated.

    The Acting DG also disclosed that the electronic distribution of annual accounts by public companies to shareholders continues to record tremendous success, as shareholders have largely accepted the new initiative and are willingly providing their email addresses. Alongside other stakeholders, we have continued sensitization to further enlighten shareholders on the benefits of the initiative.

    On the need to grow the market for trading in securities on unlisted public companies, Uduk said the SEC is making concerted efforts in collaboration with CAC and other stakeholders to assist public companies that are yet to register their securities to do so without much difficulty.

    On the role of technology in the Nigerian Capital market, Uduk said Innovations in financial technology, has made possible the potential of using digital tools to make financial services available to a wider range of consumers and enterprises, promoting financial inclusion and the affordability of financial services, adding “A financially inclusive society will provide increased access to finance, especially for women, help support sustainable growth and will create a million more jobs. The gains of having a more inclusive financial system are enormous, as it helps broaden financial markets and make policies more effective”.

    These initiatives she added, continue to highlight and promote developments and trends in the Nigerian Capital Market and drive Financial Inclusion aimed at reducing adult exclusion from financial services.

  • SEC awaits merger application

    The Securities and Exchange Commission (SEC) was yesterday notified of the proposed merger between Access Bank Plc and Diamond Bank Plc, confirming an exclusively story reported by The Nation.

    The apex capital market regulator, however, clarified that the banks have not submitted formal application for merger, which will form the basis of regulatory approval.

    “The SEC received on Monday, Dec 17 2018, notice of intention by Diamond Bank and Access Bank to merge. The Commission is currently waiting for their formal application,” SEC stated.

    Under extant rules, mergers and acquisitions must be approved by SEC to kick-start the formal process of the transaction, following which the parties will approach the Federal High Court for an order to hold an extraordinary general meeting of their shareholders for their approvals. The Nigerian Stock Exchange (NSE) will also have to approve the merger while the Federal High Court must authorise the final approved merger documents to conclude the transaction.

    Investors appeared to respond positively to the business combination yesterday at the NSE as the share prices of the banks rose by nearly the highest daily allowable change at the stock market. Diamond Bank recorded the highest gain of 9.47 per cent to close at N1.04 while Access Bank followed with a gain of 9.40 per cent to close at N8.15 per share.

    Market sources said the price rally was stimulated by the prospects and consideration of the merger. According to the proposal, Access Bank will acquire the entire issued share capital of Diamond Bank in exchange for a combination of cash and shares in Access Bank via a Scheme of Merger. Based on the agreement reached by the boards of the two banks, Diamond Bank shareholders will receive a consideration of N3.13 per share, comprising of N1.00 per share in cash and the allotment of 2 new Access Bank ordinary shares for every seven Diamond Bank ordinary shares held as at the implementation date.

    The offer represents a premium of 260 per cent to the closing market price of 87 kobo per share of Diamond Bank on the NSE as at the close of business on December 13, 2018, the date of the final binding offer.

    After the completion of the merger, Diamond Bank will be absorbed into Access Bank and it will cease to exist under law. The current listing of Diamond Bank’s shares on the NSE and the listing of Diamond Bank’s global depositary receipts on the London Stock Exchange will be cancelled, upon the merger becoming effective. Diamond Bank expects the transaction to complete in the first half of 2019.