Market News
SEC imposes N10m penalty for unauthorised security issuance - PUNCH
By Daniel Adaji
In a bold move to regulate the issuance and allotment of securities by private companies, the Securities and Exchange Commission of Nigeria has introduced stringent new rules.
The SEC has declared that any unauthorized issuance or allotment of securities will incur a hefty penalty of at least N10m, with an additional N100,000 fine accruing daily until the violation ceases.
It disclosed this in a statement shared with journalists on Thursday.
The SEC’s proposed rules outline severe consequences for those who fail to comply.
“Any person who issues or allots securities without the prior approval of the Commission, or violates any provisions of these rules shall be liable to a penalty not less than N10m in the first instance,” the Commission stated, emphasizing the gravity of the sanctions.
“To be eligible for issuing securities, a private company must be duly incorporated with a minimum three-year operational track record.”
Furthermore, the SEC mandates that securities must be listed on a registered exchange within 30 days post-allotment.
The regulations cap the amount a private company can raise within a year at N15bn. Issuing houses are required to file a detailed post-allotment report within 21 working days, ensuring transparency in the allotment process.
SEC has also placed restrictions on the use of proceeds from securities issues.
“Issuers are prohibited from using the proceeds of the issues for purposes other than those stated in the offer document without its prior approval,” the Commission clarified, underscoring the need for accountability in fund utilisation.
SEC has invited public comments on the new rules, reflecting its commitment to stakeholder engagement and transparency. All feedback is to be directed to the Rules Committee within two weeks of the publication on the SEC’s website.
The new regulations are a testament to the SEC’s resolve to ensure the integrity of Nigeria’s capital markets and protect investors from unauthorized and potentially harmful financial activities.
