19 Sep Requirements for Registration of Securities with the Securities and Exchange Commission in Nigeria

The Securities and Exchange Commission (“SEC” or “Commission”) is the main regulatory institution for the Nigerian capital market, established under the Investment and Securities Act, 2007 (ISA). It is supervised by the Federal Ministry of Finance. As part of its regulatory functions, the SEC maintains surveillance over the Nigerian Stock Exchange (NSE)[1]  , in order to ensure orderly and equitable dealings in securities, and to protect the market against insider trading abuses. The SEC prescribes Rules and Regulation which enables it to efficiently discharge its duties in pursuance of its objectives.

REGISTRATION OF SECURITIES UNDER THE INVESTMENT AND SECURITIES ACT

ISA provides that all securities of a public company and all securities or investments of a collective investment scheme shall be registered with the SEC under the terms and condition contained in the ISA and as may be supplemented by regulations prescribed by the SEC from time to time.[2]

The issuer of the securities shall file with the SEC a registration statement which shall be signed by each issuer, its chief executive officer, its principal financial officer and every person named as a member of the Board of Directors or persons performing similar functions. In case the issuer is a foreign person, the registration statement shall be signed by its duly authorised representative in Nigeria.[3]

Except the securities or investments of a public company or collective investment scheme are registered with the commission, they shall not be issued, transferred, sold or offered for subscription by or sale to the public. Anyone who contravenes this provision commits an offence and is liable on conviction to a fine or to a term of imprisonment or to both.[4] The Commission may also impose a penalty in lieu of prosecution for this contravention. Securities may be transferred electronically or by any other approved means through any securities exchange or capital point.[5]

REGISTRATION BY SECURITIES DEALERS

A capital market operator registered by the Commission shall keep a register of wherein it shall enter the particulars of the securities in which it   has interest and such interests shall be entered in the register within seven days of the acquisition.[6] Any  changes that are not prescribed in the registered security interests must also be notified to the Commission.[7]

The commission may require a person to produce the register for inspection and may take extracts from it.[8] Notice of the register must be given to the Commission, in a prescribed form, of particulars relating to the register, including the location of the register.

REQUIREMENTS FOR REGISTRATION

Rule 279(1) and (2) of the Security and Exchange Commission Rules and Regulations, 2003 provides that all securities of public companies and other entities (such as investment trust companies, other collective investment schemes, government and its agencies and supranational bodies) shall be registered by the Commission.

Securities subject to registration by the Commission may be offered to the public through an offer for subscription/sale, rights issue, bonus issue, debt-equity conversion, private placement, offer by introduction, debenture/loan stock, government bonds or Sukuk.

Registration of some of these modes of offering may have some peculiarities. However, generally, to register a security the issuer shall file an application on FORM SEC 6 as provided in Schedule III to the SEC Rules.[9] The application must be accompanied by several documents, including but not limited to the following:

• A copy of the Board and Shareholders’ resolutions authorizing the offer duly certified by the Corporate Affairs Commission;
• 2 Copies of the Memorandum and Articles of Associate (which will include any amendments) of the issuer certified by the Corporate Affairs Commission;
• A copy of certificate of incorporation of the issuer certified by the CAC. In the instance at which a copy has earlier been filed with the Commission, a photocopy of the certificate of incorporation must be certified by the Company Secretary and forwarded to the Commission.
• A signed copy of the audited accounts for the preceding five (5) years or number of years of which the issuer company has been in operation, (if less than five (5) years) or audited statement of affairs (in the case of a new company) disclosing the following information:

Financial statements;

Date of incorporation;

Authorized share capital;

Paid-up capital which shall be less that the minimum subscription level prescribed by the Companies and Allied Matters Act (CAMA);

Profile of Promoter/Directors;

Profile of Management staff;

A summary of the objective and business of the Company; and

The latest audited accounts shall not be more that nine months old for corporate bodies or twelve months old for states, local government and Federal Government agencies and Supranational bodies.

Where documents such as Memorandum and Article of Association, Certificate of Incorporation or increase in share capital have earlier been filed, they need not be filed in subsequent transaction once the applicant gives an undertaking that there have not been any changes after the previous filing.

The documents are filed at the office of the Director General, after payment of the applicable fees. The office of the Director General will scrutinize the documents and may request for additional documents where there are any deficiencies. If there are no deficiencies, the Commission will communicate its approval.

If the applicant intends to list the security on the securities exchange or with any association or body of security dealers recognized by the Commission, the issuer shall also file with the Commission such copies of the duplicate and originals of the application to the securities exchange, association or body of security dealers and a certificate that an application to the effect has been made.[10]

The copies of the approved prospectus shall be signed by the directors of the issuer and other parties to a public offer and shall be forwarded alongside other offer documents to the Commission for registration within 48 hours of the signing of the prospectus. A party who is unavailable to sign the prospectus shall give a power of attorney to any other available party to sign on his behalf. This shall be filed with the offer documents.[11]

If the securities registered by the Commission under this part will not be offered to the public within a period of six months after the registration, the issuer shall revert to the Commission for a re-validation of the registration before it is offered to the public.[12]

CONCLUSION

It is important that every public offering of securities to the public must be registered with the Security and Exchange Commission and enlisted with the Nigerian Stock Exchange or other self-regulatory entities, to enable transparency and a free flow of dealings in the securities.

The information provided in this article is for general informational purposes only and does not constitute legal advice. If you require specific legal advice on any of the matters covered in this article please contact info@berkeleylegal.com.ng

[1] A self-regulatory company limited by guarantee, licensed under the ISA to offer listing and trading services, licensing services, market data solutions, ancillary technology services, etc.

[2] Section 54(1) ISA

[3] Section 54(2) ISA

[4] Section 54(5) & (6) ISA

[5] Section 55 ISA

[6] Section 56(2) ISA

[7] Section 56(3) & (4) ISA

[8] Section 58(2) ISA

[9]279 (2) of the SEC Rules

[10] Rule 279 (5) SEC Rules

[11] Rule 279 (6)

[12] Rule 279(7)