SEC Slaps N10m Fine for Unauthorized Security Issuance

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The Securities and Exchange Commission of Nigeria has introduced stringent new rules in a bold move to regulate the issuance and allotment of securities by private companies.

In a statement shared with journalists on Thursday, the SEC announced that any unauthorized issuance or allotment of securities will lead to a hefty penalty of at least N10m, with an additional N100,000 fine accruing daily until the violation ceases.

Part of the statement specifies that any person who issues or allots securities without the prior approval of the Commission, or violates any provisions of these rules, will face a penalty of not less than N10m in the first instance.

And for a private company to be eligible for issuing securities, it must be duly incorporated with a minimum three-year operational track record.

Within 30 days post-allotment, the SEC mandates that securities must be listed on a registered exchange.

The regulations stipulate that a private company can raise a maximum of N15bn within a year, with issuing houses obligated to submit a detailed post-allotment report within 21 working days to enhance transparency in the allotment process.

SEC has also imposed 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.

Inviting public comments on the new rules, SEC demonstrates its dedication to stakeholder engagement and transparency. All feedback should be sent to the Rules Committee within two weeks of being published on the SEC’s website.

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