The Securities and Exchange Commission (SEC) has unveiled proposed new rules governing the issuance and allotment of securities by private companies, aiming to enhance regulatory oversight and safeguard investor interests. Under the proposed regulations, any individual or entity found to issue or allot securities without prior approval from the SEC or who violates any provisions of the regulations will face significant penalties.
According to the proposed rules, individuals or entities found in violation will be liable to a penalty of not less than N10 million in the first instance. Additionally, they will incur a further sum of N100,000 for every day the violation persists. These fines represent a substantial deterrent aimed at ensuring compliance with SEC regulations.
The recommended penalties are outlined in the proposed new rules on the issuance and allotment of securities by private companies, prepared by the Securities and Exchange Commission. The rules are applicable to various stakeholders within the capital market ecosystem, including private companies issuing debt securities through public offers, private placements, or other approved methods.
Moreover, the regulations extend to registered exchanges and platforms facilitating the trading, price discovery, or information repository purposes of debt securities issued by private companies. Capital market operators involved in the issuance and allotment of such securities are also subject to the proposed rules.
In addition to monetary penalties, the SEC has outlined other stringent punishments, including suspension or withdrawal of registration for capital market operators found to be in violation. Furthermore, the commission reserves the right to order the disgorgement of proceeds or income derived from the transaction in question.
In cases where it deems necessary, the SEC may ratify or rescind a transaction if it is deemed to be in the public interest to do so. These measures underscore the SEC’s commitment to maintaining market integrity, protecting investors, and promoting transparency within Nigeria’s capital markets.
Analysts say the proposed rules signal a proactive approach by SEC to strengthen regulatory oversight and ensure compliance with established standards in the issuance and allotment of securities by private companies. As stakeholders engage with the proposed regulations, SEC aims to foster a more robust and resilient capital market ecosystem conducive to sustainable growth and investor confidence.
