INVESTMENTS AND SECURITIES ACT, 2007

 

EXPLANATORY MEMORANDUM

The Act, amongst other things, provides for-

(a)        the establishment of Securities and Exchange Commission;

(b)        the repeal of the Investments and Securities Act 1999;

(c)        the enlarged powers and functions of the Commission over the capital market; and

(d)        a set of new market infrastructures and wide-ranging system of regulation of investment and securities business in Nigeria, especially in the area of Mergers, Acquisitions and Take-Over, and collective Investment Schemes, where new provisions were made.

 

 

ARRANGEMENT OF SECTIONS

PART I— ESTABLISHMENT AND MANAGEMENT OF THE SECURITIES AND EXCHANGE COMMISSION

1.       Establishment of the securities and exchange Commission.

2.       Head office of the Commission.

3.       Composition of the board of the Commission.

4.       Duties of the board.

5.       Appointment and tenure of office of members of the board.

6.       Director-General and full time Commissioners to be fully devoted to the service of the Commission.

7.       Management of the Commission.

8.       Disqualification and cessation of appointment.

9.       Remuneration and allowances of members of the Board.

10.     Meetings of the board of the Commission.

11.     Disclosure of interest.

12.     Code of ethics for members of the board.

PART II — FUNCTIONS AND POWERS OF THE COMMISSION

13.     Functions and powers of the Commission.

14.     Powers to establish departments.

PART III — STAFF OF THE COMMISSION

15.     Appointment of the Secretary and other staff of the Commission.

16.     Remuneration of the Secretary and other staff of the Commission.

17.     Duties of the Secretary.

18.     Service in the Commission to be pensionable.

PART IV — FINANCIAL PROVISIONS

19.     Funds of the Commission.

20.     Application of the funds of the Commission.

21.     Reserve account.

22.     Power to accept gifts.

23.     Penalties, fees, etc. to be retained and utilized by the Commission.

24.     Borrowing by the Commission.

25.     Investment by the Commission.

26.     Annual estimates, account and audit.

27.     Annual report.

28.     Registration of securities exchanges and capital trade points.

29.     Conditions for registration. No 1 of 1990.

PART V: REGISTRATION AND REGULATION OF SECURITIES EXCHANGES, CAPITAL TRADE POINTS AND OTHER SELF REGULATORY ORGANIZATIONS

30.     Revocation of certificate of a securities exchange or capital trade point.

31.     Approval of amendments to listing rules

32.     Role of securities exchange, capital trade point and other self regulatory organisations.

33.     Securities exchange, capital trade point or self regulatory organisation to give notice of disciplinary actions, etc.

34.     Review of disciplinary actions taken by a securities exchange, capital trade point or self-regulatory organisation.

35.     Power to issue directives to a securities exchange, capital trade point or self regulatory organisation, etc.

36.     Power of the Commission to prohibit trading in particular securities.

37.     Securities exchange, etc. to maintain proper books of account.

PART VI: REGISTRATION AND REGULATION OF CAPITAL MARKET OPERATORS

38.     Registration of capital market operators.

39.     Accounts to be kept by capital market operator.

40.     Maintenance of separate accounts and payment into certain trust accounts.

41.     Penalty for withdrawing money from trust account without authority.

42.     Money in trust account not available for payment of debt.

43.     Claims and lien not affected.

44.     Right to copies of book entries of transactions and to inspect contract notes.

PART VII: INSPECTIONS AND INVESTIGATIONS

45.     Designation of officers of the Commission for supervision of certain capital market operators.

46.     Routine examination and report.

47.     Special examination.

48.     Failing capital market operator.

49.     Control of failing capital market operator.

50.     Management of failing capital market operator.

51.     Power of the Commission to revoke registration or apply to Court.

52.     Duty to notify capital market operator or person to be affected.

53.     Application to the Federal High Court for winding up.

PART VIII: REGULATION OF SECURITIES

A— REGISTRATION OF SECURITIES

54.     Compulsory registration of securities and investments of public companies and collective investment schemes.

55.     Electronic and other means of issuing and transferring securities.

56.     Register of securities.

57.     Particulars of register.

58.     Production of register.

59.     Extracts of register.

B— CORPORATE RESPONSIBILITY OF PUBLIC COMPANIES

60.     Filing of annual and periodic reports with the Commission.

61.     System of internal control of public companies.

62.     Auditors of public companies to register with the Commission.

63.     Duty of auditor to report on internal controls of public companies

64.     Disclosure of quarterly earning forecasts by listed public companies.

65.     Penalties for contravention of sections 60, 61, 62, 63 and 64.

C — IN GENERAL

66.     Contravention of part VIII by bodies corporate.

PART IX: PUBLIC OFFER AND SALE OF SECURITIES AND INVITATIONS TO THE PUBLIC

67.     Control of invitations to the public.

68.     Invitation to the public to deposit money by public companies.

69.     Meaning of "invitation to the public"

70.     Offers for sale deemed to be made by the company.

71.     Form of application for shares to be issued with prospectus.

72.     Effective date of a prospectus.

73.     Contents of a prospectus.

74.     Exemption from application of provisions relating to prospectus in certain cases.

75.     Prohibition of issuance, circulation, etc of certain notices, circulars and advertisements.

76.     Exemption certificate and effect.

77.     Expert's statement on prospectus.

78.     Prospectus on invitation to the public to acquire or dispose of securities.

79.     General and restricted invitations to the public.

80.     Registration of prospectus.

81.     Contract in prospectus, etc., not to be varied without leave.

82.     Document with offer of securities for sale to be deemed a prospectus.

83.     Interpretation as to prospectus statements.

84.     Form of statement in lieu of prospectus.

85.     Civil liability for mis-statements in prospectus.

86.     Criminal liability for mis-statement in prospectus.

87.     Criminal liability in respect of statements in lieu of prospectus.

88.     Allotment of securities.

89.     Opening of subscription lists.

90.     No allotment unless minimum subscription received.

91.     Application monies to be held in trust until allotment.

92.     Prohibition of allotment in certain cases.

93.     Effect of irregular allotment.

94.     Action for rescission.

95.     Allotment of securities and dealing on securities exchange, etc.

96.     Return of surplus monies to subscribers, etc.

PART X: CONDUCT OF SECURITIES BUSINESS

97.     Prohibition of certain cash transactions.

98.     Securities dealer to issue Contract notes.

99.     Contents of contract notes.

100.   Disclosure of certain interests in securities by securities dealers, etc.

101.   Dealing as principal.

102.   Dealings by employees of securities dealers.

103.   Securities dealers to give priority to client's orders.

104.   Securities lending and margin requirements.

PART XI: TRADING IN SECURITIES

105.   False trading and market rigging transactions.

106.   Securities market manipulation.

107.   False or misleading statements.

108.   Fraudulently inducing persons to deal in securities.

109.   Dissemination of illegal information.

110.   Prohibition of fraudulent means.

111.   Prohibition of dealing in securities by insiders.

112.   Abuse of information obtained in official capacity.

113.   Actions not prohibited by sections 111 and 112 as dealings in securities by insiders.

114.   Effect of contravention.

115.   Criminal liability under this part.

116.   Compensation to be determined by the Commission or Tribunal.

PART XII: MERGERS, TAKE-OVERS AND ACQUISITIONS

117.   Meaning of certain words used in this part.

118.   Extent of application of this part.

119.   Meaning of merger.

120.   Thresholds and categories of mergers.

121.   Consideration of mergers.

122.   Small merger notification and implementation.

123.   Notification and implementation of intermediate and large mergers.

124.   Merger investigations.

125.   Intermediate merger procedure before the Commission.

126.   Large merger procedure before the Commission.

127.   Revocation of merger approval.

128.   Power to order the break-up of company.

129.   Power to acquire shares of dissenting shareholder.

130.   Right of a dissenting shareholder to compel acquisition of his shares.

131.   Take over.

132.   Take-over bid.

133.   Person making a take-over bid.

134.   Authority to proceed with take-over bid.

135.   Registration of copy of proposed bid.

136.   Requirements as to bid under take-over bid.

137.   Corporation making take-over bid.

138.   Despatch of bid to shareholders, etc.

139.   Arrangement for funds.

140.   Directors' circular.

141.   Inclusion of expert's opinion in a bid.

142.   Bid for all shares.

143.   Bid for less than all shares.

144.   Provisions applicable to every bid.

145.   Duty of the Commission in relation to certain instruments.

146.   Acquisition of shares of dissenting shareholders.

147.   Procedure where dissenting offeree makes election.

148.   Duties of offeree company.

149.   General provisions as to payment.

150.   Rights of remaining shareholders.

151.   Offences in relation to take-over bids.

PART XIII: COLLECTIVE INVESTMENT SCHEMES

A— GENERAL

152.   Definition of certain words used in this Part.

153.   Meaning of collective investment scheme, etc.

154.   Types of collective investment scheme. Cap 59.

155.   Principles for the administration of the scheme.

156.   Disclosure of Information.

157.   Duties of manager of a scheme.

158.   Requirements for administration of collective investment schemes.

159.   Prohibition of misleading names and acts.

160.   Authorisation of collective investment scheme.

161.   Registration of units or securities of a scheme.

162.   Alteration of trust deed, custodial agreement or change of name of scheme to be approved by the Commission.

163.   Revocation of authorisation of scheme.

164.   Approval of prospectus and other offer documents on scheme.

165.   Civil liabilities arising from prospectus.

166.   Redemption of units or securities.

167.   Prohibition of certain transactions and profits by manager under a scheme.

168.   Liability of trustees and custodian under a scheme.

169.   Audit of accounts of a scheme and annual general meetings.

170.   Determination of market price of units or securities.

171.   Investment of a collective investment scheme.

172.   Inspection and investigation.

173.   Powers of the Commission after an investigation.

174    Cancellation or suspension of registration of a manager.

175.   Commission may object to publication or distribution of misleading, objectionable, etc. documents.

176.   Power of Commission to request audit.

177.   Declaration of certain practices as irregular or undesirable.

178.   Appointment and termination of appointment of trustee or custodian.

179.   Qualification and registration of trustee or custodian.

180.   Suspension or revocation of the registration of trustee or custodian.

181.   Duties of trustee or custodian.

182.   Status of assets.

183.   Liability of trustee or custodian in respect of loss of assets.

184.   Appointment and removal of auditor.

185.   Duty of auditor to disclose irregularity or undesirable practice.

186.   Power to make regulations on the constitution and management of collective investment schemes.

187.   Alteration of schemes and change of manager, trustee or custodian.

188.   Restriction on activities of managers.

189.   Publication of scheme particulars.

190.   Power of intervention.

191.   Representation against directive or its revocation.

192.   Open-ended investment company.

193.   Real estate investment companies or trusts.

194.   Registration of real estate investment company.

195.   Foreign collective investment schemes.

196.   Supplemental investigations.

PART XIV: INVESTORS PROTECTION FUND

197.   Establishment of an investors protection fund.

198.   Objectives of an investor protection fund.

199.   Composition and tenure of the board of trustees.

200.   Removal from the board of trustees.

201.   Powers of the board of trustees.

202.   Monies constituting the investor protection fund.

203.   Fund to be kept in separate bank account.

204.   Payments out of the investor protection fund.

205.   Accounts of an investor protection fund.

206.   Power of the board of trustees to delegate functions to its management subcommittee.

207.   Minimum amount in the investor protection fund.

208.   Protection of the investor protection fund in the event of any reduction.

209.   Levy to meet liabilities.

210.   Power of a securities exchange or capital trade point to make advance to an investor protection fund.

211.   Investment of the funds of an investor protection fund.

212.   Application of the investor protection fund.

213.   Claims against an investor protection fund.

214.   Notice calling for claims against the investor protection fund.

215.   Power to settle claims.

216.   Form of order of the Tribunal.

217.   Power to require production of evidence.

218.   Subrogation.

219.   Application of insurance money.

220.   Penalty for contravention.

221.   Interpretation.

PART XV: BORROWING BY FEDERAL, STATE, AND LOCAL GOVERNMENTS AND THEIR AGENCIES.

 

222.   Bodies to which this Part applies.

223.   Issue of registered bonds or promissory notes.

224.   Restriction on raising of funds from the capital market.

225.   Loans to be charged upon revenue:

226.   Bodies to publish details of loans in the gazette or other official document.

227.   Register of securities and appointment of registrar.

228.   Appointment of issuing house.

229.   Liability of a body in respect of issue of registered securities.

230.   Bond holders to be registered.

231.   Condition for registration of bond holders.

232.   Bond certificate.

233.   Transfer of registered bond.

234.   Registration of transfer of bonds.

235.   Registration of liens on bonds.

236.   Closing of register.

237.   Register to be conclusive.

238.   Promissory notes.

239.   Manner and effect of endorsement.

240.   Rights of survivorship.

241.   Registered bonds.

242.   Appropriation of revenue.

243.   Payment of interest.

244.   Payments.

245.   Appointment of trustees.

246.   Powers of trustees.

247.   Trustee may be interested party.

248.   Power to appoint new trustees.

249.   Waiver by trustees.

250.   Appropriation of revenue for sinking fund.

251.   Separate sinking fund.

252.   Investment of sinking fund.

253.   Cessation of contribution to sinking fund.

254.   Expenses to be paid out of sinking fund.

255.   Deficiency in fund to be charged upon revenue.

256.   Payment into sinking fund in case of default by a body.

257.   Issue of duplicate and renewal of bonds certificate and promissory notes.

258.   Right of registrar to compel application to issue renewal of promissory notes.

259.   Consolidation and subdivision of bonds and securities.

260.   Indemnity bond.

261.   Immediate discharge in certain cases.

262.   Discharge in other cases.

263.   Summary procedure in special cases.

264.   Signature to be printed on certificates.

265.   Notice of trust not receivable except as provided.

266.   Exemption from stamp duties.

267.   Delegation of power.

268.   Inspection of register and documents, etc.

269.   Power to make rules and regulations under this part.

270.   Requirements of securities exchanges, etc.

271.   Binding obligation on successive governments or bodies.

272.   Application of enactments.

273.   Interpretation of certain words used in this part.

PART XVI: ESTABLISHMENT, JURISDICTION, AUTHORITY AND PROCEDURE OF THE INVESTMENTS AND SECURITIES TRIBUNAL

274.   Establishment of the Investments and Securities Tribunal.

275.   Composition of the Tribunal.

276.   Constitution of the Tribunal.

277.   Term of office.

278.   Disqualification of members of the Tribunal.

279.   Resignation and removal.

280.   Salaries, allowances and other conditions of service of members of the Tribunal.

281.   Filling up of vacancies.

282.   Chief Registrar to the Tribunal.

283.   Other staff of the Tribunal, etc.

284.   Jurisdiction of the Tribunal, etc.

285.   Funds of the Tribunal.

286.   Power to accept gift.

287.   Account and audit.

288.   Application of the funds of the Tribunal.

289.   Appeals from decisions of the Commission.

290.   Powers and procedures of the Tribunal.

291.   Right to legal representation.

292.   Onus of proof.

293.   Judgment of the Tribunal.

294.   Exclusion of proceedings.

295.   Appeal to the Court of Appeal.

296.   Costs.

297.   Further appeals.

PART XVII: MISCELLANEOUS

298.   Power of Minister to issue directives.

299.   Power to administer oath.

300.   Delegation.

301.   Right to represent Commission before court or Tribunal.

302.   Protection of action taken in good faith.

303.   Penalty.

304.   Criminal prosecution.

305.   Offences by companies and market participants.

306.   Obligation of persons to disclose information connected with activities of their employer.

307.   Change of name of capital market operators, managers, portfolio or collective investment scheme and change of shareholding or directors.

308.   Removal of appointees.

309.   Power to exempt.

310.   Committees of the Commission.

311.   Seal of the Commission.

312.   Application and relevance of other laws not barred.

313.   Rules and regulations.

314.   Repeals and savings.

PART XVIII: INTERPRETATION AND CITATION

315.   Interpretation.

316.   Citation.

 

 

THE INVESTMENTS AND SECURITIES ACT, 2007

2007 ACT NO. 29

 

INVESTMENT AND SECURITIES ACT 2007

An Act to repeal the Investments And Securities Act 1999 and to establish the Securities And Exchange Commission as the apex Regulatory Authority for the NigerianCapital Market as well as Regulation of the Market to ensure the protection of investors, maintain fair, efficient and transparent market and reduction of systemicrisk; and for related matters,

 

Commencement    [25th Day of June, 2007]

 

ENACTED by the National Assembly of the Federal Republic of Nigeria-

 

PART I: ESTABLISHMENT AND MANAGEMENT OF THE SECURITIES AND EXCHANGE COMMISSION

Establishment of the securities and exchange Commission.

1 (1). There is established a body to be known as the Securities and Exchange Commission (in this Act referred to as "the Commission")

(2)     The Commission shall be a body corporate with perpetual succession and a common seal and may sue and be sued in its corporate name.

(3)     The Commission shall have power to acquire, hold or dispose of any property, movable or immovable for the purpose of carrying out any of its functions under this Act.

Head office of the Commission.

2.      The Commission shall have its head office in a location which is by law designated as the Capital of the Federal Republic of Nigeria and may establish zonal offices in any part of Nigeria in accordance with the decision of the Board of the Commission.

 

3 (1). There shall be for the Commission a Board which shall consist of-

(a)     a part-time Chairman;

(b)     the Director-General and Chief executive as Accounting officer;

(c)     three full time Commissioners;

(d)     a representative of the Federal Ministry of Finance;

(e)     a representative of the Central Bank of Nigeria; and

(f)      two part-time Commissioners one of whom shall be a legal practitioner qualified to practice in Nigeria with ten years post call experience.

 

Composition of the board of the Commission.

(2)     A person shall not be qualified for appointment to the Board of the Commission unless he is a fit and proper person and-

(a)     in the case of the Chairman or Director-General of the Commission, he is a holder of a university degree or its equivalent with not less than 15 years cognate experience in capital market operations;

(b)     in the case of any other member other than an ex-officio member, he is a holder of a university degree or its equivalent with not less than 12 years cognate experience in capital market operations or legal practice as the case may be; and

(c)     in the case of an ex-officio member, he is not below the rank of a director in the Ministry or Central Bank of Nigeria, as the case may be.

 

Duties of the board.

4  (1). The Board shall be responsible for the general administration of the Commission and, in particular, shall-

(a)     formulate general policies for the regulation and development of the capital market and the achievement and exercise of the functions of the Commission;

(b)     approve the audited and management accounts of the Commission;

(c)     appoint Auditors for the Commission;

(d)     consider and approve the annual budget of the Commission as may be presented to it by the management;

(e)     establish zonal offices of the Commission; and

(f)      carry out such other activities as are necessary and expedient for the purposes of achieving the objectives of the Commission.

(2)     The Board shall, on the recommendation of the Director-General, approve the duties of the full time Commissioners.

(3)     The Board shall also approve the reassignment of the full time Commissioners by the Director-General.

 

Appointment and tenure of office of members of the board.

5 (1) The Director-General and the three full time Commissioners shall be appointed by the President upon the recommendation of the Minister and confirmation by the Senate.

(2)     The Director-General shall hold office for a period of 5 years in the first instance and may be reappointed for a further period of five years and no more.

(3)     The three full time Commissioners shall hold office in the first instance for a period of four years and may be re-appointed for a further term of four years and no more.

(4)     The Chairman and part-time Commissioners (other than the ex-officio Commissioners) shall each hold office for a term of four years and no more.

(5)     Notwithstanding the provisions of subsections (1) and (2) of this section, the President may extend the tenure of office of the Director-General and any of the Commissioners whose term of office has expired until a successor to such Director-General or Commissioner is appointed.

 

Director-General and full time Commissioners to be fully devoted to the service of the Commission.

6.      The Director-General and the full time Commissioners shall devote their full time to the service of the Commission and while holding office shall not hold any other office or employment except where appointed by virtue of their office in the Commission into the membership of the Board of any agency of the government in Nigeria or any international organization to which the Commission is a member or an affiliate.

 

Management of the Commission.

7.      The Director-General or, in his absence, one of the Commissioners nominated by the Director-General shall be responsible for the day to day management and administration of the Commission and shall be answerable to the Board of the Commission.

 

Disqualification and cessation of appointment.

8 (1)  A member of the Board shall cease to hold office if he-

(a)     becomes of unsound mind;

(b)     becomes bankrupt or makes a compromise with creditors;

(c)     is convicted of a felony or any offence involving dishonesty;

(d)     is guilty of serious misconduct in relation to his duties; or

(e)     is a person who has a professional qualification, and is disqualified or suspended (other than at his own request) from practicing his profession in any part of Nigeria by the order of any competent authority made in respect of him personally.

(2)     The President may at any time and upon the recommendation of the Minister remove a person to whom subsection (1) of this section applies:

Provided no full time member of the Board of the Commission shall be removed from office without the approval of the Senate.

 

Remuneration and allowances of members of the board.

9  (1). The Director-General and the three full time Commissioners shall be paid such remuneration and allowances as may be determined by the Board of the Commission.

(2)     The allowances for the part-time members shall be in accordance with the prevailing guidelines on remuneration for part-time members of public bodies issued by the appropriate agency of the Federal Government.

 

Meetings of the board of the Commission.

10 (1).        Meetings of the Board of the Commission shall take place as often as may be required but not less than four times in any financial year of the Commission.

(2)     The Chairman shall preside at every meeting of the Commission and in his absence, the members present at such meeting shall appoint one of their members to preside.

(3)     Five members of the Board shall form a quorum at any meeting, two of whom shall be non-executive members.

(4)     Unless as otherwise provided in this Act, decisions shall be by a simple majority of the vote of the members present but, in case of equality of vote, the presiding chairman shall have a casting vote.

 

First Schedule

(5)     The supplementary provisions set out in the first schedule to this Act shall have effect with respect to the proceedings of the Board of the Commission and the other matters contained therein.

 

Disclosure of interest.

11 (1). A member of the Board of the Commission who is directly or indirectly interested in-

(a)     the affairs of any company or enterprise being deliberated upon by the Board of the Commission; or

(b)     any contract made or proposed to be made by the Board of the Commission shall, as soon as possible after relevant facts have come to his knowledge, disclose the nature of his interest to the Commission at the meeting of the Board of the Commission.

(2)     A disclosure made under subsection (1) of this section shall be recorded in the minutes of the meeting of the Board of the Commission and the member after the disclosure shall-

(a)     not participate or continue to participate in any deliberation or decision of the Board of the Commission with regard to the subject-matter in respect of which his interest is so disclosed; and

(b)     be excluded for the purpose of constituting a quorum of the Board of the Commission from any deliberation or decision on the subject matter.

 

Code of ethics for members of the Board.

12.    The members of the Board of the Commission shall subscribe to, and be bound by a code of ethics to be approved by the Minister.

 

PART II: FUNCTIONS AND POWERS OF THE COMMISSION

Functions and powers of the Commission.

13.    The Commission shall be the apex regulatory organisation for the Nigerian capital market and shall carry out the functions and exercise all the powers prescribed in this Act and, in particular, shall-

(a)     regulate investments and securities business in Nigeria as defined in this Act;

(b)     register and regulate securities exchanges, capital trade points , futures, options and derivatives exchanges, commodity exchanges and any other recognized investment exchange;

(c)     regulate all offers of securities by public companies and entities;

(d)     register securities of public companies;

(e)     render assistance as may be deemed necessary to promoters and investors wishing to establish securities exchanges and capital trade points;

(f)      prepare adequate guidelines and organise training programmes and disseminate information necessary for the establishment of securities exchanges and capital trade points;

(g)     register and regulate corporate and individual capital market operators as defined in this Act;

(h)     register and regulate the workings of venture capital funds and collective investments schemes in whatever form;

(i)      facilitate the establishment of a nationwide system for securities trading in the Nigerian capital market in order to protect investors and maintain fair and orderly markets;

(j)      facilitate the linking of all markets in securities with information and communication technology facilities;

(k)     act in the public interest having regard to the protection of investors and the maintenance of fair and orderly markets and to this end establish a nationwide trust scheme to compensate investors whose losses are not covered under the investors protection funds administered by securities exchanges and capital trade points;

(l)      keep and maintain a register of foreign portfolio investments;

(m)    register and regulate securities depository companies, clearing and settlement companies, custodians of assets and securities, credit rating agencies and such other agencies and intermediaries;

(n)     protect the integrity of the securities market against all forms of abuses including insider dealing;

(o)     promote and register self regulatory organisations including securities exchanges, capital trade points and capital market trade associations to which it may delegate its powers;

(p)     review, approve and regulate mergers, acquisitions, takeovers and all forms of business combinations and affected transactions of all companies as defined in this Act;

(q)     authorise and regulate cross-border securities transactions;

(r)      call for information from and inspect, conduct inquiries and audit of securities exchanges, capital market operators, collective investment schemes and all other regulated entities;

(s)     promote investors' education and the training of all categories of intermediaries in the securities industry;

(t)      call for, or furnish to any person, such information as may be considered necessary by it for the efficient discharge of its functions;

(u)     levy fees, penalties and administrative costs of proceedings or other charges on any person in relation to investments and securities business in Nigeria in accordance with the provisions of this Act;

(v)     intervene in the management and control of capital market operators which it considers has failed, is failing or in crisis including entering into the premises and doing whatsoever the Commission deems necessary for the protection of investors;

(w)    enter and seal up the premises of persons illegally carrying on capital market operations;

(x)     in furtherance of its role of protecting the integrity of the securities market, seek judicial order to freeze the assets (including bank accounts) of any person whose assets were derived from the violation of this Act, or any securities law or regulation in Nigeria or other jurisdictions;

(y)     relate effectively with domestic and foreign regulators and supervisors of other financial institutions including entering into co-operative agreement on matters of common interest;

(z)     conduct research into all or any aspect of the securities industry;

(aa)   prevent fraudulent and unfair trade practices relating to the securities industry;

(bb)   disqualify persons considered unfit from being employed in any arm of the

securities industry;

(cc)    advise the Minister on all matters relating to the securities industry; and

(dd)   perform such other functions and exercise such other powers not inconsistent with this Act as are necessary or expedient for giving full effect to the provisions of this Act.

 

Powers to establish departments.

14.    The Commission may establish specialised departments for the purpose of regulating and developing the Nigerian capital market.

 

PART III: STAFF OF THE COMMISSION

Appointment of the Secretary and other staff of the Commission.

15 (1). There shall be for the Commission a Secretary who shall be appointed by the Commission.

(2)     The Secretary shall be a legal practitioner of not less than 10 years post call experience.

(3)     The Secretary shall act as Secretary to the Board of the Commission and its committees and carry out other functions as may be prescribed by the Board.

(4)     There shall also be appointed by the Commission other staff as the Commission may deem necessary for the efficient performance of its functions under this Act.

 

Remuneration of the Secretary and other staff of the Commission.

16     The remuneration (including allowances) and the terms and conditions of service of the Secretary and other staff of the Commission shall be determined by the Board of the Commission.

 

Duties of the Secretary.

17(1) The Secretary shall-

(a)     attend the meetings of the Board of the Commission, and its committees and render all necessary secretarial services in respect of the meetings and advise on compliance by the meetings with applicable laws and regulations;

(b)     keep and maintain records of the Board of the Commission; and

(c)     carry out such administrative and other secretarial duties as may be required by the Board of the Commission or the Director- General;

(2)     The Secretary shall exercise the powers of the Board only with the authority of the commission.

 

Service in the Commission to be pensionable.

18 (1).  Every staff of the Commission shall be entitled to pension and other retirement benefits as prescribed by law.

(2)     Nothing in this section shall prevent the appointment of a person to any office on such terms and conditions, which preclude the grant of pension and other retirement benefits.

 

PART IV: FINANCIAL PROVISIONS

Funds of the Commission.

19(1). The Commission shall establish and maintain a fund (in this Act referred to as "the Fund") into which shall be paid the following-

(a)     funds provided to the Commission by the Federal Government;

(b)     penalties, fees, charges and administrative cost of proceedings; and

(c)     monetary gifts, contributions and other funds that may be received by the Commission.

(2)     The Commission shall maintain and operate bank accounts for funds as approved by the Board of the Commission.

 

Application of the funds of the Commission.

20.    The Commission may apply the proceeds of the Fund established under section 19 of this Act to-

(a)     meet the cost of administration of the Commission;

(b)     reimburse members of the Commission or any committee set up by the Commission for expenses authorised or approved by the Commission;

(c)     pay the salaries, fees or other remuneration or allowances, pensions and gratuities payable to the employees of the Commission;

(d)     maintain any property acquired by or vested in the Commission;

(e)     implement all or any of the functions of the Commission under this Act or any matter connected with those functions; and

(f)      meet any capital expenditure approved by the Board of the Commission.

 

Reserve account.

21 (1). The Commission shall establish a reserve account into which all surpluses from the Fund shall be paid.

(2)     Disbursement from the reserve account shall be approved by the Board of the Commission.

(3)     The Commission may invest funds in the reserve account in securities prescribed by the Trustee Investments Act and such other modifying or substituting legislation or in such other securities as may be approved by the Board of the Commission.

 

Power to accept gifts.

22(1).  The Commission may accept gifts of land, money or other testamentary dispositions, endowments and contributions on such terms and conditions, if any, as may be specified by the donor of the gift.

(2)     The Commission shall not accept any gift if the conditions attached by the donor are inconsistent with the functions and objectives of the Commission.

 

Penalties, fees, etc. to be retained and utilized by the Commission.

23.    The Commission is entitled to charge, retain and utilise for its purposes-

(a)     penalties imposed for violation of this Act and the rules and regulations made thereunder; and

(b)     fees collected for the services rendered by the Commission under this Bill, including recovery of costs of administrative proceedings.

 

Borrowing by the Commission.

24     The Commission may, subject to the approval of the Board, borrow by way of loan a specified amount of money as it may require for meeting its obligations and discharging its functions under this Act.

 

Investment by the Commission.

25.    The Commission may, subject to the provisions of this Act and the conditions of any trust created in respect of any property, invest all or any of its funds as may be approved by the Board.

 

Annual report.

26 (1). The Board of the Commission shall cause to be prepared, not later than the thirtieth day of September in each year, an estimate of the income and expenditure of the Commission during the next succeeding year and when prepared, they shall be submitted to the Minister and the National Assembly.

(2)     The Commission shall cause to be kept, proper books of records and accounts which shall be audited by auditors appointed by the Board of the Commission Annual estimates, account and audit.

 

27.    The Commission, shall not later than three months after the end of each year, submit to the Minister and the National Assembly, a report on the activities and administration of the Commission during the immediately preceding year and, shall include in such reports, audited accounts of the Commission and the report of the Auditor on the accounts.

 

PART V: REGISTRATION AND REGULATION OF SECURITIES EXCHANGES, CAPITAL TRADE POINTS AND OTHER SELF REGULATORY ORGANIZATIONS

Registration of securities exchanges and capital trade points.

28 (1). No securities exchange or capital trade point as defined in section 315 of this Act shall commence operation unless it is registered with the Commission in accordance with the provisions of this Act and the rules and regulations made thereunder.

(2)     An application for registration as a securities exchange or capital trade point shall be made to the Commission in the prescribed form and in the manner specified by the Commission.

 

Conditions for registration.

29(1) Every securities exchange or capital trade point shall be a body corporate incorporated under the Companies and Allied Matters Act.

(2)     The Commission may register a body corporate as a securities exchange or capital trade point if it is satisfied that the rules of the body corporate make satisfactory provisions-

(a)     for the exclusion from its membership persons who are not of good character and who do not possess a high degree of business integrity;

(b)     for the expulsion, suspension or discipline of members for conduct inconsistent with just and equitable principles in the transaction of securities business or for contravention of or failure to comply with the rules of the securities exchange or capital trade point or the provisions of this Act;

(c)     with respect to the conditions under which securities may be listed for trading on that particular securities exchange or capital trade point;

(d)     with respect to the conditions governing dealings in securities by the members;

(e)     with respect to the class or classes of securities which may be dealt in by members; and

(f)      with respect to a fair representation of persons in the selection of members of the Board of the securities exchange or capital trade point and the administration of its affairs and provided that listed companies and investors shall each be represented by one or more members on its board.

(3)     The Commission, in granting approval to register a securities exchange or capital trade point under this section, shall ensure that the interest of the public will be served by the grant of the approval.

(4)     The Commission shall issue a certificate of registration to a body corporate registered pursuant to this section.

 

Revocation of certificate of a securities exchange or capital trade point.

30(1). The Commission may by order revoke the certificate of registration granted under section 29 of this Act, if-

(a)     the body corporate ceases to operate as a securities exchange or capital trade point within the meaning of this Act;

(b)     the body corporate is wound up; or

(c)     the body corporate is operating in a manner detrimental to the interests of investors and the public.

(2)     No order of revocation under this section shall be made unless the body corporate has been given the opportunity of being heard.

 

Approval of amendments to listing rules

31(1) Where an amendment is made to the rules or the listing requirements of a securities exchange, capital trade point or other self regulatory organisation, whether by way of recision, amendment, alteration, deletion, substitution or addition, the Board of the securities exchange, capital trade point or other self regulatory organisation shall forward a written notice of the amendment to the Commission for approval.

(2)     The Commission shall notify the securities exchange, capital trade point or other self regulatory organisation as to whether or not the Commission approves the whole or any specified part of the amendment in question, and until such notification is received, the amendment shall be of no effect.

(3)     Nothing in this section shall preclude the Commission, after consultation with the board of a securities exchange, capital trade point or other self regulatory organisation from amending the rules or the listing requirements of the securities exchange, capital trade point or other self regulatory organisation by a notice in writing specifying the amendment and the date the amendment shall come into effect.

(4)     Any notice under this section may be served personally or by registered post.

 

Role of securities exchange, capital trade point and other self regulatory organisations.

32(1).Subject to the powers of the Commission under this Act, a securities exchange, capital trade point or any other self regulatory organisation shall, as part of its primary responsibility, call for information from, inspect and conduct inquiries and audit of its members.

(2)     A securities exchange, capital trade point or self regulatory organisation, shall at the end of every quarter file a detailed report on its surveillance and enforcement activities with the Commission.

(3)     Nothing in this section shall preclude the Commission from carrying out inspections, or conducting enquiries or audit of any member of a securities exchange, capital trade point or other self regulatory organisation.

 

Securities exchange, capital trade point or self Regulatory organisation to give notice of Disciplinary actions, etc.

33.    Where a securities exchange capital trade point or other self regulatory organization reprimands, fines, suspends, expels or otherwise takes disciplinary action against a member of the securities exchange, capital trade point or other self regulatory organisation, the securities exchange, capital trade point or self regulatory organisation shall, within 7 days notify the Commission in writing of the name and other particulars of the member, the nature of and reason for the action taken by the securities exchange, capital trade point or other self regulatory organisation against the affected member.

 

Review of disciplinary actions taken by a securities exchange, capital trade point or self regulatory organisation.

34 (1). The Commission may review any disciplinary action taken by a securities exchange, capital trade point or other self regulatory organisation against its members and may affirm or set aside such decision after giving the member and the securities exchange, capital trade point or self regulatory organisation an opportunity of being heard.

(2)     Nothing in this section shall preclude the Commission from suspending, expelling or otherwise imposing or causing disciplinary action to be taken against a member of a securities exchange, capital trade point or other self regulatory organisation where a securities exchange, capital trade point or other self regulatory organisation fails to act against a member:

Provided that, before exercising the power conferred upon it by this subsection, the Commission shall give the affected member and the securities exchange, capital trade point or self regulatory organisation an opportunity of being heard.

 

Power to issue directives to a securities exchange, capital trade point or self regulatory organisation, etc.

35(1). The Commission may, where it deems appropriate, issue directives to a securities exchange, capital trade point or any other self regulatory organisation with respect to-

(a)     trading on or through the facilities of that securities exchange, capital trade point or self regulatory organisation or pertaining to any securities listed on the securities exchange, capital trade point or self regulatory organisation;

(b)     the manner in which a securities exchange, capital trade point or self regulatory organisation carries on its business including the manner of reporting off-market purchases; or

(c)     any other matter which the Commission considers necessary for the effective administration of this Act, and the securities exchange, capital trade point or self regulatory organisation shall comply with the directives.

(2)     No action shall be competent before any court of law or tribunal with regard to any directive by the Commission under subsection (1) of this section without the joinder of the Commission as a party.

(3)     A securities exchange, capital trade point or any other self regulatory organization which, without reasonable excuse, fails or refuses to comply with a directive given under subsection (1) of this section shall be liable to a penalty of N1,000,000 and a further penalty of not less than N50,000 for every day during which the non-compliance continues.

(4)     Where the Commission, after giving an executive officer of a securities exchange, capital trade point or any other self regulatory organisation an opportunity of being heard, is satisfied that such officer has contravened, failed or refused to comply with the provisions of this Act or any regulations made thereunder or the rules of the securities exchange, capital trade point or self regulatory organisation, the Commission may suspend or remove the executive officer from office.

(5)     The Commission may, in the public interest or for the protection of investors, and after giving the executive officer an opportunity of being heard, direct the securities exchange or capital trade point or any other self regulatory organisation in writing to remove the executive officer and where the securities exchange or capital trade point or self regulatory organisation fails to comply with the directive of the Commission under subsection (4) of this section, the Commission may suspend or remove the executive officer from office.

 

Power of the Commission to prohibit trading in particular securities.

36 (1). Where the Commission deems it necessary for the protection of persons buying or selling particular securities made available by a body corporate on a securities exchange, capital trade point or any other self regulatory organisation, it may suspend or prohibit further trading in the securities and give notice in writing to the securities exchange, capital trade point or self regulatory organisation.

(2)     If, after receiving the notice given under subsection (1) of this section, the securities exchange or capital trade point or self regulatory organisation fails to take action to prevent trading in the securities to which the notice relates, the Commission may, by notice in writing, to the securities exchange, capital trade point or other self regulatory organisation prohibit trading in the securities of the body corporate during such period, not exceeding 14 days; provided that the Commission shall have the power by notice in writing to increase the period for a further period not exceeding 30 days at a time.

(3)     A securities exchange, capital trade point or any other self regulatory organisation, which permits trading in securities in contravention of a notice under subsection (2) of this section is liable to a penalty of N1,000,000 and a further sum of N50,000 for every day during which the contravention continues.

(4)     Where, after the expiration of the second period of suspension of trading in the securities of a body corporate, the body corporate, securities exchange, capital trade point or self regulatory organisation, still refuses to comply with the directives of the Commission given pursuant to the provisions of this section, the Commission may-

(a)     revoke the registration of either or both the body corporate and securities exchange, capital trade point or self regulatory organisation;

(b)     refuse to consider or process any further request or application for approval, registration or consent made or to be made to the Commission by the body corporate or securities exchange, capital trade point or self regulatory organisation;

(c)     apply to the Court under the Companies and Allied Matters Act for-

(i)      the winding up of the body corporate or securities exchange, capital trade point or self regulatory organisation;

(ii)     an official receiver to take over management under supervision of the court in respect of the registered company or securities exchange, capital trade point or self regulatory organization as if the Commission were a creditor thereof

(d)     after giving a hearing to serving officers, appoint competent person(s)        nominated by the Commission in place of the serving chief executive officer and executive management and board of the registered company or securities exchange, capital trade point or self regulatory organisation;

(e)     apply to the Tribunal for an enforcement order in respect of its directive to suspend trading on the specified securities:

Provided that the Commission may take any of the forgoing actions where it considers that the interest of investors or of members of the public or the integrity of the market so requires.

 

Securities exchange, etc. to maintain proper books of account.

37.    A securities exchange, capital trade point or any other self regulatory organisation shall maintain proper books of account and records relating to its operations which shall be made available for inspection by the Commission.

 

PART VI: REGISTRATION AND REGULATION OF CAPITAL MARKET OPERATORS

Registration of capital market operators.

38 (1). No persons shall-

(a)     operate in the Nigerian capital market as an expert or professional or in any other capacity as may be determined by the Commission; or

(b)     carry on investments and securities business unless the person is registered in accordance with this Act and the rules and regulations made thereunder.

(2)     The Commission shall prescribe the conditions for registration including the level of knowledge and skill required to operate in the capital market

(3)     An application for registration under this part of this Act shall be in the manner and upon payment of the fees prescribed by the Commission.

(4)     The Commission may by order suspend or cancel a certificate of registration in the manner prescribed but no order under this subsection shall be made unless the person concerned has been given a reasonable opportunity of being heard.

(5)     Where the Commission, after giving an officer of a capital market operator, an opportunity of being heard, is satisfied that such officer has contravened, failed or refused to comply with the provisions of this Act or any regulations made there under, the Commission may suspend or remove that officer from office.

(6)     Where the Commission, after giving an officer of a capital market operator an opportunity of being heard, is satisfied that such officer has contravened, failed or refused to comply with any provision of this Act or any regulations made thereunder, the Commission may in the public interest or for the protection of investors, direct the capital market operator to suspend or remove the officer from office and where the capital market operator fails to comply with the directive of the Commission, the Commission may suspend or remove the officer from office.

 

Accounts to be kept by capital market operator.

39 (1). A capital market operator shall keep or cause to be kept such accounting and other records-

(a)     as shall sufficiently show and explain the transactions and financial position of his business and enable true and fair profit and loss accounts and balance sheets to be prepared, regularly; and

(b)     in a manner that will enable them to be conveniently and properly audited.

(2)     A capital market operator shall be deemed not to have complied with subsection (1) of this section in relation to records unless the accounting and other records of the capital market operator -

(a)     are kept in sufficient detail to show particulars of-

(i)      all monies received or paid by the capital market operator, including   monies paid to or disbursed from a trust account,

(ii)     all purchases and sales of securities made by the capital market operator, the charges and credits arising from them, and the names of the buyers and sellers, respectively of each of those securities,

(iii)    all income received from commissions, interest, and other sources, and all expenses, commissions, and interest paid by the capital market operator,

(iv)    all the assets and liabilities (including contingent liabilities) of the capital market operator,

(v)     all securities which are the property of the capital market operator showing by whom the securities or the documents of title to the securities are held and, where they are held by some other person, whether or not they are held as securities against loans or advances,

(vi)    all securities that are not the property of the capital market operator and for which the dealer or any nominee controlled by the security dealer is accountable, showing by whom, and for whom, the securities or the documents of title to the securities are held and the extent to which they are either held for safe custody or deposited with a third party as securities for loans or advances made to the capital market operator,

(vii)   all purchases and sales of options made by the capital market operator and all fees (being options monies) arising from them,

(viii)   all arbitrage transactions entered into by the capital market operator; and

(ix)    all underwriting transactions entered into by the capital market operator.

(b)     are kept in sufficient detail to show particulars of every transaction by the capital market operator;

(c)     specify the day on which or the period during which each transaction by the capital market operator took place; and

(d)     contain copies of acknowledgements of the receipt of securities or of documents of title to securities received by the capital market operator from clients for sale or safe custody clearly showing the name or names in which the particular securities are registered.

(3)     Without prejudice to subsection (2) of this section, a capital market operator shall keep records in sufficient detail to show particulars of all transactions by the capital market operator with or for the account of-

(a)     clients of the capital market operator;

(b)     the capital market operator himself; and

(c)     employees of the capital market operator.

(4)     A capital market operator who contravenes or fails to comply with any of the provisions of this section commits an offence and is liable on conviction to a fine of not less than N500,000 or to a term of imprisonment of not less than one year or to both such fine and imprisonment.

(5)     The Commission may, in lieu of prosecution for the offence prescribed in subsection (4) of this section, sanction a capital market operator who violates the provisions of this section by imposing a penalty of not less than N500,000 and a further sum of not less than N5,000 for every day in which the violation continues.

 

Maintenance of separate accounts and payment into certain trust accounts.

40 (1). A capital market operator shall maintain separate accounts for transactions carried out on behalf of different clients.

(2)     No capital market operator shall mix the proceeds of the account of a client with other accounts whether belonging to the capital market operator or his clients.

(3)     A capital market operator shall establish and keep in a bank or banks one or more trust accounts to be designated or evidenced as trust accounts, into which the capital market operator shall pay-

(a)     all amounts (less any brokerage and other proper charges) received from or on account of any person (other than a capital market operator) for the purchase of securities which are not attributable to securities delivered to capital market operator; and

(b)     all amounts (less any brokerage and other proper charges) received for or on account of any person (other than a capital market operator) from the sale of securities which are not paid to that person or as that person directs not later than the next banking business day following the day on which they were received by the capital market operator.

(4)     The payment of amounts required by subsection (3) of this section to be made by a capital market operator shall be made by the capital market operator not later than the next banking business day following the day on which the amounts were received by the capital market operator.

(5)     A capital market operator who contravenes or fails to comply with any of the provisions of this section is liable to a penalty of N100,000 and a further sum of N5,000 for every day the violation continues.

 

Penalty for withdrawing money from trust account without authority.

41 (1). A capital market operator who withdraws money from a trust account without the requisite authority commits an offence and is liable on conviction to a fine of not less than N500,000 or to a term of imprisonment not less than one year or to both such fine and imprisonment.

(2)     For the purpose of subsection (1) of this section, a withdrawal from a trust account shall be deemed to be without requisite authority where the withdrawal is made for a purpose other than-

(a)     to pay the person entitled to the payment;

(b)     to defray brokerage and other proper charges; or

(c)     as may otherwise be authorised by law.

(3)     The Commission may, in lieu of prosecution for the offence prescribed under subsection (1) of this section, sanction a capital market operator who violates the provisions of this section by imposing a penalty of not less than N500,000.

(4)     In addition to the penalty prescribed under subsection (3) of this section, the Commission shall direct the capital market operator to refund the monies received together with the interest thereon at a rate to be determined by the Commission.

(5)     A capital market operator who, withdraws money from a trust account with intent to defraud, commits an offence and is liable on conviction to a fine of not less than N500,000 or to imprisonment for a term of not less than one year or to both such fine and imprisonment.

 

Money in trust account not available for payment of debt.

42 (1). A capital market operator shall not except as otherwise provided in this part of this Act pay his debts with any money held in a trust account.

(2)     Monies held in a trust account shall be liable to be paid or taken in execution of an order of a court or tribunal.

 

Claims and lien not affected.

43.    Nothing in this section shall be construed as taking away or affecting any lawful claim or lien which a person may have against or upon any monies held in a trust account or against or upon any monies received for the purchase of securities or from the sale of securities before such monies are paid into a trust account.

 

Right to copies of book entries of transactions and to inspect contract notes.

44 (1). A capital market operator or depository shall supply on demand to his client copies of all entries in his books relating to any transaction carried out on behalf of that client, and he shall be entitled to levy a reasonable charge thereof.

(2)     A client or any person authorised by the client shall be entitled at any time, free of charge either personally or by his agent, to inspect any contract notes and vouchers relating to the said transaction.

 

 

PART VII: INSPECTIONS AND INVESTIGATIONS

Designation of officers of the Commission for supervision of certain capital market operators.

45(1). The Commission shall conduct routine and special inspection and investigation of capital market operators.

(2)     There shall be an officer of the Commission who shall be assigned responsibility for the inspection and investigation of capital market operators to which this part applies.

(3)     The officer shall carry on supervisory duties in respect of affected capital market operators and for that purpose shall-

(a)     under conditions of confidentiality, examine periodically the books and affairs of each capital market operators;

(b)     have a right of access at all times to the books, accounts and vouchers of capital market operators; and

(c)     require from directors, managers and officers of capital market operators such information and explanation as he may deem necessary to the performance of his duties under this Act.

(4)     The Commission shall where necessary, appoint other officers of the Commission to assist the officer designated under subsection (2) of this section.

(5)     The officers may be designated examiners or have other titles as the Commission may specify.

(6)     For the purpose of this part, references to examiners are references to the officers referred to in subsections (2) and (4) of this section.

(7)     In examining the affairs of any capital market operator under this Act, an examiner shall at all times avoid unreasonable hindrance to the daily business of the capital market operator.

(8)     Every capital market operator shall produce to the examiners at such times as the examiners may specify, all books, accounts, documents and information which they may require.

(9)     This part of this Act applies to any capital market operator who is involved in the administration, management or custody of funds for or on behalf of clients including the management and operation of a collective investment scheme or the soliciting of investment in a collective investment scheme.

Routine examination and report.

46.    The Commission shall, in the case of routine examination, forward a copy of the report arising from the examination together with the recommendations of the Commission, to the capital market operator concerned with instruction that it be placed before the meeting of the board of directors of the capital market operator specially convened for the purpose of considering the report and the recommendations thereon.

Special examination.

47(1) The Commission shall order a special examination or investigation of the books and affairs of a capital market operator where it is satisfied that-

(a)     it is in the public interest to do so;

(b)     the capital market operator has been carrying on its business in a manner detrimental to the interest of its clients, beneficiaries and creditors;

(c)     the capital market operator has “insufficient” assets to cover its liabilities to the clients, beneficiaries and creditors;

(d)     the capital market operator has been contravening the provisions of this Act; or

(e)     an application is made therefore by-

(i)      a director or shareholder of the capital market operator; or

(ii)     a client, beneficiary or creditor of the capital market operator;

Provided that in the case of paragraph (e) of this subsection, the Commission may not order a special examination or investigation of the books and affairs of a capital market operator if the Commission is satisfied that it is not necessary to do so.

(2)     For the purpose of subsection (1) of this section, the Commission shall appoint one or more qualified persons other than the officers of the Commission to conduct special examination or investigation, under conditions of confidentiality, of the books and affairs of the capital market operator.

(3)     Nothing in this section or in any other section of this Act shall be construed as precluding the Commission from appointing one or more officers of the Commission as examiner apart from those mentioned under section 45 of this Act and ascribing to such officers such other designations as it deems fit, and from directing or requiring all or any of the officers to exercise all or any of the powers of the Commission under this Act.

 

48 (1) Where, after an examination under section 49 of this Act or otherwise howsoever, the Commission is satisfied that the capital market operator is in a grave situation as regards the matters referred to under subsection (1) of section 49, or the capital market operator informs the Commission that-

(a)     it is likely to become unable to meet its obligations under this Act;

(b)     it is about to suspend its obligations to any extent; or

(c)     it is insolvent;

the Commission may by order in writing exercise any one or more of the powers specified in subsection (2) of this section.

(2)     The Commission may by order in writing pursuant to subsection (1) of this section-

(a)     prohibit the capital market operator from receiving funds or other assets from the public for a period as may be set out in the order, and make the prohibition subject to such exceptions, and impose such conditions in relation to the exceptions as may be set out in the order, and from time to time, by further order similarly made, extend the period;

(b)     require the capital market operator to take any steps or any action or to do or not to do any act or thing whatsoever, in relation to the capital market operator or its business or its directors or officers which the Commission may consider necessary and which is set out in the order, within such times as may be stipulated therein;

(c)     remove for reasons to be recorded in writing, with effect from such date as may be set out in the order, any manager or officer of the capital market operator, notwithstanding anything in any written law, or any limitations contained in the memorandum and articles of association of the capital market operator;

(d)     in respect of a capital market operator, notwithstanding anything in any written law or any limitations contained in the memorandum and articles of association of the capital market operator, and in particular, notwithstanding any limitation therein as to the minimum or maximum number of directors, and for reasons to be recorded in writing-

(i)      remove from office, with effect from such date as may be set out in the order, any director of the capital market operator; or Failing capital market operator.

(ii)     appoint any person or persons to manage the affairs of the capital market operator in the interim, and provide in the order for the person or persons so appointed to be paid by the capital market operator such remuneration as may be set out in the order;

(e)     appoint any person to advise the capital market operator in relation to the proper conduct of its business, and provide in the order for the person so appointed to be paid by the capital market operator such remuneration as may be set out in the order.

 

Control of failing capital market operator.

49 (1). If, after taking steps under section 48 of this Act as in the opinion of the Commission may be appropriate in the circumstance, the state of affairs of the capital market operator concerned does not improve significantly, the Commission may assume control of the whole of the property and affairs of the capital market operator, carry on the whole of its business and affairs or assume control of such part of its property, business and affairs as the Commission considers necessary or appoint persons to do so on behalf of the Commission.

(2)     Where the Commission or an appointed person has assumed control of the business of a capital market operator in pursuance of subsection (1) of this section, the capital market operator shall submit its capital market business to the control of the Commission and shall provide the Commission or appointed person with such facilities as the Commission or the appointed person may require to carry on the business of the capital market operator and notwithstanding the provisions of this section, all capital market operators shall cooperate with the Commission at all times.

 

Management of failing capital market operator.

50 (1). Where the Commission or an appointed person has assumed control of the business of a capital market operator pursuant to section 49 of this Act, the Commission or an appointed person shall remain in control of and continue to carry on the business of the capital market operator in the name and on behalf of the capital market operator until such time as-

(a)     the Commission is satisfied that adequate provision has been made for the repayment of investors; or

(b)     in the opinion of the Commission, it is no longer necessary for the Commission to remain in control of the business of the capital market operator.

(2)     The cost and expenses of the Commission or the remuneration of an appointed person, as the case may be, shall be payable from the funds and properties of the capital market operator as a first charge on the funds of the capital market operator.

 

Power of the Commission to revoke registration or apply to Court.

51.    Notwithstanding anything contained in any law or memorandum and articles of association of a capital market operator, where the Commission or an appointed person has, pursuant to an order under section 49 of this Act, assumed control of a capital market operator whose paid-up capital is lost or unrepresented by available assets, the Commission may-

(a)     make an order revoking the capital market operator's registration; and

(b)     apply to the Federal High Court for an order for the Commission or any person nominated by the Commission to purchase or acquire the capital market operator for a nominal fee for the purpose of its restructuring and subsequent sale.

 

Duty to notify capital market operator or person to be affected.

52 (1). No order under sections 48 and 51 of this Act shall be made unless the capital market operator in respect of which the order is to be made, and in the case of an order under paragraph (c) or (d) of subsection (2) of section 48 of this Act, the director, manager or officer who is to be removed from office, has been given a reasonable opportunity of making representations against or otherwise in respect of the proposed order.

(2)     The Commission, after due consideration of any representation made pursuant to subsection (1) of this section, may either confirm, modify, alter, vary or replace the earlier order in respect of which representation had been made.

 

Application to the Federal High Court for winding up.

53 (1). Where the Commission makes an order revoking the registration of a capital market operator and requiring the business of that capital market operator to be wound up, the capital market operator shall, within fourteen days of the date of the order, apply to the Federal High Court for an order of winding up the affairs of that capital market operator and the Federal High Court shall hear the application in priority to all other matters.

(2)     If the capital market operator fails to apply to the Federal High Court within the period specified in subsection (1) of this section the Commission may apply to the Federal High Court for the winding up of the capital market operator.

(3)     The Commission, if satisfied that it is in the public interest to do so, may, without waiting for the period mentioned in subsection (1) of this section to elapse, appoint any person as the official receiver or provisional liquidator and the person so appointed shall have the power conferred by or under the Companies and Allied Matters Act 1990 and shall be deemed to have been appointed provisional liquidator by the Federal High Court for the purpose of that Act.

(4)     This section shall have effect and section 408 of the Companies and Allied Matters Act 1990 shall be construed as if the cancellation of the registration of a capital market operator under this Act had been included as a ground for winding up by the Federal High Court under this section.

(5)     The liquidator of a registered capital market operator shall forward to the Commission copies of any returns which he is required to make under the Companies and Allied Matters Act 1990.

 

PART VIII: REGULATION OF SECURITIES

A — REGISTRATION OF SECURITIES

Companies and collective investment schemes.

54 (1) All securities of a public company and all securities or investments of a collective investment scheme shall be registered with the Commission under the terms and conditions herein contained and as may be supplemented by regulations prescribed by the Compulsory registration of securities and investments of public Commission from time to time.

(2)     The issuer shall file with the Commission a registration statement which shall be signed by each issuer, its chief executive officer or officers, its principal financial officer and every person named as a member of the board of directors or persons performing similar functions and in case the issuer is a foreign person, by its duly authorised representative in Nigeria.

(3)     A registration statement shall be deemed effective only as to the securities or investments specified therein as proposed to be issued.

(4)     The Commission shall issue a certificate of registration in respect of securities and investments registered by it.

(5)     No securities or investments of a public company or collective investment scheme shall be issued, transferred, sold or offered for subscription by or sale to the public without the prior registration of the securities or investment with the Commission.

(6)     Any person who issues, transfers, sells, or offers for subscription or sale to the public, the securities or investments of a public company or collective investment scheme without the prior registration of the securities or investments with the Commission commits an offence and is liable on conviction to a fine of N1,000,000 or to a term of imprisonment of 3 years or to both such fine and imprisonment.

(7)     The Commission may, in lieu of a prosecution under subsection (2) of this section, impose a penalty of N1,000,000 and a further sum of N5,000 for every day which the violation continues.

 

Electronic and other means of issuing and transferring securities.

55 (1) Securities registered by the Commission including securities issued pursuant to part XIII of this Act, may be issued or transferred electronically or by any other means or system approved by the Commission under such terms and conditions as the Commission may prescribe, through a securities exchange or capital trade point or any other self regulatory organisation.

(2)     The Commission shall prescribe the documents and information to be provided by the issuer, an issuing house, stockbroker or any other person authorised by the Commission to offer securities for sale or subscription to the public.

 

Register of securities.

56 (1)A capital market operator shall keep a register, in the prescribed form, of the securities in which he has an interest.

(2)     Particulars of the securities in which a capital market operator has an interest shall be entered in the register within 7 days of the acquisition of the interest.

(3)     Where a change in securities (not being a prescribed change) occurs in the interest of a person to whom this part of this Act applies, he shall, within 7 days after the change, enter in the register full particulars of the change, including the date of the change and the reason for the change.

(4)     For the purposes of this subsection, an acquisition or disposal of securities, shall be deemed to be a change in the interest of any person.

(5)     The Commission may by order extend the provisions of subsection (1) of this section to include any other person whose activities are connected with securities transactions.

 

Particulars of register.

57 (1)A capital market operator to whom this part of this Act applies shall, in the prescribed form, give notice to the Commission of such particulars relating to the register of securities as may be prescribed including the location of the register.

(2)     The notice required to be given under subsection (1) of this section shall be given :-

(a)     in the case of a person who is required by this Act to hold a Commission's registration Certificate, on his application for the Certificate; and

(b)     in any other case, within 14 days after becoming a person to whom this part of this Act applies.

(3)     A person to whom this part of this Act applies shall, within 14 days of his ceasing to be such a person give to the Commission the notice required under subsection (1) of this section and the notice of the cessation.

(4)     A person who fails or neglects to give the notice required under this section commits an offence and is liable on conviction to a fine not less than N100,000 or to a term of imprisonment not less than six months or to such fine and imprisonment.

(5)     The Commission may, in lieu of a prosecution under subsection (4) of this section, impose a penalty of not less than N100,000 and a further sum of not less than N5,000 for every day violation continues.

 

Production of register.

58 (1) The Commission or any person authorised by it in that behalf may require any person to whom this part of this Act applies to produce for inspection, the register required to be kept pursuant to section 56 of this Act and the Commission or any person so authorised may take extracts there from.

(2)     Any person who fails to produce a register for inspection or fails to allow any person authorised under subsection (1) of this section to make a copy of or take extracts from the register commits an offence and is liable on conviction to a fine of not less than N50,000 or for a term of imprisonment of not less than six months or to both fine or imprisonment.

(3)     The Commission may, in lieu of a prosecution under subsection (2) of this section, impose a penalty of not less than x100,000 and a further sum of N5,000 for every day during which the violation continues.

 

Extracts of register.

59.    The Commission may supply a copy of the extract of a register obtained under subsection (1) of section 58 of this Act to any person who, in the opinion of the Commission, should in the public interest be informed of the dealings in securities disclosed in the register.

 

 

B — CORPORATE RESPONSIBILITY OF PUBLIC COMPANIES

Filing of annual and periodic reports with the Commission.

60 (1) A public company whose securities are required to be registered under this Act shall file with the Commission on a periodic or annual basis, its audited financial statements and such other returns as may be prescribed by the Commission from time to time.

(2)     The chief executive officer and the chief financial officer or officers or persons performing similar functions in a public company filing periodic or annual reports under subsection (1) of this section, shall certify in each annual or periodic report filed, that-

(a)     the signing officer has reviewed the report;

(b)     based on the knowledge of the officer, the report does not contain

(i)      any untrue statement of a material fact, or

(ii)     omit to state a material fact, which would make the statement, misleading in the light of the circumstances under which such statement was made;

(c)     based on the knowledge of such officer, the financial statements and other financial information included in the report fairly present in all material respects the financial condition and results of operations of the company as of, and for the periods presented in the report.

(d)     the signing officers-

(i)      are responsible for establishing and maintaining internal controls.

(ii)     have designed such internal controls to ensure that material information relating to the company and its consolidated subsidiaries is made known to such officers by others within those entities particularly during the period in which the periodic reports are being prepared;

(iii)    have evaluated the effectiveness of the company's internal controls as of date within 90 days prior to the report;

(iv)    have presented in the report their conclusions about the effectiveness of their internal controls based on their evaluation as of that date;

(e)     the signing officers have disclosed to the Auditors of the company and audit committee-

(i)      all significant deficiencies in the design or operation of internal controls which would adversely affect the company's ability to record, process, summarise and report financial data and have identified for the company's Auditors any material weakness in internal controls, and

(ii)     any fraud, whether or not material, that involves management or other employees who have significant role in the company's internal controls;

(f)      the signing officers have identified in the report whether or not there were significant changes in internal controls or other factors that could significantly affect internal controls subsequent to the date of their evaluation, including any corrective actions with regard to significant deficiencies and material weaknesses.

 

System of internal control of public companies.

61 (1)A public company shall establish a system of internal controls over its financial reporting and security of its assets and it shall be the responsibility of the board of directors to ensure the integrity of the company's financial controls and reporting.

(2)     The board of directors of a public company shall report on the effectiveness of the company's internal control system in its annual report.

(3)     In this section, "internal control" means policies, procedures and practices put in place by management to ensure safety of assets, accuracy of financial records and reports, achievement of corporate objectives and compliance with laws and regulations.

 

Auditors of public companies to register with the Commission.

62.    No person shall carry on the business of auditing of a public company unless that person is registered by the Commission on such terms and conditions as may be prescribed from time to time.

 

Duty of auditor to report on internal controls of public companies.

63.    An 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 public company.

 

Disclosure of quarterly earning forecasts by listed public companies.

64.    A listed public company shall within 20 working days prior to the commencement of a quarter disclose to the relevant securities exchange its quarterly earning forecast.

 

Penalties for contravention of sections 60, 61, 62, 63 and 64.

65 (1) A public company who contravenes the provisions of sections 60, 61, 62, 63 and 64 is liable to a penalty of not less than N1,000,000 and a further penalty of N25,000 per day for the period the violation continues.

 

(2)     An Auditor who contravenes the provisions of sections 60, 61, 62, 63 and 64 is liable to a penalty of N100,000 and a further penalty of N5,000 per day for the period the violation continues.

 

Contravention of part VIII by bodies corporate.

C — IN GENERAL

66 (1) Where a contravention of any provision under this part is committed by a body corporate and it is proved that the contravention has been committed-

(a)     with the connivance of or as a result of any neglect on the part of a director, manager, secretary or other similar officer, servant or agent of the body corporate or any person purporting to act in any such capacity; or

(b)     as a result of a director, manager, secretary or other similar officer, servant or agent of the body corporate or any person purporting to act in any such capacity knowingly or wilfully authorising the contravention, the director, manager, secretary or other similar officer, servant or agent of the body corporate or any person purporting to act in any such capacity shall be deemed liable to the same extent as the corporate body.

(2)     The Commission may administratively apply any of the penalties prescribed for the contravention of any of the provisions of this part.

PART IX: PUBLIC OFFER AND SALE OF SECURITIES AND INVITATIONS TO THE PUBLIC

Control of invitations to the public.

67 (1) No person shall make any invitation to the public to acquire or dispose of any securities of a body corporate or to deposit money with any body corporate for a fixed period or payable at call, whether bearing or not bearing interest unless the body corporate concerned is-

(a)     a public company, whether quoted or unquoted, and the provisions of sections 73 to 87 of this Act are duly complied with; or

(b)     a statutory body or bank established by or pursuant to an Act of the National Assembly and is empowered to accept deposits and savings from the public or issue its own securities (as defined under this Act), promissory notes, bills of exchange and other instruments:

Provided that nothing in this subsection shall render unlawful the sale of any shares by or under the supervision of any court or tribunal as may be authorised by law.

(2)     If an invitation to the public is made in breach of subsection (1) of this section, all persons making the invitation and every officer who is in default or any body corporate making the invitation shall each be separately liable to a penalty of N500,000 in the case of a body corporate and x100,000 in the case of an individual.

(3)     If, any person acquires or disposes of any securities, or deposits money with any company, as a result of any invitation to the public made in breach of subsection (1) of this section, he shall be entitled to-

(a)     rescind such transactions; and

(b)     either in addition to or in place of rescinding the transaction, recover compensation for any loss sustained by him from any person who is liable whether convicted or not, in respect of the breach.

(4)     Where, in accordance with subsection (3) of this section, any person claims to rescind any transaction, he shall do so within a reasonable time and shall not be entitled to rescind any transaction with the body corporate or to recover compensation from it unless he takes steps to rescind the transaction before the commencement of the winding up of the body corporate:

Provided that the application of this subsection to bar the right of a claimant to rescind a transaction shall not prejudice his right to recover compensation from any person other than the body corporate.

 

Invitation to the public to deposit money by public companies.

68 (1) A public company making an invitation to the public to deposit money with it shall, prior to the making of the invitation, obtain the written consent of the Commission and shall only make the invitation in accordance with such conditions and restrictions as may be imposed by the Commission.

 

(2)     The Commission may in its absolute discretion grant or withhold the consent referred to in subsection (1) of this section, and without prejudice to the generality of the foregoing, may require that any advertisement or circular to be used in connection with the invitation shall be registered with or approved by the Commission.

 

(3)     If any advertisement or circular used in connection with the invitation contains any untrue statement then, subject to subsection (4) of this section, any person who made the invitation and every person who was a director of a company making the invitation at the time when the advertisement or circular was published commits an offence and is liable on conviction to pay compensation to any person who deposited money with the public company having relied on the advertisement or circular, for any loss they may have sustained by reason of such untrue statement.

 

(4)     No person shall be liable under subsection (3) of this section, if he proves that-

(a)     he had reasonable ground to believe and did believe up to the time of publication of the advertisement or circular that the statement was true; or

(b)     the advertisement or circular was published without his knowledge and that on becoming aware of its publication he immediately gave reasonable public notice that it was published without his knowledge.

(5)     If any person deposits any money with a public company as a result of an untrue statement of a material fact made, whether innocently or fraudulently, in any advertisement or circular published in connection with any invitation to the public made by or on behalf of that public company, the person shall be entitled to require the public company immediately to repay such money with interest at the current bank rate per annum or such higher rate as may have been agreed to be paid on the deposit.

 

Meaning of invitation to the public.

69 (1) For the purposes of this Act, an invitation shall be deemed to be an invitation to the public if it is an offer or invitation to make an offer which is -

(a)     published, advertised or disseminated by newspaper, broadcasting, cinematograph or any other means whatsoever;

(b)     made to or circulated among any persons whether selected as members or as debenture holders of the company concerned or as clients of the persons making or circulating the invitation or in any other manner;

(c)     made to anyone or more persons upon the terms that the person or persons to  whom it is made may renounce or assign the benefit of the offer or invitation or any of the securities to be obtained under it in favour of any other person or persons;

(d)     made to any one or more persons to acquire any securities dealt in by a securities exchange or capital trade point or in respect of which the invitation states that an application has been or shall be made for permission to deal in those securities on a securities exchange or capital trade point.

 

(2)     Nothing contained in this section shall be taken as requiring any invitation to be treated as an invitation to the public if it can properly be regarded in all circumstances as not being calculated to result, directly or indirectly, in the shares or debentures becoming available for subscription or purchase by persons other than those receiving the offer or invitation, or otherwise as being a domestic concern of the persons making and receiving it.

 

(3)     For the purpose of this section, the issuance of any form of application for securities or of any form whatsoever to be completed on the deposit of money with a company shall be deemed to be an invitation to acquire those shares or to deposit money.

 

Offers for sale deemed to be made by the company.

70.    Where any company allots or agrees to allot any of its securities to any person with a view to the public being invited to acquire any of those securities then, for all the purposes of this Act, any invitation so made shall be deemed to be an invitation to the public made by the company as well as by the person actually making the invitation, and any person who acquires any such securities in response to the invitation shall be deemed to be an allottee from the company of those securities:

Provided that where-

(a)     an invitation to the public is made in respect of any such securities within six months after the allotment or agreement to allot; or

(b)     at the date when the invitation to the public was made, the whole consideration to be received by the company in respect of those securities had not been so received, it shall be deemed, unless the contrary is proved, that the allotment or agreement to allot was made by the company with a view to an invitation to the public being made in respect of those securities.

 

Form of application for shares to be issued with prospectus.

71 (1) Subject to the provisions of section 76 of this Act, no person shall issue any form of application to deposit money for the purpose of subscribing to, purchasing or in any way acquiring the securities of a public company unless the form is issued with a prospectus which complies with the requirements of section 79 of this Act:

(2)     Where the form of application to deposit money referred to in subsection (1) of this section is issued in respect of debenture securities, the form shall in addition be accompanied with a trust deed.

(3)     This section shall not apply if it is shown that the form of application was issued either -

(a)     in connection with a bona fide invitation to a person to enter into an underwriting agreement with respect to the shares; or

(b)     in relation to shares which were not offered to the public.

(4)     A person who contravenes the provisions of this section, commits an offence and is liable on conviction to a fine of not less than N100,000.

 

Effective date of a prospectus.

72.    A prospectus issued by or on behalf of a company or in relation to an intended company shall be dated and that date shall, unless the contrary is proved, be taken as the date of publication of the prospectus.

Contents of a prospectus.

Schedule

73 (1) Subject to the provisions of section 76 of this Act, every prospectus issued by or on behalf of a company, or by or on behalf of any person who is or has been engaged or interested in the formation of the company, shall state the matters specified in part I of the third Schedule to this Bill and set out the reports specified in part II of that Schedule and parts I and II shall have effect subject to the provisions contained in that Schedule.

 

(2)     Any condition requiring or binding an applicant for shares in a company to waive compliance with any requirement of this section or purporting to affect him with notice of any contract, document or matter not specifically referred to in the prospectus, shall be void.

 

(3)     Where there is non-compliance with or contravention of any of the requirements of this section, a director or other person responsible for the prospectus shall not incur any liability by reason of the non-compliance or contravention, if he proves that-

(a)     as regards any matter not disclosed, he was not a party to it; or

(b)     the non-compliance or contravention arose from an honest mistake of fact on his part; or

(c)     the non-compliance or contravention was in respect of matters which in the opinion of the Tribunal were immaterial or was otherwise such as should, in the opinion of the Tribunal, having regard to all the circumstances of the case, reasonably be excused, Provided that, where there is a failure to include in a prospectus a statement with respect to the matters specified by regulations, no director or other person shall incur any liability in respect of the failure, unless it is proved that he had knowledge of the matters not disclosed.

 

Exemption from application of provisions relating to prospectus in certain cases.

74.    The provisions of sections 71 and 73 of this Act shall not apply to the issue-

(a)     made to the existing members of a company or to a prospectus or form of application relating to shares in the company whether or not an applicant for shares has the right to renounce in favour of other persons; or

 

(b)     of a prospectus or form of application relating to securities which are to be in all respects uniform with securities previously issued and for the time being dealt in or quoted on a securities exchange or capital trade point.

 

Prohibition of issuance, circulation, etc of certain notices, circulars and advertisements.

75 (1)No person shall without the prior approval of the Commission issue, circulate, publish, disseminate or distribute any notice, circular or advertisement to the public which —

(a)     offers for subscription or purchase of securities in a company;

(b)     invites subscription for or purchase of securities; or

(c)     calls attention to-

(i)      an offer or intended offer for subscription or purchase of securities in a company;

(ii)     an invitation or intended invitation to subscribe for or purchase any such securities; or

(iii)    a prospectus.

 

(2)     This section shall not apply to-

(a)     a notice or circular which relates to an offer or invitation not made or issued to the public;

(b)     a registered prospectus;

(c)     a notice, circular or advertisement which calls attention to a registered prospectus and states that allotments of, or contracts with respect to the shares referred to in the prospectus shall be made only on the basis of one of the forms of application referred to in and attached to a copy of the prospectus and contains no other information or matter other than some or all of the following information, namely-

(i)      the number and description of the securities in the company to which the prospectus relates,

(ii)     the name of the company, the date of its incorporation and the number of the company's issued securities and where the issue price of any securities is to be paid by installments, the amounts paid and unpaid on those issued securities,

(iii)    the general nature of its main business or the proposed main business of the company,

(iv)    the names, addresses and occupation of the directors or proposed directors,

(v)     the names and addresses of the brokers or underwriters (if any), to the issue,

(vi)    the name of the securities exchange or capital trade point (if any) of which the brokers or underwriters to the issue are members,

(vii)   particulars of the time and place at which copies of .the registered prospectus and form of application for the shares to which it relates may be obtained; and

 

(d)     a notice or circular which-

(i)      accompanies a notice or circular referred to in paragraphs (a) or (c) of this section;

(ii)     is issued or circulated by a person whose ordinary business includes advising clients in connection with their investments and is issued or circulated only to clients so advised in the course of that business;

(iii)    contains a statement that the investment to which it or the accompanying\ document relates is recommended by that person; and

(iv)    where the person is an underwriter or sub-underwriter of an issue of securities to which the notice or circular relates, contains a statement that the person making the recommendation is an underwriter or sub-underwriter as the case may be.

 

(3)     This section applies to notices, circulars and advertisements published or disseminated by a newspaper, radio or television broadcasting, cinematograph or any other means.

 

(4)     A person who-

(a)     contravenes the provisions of this section; or

(b)     knowingly authorises or permits an act which constitutes a contravention of this section, commits an offence and is liable on conviction to a fine of N100,000 or to a term of imprisonment of not less than three years or to both such fine and imprisonment.

 

(5)     The Commission may, in lieu of a prosecution pursuant to subsection (4) of this section, sanction a person who contravenes the provisions of this section by imposing a penalty of not less than N100,000 and a further sum of not less than N5,000 for every day the violation continues.

 

(6)     Where a notice, circular or advertisement relating to a company is issued, circulated, published, disseminated or distributed in contravention of this section by or with the authority or permission of an officer of the company, the company is liable to a penalty of N500,000 and a further sum of not less than N25,000 for every day the violation continues.

 

Exemption certificate and effect.

76.(1) Where-

(a)     it is proposed to offer any securities in a company to the public by a prospectus issued generally (that is to say to persons who are not existing members of the company); and

(b)     the application is made to a securities exchange or capital trade point for permission for those securities to be dealt in or quoted on that securities exchange or capital trade point;

the securities exchange or capital trade point to which the application is made may, at the request of the applicant, grant a certificate of exemption that is, a certificate that, having regard to the proposal (as stated in the request) as to the size and other circumstances of the issue of securities and as to any limitations on the number and class of persons to whom the offer is to be made, compliance with the requirements of the Third Schedule to this Act will be unduly cumbersome.

 

 

(2)     If a certificate of exemption is given and the proposal mentioned in subsection (1) of this section are complied with and the particulars and information required to be published in connection with the application for permission made to the securities exchange or capital trade point are so published, then-

(a)     a prospectus giving the relevant particulars and information, in the form in which they are so required to be published, shall be deemed to comply with the requirements of the Third schedule to this Act; and

(b)     after the permission applied for is granted, sections 71 and 73 of this Act shall not apply to any issue of a prospectus or form of application relating to the securities.

 

Expert 's statement on prospectus.

77 (1) A prospectus inviting persons to subscribe for securities in a company and including a statement purporting to be made by an expert shall not be issued unless-

(a)     the expert has given and has not, before delivery of a copy of the prospectus for registration, withdrawn his written consent to the issue of the statement included in the form and context in which it is; and

(b)     a statement appears in the prospectus that the expert has given and has not withdrawn his consent.

 

(2)     If any prospectus is issued in contravention of this section, the company and every person who is knowingly a party to the issue commits an offence and is liable on conviction to a fine of x100,000 or a term of imprisonment of not less than three years or to both such fine and imprisonment.

 

(3)     The Commission may, in lieu of a prosecution for the offence prescribed in subsection two of this section, impose a penalty of not less than x100,000 and a further penalty of not less than x5,000 for every day the violation continues.

 

Prospectus on invitation to the public to acquire or dispose of securities.

78 (1) Notwithstanding the provisions of section 67 of this Act, no person shall make an invitation to the public to acquire or dispose of any securities of a public company if-

(a)     within six months prior to the making of the invitation, a prospectus relating to such securities and complying in all respects with the relevant provisions of sections 75, 76 and 79 of this Act has been delivered to the Commission and registered by it, in accordance with section 80 of this Act;

(b)     every person to whom the invitation is made is supplied with a true copy of such prospectus as filed with the Commission; and

(c)     every copy of the prospectus states on its face that it has been registered with the Commission at the time when the invitation is first made and the date of registration is reflected thereon .

 

(2)     The provisions of paragraph (b) of subsection (1) of this section does not apply to an invitation made by or through a member of a securities exchange or capital trade point to a client of that member or to an invitation made by or through an exempted dealer.

 

General and restricted invitations to the public.

79 (1) Except as provided in section 76 of this Act, where a public company invites the public to acquire its securities, the prospectus referred to in section 77 of this Act shall state the matters specified in Part 1 of the Third Schedule to this Act and set out the report specified in Part II of the same Schedule.

 

(2)     Subsection (1) of this section shall not apply to an invitation by a company in respect of its shares -

(a)     made solely to the existing shareholders of that company; or

(b)     which in all respects is uniform with its existing listed shares.

 

(3)     A prospectus relating to any invitation to the public to acquire or dispose of any securities of a public company, being an invitation not falling within subsection (1) of this section, either because it does not invite the public to acquire any securities or because it is excluded from the ambit of that subsection, may not state all the matters or set out the reports specified in the Third Schedule to this Act but shall not contain any untrue statement, and if the securities to which it relates are dealt in on any securities exchange or capital trade point or if application has been, or is being made to a securities exchange or capital trade point for permission to deal in those securities the prospectus shall-

(a)     state that the securities to be dealt in on that securities exchange or capital trade point or, as the case may be, that application has been or is to be made for permission for the securities to be dealt in on that securities exchange or capital trade point;

(b)     state whether or not that securities exchange or capital trade point is an approved securities organisation within the meaning of this Act; and

(c)     contain the particulars and information required by that securities exchange or capital trade point, and in any other case, shall state that the securities are not dealt in on any securities exchange or capital trade point.

 

(4)     An invitation falling within subsection (1) of this section shall, hereafter in this Act be described as a "general invitation" and an invitation falling within subsection (2) of this section shall, hereafter in this Act be described as a" restricted invitation".

 

Registration of prospectus.

80 (1) No prospectus shall be issued by or on behalf of a company or in relation to an intended company unless, on or before the date of its publication, there has been delivered to the Commission a copy of the prospectus for registration, signed by every person who is named in it as a director of the company, or by his agent authorised in writing and having endorsed on it or attached to it-

(a)     any consent to the issue of the prospectus required by section 68 of this Act from any person as an expert; and

(b)     in the case of a prospectus issued generally, a copy of any contract required by paragraph 11 of the Third Schedule to this Act to be stated in the prospectus; and

(c)     in the case of a prospectus deemed by virtue of a certificate granted under section 67 of this Act to comply with the requirements of the Third Schedule, a contract or a copy of such contract or a memorandum of a contract which was made available for inspection in connection with the application made under that section to the securities exchange or capital trade point; and

(d)     where the persons making any report required by Part II of the Third Schedule to this Act have made in it or without giving the reasons have indicated in it any such adjustments as are mentioned in paragraph 21 of the Third Schedule, a written statement signed by those persons setting out the adjustments and giving the reasons for them.

 

(2)     The references in paragraphs (b) and (c) of subsection (1) of this section to the copy of a contract required to be endorsed on or attached to a prospectus shall-

(a)     in the case of a contract wholly or partly in any language other than English, be taken as references to a copy of a translation in English of the parts of the contract that are in any other languages other than English from the original language of the contract being a translation certified in any manner acceptable to the Commission to be a correct translation.

(b)     in the case of a copy of a contract or memorandum of a contract required to be made available for inspection under paragraph (c) of subsection (1) of this section, and which is wholly or partly in any language other than English, shall include a reference to a copy of a translation of the contract or memorandum or a copy embodying a translation of a part of it and certified in a manner acceptable to the Commission.

 

(3)     Every prospectus shall, on the face of it-

(a)     state that a copy has been delivered for registration as required by this section; and

(b)     specify or refer to statements included in the prospectus which specify any document required by this section to be endorsed on or attached to the copy so delivered.

 

(4)     The Commission shall not register a prospectus unless it is satisfied that -

(a)     it is dated and signed as required by this section;

(b)     it has endorsed on it or attached to it the documents (if any) specified; and

(c)     the prospectus otherwise complies with the requirements of this Act.

 

(5)     Where the Commission refuses to register a prospectus on the ground that it fails to comply with the requirements of this Act, an aggrieved person may appeal to the Tribunal established by this Act within twenty-one days after notification of the refusal by the Commission.

 

(6)     If a prospectus is issued without a copy of it being delivered under this section to the Commission or without the copy so delivered having endorsed on it or attached to it the documents required under this Act the company and every person who is knowingly a party to the issue of the prospectus, shall be jointly and severally liable to a penalty of not less than N25,000 in the case of a company and not less than N5,000 in the case of other persons for every day from the date of issue of the prospectus until a copy of it is so delivered with the required documents endorsed on it or attached to it.

 

Contract in prospectus, etc., not to be varied without leave.

81.    A company limited by shares shall not, before the statutory meeting, vary the terms of a contract referred to in the prospectus or a statement in lieu of prospectus, except with the approval of the statutory meeting.

Document with offer of securities for sale to be deemed a prospectus.

 

82 (1) Where a company allots or agrees to allot any securities in the company with a view to all or any of those securities being offered for sale to the public, any document by which the offer for sale to the public is made shall for all purposes be deemed to be a prospectus issued by the company, and all enactments and rules of law as to the statements in and omissions from prospectus or otherwise relating to a prospectuses, shall apply and have effect accordingly as if-

(a)     the securities have been offered to the public for subscription; and

(b)     persons accepting the offer in respect of any shares, are subscribers for those securities but without prejudice to the liability, if any, of the persons by whom the offer is made, in respect of mis-statements contained in the document or otherwise.

 

(2)     For the purposes of this Act shall, unless the contrary is proved, be evidence that an allotment of, or an agreement to allot securities was made with a view to the shares being offered for sale to the public if it is shown-

(a)     that an offer of all or any part of the securities for sale to the public was made within six months after the allotment or agreement to allot; or.

(b)     that at the date when the offer was made the whole consideration to be received by the company in respect of the securities had been so received.

 

(3)     The provisions of section 73 of this Act as applicable to this section shall have effect as if it requires a prospectus to state in addition to the matters required by that section to be stated in a prospectus, the following-

(a)     the amount of the consideration received by the company in respect of the securities to which the offer relates; and

(b)     the place and time at which the contract under which the said securities have been or are to be allotted may be inspected, and section 80 of this Act as applied by this section shall have effect as though the persons making the offer were named in a prospectus as directors of that company.

 

(4)     Where a person making an offer to which this section relates is a company it shall be sufficient if the document is signed on behalf of the company by two directors of the company or by such other persons as may be authorised in writing by the company.

 

Interpretation as to prospectus statements.

83.    For the purposes of the provisions of this Act, a statement -

(a)     included in a prospectus shall be deemed to be untrue if it is misleading in the form and context in which it is included; and

(b)     shall be deemed to be included in a prospectus if it is contained in the prospectus or in any report or memorandum appearing on the face of it or by reference incorporated or issued with it.

Form of statement in lieu of prospectus.

84.    A statement in lieu of prospectus shall be in the form and contain the particulars set out in part I of the fourth schedule to this Act and, in the cases mentioned in Part II of that schedule, set out the reports specified therein, and the said parts I and II shall have effect subject to the provisions contained in part III of that schedule.

 

Civil liability for misstatements in prospectus.

85 (1) Where a prospectus invites persons to subscribe for shares in a company, the persons referred to in subsection (2) of this section shall be liable to pay compensation to all persons who subscribe for shares or debentures relying on the prospectus for the loss or damage they may have sustained by reason of any untrue statement or mis-statement included in it.

 

(2)     A person liable to pay compensation under subsection (1) of this section includes-

(a)     any director of the company at the time of the issue of the prospectus;

(b)     any person who consented to be named and is named in the prospectus as a director or as having agreed to become a director either immediately or after an interval of time;

(c)     any employee of the company who participated in or facilitated the production of the prospectus; and

(d)     the issuing house and its principal officers.

 

(3)     Where under section 77 of this Act the consent of a person is required to the issue of a prospectus and he has given that consent he shall not by reason only of his having given the consent be liable under this section as a person who has authorised the issue of prospectus except in respect of an untrue statement or mis-statement purported to be made by him as an expert.

 

(4)     No person shall be liable under subsection (1) of this section if he proves-

(a)     that, having consented to become a director of the company, he withdrew his consent in writing before the issue of the prospectus, and that it was issued without his authority or consent;

(b)     that the prospectus was issued without his knowledge or consent, and that on becoming aware of its issue, he immediately gave reasonable public notice that it was issued without his knowledge or consent;

(c)     that, after the issue of the prospectus and before allotment, he, on becoming aware of any untrue statement or mis-statement in it, withdrew his consent in writing and gave reasonable public notice of the withdrawal and of the reason for his withdrawal; or

(d)     that, as regards every untrue statement or mis-statement-

(i)      not purporting to be made on the authority of an expert, or of an official public document or statement, he had reasonable ground to believe and did up to the time of the allotment of the shares, as the case may be, believe that the statement was true,

(ii)     purporting to be a statement by an expert or contained in what purports to be a copy of or an extract from a report or valuation of an expert, it fairly represented the statement, or was a correct and fair copy of or extract from the report or valuation and he had reasonable ground to believe and did up to the time of the issue of the prospectus believe that the person making the statement was competent to make it and that person had given the consent required by section 77 of this Act to the issue of the prospectus and had not withdrawn that consent before delivery of a copy of the prospectus for registration, and

(iii)    purporting to be a statement made by an official person or contained in what purports to be a copy of or an extract from an official public document, it was a correct and fair representation of the statement or copy of or extract from the document.

 

(5)     The provisions of subsection (4) of this section shall not apply in the case of a person liable by reason of his having given a consent required of him by section 77 of this Act as a person who has authorised the issue of a prospectus in respect of an untrue statement purporting to be made by him as an expert.

 

(6)     A person who, apart from this subsection, would under subsection (1) of this section be liable, by reason of his having given a consent required of him by section 60 of this Act as a person who has authorised the issue of a prospectus in respect of an untrue statement purporting to be made by him as an expert, shall not be so liable if he proves that -

(a)     having given his consent under section 77 of this Act to the issue of the prospectus, he withdraws it in writing before delivery of a copy of the prospectus for registration; or

(b)     after delivery of a copy of the prospectus for registration and before allotment he, on becoming aware of the untrue statement or mis-statement, withdrew his consent in writing and gave reasonable public notice of the withdrawal and of the reason for his withdrawal; or

(c)     he was competent to make the statement and that he had reasonable ground to believe and did, up to the time of the allotment of the shares, believe that the statement was true.

 

(7)     Where-

(a)     the prospectus contains the name of a person as a director of the company or as having agreed to become a director of the company and he has not consented to become director, or has withdrawn his consent in writing before the issue of the prospectus, and has not authorised or consented to such issue; or

(b)     the consent of a person is required under section 77 of this Act to the issue of the prospectus and he either has not given the consent or has withdrawn it before the issue of the prospectus;

the directors of the company, except a director without whose knowledge or consent the prospectus was issued, and any other person who authorised such issue, commits of an offence and is liable to indemnify the person so named or whose consent was so required, as the case may be against all damages, costs and expenses to which he may be made liable by reason of his name having been inserted in the prospectus or of the inclusion in the prospectus of a statement purporting to be made by him as an expert, as the case may be, or in defending himself against any action or legal proceeding brought against him in respect of the issue of the prospectus or the inclusion in the prospectus of the statement.

 

(8)     A person shall not be deemed for the purpose of this subsection to have authorized the issue of a prospectus by reason only of his having given the consent required by section 77 of this Act to the inclusion in it of a statement purporting to be made by him as an expert.

 

Criminal liability for misstatement in prospectus.

86 (1)Where a prospectus includes any untrue statement or mis-statement, any director or officer who authorised the issue of the prospectus commits an offence and is liable-

(a)     on conviction to a fine of not less than N1,000,000,000 or to imprisonment for a term not exceeding three years, or to both such fine and imprisonment; or

(b)     on summary conviction, to a fine of not less than N1,000,000,000 or to imprisonment for a term not exceeding three months or to both such fine and imprisonment, unless he proves either that the untrue statement or mis-statement was immaterial or that he had reasonable ground to believe and did, up to the time of the issue of the prospectus, believe that the statement was true.

 

(2)     A person shall not be deemed for the purposes of this section to have authorised the issue of a prospectus by reason only of his having given the consent required by section 77 of this Act to the inclusion in it of a statement purporting to be made by him as an expert.

 

Criminal liability in respect of statements in lieu of prospectus.

87 (1)Where a statement in lieu of prospectus includes any untrue statement or misstatement, any person who authorised the delivery of the statement in lieu of prospectus for registration commits an offence and is liable-

(a)     on conviction to a fine of not less than N1,000,000,000 or to imprisonment for a term not exceeding three years or to both such fine and imprisonment; or

(b)     on summary conviction, to a fine not exceeding N1,000,000,000 or to imprisonment for a term not exceeding three months or to both such fine and imprisonment, unless he proves either that the untrue statement or mis-statement was immaterial or that he had reasonable ground to believe and did, up to the time of the delivery for registration of the statement in lieu of prospectus, believe that the untrue statement or mis-statement was true.

 

(2)     For the purposes of this section-

(a)     any information included in a statement in lieu of prospectus shall be deemed to be untrue if it is misleading in the form or context in which it is included; and

(b)     an information shall be deemed to be included in a statement in lieu of prospectus if it is contained in the prospectus or in any report or memorandum appearing on the face of it or by reference incorporated in it.

 

Allotment of securities.

88.    Where a public offer of securities is made, whether listed or not, under such rules and regulations as may be laid down by the Commission, the issuer and the issuing house shall be responsible for the allotment of the securities of the company, subject to the approval of such allotment by the Commission in accordance with the guidelines prescribed under the rules and regulations made hereunder.

 

Opening of subscription lists.

89 (1) No allotment shall be made of any securities in a company in pursuance of a prospectus issued generally and no proceedings shall be taken on applications made in pursuance of a prospectus so issued, until the beginning of the third day after that on which the prospectus is first so issued or such later time (if any) as may be specified in the prospectus; and in this Act, the beginning of the said third day or such later time, as mentioned in this subsection, is hereafter referred to as "the time of the opening of the subscriptions lists."

 

(2)     In subsection (1) of this section, the reference to the day on which the prospectus is first issued generally shall be construed as referring to the day on which it is first so issued as a newspaper advertisement, provided that, if it is not so issued as a newspaper advertisement before the third day after that on which it is first so issued in any other manner, the said reference shall be construed as referring to the day on which it is first so issued in any manner.

 

(3)     The validity of an allotment shall not be affected by any contravention of the provisions of subsection (1) or (2) of this section but, in the event of any such contravention, the company and every director or officer is liable to a penalty of not less than N50,000.

 

(4)     In the application of this section to a prospectus offering securities for sale, the provisions of subsections (1), (2) and (3) of this section shall have effect with the substitution of references to sale, for references to allotment, and with the substitution for reference to the company and every director or officer of the company who is in default, or reference to any person by or through whom the offer is made and who knowingly and wilfully authorises or permits the contravention.

 

(5)     An application for securities in a company made in pursuance of a prospectus issued generally shall not be revocable until after the expiration of the third day following the opening of the subscription lists, unless before the expiration of the said third day, a person responsible under section 86 of this Act for the prospectus, has given a public notice having the effect under that section of excluding or limiting the responsibility of the person giving the public notice.

 

(6)     In reckoning for the purposes of this section and section 95 of this Act, the third day after another day or any intervening day which is a Saturday or Sunday or which is a public holiday in any part of Nigeria shall be disregarded, and if the third day (as so reckoned) is itself a Saturday or Sunday or such a public holiday there shall for the said purpose be substituted the first day after which is none of them.

 

No allotment unless minimum subscription received.

90.    No allotment shall be made of any securities of a company offered to the public for subscription unless the subscription level exceeds the minimum percentage prescribed by the Commission from time to time.

 

Application monies to be held in trust until allotment.

91 (1) Application monies and other monies paid prior to allotment of shares by an applicant on account of shares or other securities shall, until the allotment of the shares or other securities, be held in a separate account as deposit by the issuing house on such terms and condition as may be prescribed by the Commission.

 

(2)     If any default is made in complying with the provisions of subsection (1) of this section, the issuing house who knowingly and wilfully authorises or permits the default is liable on conviction to pay a fine of not less than N100,000 or to imprisonment for a term of not less than six months or to both such fine and imprisonment.

 

(3)     The Commission may, in lieu of a prosecution under subsection (2) of this section, also sanction a person who contravenes the provisions of subsection (1) of this section by imposing a penalty of not less than N500,000 and a further sum of not less than N5,000 for every day in which the violation continues.

 

Prohibition of allotment in certain cases.

92 (1) A public company having a share capital which does not issue a prospectus on or with reference to its formation, or which has issued a prospectus but has not proceeded to allot any of the shares offered to the public for subscription, shall not allot any of its shares unless, at least three days before the first allotment of the shares, there has been delivered to the Commission for registration:-

(a)     a statement in lieu of prospectus signed by every person who is named in it as a director of the company or by his agent authorised in writing in the form and the particulars set out in Part I of the Fourth Schedule to this Act; and

(b)     in the cases mentioned in Part II of the Fourth Schedule, setting out the specified reports, and the said Parts I and II of the Fourth Schedule shall have effect subject to the provisions contained in Part III of that schedule.

 

(2)     Every statement in lieu of a prospectus delivered under subsection (1) of this section shall, where the persons making any such statement have made in it or have, without giving the reasons, indicated in it any such adjustments as are mentioned in paragraph 6 of the Fourth Schedule to this Act have endorsed on or attached to it a written statement signed by those persons setting out the adjustments and giving the reasons for the adjustments.

 

(3)     If a company acts in contravention of subsection (1) or (2) of this section, the company and every director of the company who knowingly and willfully authorises or permits the contravention commits an offence and is liable on conviction to a fine of not less than N100,000 or to a term of imprisonment of not less than three years or to both such fine and imprisonment.

 

(4)     The Commission may, in lieu of a prosecution under subsection (3) of this section, sanction a person who contravenes the provisions of this section by imposing a penalty of not less than N500,000 and a further penalty of not less than N5,000 for every day the violation continues.

 

Effect of irregular allotment.

93 (1) An allotment made by a company to an applicant in contravention of the provisions of sections 90 and 92 of this Act shall be voidable at the instance of the applicant-

(a)     within one month after the holding of the statutory meeting of the company; or

(b)     where the allotment is made after the holding of the statutory meeting, within one month after the date of the allotment and the allotments shall be so voidable notwithstanding that the company is in the course of being wound up.

 

(2)     If any director of a company knowingly contravenes, or permits or authorises the contravention of the provisions of sections 90 and 92 of this Act with respect to an allotment, he shall be liable to compensate the company and the allottee respectively, for any loss, damage or costs which the company or the allottee may have sustained or incurred thereby but proceedings to recover any such loss, damages, or costs shall not be commenced after the expiration of two years from the date of the allotment.

 

Action for rescission.

94.    A shareholder may bring an action against a company which has allotted shares under a prospectus for the rescission of all allotments and the repayment to the holders of the shares of the whole or part of the issued price which has been paid in respect of them if the prospectus :-

(a)     contained a material statement, promise or forecast which was false, deceptive or misleading; or

(b)     did not contain a statement, report or account required to be contained in it by section 75 and the Third Schedule to this Bill.

 

Allotment of securities and dealing on securities exchange, etc.

95 (1)  Where a prospectus, whether issued generally or not, states that application has been or will be made for permission for the securities offered by it to be dealt with on any securities exchange or capital trade point, any allotment made on an application in pursuance of the prospectus shall, whenever made, be void if the permission has-

(a)     not been applied for before the third day after the first issue of the prospectus; or

(b)     been refused before the expiration of three weeks from the date of the closing of the subscription lists or such longer period not exceeding six weeks as may, within the said three weeks, be notified to the applicant for permission by or on behalf of the securities exchange or capital trade point.

 

(2)     Where permission for a dealing referred to in subsection (1) of this section has been applied for or if applied for has been refused, the company shall immediately repay, without interest, all monies received from applicants in pursuance of the prospectus and if the monies are not repaid within eight days after the company becomes liable to repay it, the directors of the company shall be jointly and severally liable to repay the monies with interest at the current bank rate per annum from the expiration of the eight days, but a director shall not be liable if he proves that the default in the repayment of the monies was not due to any misconduct or negligence on his part.

 

(3)     All monies received by virtue of this section shall be kept in a separate trust account on such terms and conditions as may be prescribed by the Commission so long as the issuing house may become liable to repay the monies specified under subsection (2) of this section; and if default is made in complying with this subsection, the issuing house and any of its officers, who is in default shall be jointly and severally liable to a penalty of N1,000,000 and a further sum of not less than N50,000 for everyday the violation continues.

 

(4)     Any condition requiring or binding any applicant for securities to waive compliance with any requirement of this section is void.

 

(5)     For the purposes of this section, permission shall not be deemed to be refused if it is intimated that the application for permission, though not at the time granted, shall be given further consideration.

 

(6)     This section shall have effect-

(a)     in relation to any securities agreed to be taken by a person underwriting an offer by a prospectus as if he had applied for them in pursuance of the prospectus; and

(b)     in relation to a prospectus offering securities for sale, with the following modifications -

(i)      references to sale shall be substituted for references to allotment,

(ii)     the persons by whom the offer is made and shall be liable under subsection (2) of this section to repay monies received from applicants, and references to the company's liability under that subsection shall be construed accordingly, and

(iii)    for the references in subsection (3) of this section to the company and every officer of the company who is in default there shall be substituted references to any person by or through whom the offer is made and who knowingly and wilfully authorises or permits the default.

 

Return of surplus monies to subscribers, etc.

96 (1)The Commission shall have the power to prescribe the maximum period within which surplus monies due to subscribers shall be returned.

 

(2)     The Commission may, subject to subsection (3) of this section, prescribe the rate of interest payable to subscribers whose surplus monies are held beyond the period prescribed pursuant to subsection (1) of this section.

 

(3)     The interest due and payable under subsection (2) of this section shall not be less than one per cent above the Central Bank of Nigeria minimum rediscount rate and the Commission may, in addition, require a company which fails to honour its obligation under this subsection to pay a higher rate of interest on the surplus monies.

 

(4)     A person who fails to comply with the provisions of this section is liable to a penalty of N1,000,000 and a further sum of not less than x50,000 for every day the violation continues.

 

PART X: CONDUCT OF SECURITIES BUSINESS

Prohibition of certain cash transactions.

97.    For the purpose of this Act, no cash transaction shall be carried out in the capital market in excess of an amount to be determined by the Commission from time to time.

 

Securities dealer to issue Contract notes.

98.    A securities dealer shall, within the prescribed time and in respect of every securities transaction either as a principal or agent, issue a contract note which complies with section 99 of this Act.

 

Contents of contract notes.

99 (1)A contract note given by a securities dealer under section 98 of this Act shall include-

(a)     the name and style under which the securities dealer carries on his business as a securities dealer and the address of the principal place at which he so carries on his business;

(b)     the name and address of the person to whom the securities dealer gives the contract note;

(c)     the date on which the transaction took place and, if outside a securities exchange or capital trade point, a statement to that effect;

(d)     the number, amount and description of the securities which are the subject of the contract;

(e)     the price per unit of the securities;

(f)      the amount of the consideration;

(g)     the rate and amount of commission (if any) charged;

(h)     the amounts of all stamp duties or other duties and taxes payable in connection with the contract; and

(i)      if the settlement amount with or without benefit is to be added to or deducted from the settlement amount in respect of right to a benefit purchased or sold together with the securities, the first-mentioned amount and the nature of the benefit.

 

(2)     A securities dealer shall not include in a contract note given under subsection (1) of this section the name and style which he knows, or is reasonably expected to know is not the name of the person with or for whom he has entered into the transaction.

 

(3)     A reference in this section to a securities dealer dealing or entering into a transaction as principal includes a reference to a person-

(a)     dealing or entering into a transaction on behalf of a person associated with him;

(b)     dealing in securities on behalf of a body corporate in which he has a controlling interest; or

(c)     where he carries on business as a securities dealer on behalf of a body corporate in which his interest and the interest of his director together constitute a controlling interest.

 

(4)     For the purpose of this section-

(a)     a securities dealer who is a member of a securities exchange or capital trade point shall not be taken to have entered into a transaction as principal by reason only that the transaction was entered into with another dealer who is a member of a securities exchange or capital trade point; and

(b)     a transaction takes place in the ordinary course of business at a securities exchange or capital trade point in the prescribed circumstances or is a transaction that is a prescribed transaction for the purposes of this section.

 

(5)     For the purpose of this section, a person is not associated with another person by reason only that he is a director of a body corporate of which the other person is also a director whether or not the body corporate carries on a business of dealing in securities.

 

(6)     A securities dealer who fails to issue a contract note is liable to a penalty of not less than N50,000 and not more than N100,000.

 

(7)     Any securities dealer or its principal officer who issues a contract note containing false or misleading information commits an offence and is liable to a penalty of N100,000, or an amount equivalent to four times the amount involved in the transaction, which ever is higher or on to a term of imprisonment not exceeding 3 years.

 

(8)     Where an investor suffers a loss as a result of the contravention of sections 98 and 99 of this Act, the securities dealer shall refund to the investor an amount equivalent to the loss, together with interest at a rate to be prescribed by the Commission from time to time.

 

Disclosure of certain interests in securities by securities dealers, etc.

100 (1) Where a securities dealer, investment adviser, underwriter or an associated person of a securities dealer, investment adviser or underwriter, issues circulars or other similar written communications with respect to securities or a class of securities in which he has interest, he shall disclose in legible form, the nature of that interest.

 

(2)     For the purposes of subsection (1) of this section, interest shall include any financial benefit or advantage which will, or is likely to, accrue directly or indirectly on or arising out of the disposal of the securities.

 

(3)     Where a securities dealer, investment adviser, underwriter or an associated person of a securities dealer, investment adviser or underwriter-

(a)     has purchased securities for the purpose of offering all or any of them to the public for purchase; and

(b)     offers to sell any of those securities to any person, he shall not make a recommendation with respect to the securities offered for the purpose unless he has informed each person to whom the recommendation is made that he purchased the securities for that purpose.

 

(4)     Where-

(a)     securities have been offered for subscription or purchase; and

(b)     a person has subscribed for or purchased or is or will or may be required to subscribe for or purchase, any of those securities under an underwriting or sub-underwriting agreement by reason that some or all of the securities have not been subscribed for or purchased, he shall not, during the period of 90 days after the close of the offer, make an offer to sell those securities, otherwise than in the ordinary course of trading on a securities exchange or capital trade point, or make a recommendation with respect to those securities within a period to be prescribed by the Commission from time to time, unless the offer or recommendation complies with the provisions of subsection (5).

 

(5)     An offer or recommendation shall not be made under subsection (4) of this section unless it contains or is accompanied by a statement to the effect that the offer or recommendation relates to securities which he has acquired, or is or will or may be required to acquire under an underwriting or sub-underwriting agreement by reason that some or all of the securities have not been subscribed for or purchased.

 

(6)     A person who is a securities dealer, investment adviser, or the representative of a securities dealer or investment adviser shall not issue to any person any circular or other communication or written offer or recommendation to which subsection (1), (3) or (4) of this section applies unless the circular or other communication or the written offer or recommendation is signed by a director, executive officer or secretary in the case of a corporate body, and that individual in the case of a natural person.

 

(7)     Where a person who is a securities dealer, investment adviser, or the representative of a securities dealer or investment adviser issues to any person a circular or other communication or a written offer or recommendation to which subsection (1), (3), (4) or (5) of this section applies, the first mentioned person shall preserve for a period of 7 years a copy of the circular or other communication or of the written offer or recommendation, duly signed by any of the persons mentioned in subsection (6) of this section.

 

(8)     Reference in this section to an offer of securities shall be construed to include a reference to a statement that is not an offer but expressly or impliedly invites a person to whom it is made, to offer to acquire securities.

 

(9)     Any person who contravenes the provisions of this section commits an offence and is liable on conviction to a fine of not less than N100,000 and not more than N500,000, or to imprisonment for a term not exceeding three years or to both such fine and imprisonment.

 

Dealing as principal.

101 (1) A securities dealer shall not as a principal deal in any securities with a person who is not a securities dealer unless that other securities dealer is acting in the transaction as principal and not as agent.

 

(2)     A reference in this section to a securities dealer dealing or entering into a transaction as principal includes a reference to a person-

(a)     dealing or entering into a transaction on behalf of a person associated with him;

(b)     dealing in securities on behalf of a body corporate in which he has a  controlling interest; or

(c)     where he carries on business as a dealer for a body corporate in which his interest and the interests of his directors together constitute a controlling interest.

 

(3)     A securities dealer who, as a principal, enters into a transaction of sale or purchase of securities with a person who is not a securities dealer shall state in the contract note that he is acting in the transaction as principal and not as agent.

 

(4)     The provisions of subsection (1) of this section shall not apply in relation to a transaction entered into by a dealer who is a member of a securities exchange or capital trade point and specialises in transactions relating to odd lots of securities being a transaction of sale or purchase of an odd lot of securities.

 

(5)     Where a securities dealer fails to comply with subsection (1) or (3) of this section in respect of a contract for sale of securities by him, the purchaser of the securities may, if he has not disposed of them, rescind the contract by a notice of rescission in writing given to the securities dealer not later than 30 days after the receipt of the contract note.

 

(6)     Where a dealer fails to comply with subsection (1) or (3) of this section in respect of a contract for the purchase of securities by him, the vendor of the securities may, in like manner , rescind the contract.

 

(7)     Nothing in subsections (5) and (6) of this section shall affect any right which a person has apart from the provisions of these subsections.

 

(8)     A person who contravenes or fails to comply with any of the provisions of this section commits an offence and is liable on conviction to a fine of not less than N20,000 or to imprisonment for a term not exceeding six months or to both such fine and imprisonment.

 

Dealings by employees of securities dealers.

102 (1) A securities dealer shall not give an unsecured credit to an employee or to a person who is associated with the employee if-

(a)     the unsecured credit is given for the purpose of enabling or assisting the person to whom the unsecured credit is given to purchase or subscribe for any securities; or

(b)     the person giving, authorising or approving the unsecured credit knows or has reason to believe that the unsecured credit will be used for the purpose of purchasing or subscribing for securities.

 

(2)     A person who contravenes or fails to comply with any of the provisions of subsection one of this section commits an offence and is liable on conviction to a fine of not less than N100,000 and not more than N500,000, or to imprisonment for a term not exceeding two years or to both such fine and imprisonment.

 

Securities dealers to give priority to client's orders.

103 (1) A securities dealer shall not, except as permitted by subsection (3) of this section, whether as principal or on behalf of a person associated with him, enter into a transaction of purchase or sale of securities to be traded on the floor of a securities exchange or capital trade point if a client of the securities dealer who is not associated with the securities dealer has instructed the securities dealer to purchase or sell, respectively, securities of the same class and the dealer has not complied with the instruction.

 

(2)     A securities dealer who contravenes the provisions of this section commits an offence and is liable on conviction to a fine of not less than x100,000 and not more than N500,000.

 

(3)     The provisions of subsection (1) of this section shall not apply in relation to the entering into of a transaction by a securities dealer as principal or on behalf of a person associated with him if-

(a)     the instruction from the client of the securities dealer requires the purchase or sale of securities on behalf of the client to be effected only on specified conditions at which the securities were to be purchased or sold and the dealer has been unable to purchase or sell the securities by reasons of those conditions; or

(b)     the transaction is entered into in prescribed circumstances.

 

Securities lending and margin requirements.

104 (1) For the purpose of preventing the excessive use of credit for the purchase or carrying of securities by dealers or member companies, the Commission may make regulations to provide for margin requirements, for the amount of credit which may, from time to time, be extended and maintained by securities dealers on all or specified securities or transactions or class of securities and transactions and for matters connected.

 

(2)     The Commission may also make regulations for securities lending transactions by securities dealers.

 

PART XI: TRADING IN SECURITIES

False trading and market rigging transactions.

105 (1) A person shall not create, or cause to be created, or do anything which may create a false or misleading appearance —

(a)     of active trading in any securities on a securities exchange or capital trade point; or

(b)     with respect to the market for the price of any such securities .

 

(2)     A person shall not-

(a)     by means of purchase or sale of any securities that do not involve a change in the beneficial ownership of those securities; or

(b