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We won’t extend recapitalisation deadline again – SEC

By BusinessNews Staff on June 5, 2015

The Securities and Exchange Commission has informed capital market operators that it will stick to the September 30, 2015 deadline, which it set for them to recapitalise their operations in line with new capital requirements approved by the commission in 2013.

Under the new minimum capital base, the capital requirement for brokers/dealers was increased from N70m to N300m. That of brokers was raised to N200m from N40m, while that of dealers was hiked to N100m from N30m.

The minimum capital requirement for issuing houses was increased from N150m to N200m, while that of underwriters was raised from N100m to N200m. Registrars saw their minimum capital requirement increased to N150m from N50m, while the requirement for trustees was increased to N300m from N40m. Rating agencies were not left out as their minimum capital requirement was increased to N150m from N20m.

The SEC, which had initially announced December 31, 2014 as the deadline, extended the deadline by nine months in December after repeated calls by operators for an extension, and possibly a review of the capital requirement.

The operators had argued that insisting on the deadline and withdrawing the licences of those who fail to meet the deadline would throw the market into crises, especially as it had been hit by several challenges, which led it to perform poorly.

They pointed to the dwindling prices of crude oil and the impact on the economy, especially the forced devaluation of the naira and the hike in interest rates, as reasons for the call among other things.

Although activities in the capital market are still depressed with the stock market’s performance for the year in negative territory, the SEC said it would stick with the deadline.

A circular, dated June 1, 2015, to the market operators read in part, “The Securities and Exchange Commission wishes to remind all Capital Market Operators who have yet to comply with the new minimum capital requirement to do so before the deadline of September 30, 2015.

“Note that the commission is committed to this deadline and would not grant any further extension.”

As of December, the SEC Board expressed satisfaction with the efforts made by all operators, particularly those who had complied with the new requirements, noting that 262 capital market operators had met the requirement at the time.

They comprise issuing houses, brokers/dealers, corporate investment advisers, fund managers and underwriters.

In a separate circular, the SEC directed all registrars of public companies to return all unclaimed dividends, which had been in their custody for 15 months and above to the paying companies.

It gave the registrars till June 30, 2015 to file evidence of remittance with the commission, stressing that failure to comply with the directive would attract sanctions “without further recourse.”

[Punch]

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