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Recapitalisation: SEC urges investors to verify compliance of operators

By on October 6, 2015

Following the expiration of deadline for the new capital  requirement, last Thursday, the Securities and Exchange Commission (SEC) has advised investors to verify the compliance status of their various preferred Capital Market Operators  (CMOs).

According to the provisional list made available by the SEC on its website, as  at close of business September 30, 437 operators had met the new capital  requirement. There are four merger applications pending before the commission.

However, speaking through  the  market-wide Implementation Committee on new minimum capital, SEC has further advised the investing public to verify the compliance status of their preferred CMO by checking the list posted on  the commission’s  website.

A statement signed by the Secretary of the Committee also  listed some guidelines that should be adhered to by investors, target firms and the Central Securities Clearing System (CSCS) where an investor wishes to move his stock account from an under-capitalised Broker/Dealer to a Broker/Dealer or Broker that has complied with the minimum capital requirement (capitalised firm).

“Where the Broker/Dealer has not met the new minimum capital requirement, the investor should approach a capitalised Broker/Dealer or Broker for engagement: The investor should undergo a Know Your Customer (KYC) process with the new firm,” the committee explained.

The board of the SEC had on December 18, 2013, announced new minimum capital requirements for all categories of market operators in pursuant to Section 313(6) of the Investments and Securities Act (ISA) 2007.  SEC increased minimum capital base for broker/dealer by 329 per cent from the existing N70 million to N300 million. A broking firm which operated with capital base of N40 million, now has N200 million, representing an increase of 400 per cent. While the minimum capital for dealer was raised by 233 per cent from N30 to N100 million, that of issuing houses (facilitators of new issues in the primary market) was increased to N200 million from N150 million.

The capital requirement for a company to underwrite issues was also raised from N100 million to N200 million, just as share registration companies now have to raise their capital base from N50 to N150 million. The minimum capital for corporate investment advisers was however retained at N5 million, unlike individual investment advisers who would only operate with a 300 per cent hike in capital base from N500,000 to N2 million.

To facilitate the smooth implementation of the new minimum capital requirements for operators, the CMC set up a market-wide implementation committee on New Minimum Capital Requirement for CMOs, comprising the SEC, Nigerian Stock Exchange (NSE), Central Securities Clearing System (CSCS), Association of Stockbroking Houses of Nigeria (ASHON) and all other capital market trade groups.

 

 

[ThisDay]