Posted by From Kunle Aderinokun in Lokoja on
The Securities and Exchange Commi-ssion (SEC) yesterday said it would not extend beyond December 31, 2005, deadline given to capital market operators for recaptalisation.
The Securities and Exchange Commi-ssion (SEC) yesterday said it would not extend beyond December 31, 2005, deadline given to capital market operators for recaptalisation.
The Commission had earlier directed the operators to shore up the capital base before the end of this year.
The apex regulator of the nation's capital market yesterday hinted that it would, at the expiration of the deadline, announce an upward review of the capitalisation.
Making the disclosure in Lokoja at a Training Workshop for Capital and Financial Market Correspondents, the Assistant Director, Legal Services, Mr. E.K. Aigbekaen, said there was no going back on the deadline set for the capital market institutions to recapitalise.
He said the Commission was poised to work towards consolidation of the capital market as well as improve corporate governance to meet new challenges.
He pointed out that with adequate capital, the firms will be more stable and competitive.
He said that "in order to reduce systemic risks, the Investment and Securities Act (ISA) empowers the Commission to prescribe a minimum capital requirement for all operators." This, according to him, is usually reviewed from time to time so as to ensure that the Nigerian capital market is globally competitive and stable."
Noting that "the level of capitalisation is not absolute" as it would be reviewed periodically, Aigbekaen said that if the firms are well capitalised and there is good corporate governance failure would be reduced.
The Commission had earlier extended the deadline for compliance with the minimum paid up capital requirement for capital market operators.
Mr. Ismaila M. Ville, Head, Corporate Affairs, said in a statement in Lagos recently, that the new deadline has been shifted to December 31, 2005, in contrast to the earlier date of March 31, 2005.
Ville added that "the revision of the deadline is a reflection of the Commission's desire to encourage market operators to consolidate in order to strengthen the structure of the market and enhance their positions in the capital market."
He disclosed that the Commission has begun a comprehensive review of the capital market that will be released in due course in line with the on-going reforms of the finance sector by the Federal Government.
"Operators in the capital market have therefore been advised to ensure compliance with the current paid up capital requirement by December 31, 2005, as target inspections would be carried out to verify their position at the expiration of this date," he said.
The Commission had on March 11, 2004, announced the new minimum paid-up capital for all categories of capital market operators in Nigeria with a view to make them compete effectively in the local and international financial market.
Details of the new minimum paid-up capital revealed that broker/dealer should increase to N70 million, while brokers should have N40 million.
Meanwhile, Aigbekaen said the Commission was seeking power to prosecute criminals in the capital market like its being done in the United States and other countries.
He said though the ISA has empowered it to investigate breaches of investment laws and apply sanctions, it could not prosecute and as such usually transfers investigated cases to the Investment and Securities Tribunal (IST), which also forward same to the Economic and Financial Commission (EFCC).