SEC moves to create, amend rules guiding transactions

Nigeria’s Securities and Exchange Commission (SEC) is proposing the introduction and amendment of some rules guiding participation and transaction in the country’s capital market and has called on inputs from stakeholders such as capital market operators, shareholders, dealers, brokers etc.

In a notice placed on its official website, the commission said the new rules and changes to existing ones will enhance stress free operations and improve market participation.

The proposed new rules are on E-Dividend Mandate, Transmission of Shares, a re-exposure on Direct Cash Settlement, electronic offerings, and derivatives trading.

On the e-Dividend Mandate rules, SEC is proposing to mandate registrars to credit accounts of shareholders of all outstanding unclaimed dividends within two days. According to the SEC, this will “increase the rate of compliance by registrars and help to reduce the quantum of unclaimed dividends.”

The SEC is also proposing that registrars be under obligation to forward status reports on all mandated shareholders accounts on a quarterly basis so as to enable it monitor the level of compliance with the E-Dividend Mandate Management System.

SEC further said another amendment would be “where BVN is provided, Bankers’ confirmation shall not be required before shareholders’ accounts are mandated by the registrars to avoid unnecessary delay in mandating shareholders’ accounts.

“Any Registrar that violates the provisions of these Rules shall be liable to a penalty of not less than One (1) million Naira and an additional sum of N20,000 for every day the violation persists to serve as a deterrent to registrars for possible violation of the rule,” it said.

On the transmission of shares rules, the commission is proposing to have registrars transfer shares of a deceased within three weeks of receiving the request from the Administrators/Executors subject to the availability of “Letter of Introduction from the Administrators/Executors, introducing themselves as the legal representatives of the Estate.

The SEC stated that “the letter should also indicate the names, addresses, signatures and BVNs of the individual Administrators/Executors; original Death Certificate from the National Population Commission (NPC) for sighting; original probate letter or Letter of Administration for sighting or the Certified True Copy (CTC) from a Notary Public; copy of newspaper advert placed by the Court or Gazette; and any evidence of ownership of the investment i.e. CSCS statement(s) of the deceased, original share certificates, dividend stub or dividend warrants or bank statement(s) showing receipt of dividend(s) into the account(s) of the deceased.”

SEC said, “Where the Administrator/Executor cannot provide these requirements, the Registrar may require confirmation through insurance, indemnity or interview.”

On what should be charged for cost of this transaction, SEC is proposing one percent of the value +5 percent VAT for a value of shares of N5 million and below; and 0.5 percent of the value subject to a maximum of N200,000 +5 percent VAT for a value of shares above N5 million.

An exposure draft of Proposed Rules on Electronic Offerings, Derivatives Trading and Sundry Amendments were also made available by the SEC on its official website.

The commission noted that “comments and input of these proposals be forwarded by e-mail to the Secretariat, Rules Committee of the Commission, at [email protected] by letter addressed to the Director-General, SEC, not later than two (2) weeks from date of publication.”

The proposals were published on Wednesday, the 13th and Thursday,14th March 2019 on the SEC’s website.