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Court reaffirms SEC’s oversight over public companies

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Securities and Exchange Commission


The Court of Appeal has reiterated the Securities and Exchange Commission (SEC’s) power to intervene in the management and control of any public company, which is considered to have failed, is failing, or is in crises.  The SEC is statutorily mandated as the apex regulator of the Nigerian capital market, to ensure the protection of investors, and maintain a fair, efficient and transparent market.

The Court of Appeal in a judgement delivered on 31st January, 2019, held thus: “That the 1st Respondent, an issuer of securities, having been duly registered with the Appellants and was at all material times performing the specific function of issuing securities in the capital market was subject to the intervention of the statutory powers of the Appellant as the pinnacle regulatory authority for the Nigerian capital market whose sole purpose is to ensure the protection of investors and to maintain fair, efficient and transparent capital market as well as reduction of systemic risk as stated in the preamble of the ISA- the beacon light to the powers of the Appellant under the ISA.”

Recall that in 2008, the SEC conducted an investigation on Big Treat Plc, a public listed company (1st Respondent) and its directors, which revealed infraction of the Investments and Securities Act 2007, such as inadequate internal control systems, and a breakdown of corporate governance in the company.

In a statement to journalists in Abuja, Tuesday, SEC said based on the foregoing, and pursuant to the provisions of Section 13 (v) of the ISA 2007, the Commission in 2010 approached the Federal High Court seeking a number of reliefs against Big Treat Plc (1st Respondent). This also concerned three of its directors – Pamela Wu, Harries Wu, and Steve Wu, and two entities owned by them – New Frontier Engineering and Construction Company Ltd., and Skyone Group of Companies Ltd., with a view to preserving the assets of the 1st Respondent.

In the course of the proceedings, the Commission applied for and was granted an ex-parte-order of interim injunction restraining the 2nd– 6th Respondents, their agents, servants or privies from obstructing the Commission in the exercise of its statutory oversight responsibilities to the 1st Respondent. It also included the appointment of an interim management to take charge of the day to day administration of the 1st Respondent with a view to preserving its assets in the interest of its stakeholders pending the determination of the Motion on Notice already filed in this suit.

The statement however, said that the ex-parte order was subsequently vacated on the grounds that the 1st Respondent (Big Treat Plc) “was not a capital market operator amenable to the control and management of the appellant in times of financial distress.”
The Commission thereafter appealed against the decision of the Federal High Court. The sole issue for determination as raised by the Commission before the Court of Appeal was “whether the lower court was right when it held that the 1st Respondent (Big Treat PLC) is not a capital market operator because it does not play any specific role in the capital market, and as such, not register-able or subject to the control of the Appellant (the Commission).”

The Court of Appeal further held that; “In conclusion, I most respectfully hold that the court below should not have vacated the interim preservative order made by it to protect the imminent collapse of the 1stRespondent but the Appellant who at all material times was exercising statutory powers under the ISA to stem the tide of decay in the internal management of the 1stRespondent…” 


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