SEC releases new rule on unlisted securities

Securities and Exchange Commission [SEC] has released a new rule on unlisted securities.
The new rule was one of those recently released by the regulatory authority.

The rule seeks to ensure that all securities of unlisted public companies are traded within securities exchanges that are registered with the Commission.

The National Association of Securities Dealers [NASD] believed this new rule will introduce new levels of transparency to the Over The Counter [OTC] market in Nigeria.

According to a statement made available, the rule will enable best practice by operators: protection for investors: better price discovery for the market in general and a much deeper, more liquid, capital market.

The association believes that a dynamic and responsive rule making process is also a vital ingredient for rapid but organized growth ‘’and we look forward to the continued development of our markets’’, they said.

In addition to the rule on trading unlisted securities, other new rules that were recently published by the SEC are: Code of Conduct for Rating Agencies, Code of Conduct for Underwriters, Code of Conduct for Trustees. Rules on Securitization as well as Rules on National Investor Protection Fund.

Under section 313(1) of the Investments and Securities Act 2007, the Securities and Exchange Commission [“SEC”] is empowered to make Rules and Regulations for effective regulation of the Nigerian Capital market.

Meanwhile, to ensure that all securities of unlisted public companies are traded within securities exchanges that are registered with the Commission, all Securities of unlisted public companies shall be bought, sold or transferred only by means of a system approved by the Commission and under such terms and conditions as the Commission may prescribe from time to time, according to the association.

‘’Also, no person shall buy, sell or otherwise transfer securities of an unlisted public company except through the platform of a registered securities exchange established for the purpose of facilitating over-the-counter trading of securities.

‘’Any unlisted public company, director, company secretary, registrar, broker/dealer or such other persons who facilitate the buying, selling or transfers of the securities of an unlisted public company otherwise than through the platform of a duly registered securities exchange, shall be liable to a penalty of not less than ₦ 100, 000 in the first instance and not more than ₦ 5, 000 for every day of default’’, said the association.