The President of Capital Market Academics of Nigeria, Professor Uche Uwaleke, has commended the Securities and Exchange Commission (SEC) for its new rules on the issuance and allotment of private companies’ securities.
Uwaleke said this in an interview with newsmen weekend in Abuja while reacting to the new rules released by the commission.
He described the new regulation as a welcome development geared towards enhancing investors’ protection.
The Capital Market Expert advised the commission to carry out massive sensitisation of the rules to enhance compliance and reduce violations caused by ignorance.
He said, “I think the new rule is a welcome development. The idea of capping the maximum debt capital that can be raised is intended to discourage reckless risk-taking on the part of private companies.
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”Enforcement of rules is enhanced by stiff sanctions which is why I support the relatively huge fine. Given that one person can now form and incorporate a private company in Nigeria and that the minimum share capital to incorporate a private company is only N100,000, going by the CAMA of 2020, I think the cap of N15 billion is for private companies.”
Uwaleke however suggested that maximum capital raise be reduced from N15 billion to N10 billion within one year such that the fine of N100 million minimum will represent one per cent of the amount.
SEC said the rules applied to debt securities issuances by private companies either by way of public offer, private placement or other methods as may be approved by the commission.
According to the SEC, any person who issued or allotted securities without its prior approval or violated any provisions of its regulations will pay a penalty of N10 million in the first instance.
The commission added a sum of N100,000 for every day if the violation continues.
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