SECNIGERIA: NEW RULES AND AMENDMENTS ON THE WAY

The Securities and Exchange Commission of Nigeria will soon introduce two new rules and some amendments to existing rules and regulations guiding the Nigerian capital market.

The two new rules are one that provides for definition and registration of Capital Market Holdings Companies (CMHC) and another on direct cash settlement of transactions on behalf of clients.

The CMHC new rules were actually being re-exposed following January 2017 first exposure and comments from stakeholders that resulted in some restructuring.

Under the new rules, CMHCs are defined as "corporate structure where a parent-subsidiary relationship exists with the parent and subsidiaries carrying out capital market operations".

This relationship exists, says the new package, where control is exercised through 50% and above shareholding or where less than 50% holding has capacity to also control the subsidiary through power over investees.

SEC is to register, regulate and approve the operations of CMHCs and they are expected to provide pre registration information like names, and profiles of directors and promoters within the group; the group structure; memorandum and articles of memorandum and the capital structure of each company in the group.

Then to get registered, there must be evidence of at least 50% holding in each company in the group and evidence of existence of at least two subsidiaries in the group in addition to the group corporate governance charter and initial organisational structure.

The rules also state services that be shared in common and corporate activities that are not approved in intra group relationship in addition to how directors have to be appointed.

Finally, the minimum capital requirement is expected to be the aggregate of each of the minimum capital requirements of all subsidiaries in the group.

The amendments being proposed  include rules covering the appointment of compliance officers; sponsorship of stockbrokers for registration; reports to be filed and relationship between sub brokers and broker/dealers.



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