Over 500 public companies may be sanctioned by the Securities and Exchange Commission (SEC) for not registering their securities with the commission, THISDAY checks at the weekend have revealed.
Public companies, according to the Companies and Allied Matters Act, 1990, are firms that have more than 50 shareholders. And once the companies have been registered by Corporate Affairs Commission (CAC), the Investments and Securities Act (ISA) 2007 gives the SEC the power to register all securities of such public companies.
SEC had in February 2014 given June 2014 deadline to register their securities or face the appropriate sanctions. It was gathered that over 100 public companies have already registered their securities with SEC, leaving more than 500 others to do so.
Market sources said given the renewed efforts by regulators to ensure compliance with rules and regulators guiding operations in the nation’s economy, the companies that are yet to register their securities may be in for a tough time in the months ahead as the Commission is planning to ensure compliance.
In notification to the public companies last year, SEC had said: “This is to draw the attention of all public companies in Nigeria to the provisions of Section 54 (1) of ISA No. 27, 2007 and Rule 279 (1) (a) of the SEC Rules and Regulations, to the effect that all securities of public companies shall be registered with the Commission. All Public Companies in Nigeria are expected to register their securities with the Commission upon incorporation or conversion from a private company. The SEC has, however, observed that some public companies in Nigeria are yet to comply with the above stated provisions.”
Continuing, SEC said all existing public companies with securities not registered with the Commission are strongly advised to comply with the provisions of the law by registering their securities with the Commission before June 30, 2014.
“At the expiration of this date, all public companies whose securities are not registered with the Commission will be sanctioned appropriately,” SEC declared.
A market operator told THISDAY that SEC should swing into action by collaborating with the CAC and other relevant bodies to ensure that the companies comply with the provisions of the laws.
“The regulators should not wait until investors begin to lose money before taking action. Companies that have been registered by CAC as public companies but are yet to be registered by SEC cannot be traded in any securities exchange. Now that we have other exchanges where investors can trade shares not listed on the Nigerian Stock Exchange (NSE), the regulators should encourage the registration of all pubic companies so that investors holding such securities and want to exit can have the opportunity to do so. On the other hand, investors who want to come into such companies can also do so. This will attract more investments into the Nigerian economy,” the operator, who is a senior securities dealer said.
Some companies, which are not authorised and not registered by the Commission, had in the past sold shares to unsuspecting members of the investing public. The regulator could not do anything to such companies because they were not in its regulatory purview.
source Thisday