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Unapproved Issuance Of Securities To Attract N10m Penalty- SEC

Any person who issues or allots securities without the prior approval of the Securities and Exchange Commission, or violates any provisions of the Commission’s rules will soon be liable to penalty of not less than ₦10m in the first instance and a further sum of ₦100,000 for every day the violation continues.

The recommended fine is contained in the proposed new rules on the issuance and allotment of private companies and securities prepared by the Securities and Exchange Commission.

The document is being exposed for inputs by stakeholders which must be forwarded to the Secretariat, Rules Committee through the Director-General of SEC not later than two weeks.

The rules apply 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; Registered exchanges and platforms which admit debt securities issued by private companies for trading, price discovery or information repository purposes; Registered capital market operators who are parties in issuances and allotment of debt securities of private companies.

The Commission in the document stated that a private company may list its securities on a registered securities exchange, adding that such securities must be listed not later than 30 days after completion of allotment.

It added that the issuing house would, within 21 working days of allotment, file with the Commission a summary report containing post allotment information; summary of applications received; list of allottees of 50,000 units of securities or more and list of all allottees acquiring 5 per cent or more of the securities on offer; list of all applications received including list of those rejected and the basis for rejection, among others.

On the utilization of Proceeds, the Commission stated in the document that, “The issuer is prohibited from using the proceeds of the issue for purposes other than those stated in the offer document without the prior approval of the Commission.

“The issuer shall file with the Commission not later than ninety (90) days after the conclusion of an issue on the appropriate SEC Form, detailed information on the utilization of proceeds.

“Evidence of such utilization shall be provided as appendix to the report. The rendition shall be on a quarterly basis until issue proceeds are fully utilized.”

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