The NASD OTC Exchange has called on public limited companies (PLCs) to adhere strictly to the Securities and Exchange Commission (SEC) regulation mandating that securities of unlisted public companies be traded exclusively on SEC-registered Over-the-Counter (OTC) Exchanges.
Under the SEC’s rules, the purchase, sale, and transfer of unlisted securities must not occur directly between parties but should only be conducted through a registered OTC Exchange to ensure transparency.
This requirement, grounded in the Investment and Securities Act (ISA), obligates companies to register their securities with SEC immediately upon creation.
Violators risk penalties, with fines starting at N100,000 for initial infractions and increasing by N5,000 daily for continued non-compliance.
The rule states: “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.
“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.”
