The Securities and Exchange Commission (SEC) has exposed new rules on issuance and allotment by private companies securities declaring that any person who issues or allots securities without its prior approval or violates any provisions of its regulations will be liable to a penalty not less than N10 million in the first instance and a further sum of N100,000 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 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 also listed other stringent punishments to include suspension, or withdrawal of the registration of the capital market operator(s) involved, disgorgement of proceeds/income from the transaction and the commission may ratify or rescind a transaction if it is in the interest of the public to do so.
