SEC to sanction issuing houses over recapitalisation rule breaches
The Securities and Exchange Commission (SEC) has announced plans to impose a N1 million penalty on banks failing to submit complete capital raise applications in line with banking sector recapitalisation guidelines.
In a statement released, SEC emphasised that banks must follow specific norms and procedures to raise capital through rights issuance, private placements, or other authorised methods.
Applications and supporting documents are required to be submitted electronically via email. The SEC will review the documents and notify applicants of any deficiencies electronically.
The statement read in part, “Where an application is returned for being incomplete, a penalty of N1,000,000 and re-filing fee of N100,000 shall apply. This fee is payable by the Issuing House without a recourse to the Issuer or the Issue proceeds.”
The SEC’s initiative aligns with the Central Bank of Nigeria’s directive for banks to raise additional capital, essential for overcoming economic challenges and achieving a $1 trillion economy by 2030.
“As the regulatory institution mandated to regulate and develop the Nigerian capital market, the Securities and Exchange Commission has the responsibility to ensure a smooth, transparent, and efficient capital raising process by the banks.
“This framework outlines the guidelines and procedures banks are required to follow to raise capital through rights issuance, private placements, or other approved methods during the 2024–2026 recapitalisation period.
“The SEC stated that applications and documents are filed electronically via email, adding that documents forwarded will be reviewed, and where there are observed deficiencies, this will be communicated to the applicants electronically,” the statement continued.
International banks must increase their capital base to N500 billion under the new CBN capital requirement, while national banks must raise theirs to N200 billion, and regional banks to N5 billion.
The SEC highlighted that this framework is designed to ensure an efficient, transparent capital raising process that protects stakeholders’ interests. Banks and stakeholders are urged to adhere to the guidelines, which align with the Investment and Securities Act of 2007.
The SEC also stressed the importance of updating corporate information with the Corporate Affairs Commission before filing applications, to streamline the approval process and enhance regulatory oversight.
“The commission may require other documents or information as may be necessary. Where an issuer had already filed necessary documents with the SEC (e.g., a Memorandum and Articles of Association (Memart) or a certificate of incorporation or a certificate of increase in share capital, etc.),” the statement concluded.
The CBN on March 28, revealed updated minimum capital requirements for banks, establishing a minimum capital base of N500 billion for commercial banks with international authorisation.
