Tinubu assents to Investments and Securities Act 2025
By Seun Ibiyemi
President Bola Tinubu has signed the Investments and Securities Act (ISA) 2025 into law, repealing the Investments and Securities Act No. 29 of 2007.
The Securities and Exchange Commission (SEC) announced this landmark development on Saturday, noting that the new legislation strengthens the legal framework of the Nigerian capital market. It enhances investor protection and introduces essential reforms to uphold market integrity, transparency, and sustainable growth.
The enactment of ISA 2025 reaffirms the SEC’s position as the primary regulatory authority of the Nigerian capital market. The Act introduces new provisions that bring Nigeria’s market operations in closer alignment with international best practices.
It also grants the SEC regulatory powers comparable to those of leading global securities regulators. These expanded powers enable the Commission to fully comply with the requirements of IOSCO’s Enhanced Multilateral Memorandum of Understanding (EMMoU), ensuring it retains its “Signatory A” status and bolstering the overall appeal of the Nigerian capital market.
One of the key aspects of the Act is the classification of exchanges and financial market infrastructures. The Act categorises Securities Exchanges into Composite and Non-composite Exchanges. A Composite Exchange facilitates the listing and trading of all types of securities and products, while a Non-composite Exchange is limited to a specific category of security or product. The Act also introduces new provisions covering Financial Market Infrastructures such as Central Counterparties, Clearing Houses, and Trade Depositories.
Another significant provision is the regulation of digital assets. The Act formally recognises virtual and digital assets, as well as investment contracts, as securities. It brings Virtual Asset Service Providers (VASPs), Digital Asset Operators (DAOPs), and Digital Asset Exchanges under the regulatory oversight of the SEC.
The Act also includes exemptions from general insolvency laws. Transactions facilitated through, or involving, Financial Market Infrastructures are now exempt from the application of general insolvency laws, ensuring stability and continuity in capital market operations.
In addition, the Act introduces systemic risk management measures. These provisions enable the SEC to monitor, manage, and mitigate systemic risk within the Nigerian capital market, safeguarding investor confidence and market stability.
The Act further expands the categories of eligible issuers, paving the way for a wider range of innovative financial products and investment opportunities. It also facilitates commercial and investment business activities, subject to SEC approval and regulatory controls.
Moreover, the Act includes a dedicated section for the regulation of Commodities Exchanges and Warehouse Receipts. This is a crucial step towards the development of a robust commodities market ecosystem in Nigeria, ensuring efficiency and transparency in commodity trading.
A major improvement brought by the Act is the facilitation of fundraising for sub-national entities. It removes certain restrictions on capital market fundraising by sub-national governments, allowing them greater flexibility in accessing capital for development projects.
To further enhance transparency in capital market transactions, the Act mandates the use of Legal Entity Identifiers (LEIs) by all participants. This requirement is expected to improve the traceability and integrity of securities transactions.
The Act also takes a firm stance against financial fraud by explicitly prohibiting Ponzi schemes and other fraudulent investment operations. It prescribes severe penalties, including prison sentences and additional sanctions, for individuals or entities involved in such illegal activities.
Additionally, the Act makes several amendments to the Investment and Securities Tribunal. These amendments refine key aspects of the Tribunal’s structure, including its composition, jurisdiction, and the appointment criteria for the Chief Registrar. These changes are aimed at strengthening the Tribunal’s ability to discharge its responsibilities effectively and efficiently.
Commenting on this significant development, the Director-General of the SEC, Dr Emomotimi Agama, praised the President’s approval of the Act, describing it as a transformative milestone for the capital market.
“By addressing regulatory gaps and incorporating forward-thinking provisions, this new Act empowers the SEC to drive innovation, strengthen investor protection, and reposition Nigeria as an attractive destination for both local and foreign investment.”
With these comprehensive reforms, the Investments and Securities Act 2025 is set to usher in a new era of transparency, efficiency, and growth in Nigeria’s capital market.
