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LAWS OF THE FEDERATION OF NIGERIA
THE INVESTMENTS AND SECURITIES ACT, 2007
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EXPLANATORY MEMORANDUM
The Act, amongst other things, provides for-
(a) the establishment of Securities and Exchange Commission;
(b) the repeal of the Investments and Securities Act 1999;
(c) the enlarged powers and functions of the Commission over the capital market; and
(d) a set of new market infrastructures and wide-ranging system of regulation of investment and securities business in Nigeria, especially in the area of Mergers, Acquisitions and Take-Over, and collective Investment Schemes, where new provisions were made.
ARRANGEMENT OF SECTIONS
PART I— ESTABLISHMENT AND MANAGEMENT OF THE SECURITIES AND EXCHANGE COMMISSION
Establishment of the securities and exchange Commission.
Head office of the Commission.
Composition of the board of the Commission.
Duties of the board.
Appointment and tenure of office of members of the board.
Director-General and full time Commissioners to be fully devoted to the service of the Commission.
Management of the Commission.
Disqualification and cessation of appointment.
Remuneration and allowances of members of the Board.
Meetings of the board of the Commission.
Disclosure of interest.
Code of ethics for members of the board.
PART II — FUNCTIONS AND POWERS OF THE COMMISSION
Functions and powers of the Commission.
Powers to establish departments.
PART III — STAFF OF THE COMMISSION
Appointment of the Secretary and other staff of the Commission.
Remuneration of the Secretary and other staff of the Commission.
Duties of the Secretary.
Service in the Commission to be pensionable.
PART IV — FINANCIAL PROVISIONS
Funds of the Commission.
Application of the funds of the Commission.
Reserve account.
Power to accept gifts.
Penalties, fees, etc. to be retained and utilized by the Commission.
Borrowing by the Commission.
Investment by the Commission.
Annual estimates, account and audit.
Annual report.
Registration of securities exchanges and capital trade points.
Conditions for registration. No 1 of 1990.
PART V: REGISTRATION AND REGULATION OF SECURITIES EXCHANGES, CAPITAL TRADE POINTS AND OTHER SELF REGULATORY ORGANIZATIONS
Revocation of certificate of a securities exchange or capital trade point.
Approval of amendments to listing rules
Role of securities exchange, capital trade point and other self regulatory organisations.
Securities exchange, capital trade point or self regulatory organisation to give notice of disciplinary actions, etc.
Review of disciplinary actions taken by a securities exchange, capital trade point or self-regulatory organisation.
Power to issue directives to a securities exchange, capital trade point or self regulatory organisation, etc.
Power of the Commission to prohibit trading in particular securities.
Securities exchange, etc. to maintain proper books of account.
PART VI: REGISTRATION AND REGULATION OF CAPITAL MARKET OPERATORS
Registration of capital market operators.
Accounts to be kept by capital market operator.
Maintenance of separate accounts and payment into certain trust accounts.
Penalty for withdrawing money from trust account without authority.
Money in trust account not available for payment of debt.
Claims and lien not affected.
Right to copies of book entries of transactions and to inspect contract notes.
PART VII: INSPECTIONS AND INVESTIGATIONS
Designation of officers of the Commission for supervision of certain capital market operators.
Routine examination and report.
Special examination.
Failing capital market operator.
Control of failing capital market operator.
Management of failing capital market operator.
Power of the Commission to revoke registration or apply to Court.
Duty to notify capital market operator or person to be affected.
Application to the Federal High Court for winding up.
PART VIII: REGULATION OF SECURITIES
A— REGISTRATION OF SECURITIES
Compulsory registration of securities and investments of public companies and collective investment schemes.
Electronic and other means of issuing and transferring securities.
Register of securities.
Particulars of register.
Production of register.
Extracts of register.
B— CORPORATE RESPONSIBILITY OF PUBLIC COMPANIES
Filing of annual and periodic reports with the Commission.
System of internal control of public companies.
Auditors of public companies to register with the Commission.
Duty of auditor to report on internal controls of public companies
Disclosure of quarterly earning forecasts by listed public companies.
Penalties for contravention of sections 60, 61, 62, 63 and 64.
C — IN GENERAL
Contravention of part VIII by bodies corporate.
PART IX: PUBLIC OFFER AND SALE OF SECURITIES AND INVITATIONS TO THE PUBLIC
Control of invitations to the public.
Invitation to the public to deposit money by public companies.
Meaning of “invitation to the public”
Offers for sale deemed to be made by the company.
Form of application for shares to be issued with prospectus.
Effective date of a prospectus.
Contents of a prospectus.
Exemption from application of provisions relating to prospectus in certain cases.
Prohibition of issuance, circulation, etc of certain notices, circulars and advertisements.
Exemption certificate and effect.
Expert’s statement on prospectus.
Prospectus on invitation to the public to acquire or dispose of securities.
General and restricted invitations to the public.
Registration of prospectus.
Contract in prospectus, etc., not to be varied without leave.
Document with offer of securities for sale to be deemed a prospectus.
Interpretation as to prospectus statements.
Form of statement in lieu of prospectus.
Civil liability for mis-statements in prospectus.
Criminal liability for mis-statement in prospectus.
Criminal liability in respect of statements in lieu of prospectus.
Allotment of securities.
Opening of subscription lists.
No allotment unless minimum subscription received.
Application monies to be held in trust until allotment.
Prohibition of allotment in certain cases.
Effect of irregular allotment.
Action for rescission.
Allotment of securities and dealing on securities exchange, etc.
Return of surplus monies to subscribers, etc.
PART X: CONDUCT OF SECURITIES BUSINESS
Prohibition of certain cash transactions.
Securities dealer to issue Contract notes.
Contents of contract notes.
Disclosure of certain interests in securities by securities dealers, etc.
Dealing as principal.
Dealings by employees of securities dealers.
Securities dealers to give priority to client’s orders.
Securities lending and margin requirements.
PART XI: TRADING IN SECURITIES
False trading and market rigging transactions.
Securities market manipulation.
False or misleading statements.
Fraudulently inducing persons to deal in securities.
Dissemination of illegal information.
Prohibition of fraudulent means.
Prohibition of dealing in securities by insiders.
Abuse of information obtained in official capacity.
Actions not prohibited by sections 111 and 112 as dealings in securities by insiders.
Effect of contravention.
Criminal liability under this part.
Compensation to be determined by the Commission or Tribunal.
PART XII: MERGERS, TAKE-OVERS AND ACQUISITIONS
Meaning of certain words used in this part.
Extent of application of this part.
Meaning of merger.
Thresholds and categories of mergers.
Consideration of mergers.
Small merger notification and implementation.
Notification and implementation of intermediate and large mergers.
Merger investigations.
Intermediate merger procedure before the Commission.
Large merger procedure before the Commission.
Revocation of merger approval.
Power to order the break-up of company.
Power to acquire shares of dissenting shareholder.
Right of a dissenting shareholder to compel acquisition of his shares.
Take over.
Take-over bid.
Person making a take-over bid.
Authority to proceed with take-over bid.
Registration of copy of proposed bid.
Requirements as to bid under take-over bid.
Corporation making take-over bid.
Despatch of bid to shareholders, etc.
Arrangement for funds.
Directors’ circular.
Inclusion of expert’s opinion in a bid.
Bid for all shares.
Bid for less than all shares.
Provisions applicable to every bid.
Duty of the Commission in relation to certain instruments.
Acquisition of shares of dissenting shareholders.
Procedure where dissenting offeree makes election.
Duties of offeree company.
General provisions as to payment.
Rights of remaining shareholders.
Offences in relation to take-over bids.
PART XIII: COLLECTIVE INVESTMENT SCHEMES
A— GENERAL
Definition of certain words used in this Part.
Meaning of collective investment scheme, etc.
Types of collective investment scheme. Cap 59.
Principles for the administration of the scheme.
Disclosure of Information.
Duties of manager of a scheme.
Requirements for administration of collective investment schemes.
Prohibition of misleading names and acts.
Authorisation of collective investment scheme.
Registration of units or securities of a scheme.
Alteration of trust deed, custodial agreement or change of name of scheme to be approved by the Commission.
Revocation of authorisation of scheme.
Approval of prospectus and other offer documents on scheme.
Civil liabilities arising from prospectus.
Redemption of units or securities.
Prohibition of certain transactions and profits by manager under a scheme.
Liability of trustees and custodian under a scheme.
Audit of accounts of a scheme and annual general meetings.
Determination of market price of units or securities.
Investment of a collective investment scheme.
Inspection and investigation.
Powers of the Commission after an investigation.
174 Cancellation or suspension of registration of a manager.
Commission may object to publication or distribution of misleading, objectionable, etc. documents.
Power of Commission to request audit.
Declaration of certain practices as irregular or undesirable.
Appointment and termination of appointment of trustee or custodian.
Qualification and registration of trustee or custodian.
Suspension or revocation of the registration of trustee or custodian.
Duties of trustee or custodian.
Status of assets.
Liability of trustee or custodian in respect of loss of assets.
Appointment and removal of auditor.
Duty of auditor to disclose irregularity or undesirable practice.
Power to make regulations on the constitution and management of collective investment schemes.
Alteration of schemes and change of manager, trustee or custodian.
Restriction on activities of managers.
Publication of scheme particulars.
Power of intervention.
Representation against directive or its revocation.
Open-ended investment company.
Real estate investment companies or trusts.
Registration of real estate investment company.
Foreign collective investment schemes.
Supplemental investigations.
PART XIV: INVESTORS PROTECTION FUND
Establishment of an investors protection fund.
Objectives of an investor protection fund.
Composition and tenure of the board of trustees.
Removal from the board of trustees.
Powers of the board of trustees.
Monies constituting the investor protection fund.
Fund to be kept in separate bank account.
Payments out of the investor protection fund.
Accounts of an investor protection fund.
Power of the board of trustees to delegate functions to its management subcommittee.
Minimum amount in the investor protection fund.
Protection of the investor protection fund in the event of any reduction.
Levy to meet liabilities.
Power of a securities exchange or capital trade point to make advance to an investor protection fund.
Investment of the funds of an investor protection fund.
Application of the investor protection fund.
Claims against an investor protection fund.
Notice calling for claims against the investor protection fund.
Power to settle claims.
Form of order of the Tribunal.
Power to require production of evidence.
Subrogation.
Application of insurance money.
Penalty for contravention.
Interpretation.
PART XV: BORROWING BY FEDERAL, STATE, AND LOCAL GOVERNMENTS AND THEIR AGENCIES.
Bodies to which this Part applies.
Issue of registered bonds or promissory notes.
Restriction on raising of funds from the capital market.
Loans to be charged upon revenue:
Bodies to publish details of loans in the gazette or other official document.
Register of securities and appointment of registrar.
Appointment of issuing house.
Liability of a body in respect of issue of registered securities.
Bond holders to be registered.
Condition for registration of bond holders.
Bond certificate.
Transfer of registered bond.
Registration of transfer of bonds.
Registration of liens on bonds.
Closing of register.
Register to be conclusive.
Promissory notes.
Manner and effect of endorsement.
Rights of survivorship.
Registered bonds.
Appropriation of revenue.
Payment of interest.
Payments.
Appointment of trustees.
Powers of trustees.
Trustee may be interested party.
Power to appoint new trustees.
Waiver by trustees.
Appropriation of revenue for sinking fund.
Separate sinking fund.
Investment of sinking fund.
Cessation of contribution to sinking fund.
Expenses to be paid out of sinking fund.
Deficiency in fund to be charged upon revenue.
Payment into sinking fund in case of default by a body.
Issue of duplicate and renewal of bonds certificate and promissory notes.
Right of registrar to compel application to issue renewal of promissory notes.
Consolidation and subdivision of bonds and securities.
Indemnity bond.
Immediate discharge in certain cases.
Discharge in other cases.
Summary procedure in special cases.
Signature to be printed on certificates.
Notice of trust not receivable except as provided.
Exemption from stamp duties.
Delegation of power.
Inspection of register and documents, etc.
Power to make rules and regulations under this part.
Requirements of securities exchanges, etc.
Binding obligation on successive governments or bodies.
Application of enactments.
Interpretation of certain words used in this part.
PART XVI: ESTABLISHMENT, JURISDICTION, AUTHORITY AND PROCEDURE OF THE INVESTMENTS AND SECURITIES TRIBUNAL
Establishment of the Investments and Securities Tribunal.
Composition of the Tribunal.
Constitution of the Tribunal.
Term of office.
Disqualification of members of the Tribunal.
Resignation and removal.
Salaries, allowances and other conditions of service of members of the Tribunal.
Filling up of vacancies.
Chief Registrar to the Tribunal.
Other staff of the Tribunal, etc.
Jurisdiction of the Tribunal, etc.
Funds of the Tribunal.
Power to accept gift.
Account and audit.
Application of the funds of the Tribunal.
Appeals from decisions of the Commission.
Powers and procedures of the Tribunal.
Right to legal representation.
Onus of proof.
Judgment of the Tribunal.
Exclusion of proceedings.
Appeal to the Court of Appeal.
Costs.
Further appeals.
PART XVII: MISCELLANEOUS
Power of Minister to issue directives.
Power to administer oath.
Delegation.
Right to represent Commission before court or Tribunal.
Protection of action taken in good faith.
Penalty.
Criminal prosecution.
Offences by companies and market participants.
Obligation of persons to disclose information connected with activities of their employer.
Change of name of capital market operators, managers, portfolio or collective investment scheme and change of shareholding or directors.
Removal of appointees.
Power to exempt.
Committees of the Commission.
Seal of the Commission.
Application and relevance of other laws not barred.
Rules and regulations.
Repeals and savings.
PART XVIII: INTERPRETATION AND CITATION
Interpretation.
Citation.
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THE INVESTMENTS AND SECURITIES ACT, 2007 [ACT NO. 29]
An Act to repeal the Investments And Securities Act 1999 and to establish the Securities And Exchange Commission as the apex Regulatory Authority for the Nigerian Capital Market as well as Regulation of the Market to ensure the protection of investors, maintain fair, efficient and transparent market and reduction of systemic risk; and for related matters.
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[Commencement] [25th Day of June, 2007]
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ENACTED by the National Assembly of the Federal Republic of Nigeria-
