The Investments and Securities Act 2007

THE INVESTMENTS AND SECURITIES ACT, 2007

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.

Section

THE INVESTMENTS AND SECURITIES ACT, 2007

Arrangement of Sections

PART I-ESTABLISHMENT AND MANAGEMENT OF THE SECURITIES AND EXCHANGE COMMISSION

1 Establishment of the securities and exchange Commission.

2 Head office of the Commission.

3 Composition of the board of the Commission.

4 Duties of the board.

5 Appointment and tenure of office of members of the board.

6 Director-General and full time Commissioners to be fully devoted to the service of the Commission.

7 Management of the Commission.

8 Disqualification and cessation of appointment.

9 Remuneration and allowances of members of the Board.

10 Meetings of the board of the Commission.

11 Disclosure of interest.

12 Code of ethics for members of the board.

PART II-FUNCTIONS AND POWERS OF THE COMMISSION

13 Functions and powers of the Commission.

14 Powers to establish departments.

PART III-STAFF OF THE COMMISSION

15 Appointment of the Secretary and other staff of the Commission.

16 Remuneration of the Secretary and other staff of the Commission.

17 Duties of the Secretary.

18 Service in the Commission to be pensionable.

PART IV- FINANCIAL PROVISIONS

19 Funds of the Commission.

20 Application of the funds of the Commission.

21 Reserve account.

22 Power to accept gifts.

23 Penalties, fees, etc. to be retained and utilized by the Commission.

24 Borrowing by the Commission.

25 Investment by the Commission.

26 Annual estimates, account and audit.

27 Annual report.

28 Registration of securities exchanges and capital trade points.

29 Conditions for registration. No 1 of 1990.

30 PART V:

REGISTRATION AND REGULATION OF SECURITIES EXCHANGES, CAPITAL TRADE POINTS AND OTHER SELF REGULATORY ORGANIZATIONS

31 Revocation of certificate of a securities exchange or capital trade point.

32 Approval of amendments to listing rules

33 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.

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34 Review of disciplinary actions taken by a securities exchange, capital trade point or self regulatory organisation.

35 Power to issue directives to a securities exchange, capital trade point or self regulatory organisation, etc.

36 Power of the Commission to prohibit trading in particular securities.

37 Securities exchange, etc. to maintain proper books of account.

PART VI:

REGISTRATION AND REGULATION OF CAPITAL MARKET OPERATORS

38 Registration of capital market operators.

39 Accounts to be kept by capital market operator.

40 Maintenance of separate accounts and payment into certain trust accounts.

41 Penalty for withdrawing money from trust account without authority.

42 Money in trust account not available for payment of debt.

43 Claims and lien not affected.

44 Right to copies of book entries of transactions and to inspect contract notes.

PART VII:

INSPECTIONS AND INVESTIGATIONS

45 Designation of officers of the Commission for supervision of certain capital market operators.

46 Routine examination and report.

47 Special examination.

48 Failing capital market operator.

49 Control of failing capital market operator.

50 Management of failing capital market operator.

51 Power of the Commission to revoke registration or apply to Court.

52 Duty to notify capital market operator or person to be affected.

53 Application to the Federal High Court for winding up.

PART VIII:

REGULATION OF SECURITIES

A-REGISTRATION OF SECURITIES

54 Compulsory registration of securities and investments of public companies and collective investment schemes.

55 Electronic and other means of issuing and transferring securities.

56 Register of securities.

57 Particulars of register.

58 Production of register.

59 Extracts of register.

B-CORPORATE RESPONSIBILITY OF PUBLIC COMPANIES

60 Filing of annual and periodic reports with the Commission.

61 System of internal control of public companies.

62 Auditors of public companies to register with the Commission.

63 Duty of auditor to report on internal controls of public companies

64 Disclosure of quarterly earning forecasts by listed public companies.

65 Penalties for contravention of sections 60, 61, 62, 63 and 64.

C-IN GENERAL

66 Contravention of part VIII by bodies corporate.

PART IX:

PUBLIC OFFER AND SALE OF SECURITIES AND INVITATIONS TO THE PUBLIC

67 Control of invitations to the public.

68 Invitation to the public to deposit money by public companies.

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69 Meaning of "invitation to the public"

70 Offers for sale deemed to be made by the company.

71 Form of application for shares to be issued with prospectus.

72 Effective date of a prospectus.

73 Contents of a prospectus.

74 Exemption from application of provisions relating to prospectus in certain cases.

75 Prohibition of issuance, circulation, etc of certain notices, circulars and advertisements.

76 Exemption certificate and effect.

77 Expert's statement on prospectus.

78 Prospectus on invitation to the public to acquire or dispose of securities.

79 General and restricted invitations to the public.

80 Registration of prospectus.

81 Contract in prospectus, etc., not to be varied without leave.

82 Document with offer of securities for sale to be deemed a prospectus.

83 Interpretation as to prospectus statements.

84 Form of statement in lieu of prospectus.

85 Civil liability for mis-statements in prospectus.

86 Criminal liability for mis-statement in prospectus.

87 Criminal liability in respect of statements in lieu of prospectus.

88 Allotment of securities.

89 Opening of subscription lists.

90 No allotment unless minimum subscription received.

91 Application monies to be held in trust until allotment.

92 Prohibition of allotment in certain cases.

93 Effect of irregular allotment.

94 Action for rescission.

95 Allotment of securities and dealing on securities exchange, etc.

96 Return of surplus monies to subscribers, etc.

PART X:

CONDUCT OF SECURITIES BUSINESS

97 Prohibition of certain cash transactions.

98 Securities dealer to issue Contract notes.

99 Contents of contract notes.

100 Disclosure of certain interests in securities by securities dealers, etc.

101 Dealing as principal.

102 Dealings by employees of securities dealers.

103 Securities dealers to give priority to client's orders.

104 Securities lending and margin requirements.

PART XI:

TRADING IN SECURITIES

105 False trading and market rigging transactions.

106 Securities market manipulation.

107 False or misleading statements.

108 Fraudulently inducing persons to deal in securities.

109 Dissemination of illegal information.

110 Prohibition of fraudulent means.

111 Prohibition of dealing in securities by insiders.

112 Abuse of information obtained in official capacity.

113 Actions not prohibited by sections 111 and 112 as dealings in securities by insiders.

114 Effect of contravention.

115 Criminal liability under this part.

116 Compensation to be determined by the Commission or Tribunal.

PART XII:

MERGERS, TAKE-OVERS AND ACQUISITIONS

117 Meaning of certain words used in this part.

118 Extent of application of this part.

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119 Meaning of merger.

120 Thresholds and categories of mergers.

121 Consideration of mergers.

122 Small merger notification and implementation.

123 Notification and implementation of intermediate and large mergers.

124 Merger investigations.

125 Intermediate merger procedure before the Commission.

126 Large merger procedure before the Commission.

127 Revocation of merger approval.

128 Power to order the break-up of company.

129 Power to acquire shares of dissenting shareholder.

130 Right of a dissenting shareholder to compel acquisition of his shares.

131 Take over.

132 Take-over bid.

133 Person making a take-over bid.

134 Authority to proceed with take-over bid.

135 Registration of copy of proposed bid.

136 Requirements as to bid under take-over bid.

137 Corporation making take-over bid.

138 Despatch of bid to shareholders, etc.

139 Arrangement for funds.

140 Directors' circular.

141 Inclusion of expert's opinion in a bid.

142 Bid for all shares.

143 Bid for less than all shares.

144 Provisions applicable to every bid.

145 Duty of the Commission in relation to certain instruments.

146 Acquisition of shares of dissenting shareholders.

147 Procedure where dissenting offeree makes election.

148 Duties of offeree company.

149 General provisions as to payment.

150 Rights of remaining shareholders.

151 Offences in relation to take-over bids.

PART XIII:

A-GENERAL

COLLECTIVE INVESTMENT SCHEMES

152 Definition of certain words used in this Part.

153 Meaning of collective investment scheme, etc.

154 Types of collective investment scheme. Cap 59.

155 Principles for the administration of the scheme.

156 Disclosure of Information.

157 Duties of manager of a scheme.

158 Requirements for administration of collective investment schemes.

159 Prohibition of misleading names and acts.

160 Authorisation of collective investment scheme.

161 Registration of units or securities of a scheme.

162 Alteration of trust deed, custodial agreement or change of name of scheme to be approved by the Commission.

163 Revocation of authorisation of scheme.

164 Approval of prospectus and other offer documents on scheme.

165 Civil liabilities arising from prospectus.

166 Redemption of units or securities.

167 Prohibition of certain transactions and profits by manager under a scheme.

168 Liability of trustees and custodian under a scheme.

169 Audit of accounts of a scheme and annual general meetings.

170 Determination of market price of units or securities.

171 Investment of a collective investment scheme.

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172 Inspection and investigation.

173 Powers of the Commission after an investigation.

174 Cancellation or suspension of registration of a manager.

175 Commission may object to publication or distribution of misleading, objectionable, etc. documents.

176 Power of Commission to request audit.

177 Declaration of certain practices as irregular or undesirable.

178 Appointment and termination of appointment of trustee or custodian.

179 Qualification and registration of trustee or custodian.

180 Suspension or revocation of the registration of trustee or custodian.

181 Duties of trustee or custodian.

182 Status of assets.

183 Liability of trustee or custodian in respect of loss of assets.

184 Appointment and removal of auditor.

185 Duty of auditor to disclose irregularity or undesirable practice.

186 Power to make regulations on the constitution and management of collective investment schemes.

187 Alteration of schemes and change of manager, trustee or custodian.

188 Restriction on activities of managers.

189 Publication of scheme particulars.

190 Power of intervention.

191 Representation against directive or its revocation.

192 Open-ended investment company.

193 Real estate investment companies or trusts.

194 Registration of real estate investment company.

195 Foreign collective investment schemes.

196 Supplemental investigations.

PART XIV:

INVESTORS PROTECTION FUND

197 Establishment of an investors protection fund.

198 Objectives of an investor protection fund.

199 Composition and tenure of the board of trustees.

200 Removal from the board of trustees.

201 Powers of the board of trustees.

202 Monies constituting the investor protection fund.

203 Fund to be kept in separate bank account.

204 Payments out of the investor protection fund.

205 Accounts of an investor protection fund.

206 Power of the board of trustees to delegate functions to its management subcommittee.

207 Minimum amount in the investor protection fund.

208 Protection of the investor protection fund in the event of any reduction.

209 Levy to meet liabilities.

210 Power of a securities exchange or capital trade point to make advance to an investor protection fund.

211 Investment of the funds of an investor protection fund.

212 Application of the investor protection fund.

213 Claims against an investor protection fund.

214 Notice calling for claims against the investor protection fund.

215 Power to settle claims.

216 Form of order of the Tribunal.

217 Power to require production of evidence.

218 Subrogation.

219 Application of insurance money.

220 Penalty for contravention.

221 Interpretation.

PART XV:

BORROWING BY FEDERAL, STATE, AND LOCAL GOVERNMENTS AND THEIR AGENCIES.

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222 Bodies to which this Part applies.

223 Issue of registered bonds or promissory notes.

224 Restriction on raising of funds from the capital market.

225 Loans to be charged upon revenue:

226 Bodies to publish details of loans in the gazette or other official document.

227 Register of securities and appointment of registrar.

228 Appointment of issuing house.

229 Liability of a body in respect of issue of registered securities.

230 Bond holders to be registered.

231 Condition for registration of bond holders.

232 Bond certificate.

233 Transfer of registered bond.

234 Registration of transfer of bonds.

235 Registration of liens on bonds.

236 Closing of register.

237 Register to be conclusive.

238 Promissory notes.

239 Manner and effect of endorsement.

240 Rights of survivorship.

241 Registered bonds.

242 Appropriation of revenue.

243 Payment of interest.

244 Payments.

245 Appointment of trustees.

246 Powers of trustees.

247 Trustee may be interested party.

248 Power to appoint new trustees.

249 Waiver by trustees.

250 Appropriation of revenue for sinking fund.

251 Separate sinking fund.

252 Investment of sinking fund.

253 Cessation of contribution to sinking fund.

254 Expenses to be paid out of sinking fund.

255 Deficiency in fund to be charged upon revenue.

256 Payment into sinking fund in case of default by a body.

257 Issue of duplicate and renewal of bonds certificate and promissory notes.

258 Right of registrar to compel application to issue renewal of promissory notes.

259 Consolidation and subdivision of bonds and securities.

260 Indemnity bond.

261 Immediate discharge in certain cases.

262 Discharge in other cases.

263 Summary procedure in special cases.

264 Signature to be printed on certificates.

265 Notice of trust not receivable except as provided.

266 Exemption from stamp duties.

267 Delegation of power.

268 Inspection of register and documents, etc.

269 Power to make rules and regulations under this part.

270 Requirements of securities exchanges, etc.

271 Binding obligation on successive governments or bodies.

272 Application of enactments.

273 Interpretation of certain words used in this part.

274 PART XVI:

ESTABLISHMENT, JURISDICTION, AUTHORITY AND PROCEDURE OF THE INVESTMENTS AND SECURITIES TRIBUNAL

275 Establishment of the Investments and Securities Tribunal.

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276 Composition of the Tribunal.

277 Term of office.

278 Disqualification of members of the Tribunal.

279 Resignation and removal.

280 Salaries, allowances and other conditions of service of members of the Tribunal.

281 Filling up of vacancies.

282 Chief Registrar to the Tribunal.

283 Other staff of the Tribunal, etc.

284 Jurisdiction of the Tribunal, etc.

285 Funds of the Tribunal.

286 Power to accept gift.

287 Account and audit.

288 Application of the funds of the Tribunal.

289 Appeals from decisions of the Commission.

290 Powers and procedures of the Tribunal.

291 Right to legal representation.

292 Onus of proof.

293 Judgment of the Tribunal.

294 Exclusion of proceedings.

295 Appeal to the Court of Appeal.

296 Costs.

297 Further appeals.

PART XVII:

MISCELLANEOUS

298 Power of Minister to issue directives.

299 Power to administer oath.

300 Delegation.

301 Right to represent Commission before court or Tribunal.

302 Protection of action taken in good faith.

303 Penalty.

304 Criminal prosecution.

305 Offences by companies and market participants.

306 Obligation of persons to disclose information connected with activities of their employer.

307 Change of name of capital market operators, managers, portfolio or collective investment scheme and change of shareholding or directors.

308 Removal of appointees.

309 Power to exempt.

310 Committees of the Commission.

311 Seal of the Commission.

312 Application and relevance of other laws not barred.

313 Rules and regulations.

314 Repeals and savings.

PART XVIII:

INTERPRETATION AND CITATION

315 Interpretation.

316 Citation.

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