Rules July 2017 Final For Execution 11 10 2017

SEC NIGERIA
NEW RULES AND SUNDRY AMENDMENTS TO THE RULES AND REGULATIONS OF THE COMMISSION Pursuant to Section 313 of the Investments and Securities Act, 2007, the following new Rules and sundry amendments are added/made to the Commission's Rules and Regulations.

NEW RULES
1. ASSET MANAGER CODE OF PROFESSIONAL CONDUCT
1.1 General Principles of Conduct
Managers have the following responsibilities to their clients. Managers must:
1. Act in a professional and ethical manner at all times.
2. Act for the benefit of clients.
3. Act with independence and objectivity.
4. Act with skill, competence, and diligence.
5. Communicate with clients in a timely and accurate manner.
6. Uphold the applicable rules governing capital markets.
1.2 CODE OF PROFESSIONAL CONDUCT
1.2.1 Obligation to clients
Managers must:
1. Place client interests before their own.
2. Preserve the confidentiality of information communicated by clients within the
scope of the Manager-client relationship.
3. Refuse to participate in any business relationship or accept any gift that could
reasonably be expected to affect their independence, objectivity, or loyalty to clients.
1.2.2 Investment Process and Actions
Managers must:
1. Use reasonable care and prudent judgment when managing client assets.
2. Not engage in practices designed to distort prices or artificially inflate trading
volume with the intent to mislead market participants.
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3. Deal fairly and objectively with all clients when providing investment information,
making investment recommendations, or taking investment action.
4. Have a reasonable and adequate basis for investment decisions.
5. When managing a portfolio or pooled fund according to a specific mandate,
strategy, or style:
a. Take only investment actions that are consistent with the stated objectives and constraints of that portfolio or fund. b. Provide adequate disclosures and information so investors can consider whether any proposed changes in the investment style or strategy meet their investment needs.
6. When managing separate accounts and before providing investment advice or
taking investment action on behalf of the client:
a. Evaluate and understand the client's investment objectives, tolerance for risk, time horizon, liquidity needs, financial constraints, any unique circumstances (including tax considerations, legal or regulatory constraints, etc.) and any other relevant information that would affect investment policy. b. Determine that an investment is suitable to a client's financial situation.
1.2.3 Trading
Managers must:
1. Not act or cause others to act on material non-public information that could
affect the value of a publicly traded investment.
2. Give priority to investments made on behalf of the client over those that benefit
the Managers' own interests.
3. Use commissions generated from client trades to pay for only investment-related
products or services that directly assist the Manager in its investment decision making process, and not in the management of the firm.
4. Maximize client portfolio value by seeking best execution for all client
transactions.
5. Establish policies to ensure fair and equitable trade allocation among client
accounts.
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1.2.4 Risk Management, Compliance and Support
Managers must:
1. Develop and maintain policies and procedures to ensure that their activities
comply with the provisions of this Code and all applicable legal and regulatory requirements.
2. Appoint a compliance officer responsible for administering the policies and
procedures and for investigating complaints regarding the conduct of the Manager or its personnel.
3. Ensure that portfolio information provided to clients by the Manager is accurate
and complete and arrange for independent third-party confirmation or review of such information.
4. sMaintain records for an appropriate period of time in an easily accessible
format.
5. Employ qualified staff and sufficient human and technological resources to
thoroughly investigate, analyze, implement, and monitor investment decisions and actions.
6. Establish a business-continuity plan to address disaster recovery or periodic
disruptions of the financial markets.
7. Establish a firm-wide risk management process that identifies, measures, and
manages the risk position of the Manager and its investments, including the sources, nature, and degree of risk exposure.
1.2.5 Performance and Valuation
Managers must:
1. Present performance information that is fair, accurate, relevant, timely, and
complete. Managers must not misrepresent the performance of individual portfolios or of their firm.
2. Use fair-market prices to value client holdings and apply, in good faith, methods
to determine the fair value of any securities for which no independent, third- party market quotation is readily available.
1.2.6 Disclosures
Managers must:
1. Communicate with clients on an ongoing and timely basis.
2. Ensure that disclosures are truthful, accurate, complete, and understandable and
are presented in a format that communicates the information effectively. SEC NIGERIA
3. Include any material facts when making disclosures or providing information to
clients regarding themselves, their personnel, investments, or the investment process.
4. Disclose the following:
a. Conflicts of interests generated by any relationships with brokers or other entities, other client accounts, fee structures, or other matters. b. Regulatory or disciplinary action taken against the Manager or its personnel related to professional conduct.
c. The investment process, including information regarding lock-up periods,
strategies, risk factors, and use of derivatives and leverage. d. Management fees and other investment costs charged to investors, including what costs are included in the fees and the methodologies for determining fees and costs. e. The amount of any soft or bundled commissions, the goods and/or services received in return, and how those goods and/or services benefit the client. f. The performance of clients' investments on a regular and timely basis. g. Valuation methods used to make investment decisions and value client holdings. h. Shareholder/unit holder voting policies.
i. Trade allocation policies.
j. Results of the review or audit of the fund or account. k. Significant personnel or organizational changes that have occurred at the Manager.
l. Risk management processes.
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2. FIXED INCOME PRIMARY ISSUANCE FEES
S/N
1.
COST CENTRE
SEC
2.
3.
4.
5.
6.
7.
8.
NSE
FMDQ Listing Fees
ISSUING HOUSE
CSCS
RECEIVING AGENT
STOCKBROKER
REGISTRARS
FEE RATES
1st N500 Mn @ 0.15%
Next N500 Mn @ 0.145%
Balance above N1 Bn @ 0.1425%
Companies already having Equity Listing @ 0% Companies not having Equity Listing @ 0.0375% States and Supra-nationals @ 0.05% @0.09% of issue size (N1Bn), ranging to @ 0.002% of issue size (> N200Bn) 1ST N1 Bn @ Max of 1.35% Next N1 Bn @ Max of 1.225% Balance above N2 Bn @Max of 1.15% @0.0075% of Offer Size Capped @ N5 Mn @0.25% of Offer size @0.13% of Offer size N30 (Existing Application) N40 (New Application) Take on fee of N1 Mn 9. 10. 11. SOLICITOR TO THE ISSUE SOLICITOR TO THE COMPANY REPORTING ACCOUNTANT 12. AUDITORS 13. TRUSTEES @0.05% of Offer size Subject to a cap of N10 Mn @0.01% of Offer size Subject to a cap of N5 Mn @0.05% of Offer size Subject to a min of N1 Mn Subject to a max of N7.5 Mn @0.01% of Offer size cap of N4 Mn Max of 0.035% of Offer size 14. UNDERWRITING 15. Cap of N5 Mn Max of 2.3% of Offer size PRINTING/ADVERTISEMENT/PUBLICITY/OTHER Max of 0.2% of Offer size EXPESNSES TOTAL Max of 2.293% (excluding underwriting commission and Registrars fee) SEC NIGERIA
3. EQUITY PRIMARY ISSUANCE FEES
S/NO
1.
COST CENTRE
SEC
2.
NSE
3.
ISSUING HOUSE
RECEIVING AGENT
4.
CSCS
5.
6.
STOCKBROKER
7.
REGISTRARS
FEE RATES
1st N500 Mn @ 0.275%
Next N500 Mn @ 0.225%
Balance above N1Bn @ 0.15%
Main Board - Listing Fees – 0.25% of Offer size subject to maximum fee of N200m Premium Board Listing Fees – 0.25% of Offer size subject to maximum fee of N400m ASEM – flat Fee of N100,000.00 1st N1Bn @ 1.35% Next N1Bn @ 1.225% Balance over N2Bn @ 1.15% At 0.0075% of offer size capped @ N5Mn @0.50% of offer size 0.13% of offer size N30 (Existing Application) 8. SOLICITOR TO THE ISSUE 9. SOLICITOR TO THE COMPANY 10. 11. 12. 13. REPORTING ACCOUNTANT AUDITORS UNDERWRITING N40 (New Application) Take on fee @ N1m 0.05% of offer size Subject to a min of N1Mn Capped at N10Mn At 0.01% of offer size Subject to N500,000 Capped at N5Mn 0.05% of offer size Subject to a min of N1Mn and a max of N7.5Mn At 0.01% of offer size capped @ N4Mn Max of 2.3% of offer size PEINTING/ADVERTISEMENT/PUBLICITY/OTHER | Max of 0.2% of offer size EXPENSES TOTAL Max of 2.833% (excluding underwriting commission and Registrars fee) 4. SEC NIGERIA SUNDRY AMENDMENTS LEGEND • •

• Provisions in strikethrough signify deletions
  Provisions in Bold letters signify additions Provision followed by .... signify preceding content
  1. Rule 56 (1) - Functions of Brokers
  Registered brokers shall have the following functions amongst others- .......
  (b) other services ancillary to (a) above (b) providing technology platform for clients to trade under clients account; (c) disclose to the Commission any dealings in a security valued at a minimum of N50 million 500,000 units executed in a single deal or in multiple deals on the same day on behalf of his clients; (d) providing investment advice to clients; (e) publishing investment research; (f) report any suspected market manipulation or insider dealing to the Commission within 48 hours.
  2. Rule 67 - SUB-BROKER; Registration Requirements
  An application for registration as sub-broker shall be filed on Form SEC 2C as contained in schedule III to these rules and regulations and accompanied by (d) copy of Return on allotment and particulars of Directors (Forms CO2 and CO7) certified by the Corporate Affairs Commission; (j) evidence of minimum paid-up capital of N10 million; SEC NIGERIA (k) letter of recommendation and undertaking signed by the sponsoring Broker/Dealer on behalf of the Sub-Broker . (n) any other information or document that may berequired by the Commission from time to time (n) operational manual and organizational chart; (o) any other information or document that may be required by the Commission from time to time Rule 67 (2) Individual Sub-Broker(Deleted) ) An application for registration as an individual sub broker shall be filed on Form SEC 2 as provided in schedule III of these rules and regulations and shall be accompanied by the following:
  (i) Certified copy of certificate of registration of business name (where applicable); (ii) Evidence of minimum net worth of N500,000; (iii) Sworn undertaking to comply with the provisions of the Act and the rules and regulations as may be required from time to time by the Commission; (iv) Evidence of compliance with rule 20(4); (v) Sworn undertaking to keep proper records and render returns. denial (b) Rule 83(3) and (4) shall, with all necessary modifications, apply in case of d or suspension of registration of a sub broker.
  4. Rule 84 – Functions of Issuing House
  Issuing houses shall have the following functions amongst others:- SEC NIGERIA (1) providing financial advisory services for schemes and issuance of securities under the relevant provisions of the Act, CAMA or any other law; (2) acting as agent of issuer for purposes of issuances of securities and schemes under the relevant provisions of the Act, CAMA or any other law; (3) coordinating activities of other professionals and parties to an issue or scheme; (4) preparing the registration statement, the prospectus, the scheme document or any and other transaction documents; (5) Any other roles ancillary to the above (5) underwriting issuance of securities (6) sponsoring issuers of publicly offered/privately placed fixed income securities including bonds (sovereign, agency, sub-national, corporate and supranational), asset-backed or mortgage-backed securities and mutual funds for listing on a recognized Exchange. (7) any other roles ancillary to any of the above
  5. Rule 88 (1) Registration Requirements
  Where a corporate body not registered as an issuing house intends to be registered as an Underwriter, it shall file FORM S.E.C 3 as contained in schedule III to these Rules and Regulations and shall be accompanied by
  6. Rule 89 (1) – UNDERWRITERS; Eligibility
  No person, other than an Issuing House, may act as underwriter in any public issue of securities unless such a person is registered by the Commission to perform the function. SEC NIGERIA
  7. Rule 89 (2)
  The following may be registered as underwriters— (a) banks; (b) issuing houses (b) insurance companies; (c) any other person as may be determined by the Commission from time to time.
  8. Rule 92 – Functions of Fund/Portfolio Managers;
  Fund/portfolio managers may perform the following functions amongst others- ....
  (2) selection of securities for the fund/portfolio in exercise of a discretionary mandate;
  9. Rule 178 (1) – Capital Market Experts Or Professionals; Registration
  Requirements
  (1) The following experts/professionals whose opinion impact directly on capital market transactions are subject to registration by the Commission:
  a) legal practitioners; b) accountants; e) auditors; d) c) engineers; e) estate valuers; f) d) property managers g) e) any other expert/professional that may be determined by the Commission 10. from time to time. Rule 179 – REPORTING ACCOUNTANTS The Reporting Accountant to an entity cannot act as Auditor to that same entity or affiliated entity. 11. Rule 181 – ESTATE SURVEYORS SEC NIGERIA Estate Surveyors and Valuers 181(4) The estate valuer to an entity cannot act as property manager to that same entity or affiliated entity.
  12. RULE ON TRADING IN UNLISTED SECURITIES – INCLUSION OF DEBT
  SECURITIES
  1. (a) All securities of public unlisted companies shall be bought, sold or
  transferred only by means of a system approved by the Commission and under such terms as the Commission may prescribe from time to time.
  2. (b) All debt securities issued in Nigeria, i.e. issued by the Federal
  Government of Nigeria (“FGN”), Subnationals (State and Local Government), Supranational and Public Companies, shall be bought, sold or transferred in the secondary market only through a SEC registered trading facility or Securities Exchange.
  3. (c) All exchange of debt securities traded (including foreign currency
  securities of Nigerian entities listed in other jurisdictions e.g. Eurodollar bonds) in the Nigerian capital market shall be executed on or reported to a SEC-registered Securities Exchange or trading facility.
  4. (b) (d) No person shall buy, sell or otherwise transfer securities of a public
  unlisted company or government agency except through the platform of a SEC-registered securities exchange or trading facility established for the purpose of facilitating over-the-counter trading of securities.
  5. (e) (e) Any public unlisted company, director, company secretary, registrar,
  broker/dealer or such other persons who facilitate the buying, selling or SEC NIGERIA transfer of the securities of a public unlisted company or government agency otherwise than through the platform of a SEC- registered securities exchange or trading facility shall be liable to a penalty of not less than N100,000 in the first instance and not more than N5,000 for every day of default.
  13. RULES ON REGISTRATION OF ALL CAPITAL MARKET OPERATORS WITH
  RELEVANT TRADE GROUPS/ASSOCIATIONS
  Rule 25: Self Regulatory Organizations/Trade Associations (1) Membership (1) (a) Every person registered to perform any function in the market shall be a member of an SRO or a Trade Association relevant to its function (2) (b) A broker or dealer shall be a member of an association of securities dealers to effect transactions in an over-the-counter (OTC) market (3) (c) Where the broker dealer effects transactions on any exchange and over- the-counter market, the appropriate self-regulatory organization shall be the exchange(s) and the association of the relevant over-the-counter (OTC) market (2) Registration All Trade Associations whose members have been registered to perform any capital market function shall be registered with the Commission. 14. RULE 35 (7)- CHANGE OF STATUS OF REGISTRANT Any person who fails to comply with the provisions of this regulation shall be liable to a late filing fee of N500 for every day that the default subsists and shall have its registration summarily suspended if the period of default exceeds ninety (90) days. SEC NIGERIA 15. 16. (1) 35(7) (a) Any person who fails to comply with the provisions of this regulation shall be liable to a minimum penalty of N20, 000.00 and a further sum of not more than N5, 000.00 for every day that the default subsists. 35(7)(b) Such person shall have their registration suspended if the period of default exceeds 90 days. RULE 314- COST OF ISSUE The total cost of issue shall not exceed 2.833% for equity and 2.293% for bonds of the total gross proceeds excluding underwriting commission and registrars' fees from the issue or such percentage of the gross total proceeds as the Commission may prescribe from time to time RULE 420- RULE ON GLOBAL DEPOSITORY RECEIPTS Depository Receipts This Rule shall apply to sponsored and unsponsored Global Depository Receipts representing ownership of securities issued by Nigerian entities and such other Depository Receipts representing ownership of securities issued by foreign entities which are tradable on the international capital markets; (2) Rule 420 (1) – Definitions