S. 1(1) of Investment and Securities Act (ISA) established the Securities and Exchange Commission. SEC is a body corporate with perpetual succession and common seal. It may sue and be sued in its corporate name. It has power to own property both movable and immovable. The chief executive officer is the Director-General with at least 15 years’ experience in capital market operations and accounting officers

Functions of the Securities and Exchange Commision - s. 13 ISA

  1. Regulate investment and securities business in Nigeria as defined in the ISA.
  2. Register and regulate securities exchanges, capital trade points (CTP) inter alia
  3. Regulate all offers of securities by public companies and entities
  4. Register securities of public companies
  5. Keep and maintain a register of foreign portfolio investments and foreign direct investment.
  6. Review, approve and regulate mergers, acquisition, takeovers and all forms of business combinations.
  7. Enter and seal up the premises of persons illegally carrying on capital market operations
  8. Conduct research into all or any aspect of the securities industries.
  9. Prevent fraudulent and unfair trade practices relating to the securities industry
  10. Advise the minister on the matters relating to the securities industry

Registration of professionals as Capital Market Operators/Consultants (CMO) or CMC

Registration by SEC is totally different from accreditation by CAC. See SEC v. Prof A.B. Kasunmu SAN (2009) 10 NWLR (Pt. 1150) 509.

To operate in the Nigerian capital market as a CMO/CMC, one must be registered by SEC. this is because section 38(1) of ISA provides that no person shall operate in the Nigerian capital market as an expert or professional or in any other capacity as may be determined by SEC; or carry on investment and securities business unless he is registered in accordance with ISA and the rules and regulations made thereunder.

Therefore, in exercise of its powers to register and regulate corporate and individual capital market operators under section 13(g) ISA, Rule 178(1) of SEC Rules 2013 provides that the following experts or professionals, whose opinions impact directly on capital market transactions are subject to registration by SEC:

  • Legal practitioners
  • Accountants
  • Auditors
  • Engineers
  • Estate valuers
  • Property managers
  • Any other expert or professional as may be determined by SEC from time to time

There are two categories of registration:

  • Registration of corporate bodies (companies) Rule 178(2)A
    Procedure:
    1. Submit an application for registration in Form SEC 3 with a receipt of payment of 5,000 Application fees.

  • Registration of firms and individuals carrying on business in their true names Rule 178(2)B

For corporate bodies, the requirements for the application for registration are listed under rule 178(2)A as follows:

  • Set of duly completed form SEC 3
  • Two sets of duly completed form SEC 2 to be filed by at least two sponsored individuals, one of whom shall be a principal partner
  • CV of the sponsored individuals including details of activities stated in order of time from secondary school till date
  • A copy of the certificate of incorporation of the company certified by the company secretary. Where an uncertified copy is filed, the applicant must present the original for sighting by an authorised officer of SEC
  • Profile of the company indicating past and present activities
  • Two copies of the MEMART certified by CAC
  • Signed copy of audited account or audited statement of affairs
  • Full postal address of immediate past employer of sponsored individuals
  • Sworn undertaken to keep proper records and render returns as may be specified by SEC from time to time
  • Evidence of minimum paid up capital of N5million. That is, bank statement of 3-6months of the applicant with minimum balance of N5million

For firms and person carrying on business in their true names, the requirements are under Rule 178(2)B as follows:

  • Duly completed form SEC 2
  • Certified copy of certificate of business name (where applicable)
  • CV of at least two officers (known as sponsored individuals) including details of activities arranged in order of time from secondary school till date
  • Profile of the firm, including details of past and present activities
  • A copy of the partnership deed (where applicable)
  • Full postal and electronic address of immediate past employer of sponsored individuals
  • Sworn undertaken to keep proper records and render returns as may be specified by SEC
  • Sworn statement that the provisions of the Act has been complied with.
  • Evidence of payment of practicing fees by sponsored individuals
  • Professional indemnity insurance
  • Evidence of minimum net worth of N2,000,000 for a firm, and 500,000 for an individual.

N.B AFTER THE APPLICATION HAS BEEN SUBMITTED, SEC HAS 60 DAYS TO CONSIDER THE APPLICATION. SEC CAN REFUSE AN APPLICATION BUT SEC WILL STATE THE GROUNDS FOR SUCH REFUSAL AND GIVE THE APPLICANT AT LEAST 14 DAYS FROM THE DATE OF THE NOTICE FOR THE APPLICANT TO COME AND MAKE REPRESENTATION TO SEC.
AFTER 14 DAYS, REASONS FOR THE DELAY TO MAKE REPRESENTATIONS MUST BE GIVEN.

SEC registers the following:
• Limited liability company - N5,000,000
• Firms - N2,000,000
• Individual - N500,000

SEC requires registration while CAC requires accreditation.