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Tuesday,
March 12, 2019 05:54 PM / SEC Nigeria
In 2008, the Securities and Exchange Commission (the
Commission), conducted an investigation on Big Treat Plc a public listed
company (1stRespondent) and its directors which revealed several
infractions of the Investments and Securities Act 2007 such
as inadequate internal control systems and a breakdown of corporate governance
in the company.
Based on the foregoing, and pursuant to the provisions
of Section
13 (v) of the ISA 2007, the Commission in 2010 approached the
Federal High Court seeking a number of reliefs against Big Treat Plc (1stRespondent),
three of its directors – Pamela Wu, Harries Wu, Steve Wu – and two entities
owned by them – New Frontier Engineering and Construction Company Ltd and
Skyone Group of Companies Ltd with a view to preserving the assets of the 1stRespondent.
In the course of the proceedings, the Commission
applied for and was granted an ex-parte order of interim injunction restraining
the 2nd– 6thRespondents, their agents, servants or
privies from obstructing the Commission in the exercise of its statutory
oversight responsibilities to the 1stRespondent including the
appointment of an interim management to take charge of the day to day
administration of the 1stRespondent with a view to preserving its
assets in the interest of its stakeholders pending the determination of the
Motion on Notice already filed in this suit.
However, the ex-parte order was subsequently vacated on the
grounds that the 1stRespondent (Big Treat Plc) “was not a capital
market operator amenable to the control and management of the appellant in
times of financial distress”.
The Commission appealed against the decision of the
Federal High Court and the sole issue for determination as raised by the
Commission before the Court of Appeal was “whether the lower court was right when it
held that the 1stRespondent (Big Treat PLC) is not a capital market
operator because it does not play any specific role in the capital market and
as such, not registerable or subject to the control of the Appellant (the
Commission)”.
The Court of Appeal in a judgement delivered on 31stJanuary 2019,
held thus;
“That the 1stRespondent,
an issuer of securities, having been duly registered with the Appellants and
was at all material times performing the specific function of issuing
securities in the capital market was subject to the intervention of the
statutory powers of the Appellant as the pinnacle regulatory authority for the
Nigerian capital market whose sole purpose is to ensure the protection of
investors and to maintain fair, efficient and transparent capital market as
well as reduction of systemic risk as stated in the preamble of the ISA- the
beacon light to the powers of the Appellant under the ISA.”
The Court of Appeal further held that;
“In conclusion, I most respectfully
hold that the court below should not have vacated the interim preservative
order made by it to protect the imminent collapse of the 1stRespondent
but the Appellant who at all material times was exercising statutory powers
under the ISA to stem the tide of decay in the internal management of the 1stRespondent…”
This judgment of the Court of Appeal reiterates the
Commission’s powers to intervene in the management and control of any public
company which is considered to have failed, is failing or is in crises.
The Commission is statutorily mandated as the apex regulator of the Nigerian
capital market to ensure the protection of investors and maintain a fair,
efficient and transparent market.
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