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SEC Proposes New Rule on Fixed Income and Equity Primary Issuance

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Wednesday, March 15, 2017/ 8:15 AM /SEC

a)     Proposed Fixed Income Primary Issuance Fees

b)     Proposed Equity Primary Issuance Fees

 

Sundry Amendments  

c)      Proposed amendment to Rule 314- Cost of Issue

d)     Proposed amendment to Rule 456 (f)- Rules on Obligations of the Custodian of a Collective Investment Scheme

e)     Proposed amendment to Schedule I of the Commission’s Rules and Regulations Registration Fees, Minimum Capital Requirements, Securities and Others

f)       Proposed amendment to Schedule VI- Basis of Computation of Bid and Offer Prices for Collective Investment Schemes

g)     Proposed amendment to Rule on Trading in Unlisted Securities- Inclusion of Debt Securities

A.    PROPOSED FIXED INCOME PRIMARY ISSUANCE FEES


 

B.  PROPOSED EQUITY PRIMARY ISSUANCE FEES


 

C.  PROPOSED AMENDMENT TO RULE 314- COST OF ISSUE

Existing Rule:

The total cost of issue shall not exceed 3.17% for equity transactions and 3.9375% for bonds of the gross total proceeds, excluding indemnity fee, advertisement, printing and take on fees for registrars, from the issue or such percentage as the Commission may prescribe from time to time. 

Proposed Amendment:

“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”.

 

D. PROPOSED AMENDMENT TO RULE 456 (F)- OBLIGATIONS OF THE CUSTODIAN OF A COLLECTIVE INVESTMENT SCHEME

Existing Rule 456 (f):  

The Custodian shall:

Be independent of a scheme’s fund manager, and not be affiliated to either of the parties.

Proposed amendment:  

Be independent of a scheme’s fund manager. 

 

E.    PROPOSED AMENDMENT TO SCHEDULE I OF THE COMMISSION’S   RULES AND REGULATIONS-REGISTRATION FEES, MINIMUM CAPITAL REQUIREMENTS, SECURITIES AND OTHERS

The following amendment is proposed to Schedule I to break up the Registration fee into 3 components:  Filing fees, Processing fees and Registration fees.

 


 

The following amendment is proposed to categorise market participants by registration threshold.

 


 

E.    PROPOSED AMENDMENT TO SCHEDULE VI-BASIS OF COMPUTATION OF BID AND OFFER PRICES FOR COLLECTIVE INVESTMENT SCHEMES

Existing Schedule VI:

The bid and offer prices of units in a collective investment scheme shall be based on the net asset value of the scheme calculated on a weekly basis by the scheme manager….

Proposed Amendment:

The bid and offer prices of units in an open-ended collective investment scheme shall be based on the net asset value of the scheme calculated on a daily basis by the scheme’s manager…     

 

 

Existing Note at end of Schedule VI:

Securities traded on a Stock Exchange or any regulated market will generally be valued at the last traded price quoted on the relevant exchange or market as at the date of computation.
  
If no trade is reported for that date or if the exchange was not open on that day, the last published sale price or the recorded bid price(whichever is more recent) shall be used.

Unlisted equity securities will be valued initially at cost and thereafter, as the Scheme’s Manager shall in its discretion deem appropriate.

Unlisted securities (other than equities), for which there is an ascertainable market value will be valued generally at the last known price dealt on the market on which the securities are traded on or before the day preceding the relevant date of valuation and unlisted securities (other than equities), for which there is no ascertainable market value, will be valued at cost plus interest (if any) accrued from purchase to (but excluding) the Valuation Date plus or minus the premium or discount (if any) from par value written off over the life of the security.

Any value otherwise than in Nigeria Naira shall be converted at the prevailing market exchange rate.

Proposed addition to Note at end of Schedule VI:
An addition to “Note” at the end of Schedule VI is proposed as follows:

Securities traded on a Stock Exchange or any regulated market will generally be valued at the last traded price quoted on the relevant exchange or market as at the date of computation.

If no trade is reported for that date or if the exchange was not open on that day, the last published sale price or the recorded bid price (whichever is more recent) shall be used.

Unlisted equity securities will be valued initially at cost and thereafter, as the Scheme’s Manager shall in its discretion deem appropriate. Unlisted securities (other than equities), for which there is an ascertainable market value will be valued generally at the last known price dealt on the market on which the securities are traded on or before the day preceding the relevant date of valuation and unlisted securities (other than equities), for which there is no ascertainable market value, will be valued at cost plus interest (if any) accrued from purchase to (but excluding) the Valuation Date plus or minus the premium or discount (if any) from par value written off over the life of the security.

Any value otherwise than in Nigeria Naira shall be converted at the prevailing market exchange rate. The closing unit price of Closed-ended funds shall be published on a daily basis on the fund manager’s website.

F.    PROPOSED AMENDMENT TO RULE ON TRADING IN UNLISTED SECURITIES-INCLUSION OF DEBT SECURITIES

Existing Rule (a):

All Securities of unlisted public companies shall be bought, sold or transferred only by means of a system approved by the Commission and under such terms and conditions as the Commission may prescribe from time to time.

Proposed amendment: 
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.

Proposed New sub-rule (b):

A new sub-rule (b) is proposed as follows: 

All debt securities issued in Nigeria by the Federal Government of Nigeria (“FGN”), Subnationals (State and Local Government), Supranational and Corporate entities, shall be bought, sold or transferred in the secondary market only through a SEC registered trading facility or Securities Exchange.

Proposed New sub-rule (c):

A new Rule (c) to include regulation of trading in foreign currency securities of Nigerian entities listed in other jurisdictions is proposed as follows:

All exchange of debt securities traded (including foreign currency securities of Nigerian entities listed in other jurisdictions like Eurodollar bonds) in the Nigerian capital market shall be executed on or reported to a SEC-registered Securities Exchange or trading facility.

Existing Sub-rule (b):

No person shall buy, sell or otherwise transfer securities of an unlisted public company except through the platform of a registered securities exchange established for the purpose of facilitating over-the-counter trading of securities.

Proposed amendment:

To be renumbered as Rule (d) and amended as follows:

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.

Existing sub-rule (c):
Any unlisted public company, director, company secretary, registrar, broker/dealer or such other persons who facilitates the buying, selling or transfers of the securities of an unlisted public company otherwise than through the platform of a registered securities exchange, 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 the infraction continues.

Proposed amendment

The existing Rule (c) as outlined above to be slightly amended and renumbered as Rule (e) to read as follows:

Any public unlisted company, director, company secretary, registrar, broker/dealer or such other persons who facilitate the buying, selling or 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.

 

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