SEC Proposes New Rule on Nominee Companies; Major and Sundry Amendments to Its Rules and Regulations

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Tuesday, August 07, 2018 /11:33 AM   /  SEC

New Rule

1.       Proposed Rules on Nominee Companies

Major Amendment

2.      Proposed amendment to Rules on Collective Investment Schemes Sundry Amendments

3.      Proposed amendment to the Rule 45 (Part C) – Registrable Functions

4.      Proposed amendment to Rule 51- Reports to be Filed/Schedule II (Penalties)

5.      Proposed amendment to Rule 57- Net Capital Requirement

6.      Proposed amendment to Rule 58- Determination of Net (Liquid) Capital

7.      Proposed amendment to Rule 125- Prohibition of Assignment

8.     Proposed creation of New Rule under Part C13- Right of Investor to appoint Custodian

9.      Proposed amendment to Rule 132- Use of Nominees

10.  Proposed amendment to Schedule I- Registration Fees, Minimum Capital Requirement, Securities & Others

Details of the proposals are as follows:

New Rule

Proposed Rules on Nominee Companies in the Nigerian Capital Market

1.      Definition of Terms

Nominee

A Nominee is a company formed by a bank or other financial institution for the purpose of holding securities and other assets and administering them on behalf of the actual owners under the terms of a custodial or nominee agreement.

Holding Company: Means a bank or other eligible financial institution that owns and controls a Nominee.

Client: Means a person who has entered into agreement with a Nominee to hold and manage its securities or other assets.

2. Business of the Nominee Companies

i. The business of the Nominee shall be to take title of property, money or securities in trust for and on behalf of clients as nominee for, or representative of such clients, to hold and deal with such property, money or securities strictly in accordance with any directions given by the respective clients from time to time to the Nominee.

ii. A nominee shall not engage in any business or activity except the business of nominee companies described above

3. Functions of Nominee

i.                    Maintaining accounts of securities of clients

ii.                 Collecting all rights and benefits on behalf of, or accruing to clients in respect of securities held

iii.               Managing the holding of clients including facilitating sale, purchase, lending and borrowing securities and settlement of investment obligations based on the clients’ mandates

iv.                ensuring compliance with contractual obligations with clients and custodians v. maintaining and reconciling records of the services referred to in sub-clauses (i) to (iv) above;

v.                  Maintaining sufficient information and record to identify the beneficial owners of securities held by it.

vi.                Providing periodic information to clients and custodians (where securities and other assets are transferred to the nominee by custodian).

4. Dealing with assets of clients

The Nominee shall deal with the assets that it holds on behalf of clients including custodians as follows:

a)     Securities

i)                   Securities as defined in the Investments and Securities Act (ISA) 2007 shall be registered in the name of the Nominee or in the name of Nominee and client

ii)                Securities shall be stored and held in safe and secure custody or electronically administered and maintained and shall be protected by adequate and appropriate security and administrative systems.

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