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Investments and Securities Decree

No 45 of  1999

Laws of the Federation of Nigeria

 

 

26th Ma y 1999

 

The Federal Military Government here by decrees as follows:

 

 

 

Part I

Establishment of the Securities and Exchange Commission

 

 

1.     (1)     There is hereby established a body to be known as Establishment the Securities and Exchange Commission (in this Decree referred to as "the Commission ").

 

(2)     The Commission -

 

(a)     shall be a body corporate with perpetual succession and a common seal;

 

(b)     may sue and he sued in its corporate name; and

 

(c)     may acquire, hold or dispose of any property, movable or immovable for the purpose of carrying out any of its functions under this Decree.

 

(3)     The headquarters of the Commission shall he situated in the Federal Capital Territory, Abuja, and the Commission may, with the approval of the Minister, establish zonal offices of the Commission in any State of the Federation.

 

2.     (1)     The Commission shall consist of -

(a)     a Chairman;

 

(b)     One person not below the rank of Director to represent the Ministry;

 

(c)     one person not below the rank of Director to represent the Central Bank of Nigeria;

 

(d)     two full time Commissioners who shall be persons with ability, experience and specialised knowledge in Capital market matters;

 

(e)     the Director-General of the Commission; and

 

(f)     five other Commissioners who shall be persons with proven ability and expertise in corporate matters generally.

 

(2)     The Chairman and the Commissioners referred to in paragraphs (d) and (e) of subsection (1) shall be appointed by the Head of State, Commander-in-Chief of the Armed Forces on the recommendation of the Minister.

 

(3)     The members of the Commission, other than the Director-General and the two full time Commissioners, shall be part-time members of the Commission.

 

(4)     The supplementary provisions set out in the First Schedule to this Decree shall have effect with respect to the proceedings of the Commission and the other matters contained therein.

 

3.    (l)     The two full time Commissioners shall hold office in the first instance for a term of four years and may be re-appointed for a further term of four years and no more.

 

(2)    The part-time Commissioners (other than the ex-officio Commissioners) shall each hold office for a term of three to five years and no more.

 

4.    (l)     A Commissioner shall cease to hold office if -

 

(a)     he becomes of unsound mind;

 

(b)     he becomes bankrupt or he makes a compromise with his creditors; or

 

(c)     he is convicted of a felony or any offence involving dishonesty; or

 

(d)     he is guilty of serious misconduct in relation to his duties; or

 

(e)     in the case of a person who has a professional qualification, he is disqualified or suspended (other than at his own request) from practising his profession in any part of Nigeria by the order of any competent authority made in respect of him personally.

 

5.     Members of the Commission appointed under subsection (1)(a) and (e) of section 2 of this Decree shall be paid such remuneration and allowances as the Head of State, Commander-in-Chief of the Armed Forces may, after consultation with the Minister, from time to time, direct.

 

6.    (1)     A member of the Commission who is directly or indirectly interested in -

 

(a)     the affairs of any company or enterprise, deliberated upon by the Commission; or

 

(b)     any contract made or proposed to be made by the Commission

 

shall, as soon as possible after the relevant facts have come to his knowledge disclose the nature of his interest to the Commission at a meeting of the Commission.

 

(2)     A disclosure made under subsection (1) of this section shall be recorded in the minutes of the Commission and the member shall -

 

(a)     not, after the disclosure, take part in any deliberation or decision of the Commission with regard to the subject mailer m respect of which his interest is so disclosed;

 

(b)     be excluded for the purpose of constituting a quorum of the Commission for any deliberation or decision on the subject 'matter.

 

7.     The members of the Commission shall subscribe to and be bound by a Code of Ethics to be approved by the Minister for the Commission.

 

 

 

Part II

Functions and Powers of the Commission

 

 

8.     The Commission shall -

 

(a)     regulate investment and securities business in Nigeria as defined in this Decree;

 

(b)     register and regulate Securities Exchanges, Capital, Trade Points, Futures, Options and Derivatives Exchanges, Commodity Exchanges and any other recognized Investment Exchanges;

 

(c)     register securities to be offered for subscription or sale to the public;

 

(d)     render assistance in all aspects including funding as may be deemed necessary to promoters and investors wishing to establish Securities Exchanges and Capital Trade Points;

 

(e)     prepare adequate guidelines and organise training programmes and disseminate information necessary for the establishment of Securities Exchanges and Capital Trade Points;

 

(f)     register and regulate corporate and individual capital market operators as defined in section 30 of this Decree;

 

(g)     register and regulate the workings of venture capital funds and collective investments schemes including mutual funds;

 

(h)     facilitate the establishment of a nationwide system for securities trading in the Nigerian capital market in order t protect investors and maintain fair and orderly markets;

 

(i)     facilitate the linking of all markets in securities through modern communication and data processing facilities order to foster efficiency, enhance competition, and increase the information available to brokers, dealers and investors;

 

(j)     act in the public interest having regard to the protection of investors and the maintenance of fair and orderly markets and to this end to establish a nationwide trust scheme to Compensate investors whose losses are not covered under the investors protection funds administered by Securities Exchanges and Capital Trade Points;

 

(k)     keep and maintain separate registers of foreign direct investments and foreign portfolio investments;

 

(1)     register and regulate central depository companies and clearing and settlement companies, custodians of securities, credit rating agencies and such other agencies and intermediaries;

 

(m)     protect the integrity of the securities market against abuses arising from the practice of insider trading;

 

(n)     act as a regulatory apex organisation for the Nigerian Capital market including the promotion and registration of self-regulatory organisations and capital market trade associations to which it may delegate its powers;

 

(o)     review, approve and regulate mergers, acquisitions and 41 forms of business combinations;

 

(p)     promote investors' education and the training of all Categories of intermediaries in the securities industry;

 

(q)     call for information from and undertake, inspect, conduct inquiries and audits of the Securities Exchanges, Unit Trusts, Mutual Funds, Capital Trade Points, Futures, Options And Derivatives Exchanges as well as other intermediaries and Self-regulatory Organisations in the securities industry;

 

(r)     call for or furnish to any agency such may be considered necessary by it for discharge of its functions;

 

(s)     levy fees or other charges on any person for carrying Out investment and securities business in Nigeria;

 

(t)     conduct research into all or any aspect of the securities industry;

 

(u)     prevent fraudulent and unfair trade practices relating to the securities industry;

 

(v)     advice the Minister on dl matters' relating to the securities industry;

 

(w)     disqualify unfit individuals from being employed anywhere in the securities industry;

 

(x)     liaise effectively with the regulators and supervisors of other financial institutions locally and overseas;

 

(y)    perform such other functions and exercise such other powers not inconsistent with this Decree as are necessary or expedient for giving full effect to the provisions of this Decree.

 

9.     That Commission shall, establish specialized departments for the purpose of regulating -

 

(a)     Securities Exchanges, including Stock Exchanges, Capital Trade Point, Futures, Options and Commodities Exchanges and such other securities organizations;

 

(b)     capital market Operators including corporate members securities exchange and individuals, professionals firms that is, accountants, solicitors, surveyors, engineers and other professionals who undertake investment business either as investment advisers or consultants;

 

(c)     collective investments including all collective investment schemes such as unit trusts, Esusu schemes, pension funds and such other schemes; and

 

(d)     mergers, acquisitions, take-overs and other forms C business combinations under this Decree.

 

 

 

Part III

Staff

 

 

10.    (1)     There shall be, for the Commission, a Director-General who shall -

 

(a)     be appointed by the Head of State, Commander-in-Chief of the Armed Forces;

 

(b)     hold office for a period of 5 years in the first instance and may be appointed for a further period of five years and no more, on such terms and conditions ns are contained in his lener of appointment; and

 

(c)     be he chief executive of the Commission.

 

(2)     The Director-General shall, subject to the general control of the Commission, be -

 

(a)     responsible for keeping proper records of the proceedings of the Commission; and

 

(b)     the head of the secretariat and be responsible for -

 

(i)     the day-to-day administration, and

 

(ii)     the direction and control of all other employees, 

 

of the Commission.

 

11.   (1)     There shall he for the Commission a Secretary rd such other employees as the Commission may deem necessary for the efficient performance of its functions under or pursuant to this Decree.

 

(2)     The remuneration (including allowances) and terms and conditions of service of employees of the Commission shall be as may be determined by the Commission

 

(3)     For the purposes of the application of the Pensions Act, any power exercisable under the Act by the Minister or authority of the Federal Government (not being the power to make regulations under section 23 thereof) is hereby vested in the Commission and not in any other person or

 

(4)     Subject to subsection (2) of this section, the Pensions Act shall in its application by virtue of subsection (3) of this section to any office, have effect as if the office were in the civil service of the Federation within the meaning of the Constitution of the Federal Republic of Nigeria 1979.

 

12.  (1)     Service in the Commission shall be approved service for the purpose of the Pensions Act, and accordingly, an officer and other persons employed in the Commission shall, in respect of their service in the Commission, be entitled to pensions, gratuities and other retirement benefits enjoyed by persons holding equivalent grades in the public service of the Federation.

 

(2)     Nothing in this section shall prevent the appointment of a person to any office on terms which preclude the grant of a pension and gratuity in respect of that office.

 

 

Part IV

Financial Provisions

 

 

13.   (1)     The Commission shall establish and maintain a fund which shall be applied towards the discharge of its functions under this Decree.

 

(2)     There shall be paid and credited to the fund establish pursuant to subsection (1) of this section, such sums as may b provided by the Federal Government for the Commission;

 

14.   (1)     The Commission may accept gifts of land, money C other testamentary dispositions, endowments and contribution on such terms and conditions, if any, as may be specified by the person or organisation making the gift.

 

(2)     The Commission' shall not accept any gift if the conditions attached by the person or organisation making the gift are inconsistent with the functions of the Commission.

 

15.   (1)     The Commission shall be entitled to charge, retain and utilise for its purposes, fees collected for die services render by the Commission under this Decree.

 

(2)     All cash gifts and such other dispositions accruing to the Commission under subsection (1) of section 14 of this Decree shall be paid into the Consolidated Revenue Fund of the Federation quarterly in arrears on the 15th of April, July, October and January of each year.

 

16.   (1)     The Commission may, with the consent or in accordance with any specific authority given by the Minister, borrow by way of loan or overdraft such specified amount of money as may be required by the Commission for meeting its obligations and discharging its functions under this Decree.

 

(2)     The Commission may, subject to the provisions of this Decree and the conditions of any trust created in respect of any property, invest all or any of its funds.

 

(3)     The Commission may invest any of its surplus funds in securities prescribed by the Trustee Investments Act or in such other securities as may, from time to time, be approved by the Minister.

 

(4)    Subject to the provisions of the Land Use Act, and any special or general direction which the Minister may give in that behalf, the Commission may acquire any land required for its purpose under this Decree.

 

17.     The Commission may, from time to time, apply the proceeds of the Fund established in pursuance of section 13 of this Decree to -

 

(a)     meet the cost of administration of the Commission;

 

(b)     re-imburse members of the Commission or any committee set up by the Commission for expenses authorised or appr6ved by the Commission in accordance with such rates as 'may be approved in that behalf by the Minister;

 

(c)     the payment of salaries, fees or other remuneration or allowances, pensions and gratuities payable to the employees of the Commission;

 

(d)     the maintenance of any property acquired by or veste in the Commission; and

 

(e)     all or any of the functions of the Commission under this Decree or any matter connected with those functions.

 

18.   (1)     The commission §hall cause to be prepared not lat~ than 3Oth September in each year an estimate of the expenditure and income of the Commission during the next succeeding year and when prepared, they shall be submitted through the Minister to the Head of State, Commander-in-Chief of the Armed Forces for approval.

 

(2)     The Commission shall cause to be kept, proper accounts of the Commission and proper records in relation thereto and when certified by the Commission, the. accounts shall be audited by auditors appointed by the Commission from the list and in accordance with the guidelines supplied by the Auditor-General of the Federation.

 

19.    The Commission shall not later than 3 months before the end of each year, submit to the Minister a report on the activities and the administration of the Commission during the immediately preceding year and shall include in such reports, audited accounts of the Commission and the auditor's report on those accounts.

 

 

 

Part V

Registration of Securities Exchanges and Capital Trade Points

 

 

20.  (1)     No Securities Exchange or Capital Trade Point as defined in section 264 of this Decree shall commence operation unless it is registered with the Commission in accordance with the provisions of this Decree and the rules and regulations made thereunder.

 

(2)     An application for registration as a Securities Exchange or Capital Trade Point shall be made to the Commission in the prescribed form and in such manner as may be specified by the Commission, from time to time.

 

21.  (1)    The Commission may register a body corporate as a Securities Exchange or Capital Trade Point if it is satisfied that the rules of the body corporate make satisfactory provisions -

 

(a)     for the exclusion from its membership persons who are not of good character and who do not possess a high degree of business integrity;

 

(b)     for the expulsion, suspension or discipline of members for conduct inconsistent with just and equitable principles in the transaction of s6curities business or for a contravention of or failure to comply with the rules of the Securities Exchange or Capital Trade Point or the provisions of this Decree

 

(c)     with respect to the conditions under which securities may be listed for trading on that particular Securities Exchange or Capital Trade Point;

 

(d)     with respect to the conditions governing dealings in securities by members;

 

(e)     with respect to the class or classes of securities which may be dealt in by members;

 

(f)     with respect to a fair representation of persons in the selection of members of the Board of the Securities Exchange or Capital Trade Point and the administration of its affairs and provide that one or more members of the Board shall be representative of listed companies and investors; and

 

(g)     generally, for carrying on of the business of the Securities Exchange or Capital Trade Point in the interest of the public.

 

(2)     The Commission in granting its approval under this section shall ensure that the interest of the public will be served by the granting of its approval.

 

(3)     the Commission shall issue a certificate of registration to a body corporate registered by it under this section.

 

22.     The Commission may, with the approval of the Minister revoke the certificate of registration granted under section 21 of this Decree if -

 

(a)     the body corporate ceases to operate as a Securities Exchange or Capital Trade Point within the meaning of this Decree;

 

(b)     the body corporate is undergoing a process of being wound up; or

 

(c)     the body corporate is operating in a manner detrimental to the public interest.

 

23.  (1)     Where an amendment is made, whether by way of decision, amendment1 alteration or addition to the rules of a Securities Exchange or Capital Trade Point or the listing requirements of a Securities Exchange or Capital Trade Point, the Board of the Securities Exchange or Capital Trade Point shall forward a written notice of the amendment to the Commission for approval.

 

(2)    The Commission shall give notice in writing to the Exchange or Capital Trade Point concerned as to or not the Commission approves the whole or any part of the amendment in question, and until such notice the amendment shall be of no effect.

 

(3)     Nothing in this section shall preclude the Commission, after consultation with the Board of a Securities Exchange or Capital Trade Point, from amending the rules or the listing requirements of the Securities Exchange or Capital Trade Point by a notice in writing specifying the amendments and the dates those amendments shall come into force and have effect, but the Commission may dispense with such consultation if it considers it necessary to do so for the protection of investors.

 

(4)     Any notice under this section may be served personally or by registered post.

 

24.   Where a Securities Exchange or Capital Trade Point reprimands1 fines, suspends, expels or otherwise takes disciplinary action against a member of the Securities Exchange or Capital Trade Point the Securities Exchange or Capital Trade Point shall, within 7 days give to the Commission, in writing, the particulars and name of the member, the nature of and reason for the action taken, the amount of the fine, if any, and the period of the suspension, if any.

 

25.    (l)    The Commission may review any disciplinary action taken by a Securities Exchange or Capital Trade Point under subsection (1) of this section and may affirm or set aside a Securities Exchange or Capital Trade Point decision after giving the member and the securities Exchange or Capital Trade Point an opportunity of being heard.

 

(2)     Nothing in this section shall preclude the Commission in any case where a Securities Exchange or Capital Trade Point fails to act against a member, from suspending, expelling or otherwise causing disciplinary action to be taken against a member of the Securities Exchange or Capital Trade Point provided that the Commission shall give the member and the Securities Exchange or the Capital Trade Point an opp6rtunity of being heard.

 

(3)     Any person who is aggrieved by the decision of a Securities Exchange of Capital Trade Point or the Commission tinder this section may, within one month after he is notified of the decision, appeal to the Investment and Securities Tribunal established under section 225 of this Decree.

 

26.   (l)     The Commission may, where it is in the public interest, issue directives to a Securities Exchange or Capital Trade Point -

 

(a)     with respect to trading on or through the facilities of that Securities Exchange of Capital Trade Point pertaining to any security listed on that Securities Exchange or Capital Trade Point; or

 

(b)     with respect to the manner in which a Securities Exchange or Capital Trade Point carries on its business including the manner of reporting off-market purchases; or

 

(c)     with respect to any, 9ther matter which the Commission considers necessary for the effective administration of this Decree,

 

and the Securities Exchange or Capital Trade Point shall comply with the directives.

 

(2)     A Securities Exchange or Capital Trade Point which, without reasonable excuse, fails or refuses to comply with a directive given under subsection (l) of this section commit an offence and is liable on conviction to a fine of not less than N100,000 and a further fine of N5,000 for every day during which the non-compliance continues.

 

(3)     A Securities Exchange or Capital Trade Point which feels aggrieved by any directive of the Commission issued under subsection (1) of this section may appeal to the Investment and Securities Tribunal established under this Decree within 30 days of the date of the Commission's directive.

 

(4)     Where the Commission is satisfied that an executive officer of a Securities Exchange or Capital Trade Point -

 

(a)     has willfully contravened; or

 

(b)     has without reasonable justification or excuse,

 

failed to enforce compliance by a member of the Securities Exchange or Capital Trade Point with the provisions of this Decree or any regulations made thereunder or the rules of the Securities Exchange or Capital Trade Point, the Commission, may remove that executive officer.

 

(5)     The Commission may, in the public interest or for the protection of investors, and after giving the executive officer an opportunity of being heard, direct the Securities Exchange Capital Trade Point in writing to remove the executive officer, and where the Securities Exchange or Capital Trade Point fails to comply with the direction of the Commission under subsection (4) of this section, the Commission may rem6ve the executive officer from office.

 

27.    (1)   Where the Commission thinks it is necessary for the protection of persons buying or selling particular securities of or made available by a body corporate on a Securities Exchange or Capital Trade Point it shall in particular in the public interest prohibit trading in those securities and give notice in writing to the Securities Exchange or Capital Trade Point.

 

(2)     If, after receiving the notice given under subsection (1) of this section, the Securities Exchange or Capital Trade Point fails to take action to prevent trading in the securities to which the notice relates and the Commission still thinks it is necessary to prohibit trading in those securities the Commission may, by notice in writing to the Securities Exchange or Capital Trade Point, prohibit trading in those securities during such period, not exceeding 14 days, as may be specified in the notice.

 

(3)     Where the Commission gives notice to a Securities Exchange or Capital Trade Point under subsection (2) of this section it shall -

 

(a)     at the same time, send a copy of the notice corporate together with a statement setting out for giving the notice; and to the body the reasons

 

(b)    as soon as practicable not later than 30 days after giving the notice, submit to the Minister a written report setting out the reasons for the notice and shall send a copy of the report to the Securities Exchange or Capital Trade Point, as the case may be.

 

(4)     A body corporate affected by a notice given to a Securities Exchange or Capital Trade Point under subsection (2) of this section may request the Commission in writing to refer the matter to the Investment and Securities Tribunal established under this Decree for determination.

 

(5)     The Commission shall, on receiving a request under subsection. (4) of this section, forthwith refer the matter to the Investment and Securities Tribunal which may, vary or confirm the prohibition imposed by the Commission.

 

(6)     A Securities Exchange or Capital Trade Point which permits trading in securities in contravention of a notice under subsection (2) of this section commits an offence and is liable on conviction to a fine of N50,000 and to a further fine of N5,000 for every day during which the contravention continues.

 

28.     In this Part of this Decree -

 

"Securities Exchange" includes a Stock Exchange or an approved Securities Organisation such as Commodity Exchange, an Over the Counter Market, Metal Exchange, Petroleum Exchange, Options, Futures and Derivatives Exchanges and such other forms of securities organisations within the meaning of this Decree;

 

"trading in securities" means trading in securities on the floor of a Securities Exchange or Capital Trade Point.

 

 

 

Part VI

Registration of Capital Market Operators

 

 

29.    (1)     Subject to the provisions of subsection (2) of this of section, no securities dealer, stockbroker, sub-broker, jobber, share transfer agent, banker to an issue, market trustee of a trust deed, registrar to an issue, merchant banker, issuing houses, underwriter, operators portfolio manager, investment adviser and such other intermediaries associated with ft securities industry shall buy, sell or deal in securities except under and in accordance with the conditions of a certificate of registration obtained from the Commission in accordance with the regulation s made under this Decree.

 

(2)     A market operator who, immediately before the commencement of this Decree, is associated with the securities industry for which no registration certificate was necessary prior to this Decree, ma y continue to operate as such for a maximum period of three months from the commencement of this Decree or if he has applied for registration under this Decree, he shall continue to operate within that period till the disposal of the application and thereafter in accordance with the regulations made for registration under this Decree.

 

(3)     No depository, custodian of securities, foreign institutional investor, credit rating agency, or any other intermediary associated with the securities market shall buy, sell or engage in any securities transaction except under and in accordance with the conditions of a certificate of registration obtained from the Commission upon compliance with the regulations ma de under this Decree.

 

(4)     Subject to subsection (5) of this section, no person shall sponsor or cause to be sponsored or carry on or cause to be carried on any venture capital funds or collective investment scheme, including mutual funds, unless he owns a certificate of registration fro m the Commission in accordance with regulation s made under this Decree.

 

(5)     A person who, immediately before the commencement of this Decree sponsored or caused to be sponsored, carried or caused to be carried on any venture capital funds or collective investment scheme, including mutual' funds operating in the securities industry, may continue to operate within six months from the commencement of this Decree and thereafter in accordance with the regulations ma de for registration under this Decree.

 

(6)     An application for registration under this Part of this Decree shall be in such manner and upon payment of such fees as m ay be prescribed by the Commission from time to time.

 

(7)    The Commission may, by order, suspend or cancel a certificate of registration in such manner as may be prescribed but no order under this Subsection shall be made unless the person concerned has been given a reasonable opportunity of being heard.

 

30.     In this Part of this Decree -

 

"capital market operator" includes a securities dealer, a stock broker, sub-broker, jobber, share transfer agent, banker to an issue, trustee of a trust deed, registrar to an issue, merchant banker issuing houses, underwriter, portfolio manager, investment adviser and such other capital market intermediaries as may be licenced by the Commission in accordance with the regulations made under this Decree .

 

 

 

Part VII

Registration of Securities and Registers of Interests in Securities

 

 

34.     This Part of this Decree applies to a person who is -

 

(a)     a capital market operator as defined in section 30 of this Decree-,

 

(b)     a dealer ;

 

(c)     a dealer's representative;

 

(d)     an investment adviser;

 

(e)     an investment journalist;

 

(f)     a financial journalist,

 

(g)     an issuer;

 

(h)     a custodian;

 

(i)     a depository.

 

32.   (1)     No person shall transfer, issue, sell, offer for subscription or sale to the public, securities or investments as defined in this Decree unless such securities or investments are registered by the Commission an d prior approval for the transfer, issue, sale, offer for subscription or public offer for sale to the public has been granted by the Commission.

 

(2)     Securities registered by the Commission including those issued by the bodies to which Part XIII of this Decree applies, and any subdivision thereof, may be transferred electronically or by any other means or system approved by the Commission under such terms and conditions as the Commission may prescribe, to a Securities Exchange or Capital Trade Point or an y other se lf regulatory organization within the meaning of this Decree.

 

(3)     The Commission shall determine the documents and information to be provided by the issuer, an issuing house, stockbroker or any other person authorised by the Commission to offer securities for sale or subscription by the public.

 

(4)     A person who contravenes the provisions of this section of this Decree commits an offence and liable on conviction to a fine of N50,00 0 and to a further fine of N5,000 for every day during which the offence continues;

 

(5)     Where an offence under this Decree which is committed by a body corporate is proved to have been committed with the connivance of or attributable to any neglect on the part of a director, manager, secretary, or other similar officer, servant or agent of the body or any person purporting to act in any such capacity who knowingly and wilfully authorises the violation of this section, that director, manager, secretary or other similar officer, servant or agent of the body or other person is guilty of the offence and is liable on conviction to a fine of N50 ,000 o r to imprisonment for a term no t less than six months or to both such fine and imprisonment.

 

33.    (1)    A person to whom this Part of this Decree applies shall keep a register in the prescribed form of the securities in which he has an interest.

 

(2)     Particulars o f the securities in which a person to whom this Part of this Decree applies and particulars of his interest in those securities shall be entered in the register within 7 days of the acquisition o f the interest.

 

(3)     W here a change in securities (not being a prescribed change) occurs in the interest o f a person to who m this Part of this Decree applies, he shall, within 7 days after the change, enter in the register full particulars of the change, including the date of the change and the reason for the change.

 

(4)     For the purposes of this subsection, an acquisition or disposal of securities, shall be deemed to be a change in the interest of any person.

 

(5)     The Commission may by order extend the provisions of subsection (1) of this section to include any other person whose activities are connected with security transactions.

 

34.   (1)     A person to whom this Part of this Decree applies shall give notice to the Commission in the prescribed form of such particulars relating to the register as may be prescribed including the location of the register

 

(2)     The notice required to be given under subsection (1) of this section shall be given -

 

(a)     in the case of a person who is required by this Decree to hold a licence, on his application for the licence; and

 

(b)     in an y other ca se, within 14 day s after be coming a person to whom this Part of this Decree applies.

 

(3)     A person to whom this Part of this Decree applies shall, within 14 days of his ceasing to be such a person give to the Commission the notice require d under sub section (1) of this section and the notice of the cessation.

 

(4)     A person who fails or neglects to give the notice require d under this section commits an offence an d is liable on conviction to a fine not exceeding N100,000 .

 

35.   (1)     The Commission or any person authorised b y it in that behalf may require any person to whom this Part of this Decree applies to produce for inspection, the register required to be kept pursuant to section 33 of this Decree and the Commission or any person so authorise d may take extracts therefrom .

 

(2)    Any person who fails to produce a register for inspection or fails to allow any person authorised under subsection (1) of this section to make a copy o f or take ex tracts from the register commits an offence and is liable on conviction to a fine of no t less than N 100,000.

 

36.   This Commission may supply a copy of the extract of a register obtained under subsection (1) of section 35 of this Decree to any person who, in the opinion of the Commission, should in the public interest be informed of the dealings in securities disclosed in the register.

 

37.    (1)     A security dealer shall keep o r cause to be kept such accounting and other records -

 

(a)     as shall sufficiently explain the transactions and financial position of his business and enable true an d fair pro fit and loss accounts and balance -sheets to be prepared, fro m time to

time; and

 

(b)     in such a manner as to enable them to be conveniently and properly audited.

 

(2)     A security dealer shall be deem ed not to have com plied with subsection (1) of this section in relation to records unless the accounting an d other records -

 

(a)     are kept in sufficient detail to show particulars of -

 

(i)     all moneys received or paid by the security dealer, including moneys paid to or disburse d from a trust account.

 

(ii)     all purchases and sales of securities made by the security dealer, the charges and credits arising from them, and the names of the buyers and sellers, respectively of each of those securities,

 

(iii)     all income received from commission s, interest, and other sources, an d all expenses, commissions, and interest pa id by the security dealer,

 

(iv)     all the assets an d liabilities ( including contingent liabilities) of the security

dealer,

 

(v)     all securities which are the property of the security dealer showing by whom the securities or the documents of title to the securities are held and, where they are held by some other person, whether or not they are held as security against loans or advances ,

 

(vi)     all securities that are not the property of the security dealer and for which the dealer or any nominee controlled by the security dealer is accountable, showing by whom, and for whom, the securities or the documents of title to the securities are held an d the extent to which they a re either held for safe custody or deposited with a third party as security for loam o r advance s made to the security dealer,

 

(vii)     all purchases and sales of options made by the security dealer and all fees (being option s moneys ) arising from them,

 

(viii)     all arbitrage transactions entered into by the security dealer, and

 

(ix)     all underwriting transaction s entered into b y the security dealer;

 

(b)     are kept in sufficient detail to show separately particulars of every transaction by the security dealer;

 

(c)     specify the day o n which or the period during which each transaction by the security dealer took place; and

 

(d)     contain copies of acknowledgements of the receipt of securities or of documents of title to securities received by the security dealer from clients for sale or safe custody clearly showing the name or names in which the particular securities are registered.

 

(3)     Without prejudice to subsection (2) of this section, a security dealer shall keep re cords in sufficient detail to show separately particulars of all transactions by the security dealer with or for the account of -

 

(a)     clients of the security dealer;

 

(b)     the security dealer himself; and

 

(c)     employees of the security

 

(4)     A security dealer who contravenes or fails to comply with any of the provisions of this section commits an offence and is liable on conviction to a fine of not less than N50,000.

 

38.    (1)     A security dealer shall establish and keep in a bank or banks one or more trust accounts to be designated or evidenced as trust accounts, into which the dealer shall pay -

 

(a)     all amounts (less any brokerage and other proper charges) received from or on account of any person (other than a security dealer) for the purchase of securities which are not attributable to securities, delivered to the security dealer not later than the next banking business day following the day on they were received by the security dealer, and

 

(b)     all amounts (less any brokerage and other proper charges) received for or on account of any person (other than a security dealer) from the sale of securities which are not paid to that person or as that person directs not later than the next banking business day following the day on which they w ere received b y the dealer.

 

(2)    A security dealer who contravenes or fails to com ply with any of the provisions of sub section (1) of this section commits an offence and is liable on conviction to a fine of not less dm N50,000 or to imprisonment for a term not exceeding on e year or to both such fine and imprisonment.

 

39.   (1)     A security dealer who withdraws any moneys from a trust account except for the purpose of making a payment -

 

(a)     to the person entitled to the payment; or

 

(b)     defraying brokerage and other proper charges; or

 

(c)     which is otherwise authorised by law,

 

commits an offence and is liable on conviction to a fine not exceeding N100,000 or to imprisonment for a term not exceeding two years o r to both such fine and imprisonment.

 

(2)     A security dealer who, withdraws money from a trust account with intent to defraud, commits an offence and liable on conviction to a fine of not less than N100,000 or to imprisonment for a term not exceeding 3 years or to both such fine and imprisonment.

 

40.    (1)     A security dealer shall no t, except a s otherwise provided in this Part of this Decree, pa y his debts with any money held in a trust account.

 

(2)     Moneys held in a trust account shall only be liable to be paid or taken in execution under a n order of a court or tribunal.

 

41.    Nothing in this section shall be construed as taking away or affecting any lawful claim or lien which a person may have against or upon any moneys held in a trust account or against or upon any moneys received for the purchase of securities or from the sale of securities be fore such moneys are paid into a trust account.

 

42.    (1)     A portfolio or fun d manager shall not deal in securities for or on behalf of a client to such ex tent as to receive a client's money or property un less -

 

(a)     for the purposes of application solely for specified purposes agreed on when or before he receives the money or property;

 

(b)     pending the application of the money, the money or property is paid or deposited by the next banking business day to a custodian with whom the trust account is maintained in accordance with this section; and

 

(c)     a separate book entry is recorded and maintained for each client by the portfolio or fund manager in accordance with the provisions of this Decree or regulations ma de under this Decree in relation to that client's money or property.

 

(2)     In this section, "client's money or property" means money received or retained by a portfolio fund manager, or a security dealer, or property deposited with an investment adviser in the course of his business as such for, which he is liable to account to another person; or money received or property deposited and held on trust by, a custodian for which he is liable to account or de liver to another person.

 

43.    (1)    A portfolio manager o r fund manager shall supply, on demand, to his client copies of all en tries in his books relating to any transaction carried out on behalf of that client, and he shall be entitled to levy a reasonable charge therefor.

 

(2)     A client or any person authorised b y the client shall b e entitled at any time, free of charge either person ally or by his agent, to inspect any con tract notes and vouchers relating to the said transaction.

 

 

 

Part VIII

Public Offer and Sale of Securities and Invitations to the Public

 

 

44.    (1)     No person shall make any invitation to the public -

 

(a)     to acquire or dispose of any securities of a body corporate; or

 

(b)     to deposit money with any body corporate for a fixed period or payable at call, whether bearing or not bearing interest un less the body corporate concerned -

 

(i)     is a public company and the provisions of sections 50 to 63 of this Decree are duly complied with, or

 

(ii)     is a body corporate licensed under the Banks and Other Financial Institutions Decree 1 991 to carry on ban king business,

 

so however that nothing in this subsection shall render unlawful the sale of any shares by or under the supervision of any court.

 

(2)     If an invitation to the public is made in breach of subsection (1) of this action, all persons making the invitation and every officer who is in default or any body corporate making the invitation commits an offence and is liable on conviction in the case of a body corporate, to a fine of not less than N100,000 and in any other case, to imprisonment for a term of not less than two years or to a fine of no t less than N10 0,000 or to both such imprisonment and fine.

 

(3)     If, as a result of any invitation to the public in breach of subsection (1) of this section, any person acquires or disposes of any securities or deposits money with an y company, he shall be entitled to rescind such transactions and either in addition or instead of rescinding the same, to recover compensation for an y loss sustained by him from an y person w ho is liable whether convicted or not, in respect of the breach.

 

(4)     Where, in accordance with subsection (3) of this section, any person claims to rescind any transaction, he shall do so within a reason able time and shall not b e entitled to rescind any transaction with company o r to recover compensation from it unless he takes steps to rescind the transaction before the commencement of the winding-up of the company, and the fact that it is too late to rescind the transaction shall not prejudice his right to recover compensation from any person other than the company.

 

45.  (1)     Notwithstanding the provision s of section 44 of this Decree, it shall b e lawful to make an invitation to the public to deposit money with a public company, if prior to the making of the invitation the written consent of the Commission has been obtained and the invitation is made in accordance with such conditions and restrictions as ma y have bee n imposed by the Commission .

 

(2)     The Com mission may in its absolute discretion grant or withhold such consent as is referred to in subsection (1) of this section, and without prejudice to the generality of the foregoing, may require the registration with and approval by it of any advertisement or circular to be used in connection with the invitation.

 

(3)     If any advertisement or circular used in connection with the invitation contains any untrue statement then, subject to subsection (4) of this section, any person who made the invitation and every person who w as a director of a company making the invitation at the time when the advertisement or circular was published commits an offence and is liable on conviction to pay compensation to any person w ho deposited money with the public company having relied on the advertisement or circular, for any loss they may have been sustained by reason of such untrue statement.

 

(4)     No person shall be liable under subsection (3) of this section, if he proves that -

 

(a)     he had reasonable ground to believe and did believe up to the time if publication of the advertisement or circular that the statement was true; or

 

(b)     the advertisement or circular was published without his knowledge and that on becoming aware of its publication he immediately gave reasonable public notice that it was published without his knowledge.

 

(5)     If any person deposits any money with a public company as a result of an untrue statement of a material fact made, whether innocently or fraudulently, in any advertisement or circular published in connection with any invitation to the public made by or on behalf of that company, the person shall be entitled to require the company immediately to repay such money with interest at the current ban k rate per annum or such higher rate as may have been agreed to be pa id on the deposit.

 

46.    (1)     For the purposes of this Decree, an invitation shall be deemed to be made to the public if an offer or invitation to make an offer is -

 

(a)     published, advertised or disseminated by newspaper, broadcasting, cinematograph or any other means whatsoever;

 

(b)     made to or circulated among any persons whether selected as members or as debenture holders of the company concerned or as clients of the persons making or circulating the invitation or in an y other manner;

 

(c)     made to any one or more persons upon the terms that the person or persons to whom it is made may renounce or assign the benefit of the offer or invitation or any of the securities to be obtained under it in favour of any other person or persons;

 

(d)     made to any one or more persons to acquire any securities dealt in by a Securities Exchange or Capital Trade Point or in respect of which the invitation states that the application has been or shall be made for permission to deal in those securities on a Securities Exchange or Capital Trade Point.

 

(2)     Nothing contained in this section shall be taken as requiring any invitation to be treated as made to the public if it can properly be regarded in all circumstances as not being calculated to result, directly or indirectly, in the shares or debentures be coming available for subscription or purchase by persons other than those receiving the offer or invitation, or otherwise as being a domestic concern of the persons making and receiving it.

 

(3)     An invitation made by or on behalf of a private company exclusively to its existing shareholders (not being greater in number than is prescribed by subsection (3) of section 22 of the Companies and Allied Matters Decree 1990 and its existing employees shall not be deemed to be an invitation to the public unless the invitation is of the type referred to in paragraph (e ) or (d) of subsection (1) of this section .

 

(4)     For the purpose of subsection (1) of this section, the issue of any form of application for securities or of any form to be completed on the deposit of money with a company shall be deemed to be an invitation to acquire those shares o r to deposit money.

 

47.    W here an y comp any allots or agrees to allot any of its securities to an y person with a vie w to the public being invited to acquire any of those securities then, for all the purposes of this Decree any invitation so made should be deemed to b e an invitation to the public ma de by the company as w ell as by the per son actually making the invitation, and any person who acquires any such securities in response to the invitation shall be deemed to be an allottee from the company o f those securities, provided that where -

 

(a)     an invitation to the public is made in respect of any such securities within six months after the allotment or agreement to allot; or

 

(b)     at the date when the invitation to the public was made, the whole consideration to be received by the company in respect of those securities had not been so received,

 

it shall be assumed, unless the contrary is proved, that the allotment or agreement to allot was made by the company with a view to an invitation to the public being made in respect of those securities.

 

48.    (1)     Subject to 'the provisions of section 53 of this Decree it shall not be lawful to issue any form of application securities in a public company unless the form is issued with a prospectus which complies with the requirements of section 56 of this Decree.

 

(2)     This section shall not apply if it is shown that the form of application was issued either -

 

(a)     in connection with a bona fide invitation to a person to enter into an underwriting agreement with respect to the shares; or

 

(b)     in relation to shares which were not offered to the public.

 

(3)     If any person acts in contravention of the provisions of this section, he is guilty of an offence and liable on conviction to a fine not less than N100,000

 

49.    A prospectus issued by or on behalf of a company or in relation to an intended company shall be dated and date shall, unless the contrary is proved, be taken as the date of publication of the prospectus.

 

50.    (1)    Subject to the pro visions of section 35 of this Decree every prospectus issued by or on behalf of a company, or by or on behalf of any person who is or has been engaged or interested in the formation of a company, shall state the matters specified in Part I of the Third Schedule of this Decree and set out the reports specified in Part II of that Schedule and Parts I an d II shall have effect subject to the provisions contained in that Schedule.

 

(2)     Any condition requiring or binding an applicant for shares in a company to waive compliance with any requirement of this section or purporting to affect him with notice of any contract, document or matter not specifically referred to in the prospectus, shall be void.

 

(3)     Where there is non-compliance with or contravention of any of the requirements of this section, a director or other person responsible for the prospectus shall not incur any liability by reason of the non-compliance or contravention, if he proves that -

 

(a)     as regards any matter not disclosed, he was not a party to it; or

 

(b)     non-compliance or contravention arose from an honest mistake of fact on his pan; or

 

(c)     the non-compliance or contravention was in respect of matters which in the opinion of the Investment and Securities Tribunal established by this Decree were immaterial or was otherwise such as should, in the opinion of the Tribunal, having regard to all the circumstances of the case, reasonably b e excused,

 

so however that, where there is a failure to include in a prospectus a statement with respect to the matters specified b y regulations, no director o r other person shall incur any liability in respect of the failure, unless it is proved that he had knowledge o f the matters not disclosed.

 

51.     The provisions of sections 48 and 50 of this Decree shall not apply to the issue-

 

(a)     made to the existing members of a company or of a prospectus or form of application relating to shares in the company whether or not an applicant for share s has the right to renounce in favour of other persons; or

 

(b)     of a prospectus or form of application relating to securities which are to be in all respects uniform with securities previously issued and for the time being dealt in or quoted on a Securities Exchange or Capital Trade Point, but, subject as specified in paragraphs (a) an d (b) of this section , sections 48 an d 50 of this Decree shall apply to a prospectus or a form of application issued on or with reference to the formation of a company or at any time thereafter.

 

52.   (1)     Subject to this section, no person shall issue, circulate, publish, disseminate or distribute any notice, circular or advertisement which -

 

(a)     offers for subscription or purchase securities in a company;

 

(b)     invites subscription for or purchase of securities; or

 

(c)     calls attention to -

 

(i)     an offer or intended offer for subscription or purchase of securities in a company, or

 

(ii)     an invitation or intended invitation to subscribe for or purchase any such securities, or

 

(iii)     a prospectus.

 

(2)     This section shall not apply to -

 

(a)     a notice or circular which relates to an offer or invitation not made or issued to the public;

 

(b)     a registered prospectus;

 

(c)     a notice, circular or advertisement which calls attention to a registered prospectus and states that allotments of, or contracts with respect to the shares referred to in the prospectus shall be made only on the basis of one of the forms of application referred to in and attached to a copy of the prospectus and contains no other" information or matter other than some or all of the following information, namely -

 

(i)     the number and description of the securities in the company to which the prospectus relates,

 

(ii)     the none of the company, the date of its incorporation-, air the number of the company's issued securities and w here the issue price of any securities is to b e paid by instalments, the amounts paid an d unpaid on those issued securities,

 

(iii)     the general nature of its main business or the proposed main business of the company,

 

(iv)     the names, addresses and occupation of the directors o r proposed directors,

 

(v)     the names and addresses of the brokers or underwriters (if any) , to the issue,

 

(vi)     the name of the Securities Exchange or Capital Trade Point (if any) of which the brokers or underwriters to the issue are m embers,

 

(vii)     particulars of the time and place at which copies of the registered prospectus and form of application for the shares to which it relates may be obtained;

 

(d)     to a notice or circular which -

 

(i)     accompanies a notice or circular referred t,) in paragraph (a) or (c) of this section or would but for the inclusion in it of a statement referred to in sub- paragraph (iii) or (iv) of this paragraph, be a notice or circular so referred to,

 

(ii)     is issued or circulated by a person whose ordinary business includes advising clients in connection with their investments and is issued or circulated only to clients so advised in the course of that business,

 

(iii) contains a statement that the investment to which it or the accompanying document relates is recommended by that person, and

 

(iv)     where the person is a n underwriter or sub- underwriter of an issue of shares to which the notice or contains a statement that the person making the recommendation is interested in the success of the issue as an underwriter or sub-underwriter, as the case may be where the person is an underwriter or sub-underwriter of an issue of shares to which the notice or circular or accompany document relates.

 

(3)     This section shall apply to notices, circulars and advertisements published or disseminated by a newspaper, radio or television broadcasting, cinematograph or any other means.

 

(4)     A person who contravenes the provision of this section or a person who knowingly authorises or permits an act which constitutes a contravention of this section, commits an offence and is liable on conviction to a fine of not less than N100,000 or to imprisonment for a term not exceeding one year or to both fine and imprisonment.

 

(5)     Where a notice, circular or advertisement relating to a company is issued, circulated, published, disseminated or distributed in contravention of this section by or with the authority or permission of an officer of the company, the company commits an offence and is liable on conviction to a fine of not less than N100,000.

 

53.    (1)     Where -

 

(a)     it is proposed to offer any securities in a company to the public by a prospectus issued generally (that is to say, to persons who are not existing members of the company); and

 

(b)     the application is made to a Securities Exchange or Capital Trade Point for permission for those securities to be dealt in or quoted on that Securities Exchange or Capital Trade Point,

 

there may, on request of the applicant, be given by or on behalf of that Securities Exchange or Capital Trade Point a certificate of exemption, that is, a certificate which, having regard to the proposal (as stated in the request) as to the size and other circumstances of the issue of securities and as to any limitations on the number and class of persons to whom the offer is to be made compliance with the requirements of the Third Schedule to this Decree would be unduly cumbersome .

 

(2)     If a certificate of exemption is given and the proposals mentioned in subsection (1) of this section are complied with and the particulars and information required to be published in connection with the application for permission made to the Securities Exchange or Capital Trade Point are so published, then -

 

(a)     a prospectus giving the relevant particulars and information, in the form in which they are so required to be published, shall be deemed to comply with the requirements of the Third Schedule of this Decree; and

 

(b)     sections 48 and 50 of this Decree shall not apply to any issue after the permission applied for is granted of a prospectus or form of application relating to the securities.

 

54.   (1)     A prospectus inviting persons to subscribe for Expert's securities in a company and including a statement purporting to be made by an expert shall no t be issued unless -

 

(a)     the expert has given and has not, before delivery of a copy of the prospectus for registration, withdrawn his written consent to the issue of it with the statement included in the form and context in which it is included; and

 

(b)     a statement that the expert has given and has not withdrawn his consent appears in the prospectus.

 

(2)     If any prospectus is issued in contravention of this section, the company and every person who is knowingly a party to the issue commits an offence and is liable on conviction to a fine of not less than N 100,000.

 

(3)     In this section, 'expert' includes every engineer, legal practitioner, accountant and any other person w hose profession give s authority to a statement made by him.

 

55.   (1)     Notwithstanding the provision s of section 44 of this Decree it shall b e lawful to make an invitation to the public to invitation to acquire or dispose of any securities of a public company if B

 

(a)     within six months prior to the of the invitation, there has been delivered to the Commission and registered by it, in accordance with section 57 of "Decree a prospectus relating to such securities complying in all respects with the relevant provisions of sections 52, 53 and 56 of this Decree;

 

(b)     except as provided in subsection (2) of this section, every person to whom the invitation is made is supplied with a true copy of such prospectus; and

 

(c)     every copy of the prospectus states on its face that it has been, at the time when the invitation is first made, registered by the Commission and the date of registration is reflected thereof.

 

(2)     The provisions of paragraph (b) of subsection (1) of this section shall not apply to an invitation made by or through a member of a Securities Exchange or Capital Trade Point to a client of that member or to an invitation ma de by or thro ugh an ex empted dealer.

 

56.  (1)     Except as provided in section 53 of this Decree where the company invites the public to acquire any a public company, the prospectus referred to in section 5 4 of this Decree shall state the matters specified in Part I of the Third Schedule to this Decree and set out the report specified in Part 11 Third Schedule of that Schedule, but this subsection shall not apply to an invitation by a company in respect of shares of that company -

 

(a)     to its associated company made solely to the existing shareholders of that company; or

 

(b)     which in all respects is uniform with the shares of that company previously issued and for the time being dealt in on an approved Securities Exchange or Capital Trade Point.

 

(2)     A prospectus relating to any invitation to the public to acquire or dispose of any securities of a public company, being an invitation not failing within sub section (1) of this section, either because it does no t invite the public to acquire any securities or because it is excluded from the ambit of that subsection, m ay not state all the matters or set out the reports specified in the Third Schedule to this Decree but shall not contain any untrue statement, and if the securities to which it relates are dealt in on any Securities Exchange or Capital Trade Point or if application ha s been, or is being mad e to a Securities Exchange or Cap ital Trade Point for permission to deal in those securities the prospectus shall -

 

(a)     state that the securities to be dealt in on that Securities Exchange or Capital Trade Point or, as the case ma y be that application has been or is to be ma de for permission for them to be dealt in on that Securities Exchange or Capital Trade Point;

 

(b)     state whether or not that Securities Exchange or Capital Trade Point is an approved securities organization within the meaning of this Decree; and

 

(c)     contain the particulars and information required by that Securities Exchange or Capital Trade Point,

 

and in any other case, shall state that the securities are not dealt in on any Securities Exchange or Capital Trade Point.

 

(3)     An invitation failing within subsection (1) of this section shall, hereafter in this Decree be described as a "general invitation" and an invitation failing, within subsection (2) of this section shall, hereafter in this Decree be described as a 'restricted invitation '.

 

57.   (1)     No prospectus shall be issued by or on behalf of a company or in relation to an intended company unless, on or before the date of its publication, there has been delivered to the Commission a copy of the prospectus for registration, signed by every person who is named in it as a director or proposed director of the company, or by h is agent authorised in writing and having endorsed on it or attached to it -

 

(a)     any consent to the issue of the prospectus required by section 54 of this Decree from any person as an expert; and

 

(b)     in the case of a prospectus issued generally, a copy of any contract required by paragraph 11 of the Third Schedule to this Decree to be stated in the prospectus; or

 

(c)     in the case of a prospectus deemed by virtue of a certificate granted under section 53 of this Decree to comply with the requirements of that Schedule, a con tract or a copy of such contract or a memorandum of a contra ct shall b e available for inspection in connection with the application made under that section to the Securities Exchange o r Capita l Trade Point; and

 

(d)     where the persons making any report required by Part 11 of the Third Schedule to this Decree have made in it or without giving the reasons have indicated in It any such adjustments as are mentioned in paragraph 21 of that Schedule a written statement signed by those person s setting out the adjustments an d giving the reasons for them .

 

(2)     The references in paragraph (b) of subsection (1) of this section to the copy of a contract required to be endorsed on or attached to a copy of the prospectus shall, in the case of a contract wholly or partly in any language other than English, be taken as references to a copy of a translation in English of the parts in any other language, as the case may be, being a translation certified in any manner acceptable to the Commission to be a correct translation, and the reference to a copy of a contract required to be available for inspection shall include a reference to a copy of a translation of it or a copy embodying a translation of a part of it.

 

(3)     Every prospectus shall on the face o f it-

 

(a)     state that a copy has been delivered for registration as required by this section; and

 

(b)     specify or refer to statements included in the prospectus which specify any documents required by this section to be endorsed on or attached to the copy so delivered .

 

(4)     The Commission shall not register a prospectus un less it is satisfied that -

 

(a)     it is dated and signed as required by this section;

 

(b)     it has endorsed on it or attached to it the documents (if any) specified; and

 

(c)     the prospectus otherwise complies with the requirements of this Decree,

 

and w here the Com mission refuses to register a prospectus on the g round that it fails to comply otherwise with the requirements of this Decree an appeal shall lie thereon to the Investment and Securities Tribunal established by this Decree within twenty-one days after notification o f the refusal by the Com mission.

 

(5)     If a prospectus is issued without a copy of it being delivered under this section to the Commission or without the copy so delivered having endorsed on it or attached to it the documents required under this Decree, the company and every person who is knowingly a party to the issue of the prospectus, commits an offence and is liable on conviction to a fine not exceeding N2 5,000 for every day from the date of issue of the prospectus 11 a copy of it is so delivered with the required documents endorsed o n it or attached to it.

 

58.    A company limited by shares shall not, before the statutory meeting, vary the term s of a contract refer red to in the prospectus or a statement in lieu of prospectus, except Subject to the approval of the statutory meeting.

 

59.   (1)     Where a company allots or agrees to allot any securities in the company with a view to all or any of those securities being offered for sale to the public, any document by which the offer for sale to the public is made shall for all purposes be deemed to be a prospectus issued- by the company, and all enactments and rules of law as to the statements in and omissions from prospectus or otherwise relating to a prospectus shall apply and have effect accordingly as if -

 

(a)     the securities have been offered to the public for subscription; and

 

(b)     persons accepting the offer in respect of any shares, are subscribers for those securities but without prejudice to the liability, if any, of the persons' by whom the offer is made, in respect of misstatements contained in the document or otherwise.

 

(2)     For the purposes of this Decree, it shall, unless the contrary is proved, be evidence that an allotment of, or an agreement to allot securities was made with a view to the shares being offered for sale to the public if it is shown-

 

(a)     that a n offer of the securities or of an y of them for sale to the public w as mad e within six months after the allotment or agreement to allot; or

 

(b)     that at the date when the offer was made the whole consideration to be received by the company in respect of the securities had not been so received.

 

(3)     The provisions of section 50 of this Decree as applied by this section shall have effect as if it requires a prospectus to state in addition to the matters required by that section to be stated in a prospectus-

 

(a)     the amount of the consideration received by the company in respect of the securities to which the offer relates; and

 

(b)     the place and time at which the contract under which the said securities have been or are to be allotted m ay be inspected,

 

and section 57 of this Decree as applied by this section shall have effect as though the persons making the offer were named in a prospectus as directors of that company.

 

(4)     Where a person making an offer to which this section relates is a company or a firm, it shall be sufficient if the document is signed on behalf of the company or firm by two directors of the company or not less than half of the partners, as the case may be, and any such director or partner may sign by his agent authorised in writing.

 

60.     For the purposes of the foregoing provisions of this part of this Decree, a statement-

 

(a)     included in a prospectus shall be deemed to be untrue if it is misleading in the form and context in which it is included; and

 

(b)     shall be deemed to be included in a prospectus if it is contained in the prospectus or in any report or memorandum appearing on the face of it or by reference incorporated or issued with it.

 

61.     A statement in lieu Of Prospectus shall be in the form and contain the particulars set out in Part I of the Fourth Schedule to this Decree an d, in the cases mentioned in Part 11 of that Schedule , set out the reports specified therein, and the said Parts I and 11 shall have effect subject to the provisions contained in Part III of that Schedule.

 

62.   (1)     Subject to the provisions of this section, where a prospectus invites persons to subscribe for shares in a company, the person s referred to in sub section (2) of this section shall be liable to pay compensation to all persons who subscribe for shares or debentures relying on the prospectus for the loss or damage they may have sustained by reason of an y untrue statement included in it.

 

(2)     A person liable to pay compensation under subsection (1 ) of this section -

 

(a)     is a director of the company at the time of the issue of the prospectus;

 

(b)     is a person who h as authorised himself to be named and is named in the prospectus as a director or as having agreed to become a director either immediately or after an interval of time;

 

(c)     is a promoter of the company; and

 

(d)     is a person who ha s authorised the issue of the prospectus.

 

(3)     Where under section 54 of this Decree the consent of a person is required to the issue of a prospectus and he has given that consent he shall not by any reason of his having given it be liable under this subsection as a person who has authorised the issue of prospectus except in respect of an untrue statement purporting to be made by him as an ex pert

 

(4)     No person shall be liable under subsection (1) of this section if he proves -

 

(a)     that, having consented to become a director of the company, he withdrew his consent before the issue of the prospectus, and that it was issued without his authority or consent; or

 

(b)     that the prospectus was issued without his knowledge or Consent, and that on becoming aware of its issue he forthwith gave reasonable public notice that it was issued with out his knowledge or consent; or

 

(c)     that, after the issue of the prospectus and before allotment, he, on becoming aware of any untrue statement in it, withdrew his consent and gave reasonable public notice of the withdrawal and of the reason for his withdrawal, or

 

(d)     that, as regards every untrue statement -

 

(i)     not purporting to be made on the authority of an expert, or of a public official document or statement, he had reasonable ground to believe, and did up to the time of the allotment of the shares, as the case may be, believe that the statement was true,

 

(ii)     purporting to be a statement by an expert or contained in what purports to be a copy of or an extract from a report or valuation of an expert, it fairly, represented the statement, or was a correct and fair copy o f or extract from the report or valuation, and h e had reasonable ground to believe and did up to the time of the issue of the prospectus believe that the person making the statement was competent to make it and that person had given the consent required by section 54 of this Decree to the issue of the prospectus and had not withdrawn that consent before delivery of a copy of the prospectus for registration or, to the defendant's knowledge, before allotment, and

 

(iii)     purporting to b e a statement ma de by an official per son or contained in what purports to be a copy of or an extract from a public official document, it was a correct an d fair representation of the statement or copy of or extra ct from the document.

 

(5)     The provisions of sub section (4 ) of this section shall not apply in the case of a per son liable by reason of his having given a consent required of him by section 54 of this Decree as a person who has authorised the issue of a prospectus in respect of an un true statement purporting to b e made b y him as an expert.

 

(6)     A person who, apart from this subsection, would under subsection (1) of Ns section be liable, by reason of his having given a consent required of him by section 54 of this Decree as a person who has authorised the issue of a prospectus in respect of an untrue statement purporting to be made b y him as an expert, shall not-b e so liable if he proves that -

 

(a)     having given his consent under section 54 of this Decree to the issue of the prospectus, he withdraws it in writing before delivery of a copy of the prospectus for registration; or

 

(b)     after delivery of a copy of the prospectus for registration and before allotment be, on becoming aware of the untrue statement, withdrew his consent in writing and gives reasonable public notice of the withdrawal and of the reason for his withdrawal; or

 

(c)     he was competent to make the statement and that he had reasonable ground to believe and did up to the time of the allotment of the shares, believe that the statement was true.

 

(7)     Where -

 

(a)     the prospectus contains the name of a person as a director of the company or as having agreed to become a director of the company and he has not consented to become director, or has withdrawn his consent before the issue of the prospectus, and has not authorised or consented to such issue; or

 

(b)     the consent of a prison is required under section .54 of this Decree to the issue of the prospectus and he, either has not given the consent or has withdrawn it before the issue of the prospectus,

 

the directors of the company, except any without whose knowledge or consent the prospectus was issued and any other person who authorised such issue, is guilty of an offence and liable to indemnify the person so named or whose consent was so required, as the case may be against all damages, costs and expenses to which he may be made liable by reason of his name having been inserted in the prospectus or of the inclusion in the prospectus of a statement purporting to be made by him as an expert, as the case may be, or in defending himself against any action or legal proceeding brought against him in respect of the issue of the prospectus or the inclusion in the prospectus of the statement.

 

(8)     A person shall not be deemed for the purpose of this subsection to have authorised the issue of a prospectus by reason only of his having given the consent required by section 54 of this Decree to the inclusion in it of a statement purporting to b e mad e by him as an expert

 

(9)     For the purposes of this section -

 

(a)     "promoter" means a promoter who was a party to the preparation of the prospectus, or of the portion of it containing the untrue statement, but does not include any person by reason of his acting in a professional capacity, for persons engaged in procuring the formation of the company; and

 

(b)     "expert" h as the same meaning as in subsection (3) of section 54 of this Decree .

 

63.    (1)     Where a prospectus includes any untrue statement, for any officer who authorised the issue of the prospectus commits an offence and is liable -

 

(a)     on conviction on an indictment, to a fine of not less than N100,000 or to imprisonment for a term not exceeding three years, or to both such fine and imprisonment; or

 

(b)     on summary conviction, to a fine of not less than N50,000 or to imprisonment for a term not exceeding three months or to both such fine and imprisonment, unless he proves either that the statement was immaterial or that he had reasonable ground to believe and did, up to the time of the issue of the prospectus, believe that the statement was true.

 

(2)     A person shall not be deemed for the purposes of this section to have authorised the issue of a prospectus by reason only of his having given the con sent required b y section 54 of this Decree to the inclusion in it of a statement purporting to be made by him as an expert.

 

64.    (1)   Where a statement in lieu of prospectus includes any untrue statement, any person who authorised the delivery of the statement in lieu of prospectus for registration commits an offence and liable-

 

(a)     on conviction upon an indictment, to a fine of not less than N100,0 00 or to imprisonment for a term not exceeding three year s or to both such fine and imprisonment; or

 

(b)     on summary conviction, to a fine not exceeding N100,000 or to imprisonment for a term not exceeding three months or to both such fine and imprisonment,

 

unless he proves either that the untrue statement was immaterial or that he had reasonable ground to believe and did up to the time of the delivery for registration of the statement in lieu of prospectus believe that the untrue statement was true .

 

(2)     For the purposes of this section-

 

(a)     any information included in a statement in lieu of prospectus shall be deemed to be untrue if it is misleading in the form or context in which it is included; and

 

(b)     an information shall be deemed to be included in a statement in lieu of prospectus if it is contained in the prospectus or in any report or memorandum appearing on the face of it or by reference incorporated in it.

 

65.     The issuer and the issuing house or any other capital market operator duly appointed by the issuer shall be responsible for the allotment of the securities of the company where a public offer of securities is made with or without quotation under such rules and regulations as m ay be laid down by the Commission.

 

66.    (1)     No allotment shall be made of any securities in a company in pursuance of a prospectus issued generally and no proceedings shall be taken on applications made in pursuance of a prospectus so issued, until the beginning of the third day after that on which the prospectus is first so issued or such later time (if any) as may be specified in the prospectus; and in this Decree, the beginning of the said third day or such later time, as mentioned in this subsection, is here after refer red to as " the time of the opening of the subscriptions lists

 

(2)     In subsection (1) of this section, the reference to the day on which the prospectus is first issued generally shall be construed as referring to the day on which it is first so issued as a newspaper advertisement, so however that, if it is not so issued as a newspaper advertisement before the third day after that on which it is first so issued in any other manner, the said reference shall be construed as referring to the day on which it is first so issued in any manner.

 

(3)     The validity of an allotment shall not be effected by any contravention of the provisions of subsection (1) or (2) of this section but, in the event of any such contravention, the company and every officer of the company who is in default commits an offence an d is liable on conviction to a fine of not less than N50,000.

 

(4)     in the application of this section to a prospectus offering securities for sale the provisions of subsections (1), (2) and (3) of this section shall have effect with the substitution of references to sale for references to allotment, and with the substitution for reference to the company and every officer of the company who is in default, or reference to any person by or through whom the offer is made and who knowingly and wilfully authorises or permits the contravention .

 

(5)     An application for securities in a company which is made in pursuance of a prospectus issued generally shall not be revocable until after expiration of the third day after the time of the opening of the subscription lists or the giving before the expiration of the said third day, by some person responsible under section 6 2 of this Decree for the prospectus, of a public notice having the effect under that section of excluding or limiting the responsibility of the person giving it.

 

(6)     In reckoning for the purposes of this section and section 72 of this Decree, the third day after another day or any intervening day which is a Saturday or Sunday or which is a public holiday in Nigeria shall be disregarded, and if the third day (as so reckoned) is itself a Saturday or Sunday or such a public holiday there shall for the said purpose be substituted the first day after which is none of them .

 

67.  (1)     No allotment shall be made of an y securities of a company offered to the public for subscription unless the amount stated in the prospectus as the minimum amount which, in the opinion of the directors, is required to be raised by the issue of share capital in order to provide for the matters specified in paragraph 2 of the Third Schedule to this Decree, has been subscribed, and the sum payable on application for the amount so stated has been paid to and received by the company.

 

(2)     For the purposes of subsection (1) of section, a sum shall be deemed to have been paid to and received by the company if a cheque for that sum has been received in good faith by the company and the directors of the company have no reason for suspecting that the cheque will no t be paid.

 

(3)     The amount so stated in the prospectus shall be reckoned exclusively of any amount payable otherwise than in cash and is in this Decree referred to as "the minimum subscription'.

 

(4)     The amount payable on each application shall not be less than five per cent of the nominal amount of the share.

 

(5)     If the conditions specified in subsections (1), (2) and (3) of this section have not been complied with at the expiration of forty days after the first issue of the prospectus, all moneys receive d from applicants for shares shall forthwith be repaid to them without interest, and if any such money is not repaid to them within forty-eight days after the issue of the prospectus, the directors of the company shall jointly and severally be liable to repay that money with interest at the current bank rate per annum from the expiration of the forty-eight days; but a director shall not be liable if he proves that the default in the repayment of the money was not due to any misconduct or negligence on his part.

 

(6)     Any condition requiring or binding any applicant for shares to waive compliance with any requirement of this section shall be void.

 

(7)     The provisions of this section, to the exclusion of subsection (4) thereof, shall not apply to any allotment of shares subsequent to the first allotment of shares offered to the public for subscription.

 

68.   (1)     Applications and other moneys paid prior to allotment of shares by an applicant on account of shares or other securities shall, until the allotment of the shares or other securities, be held in a separate account on such terms and conditions as m ay be prescribed by the Commission.

 

(2)     If any default is made in complying with this section, every officer of the company in default or, in the case of an intended company, every person named in the prospectus as a proposed director and every promoter who knowingly and wilfully authorises or permits the default, commits an offence and is liable on a conviction to pay a fine of not less than N50 ,000 or to imprisonment for a term of not less than six months or to both such fine and imprisonment.

 

69.  (1)     A public comp any having a share cap ital which does of not issue a prospectus on or with reference to its formation, or which has issued a prospectus but has not proceeded to allot any of the shares offered to the public for subscription, shall not allot any of its shares unless at least three days before the first allotment of the shares there has been delivered to the Commission for registration-

 

(a)     a statement in lieu of prospectus signed by every person who is named in it as a director or a proposed director of the company or by his agent authorised in writing in the form and the particulars set out in Part I of the Fourth Schedule to this Decree; and

 

(b)     in the cases mentioned in P art II of the Fourth Schedule, setting out the specified reports,

 

and the said Parts I and 11 of the Fourth Schedule shall have effect subject to the provisions contained in Part III of that Schedule.

 

(2)     Every statement in lieu of prospectus delivered under subsection (1) of this section shall, where the persons making any such statement have made in it or have without giving the reason s indicate d in it any such adjustments as are mentioned in paragraph 6 of the Fourth Schedule to this Decree, have endorsed on it or attached to it a written statement signed by those persons setting out the adjustments and giving the reasons for the adjustments.

 

(3)     If a company acts in contravention of subsection (1) or (2) of this section, the company and every director of the company who knowingly and wilfully authorises or permits the contravention commits an offence and is liable on conviction to a fine of not less than N 100,0 00 or to imprisonment for a term of not less than six months o r to both such fine and imprisonment.

 

70(1)     An allotment made by a company to an applicant in contravention of the provisions of sections 67 and 69 of this Decree shall be voidable at the instance of the applicant within one month after the holding of the statutory meeting of the company and not later than or where the allotment is made after the holding of the statutory meeting, within on e month after the date of the allotment an d the allotments Shall be so voidable notwithstanding that the company is in the course of being wound up.

 

(2)     If any director of a company knowingly contravenes, or permits or authorises the contravention of the provisions of section s 67 and 69 of this Decree with respect to an allotment, he is guilty of an offence and liable on conviction to compensate the company and the allottee respectively, for any loss, damages or costs which the company or the allottee m ay have sustained or incurred thereby but proceeding s to recover an y such loss, damages, or costs shall not be commenced until after the expiration of two years from the date of the allotment.

 

71.    A shareholder may bring an action against a company which has allotted shares under a prospectus for the rescission of all allotments and the repayment to the holders of the shares of the whole or part of the issued price which has been paid in respect of them if either the prospectus-

 

(a)     contained a material statement, promise or forecast which was false, deceptive or misleading or

 

(b)     did not contain a statement, report or account required to be contained in it by section 52 and Second Schedule to this Decree.

 

72.   (1)     Where a prospectus, whether issued generally or not securities and states that application has been or will be made for permission for dealing on the securities offered by it to be dealt in on any Securities Exchange or Capital Trade Point, any allotment made on an application in pursuance of the prospectus shall, whenever made, be void if the permission h as -

 

(a)     not been applied for before the third day after the first issue of the prospectus; or

 

(b)    been refused before the expiration of three weeks from the date of the closing of the subscription lists or such longer period not exceeding six weeks as may, within the said three weeks, be notified to the applicant for permission by or on behalf of the Securities Exchange or Capital Trade Point.

 

(2)     Where permission for a dealing referred to in subsection (1).of this section has been applied for or if applied for has been refused, the company shall forthwith repay, without interest, all moneys received fro m applicants in pursuance of the prospectus and if the money is not repaid within eight days after the company becomes liable to re pay it the directors of the comp any shall be jointly and severally liable to rep ay the moneys with interest at the current bank rate per annum from the expiration of the eight days, but a director shall not be liable if he proves that the default in the repayment of the money was not due to any misconduct or negligence on his p art.

 

(3)     All moneys received by virtue of this section shall be kept in a separate bank account so long as the company may become liable to re pay it under subsection (2) of this section; and if de fault is ma de in com plying with this subsection, the company and every officer of the company who is in default commits an offence and is liable on conviction to a fine of not less than N100,000

 

(4)     Any condition requiring or binding any application for securities to waive compliance with any requirement of this section shall be void.

 

(5)     For the purposes of this section, permission shall not be deemed to be refused if it is intimated that the application for it, though not at present granted, shall be given further consideration.

 

(6)     This section shall have effect -

 

(a)     in relation to any securities agreed to be taken by a person underwriting an offer by a prospectus as if h e had app lied for them in pursuance of the prospectus;

 

(b)     in relation to a prospectus offering securities for sale with the following modifications, that is -

 

(i)     references to sale shall be substituted for references to allotment,

 

(ii)     the persons by whom the offer is made and not the company, are liable under subsection (2) of this section to repay moneys received from applicants, and references to the company's liability under that subsection shall be construed accordingly, and

 

(iii)     for the references in subsection (3) of this section to the company and every officer of the company who is in default there shall be substituted references to any person by or through whom the offer is made an d who knowingly an d willfully authorises or permits the default.

 

73.  (1)     The Commission shall have the power to prescribe the maximum period within which the issuing house, shall re turn surplus moneys due to subscribers.

 

(2)     The Com mission may, subject to sub section (3 ) of this section, prescribe the r ate of interest payable to subscribers w hose surplus moneys are held beyond the pre scribed period .

 

(3)     The interest payable under the subsections (1) and (2) of this section shall not be less than one per cent above the Central Bank of Nigeria minimum re-discount rate an d the Commission may -

 

(a)     in addition, require a company which fails to honour its obligation under this section to pay a higher rate of interest on the surplus moneys; and

 

(b)     direct that such increased interest be paid into the Consolidated Revenue Fund of the Federation .

 

(4)     A person fails to com ply with the provisions of this section commits an offence and is liable on conviction to a fine of N 1 ,000,00 0 or to imprisonment for a-term no t exceeding 3 years.

 

 

Part IX

Conduct of Securities Business

 

 

74.     A securities dealer shall, in respect of a transaction o f purchase of securities, forthwith give a contract note

which complies with section 75 of this Decree -

 

(a)     where the transaction took place in the ordinary course of business at a Securities Exchange or Capital Trade Point and the securities dealer entered into the transaction otherwise than as principal to the person for whom the securities dealer entered into the transaction;

 

(b)     where the transaction did not take place in the ordinary course of business at a Securities Exchange or Capital Trade Point and the securities dealer entered into the transaction otherwise than as principal to the person for whom the securities dealer entered into the transaction an d the person with who m the securities dealer entered into the transaction;

 

(c)     where the transaction did not take place in the ordinary course of business at a Securities Exchange or Capital Trade Point and the securities dealer entered into the transaction as principal to the person with whom the securities dealer entered into the transaction.

 

75.     A contract note given b y a securities dealer under section 74 of this Decree shall include -

 

(a)     the name or style under which the securities dealer carries on his business as a securities dealer and the address of the principal place at which he so carries on business;

 

(b)     where the securities dealer is dealing as principal with a person w ho is not the holder of a securities dealer's licence, a statement that he is so acting;

 

(c)     the name and address of the person to whom the securities dealer gives the contra ct note;

 

(d)     the day on which the transaction took place and, if the transaction did not take place in the ordinary course of business at a Securities Exchange or Capital Trade Point, a statement to that effect;

 

(e)     the number, amount and description of the securities which are the subject of the contract;

 

(f)     the price per unit of the securities;

 

(g)     the amount of the consideration;

 

(h)     the rate and amount of commission (if any) charged;

 

(i)     the amounts of all stamp duties or other duties and taxes payable in connection with the contract; and

 

(j)     if an amount is to be added to or deducted from the settlement amount in respect of the right to a benefit purchased or sold together with the securities, the first- mentioned amount and the nature of the benefit.

 

(3)     A securities dealer shall not include in a contract note given under subsection (1) of this section as the name of the person with or for whom he has entered into the transaction, a name which h e knows , or should reasonably be expected to know is not the name by which that person is ordinarily known.

 

(4)     A reference in this section to a securities dealer dealing or entering into a transaction a s principal includes a reference to a person -

 

(a)     dealing or entering into a transaction on behalf of a person associated with him; or

 

(b)     dealing in securities on behalf of a body corporate in which he ha s a controlling interest; or

 

(c)     where he carries on business as a securities dealer on behalf of a body corporate in which his interest and the interest of his directors together constitute a controlling

 

(5)     For the purpose of this section-

 

(a)     a securities dealer who is a m ember o f a Securities Exchange or Capital Trade Point shall not be taken to have entered into a transaction as principal by reason only that the transaction was entered into with another dealer who is a member of a Securities Exchange or Capital Trade Point; and

 

(b)     a transaction takes place in the ordinary course of business at a Securities Exchange or Capital Trade Point in the prescribed circumstances or is a transaction that is a prescribed transaction for the purpose s of this section.

 

(6)     Notwithstanding the provisions of subsection (4) of this section, a person is not associated with another person for the purposes of this section by reason only that he is a director of a body corporate of which the other person is also a director whether or not the body corporate carries o n a business of dealing in securities.

 

76.   (1)     Where a person who is a securities dealer, investment adviser, securities dealer's representative or investment representative sends circulars or other similar written communications with respect to securities or a class of securities, he shall cause to be included in each circular or other communication, in type not less legible than that used in the remainder of the circular or other Communication, a concise statement of the nature of any interest in, or any interest in the acquisition or disposal of those securities or securities included in that class which he or a person associated with him has at the date on which the first-mentioned person last sends the circular or other communication.

 

(2)     For the purposes of subsection (1) of this section-

 

(a)     the interest of a person in the disposal of securities includes any financial benefit or advantage which will, or is likely to, accrue directly or indirectly to the person on or arising out of the disposal of the securities; and

 

(b)     without limiting the generality of paragraph (a) of this subsection a person who has entered into an underwriting agreement in respect of securities shall be deemed to have an interest in the acquisition or disposal o f those securities.

 

(3)     Where a person -

 

(a)     has subscribed for or purchased securities for the purpose of offering all or any of them to the public for purchase-, and

 

(b)     offers any of those securities for purchase,

 

he shall not make a recommendation whether orally or in writing and whether expressly or by implication with respect to the securities offered for the purpose unless he has informed each person to whom the recommendation is made that he acquired the securities for that purpose .

 

(4)     Where -

 

(a)     securities have been offered for subscription or purchase; and

 

(b)     a person has subscribed for or purchased or is or will or may be required to subscribe for or purchase, any of those securities under an underwriting or sub-underwriting agreement by reason that some or all of the securities have not been subscribed for or purchased,

 

he shall not, during the period of 90 days after the close of the offer, make an offer to sell those securities, otherwise than in the ordinary course of trading on a Securities Exchange or Capital Trade Point, or make a recommendation with respect to those securities unless the offer or recommendation complies with provisions of subsection (5 ) of this section.

 

(5)     An offer or recommendation shall not be made under subsection (4 ) of this section unless it contains or is accompanied by a statement to the effect that the offer or recommendation relates to securities which he has acquired, or is or will or may be required to acquire under an underwriting or sub-underwriting agreement by reason that some or all of the securities have not been sub scribed for or purchased.

 

(6)     A person who is a securities dealer, investment adviser, dealer's representative or investment representative shall not send to any person any circular or other communication or written offer or recommendation to which subsection (1), (3) or (4) of this section applies unless the circular or other communication or the written offer or recommendation -

 

(a)     if the first-mentioned person is a natural person, signed by that person ,

 

(b)     if the first-mentioned person is a b.-Ay corporate, is signed by a director, executive officer or secretary of the body corporate.

 

(7)     Where a person who is a securities dealer, investment adviser, dealer's representative or investment representative sends to an y person a circular or other communication or a written offer or recommendation to which subsection (1), (3),(4) or (5) of this section applies, the first-mentioned person shall preserve a copy of the circular or other communication or of the written offer or recommendation, duly signed by the person concerned mention ed in subsection (5) for a period of 7 ),ears.

 

(8)     Reference in this section to an offer of securities shall be construed as including a reference to a statement that is not an offer but expressly o r implicitly invites a person to whom it is made to offer to acquire securities.

 

(9)     For the purposes of this section a circular or other communication or a written offer or recommendation signed by the secretary of a body corporate shall be deemed to have been signed by the body corporate.

 

(10)     The Commission may, if it is in the public interest, exempt a security or any class of securities from the application of this section.

 

(11)     Any person who contravenes the provisions of this section commits an offence and is liable on conviction to a fine of not less than N100,000 or to imprisonment for a term not exceeding three years or to both such fine and imprisonment.

 

77.    (1)    Subject to subsection (4) of this section, a securities dealer shall not as a principal deal in any securities with a person who is not a securities dealer unless he is acting in the transaction as principal an d not as agent.

 

(2)     A reference in this section to a securities dealer dealing or entering into a transaction a s principal includes a reference to a person-

 

(a)     dealing or entering into a transaction on behalf of a person associated with him;

 

(b)     dealing in securities on behalf of a body corporate in which he has a controlling inter est. or

 

(c)     where he carries on business as a dealer a body corporate in which his interest and the interests of his directors together constitute a controlling inter est.

 

(3)     A securities dealer who, as a principal, enters into a transaction of sale or purchase of securities with a person who is not a securities dealer shall state in the contract note that he is acting in the transaction as principal and not as agent.

 

(4)     The provisions of subsection (1) of this section shall not apply in relation to a transaction entered into by a dealer who is a member of a Securities Exchange or Capital Trade Point and specialises in transactions relating to odd lots of securities being a transaction of sale or purchase of an odd lot of securities.

 

(5)     Where a securities dealer falls to comply with subsection (1) or (3) of this section in respect of a contract for sale of securities by him, the purchaser of the securities may, if he has not disposed of them , rescind the contract by a notice of rescission in writing given to a securities dealer not later than 30 days after the receipt of the contract note.

 

(6)     Where a dealer fails to comply with subsection (1) or (3) of this section in respect of a contract for the purchase o f securities by him , the vendor of the securities ma y, in like manner,rescind the con tract.

 

(7)     Nothing in subsections (5) and (6) of this section shall affect any right which a person has apart from that subsection.

 

(8)     A person w ho contravenes or fails to comply with any of the provisions of this section commits an offence and is liable on conviction to a fine of no t less than N20,000 or to imprisonment for a term not exceeding six months or to both such fine and imprisonment

 

78.    (1)     A securities dealer shall not give an unsecured credit to an employee or to a person who is associated with the employee if -

 

(a)     the unsecured credit is given for the purpose of enabling or assisting the person to whom the unsecured credit is given to purchase or subscribe for any securities; or

 

(b)     the person giving the unsecured credit knows or has reason to believe that the unsecured credit will be used for the purpose of purchasing or subscribing for securities.

 

(2)     A person who contravenes or fails to comply with any of the provisions of subsection (1) of this section commits an offence and is liable on conviction to a fine of not less than 100,000 or to imprisonment for a term not exceeding two years o r to both such fine and imprisonment.

 

79.   (1)     A dealer shall not, except as permitted by subsection (3) of this section enter into, as principal or on behalf of a person associated with him, a transaction of purchase or sale of securities to he traded on the floor of a Securities Exchange or Capital Trade Point if a client of the dealer who is not associated with the dealer has instructed the dealer to purchase or sell, respectively, securities of the same class and the dealer has not complied with the instruction.

 

(2)     A dealer who contravenes the provisions of this section of the Decree commits an offence and is liable on conviction to a fin e of not less than N100,000.

 

(3)     The provisions of sub section (1) of this section shall not apply in relation to the entering into of a transaction by a securities dealer as principal or on behalf of a person associated with him if -

 

(a)     the instructions from the client of the securities dealer requires the purchase or sale of securities on behalf of the client to be effected only on specified conditions at which the securities were to be purchased or sold and the dealer has been unable to purchase or sell the securities by reasons of those conditions; or

 

(b)     the transaction is entered into in prescribed circumstances.

 

80.    For the purpose of preventing the excessive use of credit for the purchase or carrying of securities by dealers or member companies, the Commission may make regulations to provide for margin requirements, for the amount of credit which may, from time to time, be extended and maintained on all or specified securities or transactions or class of securities and transactions an d for matters connected therewith.

 

 

Part X

Trading in Securities

 

 

81.    (1)     A person shall not create, or cause to be created, or do anything which may create a false or misleading appearance of active trading in any securities in a Securities Exchange or Capital or Trade Point or a false or misleading appearance with respect to the market for or the price of an y such securities.

 

(2)     A person shall not, by means of purchases or sale of any securities that do not involve a change in the beneficial ownership of those securities, or by any fictitious transactions or devices, maintain, inflate, depress, or cause fluctuations in the mark et price of any securities.

 

(3)     Without prejudice to the generality of subsection (1) of this section, a person who -

 

(a)     effects, takes part in, is concerned in or carries out, either directly or indirectly, any transaction or sale or purchase of any securities, being a transaction which does not involve any, change in the beneficial ownership of the securities; or

 

(b)     makes or causes to be made an offer to sell any securities at a specified price where he has made or cause d to be made or proposes to make or to cause to be made, or knows that a person associated with him has made or caused to be made, an offer to purchase the same number, or substantially the same number of securities at a price which is substantially the same as the first mentioned price; or

 

(c)     makes or causes to be made an offer to purchase any securities at a specified price where he has made or caused to be made or proposes to make or to caused to be made, or knows that a person associated with him h as mad e or caused to be made or proposes to make or to caused to be made, an offer to sell the same number of securities at a price which is substantially the same as the first-mentioned price,

 

shall be deemed to have created a false or misleading appearance of active trading in securities on a Securities Exchange or Cap ital Trade Point.

 

(4)     For an act referred to in subsection (3) of this section, it shall be a defence if a person establishes that the purpose or purposes for which he did the act was not, or did not include, the purpose of creating a false or misleading appearance of active trading in securities on a Securities Exchange or Cap ital Trade Point.

 

82.    (1)     A person shall not effect, take part in, be concerned in or carry out, either directly or indirectly, two or more transactions in securities of a body corporate being transactions which have, or are likely to have the effect of raising or lowering the price of securities of the body corporate on a Securities Exchange or Capital Trade Point with intent to induce other persons to purchase, sell or subscribe for securities of the body corporate or of a related body corporate.

 

(2)     A person shall not effect, take part in, be concerned in or carry out, either directly or indirectly, two or more transactions in securities of a body corporate, being trans-actions which have or are likely to have the effect of maintaining or stabilizing the price of securities of the body corporate on a Securities Exchange or Capital Trade Point with intent to induce other persons to sell, purchase or subscribe for securities of the body corporate or o f 'a related body corporate.

 

(3)     A reference in this section m transaction in relation to securities of a body corporate include -

 

(a)     a reference to the making of an offer to subscribe, sell or purchase such securities of the body corporate; and

 

(b)     a reference to the making of all invitation however made which expressly or impliedly invites a person to offer to subscribe , sell or purchase such securities of the body corporate.

 

83.    No person shall make a statement, or disseminate information, which is false or misleading in a material particular and is likely to induce the sale or purchase of the securities by other persons or is likely to have the effect of raising, lowering, maintaining or stabilising the market price of securities if, when he makes the statement or disseminates the information -

 

(a)     he does not care whether the statement or information is true or false; or

 

(b)     he knows or ought reasonably to have known that the statement or information is false or misleading in a material particular.

 

84.    (1)   No person shall by -

 

(a)     making or publishing any statement, promise or forecast which he knows to be misleading, false or deceptive; or

 

(b)     any dishonest concealment of material facts;

 

(c)     the reckless making or publishing, dishonestly or otherwise of any statement, promise or forecast which is misleading, false or deceptive; or

 

(d)     recording of storing in, or by means o f any mechanical, electronic or other device, create information which he knows to be false or misleading in a material particular with intent to induce or attempt to induce another person to deal in securities.

 

(2)     It is a defence to any liability under subsection (1) of this section if it is established that, at the time when the person so recorded or stored the information, he had no reasonable grounds for expecting that the information would be available to an y other person.

 

85.    A person shall not circulate or disseminate, or authorize or be concerned in the circulation or dissemination of any statement or illegal in formation to the effect that the price of any securities of a body corporate will or is Rely to rise or fall or be maintained by reason of any transaction entered into or other a ct or thing done in relation to securities of that body corporate, or of a body corporate which is related to that body corporate if -

 

(a)     the person or a person associated with that person has entered into any such transaction or done any such act or thing; or

 

(b)     the person has received or expects to receive directly or indirectly any consideration or benefit for circulating or disseminating or authorising or being concerned in the circulation or dissemination the statement or information.

 

86.     It shall be unlawful for any person directly or indirectly in connection with the purchase or sale of any securities to -

 

(a)     employ any device, scheme or artifice to defraud;

 

(b)     engage in any act, practice or course of business which operate or would operate as a fraud or deceit upon any person; or

 

(c)     make any untrue statement of a material fact or to omit to state a material fact necessary in order to make the statements made in the light of the circumstances under which they were made, not misleading.

 

87.  conviction to a fine of not less than N500,000 or to imprisonment of a term not exceeding three years or to both such fine and imprisonment.

 

88.   (1)    Subject to section 9 0 of this Decree, an individual who is an insider of a company shall not buy or sell, or otherwise deal in the securities of the company which are offered to the public for sale or subscription if he has information which he is unpublished price sensitive information in relation to knows those securities.

 

(2)     The provisions of subsection (3 ) of this section shall apply where -

 

(a)     an individual has information which he knowingly obtains (directly or indirectly) from another individual who -

 

(i)     is connected with a particular company, or was at any time within the six months p receding the obtaining of the information , so connected ,

 

(ii) the former individual knows or has reasonable cause to hold the information by virtue of being so connected; and

 

(b)     the former individual knows or has reasonable cause to believe that, because o f the latter's connection and position, it would be reasonable to expect him not to disclose the information except for the proper performance of the functions attached, to that position.

 

(3)     The former individual mentioned in subsection (2) of this section -

 

(a)     shall not himself deal in securities of that company if he knows that the information is unpublished price sensitive information in relation to those securities; and

 

(b)     shall not himself deal in securities of any other company if he knows that the information is unpublished price sensitive information in relation to those securities and it relates to any transaction (actual or contemplated) involving the first company and the other company, or involving one of them an d securities of the other, or to the fact that any such transaction is no longer contemplated.

 

(4)     Where a n individual is contemplating or has contemplated, making (with or without another person) a take-over offer for a company in a particular capacity, that individual shall not deal in securities of that company in another capacity if he knows that the offer is contemplated or is no longer contemplated and the offer is unpublished price sensitive information in relation to those securities.

 

(5)     Where an individual has knowingly obtained (directly or indirectly) from an individual to whom subsection (4) of this section applies, information that the offer referred to in th at subsection is be ing contemplated or is no longer contemplated, the former individual shall not himself deal in securities of that company if he knows that the information is unpublished price sensitive information in relation to those securities.

 

(6)     An individual who is for the time being prohibited by the provisions of 'this section from dealing on an approved Securities Exchange or Capital Trade Point in any securities shall not counsel or procure any other person to deal in those securities, knowing or having reasonable cause to believe that person would deal in those securities.

 

(7)     An individual who is for the time being prohibited by the provisions of this section from dealing in any securities by reason of his having any information, shall not communicate that information to any other person if he knows or has reasonable cause to believe that other person will make use of the information for the purpose of dealing or of counselling or procuring an y other person to deal in those securities.

 

89.   (1)     This section applies to any information which -

 

(a)     is held by a public officer or former public officer by virtue of his position or former position as a public officer, or is knowingly obtained by an individual (directly or indirectly) from a public office r or former public officer w ho he knows or has reasonable cause to believe held the information by virtue of an y such position;

 

(b)     it shall be reasonable to expect an individual in the position of a public officer or former position of a public officer not to disclose except for the proper performance of the functions attaching to that position; and

 

(c)     the individual holding it know s it is unpublished pr ice sensitive information in r elation to securities of a particular company (hereinafter referred to as "relevant securities).

 

(2)     This section applies to a public officer holding information to which this section applies and to any individual who knowingly obtained any such information (directly or indirectly) from a public officer or former public officer who that individual knows or has reasonable cause to believe held the information by virtue of this position or former position as a public officer.

 

(3)     Subject to section 90 of this Decree an individual to whom this section applies shall not -

 

(a)     deal in an y relevant securities;

 

(b)     counsel or procure any other person to deal in any such securities, knowingly or having reasonable cause to believe that other person, would deal in those securities; or

 

(c)     communicate to any other person the information held or (as the case may be) obtained by as mentioned in -sub section (2 ) of this section if he knows or h as reasonable cause to believe that he or some other person shall make use of the information for the purpose of dealing or of counselling or procuring any other person to deal on a Securities Exchange or Capital Trade Point in any such securities.

 

(4)     If it app ears to the Minister that the m embers, officers or employees of o r persons otherwise connected with any body appearing to him to exercise public functions may have access to unpublished price sensitive information relating to securities, he may by order declare that those persons are public officers for the purposes of this section.

 

90.   (1)    The provision s of section s 88 an d 89 of this Decree shall not prohibit an individual by reason of his having any information from -

 

(a)     doing any particular thing otherwise than with a view to the making of a profit or the avoidance of a loss (whether for himself or another person) by the use of that information;

 

(b)     entering into a transaction in the course of the exercise in good faith of his functions as a liquidator, receiver or trustee in bankruptcy;

 

(c)     doing any particular thing if the information -

 

(i)     was obtained by him in the course of a business of a stockbroker in which he was engaged or employed,

 

(ii)     was of a description which it would be reasonable to expect him to obtain in the ordinary course of that business, and he does that thing in good faith in the course of that business-, or

 

(d)     doing any particular thing in relation to any particular securities if the information was of a description which it would be reasonable to expect him to obtain in the ordinary course of that business and he does that thing in good faith in the course of that business.

 

(2)     An individual shall not, by reason only of his having information relating to any particular transaction, be prohibited by-

 

(a)     subsection (2), (3)(b), (4) or (5) of section 88 of this Decree from dealing an a Securities Exchange or Capital Trade Point in any securities; or

 

(b)     subsection (6) or (7) of section 88 of this Decree from any other thing in relation to the provisions mentioned in paragraph (a) of this subsection; or

 

(c)     section 89 of this Decree from doing anything if h e does that thing in order to facilitate the completion or carrying out of the transaction.

 

91.   (1)     Where a trustee or personal representative is a body corporate or an individual acting on behalf of that trustee or personal representative who, with the exception of subsection (1)(a) of section 90 of this Decree would be prohibited by sections 88 and 89 of this Decree from dealing or counselling or procuring any other person from dealing in any securities, deals in those securities or counsels or procures any other person from dealing in them, shall be presumed to have acted with propriety and accordingly exempted from the provisions of sections 87 and 88 of this Decree:

 

Provided that he acted on the ad vice of a person who -

 

(a)     appears to him to be an appropriate person from whom to seek such service; and

 

(b)     did not appear to him to be prohibited by virtue of section 88 or 89 of this Decree from dealing in those securities.

 

(2)     In this section, the expression 'with propriety' means otherwise than with a view to the making of a profit or the avoidance of a loss (whether for him self or another person) b y the use of the information in question.

 

92.     No transaction shall be void or voidable by reason only that it was entered into in contravention of the provisions of section 88 or 89 of this Decree.

 

93.     An insider who contravenes any provision of section 88 of this Decree or any person who contravenes any provision of section 89 of this Decree is guilty of an offence and liable on conviction to -

 

(a)     compensate any person for any direct loss suffered by that person as a result of the transaction, unless the information w as known or with the exercise of reasonable diligence could have been known to that person at the time of the transaction; and

 

(b)     be accountable to the company for the direct benefit or advantage received or receivable by the insider a s a result of the transaction.

 

(2)     An action to enforce a right created by subsection (1) of this section may be commenced only within two years after the date of completion of the transaction which gave rise to the cause of action.

 

94.    An individual, who contravenes the provisions of section 88 or 89 of this Decree commits of an offence and is liable on conviction to a fine of N1,000,000 or to imprisonment for a term of two years or to both such fine and imprisonment.

 

95.    (1)     In this Part-

 

"public officer" has the meaning assigned to it under section 277 of the Constitution of the Federal Republic of Nigeria 1979 , as amended;

 

"related company" in relation to a company, means any body corporate which is that company's subsidiary or holding company or a subsidiary of that company's holding company.

 

(2)     For the purpose of this Part -

 

(a)     an individual is an insider of a company if he is or at any time in the preceding six months h as been knowingly connected with the comp any;

 

(b)     an individual is connected with a company if, but only if -

 

(i)     he is a director of that company or a related company, or

 

(ii)     he occupies a position as an officer (other than a director) or employee of that company or a related company or a position involving a professional or business relationship between him self (or his employer or a comp any of which he is a director) and the first company or a related company which in either case may reason ably be expected to give him access to in formation which, in relation to securities of either company, is unpublished price sensitive information, and which, it would be reasonable to expect a person in his position not to disclose except for the proper performance of his functions ;

 

(c)     any reference to unpublished price sensitive information to any securities of a company is a reference to information which -

 

(i)     relates to specific matters relating or of concern (directly or indirectly) to that company, that is, is not of a general nature relating or of concern to that company, and

 

(ii)     is not generally known to those persons who are accustomed to or would be Rely to deal in those securities but which would, if it were generally known to them be Rely materially to affect the price of those securities.

 

96.     An y person who contravenes any of the provisions of this Part of this Decree commits an offence and is liable on conviction -

 

(a)     in the case of a person not being a body corporate, to a fine of not less than N50,000 or to imprisonment for a term of not exceeding seven years; or

 

(b)     in the case of a person being a body corporate, to a fine not less than N 1,000,0 00.

 

97.  (1)     A person who is liable under this Part of this Decree shall pay compensation at the order of the Commission or the Investment and Securities Tribunal, as the case may be, to any aggrieved person who, in a transaction for the purchase or sale of securities entered into with the first-mentioned person or with a person acting for on h is behalf, suffers a loss by reason of the difference between the price at which the securities would have been likely to have been dealt in such a transaction at the time when the first-mentioned transaction took place if the contravention had not occurred.

 

(2)     The amount of compensation for which a person is liable under subsection (1) of this section is the amount of the loss sustained by the person claiming the compensation or any other amount as may be determined by the Com mission or the Investment and Securities Tribunal.

 

98.    An action under this section of this Decree for the recovery of a loss shall not be commenced until after the expiration of two years after the d ate of completion of the transaction in which the loss occurred.

 

(2)     Nothing in subsection (1) of this section shall affect any liability that a person may incur under any other law or enactment.