SEC plans sanction for issuing houses over bank recapitalisation rule violations

To ensure compliance with banking sector recapitalisation guidelines, the Securities and Exchange Commission has threatened to impose a N1m penalty on banks if they fail to submit complete capital raise applications.

In a statement made available to The According on Friday, it was stated that banks must adhere to certain norms and procedures to acquire capital by rights issuance, private placements, or other authorized means.

It added that applications and supporting documentation must be submitted online via email, noting that documents that are transmitted will be examined and applicants will be notified electronically of any deficiencies found.

“Where an application is returned for being incomplete – a penalty of
N1,000,000 and re-filing fee of
N100,000 shall apply. This fee is payable by the Issuing House without a recourse to the Issuer or the Issue proceeds,’’ partly read the statement.

The SEC noted that the initiative supported the Central Bank of Nigeria’s directive for banks to raise additional capital, which was essential for navigating economic challenges and achieving a $1tn economy by 2030.

“As the regulatory institution mandated to regulate and develop the Nigerian capital market, the Securities and Exchange Commission has the responsibility to ensure a smooth, transparent, and efficient capital raising process by the banks.

“This framework outlines the guidelines and procedures banks are required to follow to raise capital through rights issuance, private placements, or other approved methods during the 2024–2026 recapitalization period.

“The SEC stated that applications and documents are filed electronically via email, adding that documents forwarded will be reviewed, and where there are observed deficiencies, this will be communicated to the applicants electronically.”

It noted that international banks must increase their capital base to N500bn under the new CBN capital requirement, while national banks must do the same with N200bn and regional banks with N5

“The commission said the framework would help to ensure that the capital raising process is conducted efficiently, transparently, and in a manner that protects the interests of all stakeholders,” it added.

The SEC advised banks and stakeholders to adhere to those guidelines meticulously, highlighting the framework’s alignment with existing regulatory provisions under the Investment and Securities Act of 2007.

It emphasised the importance of updating corporate information with the Corporate Affairs Commission before filing applications, streamlining the approval process, and enhancing regulatory oversight.

“The commission may require other documents or information as may be necessary. Where an issuer had already filed necessary documents with the SEC (e.g., a Memorandum and Articles of Association (Memart) or a certificate of incorporation or a certificate of increase in share capital, etc.),” the regulator explained.

On March 28, the CBN announced new minimum capital requirements for banks, setting the minimum capital base for commercial banks with international authorisation at N500bn.