Investors to forfeit multiple subscriptions to public off ers –SEC

By Patrick Andrew with agency report

Investors in the Nigerian capital market with multiple subscriptions for the same company’s public off ers may forfeit their investment, the Securities and Exchange Commission, SEC, said yesterday. SEC said at its last Capital Market Committee meeting (CMC) that the report of a committee on formulating a uniform position for the treatment of multiple subscriptions to public off ers was approved. It said in a circular that the Nigerian capital market cannot, and should not be seen to be rewarding wrongful acts of the perpetrators, to ensure the global sustainability of the market’s integrity and reputation. Th e circular observed that one major source of unclaimed dividend remained the use of nonexistent identity to make multiple subscriptions to public off ers. Consequently, the committee unanimously agreed that

submitting multiple applications for the same public off er was illegal, as perpetrators did so under false pretence. Th e report described two groups of investors involved in multiple subscriptions: one group are investors who actually exist, but decide to joggle their names in diff erent forms to enable them purchase more than the permitted units of shares on off er while the other group are investors who do not exist, but use fi ctitious names for the purpose of purchasing more than the permitted number of shares during public off ers.

Th e report said both groups had fraudulent intentions and their actions are illegal. To check this illegality, the CMC recommended that investors in the fi rst group should be considered for a level of forbearance, by giving them a grace period up to September 1, 2017 to come forward and prove their individual identities, subject to highest know your customer, KYC criteria, to be defi ned by the SEC. Owners of stocks, whose identities were established, SEC said, would be allowed to consolidate their accounts into one. At the expiration of the deadline, unclaimed dividends traceable to this category of investors identifi ed and consolidated, along with their securities shall be transferred to the Nigerian Capital Market Development Fund to be managed transparently in a separate basket under clear guidelines. Th ose in the second category whose securities with non-existent owners, or whose unclaimed dividends and related securities cannot be ascribed to anyone shall also be transferred to the Nigerian Capital Market Development Fund. Going forward, the commission said, any investor found to be engaging in the illegal act of multiple subscriptions for the same public off er shall be liable for prosecution. Besides, the capital market shall put in place adequate processes, leveraging on technology, towards detecting and identifying such cases of multiple subscriptions in the future. “All investors with cases of multiple subscriptions considered for forbearance should by this circular approach stockbrokers or registrars to regularize their investment,” the commission said through its spokesperson, Naif Abdussalam.

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