SECURITIES AND EXCHANGE COMMISSION (SEC)
In 1962, a year after the establishment of the Lagos Stock Exchange, an adhoc
consultative and advisory body known as the Capital Issues Committee
was established under the aegis of the Central Bank of Nigeria (CBN). Its
mandate was to examine applications from companies seeking to raise capital
from the market and to recommend the timing of such issues. The Committee,
however, had no legal backing, but operated non-officially as a capital market
consultative and advisory body within the Central Bank of Nigeria.
An increase in the level of economic activities, and consequently capital market
activities after cessation of the civil war hostilities, coupled with the
promulgation of the Nigerian Enterprises Promotion Decree in 1972,
necessitated the creation of another body, the Capital Issues Commission in
March, 1973 to take over the activities of the Capital Issues Committee.
The new body statutorily backed by the Capital Issues Commission Decree of
1973 which established a board of nine members, including a representative
of the Central Bank of Nigeria, serving as Chairman, while the other eight
members were drawn from some Federal Ministries, the industrial and finance
sectors.
Following the acceptance of the recommendations of the Financial System
Reviewing Committee in 1976, the Federal Government endorsed the
establishment of the Securities and Exchange Commission to supersede the
Capital Issues Commission. Consequently, the Securities and Exchange
Commission Decree No. 71 of 1979 was promulgated, effective retrospectively
from April 1, 1978, thus establishing the Commission and vesting wider power
on it to regulate and develop the Nigerian capital market, in addition to
determining the prices of issues and setting the basis of allotment of securities.
Unlike its two predecessors, the Commission at this stage was excised from the
CBN, although it continued to receive further funding from the apex bank. It
also had an enlarged 12-member board with a CBN representative as its
Chairman. Other members were drawn from the Ministries of Finance, Trade
and Industries, The Nigerian Stock Exchange and the Nigerian Enterprises
Promotion Board; other members were nominated on basis of personal merit.
The Commission, however, took off effectively on January 1, 1980 with a staff of
fifty one; seven of them were on secondment (for a period of three years) from
the Central Bank of Nigeria (CBN), while others were newly recruited. Nine
years after the establishment of the Securities and Exchange Commission, the
enabling law, Decree No. 7 of 1979 was re-enacted as Securities and Exchange
Commission Decree No. 29 of 1988 with additional provisions to address
observed lapses in the previous arrangement and to enable the Commission
pursue its functions more effectively.
To further enhance the Commission’s pursuit of its objects of investor protection
and capital market, another review was carried out in 1996 by a 7-man panel
headed by Chief Dennis Odife. A new Act known as “The Investment and
Securities Act No. 45 of 1999” was promulgated on May 26, 1999 based on the
panel’s recommendations. The Act repealed the SEC Act of 1988. The new Act is
expected to promote a more efficient and virile capital market, pivotal to
meeting the nation’s economic and developmental aspirations.
Part II Section 8 of the Act stipulated twenty five functions in the previous Act.
New roles were added to the existing roles of the Securities and Exchange
Commission. Among the various new roles of the Commission are to:
(a) Register and regulate Securities Exchange; Capital Trade Points; Futures,
Options and Derivatives Exchanges; Commodity Exchanges and any
other recognised Investment Exchange:
(b) Prepare adequate guidelines and organised training programmes and
disseminate information necessary for the establishment of securities
exchange and capital trade points;
(c) Funds, Capital Trade Points, Futures, Options and Derivatives as well as
other intermediaries and self-regulatory organisations in the securities
industry;
(d) Keep and maintain separate registers of foreign direct investment and
foreign portfolio investments;
(e) Promote investors’ education and the training of categories of
intermediaries in the security industry. In addition, the Act empowers
the Commission to establish specialised departments for the purpose of
regulating:
(i) Securities Exchange; Capital Trade Points; Options and
Commodity Exchange;
(ii) Capital market operators including corporate members securities
exchange and individuals; professional firms, that is, accountants,
solicitors, surveyors, engineers and other professionals who
undertake investment business either as investment advisers or
consultants;
(iii) Collective investments including all collective investment
schemes such as unit trusts, esusu schemes, pension funds and
other such schemes; and
(iv) Mergers, acquisitions, takeover and other forms of business
combinations under the Act.
Another major new provision is the establishment of Investors’ Protection Fund.
The Act provides that a Securities Exchange or Capital Trade Point shall establish
and maintain the fund to be administered by their individual governing councils
respectively.
The Securities and Exchange Commission is also a member of International
Organisation of Securities Commission (IOSCO).
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