Senate advances Investments and Securities Bill to secure investor interests

Onome Amuge

The Nigerian Senate has passed the Investments and Securities (Repeal and Enactment) Bill 2024 for its third reading, paving the way for the enactment of reforms to the country’s capital market regulatory framework.

The passage was achieved following the Senate’s deliberation and adoption of recommendations proposed by the Committee on Capital Market, led by Senator Osita Izunaso (APC Imo West).

Speaking on the importance of the bill, Tahir Monguno, the senate chief whip emphasised its potential to safeguard investors and eradicate fraudulent practices within the Nigerian capital market.

Senator Izunaso, who led the debate on the bill, noted that it would repeal the Investments and Securities Act of 2007 and establish the Investments and Securities Act 2024.

Izunaso said: “The Bill seeks to repeal the existing Investments and Securities Act 2007, and to establish a new market infrastructure and wide-ranging system of regulation of investments and securities businesses in Nigeria especially in the areas of derivatives, systematic risk management, financial market infrastructure and Ponzi scheme and platforms.

According to Izunaso,  the bill’s goal was to empower the Securities and Exchange Commission (SEC) as the premier regulatory body for the Nigerian Capital Market.

The four primary objectives of the bill, as outlined by the senator, include; fostering capital formation, safeguarding investors, maintaining a fair, efficient, and transparent market, and curbing systemic risk.

“It will protect the integrity of the security market against all forms of market abuse and insider dealing. It will prevent unauthorised, illegal, unlawful, fraudulent and unfair trade practices, relating to securities and investments,” he added.

Izunaso further explained that the bill is aimed at reinforcing the SEC’s capacity to effectively carry out its statutory mandate and revitalise the capital market, a key sector in the economy.

In his view, the legislation would grant the SEC the tools it needs to perform its regulatory functions at the highest level, thereby fostering the growth and development of Nigeria’s capital market and consequently contributing to the country’s overall economic transformation.

The bill was also supported by Senators Isa Jibrin(APC-Kogi)  and Sen. Adetokunbo Abiru (APC-Lagos).

According to Jibrin, “We have been having problems in terms of definite assignments that the Securities and Exchange Commission (SEC) is supposed to carry to ensure that the Nigerian Capital Market functions effectively. This amendment is very important to ensure that SEC does its job in line with the global best practice.”

Following a thorough deliberation of the Bill, Senate President Godswill Akpabio,declared that the bill had been passed by the Senate.

Akpabio emphasised the importance of the bill, noting that it would inspire greater confidence in investors, who would be more inclined to channel their funds into the capital market if the risks were mitigated. 

The senate president thereafter passed the bill to the Senate Committee on Capital Market for further legislative action.

Emomotimi Agama, the director general of the SEC, recently discussed the provisions of the Investments and Securities (Repeal and Enactment) Bill 2024, specifically highlighting the bill’s tougher stance against Ponzi scheme operators.

Under the proposed legislation, Agama stated that Ponzi and pyramid scheme operators would be subject to a minimum fine of N20 million or up to a decade in prison, or both, for their illicit activities.

According to  Agama, the bill would unequivocally ban Ponzi and pyramid schemes, thereby boosting the existing protections for investors against illegitimate fund managers.

He also noted that the bill’s primary objective was to safeguard the interests of Nigerian investors and strengthen the competitiveness of the country’s capital market on the global stage.

Amongst the various amendments proposed in the bill, a particularly notable change would extend the coverage of the Investor Protection Fund (IPF), a fund established by securities exchanges, to encompass investor losses arising from the deregistration of brokerage firms.

Until now, the IPF’s remit has been limited to losses due to bankruptcy or negligence, but this amendment would expand its reach, offering greater protection for investors in case of brokerage firm deregistrations.

 “This bill’s passage would be pivotal in setting Nigeria on the path to a world-class capital market,” Agama stated, underscoring the role of a robust capital market in economic diversification.

According to the SEC, the ISB 2024 is set to lay the groundwork for robust regulatory oversight of Commodity Exchanges and Warehouse Receipts, two critical components of the Nigerian commodities market that have hitherto lacked a comprehensive legal framework.