Securities and Exchange Commission (SEC) has concluded arrangements to proscribe underhand trading in the shares of unlisted public limited liability companies (Plcs).
Anyone or institution that henceforth facilitates or engages in underhand trading on securities of unlisted public limited liability company shall be liable to monetary fine and sanction by SEC, according to a new regulation, being reviewed by the apex capital market regulator.
A management source at SEC said the new rule is meant to protect investors and enhance the integrity of the over-the-counter market.
The new rule effectively cancels ‘black market’ trading on the shares of several unlisted Plcs, including companies, such as Fan Milk Plc, Friesland Campina WAMCO Nigeria Plc, Industrial and General Insurance (IGI), Food Concepts Plc and BGL Plc,s among others.
According to the new rule, all securities of public unlisted companies shall be bought, sold or transferred only by means of a system approved by SEC and under such terms and conditions as the Commission may prescribe from time to time.
The new rule prohibits anyone from buying, selling or engaging in transfer of securities of a public unlisted company except through the platform of a registered a securities exchange established for the purpose of facilitating over-the-counter (OTC) trading of securities.
“Any public unlisted company, director, company secretary, registrar, broker, dealer or such other persons who facilitate the buying, selling or transfers of the securities of a public unlisted company otherwise than through the platform of a duly registered securities exchange, shall be liable to a penalty of not less than N100, 000 in the first instance and not more than N5, 000 for every day of default,” the rule stated.
The rule concentrates trading on the shares and other securities of unlisted Plcs unto the only registered OTC platform, the NASD Plc. Formerly known as the National Association of Securities Dealers, NASD Plc is a registered OTC trading platform for unquoted securities including equities and bonds. NASD is owned by several investment and financial institutions as well as strategic investors. It is registered by SEC as an organised trading platform for unlisted securities.