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Business News

SEC to strictly regulate crowdfunding, issues new rules

SEC has proposed a new set of rules that will regulate crowdfunding businesses and deepen the capital market in Nigeria.

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Like Oando, SEC investigates, SEC’s e-dividend mandate criticised for being difficult  Lafarge Africa, Do not put all your eggs in one basket - SEC warns investors , E-Dividend: 2.820 million investors enrolled on e-DMMS in Q3’19, SEC reaffirms commitment to promote Commodities Trading, SEC threatens to suspend outdated accounts, move to address unclaimed dividends, Wonder bank clampdown: Ponzi scheme operators lose N2.35 billion assets to SEC. SEC to strictly regulate crowdfunding, issues new rules

The Securities and Exchange Commission (SEC) has proposed a new set of rules that will regulate crowdfunding businesses and deepen the capital market in Nigeria.

The commission had some weeks back, announced its plans to regulate the crowdfunding business in Nigeria in order to reduce the risks associated with it for investors and financiers.

Crowdfunding is the practice of raising a small amount of fund from a large number of people typically through the internet and has been an alternative source of finance for businesses. It is the use of small amounts of capital from a large number of people to finance a new business venture.

Some of these rules which were obtained from the commission’s website are as follow:

  • All Micro Small and Medium Enterprises (MSMEs} incorporated as companies in Nigeria with a minimum of two years operating track record shall be eligible to raise funds through a crowdfunding portal registered by the commission, in exchange for the issuance of shares, debentures or any other investment instrument.
  • Issuance of securities or other investment instruments shall be conducted through a registered crowdfunding portal.
  • The term issuer as used in the rule, shall include all entities controlled by or under common control with the issuer and any predecessors for the purpose of calculating the aggregate amount of securities and investment instruments offered and sold by an issuer under this rule and determining whether an issuer has previously sold securities or investment instruments within a 12-month period.
  • The aggregate amount of securities sold to any investor in investment-based crowdfunding during the 12-month period shall not exceed 10% of their annual income in a calendar year for retail investors. However, sophisticated, high net worth and qualified institutional investors are not subject to any limits.
  • Some exemptions to certain provisions in this rule include: the issuer may offer or sell securities or investment instruments without the need for prior registration of the securities or investments as long as the issuer is an entity incorporated in Nigeria and accredited and /or accepted by a crowdfunding portal to utilize its platform.
  • The aggregate amount of securities or investment instruments that can be offered and sold by the issuer within a 12-month period shall comply with the following limit: medium enterprises can only raise a maximum amount not exceeding N100 million, small enterprises can only raise a maximum amount not exceeding N70 million and micro-enterprises can only raise a maximum amount not exceeding N50 million.
SEC to strictly regulate crowdfunding, issues new rules

Crowdfunding

[READ MORE: SEC adjusts operations, introduces e-filing, other measures)

The commission also set out some rules for the operation of crowdfunding portals.

Crowdfunding portal is a website, portal, intermediary portal, application, or other similar modules that facilitate interaction between fundraisers and the investing public.

Some of the requirements for crowdfunding portals are:

  • Every platform that facilitates interaction between fundraisers and the investing public (crowd) for the purpose of any investment-based crowdfunding shall be registered with SEC as a crowdfunding portal.
  • A crowdfunding portal that is located outside Nigeria will be considered as actively targeting Nigerian investors if the operator or its representative, promotes directly or indirectly the platform in Nigeria.
  • A crowdfunding portal may be registered and operated only by an operator registered with the commission as a crowdfunding intermediary
  • Only entities registered with the commission as an exchange, dealer, broker, broker/dealer or alternative trading facility as prescribed under the Act and the SEC rules and regulations may be registered as a crowdfunding intermediary.

You can have a comprehensive look at the rules here.

Chike Olisah is a graduate of accountancy with over 15 years working experience in the financial service sector. He has worked in research and marketing departments of three top commercial banks. Chike is a senior member of the Nairametrics Editorial Team. You may contact him via his email- [email protected]

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Corporate Press Releases

AXA Mansard emerges Best Health Insurance Product Winner 2021

The winning product was the AXA Platinum Plus Cover which has been specially designed to provide a world-class health cover for the insurer’s customers.

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Health Management Organization, AXA Mansard Health Limited, recently announced that it has emerged as the winner of the best health insurance product of the year in the Insurance Product & Process section of the just concluded 11th Annual Global Banking and Finance Awards 2021.

The winning product was the AXA Platinum Plus Cover which has been specially designed to provide a world-class health cover for the insurer’s customers. With access to roam over 1,700 hospitals locally, care in India, UAE and South African hospitals and limited in-patient cover in the UK, France, and Germany for up to $1000 in healthcare benefits.

The product provides enrolees with benefits such as twenty-four-hour dedicated Telemedicine service, home vaccination service, free home delivery of special medications, partnership with healthy eating restaurants, and smarter budget-friendly discounts on healthy meals.

Speaking on the award, Chief Executive Officer, AXA Mansard Health Limited, Tope Adeniyi, said “We thank our highly esteemed customers for this prestigious award, as they are the reason, we passionately drive to improve our product offerings and execute innovative initiatives. This award is recognition of our unflinching commitment to our customers and an affirmation of our current position as the leading health insurance company in the country.”

AXA Mansard Health has a twenty-four-hour call centre, a team of highly trained and dedicated professionals, service portals at all AXA Mansard Welcome Centres nationwide and has deployed state-of-the-art technology to attain operational excellence while contributing to prompt service delivery and overcoming of challenges being encountered in the Nigerian health insurance industry.

Whilst thanking the organizers, Adeniyi noted that “the company is counting on the continued support of our stakeholders to continuously provide superior customer experience and to develop more innovative and value-adding products. We will continue to innovate, create new products, improve our product offering and refine our service delivery to ensure we continuously meet the changing needs of our customers”.

AXA Mansard Health Limited is the Health Maintenance Organization (HMO) arm of the AXA Mansard group of companies. The HMO is geared to promote her members’ wellbeing.

The HMO serves all clients across the country virtually and has established functional offices in Lagos (the head office), Abuja, Port-Harcourt, Enugu, with ongoing plans to open offices in other locations.

Global Banking & Finance Review is a leading Online and Print Magazine, which has evolved from the growing need to have a more balanced view, for informative and independent news within the financial community.

Since its inception in 2011, The Awards reflect the innovation, achievement, strategy, progressive and inspirational changes taking place within the Global Financial community. According to the magazine’s publishers the awards were created to recognize companies prominent in their areas of expertise and excellent in financial service delivery.

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Energy

NNPC to boost power generation with additional 5,000 megawatts to national grid

The NNPC has revealed plans to boost power generation with additional 5,000 megawatts of electricity to the national power grid.

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FG to give up majority stakes in its 4 refineries, to be privately managed, NNPC, Pipeline Vandalism: Stakeholder collaboration, critical to tame menace - Kyari, Nigeria explains when it will fully comply with OPEC+ output cut

The Nigerian National Petroleum Corporation (NNPC) has announced plans to boost power generation with additional 5,000 megawatts of electricity to the national power grid once the ongoing gas projects throughout the country are completed.

This follows progress being made on several gas projects, including the NLNG Train 7, with a foreign direct investment of between $3 billion and $5 billion.

According to a report from Thisday, this disclosure was made by the Group Managing Director of NNPC, Mallam Mele Kyari, while speaking at a virtual event organised by the Nigerian Gas Association (NGA), themed: “Powering Forward: Enabling Nigeria’s Industrialisation Via Gas,”

READ: General Electric rehabilitates 3 gas turbines at NDPHC power plants

Kyari, who was represented by the Chief Operating Officer, Gas and Power, Mr Yusuf Usman, said the NNPC was committed to fulfilling President Muhammadu Buhari’s directive to boost domestic gas supply.

Other gas projects listed by the NNPC boss include the AKK, which he described as one the largest and most aggressive gas infrastructure that has ever been embarked upon in Nigeria, stretching 614 km from Ajaokuta, Abuja, Kaduna and Kano, and Lot B of the OB3 gas project, which is already producing 125 mmscfd of gas.

He said the NNPC hopes to establish 2 gas hubs, one at Oben and the other at Brass, adding that one of the presidential mandates is to deliver on gas and power and create a market in the domestic environment that will consume the planned 4.5bcf of gas.

Kyari pointed out that the state oil giant and its partners are able to raise about $260 million within Nigerian merchant banks and 2 African banks for the Asa North gas project.

READ: Buhari flags off $2.8 billion gas pipeline project, biggest in Nigeria’s history

What the Group Managing Director of NNPC is saying

Kyari in his statement said, “At the moment, the power sector is challenged and all efforts have to be put in to unlock the liquidity in the downstream sector and expand the transmission network. This will enable us to sell the gas we have already invested in and enhance the economic prosperity of the country.

“Within the NNPC, we are looking to establish about five gigawatts of additional power into the network. So, NNPC is engaging with the stakeholders to resolve the power sector issue so that investment that has been made in generating gas can be realised.

He also stated that the NNPC had started creating a link between the domestic gas pipelines infrastructure and export gas pipelines to establish an outlet into the export route which will make the projects more bankable.

What this means

  • The actualization of this plan by the NNPC will give a much-needed boost to the power sector which has been facing serious crisis despite the rapidly growing economy.
  • Despite the power sector reform, which saw the Federal Government give up control of power generation and distribution but still retained transmission, the crisis in the sector still persists, with serious negative impacts on the agricultural, industrial and mining sectors. Even the Micro Small and Medium Enterprises are not saved from its crippling effects.
  • The addition of 5,000 megawatts of electricity, which is about half of what the country generates at the moment, will go a long way to help reduce the crisis in the power sector and boost the economy, which is still very fragile.

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