The Securities and Exchange Commission (SEC) has ordered all companies offering crowdfunding services to register with it, on or before June 30 or stop operations.
The SEC disclosed this in a statement in Abuja, on Thursday, citing new crowdfunding regulations that were introduced earlier this year to protect investors and boost innovation in the space.
What the SEC is saying about new crowdfunding rules
”In line with the transitional provisions of the rules, all persons/entities operating an investment crowdfunding platform prior to the commencement of the rules were expected to restructure all operations in accordance with the requirements of the rules.
They are also expected to apply for registration not later than 90 days from the effective date.
While the transitional period elapsed on April 21, the commission hereby directs all existing investment crowdfunding portals/digital commodities investment platforms to note the requirements and eligibility criteria for raising funds through and/or operating a crowdfunding Portal.
They are to comply with the registration requirements or cease operations by June 30,” the new rule states.
The SEC added that failure to comply will see operations of such platforms get categorised as illegal and attract regulatory sanction as stipulated in the rules.
What you should know
Nairametrics reported earlier this year that the Securities and Exchange Commission, SEC, issued updated guidelines and rules governing the operation of crowdfunding activities in Nigeria.
The highlights include, anyone seeking to raise money through a crowdfunding service will have to go through a Crowd Funding Intermediary (CFI).
The new rules also limit the amount retail investors can invest in a crowdfunding transaction to just 10% of their net annual income in a year, meaning individuals cannot invest more than 10% of their net salaries in crowdfunding activities. However, this excludes high net worth individuals who do not have limits.