The Securities and Exchange Commission , Nigeria’s apex capital market regulator, and the NGX Regulation Limited are reviewing the rules to align them with realities and strengthened the regulatory frameworks against abuses. The NGX Regulation Limited is the new entity that took over the self-regulatory functions of the defunct Nigerian Stock Exchange after the demutualisation of the NSE.
Regulatory documents showed that while the NGX Regulation has started the implementation of amended rules on disclosures and restriction of trading by insiders with price-sensitive information, SEC has started the process for a material amendment of its rules and regulations to further ensure fair and equitable dealings and further hold insiders and major investors to best practices.
In a move that seeks to address the concerns of investing public and increase protection for minority shareholders, the proposed amendments place relevant approval for mergers, acquisition or corporate restructurings on the condition that the SEC is satisfied that “all shareholders are fairly, equitably and similarly treated and given sufficient information regarding the transaction”.
Besides, SEC may also decline request for exemption from making mandatory takeover bid or mandatory tender offer by major investors that had acquired sizeable shares of a company. Section 131 of the Investment and Securities Act and Rule 445 of SEC make it mandatory for any institution or person that acquires at least 30 per cent of a company to make an MTO to other minority shareholders. There are however exemptions in few instances.
While the rules allow the NGX to permit certain trading relating to execution of transactions pursuant to statutory or regulatory obligations or court orders, stock options under a pre-existing employee stock option scheme and large volume trades or block divestments between insiders only, the Exchange “may refuse to grant approval for trading during a closed period, where it considers that such a trade if allowed will interfere with the fair and orderly functioning of its market”.
According to the Commission, the proposed rules are also intended to ensure that investors receive the financial information necessary to understand the potential effects of significant acquisitions or dispositions.