By Samuel Bankole
Nigeria’s Securities and Exchange Commission (SEC) directed that all existing investment crowdfunding portals/digital commodities investment platforms should register in accordance with its guidelines before June 30, 2021, or cease operations.
In a statement on Thursday, the capital market regulator said operations of such platform that fail to comply with its registration requirement before the deadline would be categorized as illegal and attract regulatory sanction as stipulated in the Rules.
“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 and comply with the registration requirements or cease operations by the 30th of June, 2021, failing which the operations of such platform would be categorized as illegal and attract regulatory sanction as stipulated in the Rules,”SEC stated in the circular posted on its website dated May 26.
.The SEC new rules governing Crowdfunding business in Nigeria came into effect on January 21, 2021, as part of efforts by the commission to ensure investor protection, while encouraging innovation in the conduct of securities business.
READ ALSO: Nigeria Requires N36 Trln Investment In Infrastructure To Attain Double-Digit Growth~CBN
“in line with the transitional provisions of the Rules, all persons/entities operating an investment crowdfunding portal/digital commodities investment platform prior to the commencement of the rules were expected to restructure all operations in accordance with the requirements of the rules and apply for registration not later than 90 days from the Effective Date.
“While the transitional period elapsed on the 21st day of April 2021, 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 and comply with the registration requirements or cease operations by the 30th of June, 2021, failing which the operations of such platform would be categorized as illegal and attract regulatory sanction as stipulated in the Rules,”
In the SEC new rules; “No person or entity shall operate any product that pools investors’ monies, including discretionary or non-discretionary portfolios/funds except such person or entity is registered as a fund/portfolio manager.
“No fund/portfolio manager shall develop and operate any product, discretionary or nondiscretionary portfolio/fund without the Commission’s prior approval or ‘no objection.”
The capital market regulator also stated that any person or entity that contravenes this rule shall be liable to any one or more of the following sanctions: –
“A penalty of not less than ₦500,000 (Five hundred thousand naira) and a further
sum of N10,000 (Ten thousand naira) for every day the violation continues in
respect of each product, discretionary or non-discretionary fund/portfolio under
management;
“Suspension of registration;
Withdrawal of registration;
Disgorgement of proceeds/income from the product, discretionary or nondiscretionary portfolio/fund;
Any other sanction the Commission deems fit in the circumstance,” SEC wrote in the guidelines..
