SEC sets June 30 deadline for registration of firms operating Crowdfunding Portals

The Securities and Exchange Commission (SEC) has informed all stakeholders that as part of efforts to ensure investor protection while encouraging innovation in the conduct of securities business, the rules governing Crowdfunding business in Nigeria came into effect on January 21, 2021.

Crowdfunding is the process of raising funds to finance a project or business from the public through an online platform, which could be a website, portal, intermediary portal, application, or other similar modules that facilitate interaction between fundraisers and the investing public.

The funding occurs within a period known as funding round, within which a specific project, business, or venture is hosted on a crowdfunding platform to raise funds from a large number of people in exchange for shares, debt securities or other investment instruments approved by the commission.

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The funds may either be pooled from high net worth investors, or a large number of people through an online platform in exchange for any investment instruments approved by the commission, which can also be plain vanilla bonds or debentures, and simple contracts.

SEC noted that in line with the transitional provisions of the Rules on crowdfunding, 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 April 21, 2021, the Commission has directed 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 June 30, 2021, failing which the operations of such platform would be categorized as illegal and attract regulatory sanction as stipulated in the Rules.

Iheanyi Nwachukwu

Iheanyi Nwachukwu, is a creative content writer with almost two decades journalism experience writing on banking, finance, capital markets, and tax. The multiple awards winning journalist is Assistant Editor, BusinessDay. Iheanyi holds BSc Degree in Economics from Imo State University; Master of Science (MSc) Degree in Management from University of Lagos. Iheanyi has attended several work-related trainings including (i) Advanced Writing and Reporting Skills (Pan African University, Lagos); (ii) News Agency Journalism (Indian Institute of Mass Communication {IIMC}, New Delhi, India); and (iii) Capital Markets Development and Regulations (International Law Institute {ILI} of Georgetown University, Washington DC, USA). Other trainings Iheanyi attended include: Economic/Political Risk Analysis (By Thomson Reuters Foundation); International Financial Journalism (IFJ) (By PMA Media Training, UK); Effective Business Writing Skills (By Phillips Consulting); Reporting on Corporate Governance (By International Finance Corporation (IFC) & Thomson Reuters Foundation UK); etc. In addition, he has participated in high-level economy & markets events in Dubai, South Africa, Morocco, and other African countries like Zambia, Ghana and Gambia.