The contention brewing among the Securities and Exchange Commission (SEC), Nigerian Stock Exchange (NSE) and the Central Securities Clearing System (CSCS) over whose responsibility it is to fund the Nigeria’s Investment & Securities Tribunal (IST) appears to have escalated, BusinessDay has learnt.
Nine months ago, the Federal Government, through Ngozi Okonjo-Iweala, the coordinating minister of the economy and minister of finance, directed the Investment & Securities Tribunal to receive 10 percent of every one percent of the aggregate fees from capital market transactions obtained by the Securities and Exchange Commission (SEC), Nigerian Stock Exchange (NSE) and Central Securities Clearing System (CSCS).
But there is currently a hushed misunderstanding amongst the three over the non-remittance of an ostensibly imposed 10 percent levy for the funding of IST, BusinessDay can disclose.
This has created a palpable fear among the stakeholders that the tribunal may not survive the squabble if urgent intervention to streamline the payment procedure and state whose responsibility it is to fund the tribunal is immediately settled
Nigeria’s Investment & Securities Tribunal is an independent specialised judicial body established under Section 244 of the Investments and Securities Act (ISA) 1999 (now Section 247 of ISA 2007) to interpret and adjudicate all capital market, investments and other related matters.
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SEC had pushed for the 10 percent financial support for the IST because the Tribunal had faced acute funding problems since its existence, due to the inability of the capital market apex regulator, which superintended its set-up along with the Budget Office of the Federation, to address its needs.
“We consider that funding the Tribunal from a percentage of capital market transactions may not be a pragmatic approach to resolving the dearth of funding of the Tribunal. We would rather recommend that a fixed amount (based on the Tribunal’s financial plan) be considered and approved,” a source close to the disagreement told BusinessDay.
They argued that Investment and Securities Tribunal realises monies through annual subvention from the FGN with respect to recurrent and capital expenditure, as well as, from fees collected for the services rendered by the Tribunal; and such other sums of money, as may be provided by the FGN for it.
NSE and CSCS are insisting that, as tax-paying institutions, absorbing the 10 percent levy for funding of IST adds to their tax burden paid to the Federal Government (FG), but SEC holds that unlike the National Industrial Court (NIC) which is funded adequately by the judiciary or the Tax Appeal Tribunal, backed by the Federal Inland Revenue Service (FIRS), the IST was left without financial resources.
The Investment and Securities Act (ISA), however, provides that the “Tribunal may accept any grant of money or contributions on such terms and conditions, if any, as may be specified by the person or organisation making such grant or contribution, provided that the terms and conditions are consistent with the functions and objectives of the Tribunal”.
It was learnt that the lingering face-off has driven the duo of NSE and CSCS to recommend possible amendment to the Investment and Securities Act, to provide legal backing for funding of the Investment and Securities Tribunal, through fees from capital market transactions.
“While also assuming, but not conceding, that funding the Tribunal from capital market transaction fees is a bankable option, we also recommend that the issue of possible conflict of interest of the Tribunal be thoroughly considered.
“It could be argued that a Tribunal funded by same capital market stakeholders it presides over, would struggle to be objective and independent as it performs its functions,” a market analyst told BusinessDay
While introducing the new measure, the Federal Government noted the need to strengthen all agencies in the industry to optimally perform their statutory responsibilities. “Improved funding of IST will enable it play its critical and strategic adjudicatory role and equally boost investors’ confidence in the capital market.”
In the light of this, market analysts cited the Kenya market, where the Act which establishes their Investment Tribunal, known as the Capital Market Tribunal, similar IST of Nigeria, stipulates that all expenses of the Tribunal shall be charged to the general fund of the Kenyan Capital Market Authority. A similar case, they say, is the Financial Markets Tribunal of Dubai.
Iheanyi Nwachukwu
