The Nigerian Senate has passed the Investments and Securities Bill, 2024, legislation proposed to reform the nation’s capital market to attract investment and foster capital formation.
The bill co-sponsored by Bamidele Opeyemi, the Senate leader and Osita Izunaso, chairman, Senate committee on the capital market, seeks to repeal the Investments and Securities Act, 2007 to align the capital market with current global realities.
The bill was read for the third time on Wednesday after the Senate considered the report of its committee on capital markets, and the clauses therein, with the lawmakers voting in support of the proposed law. The bill would be transmitted to President Bola Tinubu for his assent.
The proposed legislation, expected to usher in a reformed capital market framework by 2025, aims to regulate the market to ensure robust capital formation, safeguard investors, maintain a fair and transparent market, and reduce systemic risk.
The legislation proposes stiffer penalties, registration/regulation of exchanges and financial market infrastructures; regulation of new businesses; mergers, takeovers and corporate restructurings; collective investment schemes; commodities ecosystem; investors protection fund; among others.
Izunaso, while presenting the report of the committee, said the proposed law received unanimous support from stakeholders.
He argued that the enactment of the law would provide a significant opportunity to drive the growth of the capital market and diversification, thereby creating a conducive atmosphere for investors in the capital market.
He said the bill, when passed and signed into law, would address modern forms of financial malpractices and protect investors by engendering robust regulations around market abuses, insider trading, and governance standards for public-traded companies.
Read also: Market Regulation: Senate passes Investments and Securities Bill 2024
The bill envisages a regulatory framework for digital currencies and fintech activities, including the disposition of blockchain cryptocurrency transactions to support the integration of innovative technologies within the scope of the capital market.
“The passage of this bill will bring about diversity and growth in the capital market through market offerings that will form the foundation for capital economic expansion, thereby creating job opportunities within the Nigerian capital market.
“The committee on capital market, to which this bill was referred to, having thoroughly considered the same, thereby recommends that the Senate do consider and pass the Investment and Securities Repeal and Enactment Bill 2024, as amended”, Izunaso said.
The Senate later dissolved into a committee of the whole to consider the bill clause by clause.
Godswill Akpabio, the Senate president then put the bill to a voice vote and no senator voted against it. The bill was subsequently read for the third time and passed.
Recently, Emomotimi Agama, the director-general of the Securities and Exchange Commission (SEC), said that the bill would introduce harsher penalties on Ponzi scheme operators through the proposed Investments and Securities Bill (ISB) 2024, which mandates a minimum fine of N20 million or up to 10 years in prison, or both.
Agama explained that the bill explicitly prohibits Ponzi and pyramid schemes, fortifying protections for investors against illegal fund managers, adding that it aims to shield Nigerian investors from fraudulent schemes and enhance the capital market’s global competitiveness.
A notable amendment in the bill would allow the Investor Protection Fund (IPF), established by securities exchanges, to cover investor losses linked to the deregistration of brokerage firms, extending beyond the current coverage of bankruptcy or negligence cases.
Agama also noted the need for updates to the existing ISB 2007 to reduce ambiguities and align Nigeria’s capital market regulations with international standards.
“This bill’s passage would be pivotal in setting Nigeria on the path to a world-class capital market,” he stated, underscoring the role of a robust capital market in economic diversification.
The ISB 2024 also introduces regulatory frameworks for Commodity Exchanges and Warehouse Receipts, essential steps for developing Nigeria’s commodities sector.
Join BusinessDay whatsapp Channel, to stay up to date
Open In Whatsapp
