The Securities and Exchange Commission has threatened banks with a N1 million penalty if they fail to submit comprehensive capital increase applications, to enforce compliance with banking sector recapitalisation standards.
This was disclosed in a statement by SEC, according to The PUNCH.
It stated that banks must adhere to certain norms and procedures to acquire capital by rights issuance, private placements, or other authorized means.
It further stated that applications and accompanying evidence must be sent online via email, and that papers transmitted will be reviewed and applicants alerted electronically of any deficiencies discovered.
“Where an application is returned for being incomplete – a penalty of N1,000,000 and re-filing fee of
N100,000 shall apply. This fee is payable by the Issuing House without a recourse to the Issuer or the Issue proceeds,’’ statement partly reads.
The SEC stated that the program backed the Central Bank of Nigeria’s mandate to banks to raise additional capital, which was critical for navigating economic issues and reaching a $1 trillion economy by 2030.
“As the regulatory institution mandated to regulate and develop the Nigerian capital market, the Securities and Exchange Commission has the responsibility to ensure a smooth, transparent, and efficient capital raising process by the banks.
“This framework outlines the guidelines and procedures banks are required to follow to raise capital through rights issuance, private placements, or other approved methods during the 2024–2026 recapitalization period.
“The SEC stated that applications and documents are filed electronically via email, adding that documents forwarded will be reviewed, and where there are observed deficiencies, this will be communicated to the applicants electronically.”
It noted that international banks must increase their capital base to N500bn under the new CBN capital requirement, while national banks must do the same with N200bn and regional banks with N5 billion.
“The commission said the framework would help to ensure that the capital raising process is conducted efficiently, transparently, and in a manner that protects the interests of all stakeholders,” it added.
The SEC recommended banks and others to strictly follow those recommendations, emphasizing the framework’s consistency with existing regulatory provisions under the Investment and Securities Act of 2007.
“The commission may require other documents or information as may be necessary. Where an issuer had already filed necessary documents with the SEC (e.g., a Memorandum and Articles of Association (Memart) or a certificate of incorporation or a certificate of increase in share capital, etc.),” the regulator explained.
