Post Views: 230 Nigeria’s Securities & Exchange Commission (SEC) on Friday proposed new set of rules to guide the operations of nominee companies...
Nigeria’s Securities & Exchange Commission (SEC) on Friday proposed new set of rules to guide the operations of nominee companies in the country, including defining the context, operational scope and who can set one up.
The guideline sets N1bn minimum capital for operators, just as it defines a nominee as “a company formed by a bank or other financial institution for the purpose of holding securities and other assets and administering them on behalf of the actual owners under the terms of a custodial or nominee agreement.”
It also requires that parent company/shareholders, which must be financial institutions, should have a combined minimum net worth of N30bn, in addition to a current Fidelity Bond covering at least 25% of the minimum capital.
Detailed curriculum vitae of sponsored individuals and Directors of such nominee companies to be submitted to the SEC “should include details of activities from secondary school to date arranged chronologically with dates; (all gaps in employment and educational history should be explained).”
Others include “copies of credentials of sponsored individuals from secondary school to date (including NYSC discharge/ exemption certificates); originals are required for sighting by officers of the Commission,” besides “Police clearance report for each Sponsored Individual.”
Each sponsored individual must also “report at the Commission’s head office or any of its zonal offices with three recent passport photographs to commence the process; Copy of means of identification of the Directors and the Sponsored Individuals of the Company (International Passport, Driver’s license or Permanent Voters Card);” among others.”
The guideline while requiring nominees to “keep and maintain proper books of account and other records necessary to identify assets of each client and to discharge its obligations to its clients,” requires that they maintain a custody account for every client, providing access to such accounts to the client.
Such information required by the client could include those concerning assets held on his or its behalf, just as the nominee should regularly report to its clients on assets held on their behalf, including all movements and “changes in the holding concerned which occurred since the date on which the holding commenced or immediately prior to the report or as the client requests.”
The SEC rule also proposes that the nominees ensure their assets are segregated from the assets of clients and protect them “from foreclosure, appropriation/attachment by creditors or liquidators of nominee.”
Also, while “the nominee shall collect corporate action entitlements relating to all securities held on behalf of clients, verify the calculations and convey all details to clients,” such “shall have no authority to demand for board membership of companies or to exercise any voting rights attached to shares registered in the nominee company`s name unless instructed to do so by its clients.”