Nigeria’s SEC Seeks Tax Incentives For Infrastructure, Private Equity Firms

Nigeria’s SEC Seeks Tax Incentives For Infrastructure, Private Equity Firms

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Post Views: 67 •Engages NLNG, Says Palliatives Will Enhance Listings On NGSE •‘Recapitalisation Of Capital Market Players Only A Matter Of Time’ The S...

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•Engages NLNG, Says Palliatives Will Enhance Listings On NGSE
•‘Recapitalisation Of Capital Market Players Only A Matter Of Time’

The Securities and Exchange Commission, on Thursday in Lagos applauded the Federal Government’s successful birthing of the Finance Act, 2019, with so many provisions that support the development of the capital market.
Addressing business editors of major Nigerian newspapers before the 2020 budget seminar, Acting Director-General of the SEC, Ms. Mary Uduk, however, expressed a wish that more supportive provisions would have been included, such as tax reductions, as well as palliatives to encourage more companies to list their shares on the Nigerian Stock Exchange.
The commission also expressed hope that future editions of the Act would include tax incentives that would sufficiently attract much more infrastructure funds from domestic and foreign investors, given that government revenue is grossly inadequate to fix the huge financing gaps.
She, however, noted that all hope is not lost since the Act will be subject to annual reviews and amendment to bring it up-to-date, even as the expressed belief that such could attract more private equity funds involved in certain sectors of the economy. This is expected to increase the country’s tax base, besides deepening the capital market.
Also commenting on ongoing efforts to attract more companies, particularly those with government interests to the market, Acting Executive Commissioner, Operations Isyaku Tilde, said the SEC is working on establishing a clinic that will assist target companies to list their shares.
He assured that the efforts are yielding fruits, as some of the companies, including oil companies with government equity interests, are almost ready to comply with the listing requirements.
Specifically, Uduk said the electricity distribution and generation companies are not ready for the market, assuring that the commission is, nonetheless, engaging them in collaboration with the Bureau of Public Enterprises.
Fielding questions, Uduk and Tilde said recapitalization of capital market operators will happen eventually, just as other operators in the nation’s financial system, including the insurance firms, are now boosting their minimum capital. The banks have been put on notice to prepare to seek fresh capital injection.
According to Tilde, in view of the fragmentation of the capital market with so many fringe players among the 255 registered stockbroking firms only 10 of which account for 80% of activities, for example, he said recapitalization “should happen… the market will be better for it. We want strong well-capitalized firms.”
For Uduk, “sooner, or later, it will have to happen.”
Earlier in a review of market activities last year, the Acting DG said the commission’s enforcement efforts year achieved some positive results, including resolving 102 of the 167 complaints received.
In the process, the SEC recovered a total of N100.111m for Investors, in addition to some units of shares, just as it sealed and blocked the bank accounts of four Illegal Operator/Ponzi schemes containing a total of N1.119bn. In the process, real estate properties cautioned under investigation were valued at N1.226bn.
The total number of capital market fraud cases recorded and being prosecuted during the year under review was eight, even as the commission generated a total of N194.477m from penalties.
Rules pending consideration by the commission this year, she said include one on Retail Online Foreign Exchange (Forex) Trading, which seeks “to provide a framework for the regulation of Retail Online Forex Trading in the Nigerian Capital Market,” for the first time since 2005.
This year, the SEC is considering Rules on Crowd Funding, saying it will “foster economic development and deepen the market, a proposed rule is being considered to provide a regulatory framework permitting private companies with the required structure and mechanism in place to raise capital from the public through crowdfunding.
There are also the rules on Nominee Companies to “bring all Nominee Companies under proper regulation and make provision for Registration Requirements, Ownership Structure, Code of Conduct and other matters incidental thereto.
On Margin Lending, the commission said the proposed amendment is geared towards mitigating and tackling market abuse practices by dealers or member companies by restricting the excessive use of credit for purchasing or transacting in securities by dealers or member companies, among others.

Photo caption: Acting Director-General of Securities and Exchange Commission, (SEC Nigeria) Ms. Mary Uduk (middle), addressing newsmen at the SEC breakfast Meeting with Businesses Editors in Lagos on Thursday, February 13, 2020. She is flanked by Acting Executive Commissioner Operations SEC, Isyaku Tilde (right), and Head, Investment Management Department, SEC (SEC); Efiok Efiok.

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