• Further Reduction In Cost Of Primary Issues

The Securities & Exchange Commission (SEC), on Tuesday night released its proposed new fee structure for various capital market operators and operations in the country, including a 900% hike in registration fee to be paid by self regulatory organisations- the Nigerian Stock Exchange (NSE) and Abuja Commodities Exchange from the current N100,000 to N1.0 million.
Over the counter market platforms which previously paid no registration fees, now must part with N1.0 million also, just like clearing & settlement/depository agency- the Central Securities Clearing System (CSCS) and bankers to an issue, which previously paid N100,000.
If the proposal scales through, issuing houses would now pay N500,000 registration fees, 400% up from N100,000; same as broker/dealers, registrars, fund managers and trustees.
Underwriters, custodian of securities and market makers will also have their fees jerked up by 150% from N200,000 to N500,000, if the proposal is approved; while inter broker/dealer, which were previously exempted from such fees, will now pay N500,000 each; and brokers, N300,000 each, from N100,000; just like dealers. That means any firm willing to undertake broker/dealer functions would now pay N600,000 instead of N200,000 for registration. Rating agency fees will become N300,000 from N100,000; same as capital market consultants (corporate) and corporate investment adviser. Operating as either of Capital market consultants (partnership) and individual investment adviser will attract N300,000 from N50,000 each.
For sub-broker function, it is also proposed that the fee be raised to N200,000 from N50,000 same as individual investment adviser; just as capital market consultants (individual) have their fees hiked from N20,000 to N200,000; and sponsored individuals- N50,000 from N10,000.
Another proposed amendment to Schedule I of the commission’s rules and regulations fees, minimum capital requirements, securities and others, such that filing fees would be raised 10-fold from the current N5,000 to N50,000; and processing fees for all categories, which previously did not exist, is now fixed at N200,000.
Also, as an amendment to the SEC’s Rule 456(F)- obligations of the custodian of a collective investment scheme, it is proposed that the custodian “be independent of the scheme’s fund manager.”
Total cost, according to the proposal, shall not exceed 2.833% and 2.293% for equity and bonds issuance respectively of the total gross proceeds, excluding underwriting commission and registrars’ fees from the issue or such percentage of the gross total proceeds as the commission may prescribe from time to time.
It is further proposed that primary issuance (equity) cost be pegged at 2.833% maximum (excluding underwriting commission and registrars fees), from 3.17% (also excluding underwriting commission, printing/adverts and registrars fees); while that of bonds be reduced to 2.293% from 3.9375%.
Details of the proposed reduction in costs, shows that the fee payable to the SEC be reduced from 0.3% to 0.275% of first N500m; while next N500m continues to be charged at 0.225%; while the balance above N1bn would also retain the 0.15% rate. For the NSE, the fees were reviewed from the current 0.3% of offer size to 0.25% of offer size for main board listing, subject to maximum fee of N200m; while premium board listing fee is pegged at 0.25% of offer, subject to a maximum fee of N400m.
Stocks listed on the Alternative Second-tier market would attract a flat fee of N100,000.
Issuing houses would earn 1.35% on the first N1bn and 1.225% on the next N1bn; while the balance over N2bn would attract 1.15% fee; just as the 0.01% fee of offer size charged by the CSCS would be reduced to 0.0075%, which shall not however exceed N5m.
Receiving agents would now earn 0.5% of offer size, from 0.75%; stockbrokers are to retain 0.13%; registrars also are to retain N30 of existing application and N40 of new application, just as the take on fee of N1m is retained. The fee for solicitor to the issue was reduced by 50% from 0.1% of offer size, to 0.05%, subject to a minimum of N1m and a cap of N10m.
Solicitor to the company will now earn 0.01% of offer size from 0.05%, subject to the minimum of N500,000 and maximum of N5m; just as the reporting accountant will earn 0.05% of offer size, from 0.1%, subject to a minimum of N1m and maximum of N7.5m.
Auditors will now earn 0.01% of offer size capped at N4m, from 0.05%; underwriting fees is to be set at a maximum of 2.3% of offer size, should the proposal scale through, unlike the current situation where it is negotiable (excluded from current fee regime); just as printing/advertisement/publicity/other expenses is now to be pegged at 0.2% of offer size.