Recapitalisation: SEC Threatens Fine for Wrong Capital-Raising Processes

By Aduragbemi Omiyale

The Securities and Exchange Commission (SEC) has threatened to sanction any financial institution involved in the wrong capital-raising process as the race to meet the new minimum capital requirement of the Central Bank of Nigeria (CBN) begins.

The CBN in March directed financial institutions, particularly banks to increase their capital base from N25 billion to N500 billion for lenders with an international licence and N200 billion for lenders with national coverage within two years.

Already, a few of them have rushed to the capital market, particularly Fidelity Bank, to source funds from investors to shore up their capital base before the deadline.

A few others have started the process, including GTCO, and more are expected to approach the market to seek funds.

In a document on its website, the SEC, which regulates the capital market, said financial institutions must follow a proper process so as not to mislead investors.

In the disclosure titled 2024 Framework on Banking Sector Recapitalisation Programme, the regulator explained the new framework will guide banks, holding companies, and capital market operators in filing applications for capital raises and/or mergers and acquisitions.

It emphasised that the guideline will ensure full disclosure of material facts in compliance with the Investments and Securities Act 2007, SEC Rules and Regulations, and other relevant laws, ensuring proper and timely transaction reviews.

The agency warned that, “An incomplete application will incur a penalty of N1 million and a re-filing fee of N100,000, payable by the issuing house without recourse to the issuer or the issue proceeds.”

It noted that all applications and documents are to be filed electronically via [email protected], adding that documents submitted will be reviewed, and any deficiencies will be communicated to applicants electronically.

“If deficiencies are identified, the timeline for approval resets. Otherwise, approval is granted and communicated.

“For further inquiries, banks and stakeholders should contact the SEC’s dedicated offer application email,” the SEC stated.

The central bank, under the leadership of Mr Yemi Cardoso, embarked on the banking sector recapitalisation programme to prepare financial institutions for the $1 trillion economy by 2030.