SEC Sets Deadline for Approval of Nominee Accounts

nominee accounts
Image Credit: Investopedia

By Modupe Gbadeyanka

The Securities and Exchange Commission (SEC) has directed Capital Market Operators (CMOs) in Nigeria to obtain a one-off approval on or before Thursday, October 31, 2019, for the operation of nominee accounts.

In a statement signed by the management of the agency on Monday, it was stated that after securing the ‘no object’ from SEC, operators must file quarterly returns because failure to do this 30 days from the end of the quarter would attract a penalty of N100,000 at the first instance and a further sum of N2,000 per day for everyday the violation continues.

It said the returns should be filed in the format below to

S/N Nominee
Account Name
of Beneficiary(ies)
of Client Assets

SEC came up with this directive after making an amendment to Rule 61 (2) of the Consolidated SEC Rules and Regulations 2013 on the Regulation of Nominee Accounts.

The apex capital market regulatory body explained that it came up with the latest directive in order to facilitate effective compliance with the rules.

“Capital Market Operators currently operating nominee accounts without the approval of the commission are required to disclose same not later than October 31, 2019 and obtain a no objection from the commission.

“The disclosure should include a list of the nominee accounts, number of beneficiary(ies) in each of the nominee account and estimated value of clients’ assets,” the statement said.

It further said, “A Capital Market Operator (CMO) who wishes to operate nominee accounts shall apply to the commission and obtain a one-off approval to maintain nominee accounts on behalf of its client(s). This approval would enable CMO’s operate subsequent nominee accounts on behalf of prospective clients.”

“Once the one-off approval is granted, Capital Market Operators are required to commence filing of quarterly returns, effective from quarter ended December 31, 2019.

“All filings must reach the commission not later than 30 days from the end of the quarter. Failure to file returns would attract a penalty of N100,000 at the first instance and a further sum of N2,000 per day for everyday the violation continues,” SEC stated.

Business Post reports that a nominee account is a securities account opened and maintained by an authorized nominee in accordance with the rules set out by SEC.

Modupe Gbadeyanka is a fast-rising journalist with Business Post Nigeria. Her passion for journalism is amazing. She is willing to learn more with a view to becoming one of the best pen-pushers in Nigeria. Her role models are the duo of CNN's Richard Quest and Christiane Amanpour.

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