SEC Threatens Banks with Penalties Over Capital Raise Non-Compliance
The Securities and Exchange Commission (SEC) has issued a stern warning to banks, emphasizing the need for strict adherence to recapitalisation guidelines. In a statement released on Friday, the SEC announced that banks failing to submit complete capital raise applications will face a penalty of N1 million. This is part of the broader effort to ensure compliance with the Central Bank of Nigeria’s (CBN) directive for banks to bolster their capital base.
Banks are required to follow specific norms and procedures when raising capital through rights issuance, private placements, or other approved methods. Applications, along with supporting documentation, must be submitted electronically via email. The SEC stated that these documents would be scrutinized, and any deficiencies identified would be communicated to the applicants electronically.
The statement read, “Where an application is returned for being incomplete – a penalty of N1,000,000 and a re-filing fee of N100,000 shall apply. This fee is payable by the Issuing House without recourse to the Issuer or the Issue proceeds.”
This initiative aligns with the CBN’s mandate for banks to secure additional capital, a critical step towards navigating economic challenges and achieving Nigeria’s target of a $1 trillion economy by 2030. The SEC underscored its role in ensuring a smooth, transparent, and efficient capital raising process.
The framework outlined by the SEC includes detailed guidelines and procedures that banks must follow during the 2024–2026 recapitalisation period. It specifies that international banks need to raise their capital base to N500 billion, while national and regional banks must increase their capital to N200 billion and N5 billion, respectively.
The SEC advised all banks and stakeholders to meticulously adhere to these guidelines, emphasizing that the framework is in line with the regulatory provisions under the Investment and Securities Act of 2007. The commission also highlighted the importance of updating corporate information with the Corporate Affairs Commission to streamline the approval process and enhance regulatory oversight.
The announcement comes in the wake of the CBN’s new minimum capital requirements for banks, which were set on March 28. These requirements demand a significant increase in the capital base for banks, aiming to fortify the financial stability of the sector.
