The Securities and Exchange Commission (SEC) has directed all Capital Market Operators (CMOs) wishing to reclassify their business status or seeking to reduce their registered functions, in view of the new minimum capital requirement, to notify the commission not later than July 31, 2015. This directive also applies to CMOs opting for mergers, acquisitions or any other form of business combination
The directive, according to a source at the Commission, is part of the compliance and enforcement process as the apex capital market regulator prepares to enforce the September 31 deadline for the new minimum capital requirements for capital market operators.
Minimum capital base for broker and dealer was increased by 329 per cent from the existing N70 million to N300 million. The broker, which currently operates with capital base of N40 million, will now be required to have N200 million, representing an increase of 400 per cent. Minimum capital base for the dealer increased by 233 per cent from N30 million to N100 million.
Also, issuing houses, which facilitate new issues in the primary market, will now be required to have minimum capital base of N200 million as against the current capital base of N150 million. The capital requirement for underwriter also doubled from N100 million to N200 million.
Some capital market operators have been considering mergers and acquisitions to stave off liquidation.
Market sources said there had been intense discussions around consolidation, a reference to mergers and acquisitions, in recent months as the new management of the apex capital market regulator insisted it would not rescind earlier decisions on the new minimum capital base.
Sources said while some stockbrokers and other operators were considering raising funds through special placements, most deficient operators have started preliminary discussions on mergers and acquisitions. The Nigerian Stock Exchange (NSE) also recently released guidelines on the operations of sub-brokers.
SEC in 2013 announced major increases in minimum capital requirements for capital market functions under a new minimum capital structure that was initially scheduled to take off by January 1, 2015. It, however, extended the deadline to September 30, 2015.
By Dike Onwuamaeze
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