Pursuant to Section 313(6) of the Investments and Securities Act 2007, the
following new rules and amendments to the existing rules are made by the
Commission.
RULES ON THE USE OF NOMINEE ACCOUNTS
A new Rule 178C is created as follows:
Definitions
For the purposes of this Regulation the following terms shall have the meanings
hereinafter assigned to them:
Nominee registration: The registration of securities by a custodian/agent,
where it is stated that the custodian/agent are not
the owners of the securities.
Nominee account: The custodians/agents account in which clients’
securities are maintained.
Custodian/agent: Corporate entity or firm authorized to hold securities
owned by its clients.
Client: the person who receives the financial benefit from or
bears the financial risk of securities and grants
authorization to the custodian/agent to act in its own
name and be registered as the beneficial owner of the
securities.
Regulation of Nominee Account
1. Application
Corporate entity or firm authorized to hold securities owned by its clients shall
apply to the Commission for approval to hold these in a nominee account and
accept payment on behalf of its clients from individual issuers of securities.
2. Nominee Account
Owners’ approval
A client’s securities shall not be registered in a nominee account without the
client’s consent. The custodian/agent shall inform the client of the legal effects of
registering securities in a nominee account.
3. Information on clients
The custodian/agent shall have information available on clients requesting
nominee registration of securities. The custodian shall inform the client of the
obligation to provide information to the Commission under this regulation.
The custodian/agent shall preserve information on nominee accounts, for five
years from the end of the business relationship.
4. Record of clients and financial instruments
A custodian/agent holding securities in a nominee account shall maintain a
record of the shares of each individual client. The record shall always include the
names and numbers of clients associated with the securities registered in the
nominee account, as well as the number of securities covered by each nominee
registration agreement. The record shall be prepared in such a way that there is
no doubt regarding the ownership of financial instruments.
5. Identification of financial instruments registered in nominee accounts
The registrar of securities shall identify securities registered in nominee accounts
separately in its records, so that there is no doubt as to which securities are held
in nominee accounts.
6. Bankruptcy of custodians/agents
In the event that a custodian’s/agent’s estate is subjected to bankruptcy
proceedings or a moratorium is granted on its debts, or the custodian/agent is
wound up or comparable measures are taken, the client may, on the basis of the
record provided, withdraw its securities from the nominee account, provided that
their ownership is not disputed.
7. Rights conferred by securities
No other rights conferred by securities besides the rights provide herein are
attached to a nominee account. Voting rights at shareholders meetings are not
attached to nominee accounts (except expressly required to do so in writing).
8. Permission to accept payments, etc
A custodian/agent is permitted to accept payments on behalf of its clients from
individual issuers of securities, including rights to dividends or other payment
and rights to new shares in the event of an increase in share capital. The
custodian/agent shall keep these payments separate from its other assets.
9. Supervision and provision of information
Information on business
The Commission reserves the right to demand from a custodian/agent the
disclosure of the identity of the clients registered as owners of securities held in
a nominee account at any specific point in time.
A custodian/agent shall provide the Commission with the information required
under paragraph 1 in the form and within the time limit as specified by the
Commission.
10. Revocation of registration
a. The Commission may revoke the registration of the custodian/agent in a
nominee account:
i. If the custodian/agent violates the provision of the Rules and Regulations
of the Commission regarding the provision of information to the
Commission on nominee accounts.
ii. If the custodian/agent in other respects commits serious or repeated
violations of the legal provisions to which its activities are subject.
b. Before any revocation pursuant to paragraph 2, the custodian/agent may be
given a period of one month to rectify the situation, if rectification is possible
in the estimation of the Commission.
c. Revocation of the custodian’s/agent’s licence for approval in a nominee
account shall be notified to the board of directors of the custodian and
reasoned in writing.
d. Where the approval of a custodian/agent is revoked the nominee accounts
shall be transferred to another custodian/agent, which shall only be operated
as a nominee account where the nominee enters into a new agreement with
the new custodian/agent.
MADE AT ABUJA THIS 28th DAY OF FEBUARY 2013