SEC Instructs Crowdfunding, Digital Investment Platforms to Register
The Securities and Exchange Commission (SEC) has directed all existing investment crowdfunding portals and digital commodities investment platforms to register with the commission or cease operations by June 30.
A statement by the commission in Abuja on Thursday said the rules governing the crowdfunding business in the country came into effect in January.
Crowd funding, process of funding a project or venture by raising money from a large number of people who each contribute a relatively small amount, typically via the internet.
The commission said the rules were part of efforts by the SEC to ensure investors’ protection while encouraging innovation in the conduct of securities business.
”In line with the transitional provisions of the rules, all persons/entities operating an investment crowdfunding platform prior to the commencement of the rules were expected to restructure all operations in accordance with the requirements of the rules.
”They are also expected to apply for registration not later than 90 days from the effective date.
“While the transitional period elapsed on April 21, the commission hereby directs all existing investment crowdfunding portals/digital commodities investment platforms to note the requirements and eligibility criteria for raising funds through and/or operating a crowdfunding Portal.
”They are to comply with the registration requirements or cease operations by June 30.
”Failure to do this, the operations of such platform will be categorised as illegal and attract regulatory sanction as stipulated in the rules.”
NEW RULES AND AMENDMENTS TO THE RULES AND REGULATIONS OF THE COMMISSION
1. RULE ON REGULATION OF FUND MANAGEMENT PRODUCTS
(1) No person or entity shall operate any product that pools investors’ monies, including discretionary or non-discretionary portfolios/funds except such person or entity is registered as a fund/portfolio manager.
(2) No fund/portfolio manager shall develop and operate any product, discretionary or nondiscretionary portfolio/fund without the Commission’s prior approval or ‘no objection’.
(3) No fund/portfolio manager shall advertise, market or attract investors to the existence of any product, discretionary or non-discretionary portfolio/fund other than registered collective investment schemes.
(4) Every fund/portfolio manager shall submit quarterly returns and annual reports in respect of all products, discretionary or non-discretionary portfolios/funds, in a form as determined by the Commission.
(5) Any person or entity that contravenes this rule shall be liable to any one or more of the following sanctions –
a. A penalty of not less than ₦500,000 (Five hundred thousand naira) and a further sum of N10,000 (Ten thousand naira) for every day the violation continues in respect of each product, discretionary or non-discretionary fund/portfolio under management;
b. Suspension of registration;
c. Withdrawal of registration;
d. Disgorgement of proceeds/income from the product, discretionary or nondiscretionary portfolio/fund;
e. Any other sanction the Commission deems fit in the circumstance.
Please click here to download a copy of the Rules.
SEC Instructs Crowdfunding, Digital Investment Platforms to Register
