The Securities and Exchange Commission (SEC) has released its comprehensive framework for the 2024 banking sector capitalization programme, providing detailed guidance for banks, holding companies, and market participants on the recapitalization process.
Published on the SEC’s website, Friday, this framework responds to a mandate from the Central Bank of Nigeria (CBN), which requires banks to increase their capital to support Nigeria’s $1 trillion economy.
Under the new CBN capital requirements, international banks must raise their capital base to N500 billion, national banks to N200 billion, and regional banks to N50 billion.
The SEC stated that the framework aims to ensure the capital-raising process is conducted efficiently, transparently, and in a manner that protects all stakeholders’ interests.
It will serve as a guide for banks, holding companies, and capital market operators in filing applications for capital raises and mergers and acquisitions.
Key objectives of the framework include ensuring full disclosure of material facts in compliance with the Investments and Securities Act 2007, as well as the SEC’s rules and regulations. It also aims to facilitate a proper and timely review of transactions.
According to the SEC, the CBN has mandated this recapitalization programme to strengthen banks’ asset bases and support economic growth in line with the Federal Government’s goal of achieving a $1 trillion economy by 2030.
The capital market is expected to play a significant role in facilitating this recapitalization, with banks leveraging the market to raise the necessary funds or engage in business combinations.
“As the regulatory institution mandated to regulate and develop the Nigerian capital market, the SEC has the responsibility to ensure a smooth, transparent, and efficient capital-raising process by the banks,” the SEC noted.
“This framework outlines the guidelines and procedures banks are required to follow to raise capital through rights issuances, private placements, or other approved methods during the 2024-2026 recapitalisation period.”
Applications and documents are to be filed electronically via the website. The SEC will review submitted documents and communicate any observed deficiencies electronically. Incomplete applications will incur a penalty of N1,000,000 and a re-filing fee of N100,000, payable by the issuing house.
For further inquiries or clarification, banks and stakeholders are encouraged to contact the SEC via the dedicated offer application email.
The SEC emphasized that the framework is an excerpt from the existing rules and regulations of the Commission and should be read in conjunction with the relevant provisions of the Investment and Securities Act, 2007, and the SEC’s rules and regulations. The Commission may also require additional documents or information as necessary.
“Where an issuer has already filed necessary documents with the SEC, such as the Memorandum and Articles of Association or certificate of incorporation, the issuer need not refile these documents for subsequent transactions, provided there has been no change since the previous filing,” the SEC stated.
Affected banks and holding companies must regularize and update their corporate information with the Corporate Affairs Commission (CAC) before applying with the SEC.
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