Oral notice to terminate a written employment contract …


Notice is notice whether in writing or oral provided both parties are not misled as to what is meant. It does not matter, in terminating an employee’s appointment, whether he is given notice in writing or orally or not. What is important is whether the employer has demonstrated clearly by action that the services of the employee are no longer required by the employer” – per Mohammed, JSC in Ifeta v. S.P.D.C (Nig.) Ltd (2006) 8 NWLR (Pt. 983) 585.

In the instant case, the employee was informed at a meeting that he is fired, though he was not issued a letter of termination. One of the issues for determination before the court was whether the oral notice was effective since the subject matter employment contract provided that either party could terminate only by “notice in writing”. The SC held in the affirmative.

  1. There is a great deal of flexibility that courts tend to apply in the interpretation of employment contracts (and nearly always in favour of employees) – the courts will mostly look to the intent of the parties rather than the form of the contract. Otherwise, the law is trite that when parties have reduced their agreement into a document, the Court will not look outside the document in deciding the rights and obligations of the parties.
  2. Similarly, an oral notice to quit issued by an employee would equally be effective against the employer.
  3. Oral notice to terminate is likely to present some practical difficulties as it could be open to different interpretations. This is not likely where the notice is in writing as the document would speak for itself.
  4. It is best to put into writing your notice/intention to terminate/dismiss. Where the notice is oral, it should be reduced into writing shortly after and re-issued. It is needless to get entangled into legal haggles about something as basic as your intention to get out of an employment contract.


Ease of Doing Business: FG Reduces Number of Days for Business Registration

Lawyer no longer required to register business with CAC

In pursuit of ease of doing business in Nigeria, the number of days required for registration of new businesses with the Corporate Affairs Commission (CAC) is now two as against 10 days hitherto required for the exercise.

This decision was part of the resolutions of the Presidential Enabling Business Environment Council (PEBEC) meeting at the end of the 60-day action plan on Ease of Doing Business in Nigeria reforms held in the Presidential Villa on Monday. The council which took off on February 21, this year was set up by President Muhammadu Buhari, and chaired by Vice President Yemi Osinbajo.

However, a meeting was presided over by Minister of Transport, Mr. Rotimi Amaechi, in view of the ongoing investigation of suspended Secretary to the Government of the Federation (SGF), Babachir Lawal and Director-General of National Intelligence Agency (NIA) being presided over by Osinbajo.

The council also set up a 24-hour timeline for company registration from the day application form is completed and all required documents made available while prospective business owners can now search on CAC portal (www.cac.gov.ng) to avoid duplication of names.
The move is also aimed at preventing the selection of prohibited names so that company registration will no longer require the services of lawyers “as it is now optional for SMEs to hire lawyers to prepare registration documents.”

According to excerpts of the council’s report made available to journalists last night by the vice-president’s media aide, Mr. Laolu Akande, integrated FIRS e-payment solution into CAC portal to enable e-stamping has been introduced while the reform empowers CAC internal lawyers to certify company incorporation forms and conduct statutory declaration of compliance for a fixed fee of just N500. The report also listed “dealing with construction permits, getting electricity, registering property, getting credit and paying taxes as some of the areas where the council has recorded progress in the past 60 days.”

Other reforms introduced by the council include “entry and exit of people,” indicator which includes simplified visa-on-arrival process; infrastructural improvements at the Abuja airport and the new Immigration Regulation 2017. The report also stated that the completed reforms were being closely monitored to ensure diligent implementation with minimal disruption while pending reforms were being escalated to ensure completion in the coming weeks.

On trading across borders, some of the completed reforms, according to the report, include palletisation of imports, advanced cargo manifests, reduction in documentation requirements and scheduling of joint physical examination by the Nigeria Customs Service. The National Action Plan contained initiatives and actions implemented by responsible Ministries, Departments and Agencies (MDAs), the National Assembly, a number of State Governments as well as some private sector stakeholders.

PEBEC emphasised that with the conclusion of implementation of the action plan, the next phase would bother on “deepening existing reforms; completing and implementing pending initiatives; engaging with the public; validating completed reforms and kicking-off medium-term reforms.”

The report added that the council would also kick-start “sub-national reforms across Nigeria’s 36 states; trading within Nigeria; kick-off of initiatives and reforms improving business processes and regulations within Nigeria; and ease of movement of goods within and across regions in Nigeria.”
Some of the members of PEBEC at meeting were Foreign Affairs Ministers Geoffrey Onyeama, Minister of State for Industry Trade & Investment, Aisha Abubakar, and her counterpart in Budget & National Planning Zainab Ahmed, the Head of Service, Mrs. Winifred Oyo-Ita, among others.

Source: This Day


Ikoyi Billions: At the Cross Roads of Financial Crimes and National Security

By Bolaji Adebiyi in Abuja

Vice-President Yemi Osinbajo’s committee set up to investigate the N13.3 billion recovered from a flat in Osborne Towers, Ikoyi, Lagos got cracking on Monday, reviewing replies to questionnaires it sent out at the weekend to principal characters in the inquiry that intelligence quarters warn could expose the underbelly of the nation’s foremost spy organisation, the National Intelligence Agency (NIA).

The committee, which also includes the Attorney-General of the Federation (AGF) and Minister of Justice, Mr. Abubakar Malami (SAN), and the National Security Adviser (NSA), Maj.-Gen. Babagana Monguno (rtd), was constituted by President Muhammadu Buhari last week to investigate how and by whose authority the money claimed by the NIA was made available to it, and to establish whether or not there had been a breach of the law or security procedures in obtaining its custody and use.

The committee is also to investigate allegations of violations of the law and due process made against the Secretary to the Government of the Federation (SGF), Mr. Babachir Lawal, in the award of contracts under the Presidential Initiative on the North East (PINE), running into millions of naira.
The Director-General of the NIA, Ambassador Ayo Oke, and Lawal were suspended last week pending the outcome of the investigation which report is expected within 14 days.

While Lawal’s troubles began in December last year when the Senate indicted him for allegedly awarding PINE contracts to his company, Rholavision, Oke’s began on April 12, 2017 when the Economic and Financial Crimes Commission (EFCC) raided the Osborne apartment, hauling in N13.3 billion. It is the biggest cash found in a single operation since the whistle blowing policy of the federal government started yielding fruit.

Although the EFCC, which had presumably leaked the find to the media, left the public in doubt about the ownership of the billions, the doubt was cleared when THISDAY reported that the funds belonged to the NIA, which claimed that the flat was a safe house in which it kept some of its money for covert operations.

The agency was later to explain that the money was part of the $289 million intervention fund approved for its covert operations and infrastructure development by President Goodluck Jonathan in 2014. Some of the operations and projects in Abuja, according to the agency, had been completed, while others are still ongoing. It said the Ikoyi money was warehoused for some of the operations in Lagos.

Questions that immediately arose from this claim were whether the president, to whom the agency’s DG accounts to directly, and the NSA, who coordinates the nation’s intelligence agencies, knew about the money? Why was the money not kept in the agency’s headquarters that was more secure? Why was it that the wife of the agency’s DG ferried the money to the safe house? And whether it is usual for the agency to keep such a large amount of money in cash?

These are obviously questions that the Osinbajo committee would have to unravel.
But intelligence experts that spoke to THISDAY on Monday warned that except the investigation is handled with extreme care, the nation’s intelligence community might be undermined with dire implications for national security. They contended that because of the security implications of the operations of intelligence agencies, they operate largely under cover, making their modus operandi unusual, clumsy and, in fact, sometimes illegal.

“The unusual operational practices of intelligence agencies are a worldwide phenomenon,” a source said on Monday, adding: “When Nigeria needs to intervene in the politics of another country, say, Liberia, to install a president that will support its policies, how do you think it does it? It is the NIA that is used.

Where in its books would you find such operational funds?” Another typical example was the $400 million cash flown by the United States government to Iran after a deal was struck to end Iran’s nuclear programme.
Asked if such unusual operational mode is not subject to abuse, the source admitted it could, but argued that there were standards and rules, guiding intelligence operations, explaining that in terms of financial accounting, the agencies are usually responsible directly to the president.

“So there can be no such thing as money laundering as far as intelligence is concerned because the agency’s operatives would always be in possession of money for covert operations,” he said.
Basically, what the source was pointing out was that because the world of intelligence and espionage is almost always murky and clandestine, it is likely that its business is not usually done through bank transfers and cheques, and almost always done by cash. “It’s like asking the CIA to pay informants through transfers,” he quipped.

Actually, by the provisions of Paragraph 12(1) & (2) of the National Intelligence Agency Instrument No.1, a subsidiary legislation to National Security Agencies Act, 1986, the NIA accounts directly to the president and its accounts are prohibited from external auditing.

Obviously aimed at protecting intelligence operations, the instrument derives from an October 21, 1960 memo from Prime Minister Abubakar Tafawa Balewa to the Director, Directorate of Research, Ministry of External Affairs, Alhaji Aminu Sanusi, directing the latter to account directly to him.

“You will be responsible, through the Secretary to the Prime Minister, to me personally for the proper expenditure and accounting of all funds from the secret vote. Those funds will not be subject to detailed audits, but you will be required to render a certificate to the Secretary to the Prime Minister on 1 January to 1 July of each year, showing the total sum expended during the period and a breakdown of the main headings under which such expenditure has been made,” the prime minster said in the memo to the director, who is the precursor of the DG, NIA.

Did the DG, NIA comply with this law? Insiders told THISDAY that Oke did. In his April 2015 general brief to the president on the state of affairs of the agency, he itemised the $289 million intervention fund approved and released to the agency by the Jonathan administration in November 2014. In another memo to the NSA in January 2016, he gave more details of the funds, including projects being undertaken, the amount expended, balance in the bank and cash at hand.

Based on his report, the NSA set up a verification team, which inspected the projects and submitted its report in February 2016. The NSA wrote back to the DG, NIA on 17 May 2016, stating that the detailed report of NIA’s projects and exercises had been presented to the president who was pleased with the agency’s foresight in developing the critical infrastructure outlined in the report.
If Oke filed his report with the appropriate authorities, why then is he in trouble? Insiders suggest that his bosses might not have read the reports and secondly that the inter-agency rivalry might have been at the root of his woes. Both might be at work.

While the president might not have been able to read the report because of his busy schedule that was compounded by his health issues, Monguno is said to loath reading. The reports, THISDAY gathered, are however, part of the annexures to the reply to the questionnaire sent to him by the Osinbajo committee.

There has been a running battle between the EFCC and NIA since April last year over the financial operations of the spy agency. The EFCC had instituted a secret investigation into the Central Bank of Nigeria (CBN) account of the NIA. The intelligence agency only became aware of the investigation when the account of Julius Berger PLC, one of the contractors handling its projects, was blocked.

Enraged by what it believed to be a breach of the law and security protocol, the NIA protested to the NSA who in an April 19, 2016 memo to the EFCC asked it to “refrain from the external audit of NIA and other intelligence agencies” as it contravened Paragraph 12(1) & (2) of NIA Instrument No 1 issued under the NSA Act, 1986.

The EFCC was apparently not happy with the NSA’s restraining order, insisting that it had the powers to investigate suspected financial crimes. The NIA opposed this claim on the grounds that intelligence service involves national security, which cannot be enquired into by a non-intelligence body like the EFCC. This conceptual disagreement perhaps explains why on April 12, 2017 when the NIA requested the EFCC to call off its raid on its Osborne flat, the anti-graft agency refused.
This is one big issue that the Osinbajo committee would have to crack: Can the warehousing of the billions claimed to be operational funds of the NIA in the Ikoyi flat be classified as a financial crime (money laundering) that the EFCC is empowered to investigate and prosecute, or is it a national security issue that the anti-graft agency is precluded from enquiring into?

Other questions that must be addressed would have to focus on the operations of the EFCC, which in several instances has been known to put the cart before the horse. Did the EFCC obtain a search warrant to break into the Ikoyi apartment? If it did and proceeded to the court to obtain a temporary forfeiture order, did it do a search at the Lagos Lands Registry to ascertain the owner of the flat? Did it extend its search to the Corporate Affairs Commission (CAC) to verify the shareholders/directors of the company said to have bought the flat? Why did the EFCC ignore the NIA DG and the agency’s operatives when they owned up to the billions discovered in the flat? With the lid blown open on what was obviously a covert operation, who takes responsibility for the glaring breach of security protocol?

Most importantly, the Osinbajo committee has to ensure that in trying to establish probity and accountability, his committee will also attempt to ensure that what security and intelligence agencies do in the “dead of the night” to keep us safe, is not compromised.

Source: This Day

FG Creates Central Assets Register to Track MDAs’ Assets

The federal government has launched an Asset Tracking and Management Project (ATMProject), a mechanism designed to enable it locate, identify, assess and evaluate all its moveable and fixed assets.

The Minister of Finance, Mrs. Kemi Adeosu, who unfolded this new initiative also disclosed that a central asset register would be created and domiciled in the Federal Ministry of Finance for recording the actual quantity, value, condition and location of all the capital assets belonging to the federal government.

Under the International Public Sector reporting Standard (IPSAS), government is expected to record both its assets and liabilities.

The Assets Tracking and Management Project and the creation of the Assets Register are new initiatives of the ministry, designed to enhance accountability, promote transparency and deepen efficiency in line with the change mantra of the current administration.

“For the first time, a Central and Unified National Database of Assets (Asset Register) would be generated and maintained for the purpose of recording, tracking and managing the huge investments in capital assets owned by government,” Adeosun said in a statement issued by the ministry’s Director of Information, Salisu Na’inna Dambatta.

According to her, “The Asset Tracking exercise and Register will make planning and control easier and improve accountability for assets. With the increased allocation to capital expenditure to 30 per cent, it is important that all assets are recorded and accounted for. Where disposals occur, they must be in line with the laid down procedures and must be transparent.”

She explained further that the Asset Register would avail the government the opportunity to know and monitor in real time, online information on the inventory of its assets.
A project coordinator, she said, had been appointed by her for the immediate take-off of the Asset Tracking and Management Project and the creation of the first Central Assets Register for the federal government.

However, the identity and details of the project coordinator were not provided.
Meanwhile, a circular signed by Adeosun has been dispatched to all Federal Ministries, Departments and Agencies (MDAs) requesting their accounting officers  to prepare an inventory of all fixed assets held as at December 31, 2016, to facilitate physical verification by the project team.

The circular further requested all heads of MDAs “to ensure that any assets held by current and former staff are fully accounted for,” adding: “In this regard, you may find it necessary to contact any former staff and/or political office holders to avail them the opportunity to return relevant assets in their possession.”

The circular emphasised that “all inventory records submitted will be cross-checked to capital releases and project account purchases to ensure completeness. Where assets have been sold or otherwise disposed of, they must be recorded with supporting authorization for sale and evidence of payment, where applicable”.

The circular drew the attention of Heads of MDAs to Chapter 26 of the Financial Regulations, with regards to disposal of assets and warned that “any asset not accessible for physical inspection and not disposed of in accordance with financial requirements will be deemed to have been illegally withheld or converted”.

It advised them to record such assets so as to enable the investigative agencies to be notified.

The records of the assets disposed are to cover the last five years and all accounting officers of the MDAs are to submit their reports not later than three weeks from the date of receipt of the circular.

The Independent Corrupt Practices Commission (ICPC) had recently delivered 40 vehicles to the Federal Ministry of Water Resources. It recovered them from some retired directors of the ministry.

The Economic and Financial Crimes Commission (EFCC) similarly announced the recovery of 40 Sports Utility Vehicles (SUVs) from a retired permanent secretary who served in the Federal Ministry of Power.

Source: This Day

NSE Partners DMO to List $1Billion FGN Eurobond

The Nigerian Stock Exchange (NSE) has listed the $1 billion Federal Government (FGN) Eurobond issued under Nigeria’s newly established Global Medium Term Note programme.

This 15-year domestic sovereign Eurobond priced at par and at a coupon of 7.875 per cent per annum is the first foreign currency denominated security to be listed and traded in the Nigerian capital market.

Commenting on the listing, the Director General, Debt Management Office (DMO), Dr. Abraham Nwankwo said: “The listing of domestic sovereign Eurobond reinforces FGN’s commitment to deepen and grow the Nigerian capital market. Developing the domestic market can help bridge the infrastructure deficit constraining economic growth.”

According to him, the Eurobond which was over-subscribed by 780 per cent, is part of FGN’s funding strategy for its 2016 capital expenditure and will be spent on key infrastructure projects, in line with its economic plan. “This huge oversubscription rate underscores a buoyant investor’s appetite for building exposure to Nigeria and demonstrates international confidence in the economy’s long term prospects,” Nwankwo said.

Speaking in the same vein, the Executive Director, Market Operations and Technology, NSE, Mr. Ade Bajomo commended the DMO for listing the Eurobond in the nation’s bourse. He noted that the domestic listing will diversify its investors’ base by giving Nigerian institutional investors access to the bond.

Bajomo said:“The listing of the dollar denominated bond on the exchange will boost price discovery and liquidity in the local market as well as help attract reliable long term foreign currency denominated funds into the financial market. It will also set the foundation for raising and listing more foreign denominated securities in Nigeria which will open up additional capital raising options for issuers and portfolio diversification opportunities to investors.”

“To ensure seamless trading and settlement of the Eurobond, the Exchange, working with Central Securities Clearing System (CSCS) developed and presented to issuers and transaction parties, a framework depicting onshore and cross border trade and settlement process in line with robust market practices,” he added.

Meanwhile, the equities market declined further yesterday as the NSE All Share Index (NSE ASI) depreciated by 0.58 per cent to close at 25,183.10. The depreciation recorded in the share prices of Zenith Bank, Nigerian Breweries, Forte Oil, Guinness and FBN Holdings were mainly responsible for the loss recorded in the Index. The decline brought the year-to-date (YTD) depreciation in the NSE ASI to 6.29 per cent as at yesterday.

Source: This Day

Nigeria’s New Tax Policy may Raise VAT on Luxury Goods

In an effort to shore up the federal government’s revenue base, the Federal Executive Council (FEC) has approved a new tax regime, just as it announced its intention to raise taxes on luxury goods.

 Minister for Finance, Mrs. Kemi Adeosun, who announced the approval of the new tax policy, after the FEC meeting presided over by acting President Yemi Osinbajo, said council approved the revised National Tax Policy meant to review the tax rates in certain areas. She however pointed out that the government would work with the National Assembly for the amendment of certain tax laws before the commencement of the policy.

 Mrs Adeosun hinted that while taxes on some basic commodities might not be increased, taxes on luxury goods would certainly be increased. Asked if the Council made any decision on reviewing the rate of value added tax (VAT), the Finance Minister said: “What the committee has shown is that we should look at actually increasing VAT on some luxury items. At five per cent, we have the lowest VAT among our peers and whilst we don’t think VAT should be increased on basic items, if you are going to drink Champagne, for instance, you should pay more. And I think that is a very valid and sensible suggestion which we are going to talk to the National Assembly about to see how we can implement it. But as far as basic goods are concerned, there will be no increase. I believe it is only fair that when you consume luxury goods you should pay a little bit more. But the National Assembly will decide the rate.”

Source: This Day

SEC, investors and protection of equities -Collins Nweze

Investors are interested in the security of their investments. They are attracted to markets where their interests are best protected and transaction processes seamless.

Aware of these facts, the Securities and Exchange Commission (SEC) is taking steps to guarantee investors’ confidence and build systems that will make transactions hassle free. Its institution of N5 billion Investors Protection Fund (IPF) to pay investors N200,000 for losses in line with the Capital Market Master Plan, is a measure to restore investors’ confidence in the capital market.

Also, the SEC, ain collaboration with the Central Bank of Nigeria (CBN), and in line with its statutory mandate of promoting and facilitating the development of efficient and effective systems for settlement of transactions, issued guidelines for the settlement of all types of securities.

Besides, in line with Part XIV of the Investment and Securities Act (ISA) 2007, the SEC established the IPF and appointed a board of trustees to administer it. The purpose of the fund is to compensate investors with genuine loss claims  against dealing member firms, covered are losses resulting from these key areas – the insolvency, bankruptcy or negligence of a dealing member firm of the exchange; or offence committed by a dealing member firm or any of its directors, officers, employees or representatives in relation to securities, money or any property entrusted to, or received or deemed received by the dealing member firm in the course of its business as a dealing member firm.

The SEC’s Director-General, Mounir Gwarzo, said besides the IPF, the introduction of electronic dividend and direct cash settlement of investors were geared towards the successful implementation of the master plan.

“We have also done other things like the recapitalisation. We have instituted a corporate governance scorecard and introduced the IPF. The fund ensures that if there were some problems that led to loss of money, the investor would be compensated up to a maximum of N200,000. We have been talking about amending some of our laws in the capital market. We have also set up an advocacy group that will look at the market, and see how capital market can be on the front burner of the Nigerian economy,” he said.

Speaking further, he said in terms of the implementation of the master plan, SEC is doing quite well and has continued to raise the standards of the market.

According to Gwarzo, a board had been set up to help run the affairs of the fund and its members would ensure that complaints from investors were genuine.

“If you lodge any complaint, there are a lot of rigorous processes of verification to ascertain that your complaint is genuine and that you are actually the true owner of that investment. The beneficiaries would N200,000. The whole essence of giving the N200,000 is to temporally ease the financial pressure the person is going through. Early last year, we paid about 320 beneficiaries,” he said.

Analysts believe that the current low patronage of the Nigerian stock market is partly as a result of the losses they suffered during the 2008 and 2009 market downturn. Many of the investors believed the protection they got from regulators in the past was not enough and are therefore, reluctant to return to the market. However, the current market regulators have intensified efforts to protect investors in order to increase their participation in the market.

Measures to boost investors’ confidence

For instance, the Nigerian Stock Exchange (NSE) signed a Memorandum of Understanding (MoU) in 2013 with the Economic and Financial Crimes Commission (EFCC). This MoU was aimed at tackling market infractions and curbing market abuses because of its zero-tolerance stance on infractions by dealing member firms and listed companies.

The partnership has successfully opened direct lines of communication and information sharing with the EFCC for reporting and investigation of incidents leading to a more proactive law enforcement and swift recovery of stolen securities.

The initiative has severally led to the arrest of individuals suspected of forgery, impersonation and fraudulent sale of shares.

However, the extent to which an investor can be protected is defined by the commercial laws and the enforcement of such laws, such that investors are protected from expropriation by company insiders.

In the capital market, investor protection is usually measured by indicators that quantify explicit protections awarded to shareholders and creditors by corporate, bankruptcy, and re-organisation laws, as well as the quality of law enforcement. Examples of such explicit protections are those that impact shareholders’ ability to vote down directors, including whether to allow shareholders to vote by proxy.

Analysts believe that the differences in investor protection across countries are substantial and are responsible for differences in the development of financial markets and ultimately, differences in economic development. In Nigeria, the Investment and Securities Act (ISA) 2007 provides the ways and manners investors are protected.

Other initiative to protect investors

Apart from signing the MoU with EFCC, the NSE has also identified investors’ education as another veritable tool towards protecting investors in the capital market. The NSE kicked off its financial literacy programme in protecting investors in February 2012. This programme was designed to enhance investors’ understanding of the basics of investing around portfolio construction, asset allocation and risk diversification. In 2015, The NSE conducted over 172 programmes across Nigeria, including school outreach sessions, seminars and workshops to educate investors, market participants and the general public about responsible investing and sustainable capital formation, reaching about 15,000 people.

Corporate governance rating system

To promote sound practices of corporate governance, the NSE introduced the Corporate Governance Rating System (CGRS), an initiative designed to rate listed companies on the exchange based on their corporate governance and anti-corruption culture, thereby improving the overall perception of and trust in Nigeria’s capital markets and business practices.

NSE Chief Executive Officer, Oscar Onyema, said the introduction of the CGRS would improve the overall perception of the capital markets and business practices of listed companies. He said: “It is expected that companies will enjoy tangible business advantages from risk-oriented and/or ethically sensitive business partners and investors. In addition, competitors would be challenged to establish the same level of good governance by setting standards of excellence. Companies would not only set themselves apart from their peers, but also contribute to improving the climate for doing business in Nigeria.”

Similarly, as part of efforts to protect investors by enhancing access to their cash as well as eliminating fraudulent activities in the Nigerian capital market, the NSE, in collaboration with the SEC and Central Securities Clearing System (CSCS), commenced the Direct Cash Settlement (DCS) . The initiative allows for the direct payment of proceeds of sale of securities into an investor’s nominated bank account.

The initiative is a great departure from former practice where proceeds from sale of securities are paid directly into the stockbroker’s account. Stockbrokers then deduct transaction fees and remit the balance to the client’s account. Historically, issues have arisen when the proceeds of sales were not remitted into the clients’ accounts, which necessitating the need for the initiative.

In terms of enhancing surveillance, the NSE equally acquired NASDAQ’s SMARTS Market Surveillance platform to power its compliance programme. The technology will provide the NSE with the surveillance expertise needed to grow and expand the market and equip the exchange with the surveillance tools necessary to monitor market manipulation, including spoofing and layering.

The NSE launched its whistleblowing portal (X-Whistle) in 2014, to enable operators, investors and other stakeholders disclose information on market infractions and abuse. The X-Alert, which allows the investing public to know when a transaction has been made on their account, has also been introduced. Explaining the importance of the initiative, the NSE said: “Each time investors buy or sell a security, an alert is sent via a text message to the recipient’s mobile phone or via an e-mail to the recipient’s mailbox.

“The initiative brought real time notification plus transparency to the market at market rates, while safeguarding against unauthorised sale or purchase of securities.”

To increase the level of market compliance, the NSE also launched the BrokerTraX, a tool that provides transparency of broker and brokerage firm compliance with the rules of the market. Not only this, there was an introduction of X-Compliance Report, a transparency initiative designed to help maintain market integrity by providing compliance related updates on all listed companies.

Recently, the exchange has again commenced the use of enhanced Compliance Status Indicator (CSI) codes on the ticker tape for listed companies as part of efforts to further improve market transparency and integrity, provide timely information for investment decision as well as enhance the protection of investors in the capital market.

Under this initiative, the exchange tags all listed companies with a three character code that indicates the compliance status of the listed company at any particular point in time. This compliance code will enable investors to make informed decisions while ensuring a transparent market guided by timely information.

Debt Management Office steps in

In a bid to ensure that retail investors benefit from the Federal Government Bonds (FGN Bonds), the NSE has collaborated with the Debt Management Office (DMO).

According to DMO Director-General, Dr. Abraham Nwankwo, there had been efforts to ensure that the FGN bonds were democratised for retail investors to participate since 2012. He said the organisation appointed Stanbic IBTC Stockbrokers to assist in the democratisation of the initiative to ensure that its services were not only for the upper class.

He said: “We wanted Stanbic IBTC to assist us in making sure that every retail investor with little money can also participate in the investment thereon. The NSE is not an elitist platform for only those who are millionaires and billionaires, but also for those with little money like N10, 000 to invest in the government bond and have it listed on the NSE.”

Nwankwo said the move had yielded some positive results, noting that the job was to encourage retail investors to buy FGN bonds and have their bonds traded on the NSE just as big investors.

Islamic bonds investors also protected

The Central Bank of Nigeria (CBN), supported by SEC, is also keen on protecting investors’ confidence. The apex bank has set commercial banks’ investment in Islamic bonds issued by state governments to 10 per cent of the total amount on offer.

CBN’s Director, Financial Markets Department, Angela Sere-Ejembi, said the apex bank also fixed a maximum tenor of 10 years for the bonds.

“In view of the need to foster financial system and economic growth and development, as well as complement the efforts of government at various levels, the CBN has approved “Guidelines for Granting Liquid Asset Status to Sukuk Instruments issued by state governments”, to enhance the diversification of sources of funding for development at the sub-national levels,” she said.

She said financial deepening is gradually gaining ground in the Nigerian financial landscape with the introduction of new financial products, including non-interest financial instruments, to cater for the diverse financial needs of the populace and government at various levels.

The adoption of Sukuk issuance by state governments, as an alternative means of financing public expenditure, will contribute to the deepening of the financial system. In the same light, it is expected that other levels of government as well as interested supra-national financial organisations may get involved in Sukuk structuring at some time in the future.

She said to ensure the sustainability of this development, the CBN has considered the need to enhance the quality of Sukuk instruments, by issuing these guidelines to provide for eligibility for the grant of liquidity status to Sukuk issued by state governments at its discount window as well as for the purpose of liquidity ratio computation. This will further deepen the market and promote investment and secondary market activities.

The Sukuk issuance, she said, shall be backed by a law enacted by the relevant House of Assembly, specifying that a sinking fund to be fully funded from the consolidated revenue fund account of the state be established.

SEC, CBN promote efficient settlement of transactions

The guidelines for the SEC/CBN settlement plan also set out the procedures for the settlement of securities, including the rights and obligations of the parties involved in every transaction. It also covers the settlement procedures and settlement cycle for the trades executed in the Nigerian Stock Exchange traded securities, FMDQ over the Counter (OTC) Securities, NASD Over the Counter (OTC) Securities, Nigerian Commodity Exchange (NCX) traded securities and Afex Commodities Exchange.

Parties to Securities Settlement include, but not limited to Capital Market Registrars, CBN, NSE, Central Securities Clearing System (CSCS) Plc (Central Securities Depository -Clearing & Settlement Agent), Deposit Money Banks (DMBs), Custodians, Dealing Members Firms Page, Discount Houses and Nigerian Commodity Exchange (NCX).

According to a release on the CBN’s website, the general rule is that any securities transaction must trade or be reported through a licensed Exchange in line with the standard settlement guidelines.

“After each day’s transaction (Day T), the clearing/settlement agent (CSCS) shall generate the financial obligations of each dealing positions of the dealing member firms based on their respective settlement banks to arrive at net position per settlement banks,” the statement said.

For Federal Government securities, the statement added that after each day’s transaction (Day T), the clearing/settlement agent shall generate the financial obligations of each dealing member firms. It added that the clearing/settlement agent shall generate the financial positions of the dealing member firms based on their respective settlement banks to arrive at net position per settlement banks.

On Federal Government securities (primary auction), the guideline directed that among other things, after the release of auction result, the government securities issuing agent shall notify each successful bidder (primary dealer) their financial obligations. The successful bidder shall fund its account with the government securities issuing agent for settlement on or before Day T+2.”

The aim of this guideline is to promote competitive, efficient, safe and sound post trading arrangements in Nigeria. This should ultimately lead to greater confidence in securities markets and better investor protection and should in turn limit systemic risk. In addition, the guidelines seek to improve the efficiency of the market infrastructure, which should in turn promote and sustain the integration and competitiveness of the Nigerian securities markets, according to the guideline.

Digital currency

Gwarzo is interested in unlocking the country’s economic potential and creating wealth for the people. It is more concerned about investors’ protection. While many agencies and investment companies began a campaign, urging investors to invest in digital currencies, such as Swisscoin, OneCoin, Bitcoin and such other virtual or digital currencies, SEC warned them about the risk of such investment.

In a statement, SEC said: “The attention of the SEC has been drawn to radio advertisements and other modes of solicitations of the public to invest in digital currencies. The public is hereby advised to exercise extreme caution with regards to digital as a vehicle of investments. This warning is in consonance with similar warnings issued by capital market regulators and central banks across the world over the past few years.”

The Commission alerted the public that none of the persons, companies or entities promoting the initiative has been recognised or authorised by it or by other regulatory agencies to receive deposits from the public or to provide any investment or other financial services in or from Nigeria. The public should also be aware that any investment opportunities promoted by these persons, companies or entities are likely to be risky in nature with a high risk of loss of money, while others may be outright fraudulent schemes.

Continuing, it said: “Given that these instruments and the persons, companies or entities that promote them have neither been authorised, nor any guidelines/regulations developed for them by any of the regulatory authorities in Nigeria, there is no protection available to users or investors in these virtual currencies from financial losses if the virtual currencies fail or the companies promoting them go out of business.

“The public and consumers of financial services are further advised that before making any investment or entering into any financial services transaction, they should ascertain that the entity with whom the investment or transaction is being made is authorised by the Commission or other financial services regulatory authority as applicable to provide such services.”

But the Managing Director, Nigeria Deposit Insurance Commission (NDIC), Umaru Ibrahim, said the corporation and the CBN had set up a committee to look into the trending “digital currency, ‘bitcoin’.

Ibrahim, who spoke at a media forum in Kaduna with “Economic Recession and the Nigerians Banking Sector: Opportunities, Challenges and the way Forward”, as theme, said the corporation had constituted a committee together with the CBN to have a deep study of the phenomenal bitcoin.

“We will look at it’s advantages and disadvantages, what it means for the payment system and what it means for safety and security of customers. We will also look at what it means for money laundering, anti corruption, crime and measurement of money/near money instrument for the economy. But we need a lot of education to do this,” he said.

Overtime, Gwarzo believes that the potentials of the local financial market are enormous and have to be unlocked early to create wealth for the nation, but it has to be done rightly and with the right information. The SEC boss is, therefore, implementing key policy initiatives meant to deepen the Nigeria financial market, secure investors’ confidence and drive investment with new technologies.

Like the CBN, SEC under Gwarzo is aware of the impact of bringing more people into the financial market net and creating seamless dealing platforms that raise confidence level in the market. These policies are not only sustaining investors’ interest, but deepening the financial market.

The e-dividend management system, which was launched last year by the SEC in collaboration with the CBN and the Nigeria Interbank Settlement System (NIBSS) to enable investors have direct access to their dividends, is already enjoying some level of compliance from the investing public.

The SEC boss said the Nigerian capital market has amazing potential to serve as a catalyst for financial inclusion. While most people identify capital markets as important sources of medium-to-long-term capital, a few realised their amazing potential to serve as catalysts for bringing so many people into the financial services sector in the interest of the economy.

Source: The Nation