Post Recapitalisation: SEC Gives Investors Guidelines On How to Move their Stocks


Following the expiration of the deadline set by the Securities and Exchange Commission (SEC) for Capital Market Operators (CMOs) to meet the new minimum capital base, the apex regulator in the capital market has come out with procedures for investors to move their stock account from those that were unable to meet the minimum capital requirement.

Investors are advised to verify the compliance status of their preferred CMO by checking the list on the SEC website. According to a circular posted on the SEC website, the guidelines to be followed not just by the investors, but the target firms and the Central Securities Clearing System.

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Include the first step, concerned investor to approach a capitalised broker/dealer or broker for engagement. In doing this, the investor is expected to undergo a Know Your Customer (KYC) process with the new firm.

The KYC refers to the process of the broker/dealer or broker verifying the identity of the investor in this instance. After this, the broker/dealer or broker would open a CSCS account for the investor using the investor existing clearing house number from his former brokerage firm.

The investor is then expected to give a mandate to the target firm to transfer his/her account from the under-capitalised firm to the target or capitalised firm.

The investor is also expected to submit evidence of purchase of the shares such as contract notes, receipts of purchase, dividend stubs or confirmation of holdings from the registrar office, signed by the managing director of the registrar firm to the target firm. Then, the target firm would initiate inter-member transfer request.

After this, the Managing Director of the target firm would go to the CSCS to sign off the indemnity form. Then the CSCS shall process the request and notify the broker/dealer or broker through the CSCS website.

However, it expected that the current Bank Verification Number (BVN) initiative by the SEC in collaboration with the Central Bank of Nigeria (CBN) will help to accelerate the transfer.

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