By Chukwuma Umeorah
The Nigerian Senate has passed the Investments and Securities Bill (ISB) 2024, a legislative framework aimed at enhancing the regulation of the capital market, bolstering investor confidence, and attracting foreign investments.
The bill, which repeals the Investments and Securities Act of 2007, seeks to align Nigeria’s capital market with global standards and protect investors from fraudulent practices. Senate President Godswill Akpabio, while announcing the bill’s passage, emphasized its importance in reducing investment risks and fostering economic growth. “A lot of people would be happy to infuse funds into the capital market when they know a lot of the risk has been minimized,” Akpabio stated.
The bill introduces stricter penalties for operators of Ponzi and pyramid schemes, mandating fines of at least N20 million or imprisonment for up to 10 years, or both. Speaking on this provision, Director General of the Securities and Exchange Commission (SEC), Emomotimi Agama stated, “This bill explicitly prohibits Ponzi and pyramid schemes, fortifying protections for investors against illegal fund managers.”
In addition, the ISB 2024 expands the scope of the Investor Protection Fund (IPF) to cover losses resulting from the deregistration of brokerage firms, beyond its existing remit of negligence or bankruptcy cases. Agama highlighted the bill’s broader significance, saying, “This bill’s passage would be pivotal in setting Nigeria on the path to a world-class capital market.”
Chairman of the Senate Committee on Capital Market, Senator Osita Izunaso, described the ISB 2024 as transformative, addressing systemic risk management, derivatives, financial market infrastructure, and the regulation of Ponzi schemes. “The Bill seeks to repeal the existing Investments and Securities Act 2007 and to establish a new market infrastructure and wide-ranging system of regulation of investments and securities businesses in Nigeria,” Izunaso explained.
He further noted the bill’s objective to modernize Nigeria’s capital market framework, ensuring transparency, reducing systemic risks, and safeguarding investors. “The overriding purpose of the proposed legislation is to strengthen the capacity of the Commission for the effective performance of its statutory mandate as well as reposition that vital sector of the economy for national economic transformation,” he added.
The legislation also introduces regulatory frameworks for Commodity Exchanges and Warehouse Receipts, a step aimed at revitalizing Nigeria’s commodities sector and ensuring economic diversification.