By 
The NASD OTC Exchange has urged public limited companies to comply with the Securities and Exchange Commission (SEC) regulation mandating that securities of public unlisted companies be traded exclusively on SEC-registered Over-the-Counter (OTC) Exchanges.
The SEC rule prohibits the bilateral trading of unlisted securities outside a registered exchange to ensure transparency and accountability. It mandates that all transactions involving such securities take place on SEC-approved OTC platforms, as public companies are required to register their securities with the SEC upon issuance.
The SEC has underscored its authority to impose penalties on violators, as stipulated in the Investment and Securities Act (ISA). Specifically, the rule states:
“All securities of unlisted public companies shall be bought, sold, or transferred only by means of a system approved by the Commission and under such terms and conditions as the Commission may prescribe from time to time.
No person shall buy, sell, or otherwise transfer securities of an unlisted public company except through the platform of a registered securities exchange established for the purpose of facilitating over-the-counter trading of securities.
Any unlisted public company, director, company secretary, registrar, broker/dealer, or such other persons who facilitate the buying, selling, or transfers of the securities of an unlisted public company otherwise than through the platform of a duly registered securities exchange shall be liable to a penalty of not less than N100,000 in the first instance and not more than N5,000 for every day of default.”
In a recent statement, NASD noted that many unlisted public companies currently fail to trade their securities on SEC-registered OTC platforms, thereby limiting the SEC’s ability to monitor these activities as part of its investor protection efforts.
NASD highlighted the benefits of compliance, stating:
“If enforced, the rule will make the securities of unlisted public companies more accessible to investors and market participants on a trusted platform. This will enhance share liquidity for issuers, reduce reliance on management-driven transactions, curb fraudulent dealings, and boost investor confidence in the capital market.
Furthermore, the SEC-registered OTC Exchange Platform enables price discovery through market-driven dynamics and facilitates portfolio diversification, allowing equity investors to access securities across various economic sectors with ease.”
Compliance with these regulations is expected to strengthen transparency and efficiency in Nigeria’s capital market, fostering a more robust and inclusive investment environment.
Comments