HB 34: Investment and Security Act (Amendment) Bill, 2015

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Sponsor:

Hon. Abonta Uzoma Nkem

Bill Status: Awaiting Committee Report

  • First Reading: 13/08/2015
  • Second Reading: 19/01/2016
  • Committee Referred To: Committee on Capital Market Institution
  • Consolidated with:Consolidated with HB 175
  • Date Reported out of Committee:
  • Third Reading:

Bill Analysis:

SHORT TITLE

Investment and Securities Act (Amendment) Bill

OBJECTIVES

This Bill seeks to:

  • make it mandatory for the states seeking to obtain loans from the capital market, to obtain consent of their legislative houses, executive councils and elected local government councils;
  • give the Tribunal independence;
  • make the Court of Appeal the final Appeal Court with respect to the interpretation of the Investments and Securities Act.

AMENDMENTS PROPOSED BY THE BILL

Investments and Securities Act, 2004 (Principal Act)

Investments and Securities Act (Amendment) Bill

Section 171(b) –

The bodies to which this Part of this Act applies are ‐

“(b) Local Government;”

 

Clause 2 of the Bill seeks to amend Section 171(b) of the Act by inserting the phrase – “Democratically elected” before “Local Government”, to read,

 

“Democratically elected Local Government”

Section 173(2)Restriction on raising of funds from the capital market

“An application to raise a loan under this Part of this Act shall be in such form as the Commission may direct.”

 

 

Clause 3 of the Bill proposes to amend Section 173(2) by adding after the last word – “direct”, as follows:

 

“An application to raise a loan under this Part of this Act shall be in such form as the Commission may direct and shall show proof of compliance with Section 175 of this Act”

 

Section 175 - Bodies to publish details of loans in the Gazette or other official document

 

 

 

 

 

 

 

 

 

 

 

Clause 4 proposes to add new sub-sections (4) and (5) as follows:

“(4) where the body is a state governments or the Federal  Capital Territory Abuja, the gazette shall also contain:

  • A resolution of the State Executive Council approving the loan;
  • A resolution of at least two-thirds of the elected Local Government Chairmen of the state approving the loan; and
  • A resolution of the House of Assembly of the state approving the loan”

“(5) Where the body is an elected Local Government Council, the gazette shall contain:

  • A resolution of the elected Legislative arm of the Local Government approving the loan; and
  • A resolution of the House of Assembly of the state, which the Local Government belongs to approving the loan”

Section 223 – Interpretation

“Chairman - means the chairman of a local government council”

Clause 5 seeks to amend Section 223 of the Principal Act by adding the word “elected” after “the” but before “chairman of a local government council”

“The elected chairman of a local government council”

Section 224(2)

“The Minister shall specify the matters and places in relation to which the Tribunal may exercise jurisdiction“

 

 

Section 224(2) of the Principal Act by deleting the word “Minister” and inserting the phrase “the National Judicial Council”

“The National Judicial Council shall specify the matters and places in relation to which the Tribunal may exercise jurisdiction”

Section 225 – Composition of the Tribunal

“(1) The Tribunal shall consist of nine persons (hereafter referred to as "Capital Market Assessors") to be appointed by the Minister, one of whom shall be the chairman.”

“(2) The chairman shall be a legal practitioner who has been so qualified to practice for a period of not less than fifteen years with cognate experience in capital market matters”

 

Section 225(1) is amended by substituting the word “Minister” with the phrase “the National Judicial Council”

 

Section 225(2) is amended by substituting the “fifteen” with “Ten”

“The chairman shall be a legal practitioner who has been so qualified to practice for a period of not less than ten years with cognate experience in capital market matters”

Section 231 - Order constituting a Tribunal to be final

“The question as to the validity of the appointment of any person as a Capital Market Assessor shall not be the cause of any litigation in any Court or tribunal and no act or proceedings before the Tribunal shall be called into question in any manner on the ground merely of any defect in the constitution of the Tribunal.”

Section 231 is amended by being wholly repealed

 

 

 

 

Section 232 (1)

“There shall be for the Tribunal a secretary who shall‐

(a) be appointed by the Minister”

Section 232(1) is amended by deleting the word “Minister” and inserting “the National Judicial Council” as follows:

“There shall be for the Tribunal a secretary who shall‐

(a) be appointed by the National Judicial Council”

Section 238(2)

“(2) Every individual or company in a case before the Tribunal shall be entitled to be rep‐ resented at the hearing of an appeal by a merchant bank, a stockbroker, a solicitor or chartered accountant or financial adviser: Provided that, if the person intended by the company to be its representative in any matter before the Tribunal is unable for good cause to attend the hearing thereof, the Tribunal may adjourn the hearing for such reasonable time as it thinks fit, or admit the appeal to be made by some other person or by way of a written statement.”

Section 238(2) is amended by deleting the word “solicitor” and substituting it with “Legal Practitioner”

 

 

 

 

 

Section 243(1)

“Any person dissatisfied with a decision of the Tribunal constituted under this Act may appeal against such decision on points of law to the Court of Appeal upon giving notice in writing to the secretary to the Tribunal within thirty days after the date on which such decision was given.”

Section 243(1) is amended by deleting the phrase “on points of the law” as follows:

“Any person dissatisfied with a decision of the Tribunal constituted under this Act may appeal against such decision to the Court of Appeal upon giving notice in writing to the secretary to the Tribunal within thirty days after the date on which such decision was given.”

Section 243 (2)

“(2) A notice of appeal filed pursuant to subsection (1) of this section shall clear all the grounds of law on which the appellant's case is based.”

Section 243(2) is amended by deleting the whole section

 

 

Section 245 – Further appeals

“An appeal against the decision of the Court of Appeal at the instance of either party or the Commission shall lie to the Supreme Court.”

Section 245 is proposed to the repealed

Section 246 – Power of the Minister to issue Directives

Without prejudice to the foregoing provisions of this Act, the Minister may give to the Commission such directives as appear to him to be just and proper for the effective discharge of the functions of the Commission under this Act and it shall be the duty of the Commission to comply.”

Section 246 is proposed to be repealed

 

 

 

Section 247 – Power to supersede the commission

“(1) If at any time the Minister is of opinion‐

(a)  that on account of grave emergency, the Commission is unable to discharge the functions and duties imposed on it by or under the provisions of this Act; or

(b)  that the Commission has persistently made default in complying with any directive issued by him under this Act; or

(c)  that the Commission has made default in the discharge of the functions and duties imposed on it by or under the provisions of this Act and as a result of such default the financial status of the Commission or the administration of the Commission has deteriorated; or

(d)  that circumstances exist which render it necessary in the public interest so to do,

the President may, on the recommendation of the Minister, suspend the Commission for such period, not exceeding six months, as may be specified in the notification.”

Section 247 is proposed to be repealed

 

 

 

 

 

 

 

 

 

 

Section 252 – Penalty

“Save as otherwise specifically provided under the provisions of this Act, whosoever contravenes or attempts to contravene or aids or abets the contravention of the provisions of this Act or of any rules or regulations made thereunder, commits an offence and is liable on conviction to a fine not exceeding N100,000 or to imprisonment for a term not exceeding three years or to both such fine and imprisonment.”

Section 252 is amended by deleting N100,000 and substituting it with N1,000,000

 

 

 

Section 256 – Power to remove impediments

“(1) If any difficulty arises in giving effect to the provisions of this Act, the Minister may,
by order published in the Gazette, make such provisions, not inconsistent with the provisions of this Act, as may appear to be necessary for removing the impediment:

Provided that no order shall be made under this section after the expiry of five years from the commencement of this Act.“

Section 256 is amended by repealing it

 

 

 

 

 

Section 257 – Transitional Provisions

“(1) The Minister may by order make such transitional provisions as appears to him necessary or expedient to give full effect to the provisions of this Act.”

Section 257 is proposed to be amended by deleting sub-section (1)

 

CONCLUDING NOTES

The Bill seeks to make it mandatory for states seeking to obtain loans from the capital market to obtain the consent of their legislative houses, executive councils and elected local government councils to give the Investments and Securities Tribunal (IST) independence; and make the Court of Appeal the final appeal court with respect to the interpretation of the Investments and Securities Act.

The Bill further seeks to assign some of the powers of the Minister to the National Judicial Council (like the Capital Market Assessors) and reducing the number of years of experience the Chairman should have from 15 years to 10years (Section 225 of the Principal Act).

The proposal to make the Court of Appeal, the court of final jurisdiction could be to reduce adjudication time for matters provided for under the Principal Act. The amendment would be a welcome development to the investment and securities sector in Nigeria.

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