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CROWD FUNDING: SUMMARY OF PROPOSED RULES OF REGULATION BY SEC - Investment - Nairaland

Nairaland Forum / Nairaland / General / Investment / CROWD FUNDING: SUMMARY OF PROPOSED RULES OF REGULATION BY SEC (565 Views)

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CROWD FUNDING: SUMMARY OF PROPOSED RULES OF REGULATION BY SEC by Legalolumoran(m): 8:23pm On Apr 20, 2020
The Companies and Allied Matters Act (CAMA), and Investment and Securities Act prohibit private companies from inviting the public to subscribe for any shares or debentures of the company or deposit money to it.


In a clever way, this act is now being done through crowd funding portals.


Waking up from slumber, Securities and Exchange Commission proposed rules to regulate the space.


Some:

**Micro Small and Medium Enterprises (companies) that have been in operation with evidence for a period of least 2 years or more shall be eligible to raise funds through crowdfunding, but they must be registered by Security Exchange Commission.



**Micro, Small and Medium enterprise are limited to raising not more than 50, 70, and 100 million naira respectively, within a period of 12 months.



**Since Nigerians are smart, SEC figured that some companies would, after reaching their limit in capital raising, use some other affiliate companies to raise new round of funds...



**So as an attempt to cripple this sense, SEC, through the proposed rules widened the scope of definition of an ISSUER (i.e company calling for crowd funding, selling shares, stock, units of investment etc).



**It includes all affiliate companies under the control (or joint control) of the issuing company, and a company as it were before being acquired.


Funds raised by any or all of these companies would be summed up for the purpose of ascertaining the aggregate amount raised within a period of 12 months.



**Small company calling for funds may not, during the space of 12 months, be eligible to raise more than 10% of its annual income from a single person.



**Nigeria companies that had been accredited by SEC are excluded. Also, companies can seek legitimacy by utilizing an already registered crowd funding portal, provided they reach an understanding.



**Crowd funding operators must send a report of all financial transactions on their platforms to the SEC at the end of each year.



**Paid up share capital is set at 100 million Naira.



Your thoughts?

I see crowd funding platforms beginning to merge (and some 'jokers' will commence new tricks)

To follow me on IG: @realpathlawyer

Re: CROWD FUNDING: SUMMARY OF PROPOSED RULES OF REGULATION BY SEC by mrsage(m): 1:12am On Apr 21, 2020
I like the crowd funding concept.

Already looking at how I can take advantage of this for transportation business
Re: CROWD FUNDING: SUMMARY OF PROPOSED RULES OF REGULATION BY SEC by Legalolumoran(m): 10:50am On Apr 21, 2020
Awesome, but you need to be well guided, perhaps you can WhatsApp me on 07033464493 for a 1-on-1 consultation session. (Not free)


mrsage:
I like the crowd funding concept.

Already looking at how I can take advantage of this for transportation business

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