On March 25, 2025, the Investment and Securities Act 2025 (“the Act”) came into effect, repealing the Investments and Securities Act, No. 29 of 2007, and establishing the Securities and Exchange Commission (“the Commission”) as the apex regulatory authority for the Nigerian capital market. It is to regulate the market, ensure capital formation, protect investors, maintain a fair, efficient, and transparent market, reduce systemic risk, and address related matters.
Sections 1 to 2 of the Act established the Commission as an independent body corporate with perpetual succession and a common seal. It may sue and be sued in its corporate name. It shall have the power to acquire, hold, or dispose of any property, movable or immovable, and to perform any of its functions under the Act. The Commission shall have its head office in a location that by law is designated as the capital of the Federal Republic of Nigeria and may establish zonal offices in any part of Nigeria in accordance with the decision of the board of the Commission.
This article reviews the functions and powers of the Commission as provided for under section 3(1) of the Act. The Act recognises the Commission as the apex regulatory authority for the Nigerian capital market and shall perform the functions and exercise all the powers prescribed in the Act. Before considering the functions and powers of the Commission, it must be noted that the Commission has what could be considered as six objectives contained in Section 3(2) of the Act, but absent in the repealed 2007 Act. The six objectives are:
(a) act in the public interest, having regard to the protection of investors and the maintenance of fair, efficient, and transparent markets;
(b) protect the integrity of the securities market against all forms of market abuse and insider dealing;
(c) prevent unauthorised, illegal, unlawful, fraudulent, and unfair trade practices relating to securities and investments;
(d) Contribute to the reduction of systemic risk and promote financial stability.
(e) ensure the development of the capital market and facilitate capital formation for economic development; and
(f) pursue such other objectives as may be related to those stated in paragraphs (a)-(e)
These objectives are different from the preambles of the 2007 Act and the 2025 Act. They are also listed in distinct sections of the Act and are very clear.
Functions of the commission
The functions of the Commission as contained in the Act can be classified into four, namely supervision, regulation, registration, and advisory. The Commission, according to section 3(3)(a) of the Act, shall regulate investments and securities business in Nigeria as defined in the Act. Under Section 3(3)(b), it is now to register and regulate securities exchanges, commodities exchanges, virtual and digital asset exchanges, and other market venues against the provisions of Section 13(b) of the 2007 Act, which provides that the Commission shall register and regulate securities exchanges, capital trade points, futures, options and derivatives exchanges, commodity exchanges, and any other recognised investment exchange.
The 2025 Act abridged the 30 (Section 13(a) to (dd)) functions of the Commission in the 2007 Act into 20 (Section 3(3)(a) to (t)) functions. In section 3(3)(c) to (o) and (q), the Commission has expanded functions of supervision, registration and regulation of securities of public companies; register, securities offered to the public as defined in this Act; corporate and individual capital market operators as defined in the Act; workings of collective investment schemes and such other schemes as may be approved by the Commission; credit enhancement services in the capital market; securities depository companies, clearing and settlement companies, custodians of assets and securities, collateral managers, credit rating agencies, virtual asset service providers, digital asset operators, credit enhancement facility providers, and such other agencies and intermediaries as may be approved by the Commission; derivative products and the derivatives market; operations of the National Savings Scheme or any other similar scheme as may be established; self-regulatory organisations, and capital market trade associations to which it may delegate its powers; collateral management companies, warehouse operators and warehouses which issue warehouse receipt concerning commodities to be traded on a registered exchange. It is also to register and regulate the issuance of electronic warehouse receipts to be traded on a commodity exchange, online forex trading activities, platforms, and intermediaries, and cross-border securities transactions.
The Act in Section 3(3)(e), (p), and (r) to (t) allows the commission to render assistance as may be deemed necessary to promoters and investors wishing to establish securities exchanges. It is to register, review, and approve takeovers and all forms of business combinations and affected transactions of public companies. It is to review and approve takeovers and all forms of business combinations and affected transactions of public companies. Prevent and sanction unauthorised and illegal dealing in securities and investment schemes. Advise the minister on matters relating to the securities industry, and perform such other functions consistent with this act as are necessary or expedient for giving effect to the provisions of this act.
Concerns on the functions and powers of the commission
The enactment of the Act with expanded functions of the Commission is a great step towards bringing investment and securities to a global standard, present realities, and demands, and creating an assured environment for stakeholders, local and international. However, a couple of concerns must be carefully looked into in implementing the Act.
Too many functions
However, whilst the public keeps monitoring the progress of the Commission in the performance of these functions, there has always been a belief that the powers of the Commission are too many. There has been advocacy for the creation of a different platform and agency for some of the roles performed by the Commission, and in my view, at least the Act would have given a detailed framework where the functions are divided into maybe four, namely supervision, regulation, registration, and advisory, with provisions for independent departments of the Commission. Instead of leaving such an arrangement at the administrative convenience of the Commission.
The challenge with this is that the functions become overwhelming. The Commission would be faced with the challenge of cherry-picking which of the functions it would perform and/or perform well. A few functions would most likely be left out as a shadow or to the detriment of others or beautification of the Act, and in some cases, recourse would only be made to them when it best suits the Commission. Every letter of the Act must matter.
Unfettered powers
The Act gives the Commission the power to intervene in the management and control of capital market operators. public companies and regulated entities that it considers to have acted in a manner detrimental to the interest of its investors and shareholders, to have committed grave corporate governance violations, or to have failed, to be failing, or to be in crisis, including entering the premises and doing whatsoever it deems necessary in the interest of the public and for the protection of investors. Not minding the fact that, in the past, the Commission, in exercising its functions, has entered into the premises and did whatsoever it deemed fit at the time, not minding the fundamental human rights of the parties concerned and thereby violating the constitution in the exercise of what can be considered its statutory functions. It is hoped that the people saddled with administering these functions would be rational and take cognisance of the people and other existing laws in carrying out their actions.
Competent staff and operational guidelines
There have been doubts about the capacity and competence of the present staff of the Commission in performing their roles in the past. Practitioners who are in private employment have always complained about this. There is also a risk of double dealings by the staff. Hence, the staff would have to be trained on the application and implementation of the functions of the Commission to ensure it meets its objectives.
Use of technology
It was observed that most of the functions of the Commission may require a lot of physical contact and face-to-face interactions with the Commission. In a world where technology has eased many business-related processes, it is hoped that the Commission would consider adopting efficient and effective technology in these enormous functions and eliminate to the barest minimum direct human dealings, which are plagued with corruption and undue human delays.
Beyond enforcement
The Commission should consider itself not just an enforcer of the law to catch and punish offenders but also an enhancer of the law by putting guidelines and processes in place that make it difficult to violate the law, and when imposing sanctions, it should focus on addressing the issues and instilling confidence to discourage the offenders and others from further violating the law. It should carry out these functions without fear or favour and strive to foster improvement in stakeholders’ performance in the industry.
Adebayo Adekola Counsel/Executive Assistant, Wole Olanipekun & Co.
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