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Capital MarketCOVERNEWS

SEC Lists New Rules For Nominee Companies

SEC To License Brokers Offering Foreign Stocks

The Securities and Exchange Commission, SEC, has announced the release of the new rules for the operation of nominee companies.

The commission in a statement on Sunday said all persons not registered by the commission as custodians, carrying on the business of nominee and holding securities on behalf of actual owners should apply to the commission for registration as nominees.

According to the new rules, the business of the nominee shall be to take title of property, money or securities in trust for and on behalf of clients as nominee for, or representative of such clients, to hold and deal with such property, money or securities strictly in accordance with any directions given by the respective clients from time to time to the nominee company.

The statement said, “The rule also stipulates that a nominee shall not engage in any business or activity except the business of nominee companies.

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“A nominee is a company formed by a bank or other financial institution for the purpose of holding securities and other assets and administering them on behalf of the actual owners under the terms of a custodial or nominee agreement.

“The rule prescribes that a nominee company shall have minimum of three sponsored individuals, one of whom shall be a compliance officer.

“The managing director of the company shall at all times be among the sponsored individuals by complying with the requirements for registration of sponsored individuals.

The commission added that nominee companies should have necessary infrastructure, including vaults for safe custody of title documents, agreements as well as and information technology capability required to effectively discharge its functions.

SEC said a nominee company should abide by the code of conduct for capital market operators and their employees as set out in the commission’s Rules and Regulations.

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It said, “In addition, any person registered by the commission as nominee shall: not carry out any business except the business of nominee prescribed in these rules; not invest in securities; and have a robust risk management procedure and mechanism for compliance with Anti Money Laundering/Combating Financing of Terrorism regulations of its parent company.

About Author

Ife Ogunfuwa is an award-winning reporter who is versed in reporting business and economy, technology, gadgets reviews, telecoms, tax, and business policy review, among others. She loves telling stories behind the numbers. She has professional certifications in business and financial reporting. You can reach her via – [email protected]

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