Credits –
recently, the trading of securities of unlisted public companies in Nigeria was
freely carried out through private arrangements with little or no regulatory
oversight. This arrangement seemingly did not encourage transparency, enhance
liquidity of the securities and did not augur well for price
order to ensure transparency in trading of securities of unlisted public
limited companies in Nigeria, the Securities and Exchange Commission (“SEC”)
introduced the Rules on Trading in Unlisted Securities (the “Rules”) effective
April 13, 2015.


Rules have been primarily introduced to ensure that the buying and selling of
securities including equities and bonds of unquoted/unlisted public companies
is carried out through a system which has been approved by the SEC. In this
regard, the Rules stipulate that 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 (“OTC”) trading of securities
new requirement implies that the legitimate trading platform for unlisted
securities of public companies in Nigeria can only be effected through a
registered OTC platform. Accordingly, buying, selling and transfer of all
securities of unlisted/unquoted public companies must henceforth be made through
SEC registered OTC platforms such as the NASD Plc (sponsored by the National
Association of Securities Dealers) and the FMDQ OTC Plc (owned by the Financial
Markets Dealers Association) platforms which deal in trading of equity and debt
securities respectively. Therefore it has become illegal to trade in securities
of unlisted public companies through a platform not recognised by SEC.
further ensure strict compliance with the Rules, an ad valorem penalty
provision was included in the Rules which stipulate that any unlisted public
company, director, company secretary, registrar, broker or 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
N100,000.00 in the first instance and not more than N5,000.00 for every day of
is our view that the introduction of these penalties for trading in unlisted
securities will serve as deterrence and ensure strict compliance with the
requirements of the Rules.


is our belief that the introduction of the Rules will generally enhance trading
in the securities of unlisted companies by ensuring transparency and liquidity
which are required to further improve and make the Nigerian capital market more
attractive for investment by both domestic and foreign investors.
By: Oyinkansola Annie
Credits –