The enactment of the Investment and Securities Act 2024 is widely perceived as a game changer and what others describe as a long overdue change needed for the rejuvenation and future development of the Nigerian capital market. The Act comes with a lavish amount of notable provisions targeted at bringing transformative reforms in the Nigerian capital market. The bill was signed into law on the 31st of March 2025 thereby repealing the Investment Securities Act 2007. The major highlights of the new Act include the expansion of the powers of the Securities and Exchange Commission, introduction of stricter sanctions on defaulters, provision on measures for the prevention of abuse by investors, protection of investors as well as the recognition and integration of digital assets as securities under the Act. In this article, we will analyze the key features of the new Act, the prospects it offers to investors and other key players within the Nigerian capital market and all there is to know about the new Act.
Essential Features of the ISA 2024
The Act introduces key reforms aimed at promoting the integrity, transparency, and reliability of the Nigerian capital market ecosystem. We will now examine the new features of the Investment and Securities Act 2024 as follows;
1. Alignment with Global Best Practices
With the introduction of the enhanced features in the Act, Nigeria now stands closely in full compliance with global best practices and standards like the International Organization of Securities Commission (IOSCO), and Enhanced Multilateral Memorandum of Understanding (EMMOU) as well as the mandatory use of the Legal Entity Identifier (LEI) tool to monitor transparency and check fraud in the capital market.
2. Introduction of Digital Assets
The recognition of digital assets and derivatives as securities has further solidified the regulatory powers of the SEC and boosted the confidence of Digital and Fintech companies such as Cowrywise to transact with digital assets whilst ensuring compliance with regulatory laws such as ISA 2024[1]. In addition, this has further expanded the definition and understanding of securities under the Act to include Virtual Asset Service Providers, Digital Asset Operations, and Digital Asset Exchange.
3. Enhancement of the Powers of SEC:
The Act has increased the powers of the Securities and Exchange Commission to include the imposition of fines on Ponzi scheme operators, unregulated foreign investment schemes, and crowdfunding activities and has further empowered the Commission as the approving authority on issues bordering on the appointment of an Independent Non-Executive director to the board of a public company. With the advent of the new Act, the Securities and Exchange Commission has replaced the Federal Competition and Consumer Protection Commission as the approving authority for mergers and acquisitions involving public companies[2]. It further allows the SEC to gather relevant data from internet providers to trace and monitor illegal activities thereby creating a safe space for capital market operations.
4. Imposition of Stricter Sanctions
The Act provides for stricter sanctions for Ponzi scheme operators which range from the imposition of imprisonment of 10 years or a fine of N5,000,000 or both[3]. In addition, it imposes a 10 million naira fine and an N50,000 fine for each day of default on anyone guilty of the unlawful use of unclaimed dividends [4]. Unclaimed dividends are to be remitted to the Unclaimed Dividend Trust Fund under the management of the SEC
5. Improved Market Infrastructure
The ISA 2024 classifies exchanges into composite and non-composite exchanges [5]. Composite exchanges are where all types of securities and products can be listed for trade while non-composite exchanges occur when only special types of securities are listed for trade. It further makes new provisions for clearing houses, trade depositories, and central counterparties.
6. Local government can secure funds via the capital market
Another interesting provision in the ISA 2024 is that it now allows local governments to raise and secure funds via the capital market for specific projects through either of the following means;
(a) by the issue of securities in the form of registered bonds; or
(b) by the issue of securities in the form of -promissory notes;[6]
7. Introduction of the Investor Protection Fund
With an aim to create and maintain a free and fair capital market, The Act has introduced the Investor Protection Fund (IPF) to protect investors from financial loss resulting from market misconduct and fraud[7].
8. Amendment to the provision on Investment and Securities Tribunal
The Act has made amendments to the composition, appointment, and jurisdiction of the Investment and Securities Tribunal[8]. This amendment allows investors to seek legal redress for capital market disputes and other ancillary challenges encountered in the cause of trading and transacting on the market.
Based on these innovative changes and improvements, digital and fintech companies, Nigerian and foreign investors, local government, and other players in the Nigerian capital market field, are guaranteed a transparent, reliable, and safe market environment for securities exchange.
Conclusion
The Investment and Securities Act 2024 offers great prospects for players in the field of the Nigerian capital market. Armed with the potential to attract both foreign and Nigerian investors, limitless innovative opportunities abound for both local and foreign investors as Nigeria levels up through the enforcement of the ISA 2024 which is considered a remarkable attempt at achieving full conformity with international regulatory compliance, global capital market standards and best practices.
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[1] Section 350 ISA Bill 2024 (definition of “Securities”)
[2] Section 3 (3)(1)(n), (4)(b)(g), Section 140 ISA Bill 2024
[3] Section 195 (4)
[4] Section 93 (4) ISA Bill 2024
[5] Section 27 ISA Bill 2024
[6] Section 259
[7] Section 202 ISA Bill 2024
[8] Part XIV
