Court dismisses case against securitisation of loans by CBN
In a bold move to regulate the issuance and allotment of securities by private companies, the Securities and Exchange Commission of Nigeria (SEC) has introduced stringent new rules.
It declared that any unauthorised issuance or allotment of securities will incur a hefty penalty of at least N10m, with an additional N100,000 fine accruing daily until the violation ceases.
Disclosing this in a statement yesterday, SEC’s proposed rules outline severe consequences for those who fail to comply.
“Any person who issues or allots securities without the prior approval of the Commission, or violates any provisions of these rules shall be liable to a penalty not less than N10 million in the first instance,” the Commission stated, emphasising the gravity of the sanctions.
SEC mandated that securities must be listed on a registered exchange within 30 days post-allotment.
MEANWHILE, the Federal High Court sitting in Abuja has dismissed the originating motion filed by Justus Edim against the President of Nigeria, Attorney General of the Federation, Central Bank of Nigeria and Debt Management Office challenging the securitisation of loans granted to the FGN under the Ways and Means.
The court which was presided over by Justice James Omotosho upheld the argument of Kofo Alada, CBN Director of Legal Services that CBN has powers to grant the loans and also to allow repayment by way of the securitisation of same pursuant to the provisions of Section 38 of the CBN Act.
The court also noted that the CBN was the only investor so no inflation would be caused by the securitisation and that the Plaintiffs did not place any credible evidence before the court to show breaches by the CBN and the Debt Management Office on the Securitisation.
Earlier the court had held that the plaintiffs who claimed to be acting for 220million Nigerians had no locus standi to sue as they failed to demonstrate that they obtained the people’s mandate to represent them nor did the plaintiffs demonstrate that they had stronger interests than any other average Nigerian in securitisation of the Way & Means Loans. The court deprecated the practice of persons, who it described as ‘busybodies’ rushing to court to waste its time.
However, no cost was awarded.