SEC sets deadline for online investment platforms to register or be shut down

The Securities and Exchange Commission (SEC) has set a deadline of June 30 as the registration deadline of all existing investment crowdfunding portals/digital commodities investment platforms.

The SEC disclosed this in a statement in Abuja, on Thursday, citing new crowdfunding regulations that were introduced earlier this year to protect investors and boost innovation in the space.

The rules governing crowdfunding business in Nigeria came into effect on the 21st day of January 2021 and was part of efforts of the commission to ensure investor protection while encouraging innovation in the conduct of securities business.

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“In line with the transitional provisions of the Rules, all persons/entities operating an investment crowdfunding portal/digital commodities investment platform prior to the commencement of the rules were expected to restructure all operations in accordance with the requirements of the rules and apply for registration not later than 90 days from the Effective Date,” SEC said in the statement.

“While the transitional period elapsed on the 21stday of April 2021, the Commission hereby directs all existing investment crowdfunding portals/digital commodities investment platforms to note the requirements and eligibility criteria for raising funds through and/or operating a Crowdfunding Portal and comply with the registration requirements or cease operations by the 30th of June, 2021, failing which the operations of such platform would be categorized as illegal and attract regulatory sanction as stipulated in the Rules”.

This new decision follows an earlier publication by SEC limiting the amount retail investors can participate in a crowdfunding transaction to just 10 percent of their net yearly income in a year, implying that people cannot spend more than 10 percent of their net wages in crowdfunding activities.

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