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Nigeria: Government Reconstitutes the Investment and Securities Tribunal

(Oct. 12, 2017) On September 19, 2017, the Nigerian Minister of Finance announced the reconstitution of the Investment and Securities Tribunal (IST) in order “to sanitise the capital market, restore investors’ confidence and reposition the country’s economy.”  (Bassey Udo, Nigerian Govt. Moves to Sanitise Capital Market; Reconstitutes Investment & Securities Tribunal, PREMIUM TIMES (Sept. 20, 2017).)  Established under the Investment and Securities Act of 1999, a law later repealed and replaced by the Investment and Securities Act, 2007, the IST was dissolved in October 2015 in accordance with a federal government directive ordering the abolition of boards of parastatals, agencies, and state-owned corporations.  (Emma Ujah, FG Reconstitutes Investment and Securities Tribunal, VANGUARD (Sept. 19, 2017); Investment and Securities Act No. 45 of 1999, § 224 (May 26, 1999),  International Centre for Nigerian Law (ICFNL) website;  Investments and Securities Act, 2007, § 274, 7 LAWS OF THE FEDERATION OF NIGERIA, Cap. I24 (rev. ed., 2011) , Policy and Legal Advocacy Centre (PLAC) website.)

The ten-member body exercises both original and appellate jurisdiction over various matters.  It has exclusive original jurisdiction to adjudicate disputes or questions of law involving:

  • the Securities and Exchange Commission (the Commission) and a self-regulatory organization (“any registered Securities Exchange, Capital Trade Point, an association of securities dealers, clearing house, Capital Market Trade Association or any other self regulatory body approved as such, by the Commission”);
  •  the Commission and a capital market operator (any natural or juridical person registered by the Commission to perform a specific function in the capital market);
  • the Commission and an investor or an issuer of securities; and
  • disputes that result from the administration, management and operation of collective investment schemes.  (Investments and Securities Act, 2007, §§ 284 & 315.)

In its appellate authority, the IST may review a decision of the Commission relating to the operation or application of the Investment and Securities Act, particularly matters regarding any conflict between capital market operators; capital market operators and their clients or a self-regulatory organization; or an investor and a Securities Exchange, Capital Trade Point, or clearing and settlement agency.  (Id. § 284.)  A Securities Exchange is  ”an exchange or approved trading facility such as a commodity exchange, metal exchange, petroleum exchange, options, futures exchanges, over the counter market, and other derivatives exchanges.”  (Id. § 315.)  A Capital Trade Point is “a mini exchange registered by the Commission pursuant to [the Investments and Securities Act], which constitutes, maintains or provides market place or facilities for bringing together purchasers and sellers of securities or for otherwise performing, with respect to securities, the functions commonly performed by a securities exchange.”  (Id.)

The reconstitution of the Tribunal follows a recent push for it by the lower house of the Nigerian Parliament.  In March 2017, the House of Representatives adopted a resolution calling “on the Federal Government to expedite action on the re-constitution of the Investment and Securities Tribunal (IST) Membership.”  (Order Paper, House of Representatives of Federal Republic of Nigeria (Mar. 15, 2017),  Nigeria National Assembly website.)  Yusuf Tajudeen, the member who introduced the motion, at the time criticized the lack of urgency on the part of the federal government in re-establishing the Tribunal, stating that “[t]he Federal Government does not realize that for the capital market to play its role as an alternative source for long term capital amid dwindling oil revenue and economic recession, there is urgent need to strengthen the IST.”  (Reps Urge FG to Reconstitute Investment, Security Tribunal, VANGUARD (Mar. 15, 2017).)  According to Tajudeen, until its dissolution in 2015, the Tribunal had adjudicated numerous matters estimated to be worth around NGN400 billion (about US$1.1 billion), and this had brought stability to the market and the country’s overall economy.  (Id.)

In a statement she gave at its inauguration, Mrs. Kemi Adeosun, the Minister of Finance recognized the IST’s importance to restoring the confidence of capital market operators and the public in the country’s capital markets.  (Ujah, supra.)