The new rules for crowdfunding movement in Nigeria by the Securities and Exchange Commission, SEC, comes into effect on June 21, 2021. The commission has already notified stakeholders that the transitional provision must be observed by crowdfunding entities prior to this date.
This is an overview of the new SEC rule which is also a part of the effort to ensure investors’ protection while encouraging innovation in the conduct of securities business.
What is in the SEC rules on crowdfunding
The SEC rule on crowdfunding touches several areas including:
- Crowdfund portal – The operations of crowdfunding must be registered with the SEC. This section also covers jurisdiction.
- Registration – The crowdfunding entity should have a CAC registration and certificate, provide its statement of account to the SEC for registration.
- Criteria for Registration
- Revocation of Registration
- Change of Structure or Cessation of Business Operations
- Monitoring and Reporting
- Data Protection and Privacy
- Investors
- Obligations
- Transactions
- Fees for registration of a crowdfunding entity
- Application for crowdfunding
It is illegal not to comply with the SEC registration requirements and attracts regulatory sanction.
How to register crowdfunding with SEC Nigeria
The SEC rules on the transitional phase require persons/entities operating in Nigeria or offering to Nigerians to restructure all crowdfunding platform.
Crowdfunding entities can either observe the transitional provision or cease operations by June 30 2021.
More so, they are to apply for registration with the SEC not later than 90 days from the effective date.
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Things to know about SEC rule on crowdfunding
- A crowdfunding offering will close after 60 days of opening.
- The SEC rule also has a provision for fundraisers or participants in crowdfunding who wish to raise fund through these portals. They must submit relevant information to the SEC including the use of the proceeds and other personal details.