A nominee company is defined as a company formed by a bank or Other Financial Institution (OFI) for the purpose of holding securities and other assets and administering them on behalf of the actual owners under the terms of a custodial or nominee agreement.
This article will be focused on the registration of nominee companies in Nigeria which is governed by the Securities and Exchange Commission (SEC) . The requirements for this will be highlighted in terms of :
– Understanding what constitutes a parent company according to SEC.
– The functions of nominee companies.
– The payment requirements for nominee company registration.
– The sponsored individual requirements of nominee company registration.
What is a parent company?
A parent company is a bank or other eligible financial institution that owns and controls a nominee company.
What are the functions of Nominee Companies?
The functions of nominee companies include :-
– Maintaining accounts of securities of clients.
– Collecting all rights and benefits on behalf of or accruing to clients in respect of securities held.
– Ensuring compliance with contractual obligations with clients and custodians.
– Maintaining sufficient information and records to identify the beneficial owners of securities held by it.
What is the ownership structure of nominee companies as prescribed by SEC?
SEC rules on nominee companies stipulate that they should be wholly or jointly owned by a financial institution or more with a minimum or combined minimum net worth of 30 Billion Naira.
Which companies are required by SEC rules to be registered as licensed nominee companies?
All persons not registered by the Commission as Custodians, carrying on the business of Nominee and holding securities including equities, money market and fixed income securities, derivatives etc. except Pension Assets, on behalf of actual owners are required to apply to the Commission for registration as a Nominee.
What are the registration requirements of nominee companies?
An applicant for registration as Nominee Company shall be sponsored by its holding company which shall submit the undertaking required under obligations of holding/parent companies along with the under listed documents completed by the Nominee .
Company, its directors and sponsored individuals:
a) Form SEC 3 in duplicate;
b) Form SEC 2 and 2D – completed by all Directors and Sponsored Individuals/
Compliance Officer in duplicates;
c) Evidence of Required Minimum Paid-up Capital of N1,000.00 (One Thousand Naira
only) unimpaired by losses;
d) Evidence that the parent company/ shareholders (financial institutions) have a/
combined minimum net worth of N30 billion naira;
e) Current Fidelity Bond covering at least 25% of the minimum capital as stipulated by the Commission’s Rules and Regulations;
f) Detailed curriculum vitae of sponsored individuals and Directors which should include details of activities from secondary school to date arranged chronologically with dates; (all gaps in employment and educational history should be explained);
g) Copies of credentials of sponsored individuals from secondary school to date (including NYSC discharge/ exemption certificates); originals are required for sighting by officers of the Commission;
h) Sponsored individuals shall meet the requirements specified in the SEC Rules on Sponsored Individuals and Compliance Officers and Qualifications of Sponsored Individuals and Compliance Officers;
i) Police clearance report for each Sponsored Individual: Each sponsored individual is to report at the Commission’s head office or any of its zonal offices with three recent passport photographs to commence the process;
j) Copy of means of identification of the Directors and the Sponsored Individuals of the Company (International Passport, Driver’s license or Permanent Voters Card);
k) Profile of the Nominee Company which should include among others brief history of the company, organizational and shareholding structure, principal officers as well as details of past and current activities;
l) Operational Manual and Organizational chart of the company;
m) Business plan;
n) A copy of each of the following, duly certified by the Corporate Affairs Commission (CAC)
.A Certificate of Incorporation
The Memorandum and Articles of Association of the company – this should include the power to perform the specified function;
o) CAC Form(s) showing Share Capital, Return of Allotment, and Particulars of Directors;
p) Latest audited accounts or audited statement of affairs of the company;
q) Sworn undertaking to keep proper records and render returns as may be specified by the Commission from time to time signed by a director and company secretary (to be notarized);
r) Sworn undertaking to abide by SEC Rules and Regulations and Investments and
Securities Act signed by a director and company secretary (to be notarized);
s) Evidence of payment of fees as contained in Schedule 1 of SEC Rules and Regulations;
t) Any other documents as may be required by the Commission.
Are there other registration requirements for nominee companies?
Yes there are. They are as follows :-
-A Nominee Company shall have minimum of three sponsored Individuals, one of whom shall be a compliance officer.
-The Managing Director of the Company shall at all times be among the sponsored individuals by complying with the requirements for registration of sponsored individuals;
-A Nominee Company shall have necessary infrastructure, including vaults for safe custody of title documents, agreements etc. and information technology capability required to effectively discharge its functions.
