New Regulatory Frameworks To Govern Electronic Payments & Collections And Issuance Of Bankers Acceptances & Commercial Papers In Nigeria

1. In the same vein, the procedure to be followed in creating a CP is set out in the Guidelines as follows: 

   1. A company proposing to issue CPs is required to submit a proposal to the IPA with its rating report issued by a credit rating agency. The IPA is required to scrutinize the proposal and thereafter take it on record (or record the proposal in its blotter) if satisfied with same;

   2. The Company is expected to ensure that the proposed issue of CP is completed within the period of two (2) weeks from the date of opening of the issue for subscription;

   3. After the exchange of deal confirmation between the IPA and the issuer, the IPA is required to issue physical certificates to the investor or arrange for crediting the CP to the investor’s account with a Securities Depository; and

   4. All IPAs issuing the CPs are required to advise the relevant Securities Depository on the amount of CPs actually issued, within three working days from the date of completion of issue.  

   PENALTY FOR NON-COMPLIANCE

   Henceforth, all BA and CP transactions in Nigeria are to strictly comply with the provisions of the Guidelines. According to the Guidelines, non-compliance (either wholly or partially) with any of the provisions contained there-in shall attract appropriate penalties; as prescribed in Section 60(1) of the Banks and Other Financial Institutions Act, 1991 (as amended). As further stated in the Guidelines, applicable penalties may also include the debarring of erring stakeholders from the BA or CP market or any other sanction as the CBN may prescribe from time to time. 

   OTHER KEY PROVISIONS 

   In addition to the above mentioned provisions, the Guidelines also spell out other governance principles and prudential measures which, from now on, are to guide the issuance and treatment of BAs and CPs in the market. Thus, provisions are also made with regard to rating requirements; tenor & roll-over; denominations; limits & the amount of issue; underwriting; investors; forms of maintaining the instruments; IPAs; mode of payment & issuance; roles and responsibilities of parties; registration; reporting requirements; accounting treatment; provision of stand-by facility; and disclosure requirements. It is expected that full implementation of the Guidelines will positively impact the Nigerian money market, as projected. 

The Grey Matter Concept is an initiative of the law firm, Banwo & Ighodalo

DISCLAIMER: This article is only intended to provide general information on the subject matter and does not by itself create a client/attorney relationship between readers and our Law Firm or serve as legal advice. Specialist legal advice should be sought about the readers’ specific circumstances when they arise.

For further information or guidance, please contact B&I Banking & Loan Syndication Team on banwigho@banwo-ighodalo.com