Securities and Exchange Commission (SEC) has released draft guidelines for transition to electronic offering of shares and other securities in the capital market.
Electronic offering (e-O) is the use of internet or other electronic means, including mobile or Unstructured Supplementary Service Data (USSD) platforms to provide access to prospectuses, offering memoranda, subscription forms and other documentation for the subscription to securities and related documentation as well as payment for such subscription.
Electronic offering will be done on a platform purposely established by an eligible service provider registered with SEC.
In a circular, SEC said the electronic offering platform will translate the current paper-based process of securities offerings into electronic form through electronic display of offer documents, subscription and payment through a combination of web portals, mobile applications, USSD and other electronic means.
Under the electronic initial public offering (e-IPO) and other electronic public offers, investors will be able to get allotment and value for their subscriptions within few days as against the current cycle of nearly four months.
The full automation of primary issuance will involve automation of the process, approval, documentation, subscription and allotment of all issues, especially IPOs and public offers.
With this, investors will be able to subscribe and make payment for IPOs and public offers online with such orders being matched and allotted electronically and directly to the investment accounts of the investors at the Central Securities and Clearing System (CSCS) and any other designated clearing centre.
The full automation will enable the primary market to operate within a designated transaction cycle, possibly within the T+3 four-day trading cycle being operated at the secondary market.
According to the draft guideline, the e-Offering platform shall give subscribers access to general information regarding the offer, the application input screen, download, view and print the offer documents, provide for electronic online payment options, which shall be seamlessly integrated with the e-offering platform, allow integration with identity management systems such as Bank Verification Number (BVN) database for the purpose of Know Your Customer verification and integrate with the depositor to enable electronic crediting of approved allotments to subscribers’ depository accounts.
The platform shall also permit subscribers to select a broker of their choice for the purpose of the electronic crediting of the approved allotment, while providing mandatory information fields for subscribers to supply surname and other names, full company name and registration number, BVN or any other SEC-approved biometric numbering system, bank name and account numbers of subscribers and mobile telephone number and email address.
The platform is also expected to provide for the upload of provisional rights allocation for rights issues by the relevant registrar to the issue.
In order to strengthen investors’ protection, the e-O platform must mandatorily require subscribers and end-users to confirm that the subscriber has been provided with sufficient opportunity to access the offer documents and the information disclosed therein and that the information provided by the subscriber is to the best of the applicant’s knowledge, true and accurate in all material respects before submitting the application.
The e-O platform will also permit subscribers to print a copy of the relevant application screen or page containing the details of information submitted by the subscriber.
The e-O platform is also expected to provide instructions and information for subscribers outlining the procedures and any requirements subscribers shall comply with in order to use the platform as well as the process and procedure a subscriber shall follow to make a valid application.