The Nigerian House of Representatives has said the Investment & Securities Bill, would boost capital listings by strengthening regulatory oversight of the Securities and Exchange Commission (SEC).
NewsBeatng reports that the Bill has been passed by the House but waiting for Senate’s approval.
This was made known by the Chairman of the House Committee on Capital markets, Honourable Babangida Ibrahim, during an interview with Channels TV on Thursday.
He also noted that the new capital gains taxes, encoded in the Finance Bill, will not be a hindrance. That’s because investors need to only pay capital gains on profit, in a well-regulated market.
Ibrahim stated that the existing capital market act had to be repealed as the world to give the SEC more powers in a newer modern capital markets ecosystem.
“That is the reason we are sponsoring to repeal of the existing act, which is the investment and security act of 2007.
“If you remember, this act was passed during President Yaradua’s administration, immediately after its passage there was a global financial crisis, after the crisis, it was obvious there is a gap in capital market regulation, and the existing act has to be repealed.
“One major reason is to provide stronger regulatory power to the SEC to the extent of giving them more power and effective oversight over public companies and to strengthen tentacles to new developments in capital markets, for example, the commodities ecosystem was not regulated before now, commodities exchanges are operating now and need to be regulated and also new skills that are coming up now.”
He said that the new laws on capital gains taxes affect profits, citing that it does not discourage investors.
“The only aspect of the finance bill that covers capital markets is the issue of capital gains tax. I do not believe it will discourage investments, because the capital gains on shares are on profit, and everyone goes into business to make profits, you can only pay capital gains on the appreciation of the prices of shares.
“As a good omen, it would attract investment into capital markets, it is better to charge capital gains on shares, because capital gains on shares, is being treated as capital gains on any other assets, which assumes as a physical asset.”
He noted that he does not believe the capital gains on shares will discourage investors, but encourage them because there are transactions in capital markets that can lead to share appreciation. let us give it a trial and see the response of the government.
Ibrahim added that the essence of repealing the older act is to provide transparency in processes of capital markets as companies would be listed in the capital markets if there is assurance that their investment is safe.
“For that reason, the existing act will develop investors’ confidence so that areas, where there are violations, are discouraged,
“We have provided for a lot of penalties that will discourage capital market manipulations, and the transparency of the market will encourage listing in capital markets.
He noted that if the senate concurs on this bill and it will encourage investments and listings, so giving SEC regulatory oversight gives shareholders of companies confidence.
“The bill has already been passed in the house and sent to the Senate, and we are targeting before the end of January and once it has concurred on the bill and it remains the endorsement of the president”he said.