Tinubu Signs Investment and Securities Act 2024 Into Law, Paving Way for Capital Market Reforms

President Bola Ahmed Tinubu signed the Investment and Securities Act (ISA) 2024, marking a significant overhaul of the regulatory framework of the Nigeria capital market.

The legislation, which repeals the law on investments and securities n ° 29 of 2007, aims to strengthen the protection of investors, to improve market transparency and to align the country’s financial markets on world practices.

Friday, the Securities and Exchange Commission (SEC), in a press release, described the new law as a transformative stage which will improve regulatory surveillance, will introduce new asset classes and promote sustainable growth in the capital market. The Commission noted that the promulgation reaffirms its authority as a regulator Apex and gives it wider powers to combat financial misconduct and market instability.

One of the largest changes introduced by ISA 2024 is the expansion of the regulatory powers of the SEC to ensure that Nigeria meets the global standards established by organizations such as the International Organization for Securities Commissions (IOSCO). The SEC has stressed that the new provisions will help Nigeria maintain its status as a “signatory A” within the framework of the improved multilateral memorandum of IOSCO (EMMOU), which is a critical reference for credibility in the global financial landscape.

The law introduces reforms and structural innovations concerning the key sectors, including scholarships, raw materials, digital assets and systemic risk management. It also provides a clearer legal framework for financial market infrastructure, such as offsets, commercial deposits and central counterparts, which are essential for a stable and efficient capital market.

A culmination key to the law is the restructuring of scholarships, introducing a classification system that differentiates composite and non -composite exchanges. Composite exchanges will be allowed to list and exchange all categories of securities and products, while unpaid exchanges will be limited to specific asset classes. This differentiation aims to promote specialization and allow better regulatory monitoring adapted to the activities of each exchange.

For the first time, the Nigeria capital market law explicitly recognizes digital assets and investment contracts as titles. Virtual asset service providers (VASP), digital asset operators (DAOP) and digital asset exchanges will now be subject to dry regulation. This decision should ensure the protection of investors, increase responsibility and prevent abuses in the rapidly growing digital asset sector. With the growing adoption of cryptocurrencies and investments based on blockchain, this provision provides legal clarity and support for trading in digital assets in Nigeria.

The law also introduces a legal framework for the exchange of raw materials and warehouse reception systems, a decision which should stimulate the growth of agriculture, mining and other industries focused on raw materials. The law allows structured funding for raw materials and reduces risks for market players, development that could stimulate the Nigeria agricultural value chain by allowing farmers and raw materials to access funding while stabilizing prices.

The ISA 2024 grants more flexibility to the commission of capital market funds. This reform should open new financing windows for the development of infrastructure, reducing the dependence of state governments in terms of federal allowances and commercial loans. The law aims to improve economic growth at the levels of states and local governments by providing states with alternative financing mechanisms.

One crucial aspect of the new law is its repression of Ponzi’s diets and fraudulent financial activities. It introduces more stringent sanctions against financial scams, explicitly prohibiting illegal investment plans and prescribing more strict consequences, including long prison conditions for people recognized as guilty of promoting fraudulent investments. This provision is a direct response to the proliferation of Ponzi regimes in Nigeria, who have frauds thousands of citizens of billions of nairas. The government’s decision to strengthen the application in this regard indicates a renewed commitment to clean the investment landscape and protect retail investors.

To prevent financial shocks from destabilizing the market, the law introduces special exemptions for transactions processed through key market infrastructure such as compensation houses and central counterparts. These transactions will no longer be affected by the general laws of insolvency, ensuring market stability during the financial distress. The dry is also empowered to monitor and manage systemic risks to avoid disturbances that may result from financial crises.

The law also expands access to the capital market by allowing a wider range of entities to issue titles to the public. This provision could lead to increased diversity of financial products available in Nigeria, unlocking new capital collection opportunities for the public and private sectors.

To improve the transparency and traceability of transactions on the capital market, the law requires the use of legal entities (LEIS) for all market players. LIEs are overall recognized tools that improve fundflow monitoring and help regulators detect irregularities more effectively. This requirement should make the capital market in Nigeria more transparent and reduce the probability of fraudulent activities.

The ISA 2024 also strengthens the operations and independence of the investment and securities court, improving its ability to resolve the capital market disputes. Changes made to the process of composition, jurisdiction and appointment of the court have been introduced to make it more effective and reactive to the needs of investors.

Reacting to the signing of the law, the director general of the SEC, Dr. Emomotimi Agama, described it as an important step which will strengthen the confidence of investors and stimulate the development of the capital market. He declared that ISA 2024 reflects the commitment of the SEC to build a dynamic, inclusive and resilient capital market.

“ISA 2024 reflects our commitment to build a market for dynamic, inclusive and resilient capital,” said Dr Agama. “By attacking regulatory gaps and introducing prospective provisions, the new law allows the dry to promote innovation, to protect investors more effectively and to reposition Nigeria as a competitive destination for local and foreign investments.”

The SEC also recognized the bipartisan support of the National Assembly throughout the legislative process. He credited the Minister of Finance and the Coordination of the Economy, as well as the Minister of State for Finance, for their role in the formation of the law to align himself on the broader economic vision of Nigeria.

The promulgation of the ISA 2024 should arouse renewed interest from local and international investors, in particular in emerging asset classes such as digital assets and basic products. By strengthening the protection of investors, increasing market transparency and introducing more strict sanctions for financial crimes, the new law opens the way to more in -depth capital training and economic diversification.

It provides game rules more level for transmitters, exchanges and operators while providing regulators stronger tools to suppress market abuses. In addition, it presents greater financing opportunities for governments of states and businesses.

With this new legal framework, Nigeria takes a daring step towards the construction of a more inclusive, innovative and resilient capital market. ISA 2024 aligns the Nigeria capital market with international standards while addressing the country’s unique financial industry. The reforms should position Nigeria as a stronger player in the world of global investment, attracting foreign investments and strengthening confidence in the economic perspectives of the country.