A new guideline on the oversubscribed portion of public offerings and rights issues was yesterday released by the Securities and Exchange Commission (SEC).

Under the new arrangement, only 25 per cent of oversubscribed portion of public offerings and/or right issues could be absorbed by the issuers - the public companies. The new rule according to the Head, Media Relations of SEC, Lanre Oloyi, is in line with certain provisions of the Investments and Securities Act (ISA).
He explained that the rule was relaxed during the banking consolidation exercise, but had to be revised to ensure compliance with it by all the issuing companies.

"Henceforth, only 25 per cent of oversubscribed portion of any offer could be absorbed by issues. This is in line with our existing rules Section 64 subsection 2 of SEC rules and regulation made pursuance to the Investment and Securities Act (ISA), which SEC has the mandate to implement. "A situation whereby excess monies are absorbed without the need for it will no longer be tolerated.

"Only 25 per cent of oversubscribed portion would be allowed by the commission. It is not automate because the coy will have to come with supplementary offer, which has to be approved by the commission.
SEC expects you only come to the market to raise the actual fund that you need. Excess monies may not be really needed. We are going to strictly enforce our rules on absorption of oversubscribed portion of public offers. In other words, any excess monies outside the 25 per cent allowed and approved by the commission must be returned to investors.

"Hitherto SEC had relaxed its rules on the oversubscribed portion of public offers to give support to the banking consolidation exercise. Now that the exercise is over, we must go back to our rules and start enforcing it."

The enforcement according to the commission takes immediate effect and might affect all the on-going public offers and the ones that have just been concluded and yet to be cleared by the commission.".