On Monday, July 22, lawyers to the Securities and Exchange Commission (SEC) and Oando Plc will have their day in the Federal High Court.

While Oando Plc will be proving that its regulator overreached itself, and SEC on the other hand will show that investor protection was at the heart of all it did. Besides, the judge will listen to arguments about due process and the lack of it and determine which of the combatants is in the right, subject to the decision being further challenged. Ahead of the court hearing, there have been varied media fisticuffs on the same issue, especially some that accused the commission of regulatory exuberance and overstepping the limits of its powers. The management of the commission, in previous statements, insisted that its actions were based on various relevant portions of the Investment & Securities Act (ISA 2007), from which it derives powers to function as apex regulator of the Nigerian capital market. The commission will also prove that investigating the activities of Oando Plc and appointing a firm of forensic auditors into the affairs of Oando Plc is part of that “day-to-day business in Sections 7 and 13 of the ISA.

The Act, in Section 13, for example, says “the Commission shall be the apex regulatory organisation for the Nigerian capital market and shall carry out the functions and exercise all the powers prescribed in this Act and, in particular, shall- (a) regulate investments and securities business in Nigeria as defined in this Act; (b) register and regulate securities exchanges, capital trade points , futures, options and derivatives exchanges, commodity exchanges and any other recognized investment exchange; (c) regulate all offers of securities by public companies and entities; (d) register securities of public companies.” In 13 (u) and (v), the Act empowers the commission to “levy fees, penalties and administrative costs of proceedings or other charges on any person in relation to investments and securities business in Nigeria in accordance with the provisions of this Act; intervene in the management and control of the capital market operators which it considers have failed, are failing or in crisis, including entering into the premises and doing whatsoever the Commission deems necessary for the protection of investors…”
Also, Section 13(bb) empowers the SEC to “disqualify persons considered unfit from being employed in any arm of the securities industry,” a power also being challenged in court and which the judge would determine was properly exercise or not. This power of the commission was affirmed in a decision of the Court of Appeal in SEC v. Big Treat & 5 Ors Suit No – CA/L/88/2011.

Further to the Act, the SEC also relied on its Rules and Regulations 598 and 601, made pursuant to the ISA 2007, which empowers its management to summarily sanction an erring regulated entity. The courts will, therefore, determine whether the Rule should be nullified or modified. There is also the argument for and against the submission that only the SEC’s Administrative Proceedings Committee (APC) can recommend or sanction erring individuals. However, Sections 310(1) of the ISA 2007 empowers “the Commission may appoint one or more committees to carry out, on its behalf such of its functions as the commission may determine.” The word “may,” it has always been argued, is permissive and discretionary in nature, suggesting that the decision of whether to constitute a committee by the commission is discretionary and not mandatory. Moreover, Section 310(3) of the Act states that decisions of such a committee “shall be of no effect until it is confirmed by the Commission.” The forensic audit, according to the SEC, also confirmed the disposal of Oando Exploration and Production Limited (OEPL) to Green Park Management Limited without obtaining prior regulatory approvals. This, it said, is contrary to Section 118 (1) of the ISA, 2007, and the Petroleum Act 1969. Section 118 (1) of the ISA 2007, requires that “notwithstanding anything to the contrary contained in any other enactment, every merger, acquisition or business combination between or among companies shall be subject to the prior review and approval of the Commission.

Part of the issues is the alleged breach of the Code of Corporate Governance for public companies, which lawyers of Oando Plc must prove is advisory, rather than mandatory. Among issues investigated in Oando Plc was the alleged incidence of several corporate governance failures and internal control breaches, which questioned the ability of its directors to remain in office. One of the contentious decisions is the sacking of Adewale Jubril Tinubu and Omamofe Boyo as Group Chief Executive and Deputy Chief Executive respectively of Oando Plc, based on what the commission says is the imminent collapse of the company and potential systemic financial loss to the Nigerian banking system. Oando Plc has admitted being in a precarious financial condition owing financial institutions an estimated ₦201bn, in addition to having working capital liabilities amounting to ₦306.2bn under the watch of the current board and management. In a previous statement, the commission maintains that it acted to prevent Oando Plc from an imminent collapse. It is certain that no matter how long it may appear, justice will be done in the interest of all parties, especially the Nigerian retail investors whose investments are at stake.


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