Ndubuisi Francis in Abuja
In a bid to ensure a vibrant commodities trading ecosystem, which would in turn boost foreign exchange earnings for the country, the Securities and Exchange Commission (SEC) has released new rules covering warehousing and collateral management, among others.
According to the rules, every warehouse that stores commodities to be traded on a registered exchange shall apply to be registered by the SEC, while the commission shall maintain a register of all registered warehouses to be published on its website.
The new rules also provide that any warehouse applying for registration, shall submit proof of ownership or registered-lease deed or rent agreement, alongside a disclaimer from the owner of the warehouse/property providing waiver of ownership regarding commodities stored in such a warehouse, in case of leased or rented warehouse.
The warehouse shall also present evidence of construction in compliance with the National Building Code, present evidence of compliance with relevant federal and state regulation relating to the operation of warehouses, and have facilities appropriate for the storage of commodities.
Other requirements are that the warehouse should have appropriate security arrangements in place, have adequate trained staff with expertise and knowledge of scientific storage of commodities, have requisite equipment for weighing and quality measures of commodities, as well as have comprehensive insurance cover for the building, equipment, stock and other items as may be necessary.
The rules also state that “the warehouse should be located in a place with access to infrastructure to support its operations and have sufficient space for parking and movement of large vehicles, have an efficient system for loading/unloading of Commodity including a proper mechanism for segregation of different kinds/quality of commodity.
“They are to submit a Standard Operating Procedure (SOP), which shall cover the following among others: Procedures for acceptance of commodities to be deposited and delivery of commodities; procedures for weighing, sampling of goods to be deposited in compliance with industry standards, the procedure for verification of commodities and communication to depositors, and procedure for maintaining the quality of the goods stored in line with relevant specifications.
“Others are the procedure for ‘know your depositor,’ security policy for ensuring the safety of the goods, the procedure for the use of modern techniques for storage of goods, the procedure for determining and addressing losses due to theft, fire, burglary, fraud, negligence and force majeure events, the procedure for internal verification of stock, the procedure for maintenance of warehouse and preservations of Stock, organisational structure and job description for every staff.”
The rules also state that for a collateral management company to be registered by the Commission, an application shall be filed to the SEC accompanied by the relevant documents.
Some of the documents are two sets of completed appropriate S.E.C forms to be filed by the sponsored individuals; a copy of the Certificate of Incorporation certified by the Corporate Affairs Commission.
Where a copy is not certified is filed, the applicant shall present the original for sighting by an authorised officer of the Commission; a copy of the Memorandum and Articles of Association certified by the Corporate Affairs Commission, which shall among others include the power to act as a collateral manager.
A copy of the appropriate CAC form containing particulars of the directors certified by the Corporate Affairs Commission as well as a copy of the latest audited accounts or the audited statement of affairs for companies in operation for less than one year is also specified.
The rule further requires Fidelity Bond to represent 20 per cent of paid-up capital; sworn undertaking to keep proper records and render returns; evidence of minimum paid-up capital of N50 million, as well as an application for registration of a minimum of two sponsored individuals one of whom shall be the chief executive officer.