Section 117 Investments and Securities Act

Section 117 of the Investments and Securities Act 2025 is about Application money to be held in trust until allotment. It is under Part IX (Regulation of Securities) of the Act. It provides as follows:

(1) Application money and other money paid prior to allotment of securities by an applicant on account of securities shall, until the allotment of the securities, be held in a separate trust account by a custodian as nominee to the issuing house on such terms and conditions as may be prescribed by the Commission.

(2) Any issuing house who contravenes or permits the contravention of subsection (1) is liable on conviction to a fine of not less than N5,000,000 or imprisonment for a term of not less than one year or both.

(3) The Commission may, in lieu of prosecution under subsection (2), impose a penalty of not less than N5,000,000 and a further sum of not less than N50,000 for every day in which the violation continues.

(4) All application money paid by an issuing house or subscriber prior to allotment into a separate account in a bank or other financial institution shall be held in trust and upon the liquidation of such bank or financial institution shall not be construed as part of the assets, deposit liabilities or other liabilities of that entity in furtherance of the liquidation process.

(5) In the event of liquidation of a bank or financial institution in whose custody application money is kept prior to allotment, the money held in the trust account mentioned in subsection (4) shall be treated as priority to any other claim and the liquidator shall transfer such money to the issuing house in respect of the offer for which the money were deposited with the bank or financial institution.