Section 307 Investments and Securities Act

Section 307 of the Investments and Securities Act 2025 is about Offences, remedies and penalties. It is under Part XVI (Issuance of Securities) of the Act. It provides as follows:

(1) A person shall not divert or mismanage the proceeds of any bond issued under this Part.

(2) Where an appropriate officer or any other officer of a body which has issued debt securities under this Part is found guilty of having diverted or mismanaged or contributed in the diversion or mismanagement of any bond proceeds, the officer shall —

(a) restitute to the issuer the total amount diverted or mismanaged, and pay a penalty amounting to 500% of the total amount diverted or mismanaged to the Commission; and
(b) be liable on conviction to imprisonment for a term of not more than 15 years.

(3) The provisions of subsection (2) shall apply notwithstanding that the relevant officer has ceased to hold office.

(4) Where a custodian appointed in accordance with the provisions of this Part is found guilty of having diverted, mismanaged or contributed in the diversion or mismanagement of any bond proceed —

(a) the custodian shall —
(i) restitute to the issuer the total amount diverted or mismanaged, and
(ii) pay a penalty amounting to 500% of the total amount diverted or mismanaged to the Commission; and

(b) every director and staff of the custodian involved in the diversion or mismanagement commits an offence and is liable on conviction to imprisonment for a term not more than 15 years.

(5) Without prejudice to the provisions of section 271 (6) and subsections (2) (3) and (4), where a person who is under an obligation to comply with, observe or give effect to the provisions of this Part, or any rules made under this Part, fails to do so, the Commission may take one or more of the following actions —

(a) direct the person in breach to comply with, observe or give effect to any such provision of this Part or the rules and regulations made under this Act;
(b) where the person in breach of the provisions of this Part is an appropriate officer of the issuer, the Commission shall require the person to take such steps as it may direct to remedy or mitigate the effect of the breach, and this provision shall apply notwithstanding that the appropriate officer has ceased to hold office; or

(c) where the person in breach is the Registrar, trustee, issuing house, custodian or other professional party to the issue under this Part, the Commission may —
(i) impose a penalty of not less than N5,000,000 on each defaulting party and N25,000 for every day the violation continues,
(ii) require the person in breach to take such steps as it may direct to remedy the breach or mitigate the effect of such breach,

(iii) prohibit the defaulting party from participating in other capital market transactions until the breach is remedied and the penalty paid, and
(iv) direct the securities exchange to prevent the defaulting party from carrying out any services or transactions on the exchange.

(6) Where a person has failed to comply with a penalty imposed by the Commission under this section, the Commission may sue for and recover the penalty as a civil debt.