Section 54 Investments and Securities Act 2025

Section 54 of the Investments and Securities Act 2025 is about Protection of transfer orders and systems. It is under Part V (Registration and Regulation of Securities Exchanges, Financial Market Infrastructures and other Self Regulatory Organisations) of the Act. It provides as follows:

(1) The following shall not be regarded as invalid on the ground of inconsistency with the law relating to the distribution of the assets of a person on bankruptcy, winding up, administration, receivership, or any other arrangement, or in the administration of an insolvent estate or with the law relating to other insolvency proceedings of a country or territory outside Nigeria —
(a) a transfer order;
(b) the default arrangements of a system;

(c) the rules of a system as to the settlement of transfer orders not dealt with under its default arrangements; or
(d) a contract for the purpose of realising collateral security in connection with participation in a system other than under its default arrangements.

(2) The powers of a relevant office-holder in his capacity as such, and the powers of the court under the Companies and Allied Matters Act or any successor insolvency law, shall not be exercised in such a way as to prevent or interfere with —
(a) the settlement in accordance with the rules of a system of a transfer order not dealt with under its default arrangements;
(b) any action taken under the default arrangements of a system; or
(c) any action taken to realise collateral security in connection with participation in a system otherwise than under its default arrangements.

(3) Contracts between a relevant financial market infrastructure and a participant or an insolvent participant are protected from the laws of insolvency, and a financial market infrastructure shall be treated as a secured creditor of priority, irrespective of the nature of the collateral it holds, with respect to the collateral pledged by such insolvent participant.

(4) Without prejudice to subsections (1) – (3), no provision of any insolvency law in Nigeria shall have the effect to —
(a) invalidate dispositions made after the commencement of insolvency proceedings;
(b) enable an insolvency office-holder to disclaim onerous contracts;
(c) invalidate pre-insolvency transactions in particular circumstances, such as transfers made at an undervalue or preferences; or
(d) suspend the enforcement of security, such as in the moratorium applicable in an administration of an insolvent company, or by reason of rights claimed by third-parties in property provided as margin, so as to frustrate the operation of the provisions or actions specified in section 53 of this Act.

(5) A debt or other liability arising out of a transfer order which is the subject of action taken under default arrangements of a financial market infrastructure may not be proved in a winding up, bankruptcy, or administration, until the completion of the action taken under such default arrangements, and a debt or other liability which by virtue of this subsection may not be proved or claimed shall not be taken into account for the purposes of any set-off until the completion of the action taken under default arrangements of the financial market infrastructure.