By Obas Esiedesa
The Securities and Exchange Commission, SEC, has set N50 million as minimum paid up capital for Warehousing and Collateral Management companies in the country.
The threshold was among several rules rolled out by the commission for the sector.
A statement by SEC on Sunday explained that the new rules would ensure that the nation has a vibrant commodities trading ecosystem which would in turn translate into foreign exchange earnings for the country.
According to the rule, every warehouse that stores commodities to be traded on a registered Exchange shall apply to be registered by the Commission, while the Commission shall maintain a register of all registered warehouses which shall be published on its website.
SEC explained in the statement that “a warehouse applying for registration going by the rule, shall submit proof of ownership or registered-lease deed or rent agreement, along with disclaimer from the owner of the warehouse/property providing waiver of ownership regarding commodities stored in such warehouse, in case of leased or rented warehouse; 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 facility(ies) appropriate for 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 rule also states 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 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, 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 procedure for know your depositor, security policy for ensuring the safety of the goods, procedure for the use of modern techniques for storage of goods, procedure for determining and addressing losses due to theft, fire, burglary, fraud, negligence and force majeure events, procedure for internal verification of stock, procedure for maintenance of warehouse and preservations of Stock, Organizational structure and Job description for every staff”.
The rules states 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.
The rule further requires Fidelity Bond representing 20 percent 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 application for registration of a minimum of two sponsored individuals one of whom shall be the chief executive officer.