* Stricter regulation of mergers and acquisitions
* New rules for corporate bond issuance
* Tighter corporate disclosure requirements ABUJA, April 28 (Reuters) – Nigeria's Securities and Exchange Commission (SEC) announced tighter financial markets regulation on Wednesday, introducing stricter requirements on everything from corporate disclosure to capital raisings.
The new regulations give the SEC powers to break up monopolies or block mergers, provide stricter criteria for firms raising equity or debt and demand greater transparency in company reporting.
Nigeria's stock market has been one of the best performing frontier markets in the world this year and its bond market is deepening rapidly, with a spate of debt issues in the pipeline from both the public and private sectors.
But lax regulation contributed to a 70 percent fall in the stock market last year and a banking crisis in which the central bank had to rescue nine lenders in a $4 billion bailout.
"The new rules are part of efforts to transform the Nigerian capital markets into a more efficient and internationally competitive market," SEC Director General Arunma Oteh, who took over the regulator in January, told a news conference.
An SEC official said many of the tighter regulations were already provided for in Nigeria's Investment and Securities Act, the law which governs its financial markets, but had not been enshrined in the commission's own rules or ever been enforced.
The tighter rules on mergers and acquisitions give the SEC greater powers to scrutinise deals, including a post-merger compliance inspection, and the power to break up any firm it believes constitutes a restraint to competition.
The rules also give a more detailed definition of what constitutes anti-competitive behaviour, including "directly or indirectly fixing purchase or selling prices or any other trading conditions", according to documents seen by Reuters.
The merger rules are particularly relevant because the next phase of central bank reforms to the banking industry foresee the break up of universal banks into specialised businesses, ahead of a second wave of consolidation in the sector.
Analysts also expect consolidation in the second tier of Nigeria's telecoms industry.
CAPITAL RAISING, DISCLOSURE
Oteh, a former vice president of the African Development Bank (AfDB), came to office vowing a tougher line in a market where infringements such as insider trading and share price manipulation have long gone unpunished. [ID:nLDE61419Z]
"The key issue in the new rules is the enforcement," Bismarck Rewane, head of Lagos-based consultancy Financial Derivatives, told Reuters.
On equity raising, the new regulations demand a company launching an initial public offering should have a three-year financial track record. Share issues no longer have to be underwritten, but will be deemed to have failed if they are less than 50 percent subscribed, compared with 25 percent previously.
Subsequent capital raisings — either equity or debt — will only be approved on evidence of how previous proceeds have been used, an effort to prevent the sort of reckless capital raisings seen during Nigeria's last asset bubble in 2008 in which funds raised in the market were used to speculate.
The SEC is also introducing regulations for the fledgling corporate bond market. [ID:nGEE5AT22K]
The rules specify that all corporate bonds should be rated by a registered agency and disclosed in the offer documents. The rating should be reviewed annually, with the results published in at least two national newspapers.
The tighter disclosure requirements give a specified format for financial reporting and provide harsher penalties for companies which are late announcing results. Listed companies will also be expected to employ compliance officers.
Reuters By Oludare Mayowa (Additional reporting by Chijioke Ohuocha; Writing by Nick Tattersall; Editing by David Holmes)
