On March 29, 2025, President Tinubu signed the Investment and Securities Act (2024) into law, replacing the 2007 version. The ISA sponsored by Senator Opeyemi Bamidele (Ekiti Central) contains provisions such as the outright ban on Ponzi schemes and the legalisation of crypto assets, recognising them as virtual assets.
The new law adjusts the ISA (2007), taking into consideration some of the provisions in the Companies and Allied Matters Act, 2020. Here are some of the key takeaways from the ISA 2025.
1. Recognition of crypto assets
The Act has expanded the definition of “securities” to include virtual assets. Virtual assets are digitally represented assets that can be traded, transferred, or used for payments. However, these assets do not exist in physical form.
The scope of virtual assets in ISA 2025 includes cryptocurrencies, tokens, and digital assets such as Non-Fungible Tokens (NFTs). Additionally, it broadens the definition of securities exchanges to include platforms that facilitate the trading of virtual assets.
2. An outright ban on Ponzi schemes
Section 195 of the Act empowers the Securities and Exchange Commission (SEC) to enter into and shut down prohibited schemes. According to subsection (1), the SEC can obtain a court order to freeze and forfeit the assets of such schemes to the Federal Government.
In subsection (3), the Act streamlines down to Ponzi or Pyramid schemes.
“For the purposes of this Bill, “prohibited scheme” including those commonly known as a “Ponzi or Pyramid scheme”,” the bill read.
A comprehensive definition of Ponzi schemes is provided by the Act.
– Any investment scheme that pays existing investors with funds from new investors while promising high, low-risk returns.
– Schemes that restrict entry through specific conditions or limits, thus affecting the eligibility of a person to enter or receive compensation under the scheme.
– An investment scheme that emphasises recruiting new participants rather than selling genuine products or services.
According to Section 195, subsection 3, the promoters and operators of these schemes are liable to a jail term of 10 years or a fine of N5 million, or both.
3. New takeover rules and regulations
Section 141 of the Act contains new guidelines concerning the takeover of publicly listed companies. One of the regulations is that no person or group of persons (consortium) can acquire more than 30 percent of a public company’s shares without approval from the SEC.
Under Section 141(2)(c), any individual or group seeking to acquire 30 percent or more of a company’s shares must extend a takeover bid to other shareholders.
4. Whistleblower protection
ISA 2025 prescribes protection for whistleblowers when they provide information to the SEC. According to Section 138 (6), an employer cannot seek reprisal against employees for seeking advice or providing information to regulators about suspected violations. All forms of retaliation, such as termination or threats of termination, demotion, suspension, or other disciplinary action, or workplace penalties, were prohibited.
According to Section 138 (8), any contract preventing an employee from reporting misconduct to regulators or law enforcement is void. Also, if an employer retaliates against a whistleblower, the employee can file a complaint for arbitration, report the issue to the SEC, or take legal action in court.
5. SEC board composition
Section 4 of the ISA (2025) provides the requirement for the composition of the board of the SEC. The provisions are just a few adjustments from what was contained in ISA (2007). The three full-time commissioners of the SEC must now include a legal practitioner with a minimum of twelve years post-call-to-bar experience.
The CBN and Ministry of Finance representatives on the board cannot be lower than the Director cadre. Also, the Director General of the National Pension Commission (PENCOM) is now a statutory board member of the SEC.
6. SEC is empowered to appoint or remove directors of public companies
Section 3(4) of the Act grants the Securities and Exchange Commission (SEC) the authority to appoint independent directors to the boards of public companies. This is subject to regulatory action.
Additionally, the Act empowers the SEC to place directors on probation. SEC can also remove individuals linked to mismanagement of public companies or capital market operators.
7. Wider scope of prohibited conduct
In ISA (2007), the scope of prohibited conduct was mainly focused on insider trading. However, in the 2025 version, the scope of prohibited conduct has been expanded to include market manipulation, misleading disclosures, and failing to file insider disclosures, either directly or indirectly.
The violators outlined in ISA 2025 include those who enable or benefit from the violations, even though they are not directly involved. As part of whistleblower protections, a percentage of the penalties recovered may be awarded to whistleblowers.
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