The entity authorized to engage in the business of providing investment advice to others or issuing reports or analyses regarding securities, for compensation is known as an Investment Adviser.
Investment advisers may perform the following functions:
- Investment advisory services;
- Making recommendations as to types of securities to buy or sell;
- Publication of financial market periodicals.
- An investment adviser shall not engage in the maintenance or management of investors’ funds.
- An investment adviser shall keep proper records and file annual reports with the Commission.
- An investment adviser shall not make claims and advertisement that are misleading or false in content contrary to the Act and these rules and regulations.
The registration requirements of an investment adviser according to Rule 96 of SEC is as follows;
Corporate Investment Adviser
(1) An application for registration as corporate investment adviser shall be filed on Form S.E.C. 3 and shall be accompanied by-;
(a) Two (2) sets of completed Form S.E.C. 2 to be filed by the sponsored individuals;
(b) a copy of certificate of incorporation certified by the Corporate Affairs Commission. where a copy not certified is filed, the applicant shall present the original for sighting by an authorized officer of the Commission;
(c) a copy of Memorandum and Articles of Association certified by the Corporate Affairs Commission which shall among others include power to act as investment adviser;
(d) a copy of CAC Form containing particulars of the directors certified by the Corporate Affairs Commission.;
(e) copy of latest audited accounts or audited statement of affairs for companies in operation for less than one (1) year;
(f) fidelity bond representing 20% of paid-up capital;
(g) sworn undertaking to keep proper records and render returns;
(h) evidence of minimum paid-up capital of N5 million.
Individual Investment Adviser
(2) An application for registration as an individual investment adviser shall be filed on Form S.E.C. 2 as provided in schedule III of these rules and regulations and shall be accompanied by the following:
(a) certified copy of certificate of registration of business name (where applicable);
(b) sworn undertaking to comply with the provisions of the Act and these rules and regulations as may be required from time to time by the Commission;
(c) evidence of minimum net worth of N500,000.
(3) Rule 83 (3) and (4) shall, with all necessary modifications, apply in case of denial or suspension of registration of an investment adviser.
Generally, the key regulatory control of this capital market operator is the requirement that any entity meeting the definition of an investment adviser must register in accordance with the rules laid down by SEC.