Public Offers and Investor Protection: The Regulatory Framework Governing IPOs in Nigeria Under the Investments and Securities Act 2025
A public offer of securities is the process by which a company makes its shares available to members of the public, ordinarily as a means of raising capital. In Nigeria, this process is governed by the Investments and Securities Act 20251 (the “Act” or “ISA 2025”), which repealed and replaced the Investments and Securities Act 2007.2 ISA 2025 substantially revised the framework for securities regulation, strengthened the supervisory powers of the Securities and Exchange Commission (the “SEC” or the “Commission”), and introduced enhanced investor protection mechanisms. This article examines what the Act requires of issuers making public offers, the prospectus and disclosure regime it establishes, and the protections it provides to investors.
- Public Offers and the Registration Requirement
Under ISA 2025, an invitation to the public includes any offer or invitation to acquire securities that is published, advertised, or disseminated by any means, or made to one or more persons on terms permitting them to renounce or assign the benefit of the offer in favour of others.3 No person may issue, sell, or offer securities to the public without prior registration of those securities with the SEC.4 An issuer files a registration statement with the Commission containing such information as the Commission prescribes, signed by such persons as the Commission requires.5 The Commission issues a certificate of registration upon approval. A person who offers securities to the public without prior registration commits an offence and is liable on conviction to a fine of not less than fifty percent of the value of the securities offered; directors and principal officers face a fine of not less than ten percent of that value or imprisonment for not less than five years.6
No person may issue, circulate, or distribute any notice, circular, or advertisement to the public offering securities for subscription or purchase without the prior approval of the Commission.7 Contravention attracts a fine of not less than fifty million naira, with a further sum of not less than twenty thousand naira for every day the violation continues.8
- The Prospectus Regime and Disclosure Obligations
The prospectus is the primary disclosure document in a public offer. A prospectus must not be issued on behalf of an issuer unless, on or before the date of its publication, a copy signed by every person named in it as a director has been delivered to the Commission for registration.9 Every prospectus issued by or on behalf of a company must state the matters specified in Part I of the Third Schedule to the Act and set out the reports specified in Part II of that Schedule.10 The directors of the issuer bear joint and several responsibility for the accuracy and completeness of the prospectus.
The Act treats a statement in a prospectus as untrue if it is misleading in the form and context in which it is included. A statement is deemed included in a prospectus if it appears in any report or memorandum incorporated by reference or issued with it.11 Where expert statements are included in a prospectus, the expert must consent in writing to inclusion and that consent must be endorsed on or attached to the copy filed with the Commission.12
- Investor Protection Under ISA 2025
ISA 2025 provides several mechanisms to protect investors in public offers. Where a prospectus invites persons to subscribe for securities and contains an untrue statement, the directors of the issuer at the time of the issue, persons who consented to be named as directors, employees of the issuer who participated in producing the prospectus, and the issuing house and its principal officers are jointly and severally liable to pay compensation to all subscribers who suffer loss by reason of the misstatement.13
All application money paid by a subscriber prior to allotment must be held in a separate trust account by a custodian on terms prescribed by the Commission.14 Where a public offer of securities is made, the issuer and the issuing house are responsible for the allotment of securities, subject to the approval of the Commission in accordance with the rules made under the Act. Allotment may not be made unless the subscription level meets the minimum percentage prescribed by the Commission.15
On systemic risk, Sections 82 to 84 of the Act empower the SEC to request information from any capital market participant for the purpose of monitoring, mitigating, and managing systemic risks in the capital market.16 The Commission may also issue directives requiring capital market participants to take measures to manage systemic risk, and may share information and cooperate with other financial sector regulators, including the Central Bank of Nigeria, for that purpose.17
Section 196 of the Act empowers the Commission to enter and seal up all prohibited schemes, including arrangements commonly known as Ponzi or pyramid schemes, and to obtain orders to freeze and forfeit the assets of such schemes to the Federal Government. The promoter and operator of any entity engaged in a prohibited scheme commit an offence and are liable on conviction to a fine of not less than twenty million naira or imprisonment for a term of ten years or both.18
Conclusion
The regulatory framework established by ISA 2025 marks a significant development in the governance of public offers in Nigeria. The Act strengthens the SEC’s supervisory mandate, prescribes detailed registration and disclosure obligations for issuers, and creates direct civil and criminal remedies for violations of the prospectus regime. The application money trust requirement, the allotment approval process, the systemic risk oversight powers, and the prohibition on fraudulent schemes collectively reflect a framework that places investor protection at the centre of the capital market regulatory architecture.
As Nigeria’s capital market continues to develop and larger companies consider public listings, the legal requirements governing IPOs and public offers under ISA 2025 become increasingly material for companies, investors, and market participants. Compliance with the Act’s registration, disclosure, and allotment provisions is a legal obligation that governs every stage of the public offer process.
Author
Marvin Ezeanyika
Associate
Email: [email protected]
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Adeola Oyinlade & Co. is a top law firm in Nigeria, distinguished for its capital market expertise. The firm specializes in public offers, investor protection, and robust regulatory compliance under the Investments and Securities Act 2025. Committed to commercial excellence, they deliver elite legal solutions and advisory services to safeguard domestic and international market participants.
You may reach out to us for more information and enquiries via [email protected] or call +234 802 686 0247 / +234 803 826 7683.
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1 Investment and Securities Act 2025 (Nigeria).
2 Investment and Securities Act 2025 (Nigeria), s 356(1). The repealed Act is the Investments and Securities Act, No. 29 of 2007.
3 Investment and Securities Act 2025 (Nigeria), s 97(1).
4 Investment and Securities Act 2025 (Nigeria), s 86(5).
5 Investment and Securities Act 2025 (Nigeria), s 86(1)-(2).
6 Investment and Securities Act 2025 (Nigeria), s 86(7).
7 Investment and Securities Act 2025 (Nigeria), s 103(1).
8 Investment and Securities Act 2025 (Nigeria), s 103(5).
9 Investment and Securities Act 2025 (Nigeria), s 108(1).
10 Investment and Securities Act 2025 (Nigeria), s 101(1).
11 Investment and Securities Act 2025 (Nigeria), s 111.
12 Investment and Securities Act 2025 (Nigeria), s 105.
13 Investment and Securities Act 2025 (Nigeria), s 113(1)-(2).
14 Investment and Securities Act 2025 (Nigeria), s 117(1).
15 Investment and Securities Act 2025 (Nigeria), ss 115(1), 116.
16 Investment and Securities Act 2025 (Nigeria), s 82(1).
17 Investment and Securities Act 2025 (Nigeria), ss 83(1), 84(1).
18 Investment and Securities Act 2025 (Nigeria), s 196(1), (3).
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