Introduction

Going public is a significant milestone for any private company, offering access to capital, increased visibility, and enhanced credibility. In Nigeria, the Nigerian Exchange Group (NGX) formerly The Nigerian Stock Exchange (NSE) provides a platform for companies to raise capital and trade their shares. However, navigating this complex process demands meticulous planning, from securing board and shareholder approval to complying with regulatory requirements stipulated by the Corporate Affairs Commission (CAC), Securities and Exchange Commission (SEC), and the Nigerian Exchange Group NGX. 

This guide outlines the requirements, costs, and steps involved in taking a private company public and listing on the NGX.

Regulatory Framework for a Private Company to go Public on the on the NGX

1. The CAMA provides the legislative framework for company registration, share restructuring, and corporate governance in Nigeria. This involves special resolution, minimum share capital requirements, mandatory disclosure and reporting requirements and appointments of external auditors for financial verification.
2. Compliance with SEC Regulations, file a prospectus and meet disclosure requirements.
3.  NGE Listing Rules: Companies must comply with specific listing rules regarding corporate governance, financial performance, and public float.

Differences between Private and Public Companies

The primary difference between private and public companies lies in their ownership structure and share transferability. A private company is typically owned by a small group of individuals, with restrictions on share transfers to the public. In contrast, a public company offers its shares for sale on a stock exchange, allowing the public to become shareholders.

Key Differences:

1. shareholders: Public companies can have an unlimited number of shareholders, whereas private companies are limited to a maximum of 50 shareholders, as stipulated in CAMA
2. Disclosure and Reporting: Public companies are subject to more stringent disclosure and reporting requirements, in compliance with CAMA, whereas private companies have less onerous reporting obligations.

These distinctions highlight the different regulatory requirements and ownership structures that apply to private and public companies in Nigeria

The benefits of Going Public in Nigeria

Transitioning from a private to a public company and listing on the Nigerian Exchange Group (NGX) offers numerous advantages, including:

1. Capital Raising: 
2. Liquidity for Shareholders
3. Enhanced Credibility
4. Increased transparency and accountability
5. Access to a wider investor base
6. Improved corporate governance
7. Enhanced visibility and brand recognition

By going public, Nigerian companies can unlock new opportunities for growth, expansion, and success.

Categories of Listing available on the NGX

NGX offers a range of listing options through its three boards, each designed to support companies at different stages of growth and development. By choosing the right board, you can access the capital and resources needed to drive your business forward

1. Growth board listing
2. Main board listing
3. Premium board listing 

The Step-by-Step Guide in converting a Private Company to a Public Company

Step 1: Board and Shareholder Approval 

The journey to becoming a public company begins with obtaining approval from the company’s board and shareholders. A special resolution must be passed by the shareholders to authorize the re-registration of the company as a public company.

Step 2: Compliance with the Corporate Affairs Commission (CAC) 

Following shareholder approval, the company must file an application with the CAC for re-registration as a public company. The application must include:

1. Amended Memorandum and Articles of Association (MEMART) reflecting the change
2. Special resolution from the shareholders
3. Any other required documents

Step 3: Restructuring the Company’s Share Capital 

To meet the requirements of a public company, the company may need to restructure its share capital. This involves increasing the issued share capital to a minimum of ₦2 million, which may require issuing additional shares or restructuring existing shares.

Step 4: Appointment of Advisors and Auditors 

To ensure a smooth transition, the company must appoint professionals to guide it through the legal, financial, and regulatory aspects of going public. This includes:

1. Financial Advisors: to assist with valuation and IPO structuring
2. Legal Advisors: to ensure compliance with CAMA, SEC, and NGX requirements
3. Auditors: to audit the company’s financial statements

Step 5: Filing an Initial Public Offering (IPO)

The company must file an IPO with the Securities and Exchange Commission (SEC), providing a prospectus that includes a detailed description of the company, its business model, and financial condition.

Step 6: Applying for NSE Listing

After initiating the IPO process, the company can apply for listing on the NSE. This involves submitting the company’s financial statements, business model, and governance structure to the NSE for review. The company must comply with NSE’s listing rules, including the minimum public float requirement. The NGX will review the company’s application and ensure that it meets all listing requirements. Once the NGX has approved the company’s application, it will be listed on the exchange. The company’s shares will be listed on the NGX, and trading will commence.

Costs Involved in Listing on the NGX

The costs involved in listing on the NGX can be significant and include:

1. Listing Fees: The NGX charges a listing fee, which varies depending on the type of listing and the company’s market capitalization.
2. Professional Fees: The company must pay fees to its professional advisers, including lawyers, accountants, and stockbrokers.
3. Marketing and Investor Relations: The company may incur costs related to marketing and investor relations, including the preparation of a prospectus and other listing documents.
4. Regulatory Fees: The company must pay fees to the Securities and Exchange Commission (SEC) and other regulatory bodies.

Conclusion

Listing on the NGX can provide a private company with access to capital, increased visibility, and enhanced credibility. However, the process involves significant costs and requirements. By understanding the requirements, costs, and process involved, companies can navigate the listing process more effectively and achieve a successful listing.

By Deborah Ogedengbe for Adeola Oyinlade & Co.

Adeola Oyinlade & Co. is a leading full-service law firm in Nigeria offering legal and advisory services to both local and foreign clients in the corporate, finance and capital market sectors of Nigeria.

 To see our service offerings, please contact us at [email protected] or visit www.adeolaoyinlade.com

 Mobile: +234 803 826 7683 / +234 802 686 0247

Introduction

Fintech are computer programs and other technology used to support or enable banking and financial services. A fintech license is essential for establishing a compliant payment processing and routing business in Nigeria, granting authority to facilitate interbank transactions, electronic payments, and broader financial service offerings. In order to apply for a Fintech Switching and Processing License in Nigeria, you’ll need to meet the requirements set by the Central Bank of Nigeria (CBN). 

While it is important to state that there are various types of Fintech License available. This article will focus on how to obtain a switching and processing License

Switching and Processing License

A Switching and Processing License, issued by the Central Bank of Nigeria (CBN), enables companies to facilitate card processing, transaction clearing, and settlement services. 

A Switching and Processing License is a necessary requirement for any fintech company in Nigeria that intends to engage in payment processing and transaction routing activities between banks and other financial service providers. Notable examples of switching and processing fintech companies in Nigeria include Remita, Flutterwave, Moniepoint, Interswitch, and Paystack etc

What Regulatory Body issues this license?

The body which issues Fintech license is the Central Bank of Nigeria.  The fintech sector’s rapid evolution necessitates a dynamic regulatory framework. It includes key laws, regulations, and institutional guidelines that govern fintech operations, ensuring stability, security, and innovation. 

To obtain a switching and processing license, the following steps must be taken:

Capital Requirements

• Minimum shareholders’ funds of ₦2 billion unimpaired by losses
• Refundable escrow deposit of ₦2 billion into the CBN PSP Share Capital Deposit Account, paid as a lump sum

Licensing Process

• A written application to the Director, Payments System Management Department of Central Bank of Nigeria (CBN), together with proof of payment and other required documents.
• Application fee of ₦100,000
• Validity period determined by CBN upon satisfactory performance

The Documents required to obtain a switching and processing fintech license 

• Incorporation documents
• 3 years of tax clearance
• Share structure, number of employees, and organogram
• Functional physical and digital addresses
• Board composition and personal details of board members and top management
• 5-year business plan and financial projections
• Features of the switching and processing scheme, security architecture, and process flows
• IT Policies: (Develop policies on privacy, data protection, backup, security, etc.)
• Risk management, internal control, KYC/AML procedures, fraud detection plan, consumer protection policy
• Executed agreements with technical partners, banks, merchants, etc.

What Activities are permissible 

• Switching
• Card processing
• Transaction clearing and settlement agent services
• Non-bank acquiring services
• Activities of super-agents, payment terminal service providers (PTSPs), and payment system service providers (PSSPs)

Application Process

1. Pre-Application Engagement: Engage with the CBN or experienced consultants / Attorneys for clarification on requirements.
2. Submission of Application: Submit the formal application, accompanied by all necessary documents, to the CBN.
3. Payment of Shareholder Funds: Deposit the required shareholders’ funds immediately after submitting the application.
4. Due Diligence and Background Checks: The CBN conducts due diligence and background checks on the directors, shareholders, and key management personnel.
5. On-Site Inspection: The CBN may conduct an on-site inspection of the applicant’s premises. 
6. Review and Approval: The CBN reviews the application, taking into consideration all relevant factors.
7. Post-Licensing Obligations: License holders are required to comply with ongoing reporting requirements, risk management practices, and any additional guidelines issued by the CBN.

Fees

– Non-Refundable Application Fee: ₦100,000 paid via RTGS

– Licensing Fee: ₦1,000,000 to be paid before the issuance of the final license, if successful

Conclusion

In summary, a Switching and Processing License is a vital prerequisite for fintech companies in Nigeria, unlocking access to a broader range of payment services and facilitating growth, despite the complexities and costs associated with the licensing process.

Note: The content of this article is anticipated to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstance.

By Deborah Ogedengbe for Adeola Oyinlade & Co.

Adeola Oyinlade & Co. is a leading Corporate and Commercial full-service law firm in Nigeria offering advisory services to both local and foreign clients in the Fintech, Banking and Finance sectors in Nigeria.

To see our service offerings, please contact us at [email protected] or visit www.adeolaoyinlade.com

 Mobile: +234 803 826 7683 / +234 802 686 0247/ +234 814 198 3314

Regulatory Compliance involves the process of adhering to relevant laws, regulations, procedures, guidelines and other rules issued by the government or governing authorities. Companies operating business in Nigeria are required to comply with the regulatory obligations relevant to the scope of their business. Violations usually attract penalties and this may have an adverse effect on the business operation of the company.  

It is noteworthy that the nature of business and operating industry plays significant role in determining the applicable regulatory compliance to be adopted by such business. Thus, it is sacrosanct that companies seeking to operate legally and successfully in Nigeria identify the regulations applicable to their business to prevent avoidable violations. This article shall be analysed under three categories.

• General Regulations

These are the regulations applicable to all businesses regardless of the industry or sector. In other words, every company operating business in Nigeria must ensure compliance with these sets of regulations or requirements even if their business operation does not require any special or specific license or requirements.

• Business Registration:

The first regulatory requirement every company seeking to operate legally in Nigeria must comply with is the registration of the business with the Corporate Affairs Commission (CAC) in accordance with the statutory provisions of the Companies and Allied Matters Act, 2020. The registration process simply involves securing a unique name for the company, preparing and filing the necessary documents and forms, payment of applicable fess, and obtaining the incorporation certificate upon approval by the Commission.

Upon the successful registration of the company with the Commission, there are other post-incorporation requirements that must be fulfilled by the company to keep the company a legal going concern. This allows the company have a smooth business operation in Nigeria.

• Tax Registration/Compliance:

Under the Nigerian laws, it is required that every company operating in Nigeria must obtain a Tax Identification Number (TIN) from the Federal Inland Revenue Service (FIRS) and fulfil their tax obligations and other tax related activities. The applicable taxes include Company Income tax, Value Added Tax, Withholding Tax, Industrial Training Fund and others. Some other applicable taxes are industry or transaction specific, such as, Petroleum Profit Tax, Stamp Duties, Custom and Excise Duty and others. 

• Labour and Employment Compliance:

Companies must ensure compliance with laws and regulations that govern their relationship with their employees. The major law that regulates the affairs of companies and employees in Nigeria is the Labour Act. The Labour Act makes comprehensive provisions in respect of employment contracts, employee rights, payment of wages, working hours, termination procedure among others. 

Other applicable laws are Industrial Training Fund Act, Trade Unions Act, Employee Compensation Act, Factories Act and other labour related laws. 

Compliance with these laws helps prevent avoidable disputes that may arise as a result of violation.

• Data Protection Compliance:

There are data protection compliance obligations that companies in Nigeria must fulfil to ensure the protection of personal data. These obligations stem from laws and regulations such as the Nigerian Data Protection Act, 2023 (NDPA), the Nigeria Data Protection Regulation, 2019 (NDPR), the NDPR Implementation Framework, 2020. The NDPA is the principal legislation that regulates data protection compliance obligations in Nigeria. The objective of the Act among others, is to safeguard the fundamental rights and freedoms, and the interest of data subjects as guaranteed under the Constitution of the Federal Republic of Nigeria, 1999.  Companies are obligated to process and protect employees and customers/clients’ personal data in compliance with the provisions of the NDPA and other data protection regulations. 

Data protection compliance obligations include: obtaining consent from data subject; providing data security; granting data subject access to their personal data; observing data retention limitation; using collected data for lawful purpose only; verifying age and consent in respect of child’s personal data. 

Failure to comply with these obligations may attract sanctions such as payment of fine, payment of compensation to the data subject, prosecution, rectifying the violation.

• Audits and Inspections:

Companies are required to conduct internal periodic audits to ensure compliance with the regulatory obligations and identify areas of improvement. For instance, data controllers and data processors who meet the statutory minimum thresholds are required under the NDPR to submit a yearly data protection Compliance Audit Returns (CARS) by conducting annual audit and filing annual report. 

Likewise, companies are subject to inspections by regulatory bodies to ensure compliance with industry standards and regulations while also preventing unethical or fraudulent operations. 

• Reporting, Documentation and Retention:

Maintaining accurate record-keeping is an essential part of regulatory compliance for every company. 

A company is legally obligated to keep or maintain statutory records or books that concern its business operations. This requirement stems from various laws and regulations and below are some of such records:

1. Register of directors
2. Register of members
3. Tax and financial records
4. Employee records
5. Resolutions
6. Annual returns
7. Minutes 
8. Other records of compliance activities.

Furthermore, there are provisions in respect of the retention duration of these records under the various laws or regulations. For instance, section 864 of CAMA provides that “companies, firms and corporate bodies registered under this Act shall retain documents stored in pursuance of the provisions of this Act in soft copies for six years from the date of storage.” 

Similarly, section 75 of the Labour Act provides that employers shall keep records of their employees and these records shall be retained for three years after the time to which they refer. 

• Industry-specific Regulations

There is significant variance in Regulations based on the business industry. Likewise, some industries are subject to complex regulatory requirements because of their economic impact and as such undergo stringent penalties upon violation. 

Permits and Licenses:

Some businesses require specific license or permit before they can begin operations in Nigeria. However, the type of license or permit to obtain depends on the industry and scope of operation. For instance:

• Banking and Financial Institutions require Banking License from CBN; Securities Trading License from Securities and Exchange Commission (SEC); Insurance License from National Insurance Commission (NAICOM); Payment Service Provider License (PSP) from CBN.

• Telecommunications and Media companies require operating License from Nigerian Communications Commission (NCC); Broadcasting License from National Broadcasting Commission (NBC); Value Added Service License from NCC.

• Pharmaceutical and Healthcare companies require license from Pharmacy Council of Nigeria (PCN); National Agency for Food and Drug Administration and Control (NAFDAC); Lagos State Health Facility Monitoring and Accreditation Agency (HEFAMAA).

• Real Estate and Construction companies are required to obtain Building Permit from the state or local urban development authorities; Environmental Impact Assessment (EIA) Permit from the Federal Ministry of Environment; Real Estate Developer’s License.

• Sports betting companies require the National Lottery Regulatory Commission (NLRC) License issued by the NLRC. Also, Lagos State require additional licensing from the Lagos State Lotteries Board (LSLB) to operate legally within the state.

• Companies into transportation and logistics business are required to obtain Road Transport License from the Federal Road Safety Corps (FRSC) for commercial vehicles; Freight Forwarding License from the Nigerian Maritime Administration and Safety Agency (NIMASA) for cargo handlers; Logistic License issued by the Nigerian Postal Service (NIPOST).

• Money lending companies must obtain approval from the Federal Competition & Consumer Protection Commission (FCCPC) to operate digitally in Nigeria. Also, Money Lender’s License must be obtained from the state of operation or FCT.

 Foreign Participation Regulations

By the provision of section 20(4) of CAMA, an alien or foreign company may join in forming a company in Nigeria. However, this provision is subject to compliance with some legal requirements provided by the applicable laws and regulations. Some of these requirements are:

• The company must be registered with the Corporate Affairs Commission and thereafter with the Nigerian Investment Promotion Commission before commencing operation in Nigeria – section 78 of CAMA and section 20 of the NIPC Act. 

Exemption – Section 80 of CAMA makes provision for the categories of companies that are allowed to apply for exemption from incorporation as a Nigerian company before operating in Nigeria. For instance, foreign government-owned companies engaged solely in export promotion activities; foreign companies which are in Nigeria for the  execution of specific individual loan projects on behalf of a donor country or international organization.

• The minimum required paid-up capital for a company with foreign participation in Nigeria is One Hundred Million Naira (N100,000,000).

• Business Permit and Expatriate Quota must be obtained by the company from the Ministry of Interior. The Business Permit allows the company to begin business operation in Nigeria while the Expatriate Quota is necessary for the company to have foreigners as employees.

Regulatory compliance is undeniably an integral part of a business. By ensuring strict, adequate and timely compliance, companies avoid the risk of being exposed or faced with penalties from the government or regulatory bodies. Additionally, compliance positions the company as trustworthy and reliable. It is important that companies stay informed and updated about regulatory changes applicable to their business or engage experienced Attorneys for assistance in regulatory compliance. 

Note: The content of this article is anticipated to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstance.

By Ayoola Hassan for Adeola Oyinlade & Co.

Adeola Oyinlade & Co. is a leading Corporate and Commercial full-service law firm in Nigeria offering advisory services to both local and foreign clients in corporate, commercial law and regulatory compliance in Nigeria.

 To see our service offerings, please contact us at [email protected] or visit www.adeolaoyinlade.com

 Mobile: +234 803 826 7683 / +234 802 686 0247/ +234 814 198 3314

Introduction

A shipping company engages in cargo transport, ship ownership, and operations. To operate, it must be incorporated under the Companies and Allied Matters Act with shipping business objectives. The company can then apply to register its ship, if owned, via a written application. The Nigerian maritime sector is regulated by the Nigerian Maritime Administration and Safety Agency (NIMASA)^.

If you’re looking to register a shipping company in Nigeria, this article is for you as it will walk you through the registration process, highlighting the necessary steps and requirements along the way.

Registration Requirements

– Memorandum and Articles of Association: Ensure your company has a minimum share capital of N25 million, with a main object clause related to shipping.

– Certificate of Increase in Share Capital: Provide relevant documentation if your company has increased its share capital post-incorporation.

– Allotment of Shares Documents: Include documents displaying the initial allotment of shares and any subsequent changes post-incorporation.

– Particulars of Directors: Submit documents displaying details of directors, using Form CAC 7 or CAC 7A for changes post-incorporation.

– Evidence of Annual Returns Filing: Provide Form CAC 10 or a letter acknowledging the filing of annual returns from the Corporate Affairs Commission.

– Tax Clearance Certificate: Include a current tax clearance certificate for your company.

– Original Bank Reference: Provide a reference from your bank.

– Audited Accounts or Financial Statements: Submit either audited accounts or financial statements, depending on your company’s age.

The Procedures for registration

1. Collection of Debit Note from the designated desk officer for N110,000.00 (N10,000 for Form B1 and N100,000.00 for the registration fee).

2. Generate Remita Retrieval Reference (RRR) Number:

3. Make Payment using your RRR number and print out the Remita receipt.

4. Obtain NIMASA Receipt by visit the Agency’s Financial Services Department with your receipt and debit note to obtain your NIMASA receipt.

5. Pick Up Form B1 from the Legal Services Department and carefully fill it out.

6. Application Letter: Addressed to the Director-General/CEO of NIMASA, clearly stating the category of application (Shipping Company or Agent).

7. Submit Application: Attach all required documents and submit your application to the DG’s office, keeping a stamped and received copy.

Registration Costs

Debit Note: N110,000.00 (inclusive of N10,000 for Form B1 and N100,000.00 for the registration fee)

NIMASA Inspection

A physical inspection by NIMASA is required as part of the registration process. This ensures compliance with maritime safety regulations

Additional Registrations for Shipping Companies

1. Nigerian Ports Authority (NPA) Registration -To operate in Nigerian ports, shipping companies must register with the NPA. Registration requirements and fees vary depending on the port location and operational needs.

2. Special Control Unit Against Money Laundering (SCUML) Registration- The Economic and Financial Crimes Commission (EFCC) mandates all shipping companies to register with SCUML. This registration is essential for opening and operating a corporate bank account.

3. Tax Registration with the Federal Inland Revenue Service (FIRS)- Register your company with the FIRS for tax purposes and obtain a unique Tax Identification Number (TIN). This is a mandatory step to ensure compliance with Nigeria’s tax laws

Renewal of Shipping Company Registration

To renew a shipping company license, the following documents must be submitted along with the prescribed fees:

1. Collect Debit note from the desk officer in charge of Debit Note for N15,000.00 (this amount is paid annually, therefore if your expiration date exceeds a year, kindly pay for the number of years the license has remained expired)
2. Tax Clearance Certificate: The company’s current tax clearance certificate.
3. Audited Accounts: The company’s latest audited financial statements.
4. Annual Returns: Evidence of updated and paid annual returns at the Corporate Affairs Commission.

Conclusion

To operate in Nigeria’s shipping industry, a company must register with the Nigerian Maritime Administration and Safety Agency (NIMASA) and provide all necessary documents. This ensures compliance with regulatory requirements and enables the company to conduct shipping operations legally.

Note: The content of this article is anticipated to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstance.

By Deborah Ogedengbe and Adeola Austin Oyinlade for Adeola Oyinlade & Co.

Adeola Oyinlade & Co. is a leading Corporate and Commercial full-service law firm in Nigeria offering advisory services to both local and foreign clients in the maritime, shipping and admiralty sectors in Nigeria.

To see our service offerings, please contact us at [email protected] or visit www.adeolaoyinlade.com

Mobile: +234 803 826 7683 / +234 802 686 0247