Nigeria’s Securities and Exchange Commission (SEC) has proposed new rules for Public Offering of securities by a Free Trade Zone Entity (FTZE). Free Trade Zone Entity is means a free zone enterprise, established in a free trade zone and licensed by a Free Zone Authority.
The SEC has set a N7.5 billion minimum capital requirement specifically for such entities that intend to undertake a Public Offering. SEC noted that no shares of an FTZE may be issued or offered to the public, without the approval of the Commission in accordance with the provisions of the new rules.
SEC said the rule, which is being proposed pursuant to s. 95(1)(f) of the ISA 2025, is to provide eligibility requirements and conditions for free trade zone entities seeking to conduct public offering of securities in the capital market.
In addition to this requirement, SEC also noted that registration requirements for shares offered by FTZEs shall include among others the statement of the issuer’s minimum paid up capital, the holders thereof and their respective holdings, certified or verified by the Free trade Zone Authority or other authorised custodian of the register of shareholders.
Also required for the registration of the shares offered by the FTZE include: information on the current composition of the issuer’s board of directors, certified or verified by the free trade zone authority; a “No Objection” letter for the offering and listing of the issuer’s shares, issued by its free trade zone authority; and a mandatory disclosure to list the shares to be offered on a registered securities exchange.
In addition to the N7.5billion minimumpaid up share capital required by the SEC in the proposed new rule, an FTZE seeking to offer or issue its shares under the Rules shall: Be duly licensed by a free zone authority established under an enabling law; have at least three (3) years track record of operation immediately preceding the offering application, during which time the entity or its subsidiary has been engaged in an independent activity for at least 2 years in a free trade zone; and have a senior management that has sufficient competencies and experiences related to its activities.
