The Nigerian Securities and Exchange Commission has proposed a comprehensive set of new regulations designed to strengthen oversight and transparency in the issuance and allotment of debt securities by private companies.
The regulations apply to “debt securities issuances by private companies either by way of public offer, private placement or other methods as may be approved by the Commission.” Furthermore, the regulations establish a cap on the amount a private company can raise within a one-year period, setting the limit at “N15 billion.” Companies exceeding this limit “shall be required to re-register as a public company.”
The rules explicitly prohibit private companies from offering equity to the public. Debt securities, however, can be offered “only to qualified investors” through registered capital market operators. Public offerings of debt securities must be “cleared by the securities exchange and registered by the Commission.”Furthermore, the SEC emphasized the proper utilization of proceeds from debt issuance. Issuers are prohibited from diverting funds for purposes not outlined in the offer document.