Nigeria’s Securities and Exchange Commission (SEC) has proposed new rules allowing Free Trade Zone Entities (FTZEs) to conduct public securities offerings in Nigeria’s capital market, provided they meet a minimum paid-up share capital of N7.5 billion and other strict eligibility requirements.
The proposed rules, titled *New Rules for Public Offering of Securities by a Free Trade Zone Entity, are issued under Section 95(1)(f) of the Investments and Securities Act (ISA) 2025.
They seek to integrate businesses operating within Nigeria’s free trade zones into the broader capital market while emphasising investor protection.
A Free Trade Zone Entity is defined as a free zone enterprise established within a free trade zone and licensed by a recognised Free Zone Authority, such as the Nigeria Export Processing Zones Authority (NEPZA) or the Oil and Gas Free Zones Authority.
Under the proposal, no FTZE’s shares may be issued or offered to the public without prior approval from the SEC.
In addition to the minimum paid-up share capital of N7.5 billion, an FTZE wishing to offer or issue shares must meet the following conditions:
– Be properly licensed by a free zone authority established under an enabling law;
– Have at least three years of operational history immediately prior to the offering application, during which the entity (or its subsidiary) has been engaged in independent core business activity within a free trade zone for a minimum of two years;
– Have senior management with adequate relevant skills and experience;
– Comply with all applicable Nigerian tax laws; and
– Fulfil full disclosure and ongoing reporting obligations required of other public companies.
Registration documents for such offerings must include a verified statement of the issuer’s minimum paid-up capital, details of shareholdings and respective interests, certified or verified by the relevant Free Zone Authority or an authorised custodian of the shareholder register.
Additionally, offered shares must be listed on a registered securities exchange.
The high capital threshold reflects the SEC’s cautious stance towards entities that have traditionally operated under the more lenient regulatory and tax regimes of free zones, where retail and institutional investors may face increased risks.
This move is part of the SEC’s wider efforts to strengthen the capital market, following the recent increase in minimum capital requirements for market operators, with compliance expected by 30 June 2027.
The rules are presently at the proposal stage, and stakeholders will have the chance to submit comments before they are finalised. The SEC has yet to announce a timeline for concluding the consultation process.
Administrator and Writer
