SEC proposes N7.5bn capital threshold to safeguard investors in FTZE public offers

NIGERIA’S Securities and Exchange Commission (SEC) has introduced a draft framework to regulate how Free Trade Zone Entities (FTZEs) raise funds from the public. An FTZE refers to a company operating within a free trade zone and licensed by the relevant zone authority.

Under the proposed rules, the SEC has pegged the minimum capital requirement for FTZEs seeking to launch public offerings at N7.5 billion. The commission also made it clear that no FTZE will be permitted to issue or offer shares to the public without first obtaining regulatory approval in line with the new guidelines.

According to the SEC, the proposal, issued under Section 95(1)(f) of the Investments and Securities Act (ISA) 2025, is designed to define eligibility criteria and set clear conditions for FTZEs looking to access Nigeria’s capital market through public offerings.

Beyond the capital threshold, the regulator outlined additional disclosure and registration requirements. These include providing details of the company’s paid-up capital, shareholder structure, and ownership breakdown, all of which must be verified by the relevant Free Trade Zone Authority or an authorised registrar.

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The SEC also requires issuers to submit information on their board composition, backed by certification from the zone authority, alongside a ‘No Objection’ letter approving the planned offering and listing. FTZEs must further disclose their intention to list the offered shares on a recognised securities exchange.

To qualify, an FTZE must be properly licensed under an enabling law governing free zones. It must also demonstrate a minimum of three years’ operational track record prior to applying, with at least two of those years involving independent business activity within a free trade zone. Additionally, the company’s senior management must possess the relevant expertise and experience necessary for its operations.