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CrowdFunding: Who is qualified according to new SEC Guidelines

Micro, Small and Medium Scale Enterprises (MSMEs) incorporated in Nigeria with a minimum of two years operating track record, shall be eligible to raise funds through a crowdfunding portal registered by SEC

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Most startups are limited in the ways they can raise funds. Without having to wait for friends and family, angel investors or venture capitalists, a number of startups have turned to crowdfunding as a viable means of raising capital.

Crowdfunding is the use of small amounts of capital from a large number of individuals to finance a new business venture or startup. Crowdfunding makes use of the easy access to vast networks of people through social media and crowdfunding websites to bring investors and entrepreneurs together. Besides raising funds, crowdfunding ventures have also proved to be a valuable way to gather public opinion and create publicity for a startup or its product.

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Legal Framework in Nigeria
Despite such regulatory questions about the legality of crowdfunding vis-à-vis the provisions of the Investment and Securities Act (ISA) and the Companies and Allied Matters Act (CAMA), raising capital through crowdfunding has become increasingly popular for startups in recent years.

The Securities and Exchange Commission (SEC) has proposed a new set of rules that will regulate crowdfunding businesses and deepen the capital market in Nigeria. The commission had some weeks back, announced its plans to regulate the crowdfunding business in Nigeria in order to reduce the risks associated with it for investors and financiers.

READ MORE: Surviving the looming recession in the Nigerian tech space

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Who can raise funds under the new rules?
According to the SEC’s proposed rules, Micro, Small and Medium Scale Enterprises (MSMEs) incorporated in Nigeria with a minimum of two years operating track record, shall be eligible to raise funds through a crowdfunding portal registered by the commission. This could be done in exchange for the issuance of shares, debentures, or such other investment or instruments as the Commission may determine from time to time.

Eligibility of registration of crowdfunding portals
Funds may only be raised through Crowdfunding Portals, which can only be operated by platforms registered by the SEC and having a minimum paid-up share capital of N100 Million. The guidelines also provided clarity on companies incorporated outside Nigeria but still able to trade on crowdfunding platforms. According to the commission, a person is considered to be operating, providing, or maintaining a Crowdfunding Portal in Nigeria if:

(i) The platform is operated, provided or maintained in Nigeria;
(ii) The platform is located outside Nigeria but actively targets Nigerian investors; or
(iii) The component parts of the platform, when taken together, are physically located in Nigeria even if any of its component parts, in isolation, is located outside Nigeria.”

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READ MORE: Meet Jide Ipaye, the man behind Nigeria’s leading footwear brand

In line with the proposed regulation, crowdfunding portals can only be registered and operated by crowdfunding intermediaries – entities registered with the Commission as an Exchange, Dealer, Broker, Broker/Dealer or Alternative Trading Facility as prescribed under the SEC’s Rules.

What is the fundraising limit?
The commission states that the maximum amount which may be raised shall not exceed ₦100million by a medium enterprise, ₦70million for small enterprises and ₦50million for micro-enterprises. The limits set forth above shall not apply to MSMEs operating as digital commodities investment platforms, or such other MSMEs as may be designated by the Commission from time to time.

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What is maximum investment limit?
The aggregate amount of securities sold to any investor in investment-based crowdfunding during the 12-month period shall not exceed 10% of their annual income in a calendar year for retail investors. Only “Sophisticated, High Net worth and Qualified Institutional Investors” are exempted from this limit set by the commission. Retail investors who are neither High Net worth nor Sophisticated Investors shall not invest more than 10% of their annual income.

Patricia
1 Comment

1 Comment

  1. OGECHI A. EROBU

    May 5, 2020 at 9:33 am

    How can i get capital to start business, since i don’t have any collateral
    expect my school certificates. please i need assistance because to feed and take care of my family is big problem since my husband lost job due to COVID-19.

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Companies

Airtel and Telkom discontinue merger plans

The disclosure was made in a notification that was sent to the Nigerian Stock Exchange.

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Telecoms giant Airtel Africa Plc and Telkom Kenya Ltd have decided to discontinue the completion of their merger plans due to the lengthy process of the transaction which has been on since February 2019.

The two telecom firms resolved not to complete the business combination despite their respective efforts to reach a successful closure and having it drag on for a while.

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The disclosure was made in a notification that was sent to the Nigerian Stock Exchange (NSE) by Airtel Africa and signed by its Group Company Secretary, Simon O’Hara, on Wednesday, August 5, 2020.

A subsidiary of Airtel Africa Plc, Airtel Networks Kenya Limited and Telkom Kenya Limited, in collaboration with other parties, had entered into an agreement on February 2019 to combine their businesses in Kenya, so as to create an integrated telecommunications platform with mobile, enterprise and wholesale divisions.

Airtel Africa Plc in its statement said, ‘’Airtel Networks Kenya Limited (Airtel Kenya), an Airtel Africa Plc subsidiary, and Telkom Kenya Limited (Telkom) amongst other parties, had entered into an agreement dated 8th February, 2019 to combine their businesses in Kenya, so as to create an integrated telecommunications platform with mobile, enterprise, and wholesale divisions.’’

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‘’The completion of the business combination was subject to the satisfaction of various conditions precedent, including regulatory approvals.

“Despite Airtel Africa Plc and Telkom respective endeavours to reach a successful closure, the transaction has gone through a very lengthy process which has led the parties to reconsider their stance. Accordingly, Airtel Africa Plc and Telkom have decided to no longer pursue completion of the Transaction.’’

In his own reaction, the Chief Executive Officer of Airtel Africa Plc, Raghunath Mandava, said that Kenya was a large and growing market and stressed on the commitment of Airtel Africa to build a growing profitable business.

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He disclosed that the telecoms giant currently serves over 14 million Kenyan customers, a number that is growing every month. He pointed out that the revenue numbers were up double-digit in constant currency in Kenya in the last quarter.

The Airtel boss reiterated the strategy of the firm is to focus on winning more customers, invest in a best in class voice and data network and progressively expand their mobile money business, will continue to build on these results in order to deliver against the opportunities the Kenyan market has to offer.

Airtel Africa is a leading provider of telecommunications and mobile money services with a presence in 14 countries in Africa primarily in East Africa and Central and West Africa.

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Business

Austin Avuru retires as CEO of Seplat petroleum, to receive huge benefits

According to the notice, Avuru will be considered a “good leaver” on his retirement.

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Austin Avuru retires as CEO of Seplat petroleum, to receive huge benefits, Seplat to acquire more oil & gas assets after Eland's acquisition

Co-founder and Chief Executive Officer of Seplat Petroleum Development Company Plc, Austin Avuru has retired as CEO of the company, but will remain on the board as a Non-Executive Director.

According to a notice sent to the Nigerian Stock Exchange and signed by the company secretary Mrs Edith Onwuchekwa, the resignation took effect on July 31, 2020.

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READ MORE: Seplat denies swindling FG of N600 billion despite co-conspirator’s guilty plea

What this means

According to the notice, Avuru will be considered a “good leaver” on his retirement and receive his remuneration and benefits as such.

The Remuneration Committee has confirmed that Avuru will receive “a lump sum payment in lieu of notice equal to his salary, benefits, and pension allowance until November 18, 2020” as well as other security and travel benefits.

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He would also receive a loss of office payment equal to 12 months’ salary, as compensation and in accordance with the Nigerian market practice.

READ ALSO: Seplat’s Austin Avuru no longer has direct shares in company 

In line with the provisions of the Directors’ Remuneration Policy approved by shareholders of the Company at its 2018 AGM, he will also receive a pro-rata bonus (in cash) to reflect his time as CEO during the financial year, and same “will be provided in the Company’s Directors Remuneration Report for 2020 and subsequent years”.

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Seplat will also vest awards made in form of deferred shares in 2019 and 2020 at the normal vesting dates, and subject to the achievement of the relevant performance conditions, and Avuru will be subject to the post-employment shareholding requirement for two years.

The company management and board appreciated Avuru for his ‘excellent leadership’ in growing the company to become a notable player in the Nigerian and wider African hydrocarbon industry.

READ: Okomu Oil Palm ‘s profit declines by 43.22% as at Q3 2019  

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Backstory

On November 18 2019, Seplat Petroleum Development Company Plc announced that Mr Austin Avuru will be retiring as CEO at the end of July 2020.

This is in line with Avuru’s earlier plans to retire sometime around his 62nd birthday.

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Companies

UBA denies N41 billion NITEL fraud allegations

United Bank for Africa (UBA) has described the alleged N41 billion fraud levied against its Chairman, Mr Tony Elumelu, as untrue, misleading, malicious, and libellous.

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UBA Records 13% Earnings Growth and Delivers N111billion Profit

The Management of the United Bank for Africa (UBA) has described the alleged N41 billion fraud levied against its Chairman, Mr. Tony Elumelu, as untrue, misleading, malicious, and libellous, and said that it should be disregarded in its entirety.

This was disclosed in a statement issued by the bank to the Nigerian Stock Exchange and signed by the company’s secretary, Bili Odum, on Friday. Media reports in some online blogs alleged the former CEO of the bank was indicted” prompting the bank to issue a denial via a press release.

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In the press release stated Statement To The Nigerian Stock Exchange on False Reports in the Media, the bank stated that “it has set in motion all appropriate legal actions to ensure that the misleading reports are retracted and the perpetrators held accountable for their actions”.

READ MORE: Guinea Insurance Plc gives optimistic Q3 earnings forecast in spite of COVID-19

It also stated that it will “continue to conduct its business in line with global best corporate governance practices, extant laws, and regulations,” as it has done in over 70 years of operations.

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Back story: The counsel to NITEL, J.U Ayofu petitioned the Senate Committee Chairman on Ethics, Privileges and Public Petitions about the alleged fraud. The committee chairman, Senator Ayo Akinyelure, claimed the ”the N41billion alleged fraud was committed against the defunct Telecommunications company and National Carrier, NITEL”

They alleged the amount was withdrawn “systematically from NITEL for nine years” under the leadership of the bank.

READ ALSO: N1.5 billion Probe: Contractor could land in EFCC net for abandoning CCB project 

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Senate Committee Chairman on Ethics, Privileges and Public Petitions, Mr. Ayo Akinyelure, reportedly said, “The N41 billion alleged fraud was committed against the defunct telecommunications company and national carrier, NITEL.

According to the reports, in view of this, the senate committee has summoned the Group Managing Director/CEO of UBA, Mr. Kennedy Uzoka, to appear before it on Wednesday, August 5, 2020.

UBA denies wrongdoing

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Despite the allegations, the Management of the Bank denied all the allegations and will use all legal means to clear its name. “We have set in motion all appropriate legal actions to ensure that the misleading reports are retracted and the perpetrators held accountable for their actions.”

READ ALSO: More banks, insurance firms declare closed periods ahead of H1 results release

UBA’s 2020 second-quarter result is expected to be released next week. The market appears to have shrugged off the allegations as thee company’s share price closed at N6.2  gaining 3.3% week on week.

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