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The Securities and Exchange Commission (SEC) has approved the regulations for listing Tech Startups on the Nigerian Exchange Technology Board.
The NGX Technology Board is a specialized listing and capital-raising platform for technology-based businesses.
Through the board, NGX hopes to promote investments in African and indigenous technology-oriented businesses, give these businesses more prominence, and ultimately expand the Nigerian capital market. Qualified institutional investors, retail investors, and high-net-worth investors will all have access to the securities listed on the NGX Technology Board.
The rules for listing on the board contain crucial details about admissions, listing criteria, disclosure requirements, and notification obligations for Issuers, sponsors, investors, and their advisors.
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Under the section “eligibility criteria for listing Startups” issuers seeking a listing on the Start-Up technology board will need to first register with the SEC. Issuers are also expected to have technical partners or core investors, as well as a track record of at least 12 months of operations. The provisions also state that issuers must have an estimated minimum market capitalization of not less than N420 million but not above N42 billion.
In the Big Tech Segment, the provisions are similar to that of the Startup segment, however, the minimum capitalization is around N2 billion. However, they are expected to have a minimum free float of about 10% of the share capital.
Temi Popoola, CEO of NGX, remarked on the approval, “This is a significant achievement that will position the Exchange as an appealing location for capital formation by enterprises within the Technology Sector.”
- “We are convinced that the NGX Technology Board would support the listing of start-ups on the Exchange as they endeavour to satisfy their financing needs, both those created in Nigeria and those from other African nations.”
- The approval comes as the Nigerian Exchange positions itself to take a bite out of Nigeria’s expanding startup market, which has given birth to five unicorns (companies that are still in the early stages of development but have each been valued at at least $1 billion) and made the country the tech hub of Africa.
See excerpts below.
3.0 eligibility criteria for listing on the Startup Tech segment of the Technology Board
- 3.1 Every Issuer that seeks admission to the Start-Up Tech Segment of the Technology Board shall first register its securities with the Commission, make a written application to The Exchange, and execute the applicable General Undertaking.
- 3.2 The Board of The Exchange may authorize the listing of an Issuer’s securities on the Start-Up Tech Segment if the Issuer:
- 3.2.1 Is a public company limited by shares or where a private company, reregisters as a public company or incorporates a Special Purpose Vehicle (SPV) or Holding Company as the public company to be listed;
- 3.2.2 Has a core investor or strong technical partner that has a minimum of one (1) year operating track record;
- 3.2.3 Has a minimum number of two (2) shareholders or such number of shareholders as The Exchange may determine from time to time;
- 3.2.4 Has an operating track record of at least twelve (12) months before the date that The Exchange receives the Issuer’s application to list on the Start-Up Tech Segment;
- 3.2.5 Has an estimated minimum market capitalization of not less than Four Hundred and Twenty Million Naira (₦420,000,000.00) but not above Forty-Two Billion Naira (₦42,000,000,000.00) on the date that The Exchange receives its application for listing on the Start-Up Tech Segment;
- Provided that The Exchange may from time to time determine the market capitalization requirements, subject to its discretion and subsequent approval of the Commission.
- 3.2.6 If raising capital at the point of listing has a minimum float requirement of five per cent (5%) of its issued share capital or has the value of its free float equal to or above Twenty Million Naira (₦20,000,000.00) on the date The Exchange receives the Issuer’s application to list.
- Provided that The Exchange may, from time to time, review and determine the free float requirements as it may deem fit.
- 3.2.7 Undertakes to ensure that its promoters or directors retain a minimum of fifty per cent (50%) of their shares in the Issue for a minimum period of six (6) months from the date of listing (Lock-Up Period) and that they do not directly or indirectly sell or offer to sell such securities during that period
4.0 eligibility criteria for listing on the Big Tech segment of the Technology Board
- 4.1 Every Issuer that seeks admission to the Big Tech Segment of the Technology Board shall first register its securities with the Commission, make a written application to The Exchange, and execute the applicable General Undertaking.
- 4.2 The Board of The Exchange may authorize the listing of an Issuer’s securities on the Big Tech Segment if the Issuer:
- 4.2.1 Is seeking to list on the Big Tech Board of The Exchange;
- 4.2.2 Is a public company limited by shares or where a private company, reregisters as a public company or incorporates a Special Purpose Vehicle (SPV) or Holding Company as the public company to be listed;
- 4.2.3 Has a core investor or strong technical partner that has a minimum of one (1) year operating track record;
- 4.2.4 Has a minimum of five (5) shareholders or such number of shareholders as The Exchange may determine from time to time;
- 4.2.5 Has an operating track record of at least twelve (12) months before the date that The Exchange receives the Issuer’s application to list on the Big Tech Segment;
- 4.2.6 If raising capital from the public at the time of listing, has a minimum free float requirement of ten per cent (10%) of its issued share capital; or has the value of its free float equal to or above Two Billion Naira (₦2,000,000,000.00) on the date that The Exchange receives the Issuer’s application to list;
- 4.2.7 Achieves a market capitalization that is above Forty-Two Billion Naira (₦42,000,000,000.00) on the date The Exchange receives the Issuer’s application to list on the Big Tech Board
The tech board will go into oblivion just as it’s precursors. Whatever
happened to the Growth Board that was launched with fanfare
ended up with two non-tradable fifth rated companies. There is no gainsaying the fact that the tech board will fail woefully like the tech board and like the exchange itself is failing
The NGX should change its model. The exchange can no longer sit down in Lagos, write listing requirements and wait for companies to just come like zombies and shareholders sits like Adimirals of the fleet on the of AGM. That era is gone. NGX should design
and implement new value added impacts of listing. The business promoters are seeking out from the multiple sources of finance. List ming on NGX is the last on the perking order.
How many companies have executed IPOs/POs/Rights on the exchange in the last 5 years compared that number to large number that have done funding series across the globe. These were companies that should otherwise patronize NGX but felt disenchanted at its mode of operations and investor resentment.
The humongous listing requirements are time wasting. My company tried listing but when the NGX link person took us through the listing requirements both written and unwritten ones, we had no option than to seek private equity, which we concluded in record time. It took Otedola’s Geregu about 5 years to get prepared for listing on NGX. The tech companies and SMEs are not willing to wait that long. Where are the funders on NGX
NGX in it’s characteristics manner expect business promoters to bring a ready made company to list on its board without having any tangible value to contribute except name inclusion on SEDOL, attending CEO dinner among other crappy values. Who does this for God sake?
We also note the lack of cooperation between the regulation and sales team. The regulation department refused to accept the requirements of the Growth Board thereby wasting our time for some weeks going back and forth. What a joke of an exchange
The tech ecosystem has more than 200 listable entities but they are not ready for crap encapsulated in NGX and they mentioned this during one seminar we participated in 2020. The humongous documentations, the officialdom processes, valuation etc. The preference will always be for foreign and private equity funding
No matter the relaxation of requirements, failure stirs NGX in the face