Nigerian Exchange receives SEC’s approval to list tech startups

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.

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