The Securities and Exchange Commission (SEC) has given its approval to the rules for listing tech startups on the Nigerian Exchange Technology Board.
A platform for technology-based companies to list and raise funding is called the NGX Technology Board.
With the help of the board, NGX wants to encourage financial investments in African and domestic technology-based companies, offer these companies more visibility, and thereby broaden the Nigerian capital market. The securities listed on the NGX Technology Board will be open to qualified retail investors, high-net-worth individuals, and institutional investors.
Important information about admittance requirements, listing standards, disclosure obligations, and notification duties for Issuers, sponsors, investors, and their advisors can be found in the listing rules for the board.
Eligibility criteria for listing Startups
Issuers who wish to list their securities on the Start-Up Technology Board must first register with the SEC. A track record of at least 12 months of operations and technical partners or core investors are also demanded of issuers. Additionally, the regulations provide that issuers must have an estimated minimum market capitalization of N42 billion, not less than N420 million.
Despite the fact that the startup segment’s minimum capitalization is about N2 billion, the provisions are the same. Nevertheless, it is anticipated that they will have a minimum free float of 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 least $1 billion) and made the country the tech hub of Africa.
See quotations below.
3.0 eligibility criteria for listing on the Startup Tech segment of the Technology Board
- 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.
- 2 The Board of The Exchange may authorize the listing of an Issuer’s securities on the Start-Up Tech Segment if the Issuer:
- 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;
- 2.2 Has a core investor or strong technical partner that has a minimum of one (1) year operating track record;
- 2.3 Has a minimum number of two (2) shareholders or such number of shareholders as The Exchange may determine from time to time;
- 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;
- 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.
- 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.
- 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
- 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.
- 2 The Board of The Exchange may authorize the listing of an Issuer’s securities on the Big Tech Segment if the Issuer:
- 2.1 Is seeking to list on the Big Tech Board of The Exchange;
- 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;
- 2.3 Has a core investor or strong technical partner that has a minimum of one (1) year operating track record;
- 2.4 Has a minimum of five (5) shareholders or such number of shareholders as The Exchange may determine from time to time;
- 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;
- 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;
- 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
