Regulatory Alerts2005-03-29 | TED-AD-33-2005STAFF SHARE ACQUISITION LOAN SCHEME
Following the Central Bank of Nigeria's (CBN) policy on bank consolidation, a series of fundraising activities have taken place through Initial Public Offer, Public Offer, Rights Issue, and Private Placement. Consequently, banks have endeavored to involve their staff in these offerings by creating share acquisition loan schemes. However, recent observations from the CBN's capital verification exercise reveal the need for better management of these schemes. Therefore, all participating banks are required to comply with specific guidelines: firstly, they must establish and document a clear staff share acquisition loan policy approved by the CBN; secondly, the total value of shares sold to staff should not exceed 10% of the total shares on offer at any given time; lastly, the individual value of shares sold to each qualified staff member should be capped at either 10% of the total shares on offer or N10 million, whichever is lower. The implementation of these guidelines takes immediate effect under the supervision of the Director of Banking Supervision.
09-61636403 09-61636418 March 15, 2005 BSD/05/2005 CIRCULAR TO ALL BANKS:
Staff Share Acquisition Loan Scheme
Following the recent CBN policy pronouncement on bank consolidation, there has been a flurry of activities by banks in the capital market to raise funds especially through Initial Public Offer, Public Offer, Rights Issue and Private Placement. Associated with these efforts are the attempts by some banks to ensure that their staff benefit from the share issues through the creation of staff share acquisition loan scheme. However, recent field experience from the capital verification exercise has revealed the need to streamline the operation of the scheme by banks. In this regard banks are required to adhere strictly to the following guidelines: 1) Banks should have a clear and properly documented staff share acquisition loan policy/scheme approved by the CBN.
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The aggregate value of the shares to be sold to staff under the scheme should not exceed 10% of the total shares on offer (Public Offer, Rights Issue and/or Private Placement) at any point in time.
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Total value of shares to be sold to qualified individual staff should not exceed 10% of the total shares on offer or N10million, which ever is lower.
This Circular takes immediate effect.
O. I. IMALA DIRECTOR OF BANKING SUPERVISION