GUIDELINES ON REVISED MINIMUM CAPITAL FOR REGULATED ENTITIES

1. PRELIMINARY PROVISIONS

1.1 Legal Basis

These Guidelines are issued by the Securities and Exchange Commission (“the Commission”) pursuant to its statutory powers under the Investments and Securities Act, 2025 (“the ISA 2025”), and all other enabling laws and regulations, for the purpose of prescribing revised capital requirements for regulated capital market operators.

1.2 Status and Binding Effect

These Guidelines are binding on all regulated capital market operators and shall be complied with accordingly. Failure to comply shall attract such regulatory sanctions as may be prescribed by the Commission under the ISA 2025 and applicable rules.

1.3 Scope of Application

These Guidelines apply to all entities licensed, registered, or otherwise regulated by the Commission to perform capital market activities (“Capital Market Operators” or “CMOs”), including existing operators and applicants seeking new registration. Where an operator performs multiple regulated functions, the operator shall comply with the capital requirement applicable to each function.

1.4 Transitional Arrangements

a. Existing CMOs shall comply with the revised capital requirements on or before 30 June 2027. b. Compliance with the revised capital requirements shall be a precondition for the registration of all new CMOs from January 16, 2026. c. CMOs with pending applications for registration with the Commission as of January 16, 2026, must submit written board-approved plans to comply with the revised minimum capital requirement on or before 30 June 2027. d. All applicants whose applications have been pending for at least 12 months as of January 16, 2026, shall not be considered as having pending applications. They are required to file fresh applications for registration and comply with the revised minimum capital.

OBJECTIVES OF THE GUIDELINES

a. Promote investor protection by ensuring that CMOs maintain adequate financial resources to absorb operational and market-related losses; b. Enhance the resilience, integrity, and stability of the Nigerian capital market; c. Establish a risk-sensitive and proportionate capital framework aligned with the nature, scale, and complexity of regulated activities; d. Support effective supervision and early regulatory intervention through clear capital adequacy standards; and e. Reinforce domestic and international confidence in the prudential soundness of the Nigerian capital market, consistent with IOSCO principles.

2. INTERPRETATION

“Capital Base” means the shareholders’ funds of a regulated entity, comprising qualifying capital components net of accumulated losses as determined in accordance with these Guidelines. “Qualifying Capital” means capital that is fully paid-up, freely available, unencumbered, and reserves capable of absorbing losses on a going-concern basis.

3. QUALIFYING AND NON-QUALIFYING CAPITAL COMPONENTS

3.1 Qualifying Capital Components

a. Fully paid-up ordinary share capital; b. Fully paid-up irredeemable preference shares that: (i) Are non-redeemable; (ii) Are subordinated to all creditors; and (iii) Do not impose mandatory dividend obligations; c. Share premium arising from fully paid-up capital issued for cash or other eligible consideration; d. Retained earnings arising from audited profits less any unrealized gains.

3.2 Non-Qualifying Capital and Regulatory Exclusions

a. Revaluation reserves and gains from asset revaluation; b. Unrealized or fair value gains not crystallized in cash; c. Borrowed funds, shareholder loans, or other debt instruments; d. Client monies, client assets, or securities held in custody or trust; e. Contingent assets and deferred tax assets; f. Any capital subject to lien, charge, pledge, or encumbrance.

4. RECOGNITION OF CAPITAL AND RESERVES

4.1 Only qualifying capital components reflected in audited financial statements not older than nine (9) months shall be recognized. 4.2 The Commission reserves the right to require interim audited or revised financial statements.

5. MODES OF CAPITALISATION

5.1 Capital may be injected through cash, quoted equity securities, units of Collective Investment Schemes, bonds (rated investment grade), or unquoted securities actively traded on recognized platforms. 5.2 CMOs may achieve compliance through mergers and acquisitions, subject to prior notification and “No Objection” from the Commission. 5.3 Regulated entities may submit proposals to downgrade their registered functions.

6. DOCUMENTATION REQUIREMENTS

All filings must include: Memorandum and Articles of Association, CAC Certified board/shareholder resolutions, and relevant CAC certificates.

7. COMPUTATION OF CAPITAL BASE

7.1 CMOs must compute Minimum Capital Base as per Annex III. 7.2 Any capital impairment must be reported immediately to the Commission with a remedial action plan.

8. FILING AND VERIFICATION

8.1 Compliance must be filed through the Commission’s electronic portal. 8.2 The Commission conducts routine, risk-based, or for-cause verification.

9. CAPITALIZATION PLANS

9.1 Existing CMOs must submit board-approved capitalization or downgrade plans to capitalbase@sec.gov.ng by 30 April 2026. 9.3 Final deadline: 30 June 2027.

10. ENQUIRIES

Direct enquiries to capitalbase@sec.gov.ng.