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

The objectives of these Guidelines are to:
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

For the purposes of these Guidelines, unless the context otherwise requires:
“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. Other terms used but not defined herein shall have the meanings assigned to them under the ISA 2025 and relevant SEC Rules.

3. QUALIFYING AND NON-QUALIFYING CAPITAL COMPONENTS

3.1 Qualifying Capital Components

The following shall qualify as components of Capital Base, subject to verification by the Commission:
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

The following shall not qualify as capital for the purposes of these Guidelines:
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, whether secured or unsecured;
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, or such other period as the Commission may approve, shall be recognized for the purpose of determining compliance.
4.2 The Commission reserves the right to require interim audited or revised financial statements where necessary for supervisory purposes.

5. MODES OF CAPITALISATION

5.1 Capital Injection

Capital may be injected through any of the following eligible means, subject to valuation and verification:
a. Cash deposits; b. Quoted equity securities valued in accordance with Annex I;
c. Units of Collective Investment Schemes valued in accordance with Annex I;
d. Bonds issued by Federal, State, or Local Governments, supranational institutions, or corporate issuers rated not below investment grade; e. Unquoted securities actively traded on Commission-recognized OTC platforms, subject to liquidity and valuation criteria prescribed in Annex I.

5.2 Mergers and Acquisitions

CMOs may achieve compliance through mergers, acquisitions, or business combinations, subject to:
a. Prior notification to the Commission; b. Compliance with applicable SEC Rules on mergers and acquisitions; and
c. Issuance of a formal “No Objection” by the Commission.

5.3 Downgrade of registration

Regulated entities, on completion of their self-assessments, are allowed to submit proposals to downgrade/scale back their registered function(s) and apply for approval of the same.

6. DOCUMENTATION REQUIREMENTS

6.1 General Requirements

All filings shall include:
a. Memorandum and Articles of Association; b. CAC Certified board and shareholders’ resolutions authorizing the increase in share capital, merger and Acquisition or change in registered function(s);
c. CAC Certificate of increase in share capital;
d. CAC Status Report.

6.2 Additional Documentation

Specific documentation requirements for each mode of capitalization are set out in Annex II to these Guidelines.

7. COMPUTATION OF CAPITAL BASE

7.1 CMOs shall compute their Minimum Capital Base strictly in accordance with the methodology prescribed in Annex III.
7.2 Every CMO shall maintain the applicable capital base at all times.
7.3 Any capital impairment or breach shall be reported to the Commission immediately, together with a remedial action plan.

8. FILING AND VERIFICATION

8.1 CMOs that have met the applicable capital requirements shall file for compliance through the Commission’s designated electronic portal, supported by verifiable evidence.
8.2 The Commission shall conduct capital verification before approval and may undertake routine, risk-based, or for-cause verification at any time.

9. CAPITALIZATION PLANS AND IMPLEMENTATION

9.1 Every existing CMO shall submit a board-approved capitalization or downgrade/ scale back of registration plan to capitalbase@sec.gov.ng on or before 30 April 2026.
9.2 The capitalization plan shall comply with the minimum content requirements set out in Annex IV.
9.3 The final deadline for recapitalization is 30 June 2027.

10. ENQUIRIES

All enquiries relating to these Guidelines shall be directed to capitalbase@sec.gov.ng.