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NEW RULE ON SOCIAL BONDS

1. DEFINITION OF TERMS

"Social Bond" means a type of debt instrument, where the proceeds would be exclusively applied to finance or refinance new and/or existing eligible projects with clear and identifiable social objective(s) and which are dedicated to a target population.

"Social Projects" means a project directly aimed at addressing or mitigating a specific social issue and/ or which seeks to achieve positive social outcomes whether or not exclusively, for a target population.

"Look-Back period" means a maximum period in the past that an issuer can 'look back' to in order to identify assets/earlier disbursements to `eligible Social Projects' that can be included in the social bond reporting.

2. ELIGIBLE PROJECTS
   a) To qualify as a social bond, the monies shall be invested in providing and/or promoting one or more of the following Social Projects:

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i. Affordable basic infrastructure (e.g. clean drinking water, sewers, sanitation,
transport, energy, etc.)

ii. Access to basic services (e.g. health, education and vocational training,
healthcare, etc.)

iii. Affordable housing

iv. Job creation including through the potential effect of small and medium-
sized enterprises financing and microfinance

V. Food security

vi. Socioeconomic advancement and empowerment

vii. Any other Social Project as may be approved by the Commission from time
to time.

b) The projects must be dedicated to one or more of the following identified target populations:

i. People living below the poverty line

ii. Excluded and/or marginalised populations and/or communities

iii. Vulnerable groups

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iv. People with disabilities

V. Migrants and/or displaced persons

vi. Undereducated population

vii. Underserved population, due to lack of access to essential goods and
services

viii. Unemployed persons

ix. Other target population as may be included in the Social Bond Principles as
updated from time to time.

3. CONDITIONS FOR APPROVAL OF A SOCIAL BOND

In addition to the general registration requirements for debt issuances as stated in the Rules and Regulations of the Commission, an issuer of a Social Bond shall file:

a. A letter committing to invest the net proceeds of the bond in projects that qualify as Social Project(s) or assets in line with this rule.

b. A Feasibility Report stating clearly, the measurable benefits of the proposed Social Project or Assets and expected impact.

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C. A prospectus which shall disclose the social objectives, project selection
criteria, decision-making procedures, social and environmental benefits, risks associated with the projects, use and management of the proceeds.

d. An independent assessment or certification issued by a professional certification authority approved or recognized by the Commission provided this shall not apply for Gender Bond.

e. Any other documents as may be required by the Commission from time to time.

4. UTILIZATION AND MANAGEMENT OF PROCEEDS
   a. The net proceeds shall:

i. only be utilized for the purpose(s) stated in the approved offer documents;

ii. be tracked as stated in the approved internal policy of the issuer which shall
be disclosed in the offer documents;

iii. be domiciled with a Custodian in an escrow account specifically opened for
the net proceeds.

b. The issuer and the Trustees shall be the signatories to the escrow account.

c. The Trustees shall ensure that the net proceeds are utilised or invested in Social
Projects.

d. The issuer shall deploy the proceeds in the Social Project within the given timeframe prescribed in the prospectus.

e. Unallocated proceeds shall be invested by the Trustees in money market instruments with investment grade rating that may include projects which are consistent with the delivery of positive social outcomes especially but not exclusively for a target population(s).

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5. REPORTING

a. As long as the bonds are outstanding, an issuer shall provide to the Commission and any Exchange where the bond is listed, at least annually from the date of issuance, a Social Bond Report containing the list of the projects and assets to which proceeds have been allocated, for the duration of the bond. The reporting process and authority shall be documented and maintained as part of the issuer's Social Bond Framework. The issuer shall also make available to the Trustees, the Social Bond Report for inspection.

b. The Social Bond Report shall include:

i. A brief description of the projects and the amounts disbursed,
including the percentage of proceeds that have been allocated to different eligible sectors and project types and to financing and refinancing. Where confidentiality agreements or competition considerations limit the amount of detail that can be disclosed, the information may be presented in generic terms.

ii. The expected impact of the project and assets

iii. Qualitative performance indicators and, where feasible, quantitative
performance measures of the impact of the projects

iv. The methodology and underlying assumptions used to prepare
performance indicators and metrics.

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Securities & Exchange Commission

c. The issuer shall publish an assessment report issued by an independent professional
assessment or certification agency on its website or other media and conduct and report annual follow-up assessments of the Social Projects and associated environmental benefits throughout the tenor of the bond. It shall publish same in its annual Social Bond Report and on its website or other media, a copy of which should be filed with the Commission.

6. REFINANCING

Where the issuer proposes to utilise a proportion of the issue proceeds of the issue of Social Bonds towards refinancing of existing social assets, the issuer shall clearly disclose in the offer document the details of the portfolio/assets/projects which are identified for such refinancing, and, to the extent relevant, the expected look-back period for refinanced projects.

7. EXTERNAL REVIEW

a) An issuer shall appoint (an) external review provider(s) to confirm the alignment of the proposed bonds with all components of the Social Bond Principles.

b) An external review may be partial, covering only certain aspects of an issuer's Social Bond or associated Social Bond framework, or full, assessing alignment with all components of the Social Bond Principles.

c) External review providers shall disclose their credentials and relevant expertise and communicate clearly the scope of the review(s) conducted.

8. QUALIFICATION FOR ISSUANCE OF CLIMATE/SUSTAINABILITY BONDS

An entity that fulfills the requirements of these Rules for the issuance of Social Bonds and the Green Bonds, shall be eligible to issue Climate or Sustainability Bonds.

MADE AT ABUJA THIS 29th
DAY OF OCTOBER 2021

ENO OTUNBA-PAYNE
Ag. Secretary to the Commission

whause Drsler
LAMIDO A. YUGUDA
Director-General