Especially during this season when several organisations are either having rights issue or public offer, it is no gainsaying that many have observed that buying of shares in Nigeria has gotten easier with just a click on the websites or banking apps of several organisations.
Sometime in 2019, the Nigerian Securities and Exchange Commission (SEC) issued Rules on Electronic Offering of Shares. However, we only just observed its implementation in 2024
In this publication, we will highlight few important things to note regarding the Rules and its implementation:
- Prior to the implementation of E-offerings, any investor who intends to buy shares of an Issuer will simply do a walk-in to the registered stockbrokers. Alternatively, investors may fill in a form downloaded on their website and submit manually also on the website. However, with e-offering, this is the use of the Internet (or other electronic means including but not limited to, mobile or USSD platforms) to display and/or provide access to prospectuses, offering memoranda or other disclosure/offer documentation, application and/or subscription forms or other documentation for the subscription to securities and related documentation used during an offer, subscription and payments for such electronic offerings by members of the public.
- The end-to-end process of accepting the prospectus, reading the offer documentation, filling subscription forms are done on an app, or the website of the Eligible Service Provider (“ESP”) registered by the SEC to operate as a Securities Exchange or Capital Trade Point. As at today, we are aware of only one registered and licensed ESP which is the Nigeria Exchange Limited.
- Thus, with the current rights issue and public offer, Issuers who intend to sell their shares through the e-offering method is expected to be integrated into the Nigeria Exchange Limited’s platform. As observed by the investors, a prospective investor may go through the ESP’s platform or alternatively, go through the Issuer’s platforms which are integrated to the ESP’s platform for end-to-end services.
- As with traditional method of sale, an ESP is required to obtain the following documents in electronic form which shall be uploaded on the e-Offering platform and made available to prospective investors in connection with any offer:
(a) The prospectus, any supplemental prospectus, placement memoranda, rights circular approved by the SEC;
(b)The completed subscription/application forms; and
(c) Any other relevant documents in connection with the offer (collectively called the “Offer Documents”).
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Further, the Issuing House(s), Issuer and/or Sponsors is responsible for creating awareness that the securities on offer can be subscribed to electronically on the designated e-Offerings for such issues
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The Issuer and/or Sponsor is expected to post the particulars and details of its selected ESP on its website along with: (a) a list of all the available subscription channels; (b) a list of participating ESPs (where the offer is to be undertaken on more than one e-Offering platform). In this instance, the Platforms shall be able to interact with each other and provide for the aggregation of subscription data in a single database; (c) the offer open and close dates; (d) instructions for making applications; and (e) names and addresses of all the professional parties to the offer, as contained in the prospectus.
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Moreover, the ESP is expected to ensure that the following organizations are granted real-time access to the portal on the e-Offering through which information can be transmitted, downloaded or viewed: (a) the Commission; (b) the Issuing House(s); (c) the Issuer; (d) the Sponsor (where applicable) and (e) the Registrar.
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The e-Offering platform is expected to also have identity management systems such as the BVN database for the purpose of Know Your Customer verification of potential investors. Hence, prospective investors may be required to input details such as their BVN, NIN, CSCS number, etc as may be required or determined.
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Prospective investors can also now permit subscribers to select a broker of their choice for the purpose of electronic crediting of approved allotment.
The foregoing highlights some of the changes contained in the e-Offering Rules and in our opinion, we think this is a step in the right direction.
For more information, please contact: info@trudolegal.com; 08126920594
- SEC Rules and Regulations 2013 (as amended) Rule 1, part B
- SEC Rules and Regulation 2013 (as amended) Rule 1 Part B section 1 sub section 3.
- SEC Rules and Regulation 2013 (as amended) Rule 1 Part B section 2
- SEC Rules and Regulation 2013 (as amended) Rule 1 part B section 5