Introduction

The Nigerian Stock Exchange (NSE) is the most reliable institution for corporate organizations to raise equity capital. Over the years, many established companies have leveraged on the structure of the NSE to raise money from the general investing public.

The companies listed on the Nigerian stock exchange can raise capital to finance strategic business objectives and have access to long term financing at competitive rates.

There are two main listing segments a company can be admitted to on the Nigerian Stock Exchange (NSE) as a quoted company, and they are;

The Main Board

It is the most common type of listing segment. The main board has been home to several established companies from different industrial sectors as well as geographical locations. Companies listed on the main board can leverage on a prominent market place to access capital from local and international investors.

Listing on the main board has three standards – Standard A, B and C with each of the standards having their own parameters concerning a specific requirement. There are currently 141 companies on the main board of the NSE.

The listing requirements of the Nigerian Stock Exchange are as follows;

Annual Listing Fees

Companies who want to be on the main board of the NSE under Standards A, B and C are to pay annual listing fees. These fees are based on market capitalization as indicated by the NSE fee schedule which is currently N4.2 million.

Business Operations

Companies who want to be on the Exchange under Standard A, B and C are to register as a Public Limited Liability Company by the Corporate Affairs Commission.

Accounting Standard

A company seeking to be on the main board of the NSE under Standards A, B, and C is to comply with the International Financial Reporting Standard (IFRS) standard. This is in relation with the Securities and Exchange Commission (SEC) regulations.

Allotment

Companies seeking to be list on the main board of the NSE under Standards A, B, and C, are to fully pay their securities. They should pay at the time of the allotment in line with Securities and Exchange Commission (SEC) requirements. This is for the minimum threshold for a successful offer.

Pre-Tax Profit

Standard A requires that a company who wants to be listed on the board of the Exchange must provide cumulative pre-tax profits from continuing operations of not less than NGN300million over the last three years.

Standard B requires that a company as described above should provide cumulative pre-tax profits from operations of not less than N600m over the last 1 or 2 years

There is no requirement for a company in Standard C to offer cumulative pre-tax profits

 Market Capitalization

Standard B requires that a company’s market capitalization must not be less than NGN 4 billion at the time of listing. For Standards A and C, there is no capitalization requirement. 

Operating Track Record

Standard A requires that a company who wants to be listed on the main board of the Exchange must provide three years minimum running records. Standard B requires a minimum of 3 years track record of operating fully. However, as an alternative, it permits evidence of 3 years minimum operating track record of a principal investor who is a shareholder of the company.  

Standard C states that a company, as mentioned above, will provide two years minimum operating track record.

Financial

Standard A requires that a company who wants to be listed on the main board of the Exchange must provide three years financial statements, the most recent of which must not be more than nine months old at the time of application submission;

The second standard, Standard B also makes the requirement as mentioned in Standard A but provides an alternative provision, which is proof of an investor with substantial equity holding and involvement in the company, who has 3 years operating records and financial statement.

The C Standard requires that company as described above to provide financial statements with the date of the last audited accounts not being older than nine months. 

Public Float

Standards A and B states that a company will offer 20% of each class of equity of its shareholding to the public,

Standard C states that a company offers a minimum of 15% of each class of equity to the public.

Shareholders Equity

Standard A requires that a company must have N3 billion in shareholders’ equity. There are no such requirements for Standards B and C in terms of shareholders’ equity.

Initial Public Offer (IPO) Lock-Up Phase

Standards A, B, C states that Promoters and Directors to be on the main board should retain shares. The shares should be 50% Pre- Initial Public Offering (IPO) for 12 months.

Public Shareholders

Standards A and B states that the number of public shareholders in a company must be 300 and above (for equity shares). while Standard B states that the number of public shareholders in such a company will not be less than 51 

The Premium Board

This is the listing segment for the elite group of companies that meet the listing standard. This listing segment gives a company access to a global pool of investors. It also features companies that strictly adhere to international best practices on corporate governance.

​​​​​​Companies to be on the Premium Board are to satisfy any Listing Standards of the Exchange Main Board. They are also to comply with the following:

1. The company minimum market capitalization must be NGN200 billion on the date 
2. It must be evaluated under the Exchange Corporate Governance Rating System (CGRS) and get a minimum rating score of 70%​​
3. The company must satisfy one of the following:
   1. Minimum free float requirement of 20% of its issued share capital
   2. The stated value of its free float shares is equal to/ above NGN40 billion on the date the Exchange receives its application for listing.​

Conclusion

Listing on the Nigerian stock exchange is no small deal. However, investment opportunities are quite robust. 

Also, the CAC must register any company wishing to be on the NSE as a public limited liability company.