Introduction

On 29th January 2020, the Nigerian Stock Exchange (the "NSE") constituted the Growth Board, which was established as part of the NSE's initiative to elevate the Nigerian capital markets and meet the needs of businesses at every phase of their lifecycle. According to the NSE, "The Growth Board is designed to encourage growth-oriented companies with good corporate governance standards to list. It aims to encourage companies with high growth potential to seize the opportunity of raising long term capital and promote liquidity."

The objectives of the Growth Board, as set out by the NSE, are:

  • To encourage companies with high growth potential to seize the opportunity of raising long term capital and promoting liquidity;
  • To cater for various market segments and to ensure all spectrum of businesses/companies in various growth phases can be listed;
  • To highlight the benefits available in the capital market for start-ups, Small and Medium Enterprises ("SMEs") and technology companies; and
  • To provide market operators with a platform and access to a potential pipeline of companies for listing on the NSE.

However, for a company to enjoy the full benefits of the Growth Board, it must be eligible to be listed on the NSE and must comply with the NSE's listing procedures.

Eligibility Criteria for Listing

The 'Rules for Listing on the Growth Board of the Nigerian Stock Exchange' ("the Rules"), which was approved by the Securities and Exchange Commission ("SEC") on 6th May, 2019, divide the Growth Board into two segments:

  1. The Entry Segment; and
  2. The Standard Segment.

The Entry Segment is the Growth Board's platform for listing eligible entities, and financing, start-ups, small, and medium enterprises with market capitalisation between N50,000,000 (Fifty Million Naira) and N500,000,000 (Five Hundred Million Naira). The Standard Segment is the Growth Board's platform for listing eligible entities, and financing, medium-size businesses with market capitalisation between N500,000,000 (Five Hundred Million Naira) and N4,000,000,000 (Four Billion Naira) or such other amount as may be approved by the NSE from time to time.

Under the Rules, a company must meet the following eligibility criteria before it can be listed on the Growth Board:

ELIGIBILITY CRITERIA

S/N

Entry Segment

Standard Segment

Startups, Micro, Small Enterprises, Medium Businesses.

Medium, Venture Type Firms, Established Businesses.

The company should already be listed on the Main Board or Alternative Securities Market Board, or is seeking to list on the Entry Segment.

The company should already be listed on the Main Board or Alternative Securities Market Board, or is seeking to list on the Standard Segment without any prior listing.

The company must be duly incorporated as a public company limited by shares.

The company has been in operation for at least two (2) years and has:

(i) audited financial statements prepared in line with the International Financial Reporting Standards ("IFRS"); and

(ii) grown its revenue by a minimum rate of 20% (twenty per-cent) cumulatively in its last 2 (two) years of operations.

OR

is a new business that can provide evidence of investment in it by:

(i) a core investor or a strong technical partner that has a minimum of 2 (two) years' operating track record, or

(ii) a majority shareholder who is either a High Net Worth individual or is a director of a listed company.

The company has been in operation for at least two (2) years and has:

(i) audited financial statements prepared in line with the IFRS; and

(ii) grown its revenue by a minimum rate of 20% (twenty per-cent) cumulatively in its last 2 (two) years of operations.

OR

is a new business that can provide evidence of investment in it by:

(i) a core investor or a strong technical partner who has a minimum of four (4) years' operating track record, or

(ii) a majority shareholder who is a High Net Worth individual.

The company has a market capitalisation that is equal to, or is in excess of N50,000,000 (Fifty Million Naira) on the date the NSE receives the company's application to list on the Entry Segment.

The company achieves a market capitalisation that is equal to, or in excess of N500,000,000 (Five Hundred Million Naira) on the date the NSE receives the company's application to list on the Standard Segment.

Has a minimum free float of 10% (ten per cent) of its issued share capital.

Has a minimum free float of 15% (fifteen percent) of its issued share capital.

Has appointed a Designated Adviser or such other relevant professional as the NSE may prescribe from time to time.

Has a minimum of 25 (twenty-five) shareholders or such other number as may be approved by the NSE from time to time.

Has a minimum of 51 (fifty-one) shareholders or such number as the NSE deems appropriate in the circumstances.

The company is to submit a written application to the NSE and execute the General Undertaking for listing on the Entry/Standard Segment.

Undertakes to ensure that its promoters or directors retain a minimum of 50% (fifty percent) of their shares in the company for a minimum period of 12 (twelve) months from date of its listing, and that they do not directly or indirectly sell or offer to sell such securities during that period.

Download >> Listing On The Growth Board Of The Nigerian Stock Exchange

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.