Markets
Nigeria: the price is approved before the offer is made
A conversion price referenced to future market prices is not available to a company listed on the Nigerian Exchange, and neither is a standby equity facility. Securities are registered with the Securities and Exchange Commission and the offer documents cleared before the offer is made, so terms including price are settled in a document that is approved in advance.
Key takeaways
- Approval comes first, and price is part of it. The Nigerian regime registers the securities and clears the documents before the offer reaches an investor. A number that is unknowable until a future conversion cannot be in that document.
- The statute was replaced in 2025. The Investments and Securities Act 2025 repealed the Investments and Securities Act No. 29 of 2007, and the Commission has issued successive rule packages beneath it, including in December 2024 and April 2025.
- Every number in circulation is now suspect. Caps and approval periods widely quoted from the 2013 consolidated rules pre-date both the new Act and the amendments. Treat them as leads, not as terms.
- Convertibles are not banned; refixing is simply unreachable. The available Nigerian instrument is a fixed-price convertible whose terms are stated in the approved documents.
What changed in 2025, and what did not
The Investments and Securities Act 2025, signed on 29 March 2025, repealed the Investments and Securities Act No. 29 of 2007 — a full replacement of the statute that had governed the Nigerian market for eighteen years. Beneath it the Securities and Exchange Commission has been layering amendments onto the 2013 consolidated rulebook, with packages issued in December 2024 and again in April 2025, the latter including new rules on the issuance and allotment of private companies' securities.
What did not change is the shape. Nigeria is a prior-approval market: the Commission registers securities and clears the offer documents, and the exchange admits the resulting shares by supplementary listing. An issuer or an adviser working from a 2019 memorandum is now working from two generations of superseded material, and the first practical step in any Nigerian financing is to re-derive the rule references rather than inherit them.
Why prior approval and a refixing price cannot coexist
The incompatibility is structural rather than prohibitory. In a registration regime the regulator is asked to approve a described transaction: these securities, this many, at this price, to these people. A conversion price set as a discount to a trailing average measured at some future date describes a method, not a price, and the number it will produce depends on trading that has not happened. The document cannot state it, so the approval cannot cover it.
The same reasoning removes the standby facility. A facility is a promise to subscribe repeatedly, on the issuer's demand, at prices determined one at a time. In Nigeria each of those subscriptions is a separately registered transaction. Repeating that cycle every time an issuer wants working capital is not a facility; it is a series of deals with the tempo of a rights issue. Nigeria therefore sits with Kenya and Egypt, where the regulator approves each offering, rather than with South Africa, where a standing shareholder authority does the work.
| Not available | Available instead |
|---|---|
| Conversion price refixing to future VWAP | Fixed conversion price stated in the approved documents |
| Drawdown on the issuer's demand | A separately registered private placement for each raise |
| Pricing agreed after approval | Pricing settled in the filing, then approved |
| Immediate certainty on repatriation | Inflow documented through an authorised dealer bank |
| Structural summary. Not an offer, a quote, or a rate card. | |
Pre-emption is not the obstacle here
An adviser reasoning from company law will look for a subscription right to disapply and not find one. Section 142(1) of the Companies and Allied Matters Act 2020 originally gave shareholders of both private and public companies the right to be offered new shares pro rata. The Business Facilitation (Miscellaneous Provisions) Act, signed in February 2023, inserted the word "private" into that subsection, so statutory pre-emption reaches private companies only. What binds a listed Nigerian issuer is the Commission's prior approval, not its own register — unlike Egypt, where waiving pre-emption is where the pricing safeguard sits.
What a Nigerian Exchange issuer can actually do
The conventional routes remain open and are not trivial: a rights issue to existing holders, an offer for subscription to the public, an offer for sale by existing holders, or a private placement to selected investors, each registered and each followed by a supplementary listing on the Nigerian Exchange. The Premium, Main and Growth boards carry different continuing obligations, and unlisted public companies trade through NASD OTC.
For a foreign investor the securities question is only half the exercise. Capital imported for investment is documented through an authorised dealer bank, and that documentation is what supports a later transfer of dividends, interest or divestment proceeds out of the country. An investor pricing a Nigerian position is pricing convertibility as much as credit, and the timetable for the second is not in the issuer's control.
For the instrument as it is used in markets that permit a moving price, see convertible notes for listed issuers and private placements by public companies; for the separate resale question a US register creates, see Rule 144 and restricted securities. Check which listings we can work with before drafting.
General information, not legal advice. This page states the architecture of the Nigerian regime rather than rule numbers, because the Investments and Securities Act 2025 and the 2024 and 2025 rule amendments have displaced much of the previously published detail. No threshold, cap or approval period should be relied on until it has been read in the Commission's current consolidated rules. Take advice from qualified Nigerian counsel.
Primary sources
- Investments and Securities Act, 2025 — text published by SEC Nigeria
- Securities and Exchange Commission Nigeria — rules and regulations, including the 2024 and 2025 amendments
- SEC Nigeria — modes of public offering in the capital market
Financing an NGX issuer: frequently asked questions
Why can a Nigerian listed company not use a floating conversion price?
Because the price is part of what gets approved. Nigeria runs a prior-registration regime in which securities are registered with the Securities and Exchange Commission and the offer documents are cleared before the offer is made. A conversion price that will only be knowable at some future conversion date cannot be stated in a document that has to be approved first, and no Nigerian provision permitting a price to refix against future market prices was located.
Are convertible instruments prohibited in Nigeria?
No. Nothing found prohibits a Nigerian public company from issuing a convertible security. The available form is a fixed-price convertible whose terms, including the conversion price or a formula fully determined at the outset, are set out in the documents filed with the Commission. That is a different instrument from the one this site describes elsewhere, and it should be priced as one.
Which rules actually apply after the Investments and Securities Act 2025?
The Act itself repealed the Investments and Securities Act No. 29 of 2007, and the Commission has issued successive rule amendments beneath it, including packages in December 2024 and April 2025. The consequence for an issuer is practical: any threshold, cap or approval period quoted from the 2013 consolidated rules should be checked against the current consolidated text before it is relied on in a term sheet.
What is the real obstacle for an offshore investor?
Currency, once the securities question is settled. Capital brought into Nigeria for investment is documented through an authorised dealer bank, and evidence of that inflow is what supports a later transfer of dividends, interest or divestment proceeds out of the country. The securities can be admitted to the Nigerian Exchange by supplementary listing and trade normally; getting the proceeds home is the separate exercise.
What is available instead
The available Nigerian instrument is a fixed-price convertible with its terms written into the documents the Commission clears before the offer is made. That is a real instrument rather than a consolation, and it is sized like one. South Africa applies the same fix-at-issue discipline under a published rule.