The company enters the listing process via a preliminary fact-finding stage. The idea to list must be properly conceived, and the company must possess a high-level understanding of what it hopes to achieve by doing so. A company that seeks to raise funds from the capital market may approach its local banker or an issuing house about doing so. Alternatively, the process may also begin when an issuing house approaches a company with a proposal for re-capitalization through the capital market. In the second case, the benefits of public quotation should be explained, and the procedure, waiting time and associated costs of the issue should be clarified.
The company convenes board and shareholder meetings where the decision to go public is approved. These bodies then give the issuing house or financial adviser (and Designated Adviser, if the company will be listing on ASeM) a mandate to take action. Where necessary, the company’s Memorandum and Articles of Association must be amended to remove all restrictions on share transfers. The company settles on the amount of capital to be raised as well as the nature of public offering to be made..
The issuing house or financial adviser assists the company in appointing other parties to the issue, including:
Once all parties have been appointed, the company calls an all-parties meeting where functions are allocated, timelines are fixed, costs and fees are agreed upon and all the parties proceed to work and package the share issue. If need be, a second all-parties meeting is held to finalize and get the application ready.
The appointed stockbroker (also the Designated Adviser, if the company is listing on ASeM) submits the company’s application to the NSE for evaluation, along with all required fees. The NSE communicates with the stockbroker about the outcome of the application. Meanwhile, the issuing house applies to the SEC to register the shares and receives approval.
At a meeting of all parties to the issue, including the directors of the company, the offer documents are signed. These documents hold the participants individually and severally liable for all information contained in the prospectus and other offer documents. If the issue is to be underwritten on a firm basis, the underwriting proceeds are paid at the end of this meeting.
Application forms are distributed to accredited receiving agents, with the requisite number sent to the NSE for distribution to its branches and to council members. The application list usually opens for between four and six weeks in the case of a retail offer. (Companies can also opt for a book-building option.) If for any reason an extension of this period is required, the issuers request written approval from the NSE and SEC.
Once the offer period has closed, an analysis of share requests is prepared, the allotment made, and both the range analysis and allotment schedule sent to the SEC and the NSE for information purposes. All monies sent by prospective buyers as part of unsuccessful or rejected applications are returned. (Applications could be rejected because they are duplicate or, in the case of companies, if they are unsealed.) If the issue is under-subscribed, all subscribers are allotted their full share request; the balance of the security is cancelled and, if there is no standby underwriting, reverts to the authorized share capital of the issuer. If the issue subscription is under 50%, the issue is aborted. At the conclusion of the allotment process, the CSCS credits the accounts of successful shareholders, while payments of the proceeds are made to the issuer and commissions paid to receiving agents (stockbrokers and banks).
At this stage, the company prepares and delivers the following to the NSE on its letterhead: (1) Its General Undertaking (as set out in Appendix III of the Rules Governing Listing); (2) A Declaration of Compliance (see Appendix XIV of the Rules Governing Listing, with amendments to suit the method of offer)
On the day of the listing, a briefing on the importance of adhering to the post-listing requirements of the NSE is held for the company’s executives and registrar. Following the briefing, the shares are listed, with a ‘facts behind the listing’ presentation held at the close of the day’s trading.
Wherever you are in your growth phase, whatever the funding needs, there’s an available market! The Nigerian Stock Exchange (NSE) lists companies on three boards: Premium Board, Main Board and the Alternative Securities Market (ASeM), which are govern by the NSE listing rules. The board your company lists on depends on its size, scope and growth stage.
The Premium Board is for an elite group of issuers that meet stringent corporate governance, capitalisation and liquidity criteria and provides them with unparalleled visibility to the global investor community.
The Main Board consists of our larger companies. Admittance to this board is based on profitability or market capitalization criteria.
For high-growth emerging businesses seeking a safe and efficient capital raising platform, the ASeM board provides flexible requirements and a range of supporting services.
The requirements relate to factors such as spread of ownership, the number of shareholders, market capitalisation, operating and financial records.