The Nigerian Exchange Group (NGX), formerly known as the Nigerian Stock Exchange (NSE), is a gateway to the African capital market and one of the most recognised platforms for raising capital in Africa.
Nigeria, being the largest economy in Africa, provides unique opportunities for foreign companies to list on the NGX, gain visibility, and access a broad base of investors, both local and international.
Foreign companies looking to list on the NGX must navigate a comprehensive process that includes meeting regulatory requirements and complying with Nigerian laws such as the Investment and Securities Act (ISA) and the Companies and Allied Matters Act (CAMA).
This article outlines the steps, requirements, and costs involved in listing a foreign company on the NGX, providing examples of companies that have gone through the process, and addressing common questions and misconceptions.
By the end of this guide, you will have a detailed understanding of the steps, the documents required, the costs involved, and the legal frameworks governing the listing process.
Table of Contents
- Overview of the Nigerian Exchange Group (NGX)
- Why Foreign Companies Should Consider Listing on the NGX
- Types of Listings Available on the NGX
- Step-by-Step Guide to Listing a Foreign Company on the NGX
- Pre-Listing Requirements
- Application Process
- Post-Approval Requirements
- Legal Framework Governing the Listing Process
- Investment and Securities Act (ISA)
- Companies and Allied Matters Act (CAMA)
- Foreign Exchange Management Act (FEM Act)
- Examples of Foreign Companies Listed on the NGX
- Costs Involved in Listing a Foreign Company (With Chart)
- Required Documents for Listing
- Frequently Asked Questions (FAQs)
- Common Misconceptions About Listing on the NGX
- Conclusion
1. Overview of the Nigerian Exchange Group (NGX)
The Nigerian Exchange Group (NGX), formerly the Nigerian Stock Exchange (NSE), is a leading financial exchange in Africa.
Established in 1960, the NGX has grown to become a hub for trading equities, bonds, and other financial instruments.
With its state-of-the-art trading platform, the NGX facilitates the efficient trading of securities, helping companies raise capital for expansion and growth.
Key Features of the NGX:
- Market Capitalisation: Over $50 billion (as of 2023)
- Types of Investors: Domestic and foreign institutional investors, as well as retail investors
- Trading System: Automated Trading System (ATS), allowing fast and secure execution of trades
- Regulatory Oversight: Overseen by the Securities and Exchange Commission (SEC)
2. Why Foreign Companies Should Consider Listing on the NGX
Benefits of Listing on the NGX for Foreign Companies:
- Access to Capital: Foreign companies can tap into Nigeria’s growing investor base, which includes institutional and retail investors.
- Increased Visibility: Listing on the NGX enhances a company’s visibility in Africa, showcasing its commitment to local markets.
- Diversified Shareholder Base: Companies can diversify their shareholder base by attracting local investors.
- Improved Corporate Governance: Listing compels companies to adhere to strict corporate governance standards, making them more attractive to global investors.
3. Types of Listings Available on the NGX
Foreign companies can choose from several listing options, depending on their size, market capitalisation, and growth potential.
A. Main Board
The Main Board is designed for well-established companies that meet high financial and corporate governance standards. This board requires a minimum capitalisation, profitability, and public float.
B. Growth Board
The Growth Board caters to small and medium-sized enterprises (SMEs) and high-growth companies that may not meet the strict requirements of the Main Board but have strong growth potential.
C. Dual Listing
Companies already listed on another stock exchange can choose a dual listing on the NGX. This allows them to tap into the Nigerian investor market without delisting from their primary exchange.
4. Step-by-Step Guide to Listing a Foreign Company on the NGX
A. Pre-Listing Requirements
- Engage a Financial Adviser
A foreign company must engage a licensed financial adviser familiar with the NGX listing process. The adviser will assist with regulatory compliance and guide the company through the application process. - Meet NGX Listing Criteria
The company must meet the specific listing criteria set by the NGX, including:- Minimum market capitalisation
- A defined percentage of public shareholding
- Strong financial performance (typically profitability over the last 3-5 years)
- Corporate governance practices in line with Nigerian regulatory standards
- Legal Incorporation in Nigeria
Foreign companies must either incorporate as a subsidiary in Nigeria or Incorporate a branch to comply with the Companies and Allied Matters Act (CAMA). - Prepare Audited Financial Statements
The company must prepare audited financial statements in accordance with the International Financial Reporting Standards (IFRS). These financial statements must cover the last three years and will be reviewed by the NGX.
B. Application Process
- Submit the Application
The company will need to submit its application to the NGX, which includes documents such as its financial reports, prospectus, board resolutions, and proof of compliance with NGX listing standards. - Due Diligence and SEC Approval
The NGX and the SEC will conduct due diligence to verify the company’s financial health, corporate governance practices, and adherence to legal standards. The process can take several months, depending on the complexity of the listing. - Approval for Listing
If the application is successful, the company will receive approval to list on the NGX.
C. Post-Approval Requirements
- Initial Public Offering (IPO) or Private Placement
Foreign companies can raise capital through an IPO, where shares are offered to the public, or via a private placement, where shares are sold to selected investors. - Disclosure Obligations
Listed companies must adhere to ongoing disclosure requirements, such as publishing quarterly financial reports, holding annual general meetings (AGMs), and providing updates on material changes to their operations. - Corporate Governance Compliance
Adherence to the NGX’s corporate governance code is mandatory. Regular monitoring ensures that listed companies maintain high ethical and governance standards.
5. Legal Framework Governing the Listing Process
Several Nigerian laws and regulations govern the listing of foreign companies on the NGX. These include:
A. Investment and Securities Act (ISA)
The Investment and Securities Act (ISA) is the primary law governing the capital market in Nigeria. It establishes the Securities and Exchange Commission (SEC) as the regulator and provides the legal framework for public offerings, market conduct, and investor protection.
B. Companies and Allied Matters Act (CAMA)
The Companies and Allied Matters Act (CAMA) regulates the incorporation, operation, and dissolution of companies in Nigeria. Foreign companies must comply with CAMA by incorporating a subsidiary in Nigeria or establishing a branch.
C. Foreign Exchange Management Act (FEM Act)
The Foreign Exchange Management Act governs foreign exchange transactions in Nigeria. Companies repatriating profits or dividends from Nigerian operations must comply with this act.
D. Corporate Governance Code
Companies listed on the NGX must adhere to Nigeria’s Code of Corporate Governance, which promotes transparency, accountability, and responsible business practices.
6. Examples of Foreign Companies Listed on the NGX
A. Julius Berger Nigeria Plc
Julius Berger is a construction company with German roots, and it has been listed on the NGX since 1991. The company is known for its foreign ownership and expertise in infrastructure projects.
B. Stanbic IBTC Holdings Plc
Stanbic IBTC, a subsidiary of Standard Bank Group based in South Africa, is listed on the NGX. It has played a crucial role in the Nigerian financial sector and serves as an example of a foreign-rooted company thriving in Nigeria.
C. GlaxoSmithKline Consumer Nigeria Plc (GSK Nigeria)
GlaxoSmithKline, a UK-based pharmaceutical company, is listed on the NGX through its Nigerian subsidiary. It showcases how foreign firms can raise capital locally and expand their footprint in the Nigerian market.
7. Costs Involved in Listing a Foreign Company (With Chart)
The costs of listing a foreign company on the NGX can vary, depending on the company’s size, listing type, and associated services. Below is a chart summarising the typical costs involved:
| Cost Item | Estimated Cost (Naira) | Description |
|---|---|---|
| Financial Adviser Fees | ₦4,000,000 – ₦20,000,000 | Fees for hiring a financial adviser to guide the listing process |
| SEC Filing Fees | ₦1,000,000 – ₦2,500,000 | Fees for filing with the Securities and Exchange Commission |
| NGX Listing Fees | ₦2,500,000 – ₦6,000,000 | Fees charged by the NGX for processing the listing application |
| Legal Fees | ₦3,000,000 – ₦10,000,000 | Legal costs for compliance and documentation |
| Audit Fees | ₦2,000,000 – ₦5,000,000 | Costs for preparing audited financial statements |
| Marketing and Investor Relations | ₦2,500,000 – ₦10,000,000 | Costs related to marketing the IPO or placement |
| Miscellaneous Costs | ₦1,000,000 – ₦3,000,000 | Additional costs, including travel, lodging, etc |
| Total Estimated Costs | ₦17,000,000 – ₦58,000,000 | Total cost range for listing a foreign company |
8. Required Documents for Listing
To successfully list on the NGX, a foreign company must submit the following documents:
- Application Form: A completed application form provided by the NGX.
- Board Resolution: A resolution from the company’s board of directors approving the listing.
- Memorandum and Articles of Association: The company’s constitution and governance structure.
- Financial Statements: Audited financial statements for the last three years prepared according to IFRS.
- Prospectus: A document outlining the company’s operations, financials, and risks involved.
- Proof of Incorporation: Evidence of registration in Nigeria or the country of origin.
- Corporate Governance Policies: Documentation demonstrating adherence to corporate governance standards.
- Tax Clearance Certificates: Proof of compliance with Nigerian tax laws.
- Legal Opinion: A legal opinion confirming compliance with local laws and regulations.
9. Frequently Asked Questions (FAQs)
1. How long does it take for a foreign company to list on the NGX?
The listing process can take several months, depending on how quickly the company can meet regulatory requirements and prepare necessary documentation.
2. Can a foreign company maintain a dual listing on the NGX?
Yes, a foreign company can maintain a dual listing, allowing it to be listed on both the NGX and another stock exchange.
3. Are there any tax incentives for foreign companies listed on the NGX?
Foreign companies may be eligible for certain tax benefits and incentives depending on their industry and compliance with Nigerian laws.
4. Do foreign companies have to comply with Nigerian corporate governance laws?
Yes, all companies listed on the NGX, including foreign companies, must comply with Nigeria’s corporate governance regulations.
10. Common Misconceptions About Listing on the NGX
Misconception 1: Only Nigerian companies can list on the NGX.
Any company, regardless of its origin, can list on the NGX as long as it meets the necessary requirements and complies with Nigerian laws.
Misconception 2: Listing on the NGX is a quick process.
The process involves rigorous due diligence, legal compliance, and financial reporting, which can take several months.
11. Conclusion
Listing a foreign company on the Nigerian Exchange Group offers numerous advantages, including access to a broad investor base and increased visibility in the African market.
However, it requires thorough preparation, including adherence to local regulations and compliance with Nigerian laws such as the Investment and Securities Act (ISA) and the Companies and Allied Matters Act (CAMA).
By following the steps outlined in this article, engaging with a financial adviser, and preparing the necessary documentation, foreign companies can successfully navigate the listing process and unlock new growth opportunities in Nigeria.
