By Abubakar Yunusa
The Securities and Exchange Commission has proposed a new African Depositary Receipts framework to attract foreign companies and boost cross-border investments in Nigeria’s capital market.
The proposal is contained in the Nigerian Capital Market Master Plan 2.0, which outlines measures to position Nigeria as a leading capital-market hub in West Africa.
Under the framework, foreign companies unwilling or unable to undertake full secondary listings on Nigerian exchanges would be able to raise funds from local investors through depositary receipts.
The document recommends streamlined regulatory approvals, introductory listing-fee incentives, cross-border settlement and custody arrangements, as well as tax neutrality to encourage participation.
It also proposes a structured pathway for companies issuing depositary receipts to transition to full secondary listings on Nigerian exchanges.
Depositary receipts are financial instruments that allow investors to gain exposure to shares held in another market through instruments traded in their domestic market.
The SEC said the initiative formed part of a broader strategy to expand investment opportunities, attract foreign issuers and strengthen links between African capital markets.
The master plan recommends establishing regional regulatory reliance and prospectus passporting arrangements with peer regulators to simplify cross-border fundraising and eliminate duplicated approval processes.
Potential partners identified in the document include the African Securities Exchanges Association, African Exchanges Linkage Project, Bourse Régionale des Valeurs Mobilières and the Conseil Régional de l’Épargne Publique et des Marchés Financiers.
The commission also proposed a regional capital-market integration strategy aligned with the African Continental Free Trade Area to strengthen Nigeria’s position in West Africa.
A dedicated working group comprising the SEC, Nigerian Exchange Group, FMDQ and Central Securities Clearing System is proposed to drive the initiative.
The master plan further recommends a cross-border listing framework covering foreign companies seeking to list in Nigeria and Nigerian firms seeking access to regional exchanges.
It proposes amending listing rules to allow foreign companies with secondary listings to meet free-float and trading-volume requirements using their combined global shareholder register.
A dual-currency listing framework is also proposed to facilitate regional capital raising and attract international investors.
To reduce delays, the SEC plans to modernise its review processes by aligning approval timelines with the assessment schedules of securities exchanges.
The document also calls for a review of prospectus, disclosure and listing requirements to make them more competitive and proportionate to market needs.
Other recommendations include reducing issuance fees and ongoing compliance costs, introducing targeted financial and tax incentives for new listings, and shortening regulatory approval timelines.
The proposals are aimed at widening access to Nigeria’s capital market and making it easier for companies across Africa to raise funds from investors beyond their domestic markets.
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