Unveiling the Securities and Exchange Commission Regulations for Crowdfunding


The Securities and Exchange Commission (SEC or the Commission) recently published its exposure draft of rules for the regulation of the currently unregulated crowdfunding activities in Nigeria. The Proposed Rules detail the regulatory framework by which companies can raise debt or equity capital through crowdfunding, as well as the eligibility criteria and obligations of issuers, crowdfunding portals and crowdfunding intermediaries.

Under the Proposed Rules, Crowdfunding is defined as the process of raising funds to finance a project or business from the public, through an online platform. All micro, small and medium scale enterprises (MSMEs) incorporated as a company in Nigeria with a minimum of two-years operating track record are eligible to raise funds through a Crowdfunding Portal registered by the Commission, in exchange for the issuance of shares, bonds/debentures, simple investment contracts or such other investment instrument as the SEC may determine from time to time.

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