From Private to Public: A Comprehensive Guide to Listing on the Nigerian Exchange Group (NGX)

By O.I.D. Legal Consult

Introduction: Beyond Private Boundaries

The transformation of a private company into a public company is one of the most profound transitions in the corporate world. It is not merely a change of legal status; it is a strategic leap into a broader, more competitive, and more transparent marketplace. For many businesses, this step marks the beginning of a new chapter — one defined by greater access to capital, enhanced corporate reputation, and a place in the economic limelight.

In Nigeria, this pathway to public ownership is anchored on the regulatory infrastructure provided by the Corporate Affairs Commission (CAC), the Securities and Exchange Commission (SEC), and the Nigerian Exchange Group (NGX). Each plays a distinct yet interconnected role, ensuring that companies seeking public status meet stringent corporate governance standards and are well-prepared for the demands of the capital market.

However, going public is not a decision to be taken lightly. It demands a deep understanding of the legal framework, operational readiness, financial strength, and the cultural shift from private decision-making to public accountability.

Understanding the Legal and Regulatory Foundation

The primary legal framework for company conversion in Nigeria is the Companies and Allied Matters Act (CAMA) 2020. Under CAMA, a private company is characterized by its restriction on share transfers, a maximum of 50 shareholders, and relatively limited disclosure obligations. A public company, on the other hand, has no such ceiling on ownership, enjoys the liberty to invite the public to subscribe for its shares, and is subjected to higher disclosure and governance requirements.

When a private company decides to list on the NGX, it embarks on a two-stage process:

1. Conversion to a Public Company – This involves corporate restructuring, shareholder resolutions, and compliance with CAC re-registration requirements.

2. Admission to the NGX – This stage involves meeting the specific listing criteria of the NGX, preparing offering documents, and undergoing regulatory review by both the SEC and the NGX.

The CAC oversees the legal transformation, the SEC ensures the offering meets investor protection and transparency standards, and the NGX enforces operational, governance, and market performance benchmarks.

The Strategic Rationale for Going Public

A private company might seek public listing for several strategic reasons. Foremost among these is capital access. Public offerings — whether through an Initial Public Offering (IPO), direct listing, or subsequent capital raises — open the door to deep pools of equity funding unavailable in private settings.

Beyond financing, going public can deliver:

• Liquidity for Shareholders: Existing investors can sell shares in the open market, realizing gains without the need for private buyouts.

• Corporate Visibility: Being listed on the NGX enhances brand credibility, making the company more attractive to partners, clients, and skilled professionals.

• Stronger Governance: Public companies operate under rigorous governance codes, improving investor confidence and operational discipline.

• Market Valuation: A listed company’s share price provides an ongoing market valuation, useful for mergers, acquisitions, and strategic negotiations.

However, these benefits come with heightened obligations: regular financial reporting, continuous disclosure of material events, and vulnerability to market fluctuations and shareholder activism.

The Road to Public Status: Process and Requirements

1. Board and Shareholder Consent: The process begins internally. The board must pass a resolution proposing the conversion, followed by a special resolution from shareholders approving the shift to a Public Limited Liability Company (Plc).

2. CAC Re-Registration: The company submits to the CAC:

• Amended Memorandum and Articles of Association removing restrictions on share transfers and allowing public share subscriptions.

• The special resolution authorizing the conversion.

• Updated statutory forms and payment of prescribed fees.

  
  

3. Capital Restructuring: A Plc must have a minimum issued share capital of ₦2 million. For NGX listing, the requirements are more demanding, depending on the board — for example, a company seeking the Premium Board must have a market capitalization of at least ₦4 billion and a 20% public float.

4. Corporate Governance Preparation: The NGX requires compliance with the Nigerian Code of Corporate Governance. This may entail reconstituting the board to include independent directors, establishing audit and remuneration committees, and adopting formalized governance policies.

5. Financial Reporting and Due Diligence: Prospective issuers must prepare audited financial statements — typically covering at least two years of operations (for the Growth Board) or more for other boards — ensuring that they meet International Financial Reporting Standards (IFRS). Independent auditors must verify the accuracy and completeness of these statements.

6. Appointment of Professional Advisers: Going public is a multidisciplinary effort requiring the expertise of:

• Legal Advisers – to navigate regulatory compliance.

• Issuing Houses/Financial Advisers – to structure the offering and coordinate the listing process.

• Auditors – to validate financial disclosures.

• Stockbrokers – to facilitate market dealings.

  
  

7. SEC Review and NGX Admission: The company files a prospectus with the SEC, detailing business operations, risk factors, management structure, and use of proceeds. The SEC conducts a merit-based and disclosure-based review. Once approved, the NGX processes the application for admission to its chosen board.

NGX Listing Boards: Matching Profile to Platform

The NGX operates three main equity boards:

• Growth Board – Targets small and mid-sized companies with high growth potential but limited track record; requires a minimum market capitalization of ₦50 million and 10% public float.

• Main Board – Designed for established companies with a minimum market capitalization of ₦500 million, at least 15% public float, and a proven operational record.

• Premium Board – Reserved for blue-chip companies meeting the highest governance, capitalization, and disclosure standards, with a minimum ₦4 billion market capitalization and 20% public float.

The choice of board determines not only entry requirements but also the company’s market perception and investor base.

The Cost Dimension

Listing is a significant financial undertaking. Companies must budget for NGX listing fees (often based on market capitalization), SEC fees, professional service costs, public relations and marketing campaigns, and ongoing compliance expenses. These are investments in market access, but companies must ensure that their post-listing performance justifies the initial outlay.

Post-Listing Obligations

Once listed, a company’s responsibilities extend beyond trading day one. It must:

• Publish quarterly and annual financial reports.

• Disclose material events promptly (e.g., mergers, changes in management, litigation).

• Maintain governance standards required by the NGX and SEC.

• Sustain investor relations through transparent communication.

Failure to meet these obligations can result in sanctions, fines, or suspension from the exchange.

Conclusion: A Journey of Preparation and Discipline

The road from private to public ownership is demanding, but for companies with the right fundamentals, it is a gateway to unprecedented opportunities. Listing on the NGX can accelerate growth, attract strategic investors, and solidify market leadership — but only when undertaken with careful planning, strong corporate governance, and experienced legal and financial guidance.

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