On 3 March 2022, the Securities and Exchange Commission (SEC) released a circular providing further regulatory clarity on the procurement of "no objection" letters from issuers' primary regulators. In relevant circumstances, "no objection" letters are a prerequisite for the approval of capital market transactions by the SEC.

The circular is aimed at potential issuers that provide regulated services, especially those within the banking and insurance sector in Nigeria. It is directed at issuing houses in view of their roles as coordinators and arrangers on transactions.

Particularly, the SEC requires that "no objection" letters from primary regulators should cover the following information:

  • confirmation that no material change(s) have occurred in the financial statements of the issuer/sponsor from the last accounting year end to the date of the application;
  • the names of current members of the board of directors of the issuer/sponsor; and
  • the primary regulator's "no objection" to the proposed issuance.

Prior to the issuance of the circular, "no objection" letters from relevant primary regulators were a requirement for capital market transactions. However, there were no formal guidelines on the contents of the letters and no direct consequences attached to the absence of these letters. Accordingly, the SEC has now made clear, via the circular, that an application which is unaccompanied by a "no objection" letter from the applicant's primary regulator will be deemed incomplete and will not be processed by the SEC.

Issuing houses are advised to take note of this requirement and factor the procurement of these letters into their transaction timelines and advice to potential issuers.

For further information on this topic please contact Funmilola Aliu, Bukola Akinsulere or Ajibola Asolo at Aluko & Oyebode by telephone (+234 1 462 8360 71) or email ([email protected], [email protected] or [email protected]). The Aluko & Oyebode website can be accessed at www.aluko-oyebode.com.