Introduction
The objective of this project was to produce a report on the legal and regulatory framework governing capital markets in Nigeria, identifying any gaps that may restrict the deepening of these markets, providing recommendations and suggested actions to address these areas3 focusing on issues of financial openness, market development and quality of regulation that, if adopted, will contribute to the deepening of the Nigerian capital markets.

The project is led and managed by the Law Society of England & Wales, working closely with the Nigerian Capital Markets Solicitors? Association (CMSA). Together, they established a project working group4 of leading UK and Nigerian expert practitioners in this field.

The findings and recommendations are based on a wide-reaching consultation encompassing discussions with regulatory and governmental bodies, the private sector and other professions and advisors, both within Nigeria and overseas, particularly the UK5 .

The report addresses topics including debt and equity issuances, the regulatory framework governing the same and the cost of issuance. This project has the potential to make a positive impact in three significant areas:

(i)                Deeper capital markets in Nigeria will provide Nigerian businesses with an alternative source for capital, provide business opportunities for foreign companies and create additional long-term investment opportunities for domestic Nigerian investors.

(ii)                The Nigerian economy will benefit from a more developed and successful capital markets sector and foreign companies will be able to invest in Nigeria with increased confidence and certainty.

(iii)                Collaboration with Nigerian capital markets lawyers will also contribute to building legal capacity in the country which will support greater investment activity in Nigeria in the long-term

The commencement of the FCO initiative coincided with the finalisation of a year-long project sponsored by the Securities and Exchange Commission in Nigeria to devise a ten year plan aimed at increasing the depth of the Nigerian capital markets, boosting foreign direct investment and more.

This culminated in the launch of the Nigerian Capital Markets Master Plan 2015 – 2025, during the 4th Annual Capital Market Retreat at Abuja in November 2014. The Master Plan identifies areas for development and sets out a framework for achieving the desired objectives.

Although the conclusions of this project’s working group have been reached independently, we note that they are aligned with the recommendations and objectives contained in the Capital Markets Master Plan.

It is worth noting that steps taken towards achievement of the recommendations in this report will not only facilitate the realisation of the FCO objective to create new opportunities in the capital markets in Nigeria for UK and Nigerian financial services participants but also contribute to the realisation of the objectives of the Capital Markets Master Plan.

Background and methodology
 This report is a product of extensive consultation with various entities in Nigeria including the regulatory authorities. The Working Group engaged with various stakeholders in Nigeria to consider their experience in participating in the Nigerian capital markets, the challenges they face and the incentives that will drive greater participation.

The views received provided a context for the analysis by the Working Group of the legal and regulatory framework for capital markets operations in Nigeria as well as factors inhibiting the growth of the market. Wide consultation with a range of stakeholders was also critical for considering the implementation strategies for the report’s recommendations.

In compiling the report, we have, where appropriate, compared the Nigerian legal, regulatory or operations framework with the equivalent framework in the UK and identified any gaps that a further project can contribute to filling. In making our assessment of the areas of concern to be addressed, we have taken account of criteria used in various international guides in comparing the attractiveness of capital markets in countries worldwide.

In particular, we have made reference to the Global Competitiveness Report 2014/2015, the PRS Group/International Country Risk Guide 2014 and the World Bank’s Ease of Doing Business Report 2014.

This report identifies core issues affecting the facilitation of growth in the Nigerian capital markets. For the purposes of the report, these issues have been classified under four themes (I) integrity of the markets; (II) regulatory infrastructure; (III) market incentives and barriers (IV) diversity and market development.