April 17, 2026/CSL Update
The Securities and Exchange Commission (SEC) of Nigeria has introduced a proposed regulatory framework to govern the public offering of securities by Free Trade Zone Entities (FTZEs), marking a notable expansion of participants in the country’s capital markets. The framework creates a structured pathway for FTZEs to access public funding, specifically targeting companies operating within designated free zones and licensed by authorities such as the Nigeria Export Processing Zones Authority and the Oil and Gas Free Zones Authority.
By requiring prior SEC approval and full compliance with the Investment and Securities Act 2025, the rules bring these previously ring-fenced entities into the formal securities market while maintaining clear boundaries by excluding firms that are not genuinely based within free zones.
The framework also introduces stringent eligibility requirements for FTZEs seeking to raise capital publicly. Applicants must demonstrate a minimum of three years’ operational history, including at least two years of core revenue-generating activities within a designated free zone, and maintain a minimum paid-up share capital of ₦7.5 billion. In addition, firms are required to evidence experienced and competent senior management, reflecting a strong emphasis on corporate governance and operational capacity.
Notably, FTZEs that proceed to list will become subject to Nigeria’s tax regime, marking a shift away from the traditional tax incentives associated with free zone operations, and must comply with ongoing disclosure and reporting obligations in line with SEC standards. The registration and approval process is comprehensive. Prospective issuers are required to submit detailed documentation, including proof of licensing, shareholder structures, and board composition.
A mandatory “No Objection” letter from the relevant free zone authority further reinforces regulatory coordination. In addition, all securities issued under the framework must be listed on a recognised exchange, ensuring transparency, liquidity, and accessibility for investors.
For equity investors, the inclusion of FTZEs expands the investable universe to encompass export-oriented, manufacturing, and energy-linked businesses that have historically operated outside mainstream market structures. This development has the potential to enhance portfolio diversification and provide exposure to sectors with strong foreign exchange earnings capacity.
At the market level, it is expected to deepen liquidity, broaden sector representation, and increase overall market capitalisation, supporting Nigeria’s longterm capital market development.
From a broader perspective, the framework signals a shift toward tighter regulatory oversight of FTZ-based companies, aligning them more closely with fully regulated public entities. It also brings Nigeria in line with international precedents, such as the Dubai International Financial Centre and the Shanghai Free-Trade Zone, where free zone entities are integrated into wider financial ecosystems through controlled access to capital markets.
Overall, the SEC’s proposal represents a measured and strategic expansion of the market. While implementation challenges may arise, particularly around compliance costs and inter-agency coordination, the framework has the potential to enhance market depth, improve investment quality, and strengthen Nigeria’s attractiveness to both domestic and international investors.
Click here to download full report: CSL Nigeria Daily – 17 April 2026 – Capital Market.pdf
