Those who want to source funds or capital for business in Nigeria may have a difficult time getting what they want. Securities Exchange Commission (SEC) has brought up a new rule that demands intermediaries to have 100 million naira paid-up capital.
This not surprising, because, for some years, there have been calls for crowdfunding regulations. Promoters of such regulations said that it would protect investors who are sometimes made to lose their investments.
Imagine a situation in which a company collects money from thousands of investors and later disappears into thin air. If properly regulated, crowdfunding will see more clear guidelines for genuine companies that look to raise funds for the business.
Last year, SEC released an exposure draft that had guidelines for investors and crowdfunding companies. That was the first time stakeholders tried to impose a real guideline after having had many discussions about it. However, it took SEC almost a year to release a solid guideline. This was done in the month of January 2021.
Some parts of the rules look disturbing to some people. For example, Only an MSME incorporated in Nigeria with a minimum operating track record of two years can raise funds through a crowdfunding portal operated by a duly registered crowdfunding intermediary.
Once a business meets this demand, there is also a fundraising limit, which stipulates that medium enterprises can’t raise more than 100 million naira, small enterprises 70 million naira, and micro-enterprises 5o million naira.
Nonetheless, these limits don’t affect commodities investment platforms. With the guidelines in place, it means that corporate bodies like PiggyVest, Pettysave, FarmCrowdy, and others will be registered as crowdfunding intermediaries. Experts say that the new regulations are important and will protect investors in Nigeria.
With the new guidelines in place, investors will also be able to learn more about the risks they face when investing, and how to minimize such risks.