The NGX Technology Board – Access to Capital for Tech Companies?
The Securities and Exchange Commission (SEC), on Monday, 19 December 2022, approved new rules for the listing of tech companies on the Nigerian Exchange Limited’s (“NGX”) Technology Board (“NGX Technology Board” or “Board”). This presents good news for technology-inclined companies, as it enhances the ability of start-ups and established companies in the tech space to readily access long-term capital/funding from the capital market.
What is the NGX Technology Board?
The NGX Technology Board is a specialized platform for technology-based companies to list and raise capital to scale up their business and meet their financial goals. This welcomed innovation unlocks greater visibility for indigenous technologically inclined companies and promotes investments from qualified institutional investors, retail investors, and high-net-worth investors all over the world.
How are Tech Companies Listed?
The NGX Technology Board is divided into Two (2) Segments: Start-Up Tech Segment and Big Tech Segment
- Start-Up Tech Segment: the “Start-Up Tech Segment” lists eligible entities, financing start-ups, and other fintech companies with market capitalization between Four Hundred and Twenty Million Naira and Forty-Two Billion Naira
- Big Tech Segment: the “Big Tech Segment” lists eligible entities and financing technology companies with market capitalization above Forty-Two Billion Naira.
Migration Between Listing Segments
A tech company listed in the Start-Up Tech segment may apply to be transferred to the Big-Tech segment upon meeting the criteria. Conversely, a tech company listed in the Big-Tech segment may be transferred to the Start-Up Tech segment if it is unable to maintain the eligibility conditions.
Statutory Obligations on the Listed Companies
Listed companies are evaluated by the Board annually or at other intervals to evaluate eligibility. To retain its listing, the tech company shall comply with quarterly filings, annual reporting and minimum corporate governance requirements as well as other listing obligations. The company is also required to maintain a minimum free float fully paid share capital requirement of 5% and 10% for Start-Up Tech and Big-Tech, respectively.
Sanctions For Failure To Comply With The Rules
Companies listed by the Board are expected to be in full compliance with the listing rules. Defaulting companies in the Start-Up segment are expected to pay Ten Thousand Naira per day for the first ninety calendar days of non-compliance, following which their securities shall be suspended from trading on NGX until the accounts are submitted. Defaulting companies in the Big Tech segment, are expected to pay Twenty Thousand Naira per day for the first ninety calendar days of non-compliance following which their securities shall be suspended from trading on NGX, until the accounts are submitted.