INTRODUCTION
Asset management companies are integral components of Nigeria’s investment ecosystem. They invest pooled funds of capital on behalf of their clients and develop the capital through diverse investments in various asset classes such as stocks, bonds, real estate, and master limited partnerships.
The Securities and Exchange Commission (‘’SEC’’) is the primary regulator of asset management companies in Nigeria. This is line with section 3(3)(f) of the Investment and Securities Act 2025 (“ISA”). SEC’s key mandate or objectives are: (i) to protect investors, (ii) maintain fair and efficient markets, and (iii) ensure the integrity of the Nigerian capital market.
To achieve these objectives, the ISA requires all capital market operators to register with SEC. Given the nature of their functions as fund or portfolio managers, asset management companies are capital market operators.
It is unlawful to operate as an asset management company in Nigeria without the authorisation of SEC. Such unauthorised operations may attract regulatory sanctions such as fines or even imprisonment.
Accordingly, obtaining the requisite license is not only a badge of trust for asset management companies from the viewpoint of investors and the public, it is also a legal duty. The subsequent parts of this article examines the licensing requirements for asset management companies in Nigeria.
LICENSING REQUIREMENTS FOR ASSET MANAGEMENT COMPANIES
Corporate Affairs Commission Registration
All entities which desire to carry on the business of asset management must be incorporated with the Corporate Affairs Commission. The Memorandum and Articles of Association of such companies are required to clearly indicate that they would be providing asset management services.
Minimum Paid-Up Capital Requirement
The minimum paid-up capital requirement for asset management companies is dependent on the tier under which the company is categorised. For instance, for Tier 1 asset management companies, the minimum paid-up capital requirement is N5 billion. For Tier 2 asset management companies, the minimum paid-up capital requirement is N2 billion. For Tier 3 asset management companies, the minimum paid-up capital requirement is N500 million and N200 million respectively.
Fidelity Insurance Bond
A company desiring to obtain an asset management licence must provide evidence of a Fidelity Insurance Bond covering at least 20% of its minimum paid-up capital. A Fidelity Insurance Bond is a type of business insurance that offers an employer protection against losses that are caused by its employees’ fraudulent or dishonest actions.
Sponsored Individuals
The company is required to have at least 3 sponsored individuals. These sponsored individuals will include the Managing Director and a Compliance Officer who shall be responsible for monitoring the company’s compliance with all applicable laws. The sponsored individuals must be registered with SEC and partake in a pre-registration training and examination. They are also required to submit the following documents – copies of duly executed employment letters, curriculum vitae, copies of credentials including valid means of identification, work/resident permit (for aliens) etc.
Filling, Execution and Submission of Required Forms
As part of the registration process, the company would be required to provide certain information to SEC. The SEC forms required for registration are: (i) Form SEC 3 (Application form for registration of broker/dealer, corporate investment adviser, fund/portfolio Managers, and other corporate entities); (ii) Form SEC 2 (Application form for registration of sponsored individuals); (iii) Form SEC 2D for Application form for fit and proper persons (Sponsored Individuals, Directors/Partners) for registration in the capital market; and (iv) Form SEC 2B2 (Application form for transfer/change of status of registered individuals), where applicable.
