The revised capital markets framework changes how growth companies raise money in Nigeria. Here is what founders should be doing about it now, not at the point of a raise.
For most founders, capital markets regulation feels like something that only matters at the point of a listing. That assumption is expensive. The revised framework touches the instruments growth companies already use — convertible notes, SAFE-style instruments, employee share schemes and private placements — and it does so well before anyone reaches the size of a public offering.
Where the framework actually bites
The practical change is one of classification. Instruments that companies have historically treated as ordinary contractual arrangements can now fall within the definition of a security, which pulls filing, disclosure and intermediary requirements along with them. The question is no longer whether you intend to run a public raise; it is whether the instrument you have signed carries the characteristics the regulator looks for.
- Convertible instruments issued to more than a narrow group of investors
- Employee share and option schemes that vest into transferable equity
- Private placements marketed beyond a defined circle of qualified investors
- Revenue-share and profit-participation arrangements dressed as commercial contracts
The cost of finding out late
Classification issues rarely surface at the time of the raise. They surface in diligence, when a lead investor asks for the register of allotments and the paperwork does not reconcile with what was actually issued. At that point the company is negotiating a remediation plan under time pressure, with the term sheet as leverage against it. Remediation is almost always cheaper before the money is on the table.
Clean cap tables are not a legal nicety. They are the difference between a diligence process that takes three weeks and one that takes three months.
What to do now
Start with an instrument audit. Pull every document under which someone has a claim on equity — signed, promised or implied by email — and map it against the register. Where the two disagree, fix the register rather than the memory of the conversation. Second, decide your investor circle deliberately. The distinction between a targeted private placement and a general offer is a matter of how you market, not how you label the document.
Finally, build the disclosure discipline early. Companies that keep board minutes, resolutions and allotment records current treat a raise as an administrative exercise. Companies that do not treat it as an archaeology project, usually at the worst possible moment.
This article is general commentary, not legal advice. Speak to our team about how it applies to your circumstances.
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