In a bid to protect the general public when investing in crowdfunding platforms for underlying Micro, Small, & Medium Enterprises ("MSME"s), the SEC recently released a draft of the Proposed Rules on Crowdfunding (the "Rules").

The Rules define crowdfunding as the process of raising funds from the public through an online platform ("Crowdfunding Portal") to finance a project or business.

  • It provides that all MSMEs incorporated as a company in Nigeria with a minimum of two-years operating track record can raise funds through a Crowdfunding Portal in exchange for the issuance of shares, debentures, or such other investment instrument as the SEC may determine.
  • Complex structures, public listed companies and their subsidiaries, companies with no specific business plan or a blind pool cannot raise money through a crowdfunding portal.

Read our alert for more: Download PwC Regulatory Alert_SEC Publishes Exposure Draft on Crowdfunding Rules_April2020

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