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.
