How To Register As Fund Manager in Nigeria

Last updated on April 20th, 2022 at 08:02 am

There are requirements anyone or a firm must meet to start as a fund manager in every territory and of course, Nigeria isn’t an exception. The guidelines are clearly spelt out by one of the agencies under the Ministry of Finance, the Securities and Exchange Commission (SEC).

The guidelines and requirements are to have sanity in the portfolio and fund management sector in the country.

Not only that but it’s also expected that such regulations would enable the SEC to monitor the activities of fund managers, reduce the number of collapsed fund managers in Nigeria and quickly issue warnings to investors if anything awry is in the offing.

But…

Who is a Fund Manager?

A fund manager is a firm or someone who is responsible for implementing a fund’s investment strategy and managing the trading activities of investors.

They do this by bringing to the fore their verse knowledge of the capital and stock market and the right investment that would bring a fair Return On Investment (ROI).

Note: When a fund manager lures their investors with 20%, 30%, 40% or 50% ROI within 30 days, that’s a Ponzi scheme.

That said, if you are thinking of setting up a fund management company in Nigeria, you must obtain two important documents: 1) evidence of company registration with the Corporate Affairs Commission (CAC), 2) operation license from SEC

Requirements to Obtain Fund Manager Operating Licence in Nigeria

As earlier pointed out, obtaining a CAC certificate is the first hurdle of registration, the most tedious aspect of the registration is getting approval from the SEC.

We all know why this is so: it has to do with handling billions of naira or dollars in investors’ money.

So such application has to be scrutinized to ensure that there are no loopholes and for the interest of potential investors who may be planning to invest their life savings as we’ve seen in the latest collapse of Chinmark Investment Group and Ovaioza Farm Produce Storage Business owned by a woman who was believed to have swindled investors money worth over NGN3 billion

Are you ready?

Note: You may spend more than what is stated below because we’ve not included logistics and other exigencies.

Below are the requirements to register as a fund manager in Nigeria

The registration is divided into major parts: payment, forms, sponsored individuals directors among others.

Financial Requirements

Note: Minimum paid-up capital refers to bank balances, fixed asset or Investment in quoted Securities)

Sponsored Individuals and Directors

1) There must be a minimum of three sponsored Individuals. One of them shall be the compliance officer

Note

The compliance officer shall be responsible for monitoring compliance with the ISA 2007, Rules and Regulations, notifications, guidelines, instructions etc. issued by the Commission or the Federal Government.

2) Managing Director of the Company to be among the sponsored individuals

3) Postal addresses of immediate previous employers, bankers (with Current Account number)

4) Nominated referees of sponsored individuals

5) Detailed curriculum vitae of sponsored individuals and Directors

6) The CV must include details of activities arranged from Secondary School to date with dates. It must also include employment and educational history should be explained.

7) Copies of credentials of sponsored individuals including secondary school and NYSC discharge certificates. Originals must be made available for sighting by SEC

8) Evidence from the Sponsored Individuals of having a minimum of four years post-graduation experience to perform the Portfolio or Fund Manager Function as stipulated by the Commission`s Rules and Regulations

9) Police clearance report for each Sponsored Individual (Check our guide on how to apply for a police clearance report in Nigeria)

10) Also, each sponsored individual is expected to report to the SEC head office in Abuja or the Lagos zonal office.

11) The sponsored individuals must take along two recent passport photographs to commence the process

12) Copy of means Identification of the Directors and the Sponsored Individuals of the Company (International Passport, tax or utility payment documents are accepted)

Forms

We expect the commission to have made the filling of the form online, at the time of publication, fund manager applicants are expected to obtain and filling the following forms:

• Duly Executed Form SEC 3 for the Company
• Form SEC 2 and 2D for Sponsored Individuals/Compliance Officers which must be completed in duplicates
• Form SEC 2 and 2D for Directors of the Company which must be completed in duplicates

Applicant Company

1) The profile of the Company should include the following:

• brief history of the company
• organizational structure
• shareholding structure
• principal officers
• details of past and current activities

 2) names and addresses of the company’s subsidiaries/associated companies

3) type of business

4) percentage holding

5) evidence of Payment of shares allotted to the shareholders

6) operational manual or organizational chart of the company

7) Business Plan (Note: There is a difference between a business plan and a proposal)

8) Bank statement of accounts operated by the Company for the last 6 months

Corporate Documents

Other corporate documents to include in your application are

1) Duly certified copy of Certificate of Incorporation from CAC

2) Memorandum and Articles of Association – this should include the power to perform the specified function

3) Sworn undertaking to keep proper records and render returns as may be specified by the Commission from time to time signed by a director or the company secretary (to be notarized)

4) CAC Form(s) showing Statement of Share Capital, Return of Allotment, and Particulars of Directors

5) Latest audited accounts or audited statement of affairs of the company

6) Sworn undertaking to abide by SEC Rules and Regulations and Investments and Securities Act No.29 of 2007 by a director or the company secretary (to be notarized);

Note: 

The cash assets ratio shall be 60% liquid assets and 40% fixed and other assets

The original copy of the certificate is to be presented for sighting during the submission of the application

Final thought

Registering with SEC as a fund manager in Nigeria isn’t a joke. You must also note that the submission of an application isn’t enough. SEC field officials will inspect the premises of the company in the course of processing an application for registration.

Applicants must have also studied the Rules and Regulations of the Commission and Investments & Securities Act No 29 of 2007 and the Capital Market. It is an essential prerequisite for registration.

References:

• Featured image by pixabay
• SEC. “REQUIREMENTS FOR REGISTRATION AS FUND/PORTFOLIO MANAGER”. Sec.gov.ng. Retrieved April 6, 2022