How a Nigerian Company Can Obtain a Portfolio Management License from the Securities & Exchange Commission (SEC)

Portfolio management can be defined as the process of managing individuals’ investments so that they maximise their earnings within a given time. It involves building and overseeing a selection of assets such as stocks, bonds, and cash that meet an investor’s long-term financial goals and risk tolerance. Portfolio managers (individuals or corporate) are professionals responsible for making investment decisions and carrying out investment activities on behalf of vested individuals or institutions. They are also referred to as Asset Managers. Examples of portfolio managers include Stanbic IBTC Asset Management limited, FBN capital asset management limited, UBA Asset Management Company Limited.

In Nigeria, the regulatory body that grants the operational license to carry on the business of portfolio management is the Securities and Exchange Commission. However, the company must first and foremost be incorporated under the Corporate Affairs Commission (CAC) and for a company to apply for an operating portfolio management license, it must have a minimum share capital of N150m (One Hundred and Fifty Million Naira).

REQUIREMENTS FOR A PORTFOLIO MANAGEMENT LICENCE FROM SEC

1. Profile of the company should include among others brief history of the company, organizational and shareholding structure, principal officers as well as details of past & current activities.
2. The name(s) and address(es) of the company’s subsidiaries/associated companies, type of business and percentage holding.
3. Evidence of payment of shares allotted to the shareholders.
4. Operational manual or organizational chart of the company.
5. Business plan.
6. Bank statement of accounts operated by the company for the last six months.
7. A form SEC 3 application for registration as a fund/portfolio manager (The sponsored people must submit two complete sets of form SEC 3).
8. A fidelity bond equal to 20% of paid-up capital.
9. A solemn commitment to maintain accurate records and submit returns.
10. Proof of a minimum of 20 million Naira in paid-up capital.
11. The applicant company must register a minimum of three individuals known as sponsored individuals and the directors with the SEC. One of these individuals shall be the compliance officer, while the managing director should also be one of the sponsored individuals. The sponsored people must submit two complete sets of Form SEC 2 and 2D together with other supporting documents like police clearance reports, detailed CV, and full postal addresses of immediate previous employers, bankers (with current account number) and nominated referees of the sponsored individuals and other credentials.
12. The applicant company for the license of a fund manager is expected to have an office in Nigeria.

CORPORATE DOCUMENTS REQUIRED

1. Certificate of incorporation.
2. Memorandum and Articles of association.
3. CAC form(s) showing statement of share capital, return of allotment, and particulars of directors.
4. Latest audited accounts or audited statement of affairs of the company.
5. 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.
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).

STATUTORY FEES REQUIREMENT

1. Application/filing fees- N50,000 (Fifty Thousand Naira).
2. Processing fees – N200,000 (Two Hundred and Thousand Naira).
3. Registration/License fees – N500,000 (Five Hundred Thousand Naira).
4. Sponsored Individual fees: N50,000 (Fifty Thousand Naira).

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