Loan Capital – Debenture Types

Back to: FINANCIAL ACCOUNTING SS2

 

Welcome to class! 

In today’s class, we will be talking about loan capital – debenture types. Enjoy the class!

Loan Capital – Debenture Types

A capital market is any financial market in which long-term debts and equity-backed securities are traded (i.e., bought and sold). These securities are typically Capital markets are defined as markets in which money is provided for periods longer than a year. Capital markets channel the wealth of savers to those who can put such wealth to long-term productive use; such as companies or even governments making long-term investments. The capital is typically overseen by financial regulators or monitors such as the Nigerian Securities and Exchange Commission (SEC).

The Requirements for enlisting in the Capital Market

1. Application for Listing will only be entertained if sponsored by a Dealing Member of The Exchange.
2. The company must be a public company, which will issue or has issued an invitation to the public to subscribe for its shares or has satisfied Council that the public is sufficiently interested in the company’s shares to warrant Listing.
3. All securities for which listing is sought shall first be registered with the Securities and Exchange Commission.
4. All application and documents to be considered or approved by Council should always be submitted to The Exchange at the earliest possible date. The final prospectus for approval must be forwarded to The Exchange at least seven working days before the date for the completion board meeting.
5. Before the grant of Listing, all applicant companies shall sign a General Undertaking that they will provide promptly certain information about their operations and that they will follow certain administrative procedures.
6. Where it is desired to increase the authorized share capital, the directors shall state, in the explanatory circular or other documents accompanying the notice of the meeting, whether or not they presently have any intention of issuing all or any part thereof.
7. A company which applies for Listing shall comply with the minimum public float requirement prescribed by the Listing standard criteria chosen by the Issuer.
8. Subscriptions list must remain open for a maximum period of 28 working days.
9. A maximum of 10% of an offering will be allowed to staff of a company (or its subsidiaries or associated companies) on special application forms. Such offerings may be placed in Trust for the employees.  Where a proportion of the shares in placement or public offer is reserved for employees, the company shall provide The Exchange along with the General Undertaking a list of members of staff who have been allotted shares, the number of such shares, the capacity in which they work for the company and the number of years of service with the company.
10. All companies admitted to Listing on The Exchange shall pay a listing fee as laid down in Appendix iv and these fees are subject to review from time to time.
11. All clauses in the company’s Memorandum & Articles of Association that restrict the transfer of fully paid-up shares must be expunged.
12. All Listed companies shall advertise the Notice of their annual general meetings in at least two widely read newspapers at least 21 days before the annual general meeting and such advertisement must be conspicuously placed to cover a reasonable portion of a page.
13. The subscription monies pending allotment and return of funds to subscribers shall be deposited in a designated bank account appointed by the Issuing House and the company. All accrued interests in respect of cleared allotments shall be paid to the company to offset part of the cost of the Issue.
14. Return monies arising from an unsuccessful application or abortion of an offer/issue shall attract interest at the rate determined by the Commission.
15. These general requirements are not exhaustive and Council may add thereto or subtract therefrom as considered necessary subject to the approval of the Securities and Exchange Commission.

Evaluation

1. What is the capital market?
2. List 7 requirements for enlisting on the capital market?

 

In our next class, we will be talking more about Loan Capital – Debenture Types.  We hope you enjoyed the class.

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