An Investment Company or Corporate Investment Adviser or Investment Advisory Company is a company that provides advisory services relating to investment or securities for a fee. In Nigeria, the Securities and Exchange Commission (“SEC”) is the regulator vested with the licensing and regulatory supervision over all investment companies or investment advisers. It therefore presupposes that, any individual or company who wishes to engage in the provision of investment advisory services must register with the Corporate Affairs Commission and obtain operational license from the SEC.
What are the Services provided by an Investment Advisory Company?
Some of the services provided by a Licensed Investment Advisory company include the following:
- Provision of individually tailored investment advice to their clients which may include advice and recommendation of the best investment to consider or securities to buy or sell.
- Maintaining proper records and filing of annual reports with SEC.
- Assist clients to discern false claims and advertisements in the market and proffer capital market guidance where necessary.
What are the requirements for incorporating an Investment Advisory Company in Nigeria?
The requirements for incorporating an Investment Advisory Company are the same as for incorporating any private limited liability company in Nigeria. See our article on the incorporation requirements here.
What is the required minimum share capital to register an Investment Advisory Company in Nigeria?
Any company seeking to operate as an Investment Advisory Company must have a share capital of N5,000,000.00 (Five Million Naira) which must be fully paid up.
What are the applicable costs of registering an Investment Advisory Company with the Corporate Affairs Commission in Nigeria?
The cost of incorporating a corporate Investment Advisory Company with a share capital of N5,000,000 is about N70,000.00 (SeventyThousand Naira) excluding professional fees. The breakdown of the foregoing sum is as follows:
N30,000 (Thirty Thousand Naira) is chargeable by the CAC as Incorporation Fee; and
N37,500 (Thirty–Seven Thousand Five Hundred Naira) is chargeable by the Federal Inland Revenue Service (“FIRS”) as stamp duty on the N5 Million share capital (the formula for calculating this is: 0.75% x 5,000,000);
N2,500 (TwoThousand Five Hundred Naira) is estimated for miscellaneous expenses.
What are the requirements for obtaining the Investment Advisory License from SEC?
While the incorporation of an Investment Advisory Company is by CAC, the licensing of a Corporate Investment Advisory Company is by SEC.
Below is a highlight of the requirements and procedure for the business registration and application for its operational License.
The first step is to complete application for registration in Form SEC 3 for Corporate Investment Adviser and accompany same by –
(a) Two (2) sets of completed Forms SEC 2 and 2D to be completed and signed all the directors and sponsored individuals;
(b) A copy of certificate of incorporation, status report containing the particulars of shareholders and directors of the Company;
N.B. the Managing Director of the Company must be one of the sponsored individuals
(c) Memorandum and Articles of Association certified by the Corporate Affairs Commission. where a copy not certified is filed, the applicant shall present the original for sighting by an authorized officer of the Commission;
(d) Copy of latest audited accounts or audited statement of affairs for companies in operation for less than one (1) year;
(f) Fidelity bond representing 20% of paid-up capital;
(g) Notarized sworn undertaking to keep proper records and render returns;
(h) Evidence of minimum paid-up capital of N5 million.
(i) Police clearance report for each Sponsored Individual.
(j) Copy of means Identification of the Directors and the Sponsored Individuals of
the Company
(k) Latest audited accounts or audited statement of affairs of the company.
NB: Cash assets ratio must be 60% liquid assets and 40% fixed and other assets
What are the Costs for processing a Corporate Investment Advisory License?
The applicable costs for processing a Corporate Investment Advisory License from SEC (excluding professional fee) are shown in the table below:
| S/N | Item | Cost (N) |
| 1 | Registration fee | 100,000.00 |
| 2 | Application fee | 100,000.00 |
| 3 | Processing fee | 300,000.00 |
| 4 | 3 Sponsored individuals | 300,000.00 |
| 5 | Cost of processing Police Clearance Certificate for all the Sponsored Individuals | N150,000.00 |
| 6 | Miscellaneous Expenses | N100,000.00 |
What is the timeline for completing the process of obtaining a Corporate Investment Advisory License?
The incorporation of a company is 24 hours after submission of application for company registration to CAC.
However, the timeline for licensing is not certain and may range between three to six months or more in some cases.
