To understand the process of obtaining an asset management license, a quick review of Asset and Asset Management is required.

Simply put, an asset is something that provides value to its owner and the stakeholders it serves; Similarly, Asset Management is the process of outlining and regulating the acquisition, operation, maintenance, restoration, and disposition of corporate assets. This process improves the likelihood of asset delivery and minimizes associated costs and risks.

Asset management is the business of financial institutions managing funds on behalf of institutions, sovereign wealth funds, pension funds, corporations, and other large groups, it is a systematic approach to managing and realizing value from what a group or entity is responsible for throughout its revolution. It can be applied to both tangible assets and intangible assets. Asset management is the systematic process of developing, operating, maintaining, improving, and disposing of assets in the most cost-effective manner.

Asset management takes the approach of increasing total wealth over time by acquiring, managing, and trading investments that have the potential to appreciate in value.

Various asset classes include equities, commodities, bonds, futures, derivatives, real estate, cash, cash equivalents, securities, and mutual funds.

WHAT ARE ASSET MANAGEMENT COMPANIES?

An Asset Management Company (AMC), also referred to as a money manager or money management firm, is a company that invests pooled funds from its clients and develops capital through diverse investments such as stocks, bonds, real estate, and master limited partnerships.

 The Asset Management industry in Nigeria is booming due to the growing investment consciousness of many people. The non-retirement market is regulated by the Securities and Exchange Commission (SEC) and includes over 150 operators that manage collective investment schemes.

LEGAL REQUIREMENTS TO OBTAIN AN ASSET MANAGEMENT LICENSE IN NIGERIA.

A basic understanding of the Commission’s Rules and Regulations, as well as the Investments and Securities Act No 29 of 2007 and the Capital Market, is required for to obtain an asset management license.

To apply for a license to operate, an application must be filed with the SEC for processing, while the company`s application for registration must be filed with the Corporate Affairs Commission.

Applicants must also have studied the Commission’s Rules and Regulations, as well as the Investments and Securities Act No. 29 of 2007 and the Capital Market. It is a mandatory requirement for registration.

Suffice it to note that no group in Nigeria is permitted to operate an Asset Management Company unless licensed by SEC.

The Legal requirements for Companies are:

For Companies:

• The names and addresses of the company’s subsidiaries, as well as the type of business and percentage ownership.¹
• Evidence of fully paid-up shares allotted to shareholders.
• A business strategy.
• Bank statement for the last six months of the company’s accounts.
• An organizational chart of the company shareholding structure of the company list of the principal officers as well as details of the officers’ past and current activities.

For sponsored individuals:

• At least three sponsored individuals, of which one must be a compliance officer.
• Detailed resumes of sponsored individuals. This should include details and dates of activities arranged from secondary school to date.
• Police clearance report for each sponsored individual. To initiate the process, each person must submit two recent passport-sized photographs to her SEC headquarters in Abuja or the office in the Zone in Lagos.
• Copy of means of Identification of the Directors and the Sponsored Individuals of the Company.
• Evidence from a sponsored individual that he or she has at least four years of postgraduate experience to perform the functions of an asset manager in accordance with the Commission’s rules and regulations.
• Copies of the sponsored individual’s transcripts, including Secondary School and NYSC discharge certificates. The original is required for SEC review.

Note:  Managing Director of the Company is to be among the sponsored individuals

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¹ The Securities and Exchange Commission, Nigeria

Documents required for Registration as an Asset Manager:

• A  copy of the following duly certified by CAC;
• Certificate of Incorporation of the company
• Memorandum and Articles of Association. This should include the power to perform the specified function
• CAC forms showing Statement of Share Capital, Return of Allotment, and Particulars of Directors.
• A sworn undertaking signed by a director or the company secretary to keep proper records and render returns as specified by the Commission from time to time (to be notarized)
• The most recent audited accounts or audited statements of  affairs of the company
• Sworn undertaking by a director or the company secretary to comply with SEC Rules and Regulations and Investments and Securities Act No.29 of 2007 (to be notarized);

Financial Requirements

The total cost of a fund manager license application is approximately N10,700,000 (10 million, 700,000 nairas).

• Application fee –NGN100,000 (One Hundred Thousand Naira)
• Payment of Processing Fee-NGN300,000(Three Hundred Thousand Naira)
• Payment of Registration Fee-NGN10,000,000(Ten Million Naira)
• Payment of Sponsored Individual Fee-NGN100,000(One Hundred Thousand Naira) for each sponsored individual
• Minimum Paid-up Capital of 150,000,000(One Hundred and Fifty Thousand share capital)
• Current Fidelity Insurance Bond of at least 20% of the minimum paid-up capital

Forms Required:

 Asset manager applicants must obtain and complete the following forms:

• Form SEC 3 for the Company, and Form SEC 2 and 2D for Sponsored Individuals/Compliance Officers, both of which must be completed in duplicate.
• Forms SEC 2 and 2D for Company Directors, which must be completed in duplicate.

In conclusion, the commission may require, any other document it deems necessary for registration purposes.

Written by Kate Nkume for The Trusted Advisors

Email us: info@trustedadvisorslaw.com

Telephone Number: +234 810 159 9159