Crowdfunding is a form of financing that allows people or businesses to raise small amount of money in the form of donations, loans or investments from large numbers of people, while crowdfunding platforms are websites that enable the interaction between fundraisers and the crowd (public).  Financial pledges are usually made and collected via the crowdfunding platforms while fund raisers are charged a fee by crowdfunding platforms upon a successful fund raising campaign.


Crowdfunding is legal in Nigeria and is being regulated by the Securities And Exchange Commission (SEC). It is neither an alien concept in Nigeria, as various local platforms such as Naijafund, provides this service. However, Section 67(1) of the Investments and Securities Act 2007 and Section 22(5) of the Companies and Allied Matters Act 2020 permits public companies, statutory bodies or banks to accept deposits and savings from the public. Private entities are prohibited from carrying out equity based crowdfunding.


The SEC Rules on Crowdfunding, 2021 is the primary law regulating crowdfunding in Nigeria. Other regulations such as; the Companies and Allied Matters Act (2020), Investment and Securities Act (2013), Sections 22(5) CAMA and 61(1) ISA respectively, recognizes crowdfunding within Nigeria.

There are basically four types of Crowdfunding- reward based, donation based, lending based and equity based crowd funding. The SEC rules however apply to the equity or investment based crowd funding and defined same as: the process of raising funds from the public through an online portal in exchange for shares, debt securities or other investments securities approved by the commission.


Under the rule, crowdfunding transactions involves the three major players;

The Fundraisers- refers to the originator or maker of the investment instrument to be issued as recommended by the rules.

The Investors – Any individual who wishes to make or has made an investment in an investment vehicle.

Crowdfunding Intermediaries – An entity organized and registered as a corporation to facilitate transactions involving the offer or sale of securities or investment instruments through a Crowdfunding Portal;

Crowdfunding Portal: A website, platform, portal, intermediary portal, application, or other similar module that facilitates interaction between Fundraisers and the investing public;

To set up and operate a crowd funding portal in Nigeria, a Crowdfunding Intermediary License must be obtained from the Securities and Exchange Commission. In addition, an entity wishing to operate as a licensed crowdfunding intermediary must satisfy a minimum share capital requirement of N100,000,000 (one hundred million naira).


MSMEs incorporated in Nigeria who have operated for not less than two (2) years, can raise funds through a crowd funding portal owned and operated by a registered crowdfunding intermediary.

There is however a limit to the amount such businesses mentioned above can raise. Micro-enterprises cannot raise more than N50,000,000 (fifty million naira), Small enterprises cannot raise more than N70,000,000 (seventy million naira) and medium enterprises cannot raise more than N100,000,000 (one hundred million naira).

However, these fundraising limits does not apply to commodities investment platforms (CIPs). CIPs connect investors to specific agricultural or commodities projects for the purpose of sponsoring such projects in exchange for a return.


By rule 6 of the “rules”, an entity intending to register as a Crowdfunding intermediary must apply to the SEC in the prescribed form specified by the commission. The application shall be accompanied by the following documents:  

  1.  The certificate of incorporation certified by the Corporate Affairs Commission (CAC);
  2.  Memorandum and Articles of Association and amendments (if any) certified by the Corporate Affairs Commission;
  3.  CAC Form(s) showing Statement of Share Capital, Return of Allotment, and Particulars of Directors;
  4. Latest copy of the audited accounts or a copy of the statement of affairs signed by its auditors and management accounts that are not more than 9 months old or a copy of the statement of affairs signed by its auditor as at time of filing with the Commission;
  5. Management accounts that are not more than 1 month old as at the time of filing with the Commission;
  6. A profile of the Company which shall include amongst other information; a brief history of the company, organizational and shareholding structure, principal officers as well as details of past and current activities;
  7. The name(s) and address(es) of the company’s subsidiaries/associated companies/ related entities, type of business and percentage holding;
  8.  Evidence of payment of shares allotted to the shareholders;
  9. Operational manual of the company;
  10. Business plan;
  11. Existing or proposed by-laws or rules, and such other document governing the conduct of fundraisers and investors on the portal;
  12.   Sworn undertaking to promptly furnish the Commission with copies of any amendments to its by-laws, rules, or codes;
  13.  Information on Crowdfunding IT System to be adopted;
  14.  Detailed information about the Crowdfunding system to be adopted including technical details associated with the portal’s online presence;
  15.  Proposed brand name of the Crowdfunding Portal including evidence of trademark registration of the brand name (where applicable)
  16. Detailed information of all domain names of any website through which the Crowdfunding Portal will be operated, social media handles and any other online identifiers including evidence of registration (where applicable)
  17.  Detailed information about the promoters and principal officers of the Crowdfunding Intermediary;
  18.  Sworn undertaking to keep such records and render such returns as may be specified by the Commission from time to time;
  19.   An application for registration of at least three (3) principal officers of the Crowdfunding Intermediary as sponsored individuals on the prescribed Form; (a)  A person to be so appointed shall include the chief executive of the Crowdfunding Intermediary, any person who is primarily responsible for the operations and financial management, by whatever name called;
  20.  Minimum paid-up capital requirement of N100 million;
  21.  Current Fidelity Insurance Bond valued at a minimum of 20% of the paid up capital as stipulated by the Commission’s Rules and Regulations;
  22.  A written declaration by the Chief Executive of the Crowdfunding Intermediary, and which shall be filed annually, confirming that the Crowdfunding Intermediary has, in relation to the Crowdfunding Portal:

a. sufficient and capable personnel to carry out operations;

b. adequate security measures, systems capacity, business continuity plan and procedures, risk management, data integrity and confidentiality, record keeping and audit trail, for daily operations and to meet emergencies; and

c. Sufficient IT and technical support arrangements.

NOTE: SEC may require additional information from time to time, as it deems fit, for the protection of investors.


Rule 7 provides that before the SEC registers an entity as a Crowdfunding intermediary, it must be satisfied that the entity meets certain criteria such as:

  1. Transparency in operation- the SEC must be satisfied that the Crowdfunding intermediary will be able to operate an orderly, fair and transparent system in relation to the investment instruments that are offered through its electronic platform.
  2. Administration- the board, chief executive, and any officer of the Crowdfunding Intermediary who is primarily responsible for the operations or financial management of the Crowdfunding Portal, are fit and proper persons who have not:
  3. Been convicted, whether within or outside Nigeria, of an offence involving fraud or other dishonesty or the conviction of which involved a finding that he acted fraudulently or dishonestly;
  4.  Been convicted of an offence under the Act or any other law relating to the capital market;
  5.  been blacklisted by a professional body which he belongs to;
  6.  been subjected to any disciplinary process or action by the Commission or other Self-Regulatory Organization in the Nigerian capital market;
  7. contravened any provision made by or under any written law, whether within or outside Nigeria appearing to the Commission to be enacted for protecting members of the public; i. against financial loss due to dishonesty, incompetence or malpractice by persons concerned in the provision of financial services or the management of companies; or ii. against financial loss due to the conduct of discharged or un-discharged bankrupts;
  8. engaged in any unlawful business practice;
  9. engaged in or has been associated with any other business practices or otherwise conducted himself in such a way as to cast doubt on his competence and soundness of judgment;
  10. engaged in or has been associated with any conduct that cast doubt on his ability to act in the best interest of investors, having regard to his reputation, character, financial integrity and reliability;
  11. Risk management-  the crowdfunding Intermediary must be able to manage any risk associated with its business and operation. It must also have the ability to take appropriate action against a person in breach of any rules, policies, terms and other standards of the portal;
  12. Compliance- the crowdfunding intermediary is expected to have sufficient financial, human and other resources for the operation of the crowdfunding platform.

The rule places further responsibilities on the intermediaries, which are, information disclosure, due diligence, reporting obligations, data protection and privacy, operation of a trust account, compliance and restriction on cross-ownership.


By rule 37 of the Crowdfunding rules, The Crowdfunding Intermediary is prohibited from engaging in the following activities:

(i) Providing any financial assistance to investors for the purpose of investing in an offer hosted on its portal; or for which it has provided a service; and

(ii) Compensating any finder or introducer for providing the Crowdfunding Intermediary with information about potential investors.

iii Crowdfunding Intermediaries and or their managers and officers of their portals are prohibited from soliciting investments or making recommendations;

iv No Crowdfunding Intermediary shall intermediate or facilitate secondary trades between buyers and sellers for investment instruments issued pursuant to these rules.

v A Crowdfunding Intermediary is prohibited from utilizing any, website, social media portals, or third-party portals other than its registered website for the purpose of facilitating a Crowdfunding offering.


Under Rule 42 of the “rules” any crowdfunding intermediary that fails to comply with the rules, Shall be liable to a fine of not less than N100, 000.00 (One Hundred Thousand Naira Only) and the sum of N5,000.00 (Five Thousand Naira Only) for every day the violation continues and shall in addition be liable for any loss of investor funds arising due to the Crowdfunding intermediary’s failure to comply with its obligations under the rules.


The changes of the crowdfunding rules are no doubt huge but a welcome development as it is aimed at protecting investors who in most cases lose their money to unlicensed market operators.

For further enquiries on how to set up a crowdfunding platform in Nigeria, feel free to reach out us HERE.

Cynthia Tishion
Cynthia is a lawyer and currently serves as Head of Corporate / Commercial Services at LEX – PRAXIS. With her passion for business and entrepreneurship, she is actively engaged in creating awareness on the legal aspect of businesses through various platforms such as writing, public speaking engagements.

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