How to Issue Commercial Paper in Nigeria, a Step‑by‑step Guide for Issuers

Understanding how to issue commercial paper in Nigeria is essential for any corporate treasury team, CFO or in‑house counsel preparing to raise short‑term funding outside the conventional bank‑lending channel. Commercial paper (CP) is an unsecured, discounted debt instrument with a tenor of up to 270 days, issued by corporates, banks and other financial institutions to meet working‑capital needs, bridge receivables gaps or pre‑fund capital expenditure. The commercial paper issuance process is governed by the Investment and Securities Act (ISA) 2007, the SEC Rules (most recently consolidated in the Executed Rules of December 2024) and the listing rules of the two principal exchanges, FMDQ Securities Exchange and NASD PLC.

This guide walks issuers through every stage of the process, from eligibility and board approvals to placement, settlement and post‑issuance reporting, and flags the regulatory and tax changes that took effect between 2024 and 2026.

Overview of the Commercial Paper Issuance Process

A commercial paper is a short‑term promissory note issued at a discount to face value. The investor purchases the paper below par and receives the full face value at maturity; the difference represents the investor’s return. According to FMDQ Securities Exchange, CPs traded or listed on its platform carry tenors of up to 270 days. The instrument is typically unsecured, which means that the issuer’s creditworthiness, rather than collateral, drives investor appetite and pricing.

The principal actors in a Nigerian CP issuance are the issuer (the company raising funds), the Issuing and Placing Agent (IPA) registered with the Securities and Exchange Commission (SEC), legal counsel to the issuer and/or the IPA, the paying/collecting agent (usually a commercial bank), a registrar or transfer agent, and, where the CP will be listed, the relevant exchange (FMDQ or NASD). The SEC exercises oversight under the ISA 2007 and its subsidiary rules, including the Executed Rules of December 2024 which formalised definitions and procedural requirements for IPAs and CP programmes.

At the highest level, the issuance process flows through five phases: (1) programme design and board approval; (2) appointment of agents and counsel; (3) preparation of offering documentation; (4) placement, pricing and settlement; and (5) post‑issuance compliance and reporting. For a broader overview of how this instrument fits within the Nigerian capital market, see the framework for the issue of commercial papers in Nigeria.

Eligibility and Commercial Paper Requirements in Nigeria

Not every entity can access the CP market. Meeting the commercial paper requirements Nigeria’s regulators and exchanges impose is the first gate an issuer must clear before engaging agents or preparing documentation.

Corporate authority and board approvals

The issuer must be a company incorporated under the Companies and Allied Matters Act (CAMA) and registered with the Corporate Affairs Commission (CAC). Its memorandum and articles of association must permit borrowing and the issuance of debt instruments. Before any external appointment is made, the board of directors should pass a resolution that:

• Authorises the CP programme. The resolution should specify the maximum aggregate amount, permitted tenors, and the purpose of the proceeds.
• Designates authorised signatories. At least two directors (or a director and the company secretary) should be authorised to execute offering documents, engage agents and sign listing applications.
• Delegates day‑to‑day execution. The board may delegate pricing, allotment and settlement decisions to the CFO or a treasury committee, provided the delegation is recorded in the minutes.

Issuers should retain certified true copies of the board minutes and the resolution, as these will be required by the IPA, legal counsel, the exchange and, where applicable, the SEC.

Credit profile, rating and bank support

Because CPs are typically unsecured, investors look closely at the issuer’s credit standing. While a formal credit rating from a registered rating agency is not universally mandatory under SEC rules, it is strongly recommended by market practice and may be required by the exchange on which the CP is to be listed. Issuers that lack a formal rating often rely on one or more of the following credit‑support mechanisms:

• Irrevocable bank guarantee or standby letter of credit from a reputable commercial bank.
• Credit opinion or assessment letter from a recognised credit‑assessment institution.
• Audited financial statements demonstrating consistent profitability, adequate liquidity ratios and a manageable debt‑service profile over the most recent two to three financial years.

Issuers should confirm the specific credit‑support expectations with the target exchange (FMDQ or NASD) and with prospective investors’ internal credit committees before finalising the programme structure. For context on the broader regulatory framework governing securities issuance, see the review of the Investment and Securities Act.

How to Issue Commercial Paper in Nigeria, Step‑by‑Step Procedure

The following numbered steps set out the commercial paper issuance process from initial programme design through to post‑issuance reporting. Each step identifies who is responsible, the key documents involved and the typical duration.

Step 1, Design and structure the CP programme

The issuer’s treasury team and legal counsel define the programme parameters. Key decisions at this stage include:

• Tenor. Up to 270 days per FMDQ market convention. Issuers should note that rolling over a CP beyond the maximum tenor may re‑characterise the instrument as a medium‑term note, triggering different regulatory requirements.
• Aggregate programme size and tranche structure. A programme may be established for a stated maximum amount (e.g., ₦50 billion) with multiple tranches issued over time, or a single stand‑alone tranche may be issued.
• Public placement versus private placement. A public offering triggers registration and disclosure obligations under the ISA 2007 and SEC rules. A private placement, typically to qualified institutional investors, carries lighter disclosure requirements but may still require exchange listing for secondary‑market trading.
• Listing venue. Issuers choosing to list the CP for secondary trading must decide between FMDQ Securities Exchange and NASD PLC. FMDQ is the primary venue for money‑market instruments in Nigeria and operates a dedicated CP quotation and listing framework. NASD serves as an alternative, particularly for instruments targeting a different investor base. The listing decision affects documentation requirements, fees and processing times.

At the end of this step the issuer should have an approved term sheet or mandate summary setting out the programme’s commercial terms.

Step 2, Appoint the Issuing and Placing Agent and other service providers

Under the SEC Executed Rules (December 2024), the Issuing and Placing Agent (IPA) is the principal intermediary responsible for structuring, marketing and placing the CP with investors. The IPA must be registered with the SEC. The issuer selects the IPA through a request‑for‑proposal process or direct engagement and executes a formal engagement letter covering:

• Scope of services, structuring, documentation support, investor marketing, bookbuilding and settlement coordination.
• Fees, typically expressed as a percentage of the issuance amount.
• Indemnities and representations, standard market provisions allocating risk between issuer and IPA.

In parallel, the issuer appoints legal counsel (to the issuer and, if required, independent counsel to the IPA), a paying/collecting agent (usually a commercial bank that will receive subscription funds and disburse principal at maturity), and a registrar or transfer agent to maintain the investor register. Where the CP will be listed, the issuer or IPA must also liaise with the relevant exchange at this stage to confirm listing requirements.

Step 3, Prepare offering documentation

The IPA and issuer’s legal counsel prepare the suite of offering documents. The core documents include:

• Information Memorandum (IM) or Offer Letter. This is the primary disclosure document. It sets out the issuer’s business, financial position, risk factors, use of proceeds, tenor, pricing mechanics and redemption terms. For a private placement, a shorter form IM or placement memorandum may suffice.
• Term Sheet. A summary of the CP’s commercial terms, face value, discount rate or yield, issue date, maturity date and settlement instructions.
• Subscription Agreement. The contract between the issuer and each subscribing investor, setting out the investor’s commitment and the issuer’s obligations.
• Placement Instructions / Dealer Agreement. Instructions from the issuer to the IPA and any sub‑placing dealers regarding allocation, minimum denomination and settlement mechanics.
• Legal Opinion. Issuer’s counsel delivers an opinion confirming the issuer’s capacity, due authorisation and the enforceability of the CP documents under Nigerian law.

If the programme involves a trust structure (common for asset‑backed or credit‑enhanced CPs), a trust deed and related trustee appointment documents will also be required. All documents should be reviewed for compliance with the SEC rules and the applicable exchange listing rules before finalisation.

Step 4, Execute regulatory filings, market the CP, and settle

Once documentation is finalised, the issuer (through the IPA) proceeds to:

1. File required regulatory notices with the SEC, the specific filing depends on whether the issuance is public or private and must comply with the procedures set out in the SEC Executed Rules (December 2024) and the ISA 2007.
2. Submit a listing application to FMDQ or NASD, accompanied by the offering documents, board resolution, audited financials, legal opinion and any other attachments required by the exchange’s listing rules. Allow 2–10 business days for the exchange to process the application, depending on the completeness of the submission.
3. Market and place the CP, the IPA distributes the IM and term sheet to target investors (banks, pension fund administrators, asset managers, insurance companies, high‑net‑worth individuals). Placement may occur through a bookbuild (where investors bid at various discount rates and the issuer sets a final rate) or through firm allotment at a pre‑agreed rate.
4. Settle, investors remit subscription funds to the paying/collecting agent. Settlement typically occurs on the issue date (T+0) or within T+1 to T+3, following the market convention applicable to the listing venue. The Central Securities Clearing System (CSCS) or the exchange’s own depository infrastructure facilitates electronic settlement and custody.

The issuer receives the net proceeds (face value less discount) once settlement is confirmed.

Step 5, Comply with post‑issuance reporting obligations

After settlement, the issuer and IPA must:

• Confirm issuance details to the exchange, issue size, maturity date, allottee register and settlement confirmation.
• Notify the SEC where required under the applicable rules.
• Maintain continuous disclosure, any material event affecting the issuer’s ability to redeem the CP at maturity (e.g., significant financial deterioration, litigation, change of control) must be disclosed promptly to the exchange and investors.
• Ensure timely redemption, the paying agent redeems the CP at face value on the maturity date. Late payment triggers default provisions and potential regulatory sanctions.

The table below consolidates the typical timeline for the full commercial paper issuance process.

Required Documents for Issuing Commercial Paper in Nigeria

Assembling the correct documents is one of the most common bottlenecks in the commercial paper issuance process. Incomplete submissions to the exchange or to the SEC delay listing approvals and can push the issuer past its target pricing window. The table below lists every document typically needed and identifies who is responsible for producing it.

Issuers targeting a listing on FMDQ should confirm whether additional exchange‑specific forms, such as a quotation request letter, a compliance certificate or a credit‑support confirmation, are required under the current FMDQ listing rules. NASD PLC has its own listing documentation checklist, which may differ in certain respects. In both cases, engaging the exchange’s listing team early in the process reduces the risk of delays.

Timeline and Key Deadlines for the Commercial Paper Issuance Process

The total elapsed time from initial board approval to settlement varies depending on programme complexity, whether a credit rating is required, the responsiveness of service providers, and the exchange’s processing time for listing applications. As a practical guide:

• Fast‑track issuance (experienced issuer, existing programme, no rating required): 2–4 weeks from board resolution to settlement.
• Standard issuance (new programme, first‑time issuer or rating required): 4–8 weeks.
• Complex or credit‑enhanced issuance (bank guarantee, trust structure, multiple tranches): 6–12 weeks.

The critical‑path items that most frequently cause delays are:

• Board scheduling. If the board meets on a fixed quarterly cycle, the issuer may need to convene a special meeting or obtain a written resolution to avoid waiting for the next scheduled meeting.
• Credit opinion or rating. Rating agencies and credit‑assessment institutions typically require 7–21 days from receipt of complete information. This step should be initiated in parallel with documentation preparation.
• Exchange listing application processing. FMDQ and NASD publish indicative processing timelines, but actual turnaround depends on the completeness of the submission. Incomplete applications are returned, which may add 5–10 additional business days.
• SEC acknowledgement. Where regulatory filing or notification is required, issuers should allow sufficient lead time for SEC processing and any queries.

Issuers should build a backward‑looking timeline from the target issue date, identifying each predecessor activity and its lead time. A simple project‑management tracker, shared between the issuer, IPA, legal counsel and the paying agent, is the most effective way to keep the process on schedule.

Costs, Fees and Tax Implications of Issuing Commercial Paper in Nigeria

The cost of issuing a CP is typically lower than the all‑in cost of a bank term loan or an overdraft facility, which is one of the instrument’s principal attractions. However, issuers must budget for several direct and indirect costs. The table below sets out the main cost items on an indicative basis. Exact amounts are negotiable and should be confirmed with each service provider and the relevant exchange.

Tax considerations for 2026

Nigeria’s tax landscape for debt instruments has been reshaped by a series of Finance Acts enacted between 2019 and 2024, as well as the broader Nigeria tax reform acts. Key questions issuers must resolve with their tax counsel before pricing include:

• Withholding tax on the discount. Whether the discount element of a CP is subject to withholding tax, and at what rate, depends on the classification of the income (interest vs. discount) and the investor category (corporate, individual, exempt institution). Tax counsel should confirm the applicable rate and the issuer’s or paying agent’s withholding obligations.
• Stamp duty. The Stamp Duties Act and subsequent amendments may impose stamp duty on the CP instrument or on the subscription agreement. Issuers should confirm whether an exemption applies and, if not, who bears the liability.
• Company income tax deductibility. The discount paid to investors is generally treated as a financing cost. Issuers should confirm deductibility under the Companies Income Tax Act as amended, including any thin‑capitalisation or interest‑limitation rules that may apply.

Industry observers expect that the ongoing consolidation of Nigeria’s tax reform agenda may further clarify or simplify the treatment of money‑market instruments. Issuers planning a CP programme in 2026 should seek a written tax opinion before execution.

What Changed for Commercial Paper Issuers in 2026

Several developments between late 2024 and mid‑2026 have direct implications for issuers preparing to access the CP market:

• SEC Executed Rules (December 2024). The consolidated rulebook formalised the definition and registration requirements for Issuing and Placing Agents (IPAs), stipulating that an IPA must be registered with the SEC before acting in that capacity. Issuers should verify that their chosen IPA holds a current SEC registration. The rules also updated notice and filing procedures for securities offerings, including CPs.
• Investment and Securities Act developments. Amendments and supplementary regulations continue to refine the SEC’s supervisory powers over short‑term debt instruments. Issuers should confirm the current state of the law with their legal counsel, as certain procedural requirements may have been updated since the December 2024 consolidation.
• FMDQ and NASD listing rule updates. Both exchanges periodically revise their listing rules, fee schedules and documentation requirements. Early indications suggest that FMDQ has streamlined its CP quotation process, but issuers should confirm current requirements directly with the exchange’s listing team.
• Tax reform implications. The tax reform acts signed into law in 2024 introduced changes that may affect withholding‑tax treatment, stamp‑duty obligations and reporting requirements for money‑market instruments. The Federal Inland Revenue Service (FIRS) has been issuing implementation guidance. Issuers must consult tax counsel to confirm the position as at the intended issue date.

The practical effect of these changes is that issuers can no longer rely on pre‑2024 precedents or template documents without updating them. A compliance review by legal counsel, benchmarked against the SEC Executed Rules (December 2024) and the current exchange rules, should be a mandatory step before any new issuance.

Common Pitfalls When Issuing Commercial Paper in Nigeria and How to Avoid Them

• Missing or defective board resolution. The board resolution is the foundation of the issuer’s authority. A resolution that omits the programme amount, tenor or authorised signatories will be rejected by the IPA, the exchange and the SEC. Mitigation: use a template resolution reviewed by counsel; circulate it to the board well in advance of the target issue date.
• Appointing an unregistered IPA. The SEC Executed Rules (December 2024) require the IPA to hold a current SEC registration. Engaging an unregistered agent exposes the issuer to regulatory sanctions and may invalidate the issuance. Mitigation: request and verify the IPA’s SEC registration certificate before executing the engagement letter.
• Incomplete exchange listing application. Submitting a listing application without all required attachments, financials, legal opinion, KYC forms, causes the exchange to return the application, adding days or weeks to the timeline. Mitigation: obtain the exchange’s current documentation checklist and conduct a pre‑submission completeness review.
• Failure to address tax withholding before pricing. If the withholding‑tax position is not confirmed before the CP is priced, the issuer may under‑price the instrument (absorbing an unexpected tax cost) or over‑price it (reducing investor demand). Mitigation: obtain a tax opinion and confirm withholding mechanics with the paying agent before the bookbuild.
• Late post‑issuance disclosures. Failure to notify the exchange or the SEC of material events, or to file post‑settlement confirmations on time, may trigger regulatory queries, fines or suspension of listing privileges. Mitigation: assign a compliance officer or external counsel to manage the post‑issuance reporting calendar.
• Mis‑timed settlement. Where the paying agent does not receive clear instructions or where subscription funds arrive late, settlement may fail. A failed settlement damages the issuer’s market reputation and may constitute a breach of the subscription agreement. Mitigation: conduct a mock settlement run with the paying agent and the CSD at least two business days before the issue date.

Sources

1. Nigeria Securities and Exchange Commission, Executed Rules (December 2024)
2. FMDQ Group, Commercial Papers Product Page
3. NASD PLC, Listing and Market Data
4. Central Bank of Nigeria
5. ALP NG & Co, Basics of Issuing Commercial Papers in Nigeria
6. Tope Adebayo LP, Raising Capital Through Commercial Paper
7. ARM, FAQ on Commercial Paper Investment in Nigeria
8. Federal Inland Revenue Service (FIRS)