Commercial Paper Issuance Agreement (Nigeria)

A Commercial Paper Issuance Agreement in Nigeria governs the relationship between the parties by fixing what each must do.

In Nigeria, commercial paper issuance is regulated by two primary bodies. The Securities and Exchange Commission (SEC) regulates the issuance and listing of commercial paper under the Investments and Securities Act 2007 (ISA 2007) and the SEC Rules and Regulations 2013 (as amended). The Central Bank of Nigeria (CBN) has issued guidelines on commercial paper under its framework for non-bank financial instruments, and the CBN's Financial Markets Department oversees the registration of commercial paper programmes in the Nigerian financial markets.

The Investments and Securities Act 2007, Section 67, requires issuers of securities — including commercial paper — to register a prospectus or an offering memorandum with the SEC unless an exemption applies. Companies with a good credit rating may issue commercial paper under the SEC's simplified registration procedure. Commercial paper is traded on the FMDQ OTC Securities Exchange (FMDQ Exchange), Nigeria's primary debt capital markets platform, which provides registration, listing, and trading services for Nigerian commercial paper programmes.

Commercial paper issued by Nigerian banks is subject to additional CBN prudential guidelines under the Banks and Other Financial Institutions Act 2020 (BOFIA 2020). Issuances by non-bank corporates must comply with the SEC Rules and Regulations 2013 on offering documents, minimum credit ratings (typically BB or above from Agusto & Co. Or GCR Ratings), and maximum maturity periods.

The Companies Income Tax Act Cap C21 LFN 2004 and the Finance Acts 2019 and 2020 govern the tax treatment of commercial paper — interest income received by investors may be exempt from tax under certain conditions applicable to bonds and fixed income instruments.

The legal framework governing the Commercial Paper Issuance Agreement (Nigeria) in Nigeria draws on several key statutes and regulatory bodies. Under Nigerian law, the Companies and Allied Matters Act 2020 (CAMA) regulates corporate entities through the Corporate Affairs Commission (CAC). The Labour Act (Cap L1 LFN 2004) and the National Industrial Court of Nigeria (NICN) govern employment disputes. The Nigeria Data Protection Regulation (NDPR) 2019 and the Nigeria Data Protection Commission (NDPC) protect personal data. The Federal Inland Revenue Service (FIRS) administers tax obligations under the Companies Income Tax Act. The Federal High Court and state High Courts have jurisdiction over civil matters. Parties executing a Commercial Paper Issuance Agreement (Nigeria) in Nigeria should confirm the document reflects current law, including any amendments enacted since the original drafting date. The Investments and Securities Act 2007 sets the foundational requirements.

A Nigeria Commercial Paper Issuance Agreement is needed when a company wishes to access short-term debt capital from the capital markets as an alternative or supplement to bank borrowing.

Corporate treasurers of large Nigerian companies — including oil and gas companies, FMCG manufacturers, telecoms operators, and conglomerates — use commercial paper programmes to diversify their short-term funding sources beyond bank credit facilities, typically at lower interest rates reflecting the issuer's credit quality.

Companies seeking working capital financing between creditor payment cycles — for example, a manufacturer financing raw material purchases pending receipt of sales proceeds — can issue commercial paper for 90 to 180 days to bridge the gap without drawing on revolving credit facilities.

Nigerian companies establishing a commercial paper programme for the first time need an issuance agreement (often called a Programme Agreement) between the issuer, the Issuing and Paying Agent (typically a Nigerian commercial bank), the legal advisers, and (where applicable) the FMDQ Exchange to define the programme size, tenor, issuance mechanics, and investor eligibility.

Where an existing CP programme is being renewed, extended, or amended — for example, following a credit rating review by Agusto & Co. Or GCR Ratings, or following a change in the SEC Rules and Regulations — a fresh or amended issuance agreement is required.

Investors — including pension fund administrators (PFAs) regulated by the National Pension Commission (PenCom), insurance companies regulated by the National Insurance Commission (NAICOM), and fund managers — need the CP issuance agreement to confirm the terms of each tranche before investing.

Parties in Nigeria should prepare a Commercial Paper Issuance Agreement (Nigeria) proactively rather than waiting for a dispute to arise. Courts interpret agreements based on the written terms rather than oral representations. Under Nigerian law, the Companies and Allied Matters Act 2020 (CAMA) regulates corporate entities through the Corporate Affairs Commission (CAC). The Labour Act (Cap L1 LFN 2004) and the National Industrial Court of Nigeria (NICN) govern employment disputes. The Nigeria Data Protection Regulation (NDPR) 2019 and the Nigeria Data Protection Commission (NDPC) protect personal data. The Federal Inland Revenue Service (FIRS) administers tax obligations under the Companies Income Tax Act. The Federal High Court and state High Courts have jurisdiction over civil matters. Where the transaction involves regulated activities, prior approval from the relevant authority may be required before execution.

A Nigeria Commercial Paper Issuance Agreement must contain the following key elements to comply with the Investments and Securities Act 2007, the SEC Rules and Regulations 2013, and applicable FMDQ Exchange requirements.

Issuer Identity: Full legal name, CAC registration number (under CAMA 2020), registered address, and board resolution authorising the CP issuance and the execution of the agreement.

Programme Size: The maximum aggregate face value of commercial paper outstanding at any time under the programme (the programme limit), expressed in NGN.

Tenor: The minimum and maximum maturity periods for each tranche — under Nigerian SEC Rules, commercial paper typically has a maximum maturity of 270 days.

Issue Price and Discount: Whether commercial paper is issued at a discount to face value (discount CP) or at par with periodic interest (interest-bearing CP), and the applicable discount rate or interest rate expressed as a per annum rate.

Issuing and Paying Agent: The appointment and obligations of the Issuing and Paying Agent (IPA) — typically a commercial bank licensed by the CBN under BOFIA 2020 — responsible for effecting issuance, maintaining the register of holders, and making payments at maturity.

SEC Registration: The issuer's obligation to register the programme or each tranche with the Securities and Exchange Commission under the Investments and Securities Act 2007 and file an offering memorandum complying with SEC Rules and Regulations 2013.

FMDQ Listing: Where the CP is to be listed on FMDQ Exchange, the obligations to comply with FMDQ admission criteria, continuous disclosure requirements, and trading rules.

Credit Rating: The minimum credit rating required for issuance (e.g., minimum of B+ from Agusto & Co. Or GCR Ratings) and the obligation to maintain the rating throughout the programme.

Events of Default: Failure to pay at maturity, insolvency proceedings under the Insolvency Act 2022, breach of SEC registration obligations, or material adverse change.

Tax Treatment: Withholding tax obligations on interest or discount income under the Companies Income Tax Act Cap C21 LFN 2004 and the Finance Act 2020, and any tax exemptions applicable to the CP instruments.

Governing Law: Laws of the Federal Republic of Nigeria, with jurisdiction of the Federal High Court or State High Court in Lagos or Abuja.

Additional compliance elements for a Commercial Paper Issuance Agreement (Nigeria) used in Nigeria include: Under Nigerian law, the Companies and Allied Matters Act 2020 (CAMA) regulates corporate entities through the Corporate Affairs Commission (CAC). The Labour Act (Cap L1 LFN 2004) and the National Industrial Court of Nigeria (NICN) govern employment disputes. The Nigeria Data Protection Regulation (NDPR) 2019 and the Nigeria Data Protection Commission (NDPC) protect personal data. The Federal Inland Revenue Service (FIRS) administers tax obligations under the Companies Income Tax Act. The Federal High Court and state High Courts have jurisdiction over civil matters. Forms-legal.com provides this template as a starting point for Nigeria-compliant documentation.