The National Insurance Commission (NAICOM) has directed insurance and reinsurance companies in Nigeria that the submission of recapitalization progress report shall now be monthly. The report shall be submitted not later than five working days after the end of each month, effective end of August, 2020.
In a circular no: NAICOM/DPR/CIR/25 -05/2020, dated August 17, 2020, Re: Minimum paid-up share capital policy for insurance and reinsurance companies in Nigeria, signed by Pius Agoola Director (Policy and Regulations) for commissioner for insurance, said this circular is in furtherance to put earlier circulars referenced NAICOM/DPR/CIR/25/2019 dated May 2019; July 23, 2019, and December 30, 2019, respectively on the above subject matter.
The Commission hereby reiterates that the minimum paid-up share capital shall be through any or a combination of the following:
(a) Existing paid-up share capital
(b) cash payment for new Shadare’s
(c) retained earnings – capitalization of undistributed profits
(d) payment in kind (such as properties, T-Bills, shares, bonds, etc.) for new shares issued which must be converted to cash not later than three months to the recapitalization deadline
(e) share premium.
According to the circular, the components of (b – e) are to be converted to paid-up share capital in compliance with the recapitalization exercise and applicable laws and regulations in Nigeria.
For private placement, appropriate clarification have been obtained from the relevant regulatory agency to the effect that insurance and reinsurance companies may offer more than 30% of the existing issued and fully paid shares. According to the circular, the timeline of the activities for the first phase of the recapitalization exercise is attached as appendix 1.
The commission’s director noted that all mergers for the purpose of meeting the first phase of November 30, 2020, recapitalization would commerce on sept. 14 and shall be irreversible, except with a written approval of the commission.
According to him, NAICOM shall commerce capital verification on sept. 21, while communication of capital verification report to respective companies shall begin on Nov. 30 and end Jan. 21, 2021.
“Deadline for compliance with the first phase of the new minimum paid-up capital by all existing companies remains Dec. 31 and issuance of letters of compliance as at date is Feb. 26, 2021” he said.