Most employee share scheme guidance in Nigeria focuses on listed companies. But what about private companies? Here is what the law allows and what the practical challenges are.
The legal and regulatory framework for Employee Share Investment Schemes (ESIS) in Nigeria primarily targets companies listed on the Nigerian Exchange Group (NGX). But private companies — from mid-sized family businesses to technology startups — increasingly ask whether they can offer employees an equity stake. The answer is: yes, with important differences from the listed company model.
Ready to start investing in Nigerian stocks? Shares Saver registers your shares directly in your own name through SEC-regulated brokers.
Important disclaimer
This article is for general information purposes only and does not constitute legal or financial advice. The rules governing private company share plans in Nigeria are complex and fact-specific. You should obtain advice from a qualified Nigerian corporate lawyer before implementing any equity plan.
CAMA 2020 permits private companies to allot shares to employees. There is no general prohibition on private company share plans. However, private companies face restrictions that do not apply to listed companies: shares in a private company cannot be freely transferred or sold on an exchange; any transfer requires compliance with the company's articles of association, which typically include pre-emption rights (existing shareholders have the first right to buy any shares being transferred). This illiquidity is the central practical challenge for private company employee share plans.
Ready to start investing in Nigerian stocks? Shares Saver registers your shares directly in your own name through SEC-regulated brokers.
The fundamental challenge with private company equity is liquidity. A listed company employee can sell their vested shares on the NGX on any trading day. A private company employee holding shares has no ready market. Their shares are only realisable if the company is sold, undergoes an IPO, or implements a formal share buyback. If none of these events occur, the employee holds illiquid equity that cannot be monetised. For this reason, many private companies prefer phantom share or cash-settled plans until a liquidity event is in sight.
The SEC Nigeria regulatory framework for ESIS (including notification requirements) is primarily designed for listed companies. Private companies are not subject to the same SEC filing obligations. However, if a private company intends to issue shares to a large number of employees in a way that could constitute a public offering, SEC guidance should be obtained. In practice, most private company employee equity plans involve a limited number of senior participants and do not trigger public offer rules.
Shares Saver specialises in employee share plans for Nigerian listed companies. If your company is listed on the NGX, we can design and administer your scheme end-to-end.
Employee Share Plan for Listed CompaniesCreate a free Shares Saver account and start buying Nigerian stocks directly in your name.