Detailed answers to the regulatory, operational, and practical questions about Employee Share Investment Schemes (ESIS) for Nigerian listed companies.
An Employee Share Investment Scheme (ESIS) is the formal regulatory term used by SEC Nigeria for an arrangement through which a listed company enables its employees to acquire or hold shares in the company. The scheme may operate through direct allotment, payroll deduction purchase, or a combination of both. Shares are registered in each participant's name at the CSCS and held through an independent trust during the vesting period.
Any company listed on the Nigerian Exchange Group (NGX) is eligible to establish an ESIS, subject to board approval and — where required by CAMA 2020 — shareholder consent at a general meeting. The formal regulatory framework for ESIS is designed for listed companies. Private companies can offer employee equity arrangements but face different practical constraints (particularly around share liquidity and transferability).
A listed company must obtain board approval (by board resolution specifying the scheme terms) and typically shareholder approval at a general meeting. The company must notify SEC Nigeria of the scheme. If the scheme involves allotment of new shares, a valid share allotment authority must be in place. The independent trust deed must be registered with the CAC. Shares Saver works alongside legal advisers to manage the full approval process.
An independent trust holds company shares on behalf of scheme participants pending vesting. The trust is governed by a trust deed and managed by independent trustees. This structure ensures CAMA 2020 compliance with the financial assistance exemption, protects employee interests (shares are held by a third party, not by the employer), and provides a clear governance framework for allotments, vesting events, and leaver situations.
Under cliff vesting, all shares vest on a single date (e.g., after three years). Under graded vesting, shares vest in tranches — for example, one-third per year over three years. Cliff vesting maximises retention pressure at the vesting date. Graded vesting provides continuous retention incentive and gives employees a partial benefit even if they don't complete the full vesting period. Most Nigerian ESIS use graded vesting over three to five years.
Each participant must have a CSCS account with a valid CHN (CSCS Holder Number). If an employee does not already have a CHN, the scheme administrator opens one on their behalf as part of the enrolment process. Shares are then registered directly in the employee's name — so they are a direct registered shareholder of the company, not just a beneficial owner.
The taxable benefit arises at allotment: the market value of shares allotted is treated as employment income subject to PAYE at the relevant rate. Dividends on shares are subject to 10% Withholding Tax deducted at source by the company's registrar. Gains on disposal of NGX-listed shares are currently exempt from Capital Gains Tax. Employees should consult a qualified Nigerian tax adviser for advice on their specific situation.
Death is universally treated as a 'good leaver' event in Nigerian ESIS. On the death of a participant, their vested shares pass to their estate. Unvested shares are typically either accelerated to vest immediately or paid out on a pro-rata basis, depending on the scheme rules. The trustee and administrator manage the estate claim process, including obtaining a grant of probate or letters of administration.
Yes. Once shares vest, the employee has unconditional ownership and can sell through any licensed NGX stockbroker. However, some scheme rules impose a post-vesting holding period or trading restrictions (for example, executives subject to insider trading black-out periods cannot sell during closed periods). Outside of any such restrictions, vested shares can be freely sold on the NGX.
In a payroll deduction scheme, the employee elects to save a percentage of their salary (or a fixed naira amount) each month. The payroll team deducts this amount and transfers it to the scheme administrator (Shares Saver). The administrator aggregates all deductions and executes share purchases on the NGX through a licensed stockbroker. Purchased shares are allotted to each employee individually and registered at CSCS in their name.
There is no legal difference — the terms are used interchangeably. 'Employee share scheme,' 'employee share plan,' and 'employee share investment scheme (ESIS)' all refer to the same type of arrangement. The formal SEC Nigeria term is ESIS. Shares Saver uses all three terms to match the search language used by different HR and corporate finance professionals.
Shares Saver's administration platform maintains complete records of all allotments, vesting events, participant accounts, and scheme transactions. At year-end, the platform generates the annual ESIS compliance report in the format required by SEC Nigeria. This report covers participant counts, allotment values, vesting events, and scheme rule compliance. The company secretary reviews and submits the report to SEC Nigeria as part of the annual reporting cycle.
Shares Saver handles the full administration of employee share investment schemes for Nigerian listed companies — from SEC notification to CSCS registration to employee dashboards.
Contact Us