The Securities and Exchange Commission’s Regulatory Incubation Program for Fintech Startups in Nigeria

A Summary

A group of people are walking in front of a screen that says fintech.
Introduction

Recently, the Nigerian Securities and Exchange Commission (“SEC”) issued a circular introducing its Regulatory Incubation Program (“the Program”) for Financial Technology (“FinTech”) Companies.1. SEC describes the new regulation as an interim measure to aid the evolution of effective regulation. SEC aims to accommodate innovation by FinTech companies without compromising market integrity and investor confidence in the sector. The Program, which has two stages, i.e. the Initial Assessment Stage and the Regulatory Incubation Phase, was set to commence in the 3rd Quarter of 2021, will run for a period of 1 year. It will admit FinTech companies in line with its guidelines. Mainly, the SEC will supervise eligible FinTech companies to make them regulatory ready and compatible before they become fully established.


Eligibility for the RI Program:
To be eligible for the Program, the Applicant must:
1. Be using innovative technology to offer a new type of product or service, or applying innovation to an existing financial product or service;
2. Be involved in or seeks to be involved in an activity that, if carried on in or from Nigeria, is a financial service which SEC regulates;
3. Be ready to take off with live customers and operate within the purview of the SEC Regulatory Framework;
4. Register as soon as rules guiding the RI Program are released by SEC;
5. Offer a product or service that addresses a problem (compliance or supervision) or brings potential benefits to consumers or the Nigerian Capital Market;
6. Ensure that the product is safe for investors; and
7. Complete the FinTech Initial Assessment Form and discuss the proposal with SEC at an early stage.
An applicant who meets these requirements proceeds to the Initial Assessment Phase.


The Initial Assessment Phase

At this phase, the applicants must fill the FinTech Initial Assessment (“FIA”) Form and pay a processing fee of N200,000 (Two Hundred Thousand Naira). A response will be given to the FIA Form within 15 working days from its submission.


Where a regulatory framework that regulates the product exists, the SEC will guide the applicant, and if no framework exists, the applicant will be directed to fill and submit the Regulatory Incubation (“RI”) Form within 16 working days. The RI Form is to be submitted with an Implementation Plan for the applicant’s product.


The Implementation Plan shall contain

1. A full description of the business and the proposed innovative product, service or business model, including the type of technology;
2. The objectives and parameters for the incubation period;
3. The implementation timeline and critical milestones for testing;
4. The existing/target customers;
5. A Risk Management Framework, clearly stating key risks and how they will be controlled and mitigated, including insurance cover;
6. A description of how the entity will ensure that customers fully understand the risks;
7. A description of how communications with customers will be handled before and during the incubation period, including how the entity will deal with queries, feedback and complaints;
8. A description of the next steps at the expiration of the incubation period; and
9. A clear exit plan if registration is not achieved, including how the entity will fulfil its obligations to its customers.


Upon filing and submission of the RI Form, the SEC will respond within 20 working days of confirmation whether:

1. admission has been granted to the RI Program subject to the Terms and Conditions of Admission;
2. the applicant will be admitted to the RI Program at a future date; or
3. The application is declined.


After the Initial Assessment Phase has been passed, the applicant shall receive a Letter of Admission into the RI Program from SEC and, within three working days from the receipt of the letter, undertake to:


1. be deemed fit and possess relevant skills in financial services and/or technology;
2. act with integrity, due care, and diligence, and provide referee information;
3. provide complete information to clients and commit to sending them regular feedback;
4. provide full disclosure to SEC on the business through an incubation implementation plan;
5. provide the procedure for holding and controlling client assets;
6. comply with all relevant laws and regulations;
7. have an office in Nigeria;
8. comply with Anti-Money Laundering /Combatting the Financing of Terrorism (AML/CFT) requirements; and
9. provide monthly reports to SEC.


Regulatory Incubation Phase

Admitted applicants must comply with all prescribed provisions in the Guidelines. Applicants will receive quarterly feedback on their product or service from the RI Team, and by the 10th month of admission, the applicant shall receive a guideline issued by SEC that will direct its business. At the end of the year, applicants will exit from the Program with clear directives from SEC on the next steps to take. The applicant will commence operations as an entity registered under SEC, and SEC may also terminate its activities where it:


1. is found no longer fit to participate in the process;
2. has breached any restrictions or conditions imposed on its participation;
3. has breached the Laws of the Federal Republic of Nigeria or the Guidelines;
4. deviates from its Implementation Plan; or
5. has not promptly taken steps either to apply for registration or submit a notice of discontinuance after one year of the regulatory incubation process.


Conclusion

The introduction of the Regulatory Incubation program by SEC positions it in a new light as a growth and development facilitator. It provides some form of certainty and a clear pathway for developing the Nigerian security and financial system towards fostering overall economic growth.

 

Reference

“Circular on the SEC Regulatory Incubation Program” by SEC, accessed 29 June 2021. https://sec.gov.ng/circular-on-the-sec-regulatory-incubation-program/.


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Every film begins with an idea, but ideas alone are not protected by law. Under Nigerian and international copyright law, ideas are not protected; only a tangible expression such as a written script, can be protected under copyright [1] . The establishment of ownership via the authorship of a comprehensive documentation represents the foundational legal procedure in the filmmaking industry. Where screenwriters or creators adapt existing works, whether novels, news articles or real-life events, they must go a step further to secure adaptation rights. This often involves the execution of a rights acquisition agreement, usually in the form of an option contract. This contract grants temporary rights to adapt a work, often subject to clearly defined timelines and payment terms. A widely publicized example of the above is the controversy surrounding Òlòtūré, a 2020 Netflix original produced by Ebonylife Studios. Shortly after its release, the film drew criticism when investigative journalist Tobore Ovuorie claimed it closely mirrored her 2014 undercover exposé on human trafficking in Nigeria, originally published by Premium Times Newspaper. While the producers claimed to have obtained rights from Premium Times, the publisher of her story, Ovuorie contended that no one had the authority to license her life experience without her permission. Her claims sparked a wider conversation and spotlighted not only copyright considerations, but also moral rights and the ethical obligations filmmakers have especially when telling personal stories. In the end, the Òlòtūré case is a strong reminder that legal compliance is only the floor and not the ceiling. In matters involving real people and sensitive narratives, meaningful engagement is often as important as formal rights acquisition. Confidentiality is another concern at this stage. In practice, many filmmakers use Non-Disclosure Agreements (NDAs) to protect concepts when collaborating with potential partners or investors [2] . NDAs while not infallible, remain a useful tool for safeguarding ideas during the ideation stage. Pre-Production: Building the Legal Foundation Once the creative direction is set, the focus shifts to establishing the film’s legal and operational structure. The corporate set-up and structuring is usually the first box to tick during the pre-production phase. Filmmakers and producers typically incorporate a special purpose vehicle (SPV), usually a limited liability company [3] . This is to ring-fence the project, provide personal liability protection, as well as clear management of tax, accounting and contractual obligations. Financing would typically follow corporate set up and this requires extensive legal overview and diligence. Amongst others, investor agreements remain relevant hereunder. They address the issues surrounding the investment and finance framework including but not limited to; return on investment, ownership rights, and profit-sharing. Although rarely, capital may be raised from the public; where this is the case, securities regulations will apply. Again, there is an attention to human resource as such talent and crew contracts remain relevant to the film making industry and architecture. There contracts must and should clearly outline obligations around responsibilities, compensation, credit entitlement, and dispute resolution mechanisms etc. This helps reduce ambiguity and mitigate the risk of post-production dispute. Another area of concern will be the permits and licensing right relating to locations and filming. Permission must be obtained for filming on private and public property. In many countries, including Nigeria, filming in a location without authorization can lead to lawsuits, equipment seizure, or production shutdown [4] . Production: The Legalities surrounding “Action!” “Cameras, Lights, Action!”. As cameras begin to roll, legal stakes begin to materialize in real time. A plethora of legal considerations ranging from consent to regulatory compliance come to life during this phase. Whilst preparing for on-screen appearance by actors, extras or general members of the public, consent must be gotten, and filmmakers are encouraged to obtain release forms from individuals appearing onscreen. This is especially important for documentary projects or public footage, where lack of consent can expose the production to privacy or defamation claims. Production must comply with applicable labour laws [5] , regarding working hours, wages, health and safety regulations. Where personnel are unionized, compliance with the terms of collective bargaining agreements is important as non-adherence may attract regulatory sanctions or litigation. Insurance is also a consideration that must be at the top of the list as it acts a shield in the face of liability. Two major forms of insurance; Errors & Omissions (E&O) insurance- which covers legal risks like defamation, copyright infringement, or invasion of privacy [6] and general liability insurance which covers accidents or injuries on-set. Lack of adequate insurance could jeopardize production as a single legal claim could bankrupt the entire project. Also, Brand logos, artwork, music, or even incidental background visuals must be cleared or licensed. Failure to do so can trigger infringement actions and post-production delays. Post-Production: Finalising Rights and Risks The editing room may feel far from legal issues, but this stage is where creative and legal threads converge. In the editing room, attention turns to licensing, credit, compliance, and final clearances. First, proper documentation around the use of music must be in place. 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Before a film can be distributed, streaming platforms and broadcasters require a full chain of title—a documented trail of ownership from idea to final production. If any ownership rights are unclear, this may present a block to distribution or broadcasting of the film. Distribution: Protecting Value and Enforcing Rights Distribution is the final legal frontier—and often the most consequential for revenue generation. Distribution agreements define who can distribute the film, in what territories, for how long, formats (e.g., cinema, streaming, DVD). The agreements also govern revenue sharing, exclusivity and language or subtitle terms. Streaming platforms like Netflix or Prime often require exclusivity periods and specific licensing agreements. Additionally, films must comply with censorship and classification laws. In Nigeria, for instance, the National Film and Video Censors Board (NFVCB) [9] must review and approve films before public release. Non-compliance can attract fines or bans. Finally, legal counsel is needed to manage royalty agreements. Where, cast, writers, or financiers are entitled to royalties or profit share, well-drafted backend agreements are essential to avoid future disputes and ensure fair compensation. CONCLUSION Filmmaking is art, but beneath the artistry lies an elaborate legal system without which no film can be safely made or commercially exploited. From the ideation through post-production and distribution, legal considerations shape every stage of the creation process. The law and legal counsel are not a postscript to the filmmaking process; it is the quiet but crucial backbone behind every frame and a necessary consideration for Nigerian filmmakers aiming to compliantly penetrate both local and international markets. [1 ] Copyright Act, 2022 [2] Non-Disclosure Agreement (NDAs) For Film And TV Executives In Nigeria [3] Section 21, Companies and Allied Matters Act 2020 [4] Section 17, National Film and Video Censor Board Act 1993 [5] Labour Act, 1971 [6] Olisa Agbakoba Legal, S.E.T Guide to Entertainment Law, (2022), 20 [7] Section 15 (1) of the Nigerian Copyright Act, CAP C28, LFN 2004 [8] (2020) 13 NWLR (Pt. 1742) 415. [9] Section 17, National Film and Video Censor Board Act 1993