The National Insurance Commission, NAICOM, has advised insurance companies to step up efforts in their recapitalisation exercise because deadline for compliance with the first phase of the new minimum paid-up capital by all existing companies remains December 31 while issuance of letters of compliance would be February 26, 2021.
The regulator issued this reminder on Tuesday after it released fresh guidelines for the payment of minimum paid-up share capital by insurance and re-insurance companies in Nigeria.
The move, according to a circular released on Tuesday is in compliance with the first phase recapitalistion directive deadline of December 31 this year.
The Director, Policy and Regulations, NAICOM, Mr Pius Agboola, said that the guidelines were in furtherance to the commission’s earlier circulars dated May 20, 2019, July 23, 2019 and December 30,2019 respectively on the subject matter.
Agboola said that the minimum paid-up share capital would be through any or a combination of either existing paid-up share capital, cash payment for new shares, retained earnings or capitalisation of undistributed profits.
He also listed payment in kind, such as properties, T-Bills, Shares, Bonds, share premium among others for new shares issued.
This, he stated, must be converted to cash not later than three months to the recapitalisation deadline.
According to him, these components are to be converted to paid-up share capital in compliance with the recapitalisation 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 per cent of the existing issued and fully paid shares.
“Submission of recapitalisation progress report shall now be monthly and the report shall be submitted not later than five working days after the end of each month, effective end of August ,” he said.
Agboola stated that timeline and activities for the first phase of the recapitalisation had been scheduled to commence on August 30 for submission of monthly recapitalisation progress report.
He said completion of the submitted reports would be five working days after the end of each month.
Agboola noted that all mergers for the purpose of meeting the first phase of November 30, 2020 recapitalisation would commence on September 14 and would be irreversible, except with a written approval of the commission.
He said NAICOM would commence capital verification on September 21, while communication of capital verification report to respective companies would begin on November 30 this year and end January 21, 2021