SS2 Third Term Financial Accounting Lesson Note – Requirement for Accessing the Capital Market and Benefits of Capital Market

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WEEK FOUR (3)    

TOPIC: REQUIREMENT FOR ACCESSING THE CAPITAL MARKET AND BENEFITS OF CAPITAL MARKET

CONTENTS:

• Requirements:
• requirements
• stages in accessing the capital market
• benefits of capital market

Sub topic 1: Requirements for accessing the capital market

MUST BE PUBLIC COMPANY: The first requirements a company needs in order to access the capital market, is to be registered as public company.

MUST PRESENT COMPANY AUDITED ACCOUNT: for the capital market to recognize companies either register or not, the company must employ the service of a professional accountant, to audit the financial statement of the company.

MUST APPOINT MARKET OPERATOR AND CONSULTANT: The Company needs a market operator and consultant. The company needs professional advisers, which a company had used in the past, may not necessarily be suitable or experienced to take the company to the market because of the specialist input required.it means that consultant must be a professional.

STAGES IN ACCESSING THE CAPITAL MARKET

INTRODUCTION

From beginning to end, the process of taking a private company to the Daily Official List of       the Nigerian Stock Exchange can be broken down into stages. The stages are:

• Consultation/Discussion Stage
• Decision Making/Mandate Stage
• Documentation/Packaging Stage
• Regulatory – NSE Quotation Approval/SEC Registration Stage
• Completion Board Meeting Stage
• Distribution/Marketing Stage
• Range of Analysis/Allotment Stage
• General Undertaking/Declaration of Compliance Stage

Consultation/Discussion Stage

A company that desires to raise funds and is considering the stock market option may approach

Its local banker or an issuing house. Alternatively, an issuing house may approach a company with a proposal for re-capitalization through the stock market. If the initiative is from an

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