Beware Of Dubious Private Placements

You must have been approached by some marketers persuading you to buy one private placement or the other. Ideally, private placement is an arrangement where by a privately or publicly owned but not listed company sells parts of it shares to a few members of the public in its bid to increase its capital base and may or may not eventually be listed ( e.g. MTN nigeria) on the stock exchange.

Although the arrangement is a good one but we all need to be wary of some of them because of absence of regulations for private placemnts in the country. A lot of Nigerians have their monies tied in the hands of such companies. Apart  from tying down your money, not all them will meet the listing requiremnts of the Nigerian Stock Exchange.

Some of these companies can't even show you their trading results which is key for listing on the floor.( NOTE: A company must have traded for at least 5 years before it can be listed on the 1st tier and for 3 years on the 2nd tier of the exchange.

You are right. Thanks.

I'm not sure any company that uses dubious private placement to collect money from you will agree to sign any MOU stating your claim to the company.

even though there are no regulatory authorities to moderate PP, there is still the legal bind a share certificate puts on a company. if you have a share certificate or you have a copy of the subscription form you used in buying into the company, you are a legal part owner of the company and you will be treated as such in case of liquidation.

if you don't have either, then you will insist on getting a share certificate from the company not a MOU

I read a report on this post in thisday on sunday(23rd), in fact i thought the reporter saw the post on nairaland before publishing it in the newspaper. I want to thank the author of this post because i have actually invested in some P.P. and  i was about buying another before i stumbled on this post.


This is what i read from the report yesterday.

We are advised to make sure that, the company will remain either a private or public outfit after the close of the offer. A company can be a public company and yet still be unquoted and only this can ensure an early exit.