In a fresh regulatory move, the Central Bank of Nigeria (CBN) has issued a directive clarifying how Financial Holding Companies (HoldCos) and their subsidiaries should compute their minimum paid-up capital.
This clarification stems from persistent confusion that contributed to delays in banks’ half-year and nine-month earnings reports.
In a circular dated November 14, 2025, the CBN ruled that the “minimum paid-up capital” referenced in Section 7.1 of the 2014 Guidelines for Licensing and Regulation of Financial Holding Companies must be calculated strictly as the par value of issued shares plus any share premium from issuance. This definition overrides earlier interpretations with immediate effect.
Addressing financial holding companies directly, the CBN noted “divergent interpretations” in how minimum paid-up capital was understood under its 2014 Guidelines. It stated:
“Minimum paid‑up capital shall be the aggregate of the par value of issued shares and any share premium arising from their issuance.”
The circular mandates all HoldCos, including their subsidiaries, to adopt this narrow definition. Previous understandings that conflict with the new one are to be “discontinued forthwith.”
Industry insiders told Nairametrics that some banks and HoldCos excluded share premium when computing their minimum capital. Others went further, including reserves or retained earnings. These inconsistent practices sparked friction during regulatory reviews, especially when institutions were finalizing their audited and unaudited earnings.
In a number of cases, regulators asked firms to reconcile their capital positions before approving or releasing financial results, a process that contributed directly to delayed earnings filings.
The CBN’s directive strikes at the heart of capital structure for HoldCos. Under existing rules, a HoldCo’s issued share capital must exceed the combined minimum capital of all its subsidiaries. But some HoldCos had been relying on reserves or retained earnings to satisfy this threshold.
By insisting that only issued share capital and share premium count, the CBN forces those HoldCos to re-evaluate their structures. Failure to comply could affect dividend approvals, group reorganisation plans, and the upstreaming of profits.
The clarification comes against the backdrop of the CBN’s broader recapitalisation programme, which demands banks shore up their capital according to new minimum thresholds. These thresholds, introduced in a 2024 circular, exclude retained earnings and rely solely on paid-up capital plus share premium.
By standardising the definition at the HoldCo level, the CBN strengthens its consolidated supervision model, ensuring capital reflects actual shareholder inputs rather than accounting reserves.
With the new rules now in force, banks and their holding companies are expected to revalidate their capital calculations. Going forward, their filings will need to reflect this stricter definition.
The CBN may issue additional capital guidance, as part of its long-term recapitalization framework. The move is widely seen as a bid to reduce regulatory ambiguity, hasten delayed earnings disclosures, and promote uniform capital reporting across Nigeria’s banking sector.
