NIGERIA Law and Practice Contributed by: Tosin Ajose, Izuchukwu Ubadinma, Deborah Leshi and Precious Omope, DealHQ Partners
mitted to the SEC as part of the approval process for M&A transactions. The SEC requires the filing of the Offeror’s Annual Report and accounts for the preceding five years (or fewer if the company has been in operation for less than five years) when applying for the registration of a takeover bid. This requirement enables regulators and shareholders to assess the financial health or value of the bidder’s shares they would receive in exchange for their own. For cash transactions, the emphasis is different. Here, the primary concern would be for the target company and its shareholders to ascertain the sufficiency of the bidder’s funds to complete the transaction. Required Accounting Standards The Financial Reporting Council of Nigeria has adopt- ed International Financial Reporting Standards (IFRS) as the mandatory accounting standard for all public interest entities, including companies listed on the NGX and other regulated companies. Therefore, any financial statements submitted by a bidder in a public transaction must be compliant with IFRS in order to ensure transparency, consistency and comparability for all stakeholders. 8.4 Disclosure of Transaction Documents Public companies or mergers that meet the notification threshold would need to submit definitive transaction agreements to the relevant regulatory agency. The SEC demands the filing of the share purchase agreement or asset purchase agreement and any other relevant executed agreement, alongside the statutory disclosure documents. Similarly, the FCCPC requires the submis- sion of all documents forming the basis of the merger. Other filing requirements from regulatory agencies like the FIRS, CAC and CBN must be adhered to where relevant.
erally interpreted to mean the collective interests of the shareholders. Under the CAMA and common law principles, directors must act honestly, in good faith, and in what they reasonably believe to be the best interests of the company. Their principal duties include the following. • A duty of care, skill and diligence to make the informed and prudent decisions reasonably expected of someone in their position. This involves thoroughly reviewing financial, operational and legal information relating to the business com- bination, to ensure that decisions are well ground- ed and in the company’s best interest. • A fiduciary duty to act bona fide in the interests of the company by prioritising the company’s inter- ests over personal gain and avoiding conflicts of interest. • Directors are prohibited from using confidential company information or corporate opportunities for personal benefit. Any opportunity identified through the company’s business, resources or position must be assessed in the company’s interest first, before considering personal gain. • Directors must disclose any personal or financial interest in proposed transactions or arrangements involving the company. Full transparency ensures that potential conflicts of interest are addressed, and that all decisions are made with integrity and fairness to the company and its shareholders. • Directors must ensure full and fair disclosure to shareholders, obtain independent valuation or fairness opinions where appropriate, and refrain from actions that frustrate a bona fide offer without shareholder approval. While the primary duty is to shareholders, directors are also expected to consider the interests of employ- ees, creditors and the community, especially where the company’s solvency or continuity may be affected by the transaction. 9.2 Special or Ad Hoc Committees It is common practice for boards of directors to estab- lish special or ad hoc committees in the context of busi- ness combinations, particularly in mergers, acquisitions or tender offers. These committees are usually tasked
9. Duties of Directors 9.1 Principal Directors’ Duties
In a business combination, directors owe their duties primarily to the company as a whole, which is gen-
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