SIERRA LEONE Law and Practice Contributed by: Gelaga King, Eku Williams, Robert Koroma and Valentina Coker, GPKLegal
3. Recent Legal Developments 3.1 Significant Court Decisions or Legal Developments The National Investment Board Act 2022 and the Employment Act 2023 have indirectly had the most significant impact on M&A, having helped to create a more predictable environment for transactions, lead - ing to a gradual increase in deal activity. The NIB is intended to act as a “one-stop shop” for investors. 3.2 Significant Changes to Takeover Law There have been no significant changes to takeover law in the past 12 months. 4. Stakebuilding 4.1 Principal Stakebuilding Strategies Pre-offer stakebuilding is not customary in Sierra Leone. Although there is a stock exchange, it is very limited in its functioning. 4.2 Material Shareholding Disclosure Threshold The Companies Act, 2009 requires that anyone with a “substantial” shareholding in a public company should disclose the shares they hold. A substantial shareholding for such purposes is a minimum of 10%. The notice must be given within 14 days of acquiring the holding. 4.3 Hurdles to Stakebuilding Companies in Sierra Leone cannot introduce different reporting thresholds in their articles of incorporation or by-laws as these are governed by statute, and statu - tory requirements cannot be evaded by the articles of incorporation or shareholders’ agreements. Other hurdles include the limited functionality of the stock exchange, a stringent regulatory regime and resistance from target company boards, which tend to be risk averse and to view stakebuilding as hostile. 4.4 Dealings in Derivatives Derivatives are not currently used in Sierra Leone. Deals rely on more traditional forms of consideration and risk management.
Employment Act 2023 and Employment Regulations 2023
The Employment Act 2023 consolidates and regulates all aspects of the employer/employee relationship. It provides for continuity of employment contracts dur - ing business transfers, requiring acquirers to honour existing terms unless renegotiated with employee consent. For redundancies, the Act regulates severance pay - ments and imposes consultation with the Ministry of Labour and Social Security. Non-compliance with the act and/or the regulations risks incurring penalties or legal challenges. Work Permit Act 2023 The Work Permit Act 2023 governs foreign employ - ees. In cross-border M&A, acquirers inheriting expatri - ate staff must ensure that such staff hold valid work permits, which are renewable through the Ministry of Labour. Non-compliance can lead to the imposition of fines or deportation. Due diligence should confirm permit status and local content compliance, as Sierra Leone prioritises hiring nationals and capacity build - ing. Collective Bargaining Agreements CBAs negotiated between employers and trade unions apply to all sectors and are sector-specific. They often set minimum wages that are above the statutory minimum, and provide for enhanced leave or job security terms. Acquirers must assume these obligations post-transaction, as the Employment Act of 2023 enshrines CBA applicability and enforceability. 2.6 National Security Review There is no formal national security review of acquisi - tions in Sierra Leone, but the government may scruti - nise deals involving strategic assets. Relevant minis - tries, like Internal Affairs, may intervene if a transaction is deemed to threaten national stability or sovereignty. Although there is no specific law that provides for such reviews, political and economic considerations may lead to informal assessments, particularly for for - eign investors.
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