NIGERIA Law and Practice Contributed by: Chinyerugo Ugoji, Tiwalola Osazuwa, Onyinyechi Chima and Edidiong Antai, ǼLEX
2. Overview of Regulatory Field 2.1 Acquiring a Company
Exchange Commission (SEC) and at least 75% of the company’s shareholders. Takeover A mandatory takeover offer obligation arises when (i) a person, whether by a series of transactions or not, intends to acquire shares representing 30% or more of a public company’s voting rights or (ii) a person, whether by a series of transactions or not, acting in concert with another, intends to acquire shares which taken together with the shares held, represent 30% or more of a public company’s voting rights. Gener - ally, dealmakers’ chosen structure depends on various factors, including tax implications, cost implications, complexity, time constraints, stake size, strategic and business plans, acquirer’s risk appetite and regulatory constraints. Asset Acquisition An asset acquisition generally involves acquiring spe - cific assets and rights, and in some cases, assuming certain liabilities of a company. In this structure, par - ties must identify and negotiate the specific assets the buyer will acquire, as assets do not automatically transfer to the buyer. The seller in an asset acquisi - tion is the company itself, not its shareholders. An asset acquisition is executed through an asset sale agreement containing the specific details of the assets being acquired and the conditions under which they are transferred or acquired. Parties must ensure com - pliance with all formalities required for the transfer of specific assets, including regulatory consents, third- party consents, and transfer formalities for assets such as land and intellectual property rights. If the asset acquisition constitutes a “major asset transaction” under the Companies and Allied Matters Act 2020 (“CAMA 2020”), shareholder approval of the target company is required. The default requirement is approval by at least 75% of the votes cast at a duly convened general meeting, unless the company’s articles of association provide that approval may be obtained by a simple majority of the votes cast. The CAMA 2020 defines a major asset transaction as (i) a purchase or other acquisition outside the usual course of a company’s business or (ii) a sale or transfer out - side the usual course of a company’s business, of assets representing 50% or more of the book value
In Nigeria, acquisitions of private companies are typi - cally structured as share purchases pursuant to share sale and purchase agreements or share subscrip - tions. Acquisitions of public companies are commonly implemented through court-sanctioned schemes of arrangement and schemes of merger. A scheme requires approval by at least 75% in value of the shares of members present and voting (in person or by proxy) at a court-ordered meeting. Following share - holder approval, the scheme must be sanctioned by the court, and the court order filed with the Corporate Affairs Commission (CAC) for it to become effective. A company’s business may also be acquired through the acquisition of all or substantially all of its assets pursuant to an asset purchase agreement. Generally, dealmakers’ chosen structure depends on various factors, including tax implications, cost impli - cations, complexity, time constraints, stake size, stra - tegic and business plans, acquirer’s risk appetite and regulatory constraints. Share Acquisition A share acquisition generally involves the acquisition of some or all of the shares of a target company. If it includes a subscription for shares, the acquisition would be between the acquirer and the company. If a share transfer is anticipated, the acquisition is between the acquirer and the relevant shareholder(s) of the target company. It could also involve a com - bination of share subscription and share transfer, in which case the acquirer contracts with the target com - pany and the selling shareholder(s). For publicly listed companies, shares can be acquired through the relevant securities exchange, private placement or takeover (mandatory or otherwise). Private Placement Public companies are permitted to issue securities to the public. However, they can issue shares to select investors through private placements, provided that they obtain prior approval from the Securities and
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