NIGERIA Law and Practice Contributed by: Chinyerugo Ugoji, Tiwalola Osazuwa, Onyinyechi Chima and Edidiong Antai, ǼLEX
of the company’s assets based on the most recent balance sheet, determined as at the date of the com - pany’s decision to complete the transaction. 2.2 Primary Regulators The primary regulators of M&A activity in Nigeria are: • the Federal Competition and Consumer Protec - tion Commission (FCCPC), which is the agency responsible for merger control and antitrust-related issues; • SEC, which is the regulator of the capital markets and is involved with M&A involving public compa - nies and their subsidiaries; and • sector-specific regulators. 2.3 Restrictions on Foreign Investments Non-Nigerian persons and companies are generally permitted to invest in all sectors and businesses in Nigeria, with the exception of the production of arms and ammunition; production of and dealing in drugs, narcotics and other psychotropic substances; the pro - duction of military and paramilitary wares and accou - trements; and such other items as determined by the Federal Executive Council from time to time. However, there are certain sectors in which compa - nies that are wholly owned by foreign investors can - not operate or which have local content regulations that prescribe minimum local content thresholds and incentives for Nigerian-controlled companies. Exam - ples of such sectors include the oil and gas and avia - tion sectors. 2.4 Antitrust Regulations In Nigeria, the generally applicable merger control framework is contained in the Federal Competition and Consumer Protection Act 2018 and the various regulations, guidelines and notices made pursuant to that statute. Notification Threshold Generally, a transaction resulting in a change in control of a Nigerian undertaking will require the prior approval of the FCCPC, if the notification threshold prescribed by the FCCPC is met. The Notice of Threshold for Merger Notification provides that a merger will require notification to the FCCPC if (i) the combined annu -
al turnover of the acquiring undertaking and target undertaking in, into or from Nigeria equals or exceeds NGN1 billion (approximately USD720,000); or (ii) the annual turnover of the target undertaking in, into or from Nigeria equals or exceeds NGN500 million (approximately USD360,000). Merger Reviews First phase Merger reviews are conducted in a two-stage process. In the first phase, the FCCPC will assess whether the transaction is likely to substantially prevent or reduce competition. If it is likely to, the parties will be allowed to offer remedies if the competition concerns are of a remediable nature. Upon completion of its review, the FCCPC will either approve the transaction uncon - ditionally or subject to accepted remedies or, if the transaction still raises competition concerns, proceed to the second phase, in which it will undertake a sec - ond detailed review. Second phase In the second phase of its review, the FCCPC will consider whether there are any technological efficien - cies or other pro-competitive gains, or public interest grounds, which are sufficient to offset the competition concerns. If the FCCPC makes a positive determina - tion on either ground, it will approve the transaction subject to conditions which it deems appropriate; oth - erwise, the transaction will be refused. 2.5 Labour Law Regulations There are various laws governing employment-related matters in Nigeria. These laws include: • the Nigerian Labour Act; • the Pensions Act; • the Industrial Training Fund Act; • the Employee Compensation Act; and • the Trade Unions Act. In addition to any mandatory provisions of these laws, the relationship between an employee and employer is regulated by contract. Therefore, an acquirer in an M&A transaction ought to be mindful of the target companies’ compliance with the employment-related laws and the relevant contracts of employment. It is usual for Nigerian companies to have standard terms
946 CHAMBERS.COM
Powered by FlippingBook