NIGERIA Law and Practice Contributed by: Chinyerugo Ugoji, Tiwalola Osazuwa, Onyinyechi Chima and Edidiong Antai, ǼLEX
4.5 Filing/Reporting Obligations Filing obligations under securities and competition laws will arise where a person, due to their deriva - tives holding, becomes a substantial shareholder or becomes a person with significant control of a com - pany. Such a person will be required to comply with the notification requirements discussed in 4.2 Mate- rial Shareholding Disclosure Threshold and may be required to obtain the approval of the FCCPC as dis - cussed in 4.3 Hurdles to Stakebuilding . The SEC Rules on Derivatives require the following: • the registration of all derivatives contracts with SEC before being introduced on an exchange; the registration process involves disclosing certain information, including: (a) risk protection mechanisms; (b) target investors for the derivatives product; (c) trading infrastructure to be deployed by the exchange for surveillance, trading and pricing information; and (d) assessment of the product’s susceptibility to manipulation. • the exchanges to report to SEC participants or clients that own up to 5% or more of total open interest of a particular contract; • the exchanges to notify SEC on position limits, methodologies and rationale used for determining the limits; • market participants to disclose information, when needed, on their trading and clearing activities and make quarterly disclosures on outstanding deriva - tives exposure from proprietary positions to SEC and in their quarterly and annual financial state - ments; • participants to provide full disclosure of contract specifications and accompanying risks to their clients before accepting orders; and • all OTC derivatives to be reported to a trade repository or an exchange. 4.6 Transparency Where a merger control filing is required, an acquirer will be required to provide the FCCPC with the ration - ale for the acquisition.
Furthermore, for listed companies, an application seeking NGX approval for an acquisition must include the buyer’s investment objectives, management con - tinuity plans and the post-acquisition management profile of the target. The buyer’s intentions regarding the target’s employees must also be disclosed.
5. Negotiation Phase 5.1 Requirement to Disclose a Deal Disclosures by Listed Companies
For listed companies, the giving or receiving of a notice of the intention to make a takeover, merger, acquisition, tender offer or divestment is classified as price-sensitive information. While a listed company is not prohibited from disclosing a deal to the relevant advisers, it is required to advise such advisers or any relevant third party of the confidential nature of the information and that it constitutes insider information. Where a listed company is required to disclose price- sensitive information to a third party or regulator and such information enters the public domain, the com - pany must ensure that the information is simultane - ously released to the market. A target company is required to announce a proposed transaction after its board has approved the terms of the definitive agreements for the deal. Disclosures by Private Companies and Unlisted Public Companies There is no requirement for private or unlisted public companies to announce deals. Therefore, parties are free to deal with such disclosures as they wish, sub - ject to any confidentiality agreements that may exist. However, parties tend to limit information to employ - ees generally, except for senior management. 5.2 Market Practice on Timing The market practice on timing of disclosure does not differ from the legal requirements discussed above. 5.3 Scope of Due Diligence In Nigeria, due diligence exercises will usually cover legal, commercial, financial and tax issues. The scope of the diligence exercise will differ from one transac -
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