NIGERIA Law and Practice Contributed by: Chinyerugo Ugoji, Tiwalola Osazuwa, Onyinyechi Chima and Edidiong Antai, ǼLEX
to the court for the same purpose within a further period of 20 days. • A schedule showing details of the target’s share - holders who have accepted the offer and the volume and value of their respective shares, and evidence of payment of the consideration to the shareholders must be filed with SEC within seven days of the offer. • SEC will undertake a post-takeover inspection within three months after the registration of the bid. 6.2 Mandatory Offer Threshold Under Nigerian law, a mandatory offer must be made in the circumstances outlined in 2.1 Acquiring a Com- pany . 6.3 Consideration In Nigeria, the consideration in M&A transactions will generally be cash or shares, or a combination of both, or it may be any other form of consideration other than cash or shares. To deal with valuation uncertainties, some of the mechanisms that parties adopt include earn-outs, deferred consideration, locked-box mechanisms and completion accounts. 6.4 Common Conditions for a Takeover Offer In Nigeria, the conditions attached to a takeover offer will usually be determined by a contract between the parties. Some of the usual conditions will include obtaining all the required internal approvals and reg - ulatory sanctions. For public takeovers, a bidder is required to include the terms on which the shares are to be acquired, among other things. 6.5 Minimum Acceptance Conditions There are no statutorily prescribed minimum accept - ance conditions. Minimum acceptance conditions have been used in tender offers as they are beneficial to a bidder’s attainment of its intended level of control or stake in the target. However, for listed companies, the Rulebook of the NGX requires an offer to state all conditions attached to acceptances, including whether the offer is con - ditional on the receipt of acceptance in respect of a minimum number of securities. In such cases, the
offer should include the minimum number and the last date on which the offer can be made unconditional. The Rulebook of the NGX also prohibits an offer that is conditional on the payment of compensation for loss of offer without disclosing full particulars. In practice, there are cases where a majority share - holder looking to acquire full control of a target by acquiring the shares of the minority shareholders has done so by a scheme of arrangement. The use of a scheme is beneficial for this purpose because once approved by persons holding 75% of the voting rights of the target, the terms of the scheme become binding on all the shareholders of the company. 6.6 Requirement to Obtain Financing The parties to a business combination can agree that the transaction will be conditional on the bidder obtaining financing. This is largely a contractual issue that will need to be negotiated and agreed upon by the parties. For takeovers, SEC requires a bidder to file its evi - dence of source of funds at the point of applying for approval to proceed with the bid. 6.7 Types of Deal Security Measures Bidders generally have the freedom to seek measures they deem necessary to protect their interests in a deal. The type of security a bidder is likely to obtain largely depends on negotiations with their counter - party and their bargaining power. Common deal pro - tection measures include break fees, matching rights and non-solicitation provisions. Although Nigerian law does not expressly prohibit “force the vote” provisions or “no shop” agreements, these measures might con - flict with a target company’s directors’ fiduciary duties under the CAMA 2020. Changes to the Regulatory Environment Impacting the Length of Interim Periods The regulatory changes that may impact the length of interim periods are outlined in 6.1 Length of Process for Acquisition/Sale .
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