NIGERIA Law and Practice Contributed by: Chinyerugo Ugoji, Tiwalola Osazuwa, Onyinyechi Chima and Edidiong Antai, ǼLEX
6.8 Additional Governance Rights A bidder who does not seek 100% ownership of a target may seek additional governance rights such as the right to a board seat(s), the right to appoint a chairperson, the right to appoint and remove key officers such as the CEO or CFO, and veto rights over reserved matters. It should be noted that the possession of some or all of these rights could, even where the bidder has no legal control, trigger a competition filing as the bid - der could be deemed to be able to exercise material influence over the target’s business. See 4.3 Hurdles to Stakebuilding . 6.9 Voting by Proxy Shareholders are permitted to vote by proxy under Nigerian law. 6.10 Squeeze-Out Mechanisms In a takeover, an acquirer may only squeeze out dis - senting shareholders if it has already acquired 90% of the shares that are subject to acquisition. The dis - senting shareholders may elect to have their shares acquired on the same terms offered to the consenting shareholders or to receive fair value for their shares, as determined by the Federal High Court. 6.11 Irrevocable Commitments A bidder is not prohibited from seeking commitments from principal shareholders prior to making a formal announcement of its intention to acquire shares in the target company. The terms of the undertaking will be negotiated and agreed upon by the relevant parties before a formal offer is made to the target company. Irrevocable commitments may give a bidder some certainty as to the outcome of the tender offer, as they could guarantee that the bidder will be able to acquire a minimum number of shares in the target company. The principal shareholder may be bound by an irrevo - cable commitment to the bidder or otherwise be at risk of a civil action for breach of contract, specific performance, injunction or any other remedy agreed with the bidder as a remedy for breaching the com - mitment. In such instances, the principal shareholder may seek indemnity from a subsequent bidder with a
better offer against costs resulting from breaching the irrevocable commitment.
7. Disclosure 7.1 Making a Bid Public
For private company transactions, it is not common for bids to be made public. However, where a transac - tion requires the approval of the FCCPC, the FCCPC publishes a summary of the proposed transaction upon an application for its clearance. For public company transactions, where a mandatory bid is triggered, an application for authority to proceed with a takeover bid should be filed with SEC within three business days of the triggering event, and the intention to make a takeover bid should be published in at least two national daily newspapers and on the company’s website, as well as announced on the floor of any exchange on which the shares are listed. On registration of the takeover bid with SEC, a formal bid can be made by the buyer to the shareholders of the target company and published in two national daily newspapers. The bid is also required to be dis - patched to the board of directors of the target com - pany and SEC at the same time that it is sent to the shareholders. 7.2 Type of Disclosure Required In private transactions, the type of disclosure required would usually be agreed upon by the transaction par - ties. For business combinations involving companies listed on the NGX, any document or advertisement addressed to shareholders containing information or advice from an offeror or the board of an offeree company or their respective advisers must, as is the case with a prospectus, be prepared with the highest standards of care and accuracy. 7.3 Producing Financial Statements There is no requirement to disclose the financial state - ments of the offeror to the shareholders of the target. However, the financial statements of the offeror for five years preceding the offer are to be filed with SEC
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