NIGERIA Law and Practice Contributed by: Chinyerugo Ugoji, Tiwalola Osazuwa, Onyinyechi Chima and Edidiong Antai, ǼLEX
during the application for the registration of a takeover bid. Financial statements are typically prepared under the GAAP or IFRS principles. With the introduction of the Business Facilitation (Mis - cellaneous Provisions) Act 2023, financial statements are to be prepared in the form and content adopted by the Financial Reporting Council of Nigeria. 7.4 Transaction Documents It may be necessary to disclose transaction docu - ments in full to regulatory bodies in the process of obtaining requisite transaction approvals or waivers. Under Nigerian law, directors have extensive com - mon law and statutory duties which apply in the per - formance of their duties, including during a business combination. The principal duties include the duty to act in good faith at all times in the best interests of the company as a whole. The directors are also expected to have regard to the impact of the company’s operations on the environment in the community where it operates, the interests of the company’s employees in general and the interests of the company’s members. 8. Duties of Directors 8.1 Principal Directors’ Duties If any payment is to be made to a director of a com - pany as compensation for loss of office or as consid - eration for or in connection with the director’s retire - ment during a business combination, it is the duty of that director to do all things reasonably necessary to ensure that particulars with respect to the pay - ment and the amount are included in, or sent with, any notice of the offer made for the shares which are given to any shareholder. 8.2 Special or Ad Hoc Committees It is common for boards of directors to establish spe - cial or ad hoc committees in business combinations. The aim is usually to ensure efficiency and effective - ness during the process. The committees may also be used in cases where directors have a conflict of
interest, although there is no regulatory requirement to do so. 8.3 Business Judgement Rule The general approach of courts in Nigeria is to uphold decisions of the board of directors which have been made within the bounds of their powers under Nige - ria’s company law and the company’s constitutional documents. While there has been no case law in Nigeria on the business judgement rule in takeover situations, it is expected that the courts will defer to the judgement of the board of directors provided that there has been no breach of the directors’ duties, fraud or negligence. 8.4 Independent Outside Advice It is typical for directors to obtain independent third- party advice from financial, tax and legal advisers in connection with business combinations. 8.5 Conflicts of Interest Conflicts of interest are scrutinised in Nigeria. In the context of directors, Nigeria’s company law pro - vides that the personal interest of a director shall not conflict with any of their duties as a director under the law and that a director shall not, in the course of managing the affairs of a company, make any secret profit or achieve other unnecessary benefits. It is also the duty of any director of a company who is in any way, whether directly or indirectly, interested in a transaction or a proposed transaction with a com - pany, to immediately notify the other directors of such company in writing, specifying the particulars of the director’s interest. In addition, the 2018 Nigerian Code of Corporate Gov - ernance recommends that: • directors should promptly disclose any “real” or “perceived” conflict of interest that they may have by virtue of their membership of the board of direc - tors; • a director may not be present when any matter in which they have an interest is being decided and should not seek to participate in or influence any
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