NIGERIA Law and Practice Contributed by: Chinyerugo Ugoji, Tiwalola Osazuwa, Onyinyechi Chima and Edidiong Antai, ǼLEX
discussions or negotiations relating to that matter; and • if any question arises before the board of direc - tors as to the existence of a “real” or “perceived” conflict, the board of directors should by a simple majority determine whether a conflict exists (the director or directors potentially involved in the con - flict of interest should not be present during any discussion or voting on the issue). Generally, companies are expected to establish a policy for related-party transactions and to report all related-party transactions in their financial statements. There are no provisions under Nigerian law specifically on hostile tender offers. The existing legal framework for tender offers covers tender offers generally, and it is possible to execute hostile tender offers under the framework. Hostile tender offers are not common in Nigeria. 9.2 Directors’ Use of Defensive Measures There is no legal framework for directors’ use of defensive measures in hostile takeover scenarios in Nigeria. It is possible for directors to adopt common defensive measures available in other jurisdictions, provided that they have regard to their fiduciary duties to the company. 9.3 Common Defensive Measures See 9.1 Hostile Tender Offers . Hostile takeovers are As stated in 9.1 Hostile Tender Offers and 9.2 Direc- tors’ Use of Defensive Measures , there is no legal framework for hostile tender offers, bids and takeo - vers in Nigeria. There are also no provisions specific to defences available to directors in such instances. Directors would, therefore, be bound by their general duties under Nigeria’s company law, which include the duty to: 9. Defensive Measures 9.1 Hostile Tender Offers not common in Nigeria. 9.4 Directors’ Duties
• act at all times in what such directors believe to be the best interests of the company as a whole so as to preserve the company’s assets, further the company’s business and promote the purposes for which the company was formed, and in doing so, have regard to the impact of the company’s opera - tions on the environment in the community where it operates; and • have regard for the interests of the company’s employees in general and the interests of the com - pany’s members. In relation to takeover bids, the board of directors of the target company is required to send a circular to every shareholder of the target company and SEC at least seven days before the takeover bid is to take effect. The circular should contain the opinion and recommendation of the board of directors in relation to the takeover bid, including the effect of the bid on the operations of the company and its employees, as well as expert opinions, where applicable. 9.5 Directors’ Ability to “Just Say No” Directors cannot “just say no” and take action that prevents a business combination. They are expected to take reasoned decisions having regard to the inter - ests of the company, employees, shareholders and environment as a whole.
10. Litigation 10.1 Frequency of Litigation
Litigation is not common in M&A transactions in Nige - ria. Definitive agreements for private M&A transactions would typically contain arbitration provisions. How - ever, these arbitration provisions are rarely invoked, as parties typically favour commercially agreed reso - lutions. 10.2 Stage of Deal
See 10.1 Frequency of Litigation . 10.3 “Broken-Deal” Disputes See 10.1 Frequency of Litigation .
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