NIGERIA Law and Practice Contributed by: Chiagozie Hilary-Nwokonko and Chukwuyere Ebere Izuogu, Streamsowers & Köhn
In the communications sector, the following transactions are caught: • the acquisition of more than 10% of the shares of a communications licensee; • a transaction that results in a change of con - trol of a communications licensee; and • a direct or indirect transfer or acquisition of an individual communications licence. 2.4 Definition of “Control” Neither the FCCPA nor the FCCPC defines what constitutes control for merger notification pur - poses. However, Section 92 (2) of the FCCPA provides a list of situations where an undertaking may be determined to exercise control over the business of another undertaking. These situa - tions are where an undertaking: • beneficially owns more than one-half of the issued share capital or assets of another undertaking; • is entitled to cast the majority of votes that may be cast at a general meeting of the com - pany or can control the voting of the majority of those votes; • is able to appoint or veto the appointment of a majority of the directors of the undertaking; • is a holding company, and the company is a subsidiary of that company as contemplated under the Companies and Allied Matters Act; • in the case of an undertaking that is a trust, has the ability to control the majority of votes of the trustees, to appoint the majority of the trustees or can • materially influence the policy of the company in a manner comparable to a person who, in ordinary commercial practice, can exercise the element of control referred to in the above points.
According to Section 92 (3) of the FCCPA, con - trol does not exist in either of the following cir - cumstances: • credit institutions or other financial institutions or insurance companies acquiring securities of an undertaking in the ordinary course of business on a transitory basis or where the company is raising capital, provided they do not exercise voting rights to determine the competitive behaviour of the undertaking and they dispose of the securities within one year of acquisition; and • control acquired under the law relating to liquidation, winding up, insolvency, cessa - tion of payments, compositions or analogous proceedings. In addition, as explained in 2.1 Notification , con - trol is only one of the criteria used to assess whether a merger is notifiable to the FCCPC; the other is the turnover threshold. If these two cri - teria are met, then a merger is caught and must be notified to the FCCPC. 2.5 Jurisdictional Thresholds See 2.1 Notification . 2.6 Calculations of Jurisdictional Thresholds The jurisdictional threshold necessary to trigger a merger review involves two cumulative criteria that must be met in every case: the control ele - ment and the turnover test. Only the turnover test involves calculations which must be done in accordance with the Threshold Regulations. Pursuant to paragraph 1.1 of the Threshold Regulations, the turnover test is met if, in the financial year preceding the merger: • the combined annual turnover of the acquir - ing undertaking and the target undertaking in,
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