Planning a merger or acquisition in Nigeria? Learn the legal process, regulatory bodies involved, and key implications for SMEs, startups, and investors.
What Nigerian SMEs Must Know About Mergers and Acquisitions (M&A)
In the dynamic Nigerian business environment, mergers and acquisitions (M&A) have become strategic tools for growth, survival, and market dominance. While large corporations dominate the headlines, small and medium-sized enterprises (SMEs) are increasingly exploring M&A to access capital, technology, and new markets.
But with every opportunity comes legal risk.
What Is a Merger or Acquisition?
- Merger: When two companies combine to form one entity.
- Acquisition: When one company buys the controlling interest of another.
Both actions result in legal, financial, and structural changes that must comply with Nigerian law.
Legal Framework for M&A in Nigeria
- Companies and Allied Matters Act (CAMA) 2020
- Investments and Securities Act
- Securities and Exchange Commission (SEC) Rules
- Federal Competition and Consumer Protection Commission (FCCPC) Regulations
- Sector-Specific Laws (e.g., CBN for banks, NCC for telecoms)
Regulatory Approvals
- Pre-Merger Notification: Required by the FCCPC for transactions that meet monetary thresholds.
- SEC Approval: For public companies or transactions involving share swaps or equity restructuring.
- CAC Filing: Required for structural changes like change of company name, shareholding, or board.
Legal Risks and Due Diligence
- Tax liabilities
- Employee redundancy claims
- Pending litigation or regulatory sanctions
- Undisclosed debts or off-balance-sheet obligations
Conducting legal and financial due diligence is essential before signing any agreement.
Post-Merger Integration
This often involves:
- Amending constitutional documents
- Notifying shareholders and creditors
- Rebranding or restructuring
Final Thought
For SMEs, M&A can be transformative—but only when guided by legal expertise. Whether you’re buying, selling, or merging, always engage a Nigerian business lawyer experienced in corporate restructuring.
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