1 Relevant Authorities and Legislation
1.1 Who is/are the relevant merger authority(ies)?
The regulatory oversight for mergers and acquisitions in Nigeria is vested in the Federal Competition and Consumer Protection Commission (the "Commission" or "FCCPC") by virtue of the Federal Competition and Consumer Protection Act 2018 ("FCCPA" or "Act"). The FCCPA repealed certain sections of the Investments and Securities Act 2007 ("ISA") dealing with the Securities and Exchange Commission's ("SEC") previous regulatory oversight of mergers. The FCCPA makes provision for the creation of the FCCPC. The Commission acts as the competition regulator empowered to prevent and punish anti-competitive practices, regulate mergers, takeovers and acquisitions, and protect regulated industries in every sector and location in Nigeria. It also creates a Competition Tribunal to deal with any disputes and concerns that may arise.
The role of the SEC under the ISA as amended by the FCCPA in mergers and acquisitions is limited to fairness consideration in the exercise of its primary function as the regulator of the capital market.
Additionally, the SEC, on August 30, 2021, released New Rules and Amendments to its SEC Rules of 2013, which previously regulated mergers in Nigeria. Part 4 of the New Rules and Amendments covers mergers, acquisitions and combinations involving the acquisition of shares, assets, business or subsidiaries of a public company, which also aligns with its primary function as the regulator of the capital market.
The Corporate Affairs Commission ("CAC"), established by the Companies and Allied Matters Act 2020 ("CAMA") CAP C20 LFN 2004, also plays a part with respect to corporations that intend to merge. It is the responsibility of the CAC to receive corporate filings and to certify corporate resolutions and the de-registration of any dissolved company that may occur in the merger process. The new CAMA received Presidential assent on August 7, 2020, and came into force on January 1, 2021.
The Nigerian Exchange Limited ("NGX") is a self-regulatory body that runs the exchange for trading in shares. Quoted companies must meet the listing rules on merger transactions. Listed companies are required to submit to the NGX drafts of all circulars issued by the company to its shareholders; they are also required to disclose any conflict-of-interest issues between directors of merging companies. In addition, a listed company may have to be delisted due to a merger.
The Federal High Court ("FHC") also acts as a relevant judicial authority in merger control. Section 251 of the 1999 Constitution (as amended) of the Federal Republic of Nigeria gives the FHC the power to handle matters with respect to companies' operation, management and regulation. The FHC makes orders for shareholders' meetings to consider arrangement/compromise schemes that involve the transfer of shares. In addition, there are some sectoral merger regulatory authorities which may be involved depending on the business of the company. For instance, the National Insurance Commission ("NAICOM") would be a merging authority where the entity/entities involved is/are an insurance company, and the Nigerian Communications Commission ("NCC") for the telecommunications industry. The Central Bank of Nigeria ("CBN") performs a similar role for mergers in the financial services sector. On August 3, 2021, the CBN issued the Guidelines for Licensing and Regulation of Payments Service Holding Companies in Nigeria ("PSHC Guidelines"), wherein provisions as to control were provided. Paragraph 4 of the PSHC Guidelines states that prior approval of the CBN shall be obtained for any shareholding of 5% and above, or any change in ownership that results in a change in control of the payment service holding company ("PSHC"). Furthermore, where such shares are acquired through the secondary market, the PSHC shall apply for approval from the CBN within seven days of the acquisition.
1.2 What is the merger legislation?
The FCCPA is the key legislation on mergers in Nigeria. The FCCPA introduced significant changes to the regulation of mergers. The FCCPA repealed Sections 118-128 of the ISA. However, the SEC may still exercise the function under Section 121(1)(d), which empowers the SEC to determine whether all shareholders are fairly, equitably and similarly treated, and given sufficient information regarding the merger in line with Section 165(2) of the FCCPA. The FCCPC, pursuant to its powers under the FCCPA, has issued various regulations and guidelines for mergers in Nigeria. These regulations include: the Notice of Threshold for Merger Notification, 2019 ("Notice"); the Notice in Respect of Indicative Timeframes for Merger Notification and Review Process, 2020; the Merger Review Regulation, 2020 ("Rules"); the Merger Review (Amended) Regulations, 2021; the Guidelines on Simplified Process for Foreign-to-Foreign Mergers with Nigerian Component, 2019 ("Guidelines"), which were issued to provide a guide for obtaining the Commission's approval for offshore merger transactions; and the Merger Review Guidelines 2020, which were issued to govern the notification and review of mergers under the FCCPA.
The Companies Income Tax Act (Amendment) 2007 also requires the consent of the Federal Inland Revenue Service to a proposed merger or acquisition in relation to the capital gains tax payable. Section 25(12) of the Act provides that no merger, takeover, transfer or restructuring of trade or business carried out by a company shall take place without having obtained the Federal Inland Revenue Service's direction and clearance with respect to any tax that may be due and payable under the Capital Gains Tax Act. The CAMA is also applicable as well as the rules of the FHC. Sectoral pieces of legislation may also apply depending on the business of the merging companies.
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