Nigeria

Introduction  Shareholder disputes are a major governance issue in Nigerian private companies. Because these companies are often closely held, with overlapping owners and managers, and limited ability to sell shares, disagreements can quickly turn into long legal battles. The main law for these disputes is the Companies and Allied Matters Act 2020 (CAMA 2020),[1] supported by court-made equitable rules. To set the stage for available solutions, it is important to first understand the underlying causes behind shareholder disputes in Nigerian private companies. This article examines the causes, then analyzes the statutory remedies and practical mechanisms available to resolve such conflicts. 2. Nature and Causes of Shareholder Disputes In private companies, shareholder disputes usually arise from disagreements about control, valuations, governance, fiduciary duties, dividend policies, or how to exit the company. Key causes include: a. Conflicting Company Objectives Conflicting shareholder visions can turn strategic decisions into sources of contention, eroding trust and cohesion. b. Minority Oppression Minority shareholders may feel excluded by the decisions of the majority in the company, especially if their rights and interests are neglected or ignored.[2] c. Breach of Fiduciary Duties Directors and controlling shareholders owe fiduciary duties to both the company and other shareholders. When they breach these duties, such as through self-dealing, misuse of company assets, or exclusion of others from decision-making, disputes often arise.[3] d. Poor Corporate Governance If a company lacks a detailed shareholder agreement, clear dispute-resolution procedures, and proper decision-making rules, this is a governance problem. 3. Legal Remedies for Shareholder Disputes Legal remedies are statutory or equitable measures that courts or regulators can enforce to resolve or reduce shareholder conflicts. a. Enforcement of Shareholder Agreements A strong shareholder agreement is the first defense in dispute resolution. Typical agreements cover: Voting rights Pre-emption rights Drag-along and tag-along rights Buy-sell provisions Deadlock resolution mechanisms Courts usually enforce these contract terms unless they are unconscionable or illegal.[4] b. Statutory Remedies for Minority Protection Most legal systems offer protection against unfair prejudice, also called oppression. This occurs when the company or its majority shareholders act in ways that harm, discriminate against, or treat minority shareholders unfairly.[5] Available remedies can include: Order from the Court for the company to cease the offending conduct Mandatory buy-out of the minority’s shares at fair value The appointment of inspectors or special managersc. Fiduciary Duty Claims Shareholders can take legal action if directors or controlling shareholders breach their fiduciary duties, such as the duties of loyalty and care. Possible remedies are: Account of profits Damages Removal from office Injunctions Courts have broad powers to order restitution or stop illegal actions.[6] d. Derivative Actions A shareholder may use a derivative action to sue on the company’s behalf. [7]This is used to address internal wrongdoing, so the company—not just the shareholder—benefits. CAMA details the process, allowing shareholders to act if wrongdoers control the company and the company itself will not act.[8] Court permission is needed before starting.[9] This provision modifies the effect of the common law rule in Foss v Harbottle[10], which generally restricts individual shareholders from bringing suit for wrongs committed against the company. against the company. e. Specific Performance and Injunctions i. If money cannot resolve the problem, courts may order specific performance of contractual obligations, such as those in shareholder agreements.[11] ii. Injunctions to prevent anticipated breaches or enforce governance norms Practical Options for Managing Disputes Legal remedies are important but can be costly, adversarial, and slow. Practical alternatives can save value, protect relationships, and keep the business running. a. Mediation Mediation is a dispute-resolution process in which a neutral mediator helps the parties reach common ground, generate options for mutual gain, and preserve relationships. However, it is non-binding until terms are agreed upon, mediation is flexible and confidential.[12] b. Arbitration The Arbitration and Mediation Act 2023 recognizes and gives effect to arbitration clauses in shareholders' agreements. The Act modernizes Nigerian arbitration law and gives it an international flavour. Arbitration is a private and binding alternative to court adjudication. Its Key advantages include: 1)    Confidential proceedings 2)    Expertise of arbitrators in commercial matters 3)    Finality of awards Arbitration clauses should therefore be included in shareholders’ agreements.[13] c. Internal Dispute Resolution Mechanisms Companies are adopting internal measures, such as board committees, to assess conflicts. i. Escalation matrices ii.Independent expert evaluations These options reduce escalation and encourage early resolution. d. Business and Strategic Solutions Some of the practical approaches to managing disputes include: i. Corporate governance reform i. Corporate Governance Reform Establishing clear policies and decision-making rules can greatly reduce the uncertainty that often causes conflicts or issues. ii. Share Transfer Agreements: These agreements create clear and predictable ways for shareholders to exit and lay out how shares will be valued.[14] iii. Equity Structuring Giving different classes of shares with clearly defined rights—such as voting or non-voting—helps align the interests of all parties. CAMA allows courts to order remedies for minority oppression, such as buying out minority shares or stopping unfair conduct.[15] Dispute resolution depends on strong governance and enforceable contracts. Best Practices and Recommendations To mitigate and manage disputes effectively, companies should: ii. Draft Comprehensive Shareholder Agreements The Agreement should include detailed, clear governance provisions, valuation methods, and dispute-resolution clauses. ii. Include ADR Clauses Put mediation and arbitration clauses in the agreement to avoid expensive court cases. iii. Enhance Corporate Governance Use transparent decision-making structures and systems for regular reporting. iv. Conduct an effective Periodic Review of Agreements Ensure contractual frameworks evolve the meet the business's needs. v. Engage Neutral Experts Early Get valuation experts, governance advisors, or ombudsmen to help settle technical disagreements early. Conclusion CAMA 2020 regulates shareholder disputes in Nigerian private companies. It offers remedies like unfair prejudice petitions, derivative suits, rectification orders, and winding-up. Beyond court action, arbitration, mediation, and good governance are practical ways to manage disputes. Combining legal safeguards with clear governance best manages shareholder disputes in Nigeria. [1] Act No. 3 of 2020 [2] Minority oppression doctrines are codified in the CAMA 2020 (s. 305). [3] Fiduciary duties are core obligations imposed on directors and controlling shareholders (Delaware Gen. Corp. Law § 144; Re City Equitable Fire Insurance Co [1925); Murdock, C. W. (2004). Squeeze-outs, Freeze-outs, and Discounts: Why Is Illinois in the Minority in Protecting Shareholder Interests? https://core.ac.uk/download/268429717.pdf [4] Enforceability of shareholder agreements is grounded in contract law principles (Chitty on Contracts, 34th ed.). [5] Statutory protections against unfair prejudice and oppression exist in many Jurisdictions (UK Companies Act 2006; CAMA 2020) [6] Remedies for breach of fiduciary duty include equitable relief (Gower & Davies, Principles of Modern Company Law, 10th ed.). [7] Derivative suits allow individual shareholders to vindicate company rights (Foss v Harbottle (1843)2 Hare 461). [8] CAMA 2020, Section 344-349 [9] CAMA 2020, Section 346 [10] 1843) 2 Hare 461). [11] Specific performance is available where damages are inadequate (Co-operative Insurance Society Ltd v Argyll Stores (Holdings) Ltd [1998]) [12] Mediation preserves commercial relationships and confidentiality (International Mediation Institute Standards). [13] Arbitration ensures enforceable and private determination of disputes (UNCITRAL Model Law). [14] Buy-sell agreements provide exit mechanisms under predetermined conditions (Brinig & Buckley, Family Business Law, 2026). [15] Nigeria minority protection and relief against prejudice are provided under CAMA Part XXXIV. By: Oluwasileola Akinsete (Associate)

Growing populations and increasing infrastructure demands continue to create a need for large-scale projects across multiple industries, including natural resource development, energy projects, transportation, technology, and industrial plants. These projects are usually capital-intensive, making them impossible to finance using conventional loan structures[1]. Thus, project finance becomes a ready technique for funding large-scale, capital-intensive projects. Unlike traditional corporate loans, the viability of financed projects is tested on cash flow forecasts rather than the credit-worthiness of sponsors or the actual value of the project assets[2]. That is, it relies on a non-recourse or limited recourse structure, where lenders look primarily to the cash flows generated by the project for repayment. Project finance holds significant benefits for stakeholders, including: a. Efficient risk allocation among parties best able to manage specific risks[3] b. Mobilization of large capital pools c. Realization of economies of scale However, these benefits come with a corollary of legal risks. Due to the significant capital requirements, financing is typically achieved through partnerships, bonds, syndication, and risk-sharing arrangements among multiple stakeholders[4]. This complex structure opens project finance model to major legal risks. In this article, we discuss some of the legal risks at both pre-completion and post-completion stages Completion Risk (pre-operational phase): Completion risk refers to the possibility that the project is not completed on time, within budget, or to the required specifications. Since cash flow generation begins only after completion, delays or failures can jeopardize the entire financing structure. Without completion, all other risks arise, making financial losses inevitable. Financial difficulties faced by the contractor and variations by the project sponsors are the leading causes of construction delay. Other factors that extend the time required to complete projects include Severe weather conditions and changes in law.[5] At the preoperational stage, the project may require regulatory approvals, licenses, or permits. It is important to obtain these licenses before commencing the project. Failure to obtain licenses before commencement may truncate the project if regulators refuse requisite approvals, leading to abandonment. Additionally, defective title, encumbrances, or community disputes can affect site access. The financial agreement should include comprehensive conditions precedent, making the lender’s payment obligations contingent on the prior obtaining of the requisite permits, land title verifications, consents, and approvals. Also, many projects require construction contracts. Imprecise drafting may lead to disputes over scope, timelines, or performance standards. Clearly drafted fixed-price, date-certain EPC contracts with bankable standards ensure protection against delays arising from variations and unforeseen circumstances. An elaborate force majeure clause can be a good mitigating tool. Permissible non-performance during a set force majeure period (natural disasters, pandemics, political events etc) together with clear payments and settlement obligations for contractor costs if force majeure persists, can be advantageous to the contractor. The project company, on the other hand, can benefit from termination rights where the contractor abandons the project or fails to comply with key obligations under the agreement. The right to terminate and recover site materials and equipment, together with damages, can enable the project company to engage another contractor to complete the works. Unenforceable or poorly structured Liquidated Damages clauses may fail to compensate lenders. Liquidated damages should be payable if completion is not achieved by a fixed date, and those liquidated damages should be adequate and at least cover interest payable on the loan.[6] Sponsors are usually required to provide robust liquidated damages provisions and completion guarantees. The contractor should provide extensive guarantees and, if the contractor is to be released from liability for defects after a period, that period should be long and only run from the passing of a well-defined completion test.[7] Sponsors are also usually required to provide completion guarantees or sponsor support undertakings, while contractors provide performance bonds, advance payment guarantees, and maintenance bonds to secure their obligations. Additionally, contractor bonds serve as key risk mitigants, motivating performance and offering financial recourse if projects are not completed or if advance payments are misused. Certifications from independent technical advisors before drawdowns further ensure that construction milestones and performance standards are achieved. Post-completion risks (Operational Phase): After completion, the project must generate stable, predictable cash flows to service debt and provide returns. A robust system for the collection and distribution of project proceeds is essential to ensure timely debt servicing and sponsor distributions. This ensures disbursements to sponsors and timely repayment of the project loan. Some legal risks in this stage are discussed below. Offtake Agreement Risk: Offtake agreements are important for ensuring a ready buyer for the project’s products. Unenforceable or poorly drafted Offtake Agreements with buyers can pose significant risks. If an offtake agreement has weak payment obligations, it can become difficult to repay or service the loan. One way to mitigate this risk is through the use of take-or-pay structures in offtake agreements. Under a take-or-pay structure, the buyer has to pay a basic cost of the project products even if delivery is not taken[8] or the buyer commits to a fixed charge, whether or not the buyer requires the project products on an ongoing basis. The rights under this contract will usually be assigned to the lenders who will have a direct claim under it should the borrower experience payment shortfalls.[9] Operations and Maintenance (O&M) Risk Post-completion performance relies heavily on the efficiency of project operations and maintenance. Poor operational performance can decrease output levels and, in turn, revenue. This risk is mitigated through strong Operations and Maintenance (O&M) agreements, which include clearly defined performance standards, key performance indicators (KPIs), and penalty regimes for underperformance. Currency and Repatriation Risk In cross-border projects, particularly within emerging markets, restrictions on foreign exchange availability or capital repatriation can impede the ability of investors and lenders to access project revenues. This risk is mitigated through the use of hedging arrangements, and, where appropriate, political risk insurance, which collectively enhance the security and transferability of project cash flows. CHANGE IN LAW RISK Changes in regulatory policies or laws risk cutting across both the construction and operational phases of a project. For instance, carbon emission laws and standards can have significant negative impacts on ongoing energy projects, particularly those reliant on fossil fuels (coal, oil, natural gas). These regulations, including carbon taxes, cap-and-trade systems, and stricter emission limits, increase operational costs, reduce profitability, and risk turning even existing infrastructure into "stranded assets". To mitigate this risk, project agreements commonly include “change-in-law” provisions that allocate the financial consequences of such changes, often through tariff adjustments or compensation mechanisms designed to preserve the project’s economic equilibrium. "Change in Law" Clauses should explicitly include climate-related regulations (carbon taxes, new emission standards) as a "Change in Law" event, allowing for contract renegotiation, cost-sharing, or price adjustments. It is therefore germane to negotiate definitions to include sudden, extreme regulatory changes that make a project economically unviable. Also, carbon laws can influence the architecture of project agreements and may call for more tailored provisions. Where the project generates carbon credits or offsets, clearly defining which party owns, manages, and benefits from these credits or offsets can help prevent conflicts. The inclusion of emissions reporting obligations is also advisable to comply with such environmental and sustainability-driven laws, particularly in the oil sector. Continuing transparent Monitoring, Reporting, and Verification (MRV) routines to meet compliance standards and avoid penalties should be embedded in the project agreement. Some agreements are starting to include technology & retrofitting clauses. This provides for mandatory adoption of emission-reduction technology such as Carbon Capture, Utilization, and Storage - CCUS[10], and outlines responsibility for costs. Finally, government support agreements or guarantees, where available, provide additional comfort to lenders by mitigating regulatory and political risks, including adverse changes in law or indirect expropriation. CONCLUSION Project finance remains a critical tool for delivering large-scale infrastructure and industrial projects. However, its success depends on careful legal structuring and risk allocation throughout the project lifecycle. From completion risk during construction to revenue and regulatory risks during operation, each stage presents distinct challenges. Ultimately, the bankability of a project depends on the extent to which legal frameworks are able to secure, stabilize, and protect project cash flows, ensuring that lenders are repaid and investors achieve their expected returns. [1] Beidleman, Carl R; Fletcher, Donna; Veshosky, David, On Allocating Risk: The Essence of Project Finance, Sloan Management Review; Cambridge Vol. 31, Iss. 3, (Spring 1990): 47. [2] Andrew Fight, Introduction to Project Finance, 2006 Chapter 1, page 1 & 8 [3] https://www.lexology.com/library/detail.aspx?g=87dd721a-64cf-4b4f-b24d-c6846fee507b; Paul D. Clifford, Project Finance - Applications and Insights to Emerging Markets Infrastructure; Hoboken, New Jersey: Wiley 2021 [4] Yescombe, E.R. (2014) Principles of Project Finance. 2nd Edition, Elsevier Science, Burlington. Pages 16, 21, https://doi.org/10.1016/B978-0-12-391058-5.00002-3 [5] G. Sweis, R. Sweis, A. Abu Hammad, A. Shboul, Delays in construction projects: The case of Jordan, International Journal of Project Management, Volume 26, Issue 6, 2008, Pages 665-674, ISSN 0263-7863, https://doi.org/10.1016/j.ijproman.2007.09.009. (https://www.sciencedirect.com/science/article/pii/S0263786307001573)\ [6] Andrew @ page 114 [7] ibid [8] Ibid [9] ibid [10] https://ccushub.ogci.com/ccus-basics/understanding-ccus/ By: Michael Isokpehi (Associate)

Involving Nigerian Targets: A Practical Perspective Introduction Nigeria remains one of the most strategically significant M&A markets on the African continent. With Africa's largest economy, a population exceeding 220 million, and sectors ranging from upstream petroleum to high-growth fintech, the country consistently draws foreign acquirers looking for scale and first-mover advantage. But anyone who has negotiated a deal involving a Nigerian target knows that regulatory complexity not valuation is often the defining variable in whether and when a transaction closes. This article takes a practical look at how regulatory risk manifests across the lifecycle of a cross-border deal involving a Nigerian target: from early structuring decisions and due diligence design, through to the drafting of conditions precedent, MAC clauses, and indemnity regimes that can mean the difference between a clean close and a costly impasse. It draws on the regulatory developments of the past two years including the Investments and Securities Act 2025 (ISA 2025), the Nigeria Tax Act 2025, the new CBN Foreign Exchange Code, and the Federal Competition and Consumer Protection Commission's (FCCPC) increasingly assertive enforcement posture to offer guidance that is current and actionable. The article is written primarily for foreign acquirers and their counsel, though the principles are equally relevant to Nigerian sellers negotiating the allocation of regulatory risk. Download full article here: TTA Article on Nigeria MA Regulatory Risk.cdr By: Olawunmi Ojo – Managing Associate

INTRODUCTION Foreign investment plays a central role within global economic development through facilitating the cross-border movement of capital, technology and expertise. However, the ability of investors to realize returns on their investments is closely tied to the foreign exchange regime of the host country. The government regulates the conversion and transfer of foreign currency primarily to manage balance-of-payments pressures, stabilize domestic currencies and preserve foreign reserves. As these measures may serve legitimate macroeconomic objectives, they might significantly affect investors’ ability to repatriate profits and capital. This article examines foreign exchange controls, the legal regime governing repatriation of funds and the consequences for foreign investors, with reference to both developed and developing economies. CONCEPT OF FOREIGN EXCHANGE CONTROLS Foreign exchange controls refer to regulatory rules imposed by governments or central banks to oversee the purchase, sale, transfer and use of foreign currency. These controls often extend to international financial transactions such as profit remittances, capital transfers and currency conversion. States typically adopt such measures to conserve foreign reserves, curb exchange rate volatility, manage inflationary rate and protect domestic financial systems from destabilizing capital flows. Historically, exchange controls have been more prevalent in developing economies, where economic-related vulnerability and limited reserves necessitate closer regulation of foreign exchange movements. [1] FORMS AND MECHANISMS OF FOREIGN EXCHANGE CONTROLS The nature of foreign exchange controls vary across jurisdictions. In some countries, investors may face restrictions on converting local currency into foreign currency or may be required to obtain regulatory approval before doing so. Other regimes limit the amount or frequency of transfers abroad or impose controls on cross-border capital movements. Certain jurisdictions operate multiple exchange rate systems, creating disparities between official and market-based rates. In addition, extensive record-keeping requirements are often imposed to guarantee compliance with tax, regulatory, and anti-money laundering obligations. Collectively, these measures can complicate investment operations and constrain capital mobility. REPATRIATION OF FUNDS Repatriation of funds refers to the transfer of investment-related earnings from the host state to the investor’s home jurisdiction. Such funds may include dividends, operational profits, capital gains, loan repayments, interest payments, or proceeds from the sale or liquidation of investments. The right to repatriate capital is a core protection under international investment law and is a major determinant of investment attractiveness. SCOPE OF REPATRIABLE INVESTMENT PROCEEDS To encourage foreign direct investment, many States provide legal guarantees for the repatriation of funds through domestic legislation and international agreements. These guarantees are commonly embedded in national investment laws, bilateral investment treaties, free trade agreements and regional investment frameworks. In Nigeria, for example, the Nigerian Investment Promotion Commission Act guarantees foreign investors the right to repatriate profits, dividends, and capital, subject to compliance with applicable tax and regulatory requirements. Similarly, the Foreign Exchange (Monitoring and Miscellaneous Provisions) Act regulates foreign exchange transactions and permits the transfer of capital and profits through authorized channels in accordance in prescribed guidelines.[2] Such statutory assurances play an important role in building investor faith. DOMESTIC LEGAL GUARANTEES FOR REPATRIATION The central banks typically serve as the primary regulators of foreign exchange transactions and capital movements. Their duties include overseeing foreign currency markets, supervising authorized financial institutions, approving cross-border remittances and issuing operational guidelines. In Nigeria, the Central Bank of Nigeria performs these functions and regulates banks that process remittance applications for foreign investors. Repatriation is generally conditional upon satisfaction of specific paperwork and compliance requirements. Investors are often required to demonstrate lawful importation of capital, tax compliance and adherence to financial reporting standards. In Nigeria, the Certificate of Capital Importation issued by an authorized dealer bank serves as formal evidence that investment capital was brought into the country through approved channels. Possession of this certificate is essential for the subsequent repatriation of profits and capital.[3] In addition, investors must discharge all relevant tax liabilities, including corporate income tax, withholding tax on dividends and capital gains tax, before funds may be transferred abroad. IMPLICATIONS OF FOREIGN EXCHANGE CONTROLS FOR INVESTORS Foreign exchange controls have several implications for investors. Restrictions on currency convertibility may delay or limit access to foreign currency, thus affecting the timing and certainty of profit repatriation. Compliance and documentation requirements can increase transaction costs and administrative obligations, while capital transfer restrictions may constrain liquidity and reduce investment flexibility. Exchange rate volatility, often associated with controlled regimes, can further erode the value of repatriated funds. Moreover, stringent foreign exchange controls may denote underlying economic or political instability, heightening sovereign and regulatory risk. In such environments, investors must thoroughly evaluate the availability of treaty protections and the likelihood of recourse to international dispute resolution mechanisms. From the perspective of host countries, foreign exchange controls present both advantages and disadvantages. While they can help preserve foreign reserves, stabilize domestic currencies and lessen financial crises, overly restrictive regimes may deter foreign investment, encourage capital flight through informal channels and undermine confidence in the financial system. Experience suggests that well-balanced and transparent foreign exchange policies are more effective in attracting stable, long-term investment. [4] ROLE OF INTERNATIONAL INVESTMENT AGREEMENTS AND ARBITRATION International investment agreements play a key role in reducing the risks linked to foreign exchange controls. Bilateral investment treaties commonly guarantee the free transfer of investment-related funds and provide protections against expropriation and unfair treatment. Where host states impose arbitrary or discriminatory restrictions on capital transfers, investors may seek redress through international arbitration under frameworks such as the ICSID Convention or the UNCITRAL Arbitration Rules. RISK CONTROL STRATEGIES FOR FOREIGN INVESTORS To manage foreign exchange risks, investors often adopt strategies designed to protect capital and returns. These may include structuring investments through jurisdictions with favourable treaty protections, employing currency hedging instruments, maintaining meticulous documentation of capital inflows and financing operations partly through local borrowing. Strict conformity with regulatory and tax requirements is also necessary to minimize delays and disputes during repatriation. EMERGING TRENDS IN FOREIGN EXCHANGE POLICIES Globally, foreign exchange control policies continue to evolve. While many countries have liberalized their regimes to attract foreign capital, phases of economic stress often prompt renewed restrictions. Recent reforms in several jurisdictions indicate that measured relaxation of foreign exchange controls can enhance investor assurance and stimulate capital inflows, provided that adequate regulatory safeguards remain in place.[5] CONCLUSION In conclusion, foreign exchange controls and repatriation rules remain fundamental components of the international investment environment. Although such controls serve legitimate economic purposes, they also present legal and monetary challenges for foreign investors. The ability to repatriate profits and capital efficiently is a decisive factor in investment decision-making. Accordingly, host countries must strike a fine balance between regulatory supervision and investor protection, while investors must engage in informed legal planning, regulatory compliance, and risk management for succeed in controlled foreign exchange environments. [1] (Hartmann, 1994) [2] Foreign Exchange (Monitoring and Miscellaneous Provisions) Act, 1995 [3] Investor Rights – Nigerian Investment Promotion Commission [4] Joshua et al., 2025 [5] FX reforms ignite confidence as inflows hit $20.98bn, 2025 By: Olawunmi Ojo (Managing Associate)