Nigeria has witnessed a number of significant economic changes and policies such as increases in monetary policy rates and recapitalization policies. These changes have also affected economic activities, including acquisition finance. Tightening credit conditions and rising interest rates (Nigeria’s monetary policy rate is currently at 27.5%) have made traditional bank financing prohibitively expensive. Interest rates have risen in response to the monetary policy by the Central Bank of Nigeria (CBN) and inflation driving parties to seek foreign financing sources such as offshore loans, private equity from international funds, and loans from development finance institutions (DFIs).

In Nigeria, foreign investment is being reshaped by several factors and trends. Nigeria’s market is however gradually making a comeback, with a total capital importation value of US$5.64 billion in Q1 of 2025, 67.1% higher than what was recorded in Q1 of 2024. Currency depreciation and high inflation rates have made cash flow very unpredictable which is disadvantageous for lenders and buyers alike.

Global tensions have also affected the flow of capital and the availability of foreign credit directly or indirectly. While Nigeria might not be directly subject to sanctions, it has affected the behaviour of investors. Global conflicts have prompted the U.S. Federal Reserve and the European Central Bank to raise interest rates and tighten global credit conditions, and this means is that foreign investors and lenders which major acquisitions rely on have become more risk-averse and seek to reduce exposure to emerging markets like Nigeria. Funds that are sourced from offshore banks or credit funds have become not just harder to access but also more expensive as borrowers now face shorter loan tenors and stricter loan covenants in cross-border transactions. Higher interest rates trigger portfolio outflows from emerging markets like Nigeria. There is also the issue of an increase in political risk insurance and guarantees usually required by international lenders, adding extra layers of complexity and cost to securing capital for Nigerian deals.

The African Continental Free Trade Area (AfCFTA) is driving regional integration and competition as it mandates a compulsory phased elimination of tariffs and removal of non-tariff barriers. Access to a pan-African market equals more competitive goods and services with lower production costs which will reduce cost of operations amongst other things to increase and preserve acquisition returns.. Cross-border loan syndication has also become more attractive as local banks may co-finance with Development Finance Institutions (DFI) or pan-African lenders with assurance that the AfCTA’s Investment Protocol and Dispute Settlement Mechanism (DSM) will be activated as a risk mitigant if need be, reducing uncertainty in cross-border acquisitions.

Additionally, the finance landscape has evolved past including sustainable business practices as a checklist. Investors are now paying attention to ESG issues from the selection of target companies down to due diligence, negotiation, and acquisition financing. Buyers/acquirers are increasingly avoiding target companies with poor/weak compliance history or structures even where they are profitable. ESG compliance also reflects on the rates of interest charged onloans ,. In the past year, more M & A deals contained high ESG due diligence by investors who looked out for environmental footprint, social practices and governance structure.

In the Nigerian banking sector, the Central Bank of Nigeria (CBN) has increased the capital requirements for banks and other financial institutions, which has in turn created a short-term strain on liquidity as banks are forced to divert their resources to meet the new thresholds, thus reducing their willingness or ability to lend.. It is advised that lenders consider syndication with partners with liquidity and regulatory strength, to strengthen deal credibility and reduce exposure. On the other hand, the CBN’s recapitalisation exercise opens the door for acquisition in the banking industry as the deadline for meeting the new capital thresholds for banks is March 2026.

The CBN has also banned the use of foreign-currency denominated collateral for naira loans, forcing lenders to unwind existing FX-secured naira lending arrangements. Foreign currency-denominated collaterals for Naira loans is now prohibited except where the foreign currency collateral is Eurobonds issued by the Federal Government of Nigeria or guarantees of foreign banks, including standby letters of credit.

There has been increasing efforts to implement the Money Laundering (Prevention and Prohibition) Act 2022 (MLA) by the Nigerian government especially in high-value transactions and transactions that involve high-net-worth individuals, public officials or politically exposed persons (PEPs) . The Act demonstrates this through several stringent provisions. Section 2(1) of the MLA prohibits individuals and corporate bodies from making or accepting cash payments exceeding ₦5 million and ₦10 million respectively, while Section 2(2) criminalises the splitting of transactions to avoid these limits—measures designed to curb illicit movement of large sums often associated with high-value dealings. Furthermore, Sections 7–10 of the MLA impose robust customer due diligence (CDD) obligations on financial institutions and designated non-financial businesses and professions (DNFBPs), mandating verification of beneficial ownership, ongoing monitoring, and the application of enhanced due diligence (EDD) where higher risks are identified. The CBN’s Customer Due Diligence Regulations 2023, as well as the CBN’s Guidance Note on Politically Exposed Persons (2023), also require financial institutions to identify PEPs, obtain senior management approval before establishing or continuing business relationships with them, and ascertain their source of funds and wealth. Additionally, Section 23 of the MLA compels the reporting of international transfers of funds or securities above US$10,000 to the Nigerian Financial Intelligence Unit (NFIU), CBN, and Securities and Exchange Commission (SEC), tightening oversight of cross-border movements linked to affluent or politically connected clients. The Act also broadens the supervisory scope under Section 30(1) by including “high-value dealers,” real-estate agents, legal practitioners, and accountants as DNFBPs, ensuring AML rules extend to the non-bank sectors that frequently service high-net-worth and politically exposed persons.

The National Tax Act 2025, which becomes effective in 2026, aims to consolidate taxes and its administration in Nigeria. There are expected increases and decreases in the rate of various taxes, such as Capital Gains Tax (CGT). The new act aligns capital gains to tax to the income tax rate, this increases the (CGT) rate from 10% to 30% for large companies. Additionally, the CGT exemption threshold for the sale of shares has been increased to NGN150million (from NGN 100 million) in any 12 consecutive months, provided that the gains do not exceed NGN10million.

The FX and currency devaluation concerns continue to pose a convertibility risk in transactions. These factors directly affect the ability of borrowers to perform their loan obligations. As a result, repayment becomes a huge risk for foreign lenders, and this increases finance costs for acquisition transactions. In addition, acquisitions in specific sectors require regulatory approvals from some agencies without which the transaction may be void or delayed. Furthermore, where Nigerian security is created under the finance documents, such security interest in Nigeria remains unenforceable and stands the risk of losing security priority against third parties without formalities like consent, stamping and registration with the applicable agencies.

ESG standards have become non-negotiable in finance transactions. There is serious scrutiny of transactions that violate environmental or social standards. The National Code of Corporate Governance and Securities Exchange Commission’s Rules specifically address sustainability issues and reporting requirements for publicly listed companies. Beyond influencing corporate strategy, ESG principles are now shaping transactional behaviour, not only in how acquirers evaluate target companies, but also in how lender’s structure and document financing arrangements. Financial institutions are increasingly moving away from purely traditional loan models to incorporate ESG-linked covenants and performance metrics in loan documentation. under the loan agreement to a new lender are gradually being mirrored in Nigeria’s financial sector as banks adopt internal ESG policies aligned with the CBN’s Sustainable Banking Principles (2012). Thus, ESG considerations are now not only a corporate governance expectation but a core determinant of credit risk, pricing, and deal structuring in Nigerian and cross-border finance transactions. Additionally, enhanced regulatory scrutiny from the Federal Competition and Consumer Protection Commission (FCCPC), particularly regarding merger control thresholds and market dominance assessments, in acquisition transactions has extended transaction timelines and increased compliance costs, with the FCCPC demonstrating willingness to impose strict conditions or even block transactions which do not comply with the notification requirements.

a. Greater Scrutiny on Equity Commitment and Capitalisation Covenants: The banking recapitalization policy and tighter credit conditions are bound to make lenders concerned about post-acquisition capital sustainability. It is expected that there might be the requirement of global best practices like annexing equity commitment documentation to finance agreements moving forward especially given that the policy that mandates clear capital structures. Post-closing covenants might now include minimum capital thresholds, regulatory compliance checkpoint and equity injection deadlines.

b. Disbursement Conditions Linked to Regulatory Milestones: In industries like telecommunications, insurance and banking, the timeline for acquisition is typically affected by delays in approvals for the respective agencies. It is not out of place for lenders to insert staged disbursement mechanics tied to milestones and automatic termination clause to be activated where ley approvals are not received.

c. Expanded Representations and Undertakings on ESG: In line with growing focus on ESG and AML, borrowers are expected to give undertakings and detailed representation on their policy on the same, a breach of which can trigger defaults or margin step-ups.

d. Bank of Agriculture Limited v. Salem Farms Limited (2020) : In Nigeria, recent judicial developments are beginning to influence how lenders and borrowers approach the drafting and interpretation of leveraged finance documentation This case revisited the doctrine of frustration in the context of loan and credit agreements. The Court reaffirmed that the principle of frustration, which discharges parties from further obligations when performance becomes impossible due to unforeseen events, applies only in exceptional circumstances and does not excuse a borrower’s failure to repay a loan merely because of adverse market or economic conditions. This position has significant implications for the negotiation and drafting of finance documents.

In response, lenders have become more deliberate in clarifying “force majeure” and “material adverse change (MAC)” clauses, expressly excluding macroeconomic instability, currency depreciation, or regulatory shifts as events that relieve borrowers of their repayment obligations. Conversely, borrowers are seeking to negotiate more flexible covenants or include temporary suspension and waiver provisions that can be invoked during periods of severe economic disruption. Overall, the Salem Farms decision has prompted parties in leveraged finance transactions to re-examine the allocation of risk in loan documentation, leading to more precise drafting around default triggers, events of frustration, and the definition of supervening events that could justify a contractual reprieve.

Although equity bidding is not prevalent, there have been instances where it has occurred in private transactions. In 2023, Access Holdings Plc acquired majority stake in Finibanco Angola S.A. and from the announcement timelines, we can deduce that Access signed the acquisition agreement before final CBN and Angolan regulatory approval, and before final capital disbursements were fully visible. Equity commitments were disclosed via corporate announcements, showing a commitment to the transaction even while financing elements were still underway.

Xerox provisions are not commonly used in the related acquisition agreements given that the lender would typically not be a party to the acquisition agreement and not subject to liability under it. Nigerian acquisition financing documents typically draw from global templates and most insert clauses that shift financing risk to buyers especially where equity bidding is used. This helps sellers lock in commitments and protect the interest of lenders post-signing. Other lender protections may include a ‘no financing condition’ clause to prevent the failure of a buyer to obtain financing from performing its obligations, and full disclosure of funding plans. Transaction documentation also tends to include conditions precedents such as corporate authorisations, execution of the transaction documents and obtaining regulatory approval, commitment letters and escrow arrangements to protect the interest of the lender.

There are notable trends emerging in the Nigerian acquisition financing landscape, particularly in response to recent regulatory changes, and recapitalisation pressures on banks.

a. Private credit has gained popularity in recent years given the rise in both early stage and growth business owners who may find traditional bank debt too expensive or restrictive. Private lenders are capable of operating outside regulatory constraints and offer way flexible terms. It is however used more often in growth or working capital rather than traditional M & A acquisitions.

b. Syndicated lending remains a more favourable option, particularly for larger and high-profile transactions as it offers lenders an opportunity to share risk. In addition, the CBN’s Prudential Guidelines for Deposit Money Banks in Nigeria set single obligor limits at 20% of the bank’s unimpaired shareholders’ fund, which means Nigerian banks have a regulatory limit on the amount of capital to a single borrower or group of related borrowers. Syndication enables risk distribution by allowing multiple banks share risk on a large acquisition without breaching any regulatory caps or overstretching their financial capacity. Syndicated loans especially those by Nigerian commercial banks may also come with lower interest rates in comparison to private credit for reasons like access to cheaper capital and its pricing being subject to negotiation with established corporate clients.

c. There is also an increased use of hybrid capital such as preferred equity or mezzanine instruments especially in sponsor-backed transactions. For example, the 2023 Titan Trust Bank acquisition of Union Bank was funded by a combination of a US $300 million facility from the African Export Import Bank (Afrexim bank) and equity commitments from Titan Bank’s core investors and shareholders.

d. Holding Company Structuring and Financing: The adoption of this is rampant in Nigeria especially in fintech acquisitions. Flutterwave Inc., a U.S. registered Delaware holding company (HoldCo) for example owns and controls operations under Flutterwave Technologies Limited. In this model, equity or debt is raised offshore, funds flow into operating entities and Nigeria’s regulatory restrictions are navigated through the HoldCo structure. Other fintech companies such as Opay Inc. and Paga Group also follow a similar structure where investor entry is simplified and regulatory compliance is delegated to the local operating companies, enabling a tax efficient structure also. Access Holdings Plc is also structured as a HoldCo to facilitate multi-jurisdictional acquisitions including Finibanco Angola S.A.

e. Preferred Equity for Sponsor Flexibility: this structure offers financial flexibility especially in environments with credit conditions or where sponsors want to preserve control and limit dilution. The preferred equity is not debt, so the company’s leverage does not increase. It is also attractive because it is often non-dilutive or minimally dilutive, avoids typical covenant heavy structures and offers flexible terms on cash payouts. Fintech financing in Nigeria has seen founders and sponsors use Series A/B/C preferred shares structure to maintain valuation advantages while securing early-stage capital commitments.

Technology continues to transform transactions across the world and Nigeria is not left behind. This is largely driven by the need for speed, efficiency, and regulatory compliance especially in cross-border transactions or transactions with stringent timelines. Under Nigerian law, electronic signatures are binding and admissible. This has been adopted in finance transactions, and it reduces signing delays, courier costs, and enables real-time closing across jurisdictions. These are particularly useful in syndicated and leveraged financing, where documents require execution by multiple. Automated documentation also speeds up the process, reduces errors and supports compliance on due diligence, preparation of term sheets, and CP checklists.

Licensed banks and non-bank lenders in Nigeria are authorised to provide financing, subject to the following requirements:

a. Lending banks and other financial institutions must hold a valid banking licence from the CBN.

b. Lending banks must comply with CBN minimum capital requirements and prudential regulations.

c. Lenders must conduct KYC, report suspicious transactions, and comply with anti-money laundering regulations.

Foreign lenders are however not required to obtain a Nigerian licence provided they do not carry on business in Nigeria on a habitual basis. Loans from foreign entities must be brought in country via an authorised dealer registered with the CBN to allow access to the official FX market to allow unconditional repatriation of principal and interest.

In taking security, lenders must ensure that the security interest created is registered with the Corporate Affairs Commission (CAC) under the Companies and Allied Matters Act (CAMA), which mandates the registration of charges within 90 days of its creation. The transaction documents must also be stamped within 30 days of execution. Stamp duties are payable at either a nominal rate or an ad valorem rate and loan documents are typically charged at an ad valorem rate of 0.125% of the secured amount.

Where security is taken over real estate, registration of such security interest with the state’s lands registry is also required. Additionally, where an interest is taken over a regulated asset, such as petroleum assets, ships, aircrafts, registration with the industry regulator is required to perfect the security and allow the lenders take benefit in an enforcement scenario.

Foreign loans (whether from banks, DFIs, multilaterals, private credit, or corporate lenders) must be brought in country through a certificate of capital importation (CCI) via an authorised dealer (typically a commercial bank) to legitimize the inflow and allow access to the official FX window for the repayment of principal and interest in foreign currency. Without a CCI, repayment from official FX sources is not allowed, and the borrower may be forced to use alternative FX sources which is an inefficient and risky approach. Proceeds from enforcement or sale of assets can be repatriated using the official channels only if a CCI was issued at the point of capital inflow. In relation to interest payments on foreign loans, Withholding Tax (WHT) also applies save for where there is a double taxation treaty in place.

Foreign entities are permitted to acquire assets in Nigeria, subject to compliance with legal and regulatory requirements.

a. Foreign companies that wish to acquire assets in Nigeria are generally not required to be incorporated locally under the Companies and Allied Matters Act (CAMA) 2020. However, the need to establish a local entity depends largely on the nature of the transaction and the type of assets being acquired. For instance, acquisition of interests in the oil and gas, power, or other regulated sectors typically triggers sector-specific licensing and local content requirements, which can only be satisfied through a Nigerian-incorporated company. Similarly, ownership of land by foreign entities must comply with the Land Use Act and relevant state consent provisions, often making it more practical or even mandatory to hold such assets through a Nigerian company.

b. Foreign lenders providing financing for asset acquisitions are also not required to be locally incorporated merely because they are advancing a loan. Such financing may be extended from offshore without a Nigerian corporate presence. However, where the foreign entity intends to carry on lending or financing activities on a habitual or continuous basis, it may be required to obtain the requisite consent or licence from the relevant regulator (such as the CBN). Additionally, foreign entities acquiring assets in a Nigerian company may be required to notify and obtain approval from the Federal Competition and Consumer Protection Commission where the acquisition results in a change of control or exceeds specified turnover thresholds.

c. The provisions of the Nigerian Investment Promotion Commission (NIPC) Act also apply where foreign capital is brought into Nigeria. Foreign investors may invest and participate in any Nigerian enterprise except those on the negative list, which includes production of arms, ammunition; production of and dealing in narcotic drugs and psychotropic substances; production of military and para-military wears and accoutrement, including those of the Police and the Customs, Immigration and Prison Services; and such other items as the Federal Executive Council (FEC) may from time to time determine

d. Regulatory Requirements for Acquisitions: All mergers or acquisitions that qualify as notifiable under the Federal Competition and Consumer Protection Commission (FCCPC) Act and Merger Guidelines require prior clearance. Where the company is publicly listed or publicly listed shares are involved, the approval of Securities and Exchange Commission (SEC) must also be sought and obtained.

e. Land Acquisition: Land acquisition by foreigners in Nigeria is possible, but only conditionally. Foreigners are not permitted to acquire land directly given that obtaining leasehold interests are subject to the Governor’s consent and typically granted to Nigerians. Despite the restrictions that are imposed on foreigners in acquiring properties in Nigeria, a foreigner may still acquire such interest if the prior approval of the governor of the state has been sought and obtained in writing, with respect to interest in land beyond three years. The interest or right to be acquired by the foreigner will not be acquired for more than a term of twenty-five (25) years.

In Nigerian acquisition finance transactions, the security package is generally structured to give lenders comprehensive recourse over both the acquirer and, post-completion, the target. The typical package includes the following:

a. Share Charge over the Acquirer or Acquirer SPV: Lenders usually take a charge over the shares of the Acquirer or the Acquirer SPV. The share charge is documented by a deed of share charge and is registrable at the CAC where the charging entity is a Nigerian company.

b. All-Asset Security over the Acquirer or Acquirer SPV: In addition to the share charge, lenders may also require an all-asset debenture creating fixed and floating charges over the Acquirer’s or Acquirer SPV’s assets. This commonly covers plant, machinery, movable and immovable property, bank accounts, intellectual property, investments, and other operational assets. The debenture also creates a charge over designated bank accounts and assignments of key contractual rights, including material contracts, receivables, and insurance proceeds.

c. Post-Completion Security over the Target: Following completion of the acquisition (to avoid issues under Nigerian financial assistance rules), lenders usually extend the security package to include security granted by the target company. This may include an all-asset debenture from the target and a charge over its shares and bank accounts, thereby completing the security chain across the enlarged group.

d. Guarantees: Lenders may also require guarantees from the Acquirer’s parent, group, or affiliate companies, provided such guarantees do not contravene the prohibition on financial assistance. While it is technically possible for the target company to guarantee the acquisition debt, such a guarantee will almost always constitute financial assistance. Accordingly, any guarantee from the target is typically obtained only after completion of the acquisition.

Beyond the standard security arrangements, lenders may also take security over other assets, including real estate (through a mortgage) and other specialised assets like marine vessels and aircrafts. Taking security over specialised assets will however require registration and obtaining consent from the relevant regulatory authorities.

Yes, Nigerian law permits the creation of floating charges over the whole or a specified part of a company’s undertakings and assets. Section 198 (2) of CAMA provides that “Debentures may be secured by a fixed charge on certain of the company’s property or a floating charge over the whole or a specified part of the company’s undertaking and assets…”

In addition, security by way of a floating charge may also be created over future assets or future obligations. CAMA recognizes a floating charge to include an equitable charge over the whole or part of a company’s undertakings and assets, including cash and uncalled capital of the company both present and future. Security over future assets typically attaches automatically once the asset comes into existence or is acquired by the charger. The floating charge may then crystallise into a fixed charge when the security becomes enforceable; or a receiver or manager is appointed or takes possession of the assets; or when the company goes into liquidation.

No. Nigerian law does not require security documents to include a cap on liabilities. Parties are free to agree on the scope of secured obligations, and the security may validly secure all present and future obligations of the chargor without the need for a monetary limit.

In practice, lenders in acquisition finance transactions typically define the secured obligations broadly to cover:

a. all amounts outstanding under the facility agreement (principal, interest, fees and costs);

b. hedging obligations (where applicable); and

c. indemnities and other contingent liabilities.

Relatedly, however, Nigerian law requires that security documents be stamped at a value representing a percentage of the loan amount. In practice, parties may agree to stamp to cover only a limited value of the facility. However, where a security document is stamped on a declared value that is lower than the full secured obligations, the lender may be restricted to enforcing up to the stamped amount unless the document is re-stamped to reflect the full secured obligation. For this reason, lenders generally ensure that stamp duty is paid on the full facility amount (or the maximum secured obligations) to avoid any limitation at enforcement or alternatively, stamp a portion of the secured obligation with the balance stamp duty deposited in a stamp duties reserve account, which may be used to up-stamp where required.

The nature of the secured asset typically determines the perfection required.

Registration with the CAC

Generally, CAMA requires that all securities created over assets of a company be registered with the CAC within 90 days of creation. To register a charge with the CAC, parties will be required to pay a fee of N25,000 or 0.35% of the amount secured by the charge, whichever is higher. Where the security includes assets that are specifically regulated (e.g., petroleum assets and intellectual property), such security interest will also require registration at the relevant regulatory authority’s registry.

Stamp Duties

In addition to registration at the CAC, stamp duties are required to be paid on any instrument executed in Nigeria or relating, wheresoever executed, to any property situated or to anything done or to be done in Nigeria. Stamp duties for financing documents are typically charged at an ad valorem rate, ranging from 0.125% – 1%, depending on the primary document being stamped. Any instrument not duly stamped is inadmissible in civil proceedings in court.
Other specific modes of perfection are as follows.
a. Real Estate: A legal mortgage is required to be registered at the state land registry, with the governor’s consent obtained. State-specific fees range from 1%–13% of the secured value.

b. Contractual Rights and Insurances: Rights arising under a contract or agreement, including intellectual property licences and insurance contracts, are commonly assigned by way of security to lenders with a provision to reassign the assigned rights to the assignor upon the full discharge and satisfaction of all obligations secured under the relevant finance documents. These are perfected by issuance of notice to the contractual counterparty and also by obtaining acknowledgement.

c. Bank Accounts: perfection of charges over bank accounts is done by giving notice of the security interest to the counterparty and the account banks.

d. Share Charges: in addition to registration at the CAC, perfection of a share charge also requires the chargor to deposit the share certificates with the lender or the security agent. As part of the security package, the lender is provided with signed but undated share transfer forms in respect of the shares. These documents will also be accompanied by a signed and undated resolution of the board of directors of the company in which the shares are held approving the transfer of the shares in the event of an enforcement.

A Nigerian company can provide upstream guarantees for its parent companies’ liabilities and downstream guarantees for the liabilities of its subsidiaries and affiliates, provided that the constitutional documents of the company permit the making of such guarantees, and the board of directors approve the making of the guarantee.

There is, however, a limitation on the extent of guarantees a Nigerian company may give. An upstream or downstream guarantee may be voidable where it amounts to unlawful financial assistance under Nigerian law. Under CAMA, a Nigerian company and its Nigerian subsidiaries are prohibited from providing financial assistance directly or indirectly for the purpose of acquiring shares in that company. The exceptions to provisions of financial assistance and ways to resolve these credit support issues are discussed in our response to 17 below.

For acquisition finance, where a target is required to provide a guarantee for the obligations of the acquirer, the lenders typically defer the making of such guarantee until completion of the acquisition to avoid a possible categorisation of the guarantee as financial assistance.

To provide security or to guarantee an acquisition financing, the board of directors of the company giving the guarantee or providing the security must approve the guarantee or security through a resolution. In addition, the Guarantee and Security document is required to be stamped at FIRS and CAC, and we have detailed the associated costs in our response in .14 above.

Financial assistance is generally prohibited under Nigerian law. “Financial assistance” under Nigerian law includes guarantees, security interests, loans, indemnities, gifts, and any assistance given by a company that reduces its net assets by up to 50% or a company which has no assets. Section 183 (2) (a) of CAMA provides that “where a person is acquiring or is proposing to acquire shares in a company, it shall not be lawful for the company or any of its subsidiaries to give financial assistance directly or indirectly for the purpose of that acquisition before or at the same time as the acquisition takes place” This prohibition also extends to situations where a person has already acquired shares in a company and has incurred liabilities for that purpose; the company is prohibited from assisting to reduce or discharge those liabilities.

Specifically, in instances of:

(i) Acquisition of Shares in the Company Itself (The Target)

A Nigerian company is strictly prohibited from giving financial assistance to support the acquisition of its own shares. Accordingly, the target company cannot grant guarantees, provide security, or otherwise support the acquirer’s acquisition financing. Any such assistance may be voidable and may be set aside by a court or liquidator. Notwithstanding, Nigerian law provides for some exemptions where a company may lawfully provide financial assistance in furtherance of the acquisition of its shares, as discussed below.

(ii) Acquisition of Shares in a sister Company

It may be lawful to provide financial assistance for the acquisition of shares of a sister company (two subsidiaries under a common parent or within a group structure). The restriction under CAMA applies only to the company whose shares are being acquired directly or indirectly. Thus, a company whose shares are not being acquired may provide upstream, cross-stream, or downstream guarantees to an acquirer for the acquisition of the shares of its sister company, provided that it is permissible under its constitutional documents, the board approves the transaction, and the directors can justify that the transaction is in good faith and in the interest of the company.

(iii) Acquisition of Shares in a Parent Company

As stated above, CAMA also prohibits a subsidiary from providing financial assistance for the acquisition of shares in its parent company, given that such provision would indirectly constitute assistance for acquiring the subsidiary’s own shares. This restriction is, however, subject to the exemption as discussed under statutory exemptions below.

The Companies and Allied Matters Act provide some exceptions under which financial assistance may be permissible. These exemptions mitigate the strictness of the general rule and may be used to structure acquisitions safely. These exceptions are:

(i) Transactions in the Ordinary Course of Business: the lending of money by the company is still permitted, provided that lending of money is part of the ordinary business of the company.

(ii) Employee Share Schemes and Related Transactions: the prohibition does not apply where funds are provided to trustees acquiring fully paid-up shares in the company or its holding company for the benefit of employees (including salaried directors), or the provision of loans to employees (excluding directors) to purchase fully paid-up shares.

(iii) Court-Sanctioned Schemes and Corporate Restructurings: a company may lawfully provide financial assistance pursuant to a court order approving a scheme of arrangement, a scheme of merger, or any restructuring formally sanctioned by the court.

(iv) Good Faith and Corporate Benefit: CAMA also permits financial assistance where such assistance is the principal purpose of the company and giving the assistance is not to reduce or discharge acquisition liabilities, any such reduction is merely incidental to a larger corporate purpose, and the assistance is given in good faith and in the interests of the company.

Yes, a company may give guarantees or security for debt that is not pure acquisition debt such as refinancing debt, working-capital facilities or general corporate borrowing. The prohibition on financial assistance restrictions under the CAMA is for specific transactions and only restricts a company from giving financial assistance for the purpose of acquiring its own shares (or indirectly, its holding company’s shares). It does not impose a blanket prohibition on a company giving guarantees or security for other types of debt.

Accordingly, a Nigerian company may validly give guarantees and/or security for non-acquisition debt, including refinancing debt, working capital facilities, capex financing, and general corporate borrowings, provided that such support is not connected to the acquisition of its own shares.

However, where a facility includes both acquisition and non-acquisition elements, it is recommended to segregate the debt. This could be achieved by separating the facilities as different tranches under the same facility agreement or as separate facility agreements entirely, so that the guarantee or security clearly relates only to the permissible non-acquisition portion. This allows parties to ensure that the target does not provide guarantees or security in respect of the acquisition tranche, and the target may validly secure or guarantee only the non-acquisition tranche without breaching financial assistance rules.

If acquisition debt and non-acquisition debt are not properly segregated, there is a material legal risk that any guarantee or security granted by the target in support of the facility could be re-characterised as indirect financial assistance; and the entire security package provided by the target could become voidable. The application of the financial assistance prohibitions, however, is subject to the exemptions as discussed above.

Nigerian law recognizes the concept of a security trustee or security agent. Security trustees are typically appointed under a security trust deed or collateral agency agreement to hold security on behalf of a lender or multiple lenders, enforce rights, and apply proceeds in accordance with the intercreditor terms. Security held by a trustee is enforceable under common law principles of trust and contract. Appointment of a security trustee is strongly preferred in multi-lender acquisition financing because it enables transparent, orderly and collective enforcement that protects the interest of all the secured lenders.

Where a security trustee holds security for multiple lenders, it is typical to have an intercreditor agreement where lenders contractually agree on the manner in which enforcement decisions are to be taken, including voting thresholds, consent requirements, and sharing of repayment proceeds.

Parallel debt is not a widely used structure for holding security interests in Nigeria. This is because Nigerian law recognises the concepts of security trustees and security agents through a combination of contractual arrangements and trust law principles. As a result, in most syndicated financing transactions in Nigeria, lenders typically rely on the appointment of a security trustee to hold security on trust for the lending syndicate, together with detailed intercreditor agreements to regulate enforcement, priority, and distribution of proceeds.

There are limited restrictions on the role of a security trustee or security agent. In Nigeria, if a security trustee or agent is validly appointed, no additional steps are required for the trustee or agent to be recognised under Nigerian law and, provided that any security interests granted in favour of that trustee or agent have been properly perfected, the trustee’s or agent’s rights over the security interests are enforceable. However, for practical purposes, a foreign security agent may not be able to hold security over certain assets, particularly in real estate backed transactions.

In Nigeria, bank loan financing and high-yield bond financing are both used for acquisition transactions; however, bank loans remain dominant.

Bank loan acquisition financing is usually highly negotiated and governed by a detailed facility agreement featuring extensive covenants, financial ratio tests, mandatory prepayment triggers, and comprehensive security packages (often including share charges, debentures, bank account security and assignments). The lenders have significant control rights, including information rights, consent thresholds, and step-in powers upon default. Because of these features, bank loans provide lenders with tighter control and more direct enforcement options.

High-yield bond financing, by contrast, is typically raised through offshore SPVs and issued into the international capital markets, even where the proceeds are used for a Nigerian acquisition. The documentation is standardized, covenant-light, and has fewer restrictions than bank loan documentation. Rather than financial maintenance covenants, high-yield notes rely heavily on incurrence covenants, permitting the borrower to take actions (e.g., incur debt, dispose assets, pay dividends) so long as certain conditions are met at the time of the action.

These structural differences affect the overall acquisition finance strategy. Loan financing permits faster drawdown and direct lender engagement while high-yield financing offers greater operating flexibility and access to a broader pool of capital. Where both financing types are used, there may be a need to put in place an intercreditor agreement to provide for payment subordination. In such instances where a bank loan and high-yield bond is utilised, the bank debt is usually senior secured, and the bonds are subordinated or structurally junior.

Under Nigerian law, the primary mechanism for transferring loans is through a loan assignment. In an assignment, the original lender (the assignor) transfers its rights and benefits under the loan agreement to a new lender (the assignee). This transfer can be structured as either a novation or an assignment:

1. Novation: A novation involves the substitution of the new lender in place of the original lender, effectively replacing the original contractual relationship. In this case, the borrower becomes directly liable to the assignee under the same terms, and the assignor is released from its rights and obligations.

2. Assignment: In an assignment, the original lender assigns its rights such as rights to receive principal, interest, and fees, under the loan agreement to a new lender. The original lender, however, remains a party to the loan agreement and retains its obligations as a lender. The borrower’s consent may not be strictly required unless the loan agreement prohibits assignment, however the original lender may be required to give notice of the loan assignment to the borrower.

3. Sub-Participation Arrangements: A sub-participation is another recognised method through which lenders in Nigerian acquisition finance transactions can transfer exposure to a loan without transferring their legal interest in the underlying loan. Under a sub-participation arrangement, the incoming lender (the sub-participant) pays the existing lender an amount equal to its desired participation in the loan. In return, the existing lender agrees to pass through to the sub-participant amounts equivalent to its share of payments received from the borrower when and if received.

Unlike an assignment or novation, a sub-participation does not transfer the lender’s rights or obligations to the sub-participant. The existing lender retains all contractual rights and obligations under the loan documents, including enforcement rights, while the sub-participant assumes only the economic risk and benefit.

The transfer of a loan is often accompanied by the transfer of the associated security package to ensure the assignee has the same protection as the original lender. Under Nigerian law, security packages can be transferred in several ways:

a. Direct Assignment of Security Documents: Security rights may be assigned directly to the assignee. For example, a share charge, mortgage, or debenture can be assigned through an assignment deed or under a security trust deed.

b. Accession to Security Documents: Where the original loan was secured via a security trustee, the assignment of the loan may not require a separate transfer of security, as the trustee holds the security on behalf of the lenders. The assignee simply steps into the lender’s rights under the trust arrangement by executing a deed of accession. This approach simplifies enforcement and avoids re-registration of security interests.

Priority

In Nigeria, the priority of competing security interests is primarily governed by the “first in time” principle. Under CAMA, a charge created over a company’s assets is void against a liquidator or any creditor of the company unless such charge is registered with CAC. Consequently, the supervening security interest that is duly perfected or registered will generally rank ahead of subsequent interests. For real estate, priority also depends on registration at the relevant state land registry.

Subordination

Subordination of priority can be achieved by structure or by contract. Structural subordination arises when senior creditors lend directly to an operating subsidiary of a company, thereby taking priority over junior creditors who lend to the holding or parent company. Contractual subordination occurs where junior creditors agree by contract to subordinate their claims to those of senior lenders. Debts can be contractually subordinated by the lenders using inter-creditor agreements to regulate relationships among different classes of creditors, including provisions on enforcement rights, standstill periods, and payment waterfalls. Nigerian law upholds the principle of freedom of contract, and courts have consistently recognised the enforceability of agreements that reorder priorities.

Contractual Subordination and Insolvency

Contractual subordination provisions generally survive the insolvency of a Nigerian borrower, provided that the underlying security interests were validly created and perfected before the commencement of insolvency proceedings. However, under CAMA, a security or guarantee given within three months before the onset of insolvency, or given in favour of persons connected with the company (other than by reason of employment) within a period of a year ending with the onset of insolvency, may be deemed a fraudulent preference and declared invalid if it has the effect of giving the holder of such security an undue advantage.

Nigerian law does not automatically subordinate shareholder loans to other creditors purely because the lender is a shareholder. Shareholder loans to a Nigerian company are generally treated as ordinary unsecured or secured debt, depending on whether the lender has taken security.

In practice, subordination of shareholder loans is usually achieved contractually, through intercreditor agreements or subordination agreements, rather than by operation of law. Nigerian acquisition finance structures often include such contractual provisions to place shareholder or sponsor loans behind senior or mezzanine debt.

Recognition of Foreign Governing Law

Under Nigerian law, parties to a contract are generally free to choose a foreign governing law for their agreement. Nigerian courts will uphold such a choice where the transaction bears a reasonable connection to the selected foreign jurisdiction or where the parties have clearly expressed their intention in the contract to adopt that choice of law for their transaction.

Notwithstanding the above, in relation to security assets, Nigerian courts are inclined to apply the law that regulates such assets. Assets typically regulated under local laws include shares in a Nigerian company, land in Nigeria, upstream petroleum assets, etc.

Nigerian courts will also respect a contractual submission to a foreign jurisdiction, including clauses specifying that disputes should be resolved by foreign courts or arbitral tribunals. A Nigerian court will enforce exclusive jurisdiction clauses unless there are strong reasons not to do so, such as fraud, oppression, or a denial of justice.

A waiver of sovereign immunity by a Nigerian state-owned entity or government body is also generally recognised under Nigerian law and will be deemed valid and enforceable. Nigerian courts have upheld waivers of immunity in cases involving international financing and investment agreements, provided that the waiver is clear and unequivocal. However, enforcement against certain categories of state-owned property, especially assets used for diplomatic or public purposes, may still be restricted under principles of public international law and the Nigerian State Immunity Act.

Enforcement of Foreign Judgment

Nigerian courts will generally recognise and enforce foreign judgments without a further review of the merits, subject to certain conditions. Any final and conclusive judgment obtained in a foreign jurisdiction, including an award against an obligor under the finance documents, may be registered and enforced as a judgment of the courts of Nigeria, provided that specific conditions are satisfied. These include:

a. The country whose court or institution entered the judgment accords reciprocal treatment to judgments delivered by Nigerian courts.

b. The parties to the finance documents had the capacity to enter into the agreements.

c. It is established that the foreign court or arbitral tribunal was properly constituted and had jurisdiction over the subject matter of the judgment.

d. Notice of the proceedings in the foreign court or arbitral tribunal was duly served on the defendant in sufficient time to enable a defence to be made.

e. The judgment was not obtained by fraud.

f. Enforcement of the judgment would not be contrary to Nigerian public policy.

g. The matter in dispute had not already been the subject of a final and conclusive judgment by another competent court.

h. Enforcement proceedings are instituted in Nigeria within 12 months from the date of the judgment.

A foreign arbitration award will also be recognised in Nigeria following an application to the court for that purpose, provided that none of the limited grounds for non-recognition applies. Such grounds include:

a. A party to the arbitration agreement does not have capacity, or the arbitration agreement is invalid under law.

b. Proper notice of the appointment of an arbitrator was not provided.

c. The award deals with a dispute not falling within the terms of the submission to arbitration.

d. The composition of the arbitral tribunal or the arbitral procedure was not in accordance with the agreement of the parties or the law of the country where the arbitration took place.

e. The award has not yet become binding on the parties or has been set aside or suspended by a competent court.

f. The subject matter of the dispute is not capable of settlement by arbitration under Nigerian law, or recognition or enforcement of the award would be contrary to Nigerian public policy.

Once a foreign judgment has been duly registered in Nigeria, it has the same effect as a judgment originally obtained in Nigeria.

In Nigeria, the procedures for enforcing collateral vary depending on the type of asset. Land and real estate are typically secured through legal or equitable mortgages. Where land is secured under a legal mortgage, a secured lender can dispose of the land towards the discharge of the secured obligation where the right of sale under the legal mortgage has arisen and is enforceable. For equitable mortgage, the secured lender may apply to court to foreclose the equitable mortgage and sell.

Shares in a Nigerian company are generally pledged under a deed of share charge. Typically, the chargor is required to sign undated share certificate and board resolutions approving the transfers. Enforcement involves executing lodged share transfer forms and accompanying board resolutions, allowing the lender to assume ownership and exercise voting rights.

Bank accounts may be charged by fixed or floating charges with the chargor notifying the account bank of the secured lender’s right. Fixed charges allow the lender to immediately control and apply the funds, while floating charges require crystallization before enforcement. Enforcement is effected by the secured party notifying the account bank and directing that the funds be released to the secured lender.

Insurance proceeds and other contractual rights are usually assigned to the lender with the insurance company or the contract counterparty notified of the assignment at execution. Enforcement is achieved by giving notice of the assignment to the counterparty or insurer, enabling the secured lender to collect insurance or contract proceeds directly.

There are alternative processes outside formal insolvency proceedings in Nigeria that companies use to manage financial distress or reorganise their affairs.

One of these processes is receivership, which allows secured creditors to take control of and realise specific assets of a borrower to recover an outstanding debt without winding up the borrower. In Nigeria, receivership is governed by CAMA and the terms of the relevant security agreement.

CAMA provides two formal procedures for rescue: administration and the company voluntary arrangement (CVA). An “administration” is a corporate rescue procedure where an insolvent company is placed under the control of an administrator to protect it from creditors while efforts are made to restructure or revive it. The administrator is empowered to manage the company’s affairs, business, and property with the primary objective of rescuing the company as a going concern or achieving a better result for creditors than liquidation. During administration, a statutory moratorium applies, preventing creditors from enforcing claims without the court’s consent.

Under CAMA, a CVA is a formal agreement between a financially distressed company and its creditors to restructure its debts, usually through reduced payments or extended timelines. The arrangement is initiated by the directors, administrator, or liquidator, and requires approval from creditors holding at least 75% in value of the debts. Once approved, the CVA becomes binding on all unsecured creditors, allowing the company to continue operating while meeting its restructured obligations.

Another approach used as an alternative to formal rescue procedures is debt restructuring arrangements between a company and its creditors. These may involve debt rescheduling, refinancing, or converting debt to equity. In addition to administration, CAMA also provides for schemes of arrangement and compromise, which enable a company to reach binding agreements with its creditors or members to restructure debts or reorganise ownership and capital. Companies may also pursue mergers or business combinations, often co-ordinated with the Federal Competition and Consumer Protection Commission under Nigeria’s competition law framework.

Commencement of insolvency proceedings has a significant impact on a lender’s right to enforce its loan, security, or guarantee. When a winding-up petition is filed or a company enters administration, the primary effect is the imposition of a statutory moratorium on enforcement actions which prevent creditors from commencing or continuing legal proceedings, enforcing security interests, or taking possession of a company’s assets without the leave of the court or the consent of the liquidator.

However, CAMA preserves the interest of a holder of a fixed charge. Accordingly, the holder of a fixed charge may take action to enforce and realise the security interest even after the commencement of insolvency proceedings. Fixed-charge holders can enforce their rights by taking possession of the secured assets and applying the proceeds to repay the debt, provided that the security has been properly perfected and registered.

The priority of payments on a company’s insolvency is set out in CAMA. CAMA provides that secured creditors shall rank in priority to all other claims, including any preferential payment or any other debts, inclusive of winding-up expenses. The waterfall of payments is generally as follows:

a. Secured creditors holding fixed charges over specific assets are paid first from the proceeds of the sale of those assets, provided their security interests were validly created and perfected prior to insolvency.

b. Costs and expenses of the insolvency process including remuneration for liquidators, administrators, or receivers, as well as court-approved expenses incurred in preserving and realising the company’s assets.

c. Preferential Debts such as amounts owed to employees (such as wages and salaries up to a statutory limit), unpaid taxes, and certain pension contributions.

d. Secured creditors holding floating charges are paid from the remaining assets subject to the floating charge after the preferential debts have been settled.

e. Unsecured Creditors rank equally (pari passu) and share any remaining assets on a pro rata basis.

f. Any claims by subordinated creditors are settled next, in accordance with the terms of their subordination agreements.

g. Any surplus remaining after all external debts and liabilities have been discharged is distributed among the shareholders or members according to their rights under the company’s constitutional documents.

Under Nigerian insolvency law, transactions carried out shortly before a company enters winding-up or administration may be challenged and set aside. These rules exist to prevent a distressed company from unfairly favouring certain creditors or dissipating assets prior to insolvency. Although Nigerian law does not use the term “hardening period” expressly, it recognises look-back periods during which certain transactions can be declared void or voidable.

Specifically, CAMA provides that a security or guarantee given within three months before the onset of insolvency, or given in favour of persons connected with the company (other than by reason of employment) within a period of a year ending with the onset of insolvency, may be deemed a fraudulent preference and declared invalid if it has the effect of giving the holder of such security an undue advantage.

A preference will only be upheld if the creditor can demonstrate that the transaction was not intended to put them in an advantageous position. If the creditor fails to do so, any assignment by the company of its property to trustees for the benefit of that creditor may be rendered void.

In the context of insolvency, the length of time for insolvency proceedings in Nigeria is of relative concern. A voluntary winding-up can take 12 to 24 months if uncontested, as it is driven mainly by the company’s members and creditors and involves fewer court interventions. A compulsory winding-up ordered by the court may extend longer, often two to five years or more, especially when disputes arise over creditor claims, the validity of security interests, or allegations of fraudulent preference or transactions at undervalue. Receiverships are faster, sometimes resolving within 6 to 18 months, but their duration depends on the level of co-operation from the borrower or other stakeholders.

Another concern is the value of realisation. The value of recovery for a creditor is dependent on the priority of the creditor in the payment waterfall. Secured creditors with fixed charges are generally the most likely to achieve more commensurate recoveries, as their rights attach to specific assets that can be realised independently of the general insolvency process. Creditors with floating charges, preferential debts, or unsecured claims may recover only a less commensurate value of their exposures, especially where the borrower’s assets are heavily encumbered by fixed secured creditors or where enforcement costs and delays erode asset values.

Nigerian companies are required to deduct and remit withholding tax (WHT) to the Federal Inland Revenue Service (FIRS) on payments made on specified transactions such as interest payments to lenders, at a rate of 10%, unless reduced by a double taxation treaty (typically to 7.5%). WHT may also be applicable to certain fees such as commitment fees and arrangement fees, particularly where these fees are characterised as payments for services rendered by a non-resident person. The company making the payment is required to deduct WHT when the amount is paid or credited, whichever occurs first. Remittance must be made to the FIRS within 21 (twenty-one) days of deduction of the tax.

Stamp duties are also payable on the finance and security documents executed in Nigeria. Loan agreements are chargeable at a rate of 0.125 of the secured amount, while charges and mortgages are chargeable at a rate of 0.375% of the secured amount, respectively. Perfection of the security (registration) at the CAC also attracts a registration fee of 0.35% of the secured amount.

Although, this is not strictly a tax issue, it is important for lenders lending into Nigeria to be aware that interest payments and repayments to lenders must comply with Nigeria’s foreign exchange regulations. This includes obtaining a certificate of capital importation to evidence the inflow of capital through official channels and provide a transparent record of such inflow. This is particularly important where the parties may want to rely on Nigeria’s tax treaties with respect to WHT.

In Nigeria, the acquisition of a public company is governed by a combination of regulatory frameworks to protect investors. These frameworks include.

a. The Federal Competition and Consumer Protection Act (FCCPA) 2018: the FCCPA is the primary legislation regulating mergers and acquisitions in Nigeria. The act prohibits unfair business practices which distort competition or constitute an abuse of a dormant position in the Nigerian market. The FCCPA does not distinguish between private and public companies, accordingly, any acquisitions which result in a change in control or meet the turnover thresholds must be notified to the Federal Competition and Consumer Protection Commission before implementation.

b. Companies and Allied Matters Act (CAMA) 2020: CAMA prescribes the standard for board and special resolutions that authorise internal and external corporate restructurings of companies, and acquisition of a company will typically require a special resolution i.e., the approval of at least 75% of shareholders of the company.

c. Investment and Securities Act (ISA): the ISA provides that a public company shall not, without the prior approval of the SEC, undertake a proposal, scheme, transaction, arrangement in relation to the acquisition or disposal of assets which results in a significant change in the business direction of the company. Additionally, the SEC governs and regulates the conduct of persons involved in takeovers, mergers or compulsory acquisitions of a public company, any acquirer that wishes to obtain control in a public company must do so in accordance with the provisions of ISA. Although the FCCPA is the primary legislation for mergers & acquisition, the SEC is still required to consider whether all shareholders of the public company are fairly, equitably and similarly treated regarding the transaction.

d. NGX Listing Rules: publicly listed companies are also required to comply with the NGX’s rules, which include notifying the market of any substantial changes in ownership.

e. Federal High Court Rules: the Federal High Court is the court of first instance with jurisdiction to hear all matters arising out of operation of CAMA, including the power to sanction any schemes of arrangement for the transfer and acquisition of the shares of a company. It also clearly outlines the timeline for filing suits regarding matters that are considered unfairly prejudicial to any class of shareholders during the acquisition of a company.

The nature of the key milestones and disclosure requirements depend on whether the acquisition involves a publicly listed company or a private company, and whether the acquisition triggers Nigeria’s merger control regulations.

Merger Notification: The acquisition process typically begins with a determination as to whether the transaction meets the turnover threshold, i.e., the combined annual turnover of the acquiring and target undertakings equals or exceeds ₦1 billion, or where the target’s annual turnover equals or exceeds ₦500 million in the preceding financial year. Following an affirmative determination, a description of the merger will be submitted (along with supporting documentation) and published on the FCCPC’s website. For publicly listed companies, the SEC will also need to be notified, and parties will have to submit the detailed scheme documents for approval.

Letters of No-Objection: for transactions involving entities operating in regulated sectors, a letter of no-objection will have to be obtained from the sector specific regulator.

Newspaper Publication: for public companies, notices of the court-ordered meeting and the draft resolutions that will be proposed for consideration at the meeting of the shareholders, will also need to be published in at least two (2) national daily newspapers.

Board and Shareholder Meetings: the requisite board and shareholder meetings will be convened to pass the authorising board and shareholder resolutions in respect of the transaction.

Court Sanction: where the transaction will be effected by way of a scheme of arrangement, the parties will also be required to file the necessary applications to the Federal High Court to sanction the scheme.

Disclosures: under CAMA, a person who becomes a holder (directly or indirectly) of 5% or more of the shares of a company is required to give the company notice of this fact within a period of 7 (seven)days, and the company is equally required to give notice to the Corporate Affairs Commission (CAC) not later than 1 (one) month from the receipt of that information. The NGX Rulebook contains a similar disclosure requirement which requires companies to notify the NGX of any transactions which will result in the ownership of 5% or more of its shares.

Under Nigerian law, there is no fixed technical minimum acceptance condition that applies automatically to acquisitions. In practice, the minimum acceptance condition is typically set in reference to the provisions of CAMA which requires key decisions such as authorising an acquisition to be effected by a special resolution, requiring the consent of ¾ or 75%of the shareholders present and voting at the court-ordered meeting of the shareholders.

Yes, there is a squeeze out procedure for minority hold outs. CAMA provides that where the scheme or contract has within four (4) months from the date of the offer been approved by the holders of at least 9/10 in value of the shares of the company, the company may at any time within two months after the expiration of the four month period, give notice to any dissenting shareholder that it desires to acquire his shares. The shares must however be acquired on the same terms as the shares of the willing shareholders were acquired. Additionally, the acquirer must also obtain the approval of at least 75% in number of the holders of the shares.

(i) The bidder can pass special resolutions once it obtains the 75% acceptance rate (from the shareholders).

(ii) The bidder can also apply to delist the target once it holds 75% or more of the voting shares subject to making adequate provisions for the protection of minority shareholders through fair exit mechanisms and the approval of the SEC and the NGX.

(iii) As mentioned in 37 above, the bidder can effect a squeeze out at 90% ownership in value of the shares of the company and upon obtaining approval of at least 75% of the shareholders by numbers.

(iv) Beyond passing a special resolution which requires the authorisation of at least 75% of the shareholders present and voting, there are no specific targets to grant upstream guarantees and security. Upstream guarantees and securities generally fall under the definition of financial assistance under CAMA, which prohibits a company from providing financial assistance for the acquisition of its own shares where it would materially reduce the company’s net assets or where the company has no net assets.

Apart from the rules on financial assistance, there are no restrictions on the types of financing that may be used in acquisition finance. The financing must, however, comply with applicable regulatory requirements, such as, the CBN’s single obligor limits for local lenders and the importation of capital using a certificate of capital importation for foreign lenders.

While there is no mandatory requirement for cash confirmations, in transactions involving the SEC, the SEC may ask parties to provide evidence of financing at the point of filing. Lenders also typically provide a commitment letter confirming the lender’s ability to provide financing.

Parties are free to agree on the conditions to completion provided they are lawful and not contrary to any statutory provisions. These conditions typically include obtaining regulatory approvals, shareholder approvals, and the completion of due diligence.