What Are the Legal Requirements for Mergers and Acquisitions Under CAMA 2020 in Nigeria?

Mergers and acquisitions (M&A) are important corporate restructuring tools in Nigeria, enabling companies to consolidate, expand market share, access new technologies, and achieve operational efficiencies. The legal framework for M&A in Nigeria is primarily governed by the Companies and Allied Matters Act 2020 (CAMA 2020), the Investments and Securities Act (ISA) 2007, and sector-specific regulations.

Under CAMA 2020, a merger may be effected through a scheme of arrangement under Section 715, which requires court approval, or through a statutory merger under Section 717, which also requires court approval and compliance with specified procedural requirements. In either case, the board of directors of the merging companies must approve the merger plan, which must include the terms of the merger, the rights of shareholders and creditors, and the consideration to be paid to shareholders of the absorbed company.

For publicly quoted companies, the Securities and Exchange Commission (SEC) must approve any merger or acquisition involving a public company under the ISA 2007 and the SEC Rules on Mergers, Acquisitions, Takeovers and Business Combinations. SEC reviews the merger for compliance with competition law principles (to prevent anti-competitive concentrations), fairness to minority shareholders, and adequacy of disclosure.

Step-by-Step Procedure to Resolve This Legal Matter:

1. Preserve Contemporaneous Evidence: Collate physical receipts, verified bank timestamps, stamped letters, and electronic communication logs prior to formal intervention.
2. Deliver Statutory Pre-Action Notice: Issue a formal written demand outlining the specific statutory breach and giving the opposing party statutory time to remedy the grievance.
3. Engage Accredited Legal Counsel: Initiate judicial proceedings before the competent court of record or submit an official petition to the relevant regulatory commission.

Proposed mergers that would significantly reduce competition in relevant markets may be referred to the Federal Competition and Consumer Protection Commission (FCCPC) for merger review under the FCCPA 2018.

Key Evidential Considerations & Statutory Benchmarks:

• Documented statutory breach and verified timeline of events.
• Jurisdictional competence of the regulatory agency or superior court.
• Contemporaneous written correspondences, notices, and financial records.
• Quantifiable proof of pecuniary loss or civil rights violation.

“The rule of law ensures that statutory rights and duties cannot be compromised by informal arrangements or administrative fiat; every citizen has the constitutional right to due process.”
— Nigerian Legal Precedent & Constitutional Jurisprudence

The FCCPC’s merger review process under the Federal Competition and Consumer Protection Act 2018 applies to mergers that meet specified turnover thresholds. Merging parties must notify the FCCPC and obtain clearance before completing the merger, or risk having the merger declared void and facing significant fines.

The FCCPC may approve the merger unconditionally, approve it subject to conditions (such as divestiture of certain assets or businesses), or prohibit it if it would substantially lessen competition in any Nigerian market.

Sector-specific regulators impose additional M&A approval requirements in regulated industries. Bank mergers require CBN approval under BOFIA 2020, insurance company mergers require NAICOM approval, and telecommunications company mergers require NCC approval.

Upstream petroleum company mergers involving production licences may require NUPRC consent to the transfer of licences. Multi-sector businesses undergoing M&A may therefore face multiple concurrent regulatory approval processes, each with its own timelines, information requirements, and conditions — making M&A transactions in Nigeria complex and time-intensive undertakings requiring specialist legal and financial advisory support.

Employee rights in M&A transactions are also regulated. Under the Labour Act Cap L1 LFN 2004, the transfer of a business as a going concern does not automatically extinguish the employment contracts of the employees of the transferred business — the acquiring company is generally required to offer to continue the employees’ employment on terms no less favourable than their existing terms.

For direct regulatory verification, official complaints, or accessing statutory registers without third-party fees, members of the public can consult the official portal of the Central Bank of Nigeria (CBN) Consumer Protection Portal.

Failure to respect employee rights in M&A transactions may give rise to wrongful dismissal claims, and the NICN has jurisdiction to hear such claims. Trade unions must also be consulted where the merged entity employs unionised workers under a collective bargaining agreement.

Ignorance of the law is no excuse.