Businesses desiring to combine or merge in Nigeria now have to pass through two different agencies of government in Nigeria. One is the Nigeria’s Securities and Exchange Commission, and the other, the newly constituted Federal Competition and Consumer Protection Commission. Nigerian President, Muhammadu Buhari, signed into law, the Federal Competition and Consumer Protection Act (FCCPA) in January, 2019.
Highlights of The New Position
Previously, mergers, acquisitions and other forms of business combination in Nigeria have always been the exclusive reserve of the Securities and Exchange Commission. In a statement jointly signed by both commissions, the new positions are that:
- The Federal Competition and Consumer Protection Act now has the exclusive right to authorize, with or without conditions, prohibit or approve mergers of which notice is received, in compliance with its mandates under the Federal Competition and Consumer Protection Act (FCCPA).
- Forms of business combinations contemplated under the Act include the purchase or lease of stocks or interests of another company or business entity; business combination between two companies or entities ; any form of joint venture between two or more business entities.
- The FCCPC (old Consumer Protection Council in Nigeria, before it was disbanded by the new law) is to review all mergers and other business combinations or arrangements to ensure that such combinations do not distort or impede the markets or create a monopoly.
- Now that the Federal Competition and Consumer Protection Act has come into effect, approval for mergers or other forms of business combination will only be filed with the Securities and Exchange where the mergers and acquisitions involve a public company or where the transactions involve a change of shareholding of capital market operators, even if the transaction is between a private company on the one hand and a public company on the other.
Also See: These Businesses Are Currently Free From Tax In Nigeria
- Thus, where the notice of approval of merger is from a public company, Nigerian Securities and Exchange Commission, now, only comes in to determine whether all shareholders are fairly, equitably and similarly treated and given sufficient information regarding the merger. This in fulfillment of its mandate under the Nigerian Securities and Investment Commission.
Backlog of Pending Mergers and Acquisitions Notices in Nigeria
- The statement however states that all notifications pending before SEC at the time of enactment of the FCCPA will be subject to the interim process above and FCCPC will convey the decisions accordingly. Consequently, SEC and FCCPC will jointly review such notifications and FCCPC will convey decisions with respect to the notifications.
- Subsequent notices would be filed with the FCCPC.
The statement read in part:
In order to ensure continuing and seamless commercial transactions and market operations, SEC and FCCPC have come to a mutual understanding with respect to these transactions within the transition period, which pursuant to this notice commences immediately, and shall remain in force until otherwise discontinued by further Advisory or Guidance.
During this transition period, starting today, May 3rd, 2019:
Where and How To File New Notices
According to the statement, notifications of mergers or acquisitions or any form of business combinations would now will be filed at;
1. FCCPC: 17 Nile Street, Maitama, OR;
2. SEC/FCCPC Interim Joint Merger Review Desk at SEC Tower, Plot 271, Samuel Asesujo Ademulegun Street, Central Business District, FCT, Abuja OR;
3. SEC/FCCPC Interim Joint Merger Review Desk at SEC Office 3, Idejo Street, Opposite ICON House, Off Adeola Odeku Street, Victoria Island, Lagos.
*All applicable fees will be paid to the FCCPC.
Charles Rapulu Udoh
Charles Rapulu Udoh a Lagos-based Lawyer with special focus on Business Law, Intellectual Property Rights, Entertainment and Technology Law. He is also an award-winning writer. Working for notable organisations so far has exposed him to some of industry best practices in business, finance strategies, law, dispute resolution and data analytics both in Nigeria and across the world.