The regulatory framework governing mergers and acquisitions in Nigeria has experienced a notable shift with the enactment of the Investments and Securities Act 2025 (the “Act”). While the Federal Competition and Consumer Protection Commission (FCCPC) continues to be the primary regulator overseeing all mergers and acquisitions in Nigeria, the Act was recently amended to streamline the role of the Securities and Exchange Commission (the “Commission”) in overseeing mergers and acquisitions related to public companies and the conduct of stakeholders in such transactions.
This newsletter highlights some of the provisions in the Act as they relate to public companies and what they mean for stakeholders.
- Approval of Mergers by the Commission
The Act provides specifically that all public companies intending to undertake a scheme, transaction, arrangement, or activity or issue securities or offer for subscription or purchase of securities must first seek the approval of the Commission before undergoing such arrangement. Where a public company proposes a compromise, arrangement, or scheme involving the issuance of securities for the amalgamation of two or more listed companies, the public company is required to make an application to the Commission for its approval and obtain an approval in principle. Upon obtaining the approval in principle, the public company is required to make an application to the Federal High Court(“Court”) for a meeting of the shareholders for their agreement on the merger.
In considering an application for approval of a merger, the Commission will assess whether shareholders are treated equitably and fairly. Once the merger is approved, the parties must apply to the Court for the merger to be sanctioned. Upon the Court’s sanction, the merger becomes binding on all parties involved.
- Acquiring Voting Rights
The Act provides that no single person shall acquire more than 30% or more of the voting rights of a public company. It further stipulates that no person acting alone or in concert with other individuals may acquire more than 30% or more of the voting rights or such other threshold as may be prescribed by the Commission.
Where a person intends to acquire more than 30% of a company’s voting rights, the Act stipulates that such person must first make an offer to acquire all or part of the voting rights of the company to the shareholders. This is referred to as a take-over bid and is subject to the approval of the Commission. During such take-over bid, the Commission shall ensure that (i) the identity of the acquirer is disclosed to the shareholders;(ii) the shareholders have reasonable time to consider the offer;(iii) the shareholders are supplied with necessary information to assess the take-over offer made.
In the acquisition of the rights in the company, both the company and the offeror must ensure that the shareholders, particularly minority shareholders are treated fairly in such a transaction.
Where the take-over bid fails, the offeror cannot proceed with the acquisition of the voting rights. In the event that the Commission approves the take-over bid, the offeror may proceed with the take-over bid and acquire the additional voting rights.
- Payment for Director’s Loss of Office During a Merger or Takeover
The Act provides that payment to a director for loss of office due to the transfer of shares in a company or its subsidiary in the course of a merger or takeover cannot be made unless such payment is made with the approval of the shareholders of the company- specifically shareholders whose shares are being targeted or purchased during the merger or takeover.
In addition, the Act provides that a resolution approving the payment must be disclosed in a memorandum and made available for inspection by the shareholders at least 15 days before the meeting of the members of the company.
- Penalties for Non-Compliance
Where an acquirer fails to comply with the provisions of the Act on Mergers and Acquisitions, or the directives of the Commission, the acquirer shall be liable to a penalty of ₦10,000 and an additional ₦25,000 for each day the violation continues. Any other party involved in the transaction who fails to comply with the provisions of the Act shall also be liable to a penalty of not less than ₦10,000 and a further sum of ₦25,000 for every day the violation persists. Furthermore, any person who provides the Commission with false or misleading information in relation to a merger or takeover transaction shall, upon conviction, be liable to a fine of ₦5,000,000 or imprisonment for a term of not less than five years, or both.
Conclusion
As public companies proceed with mergers and acquisitions, they must generally ensure that their transactions strictly comply with the Act. The Act ensures that mergers involving public companies are transparent, equitable, and are investor friendly. For companies, it means stricter obligations around disclosure and fairness. For investors, it offers greater protection and recourse in takeover transactions.