Prior to the enactment of the Federal Competition and Consumer Protection Act, 2018 (“FCCPA”), mergers and acquisitions in Nigeria were generally regulated by the Investments and Securities Act, 2007 (“ISA”) with the Securities and Exchange Commission (“SEC”) having general regulatory oversight. The FCCPA has now repealed Sections 118 to 128 of the ISA – which deal with mergers and acquisitions – suggesting that the regulatory oversight for mergers and acquisitions in Nigeria will now be vested in the new Federal Competition and Consumer Protection Commission (the “Commission”) and not the SEC.
However, in a publication by the SEC on its website in respect of the new merger regime, the SEC stated that Section 121(1)(d) of the ISA is excluded from the provisions of the ISA repealed by the FCCPA. The SEC has also stated that it will continue to have regulatory purview over mergers and acquisitions “by or involving public companies” . According to the SEC, its purview will be restricted to the objective captured in Section 121(1) (d) of the ISA, which is to “determine whether all shareholders are fairly, equitably and similarly treated and given sufficient information regarding the merger”.
The SEC’s publication raises a few questions regarding the new merger regime. One of such questions, is what is the basis of the SEC’s position that Section 121(1)(d) of the ISA is excluded from the repealed ISA provisions, although the FCCPA suggests otherwise?
Furthermore, it is not clear at this time what type of merger and acquisition transactions will be deemed to “involve public companies” for which the SEC will continue to have regulatory oversight. For example, can an acquisition of shares transaction occurring in an offshore parent company of a Nigerian public company be deemed as a transaction “involving the public company” notwithstanding that the direct shareholding of the Nigerian public company will not be impacted? Could it also be that the intention is that only transactions where shares of a Nigerian public company are being directly acquired or the Nigerian public company is acquiring shares of other entities, will be deemed as “involving public companies”?
The above issues will need to be clarified as soon as possible to enable all stakeholders to fully understand the impact of the FCCPA and the SEC’s role in connection with mergers and acquisitions in Nigeria.
 According to the circular release by SEC dated 8 February 2019, there is a transitional period of 3 months for the Commission to be established following which the FCCPA will become operational.
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Adepetun Caxton-Martins Agbor & Segun
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