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A NEW REGULATORY ORDER FOR NIGERIAN PORTS – UNDERSTANDING THE NPERA ACT 2026

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BY SEUN TIMI-KOLEOLU & ENIOLA SOGBESAN

Introduction 

Nigeria’s maritime sector is poised for a significant regulatory transformation following the enactment of the Nigerian Ports Economic Regulatory Agency Act, 2026 (the “NPERA Act” or the “Act”) by President Bola Ahmed Tinubu on June 19, 2026, and the repeal of the Nigerian Shippers’ Council Act (the “Nigerian Shippers’ Council Act”). The NPERA Act establishes a new framework for the economic regulation of Nigeria’s ports and transforms the former Nigerian Shippers’ Council into the Nigerian Ports Economic Regulatory Agency (the “Agency”), with an expanded mandate to oversee and regulate the economic aspects of port operations in Nigeria. 

More significantly, the Act marks a shift in the institutional role of the former Nigerian Shippers’ Council—from a statutory body primarily focused on shipper protection to an economic regulator with broader powers over port services. This expanded mandate positions the Agency to play a central role in shaping the commercial and competitive environment within Nigeria’s maritime sector. 

In this newsletter, we examine the key provisions of the NPERA Act and consider its implications for terminal operators, shipping lines, investors and the broader maritime industry.  

Objectives and Application of the Act 

The NPERA Act has two objectives which are: 

  1. to establish a legal framework for the efficient economic regulation of regulated services including vessel reception, carriage, storage and handling of cargo, freight forwarding, logistics services, and any other service declared to be a regulated service within Nigeria’s ports; and 
  2. to protect the interests of shippers, providers and users of regulated services. 

Compared to the former Nigerian Shippers Council Act, which was largely administrative and advisory, the NPERA Act is designed to actively regulate market participants and enforce service standards within Nigerian ports.  

The Nigerian Ports Economic Regulatory Agency 

The NPERA Act establishes and empowers the Agency to implement the provisions of the Act. In implementing the provisions of the Act, the Agency is required to perform its functions in a manner that does not contravene any law implemented by other government agencies. This requirement is intended to address potential concerns about regulatory overlap and conflict between the Agency and other agencies such as the Nigerian Ports Authority (NPA), the Nigerian Maritime Administration and Safety Agency (NIMASA) etc. 

Registration and Licensing 

The NPERA Act empowers the Agency to register and license regulated service providers. In exercising this function, the Agency is empowered to make regulations that specify the services that require registration and prescribe the conditions for registration, issuance of certificates, suspension, cancellation, revocation and de-registration.  

The registration requirements are also applicable to existing regulated service providers and other service providers licensed by any other relevant government agency within the ports. As of the date of this newsletter, we note that the Agency is yet to release any regulation for the registration of service providers. 

Determination of Tariffs, Rates and Charges 

The NPERA Act gives the Agency substantial powers to determine tariffs and fines. In addition, the Agency is empowered to set guidelines on tariffs, monitor compliance, set service delivery standards, and publish tariffs as may be necessary. 

The failure of any regulated service provider to comply with the guidelines that may be issued by the Agency will result in fines, institution of criminal proceedings or the revocation of the service providers license. More specifically, the Act imposes fines ranging from ₦2,000,000 to ₦20,000,000 on defaulting service providers. 

Conflict of Functions and Overlapping Mandates 

A significant issue arising from the NPERA Act is its interaction with existing sector regulators. The NPERA Act empowers the Agency to make regulations on standards and conditions of service delivery, market conduct, tariffs and other economic-regulatory matters in relation to “prescribed services”.  

The definition of “prescribed services” includes services provided by the National Inland Waterways Authority (NIWA), the Nigerian Ports Authority (NPA) and the Nigerian Railway Corporation. These provisions may potentially overlap with the regulatory powers exercised by those bodies under their own enabling laws. 

It is important to note that although the NPERA Act require the Agency to perform its functions without contravening the laws implemented by other regulators, it does not prescribe a mechanism for resolving any inconsistent directives between related regulators. This raises the question of which regulator’s directive should prevail where their regulatory mandates overlap. 

Conclusion 

As stated earlier, The Act is a significant shift from the shipper-protection framework under the repealed Nigerian Shippers’ Council Act towards a more robust economic regulation of Nigeria’s ports. Given Nigeria’s commitment under the Enhanced Trade and Investment Partnership (ETIP) with the United Kingdom announced on March 18, 2026, which we wrote about here, the NPERA Act appears to be a development that will potentially deliver benefits under the ETIP.  

Nevertheless, the practical impact of the Act will depend substantially on the regulations and guidelines to be issued by the Agency, as well as the effectiveness with which the Act will be implemented.  

For regulated service providers, the practical implications include –  

  1. registration may now be a precondition for operating or providing certain regulated services; 
  2. tariffs and charges are subject to the Agency’s regulatory framework; and  
  3. regulated entities will be subject to enhanced monitoring and enforcement measures.  

Accordingly, businesses operating in the ports sector should review their existing regulatory arrangements against the NPERA framework to ensure compliance. 

NIGERIA’S ANTI-COMPETITION REGIME: KEY COMPLIANCE CONSIDERATIONS FOR MIDSTREAM AND DOWNSTREAM PETROLEUM OPERATORS IN NIGERIA

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BY ADERONKE ALEX-ADEDIPE & OLUWAYEMI IBIRINDE

Introduction 

On 6th August 2026, the Nigerian Midstream and Downstream Petroleum Regulatory Authority (“NMDPRA”) launched a stakeholder consultation in relation to the proposed Midstream and Downstream Petroleum Prevention of Anti-Competitive Practices and Behavior Regulations, 2026 (the “Regulations”). Comprising 138 provisions across 23 parts, the Regulations seek to introduce the first dedicated, detailed competition-law framework governing anti-competitive conduct in Nigeria’s midstream and downstream petroleum sector. 

Historically, competition concerns in the sector including price-fixing, market allocation and abuse of dominant positions by vertically integrated operators were addressed only indirectly, through the general provisions of the Petroleum Industry Act and the oversight of the Federal Competition and Consumer Protection Commission (FCCPC”). The Regulations seek to close this gap by translating the PIA’s competition provisions into sector-specific rules, while establishing a coordination framework with the FCCPC through a recently signed Memorandum of Understanding. 

In this newsletter, we examine the key provisions of the Regulations and highlight some of the legal and commercial considerations for operators. 

Who Do the Regulations Apply To? 

The Regulations apply broadly to licensees and permit holders operating across the midstream and downstream petroleum value chain. Specifically, they apply to: 

  1. operators engaged in pricing, marketing and distribution of petroleum products (marketers and retailers); 
  2. owners and controllers of essential petroleum infrastructure, including pipelines, storage terminals, jetties, bulk-loading facilities and depots;
  3. vertically integrated operators and their affiliates, including entities engaged in intra-group transactions; and 
  4. operators participating in mergers, acquisitions, or joint ventures within the sector. 

The regulatory focus is therefore not on any single category of licensee, but on any conduct, agreement or arrangement capable of preventing, restricting or distorting competition in the sector. 

What are the Key Prohibitions? 

1. Prohibition on Anti-Competitive Conduct (Regulation 3) 

The foundation of the regime is Regulation 3, which prohibits any conduct, agreement, arrangement, understanding, decision or practice that has the object or effect of preventing, restricting or distorting competition regardless of whether it is formalised in writing or conducted informally. 

2. Price-Fixing, Market Allocation and Bid-Rigging 

Competing operators are prohibited from coordinating pump prices, ex-depot prices, margins, discounts, freight charges, supply or output levels, territories, customer allocation and tender submissions. 

3. Restrictive Commercial Arrangements 

Exclusive supply agreements, long-term contracts, take-or-pay arrangements, tying and bundling, loyalty rebates, minimum-volume commitments, resale price maintenance and franchise restrictions may be scrutinised where they substantially lessen competition with focus is not on whether they foreclose market access or distort competitive conditions. 

4. Abuse of Dominance 

The Regulations do not prohibit market dominance itself, only its abuse. Dedicated provisions address vertically integrated firms, affiliate transactions and cross-subsidisation. 

5. Infrastructure Access and Transparency 

Controllers of essential infrastructure are prohibited from unjustifiably refusing, delaying or obstructing access by qualified third parties. Access must be transparent, non-discriminatory, and based only on legitimate technical, safety and creditworthiness considerations. Operators must also publish tariffs, fees and service conditions; hidden surcharges, secret discounts and undisclosed preferential arrangements are prohibited. 

6. Mergers and Digital Markets 

The Regulations introduce a merger and acquisition review mechanism empowering the NMDPRA to assess transactions for effects on competition, market entry and consumer welfare, alongside emerging oversight of digital markets including shared platforms, data-sharing and algorithmic pricing risks. 

Compliance Considerations 

Pending finalisation of the Regulations, operators in the midstream and downstream sector should consider the following: 

  1. Operators should audit supply agreements, distribution contracts and pricing arrangements with competitors for provisions that could be characterised as price-fixing, market allocation, or bid-rigging. 
  2. Vertically integrated operators and infrastructure owners should evaluate whether their current market position could expose them to “abuse of dominance” scrutiny, particularly regarding third-party infrastructure access. 
  3. Owners of pipelines, depots, terminals and jetties should ensure access terms are documented, published, and based on objective technical and safety criteria. 
  4. Organisations should establish internal governance procedures including competition-law training and pricing-communication protocols to monitor ongoing compliance ahead of finalisation. 
  5. Given that NMDPRA has invited stakeholder input on the clarity, practicality and impact of specific provisions, operators should consider making submissions to flag ambiguous provisions before the Regulations are finalised. 

Penalties for non-compliance 

The draft Regulations introduce significant sanctions for non-compliance. Operators found guilty of serious offences, including price-fixing, bid-rigging, market allocation and abuse of market dominance, may be fined between 3–5% of annual turnover. Persistent offenders may face licence suspension or revocation while the NMDPRA may impose daily penalties on operators that fail to comply or continue prohibited conduct. 

Conclusion 

The NMDPRA indicates it is actively reviewing submissions ahead of finalization. Therefore, stakeholders should prioritise reviewing their commercial arrangements, infrastructure access policies, and internal compliance frameworks.  

Operators who engage proactively with the consultation process, and who position themselves for compliance ahead of finalisation, will be better placed to navigate this significant shift in Nigeria’s petroleum regulatory landscape.

REGULATORY UPDATE: 2025 DIGITAL, ELECTRONIC, ONLINE, OR NON-TRADITIONAL CONSUMER LENDING GUIDELINES – NAVIGATING COMPLIANCE

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BY SEUN TIMI-KOLEOLU AND MARK IMONITIE

Introduction

In furtherance of its regulatory powers, the Federal Competition and Consumer Protection Commission (the “Commission”) on November 18, 2025 issued the Digital, Electronic, Online, or Non-Traditional Consumer Lending Guidelines, 2025 (the “Guidelines”). The Guidelines aim to contextualize, clarify, and enhance the provisions outlined in the Digital, Electronic, Online, or Non-traditional Consumer Lending Regulations 2025 (the “Regulations”) issued by the Commission in July 2025.

The Guidelines which became effective on November 18, 2025, introduce key provisions affecting digital lenders—such as approval of lending applications, transition for previous license holders, and pilot lending programme.

In this newsletter, we examine some of the key provisions introduced by the Guidelines, which improves on the provisions of the Regulations as discussed in our newsletter  earlier written.

  1. Scope of the Guidelines

The Guidelines apply to all individuals, entities, or institutions involved in providing, facilitating, or managing digital, electronic, online, or other non-traditional consumer lending services within the Federal Republic of Nigeria. This includes those operating directly or through digital platforms, agents, or other intermediaries, as well as Nigerian citizens residing both inside and outside Nigeria.

Furthermore, the Guidelines extend to cross-border digital consumer lending services offered to consumers in Nigeria, as well as corporate bodies or government agencies engaged in commercial lending or holding controlling interests in such activities.

However, the Guidelines do not apply to:

  1. financial institutions duly licensed and regulated by the Central Bank of Nigeria;
  2. lending arrangements between employers and employees conducted strictly under an employment relationship; and
  3. cooperative societies that are duly registered, licensed, and operating in accordance with relevant laws.
  1. Approval of Lending Applications

Prior to the Guidelines, the Commission was not obligated to review or approve the mobile or web applications used by lenders in delivering their lending services.

However, under the Guidelines, in addition to the registration requirement for digital lenders outlined in paragraph 15 of the Regulations, applicants are now required to submit the mobile or web application intended for lending services to the Commission for approval.

The Guidelines further require intending digital lenders to provide:

  1. evidence of compliance with relevant standards for mobile applications, data messaging, information security, data quality, and secure authentication, as set by the International Organization for Standardization (ISO);
  2. proof of ownership of intellectual property rights in the lending application or a valid, active license to use it;
  3. confirmation that the lending application complies with the Nigeria Data Protection Act, 2023, and other applicable laws and guidelines of the Nigeria Data Protection Commission; and
  4. any additional information or documentation the Commission may request.

If an applicant fails to disclose any lending application used or intended for consumer lending services, the Commission may refuse approval. If approval was already granted before this nondisclosure is discovered, the Commission may revoke approval or impose a penalty on such applicant. The Commission may also order any application marketplace or digital platform to delist such lending application for violating the Regulations or Guidelines.

The aim of this requirement is to ensure that digital lending platforms meet regulatory standards for security, intellectual property, and data protection before approval, thereby safeguarding consumer interests and maintaining compliance with relevant laws.

Furthermore, the non-refundable approval fee of One Million Naira (N1,000,000) as provided under the Regulation, shall entitle an applicant to register up to two (2) lending applications. Where an applicant seeks to register additional lending applications such that the total number exceeds two (2), the applicant shall pay an additional fee of Five Hundred Thousand Naira (N500,000) per application. In any case the maximum registrable number of applications shall not exceed five (5).

  1. Transition for Previous License Holders

The Guidelines establish the requirements for transitions by digital lenders who were registered under the Digital Lending Guidelines, 2022.  It provides that entities registered with the Commission under the 2022 Guidelines and before the 2025 Regulations came into effect, will be regarded as Deemed Licensees.

It is understood that such Deemed Licensees hold a deemed license to offer consumer lending services until June 30, 2026, and Deemed Licensees wishing to continue providing consumer lending services beyond this date must apply to the Commission for approval at least sixty (60) days before the expiration.

Under the Guidelines, a Deemed Licensee is not required to obtain immediate approval from the Commission to provide Consumer Lending Services pursuant to the Regulations. Nevertheless, Deemed Licensees must submit the following to the Commission:

  1. a schedule of loan books and transactions;
  2. the financial statements for the previous financial year;
  3. details of the lending applications used by the Deemed Licensee for digital lending services;
  4. evidence of compliance with annual returns filing as required by the Companies and Allied Matters Act, relevant sector-specific laws and regulations; and
  5. any other information the Commission may request.

If the Commission determines that there has been a significant change since the date of registration—such as changes in the Deemed Licensee’s details, ownership structure, or business nature—the Deemed Licensee will be required to formally apply for approval under the Regulations.

  1. Pilot Programme

The Guidelines introduced new provisions for entities seeking to provide consumer lending services under a Pilot Programme. The Pilot Programme is meant to cater for entities who wish to test the digital lending market prior to full registration, and is a proactive step towards meeting FCCPC’s comprehensive regulatory expectations.

Under the Guidelines, a Pilot Programme means a limited, trial implementation of consumer lending services for the purpose of evaluating performance, functionality, and feasibility in a controlled environment, prior to a full-scale commercial deployment or implementation.

To apply under the Pilot Programme, amongst other information requested by the Commission, an applicant is required to submit: (i) a board resolution approving application and participation; (ii) Certificate of Incorporation; (iii) company profile, organogram, and contact details; (iv) MEMART and updated Status Report; (v) CVs of directors and management staff; and (vi) AML/CTF policy.

The Commission may approve a Pilot Programme if the consumer lending exposure does not exceed One Million Naira (N1,000,000) and onboards less than one hundred (100) unique customers. Other considerations by the Commission include: the sufficiency of resources and expertise to manage risks and losses; the level of innovation and likelihood to enhance accessibility, efficiency, security, quality, or fill market gaps; and the viability of business plan for post-pilot deployment.

The Pilot Programme is valid for a period of ninety (90) days, and is renewable once for an additional period of ninety (90) days upon request. Applicants intending to obtain a full license must apply in writing at least fourteen (14) days before expiration of the Pilot Programme and the Commission may grant full license based on the entity’s performance during the Pilot Programme.

 

Conclusion

The Guidelines represent a significant step forward by the Commission in enhancing the regulatory framework for digital lending in Nigeria. Implementation of the Guidelines would ensure operational integrity, strengthen consumer protection, foster transparency and accountability within the digital lending ecosystem, and support the sustainable growth of fintech innovations in Nigeria.

WHAT IS NEW IN NIGERIA’S MERGERS AND ACQUISITION LANDSCAPE? A REVIEW OF REGULATORY SHIFT.

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BY ADERONKE ALEX-ADEDIPE AND HILLARY OKOROTIE

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.

UNSECURED LENDING IN NIGERIA: WAYS TO PROTECT AGAINST DEFAULT

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BY SEUN TIMI-KOLEOLU AND SHARON OKPO

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INTRODUCTION

In spite of the rapid growth in the financial sector in Nigeria with various Fintechs providing more accessible and efficient services, the credit system in Nigeria is still very under-developed. Nigeria’s poor credit system adversely affects the growth of the economy and the people’s standard of living.

Credit cards and loans (to a certain value) are made easily available to citizens of many developed countries including Britain and the United States once these citizens have good credit ratings. Nigeria, however, does not have a credit rating system strong enough to: guide lenders on who to grant unsecured loans to; and deter borrowers from defaulting on loans. Notwithstanding this, certain local and international lenders are setting up digital unsecured lending services in Nigeria to solve the credit issue (“Lenders”). They are, however, faced with the challenge of frequent defaults in repayment of loans by borrowers on the one hand; and poor systems in place to recover debts and deter borrowers from defaulting on the other hand.

In view of the foregoing, this newsletter aims to guide digital Lenders and non-digital Lenders offering unsecured loans on steps that can be taken in Nigeria to reduce the defaults and recover the debts more easily.

The following steps may be taken to protect against default:

1. Domiciliation of proceeds– A Lender may request that the borrower should pledge or mortgage his income or funds inflow in its favour, thereby making the Lender the first beneficiary of any cash inflow on such domiciliated account. The cash inflow could be income and sales proceeds from business activities or salaries due to such borrowers from his employment, etc.

In order for this to be effective, the borrower will be required to present an undertaking signed by the source of income (e.g the borrower’s employer or purchaser) to pay in favour of the Lender, to the full amount of the loan granted.

2. Retention of Title– Where the facility is being given for the procurement of goods for use by the borrower, the Lender may retain the title in such goods until such time that the borrower repays the loan facility.

A retention of title clause should be inserted in the loan agreement to preserve the Lender’s ownership rights in the goods, and its priority over other creditors with regard to the goods. This clause will also give the Lender the right to repossess (and resell) the goods upon default in repayment by the borrower. In addition to a retention of title clause, the Lender may go a step further to have its name clearly stated as the owner of the goods on the receipt for the purchase of the goods.

3. Guarantees– Lenders may request that borrowers provide guarantors prior to granting the loan. The guarantor will be required to sign an undertaking, guaranteeing the repayment of the loan amount by the borrower where the borrower defaults on repaying the loan. It is important to ensure that where the guarantee is issued by a corporate entity, such entity is permitted by its articles of association to issue such guarantees and to such value as stated on it.

Prior to granting loans, Lenders may also consider taking the following steps:

1. Alternative Data and Credit Scoring- Lenders can rely on technology and big data analytics, to access a broader range of information beyond traditional credit reports. This includes alternative data sources like utility payments, rent payments, social media activity, education and employment history, information on phone usage, and even online behavior.

2. Proper assessment of the borrower’s credit-worthiness– although they are not prevalent in Nigeria, there are a few credit rating institutions in Nigeria who Lenders can liaise with to ensure easy and quick access to the borrower’s reports when necessary. This will aid the Lender in assessing the borrower’s credit worthiness, and the probability of the loan becoming a delinquent loan.

3. Conducting identity verifications and due diligence- Lenders may also use identity verification tools to confirm certain details provided by the borrower (and Guarantor where applicable), such as name, address, date of birth and other personal information supplied; employment information; existence and location of assets used as security; confirmation of any existing legal encumbrance on assets used as security; etc. Startups such as Prembly provide such verification services.

CONCLUSION

While the above measures and strategies are not failproof in ensuring that all loans facilities are repaid, it would help to reduce the number of delinquent loans recorded by a Lender when properly applied. We also encourage regulators such as the Federal Competition and Consumers Protection Commission (FCCPC) and others to work towards balancing the need to protect the borrowers and a need to protect the interest of Lenders so as to ensure the credit system flourishes in Nigeria.

Legal and Regulatory Considerations for Business Acquisitions in Nigeria

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By Aderonke Alex-Adedipe and Olawale Atanda

The main objective of every business is to make profit. Companies continually explore methods of increasing their bottom line and sometimes, that may mean acquiring companies in the same industry for several operational or economic reasons which ultimately would lead to increased revenue.

Recently, the fintech space in Nigeria was given a significant boost following the acquisition of Paystack by international payments company, Stripe in a record-breaking deal. For companies seeking to make similar acquisitions in Nigeria, there are certain legal and regulatory requirements to be considered when acquiring a business.

  1. General Applicable Legislations

Acquisitions in Nigeria are governed by key legislations. These are the Federal Competition and Consumer Protection Act (FCCPA) 2019 and the Companies and Allied Matters Act 2020 (CAMA).

Prior to the passage of the FCCPA in 2019, the Investment and Securities Act (ISA) 2007 and the Securities and Exchange Commission Rules and Regulations 2013 (SEC Rules) governed mergers and acquisitions in Nigeria. By the provisions of the FCCPA however, the Federal Competition and Consumer Protection Commission (“the Commission”) took over the regulation of mergers and acquisitions from SEC.

Under the FCCPA, all acquisitions are required to be approved by the Commission. However, acquisitions classified as “small mergers” are not required to be notified to the Commission except otherwise requested by the Commission. Small mergers are classified as such, where the combined assets and turnovers of the acquiring and target company fall below NGN1 billion.

It should be noted that acquisitions of shares qualify as “mergers” and fall under the regulation of the Commission whenever they result in an acquisition of controlling stake in the acquired company.

  1. Sector-Specific Legislations

There are other legislations that are specific to individual industries. Companies operating in these sectors are required to follow the rules of acquisitions specified in the legislations or required by regulators. These laws and regulatory requirements operate in addition to the primary legislations stated above.

In the banking sector for example, the Banks and Other Financial Institutions Act and the Central Bank of Nigeria’s Guidelines regulate acquisitions in the banking sector. Also, the Central Bank of Nigeria (“CBN”) generally requires other financial institutions which the CBN regulates to seek its consent prior to a change in the ownership structure of such institutions.

  1. Taxes

Acquisition transactions should not take place without the prior direction from the Federal Inland Revenue Service (FIRS) in connection with taxes/duties which may be applicable to such transaction. It is important that both the acquirer and target companies settle all outstanding tax obligations to the FIRS. Where the acquisition involves the sale of assets, capital gains tax will be payable. In situations where an acquisition results in the creation of more shares, stamp duties tax will be payable on the new shares.

Conclusion

Acquisition transactions are major deals which require several legal considerations. Acquiring companies should ensure that, in addition to the economic factors already considered, legal and regulatory requirements should be met when closing an acquisition deal to prevent regulatory sanctions and legal liability.