Legal Framework for Mergers and Acquisition

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LEGAL FRAME WORK FOR MERGERS AND ACQUISITIONS
BY

DAVID OGWU
COMMISSIONER(OPERATIONS)

SECURITIES AND EXCHANGE COMMISSION
Presented at the Central Bank and West African Institute for Financial and Economic Management Retreat on Mergers and Acquisitions in the Banking Industry. Nicon Hilton Hotel, Abuja. September 17-19, 2004

INTRODUCTION
A legal framework exists for mergers and acquisitions in Nigeria as in other jurisdictions. The legislations that have impact directly or indirectly on Mergers and Acquisitions are: § The investment and Securities Act (ISA) No 45 of 1999 and the Rules and Regulations of SEC pursuant to the ISA.

Cont’d
§ The Companies and Allied Matters Act (CAMA) 1990 § The Banks and Other Financial Institutions Act (BOFIA) No 25 of 1991 § The Insurance Act § The Companies Income Tax Act

INVESTMENT AND SECURITIES ACT (ISA)
This is the principal legislation regulating Mergers and Acquisitions in Nigeria. It repealed the specific provisions for the regulation of M & A’s in CAMA and transferred the relevant sections to the ISA. § The objective of M & A regulation by the ISA is to Prevent restraint of competition and monopolistic tendencies.

Cont’d
§ The ISA provides that all other laws shall be read in conformity with it in respect of capital market issues. This confers the ultimate regulation of M & A’s on SEC. § It also mandates the SEC to make Rules and Regulations for the market. § Sections 99 – 122 of the ISA contain specific laws for regulating M & A’s

PROVISIONS IN ISA FOR REGULATING MERGERS AND ACQUISITIONS
§ Provisions are made for reconstruction and mergers of companies as well as for the holding of court-ordered meetings § A majority agreement is required at the court-ordered meetings before approval of the Commission is sought. § If a scheme is approved by the Commission and sanctioned by the court it shall become binding on the companies and the court will by the order sanctioning the scheme provide for...
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