So that is it for regulatory bodies involved in M&As. As we have pointed out earlier this list above is by no means comprehensive, but at the least, we have been able to examine the crucial ones.
Last week we started discussing generally on mergers and acquisitions (M&As) in Nigeria. We gave an expose on what M&As are, their types and why you would want to go into one of such transactions. This week we will be looking at the regulatory bodies involved when two or more companies. We will not be able to discuss the bodies/regulatory agencies that could possibly be involved in merger transactions. But we’ll discuss the most required or somehow mandatory.
Agencies/Institutions Regulating M&As
SECURITIES AND EXCHANGE COMMISSION
The first and probably most crucial is the Securities and Exchange Commission (“SEC”). SEC was established by Section 1 of the Investment and Securities Act 2007 (“ISA”). SEC is the apex regulatory institution with respect to business combinations and the capital market. Specifically Section 118(1) of ISA provides as follows: Notwithstanding anything to the contrary contained in any other enactment, every merger, acquisition or business combination between or among
companies shall be subject to the prior review and approval of the Commission. So, firstly and most importantly, the SEC must approve every form of merger and acquisition in Nigeria.
As a result of the above provision, SEC performs a very ubiquitous role in M&As. It receives pre-merger notifications, receives formal application, and gives approval before any merger can be consummated. Also, it must be satisfied that post-merger requirements have been carried out.
In regulating and granting approvals for mergers, the SEC must have its duties under Section 121 ISA in mind. These include to check whether the merger will likely cause substantial restraint of competition or will create a monopoly. This is very important especially in horizontal mergers (merger between companies in the same line of business). Just imagine what will happen if MTN Nigeria Communications LTD were to merge with Globacom Ltd, what would happen in terms of competition in the industry? Obviously, SEC will have to take its duty under Section 121 ISA seriously.
FEDERAL HIGH COURT
The Federal High Court (“FHC”) is the constitutionally enabled court to handle matters with respect to companies’ management and regulation in Nigeria. Section 251 (1)(e) of the 1999 Constitution of the Federal Republic of Nigeria (as amended) (“CFRN”) is clear on this. That section provides as follows:
Notwithstanding anything to the contrary contained in this Constitution and in addition to such other jurisdiction as may be conferred upon it by an Act of the National Assembly, the Federal High Court shall have and exercise jurisdiction to the exclusion of any other court in civil causes and matters-
(e) arising from the operation of the Companies and Allied Matters Act or any other enactment replacing the Act or regulating the operations of companies incorporated under the Companies and Allied Matters Act;
This section clearly gives the FHC jurisdiction over companies operating under the CAMA, which invariably includes all companies; and any other enactment replacing the CAMA. This latter part is also relevant because certain parts of CAMA were severed to create the Investment and Securities Act (“ISA”). So invariably the FHC has jurisdiction over matters arising from the operation of companies under the ISA. This constitutional enablement of the FHC is further backed up by Section 7(1)(c)(i) of the Federal High Court Act (which for our purpose is mutatis mutandis with Section 251(1)(e) (e) of the CFRN).
Despite this clear investment of powers on the FHC, the regime of Sections 284, 294 of the ISA 2007 and 93(1) of the Pensions Reform Act 2004 has brought in some jurisdictional conflict between the FHC and the Investment and Securities Tribunal (“IST”) especially where the dispute involve investment in securities. This extent of such conflict is outside the scope of this article. But let us emphasis that the Constitution gives the FHC exclusive jurisdiction with respect to matters on the operation of the CAMA, operation of companies under CAMA and any legislation replacing CAMA. As such it the FHC that makes order for the holding of a meeting by the shareholders of the merging to consider the merger scheme and also sanctions the merger scheme. The FHC also deals with objections to the merger.
CORPORATE AFFAIRS COMMISSION
The CAMA established the Corporate Affairs Commission (“CAC”) to administer the Act, register and regulate the affairs of companies. Despite the fact that SEC now has most of the responsibilities, the CAC is still responsible for receiving corporate filings, and certification of corporate resolutions, the sanction and documents to be filed with SEC. it also has the responsibility of deregistration of dissolved companies.
We may just mention the Nigerian Stock Exchange (“NSE”) which comes in where quoted companies are involved because they have to meet up with Listing Rules; and the Central Bank of Nigeria (“CBN”) which must be resorted to when one or more of the merging companies are banks.