On 13 November 2019, the Nigerian Federal Competition and Consumer Protection Commission (FCCPC) published Guidelines on the Simplified Process for Foreign to Foreign Mergers with Nigerian Component (Guidelines).
Prior to the assent to the Federal Competition and Consumer Protection Act (“FCCPA”) on 5th of February 2019, Merger and acquisition was regulated by the Securities and Exchange Commission (SEC) pursuant to sections 117 – 130 of the Investments and Securities Act, 2007 (ISA). However, with the enactment of the FCCPA, mergers and acquisitiions are now regulated by the provisions of the FCCPA which provide for the establishment of the Federal Competition and Protection Commission (FCCPC) which is now saddled with the responsibility of reviewing all mergers and business combinations in order to ensure that they do not impede or distort the market.
The Securities and Exchange Commission (SEC) and Federal Competition and Consumer Protection Commission (FCCPC) recently issued joint guidance on submission of notifications for proposed mergers, acquisitions and other business combination notifications.
The FCCPA mandated FCCPC (to the exclusion of SEC) to set, publish and gazette thresholds applicable to all mergers and combinations, regardless of the size of the transaction i.e. whether large, medium or small. This new responsibility of FCCPC does not however abrogate the powers of SEC to regulate transactions involving public companies. The role of the Commission in relation to Mergers will now be in the exercise of its primary function as the regulator of the capital market. The regulatory purview of the Commission will be restricted to mergers and acquisitions by or involving public companies as well as transactions involving a change of shareholding of capital market operators. The review and approval by the Commission on mergers will be restricted to the objective captured in Section 121(1) (d) of the Investments and Securities Act, which is to ‘determine whether all shareholders are fairly, equitably and similarly treated and given sufficient information regarding the merger’ as well as other statutory mandates of the Commission. The Federal Competition and Consumer Protection Commission on the other hand will consider the anti-competitive effects of a transaction in a relevant market. It should be noted that the provisions and application of Sections 131-151 of the Investments and Securities Act, 2007 remain unaffected by the enactment of the Federal Competition and Consumer Protection Act. Consequently, the Commission will continue to enforce compliance with the takeover provisions and monitor acquisition of shares of public companies.
In a bid to address the issues emanating from the transition from SEC to FCCPC regime, SEC and FCCPC issued the Guidance to ensure seamless and continuous commercial transactions and market operations. Based on the Guidance, which became effective on 3 May 2019 (and is applicable until further notice/directive):
- All pending notifications awaiting review by SEC will now be jointly reviewed by SEC and FCCPC.
- All subsequent notifications/requests for approval are to be filed at FCCPC’s office in Abuja or with the SEC/FCCPC interim review desk office in Lagos or Abuja.
- All applicable fees are to be paid to FCCPC.
- Every complete application filed with SEC prior to the effective date of the Federal Competition and Consumer Protection Act and for which appropriate processing fees had been paid would be continued and completed.
The joint advisory provides some clarity on how companies should proceed in respect of current or potential transactions. This interim structure is not expected to extend indefinitely as the FCCPC is likely to issue more robust guidelines for the entire process. The FCCPA already includes some salient distinctions on the scope of mergers which is different from what was provided under the ISA and also gives the FCCPC powers to set thresholds for mergers. Companies are keen to see how the FCCPC will address such issues, but until then, the procedure remains largely the same.
In furtherance of its mandate, the FCCPA recently issued a guideline on the Simplified Process for Foreign to Foreign Mergers with Nigerian Component. The Guidelines, which is divided into nine (9) parts constitute a merger notification ‘form’ specifically for foreign-to-foreign mergers, indicating, among others, the type of information required regarding the merging parties, and mandatory supporting documentation to be provided and the applicable fees.
From all indications, taking a cue from other African jurisdictions, it seems these Guidelines are the first of their kind in Africa providing specific rules for (i) the treatment and notification of foreign-to-foreign mergers and (ii) outlining a simplified procedure for foreign-to-foreign mergers process in Nigeria.
Under the Guidelines, FCCPC undertakes to review foreign-to-foreign mergers under the simplified procedure within 15 business days, subject to the payment of an additional fee of NGN 5 million (approx. USD 13 800). However, the Guidelines is silent on the applicable number of days the review will take place should an applicant pay the normal fee provided in the Guidelines.
Under the Guidelines, the filing fees for foreign-to-foreign mergers are as follows:
| Threshold | Filing fees |
| Merger with combined turnover of NGN 1 billion (approx. USD 1.4 million) or more (where turnover refers to domestic turnover of the merging parties) | The higher of: • NGN 3 million (approx. USD 8 300); or • 0.1% of the combined turnover |
| Merger where target undertaking has turnover of between NGN 500 million and NGN 1 billion (i.e. between approx. USD 1.4 million and USD 2.8 million) | NGN 2 million (approx. USD 5 500) |
| For a foreign-to-foreign merger to be reviewed under the simplified procedure (i.e. within 15 business days) | An additional NGN 5 million (approx. USD 13 800) is payable |
The above filing fees must be interpreted in the context of the merger thresholds published in Government Notice 85 of 2019 which, essentially, provide that a merger is notifiable where the parties’ combined annual turnover in Nigeria in the preceding financial year is more than NGN 1 billion (approx. USD 2.8 million), or where the target’s annual turnover in Nigeria in the preceding financial year is more than NGN 500 million (approx. USD 1.4 million). The above filing fees are only applicable to foreign-to-foreign mergers. Another Guideline may be issued for merger threshold within Nigeria affecting Nigerian entities but for now, the merger threshold issued by the SEC prior to the enactment of the FCCPA is still operational.
A link to the Guideline can be found here: