In nigeria, mergers and acquisitions were not so common until recently due to the economic. It is hoped that the regulation will fill some of the gaps in the substantive provisions of the companies and allied matters act cama. A merger occurs when two or more separately existing companies come together to form a new single company. The local content act 2010 enactment, enforcement and.
It will cover some selected commercial banks in nigeria, which have engaged in one form of corporate restructuring exercise or the other and. Nigeria covers 356,668 sq miles 923,7770 sq kilometers. A major reason for conglomerate takeovers, or mergers is diversification of activities into other. Harvey university of ghana business school this study analyzes the impact of mergers and acquisition on performance of the acquiring firm using a ttest to test the difference between the average pre and postacquisition performance indicators. The methodology used is a survey of companies incorporated in nigeria under the companies and allied matters act 1990, which have undergone a merger or an acquisition process. The effects of mergers and acquisition on corporate growth. Section 37 of the companies and allied matters, act, 2004 provides for the effect of registration thus as from the date of incorporation mentioned, in the certificate of incorporation, the subscriber of the memorandum together with such other persons as may, from time to time become members of the company shall be a body corporate by the name contained in. Original research article impacts of mergers and acquisition.
At as this time 2016, the recognized company law in nigeria is the companies and allied matters decree of 1990. The companies and allied matters act 1990 cap fn c20 is also applicable as well as the rules of the federal high court. An incorporated company may be either a company a having the liability of its members limited by the memorandum to the amount, if any, unpaid on the shares respectively held by them in this act termed a company limited by shares. The provisions governing schemes of arrangement are contained in the companies and allied matters act, chapter c20, laws of the federation of nigeria 2004 cama. Apr 11, 2014 the senate on wednesday passed a bill seeking to amend the companies and allied matters act, 2004. Notification is mandatory for acquisitions involving companies with assets or turnover of n500,000,000 and above which do not qualify for the exemptions referred to in 1. The companies and allied matters act further describes a director to include any person on whose instructions and direction the board of directors of a company is accustomed to act despite the fact that such a person is not officially appointed or listed as one of the directors of the company. Procedure for mergers, acquisitions and takeovers in nigeria. An overview of mergers and acquisitions under nigerian law omotayo akinrinwa abstract this essay seeks to explore the legal framework governing the operation or activities of mergers and acquisitions in nigeria. As noted above, the act requires that first consideration be given to nigerian companies when contracts are awarded for oil blocks, licenses and all other projects.
Memorandum and articles of association of a microfinance bank special warning this document is not prescriptive. An overview of mergers and acquisitions under nigerian. The global transaction report obtained by sweetcrude indicated. Banks consolidation in nigeria covenant university. The principal law that governs the merger and acquisition in nigeria is the investment and securities act isa 2007. Pursuant to the isa, the key regulator of mergers in nigeria is the securities and exchange commission the sec. Umoren and olokoyo 2007 studied merger and acquisition in nigeria. It is unfortunate that a simple policy initiative, merger of ministries and agencies of government for ease of bureaucratic business by the oneyearold muhammadu buhari administration remains. It is about the same size as california, nevada and utah combined. Official website of the consulate general of nigeria in. It is defined in section 537 of the companies and allied matters. The governor of central bank of nigeria, professor charles soludo in defense of the new capital base of n25billion and consolidation by merger and acquisition did analysis of the position of the government of the federal republic of nigeria and their reform programme to have a banking system that will be a strong bedrock for economic building.
It is worthy of note that sectoral legislations may also apply depending on the object of the merger. Allied matters act7 is the principal legislation regulating incorporation and management of companies in nigeria. There is bill pending before the national assembly seeking to amend section 80 of the companies and allied matters act cama. This section is also very similar to section 100 of the investment act.
Vat act 1993 and made payable on the value of goods and services listed in the schedule to the act at the rateof 5% machinery and equipment imported by a local subsidiary subject to 5% vat, calculated on an aggregate value of cost, insurance and freight, customs duties and all other charges on the imported machinery or equipment. Sec 2441 of the companies and allied matters act cap c20 lfn 2004 the term director of a company would be defined as a person appointed or elected according to law, authorized to manage or direct the affairs of a company or corporation sofowara, mordern nigerian company law, second edition, 2006, p. As such, it bears similarly an important status in the nigerian company law and, hopefully there exists a legal framework for. Later in 1968, the companies decree took over from the 1922 company act. The period was characterized by financial deregulation, the global economic crisis, and bank restructuring programs. Provisions on scheme of merger similar to those in the investments and. It is no news that after 28 years, a new companies and allied matters act. Companies and allied matters act, 1990 1990 act, the cam bill seeks to promote reform of the onerous legal and regulatory framework as well as administrative bottlenecks which, for close to three decades, have made doing business in nigeria substantially difficult particularly for micro, small and. Merger, acquisition in nigeria, other african nations to. Consequently i am attracted into researching about these human agents, trustees and. A total of ten incorporated banks were selected using simple random sampling technique. The banks shrink will let nigeria enjoy maximum patronage of foreign investors and fully open nigerian economy to the world according to the nigerian financial system strategy. For this purpose, the act defines a nigerian company as one formed and registered in nigeria under the companies and allied matters act 1990.
A synergistic harvest by enyi patrick enyi phd, mba, aca, acca, mfp, rfs. By section 631 of the companies and allied matters act, the abstraction called a company shall act through its members in general meeting or. As such, it bears similarly an important status in the nigerian company law and, hopefully there exists a legal framework for its regulation under relevant. Some merger actions are specified by law or by a regulatory body. Cama means the companies and allied matters act, cap c20, laws of the federation of nigeria 2004. Merger of ministries, departments and agencies mdas. This is in addition to the specific provisions of the companies and allied matters act cama 1990, and the companies income tax act cita 1979 on purchase, issuance and transfer of shares and other securities.
Chapel hill means chapel hill advisory partners limited. One other requirement of registration of company in nigeria is the. Merger is the global business term used achieving the business growth and survival. The bill, among other provisions, requires the corporate affairs commission to subject the appointment of its chairman to the senate for confirmation, while also providing for the appointment of the secretary to the commission. Feb 14, 2016 by section 631 of the companies and allied matters act, the abstraction called a company shall act through its members in general meeting or its board of directors or through officers or. The companies and allied matters act further describes a director to include any person on whose instructions and direction the board of directors of a company is accustomed to act despite the fact that such a person is not officially appointed or listed as. Duties and position of company directors under nigerian company law introduction the enormous and challenging responsibilities of managing incorporated companies are vested on directors by the companies and allied matters laws of the federation, 2004. Be it enacted by the national assembly of the federal republic of nigeria as follows. Analysis of performance pre and post consolidation of thirteen mega banks in order to consider if there had been improvements. Statutory requirement under companies income tax act cita the cita in section 2912 cap 21, lfn, 2004 provides that no merger, takeover, transfer or restructuring of the trade or business. The companies and allied matters decree 1990 with the enactment of the companies and allied matters decree 1990, a company law in nigeria became statutory.
It is intended only as a prototype for the information and guidance of all prospective investors in microfinance banking as well as existing community banks converting to microfinance banks. Companies and allied matters amendment bill 2014 the barcode. Table a of the first schedule to the companies and allied maters act, 1990 hereinafter referred to as table a shall apply to the company. Acquisition or takeover on the other hand is the purchase of controlling power or interest in one company by another company, such that the acquired. Merger is also helpful for businesses in terms of solvency. Thursday, april 22, 2010 witnessed a landmark in the history of the nigerian oil and gas industry the industry by the signing into law of the nigerian oil and gas industry content development bill also known informally as the nigerian content bill or local content bill by the then. Mergers, acquisitions and takeovers in nigeria are governed by the investments and securities act isa, the securities and exchange rules and regulations serr made pursuant to isa, and the companies and allied matters act cama. Board of directors and corporate governance in nigeria. Merger is the combination of two businesses that leads toward a new business, but acquisition is the takeover or purchase of one business by other business. The banks shrink will let nigeria enjoy maximum patronage of foreign investors and fully open nigerian economy to the world according to the nigerian financial system strategy fss 2020, with a. Cap c20, laws of the federation 2004 hereinafter called cama.
Act cap c20, lfn 2004 cama and enact the companies and. The securities and exchange commission the commission is the body in charge of implementing the provisions of isa and sanctions mergers. Nigeria witnessed an unprecedented wave of mergers and acquisitions in its banking sector in the post1995 and 2009 periods as a result of regulatory mandates issued by the central bank of nigeria, aimed at strengthening the capital base of nigerian banks. The bill which seeks to repeal and reenact the existing act, the companies and allied matters act, 2004, is aimed at addressing the shortcomings of the said existing act, and when assented to by the president, is expected to promote the ease of doing business in nigeria. Pursuant to the provisions of the isa, the key regulator for merger and acquisition is the securities and exchange commission sec rules. An incorporated company may be either a company a having the liability of its members limited by the. Owokalade 2006, observes that the companies and allied matters decree 1990 defines merger as any amalgamation of the undertaking or any part of the. It is a unique field in the nigeria legal system, and this is connected to the limited expertise in this area. Mergers, acquisitions and takeovers in nigeria are governed by the. Foreign companies intending to carry on business in nigeria. The local content act 2010 enactment, enforcement and matters arising preliminary.
Apparently the objective of transferring the relevant laws to the investment and. Jul 28, 2010 the local content act 2010 enactment, enforcement and matters arising preliminary. The act prohibits the existence of a foreign company in nigeria for any purpose unless assimilated as a nigerian entity 8. Laws that govern merger and acquisition in nigeria. It was known then as the companies amendment and extension act of 1917.
This is in addition to the specific provisions of the companies and allied matters act cama 1990, and the companies income tax act cita 1979 on purchase, issuance. Statutory requirement under companies income tax act cita the cita in section 2912 cap 21, lfn, 2004 provides that no merger, takeover. If passed the amendment will correct the lacunae in section 80 of cama which allows infants to be members of a company simply by neglecting to count them when calculating the statutory minimum number of members in a company. Merger control 2020 laws and regulations nigeria iclg. Parties to a small merger may voluntarily notify the sec of the merger at any time. Thursday, april 22, 2010 witnessed a landmark in the history of the nigerian oil and gas industry the industry by the signing into law of the nigerian oil and gas industry content development bill also known informally as the nigerian content bill or local content bill by. This study examines the impacts of merger on deposit money banks performance in nigeria between 2000 and 2009. The senate on wednesday passed a bill seeking to amend the companies and allied matters act, 2004.
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