The Securities and Exchange Commission (“SEC” or the “Commission”) on 30 August 2021 introduced new rules to the provisions on mergers, takeovers and acquisitions (the “New Rules”), amending the provisions of the SEC Rules and Regulations 2013 (as amended) (the “SEC Rules”). In our last issue, we analysed the impact of the New Rules on mergers and acquisitions. Please click here to access the last issue.
In this issue, we consider the provisions of the New Rules that affect corporate restructuring and takeovers in Nigeria.
1. Corporate Restructuring
The scope of the New Rules on corporate restructuring apply to carve-outs, spin-offs, split offs and other forms of restructuring.
Under the New Rules, a carve-out is defined as the formation of a new entity from the parent company in which some or all the shares of the new entity are offered to the public through an initial public offering. A spin-off is the creation of a new and separate entity from the parent company by distributing the shares of the spun-off entity to the existing shareholders of the parent entity on a pro rata basis. A split-off relates to a scheme where a new entity is formed from the parent company with an option to existing shareholders to either hold the shares of the parent company or trade them for shares of the newly formed entity.
Every public company is required to notify the Commission prior to effecting a restructuring of its operations, corporate structure or shareholding in any manner. A notification fee of ₦100,000.00 (One Hundred Thousand Naira) is required to be paid to the Commission.