M&A Reimagined: The Investment and Securities Act 2025 and Nigeria’s New Takeover, Merger, and Restructuring Regime

Abstract

The Investment and Securities Act (ISA) 2025, which repealed the ISA 2007, represents the most significant overhaul of Nigerian capital market and mergers & acquisitions (M&A) regulation in nearly two decades. This article examines the Act’s modernisation of the legal framework for takeovers, mergers, and corporate restructurings. Key innovations analysed include: the introduction of a mandatory squeeze‑out and sell‑out regime for public companies; streamlined court‑approved merger procedures with presumptive timelines; enhanced protections for minority shareholders via the Securities and Exchange Commission’s (SEC) expanded intervention powers; a new regulatory framework for cross‑border mergers; and the codification of schemes of arrangement as an alternative to takeover offers. The article also addresses the Act’s treatment of hostile takeovers, the role of the Competition and Consumer Protection Commission (FCCPC) in merger review, and the new penalties for non‑disclosure and insider trading during M&A processes. It concludes that while the ISA 2025 brings Nigeria closer to international best practices (e.g., UK Takeover Code and US Williams Act analogues), implementation challenges including judicial delays and overlapping regulatory mandates remain significant.

1. Introduction

Mergers and acquisitions are critical drivers of corporate growth and market efficiency, but Nigeria’s old ISA 2007 had become outdated. It lacked clear rules for cross‑border consolidations, offered inadequate minority protection during mandatory takeovers, and contained procedural bottlenecks that could delay approvals by 12–18 months. The collapse of several high‑profile M&A transactions between 2020 and 2024, most notably the failed acquisition of a major food conglomerate due to protracted SEC and court reviews, catalysed legislative reform.

The Investment and Securities Act (ISA) 2025 (No. 8 of 2025) was passed by the National Assembly in December 2025 and became effective on 1 March 2026. It is a comprehensive law governing securities offerings, capital market intermediaries, collective investment schemes, and, crucially, Part XIV (Sections 318–389) which regulates mergers, takeovers, and corporate restructurings.

This article provides a detailed analysis of the M&A provisions of ISA 2025. Part II outlines the pre‑2025 regime and its shortcomings. Part III discusses the institutional framework, the SEC’s enhanced role and the interface with the FCCPC and courts. Part IV dissects the mandatory takeover regime, including the new 30% threshold and squeeze‑out rights. Part V analyses the court‑approved merger procedure, including the new 90‑day presumptive timeline. Part VI examines cross‑border mergers, a novel feature. Part VII covers schemes of arrangement as an alternative restructuring tool. Part VIII discusses anti‑avoidance and enforcement provisions. Part IX offers practical guidance for dealmakers and legal advisors. Part X concludes.

2. The Pre‑2025 Regime: Deficiencies and Drivers of Reform

Under the ISA 2007, the SEC had authority to review and approve mergers and acquisitions involving public companies and certain private companies. Key deficiencies included:

The ISA 2025 addresses each of these deficiencies, often by borrowing from the UK Companies Act 2006 and the South African Companies Act 2008, while tailoring rules to Nigerian market realities.

3. Institutional Framework and Regulatory Coordination

3.1. SEC as Primary M&A Regulator, Section 320

Section 320(1) of ISA 2025 confirms that no merger, acquisition, takeover, or scheme of arrangement involving a public company (or a private company that meets the size threshold: assets or turnover exceeding N5 billion) shall be effective without the prior approval of the SEC. The SEC must issue a decision within 90 business days of receiving a complete application, failing which the application is deemed approved, a radical change from the previous open‑ended discretion.

3.2. Coordination with FCCPC, Section 326

Concurrent merger review has been replaced by a sequential model:

• The applicant must first file with the SEC.
• If the SEC determines that the merger may substantially lessen competition (a new test introduced under Section 330), it refers the matter to the FCCPC for a competition assessment.
• The FCCPC has 60 days to complete its review (extendable by 30 days). The overall timeline remains within the SEC’s 90‑day presumptive period.
• If the SEC and FCCPC disagree, a Joint Committee on Mergers (comprising two SEC commissioners and two FCCPC commissioners) will resolve the issue by simple majority. This prevents regulatory deadlock.

3.3. Court Role, Section 350

Court involvement has been reduced but not eliminated. The SEC’s approval is administrative; however, where shareholders challenge the fairness of a merger or takeover, the matter goes to the Federal High Court (specialised commercial division). Section 353 imposes a 180‑day timeline for the court to deliver judgment in such challenges, a welcome reform in a jurisdiction where commercial cases often linger for years.

4. Mandatory Takeover Regime (Part XIV, Division B, Sections 360–375)

This division replaces the previous optional takeover code with a mandatory framework modelled on the UK Takeover Code.

4.1. Mandatory Offer Threshold, Section 362

“Any person who, together with persons acting in concert with him, acquires an interest in shares carrying 30% or more of the voting rights of a public company shall, within 30 days of such acquisition, make a cash offer to all other shareholders to acquire their shares at a price not less than the highest price paid by the offeror or any concert party for any shares of the target company in the preceding 12 months.”

The 30% trigger is a reduction from the previous 51% threshold (which was effectively useless, at 51%, the bidder already had control). The new rule catches creeping control acquisitions.

Exceptions:

• A share buy‑back by the company that inadvertently increases a shareholder’s percentage to 30%.
• An inheritance or court‑approved transfer.
• A whitewash procedure: independent shareholders may waive the mandatory offer requirement by a 75% vote at a general meeting, provided the offeror did not participate.

4.2. Squeeze‑Out Right, Section 368

If a bidder (following a mandatory or voluntary takeover offer) has acquired 90% or more of the shares and 90% of the voting rights of the target, the bidder may give notice to the remaining minority shareholders to acquire their shares compulsorily within three months. The price must be the same as the offer price, unless the target’s net asset value has materially changed.

4.3. Sell‑Out Right, Section 369

Conversely, if the bidder acquires 90% of the shares, any minority shareholder may demand that the bidder purchase their shares at the offer price. This protects minorities trapped in a company controlled by a majority that may not wish to go private fully.

These twin provisions eliminate the previous asymmetry and align Nigeria with developed markets.

4.4. Hostile Takeovers, Section 372

The ISA 2025 explicitly recognises hostile takeovers (offers not recommended by the target’s board). The target board must circulate its opinion within 14 days, but defensive measures (poison pills, staggered boards) are prohibited unless approved by a shareholder vote. The SEC can prohibit any action taken by the target board that is “frustrating”, a concept imported from the UK City Code.

5. Court‑Approved Mergers (Part XIV, Division C, Sections 380–389)

This division provides a streamlined procedure for friendly mergers, whether by absorption (one company merging into another) or consolidation (new company formed).

5.1. Application and Approval Process, Section 381

The merging companies file a joint application with the SEC, accompanied by:

• The draft merger agreement.
• Combined financial statements (audited).
• A fairness opinion from an independent merchant banker or auditor.
• A scheme of merger outlining the treatment of shares, assets, and liabilities.

The SEC has 30 days to raise preliminary objections; thereafter, if satisfied, it issues a “no‑objection” clearance. The companies then apply to the Federal High Court for a sanction hearing.

5.2. Presumptive Court Timeline, Section 384

The court must fix a hearing date within 45 days of filing. Creditors and shareholders have the right to object, but only on grounds of material unfairness or illegality (not mere disagreement with the commercial terms). The court shall deliver its ruling within 30 days of the hearing. This combined timeline (SEC: 90 days maximum; court: ~75 days) means a simple merger could be completed in under 6 months, a vast improvement.

5.3. Scheme of Arrangement as Alternative, Section 400

In addition to mergers, the ISA 2025 retains and enhances the scheme of arrangement under CAMA 2020. A scheme requires approval from (a) a majority in number representing 75% in value of creditors or shareholders, and (b) court sanction. The ISA 2025 adds that where a scheme is used to effect a takeover, the disclosure requirements of the takeover code apply. This provides flexibility for complex restructurings (e.g., debt‑for‑equity swaps).

6. Cross‑Border Mergers (Part XIV, Division D, Sections 390–395)

This is entirely new. Section 391 permits a merger between a Nigerian company and a foreign company, subject to:

• The foreign company is incorporated in a jurisdiction that recognises the legal personality of the merged entity.
• The merger is permitted under the foreign company’s domestic law.
• The surviving entity may be Nigerian or foreign; if foreign, it must register a place of business in Nigeria and appoint a process agent.

The SEC, in consultation with the Corporate Affairs Commission (CAC) and the Nigerian Investment Promotion Commission (NIPC), has issued Cross‑Border Merger Guidelines 2026 specifying tax neutrality (carryover of losses, rollover relief on asset transfers). This provision is expected to facilitate inbound mergers where a multinational wants to absorb its Nigerian subsidiary into a regional holding company, and outbound mergers where a Nigerian company consolidates operations abroad.

7. Minority Shareholder Protections and Fairness

The ISA 2025 strengthens minority rights in several ways:

• Independent committee review: For any merger or takeover involving a controlling shareholder (acting on the other side of the transaction), the target board must appoint an independent committee of non‑executive directors with no interest in the transaction. That committee must obtain its own fairness opinion and negotiate on behalf of minorities.
• Appraisal rights (Section 396): Shareholders who vote against a merger or scheme and are dissatisfied with the cash consideration can demand a judicial appraisal of the fair value of their shares. The court may appoint an independent valuer. The cost of appraisal is borne by the company if the appraised value exceeds the offer by more than 10%.
• SEC intervention power (Section 398): Even after SEC approval, if a minority shareholder demonstrates oppressive conduct (defined as conduct “substantially prejudicial to the interests of minority shareholders”), the SEC may order a buy‑out at fair value.

These provisions mirror the appraisal remedy under Delaware law, a welcome import.

8. Anti‑Avoidance, Penalties, and Enforcement

8.1. Disclosure Obligations, Section 410

Any person who acquires 5% of a public company’s shares must notify the company and the SEC within 7 days. Each subsequent acquisition of 1% or more (up to 30%) triggers further disclosure. False disclosure attracts a penalty of N100 million (approx. $65,000) plus 2 years imprisonment for directors.

8.2. Insider Trading During M&A, Section 415

It is an offence for any person in possession of non‑public information relating to a proposed merger or takeover to deal in securities of any of the involved companies. The penalty includes disgorgement of profits, a fine of up to N500 million, and up to 10 years imprisonment. Notably, the SEC may seek a court order freezing the assets of suspected insider traders, a powerful new tool.

8.3. Penalties for Non‑Compliance with Mandatory Offer, Section 420

If a person crosses the 30% threshold and fails to make a mandatory offer within 30 days, the SEC may:

• Impose a daily penalty of N5 million;
• Restrict voting rights of the offending shares;
• Apply to the court to vest the shares in a nominee for sale to a third party.

The last remedy, forced divestiture, is draconian and has no parallel in previous Nigerian law. It is designed to deter deliberate evasion.

9. Practical Implications and Strategic Guidance

9.1. For Acquirers and Bidders

• Monitor shareholding carefully: The mandatory offer trigger at 30% means strategic buyers cannot quietly build a controlling stake without triggering a full cash offer. Plan acquisition strategies accordingly, either stay below 29.9% or be prepared for a full takeover.
• Timing of due diligence: The 90‑day SEC review clock starts only upon a completed application. Submit a thorough application to avoid requests for additional information that reset the clock (Section 325 provides that any SEC request for information pauses the clock but does not reset it, a compromise).
• Hostile bids are feasible but expensive: you must make a cash offer at the highest price paid in the preceding 12 months. Negotiated friendly mergers remain cheaper.

9.2. For Target Boards

• Do not frustrate a hostile bid without shareholder approval. Actions like issuing new shares to a “white knight” without a shareholder vote may be voided by the SEC.
• Appoint an independent committee early if the bid comes from a controlling shareholder. Fairness opinions from credible advisors are essential to avoid appraisal claims.

9.3. For Minority Shareholders

• Monitor crossings of 5% and 30% thresholds via SEC public filings. If a mandatory offer is not made, petition the SEC for enforcement.
• Consider appraisal rights if you believe the merger consideration is unfair. The cost of appraisal is now risk‑shared in your favour if you win.

9.4. For Legal Advisors

• Cross‑border mergers require coordination with foreign counsel. The SEC’s new guidelines require a legal opinion from the foreign jurisdiction confirming the merger is valid there.
• Litigation strategies: The 180‑day court timeline for merger challenges is tight. Be prepared to file promptly and present evidence efficiently. The courts will likely not grant extensions absent exceptional circumstances.

10. Conclusion

The ISA 2025 modernises Nigeria’s M&A framework substantially, bringing it closer to international standards. The mandatory 30% takeover trigger, the squeeze‑out and sell‑out rights, the presumptive timelines for SEC and court approvals, and the new cross‑border merger provisions address long‑standing deficiencies. For the first time, minority shareholders have clear statutory exit rights and appraisal remedies. Hostile takeovers, while still rare in Nigeria’s closely‑held market, are now a credible threat that will discipline underperforming boards.

However, the Act’s success depends on implementation. The SEC must build internal capacity to review complex merger applications within 90 days; the courts must respect the 180‑day timeline for challenges. Overlap with the FCCPC, though reduced, could still cause friction. And the forced divestiture remedy for non‑compliance with the mandatory offer may face constitutional challenges as a deprivation of property without compensation.

Despite these challenges, the ISA 2025 is a watershed. Dealmakers now have a clearer, faster, and fairer legal environment. Nigeria’s M&A market, which has long lagged behind South Africa and Kenya, is poised for growth.

References

1. Investment and Securities Act (ISA) 2025, No. 8 of 2025, Sections 318–420.
2. Federal Competition and Consumer Protection Act (FCCPA) 2018, Sections 90–110.
3. Securities and Exchange Commission (2026). Guidelines on Cross‑Border Mergers (Circular No. SEC/2026/004).
4. SEC (2026). Practice Notes on Mandatory Takeover Offers (January 2026).
5. UK Takeover Code (2025 edition), Rules 9 (mandatory offer) and 12 (frustrating actions).
6. South Africa Companies Act 2008, Chapter 5 (Mergers and Takeovers).
7. Nigerian Exchange Group (2026). Listing Rules Amendments Consequent to ISA 2025 (March 2026).
8. Federal High Court Practice Directions (Commercial Division) 2026, Paragraphs 18–25.