NIGERIA – As the appetite for mergers and acquisitions (M&A) continues to increase in Nigeria, the Securities and Exchange Commission (SEC) is set to fast-track the M&A process and make it more beneficial for all stakeholders.

THISDAY had last week exclusively reported that the Board of SEC had given approval to the management of the commission to come out with new rules that would make the   nation’s capital market more attractive.

THISDAY checks revealed that some of such rules are those guiding M&A. Sources   said SEC will soon release  new rules on M&A and takeovers that would  align with  relevant provisions of the Investments and Securities Act (2007).  It was gathered that the draft amendments have been exposed to the market for comments with the final version awaiting the approval of the Minister of Finance.

The new rules will shorten approval timelines for M&A deals and  reduce related transaction costs. Under its provisions, the approval process shall now be in two stages instead of the present three-stage process.

“Applicants will now be  required to file a merger notification along with a draft scheme document to the Commission as part of the first stage. Once the Commission conveys its approval-in-principle, the applicant can then file for a court ordered meeting at a Federal High Court.

This implies that the  current requirement, where the applicant must first obtain a letter of ‘No Objection’ before proceeding with any of the processes, will no longer hold,”   the source said.

Also, the fees charged for such transactions have been reviewed in the expected framework. Typically, SEC fees on M&A transactions were charged based on the nominal value of the company’s issued and paid-up capital.  However, the regulatory fees will now be calculated based on the total consideration offered for the deal.

In  the area of protecting minority shareholders, the new framework will  make it mandatory for  Directors of a company to issue a ‘Directors’ Circular’ to all shareholders notifying them of a take-over bid intention at least seven days before the date on which the take-over bid takes effect.

“Additionally, court ordered meetings must now be adequately disseminated while a copy of notice to employee unions shall be forwarded to the Commission as part of necessary filings,” the source said.

Similarly, post-bid requirements have been clearly spelt out in the new rules including the treatment of the shares of dissenting shareholders and the deposition of complaints by aggrieved shareholders. 

It was gathered that to avoid a situation in which rumours of an M&A deal fuel irrational share price movements, the new framework requires an offeror in an M&A transaction to make a public announcement of take-over on the floor of the securities exchange on which it is listed, in addition to the traditional newspaper publication.

Commenting on the development, a stockbroker, Mr. Mike Ezeh of Crane Securities Limited said,  these are rules  that must be encouraged commended.

“SEC, has been proactive   and the acting Director General, Mr. Mounir Gwarzo,  and his management team should be commended for these great initiatives within the short period of time since he took over the helm of affairs” Ezeh said.

March 25, 2015;