SEC to modify regulatory guidance for mergers & acquisition approval

THE SECU RITIES AND Exchange Commission (SEC), has said it will now restrict regulatory activities on mergers and acquisitions to public companies and change of shareholding of capital market operators.

The modification of the regulatory purview of SEC comes on the heels of the February 5, 2019 signing into law of the Federal Competition and Consumer Protection Act by President Muhammadu Buhari.

The law provides for the establishment of the Federal Competition and Consumer Protection Commission and the Competition and Consumer Protection Tribunal, and repeals sections 118, 119, 120, 121 (excluding S. 121(i) (d)), 122, 123, 124, 125, 126, 127 and 128 of the Investments and Securities Act (ISA), 2007, the enabling law for SEC.

SEC, Nigeria’s apex capital market regulator, in a circular, indicated that it would undertake a review of its regulatory oversight on mergers and acquisitions as well as applicable fees and guidelines.

With the federal competition and consumer protection act, the role of SEC in relation to mergers 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.

However, if a private company is to be merged with or acquired by a public company, the public company still has a duty to obtain the “No Objection” approval of SEC, the commission explained.

Explaining further, the commission noted that the review and approval by SEC on mergers will be restricted to primary objective of determining “whether all shareholders are fairly, equitably and similarly treated and given sufficient information regarding the merger”. The Federal Competition and Consumer Protection Commission on the other hand will consider the anti-competitive effects of a transaction in a relevant market.

SEC will meanwhile continue to enforce compliance with the takeover provisions and monitor acquisition of shares of public companies as enshrined in the ISA, 2007.

The commission said it will also continue to oversee corporate restructurings. “Every public company undertaking a proposal, scheme, transaction, arrangement, or activity or issue of securities or offer for subscription or purchase of securities in relation to conversion of a public company or the reconstruction of it shares; a carve-out, spin-off, split-off or other form of restructuring of its operations; acquisition or disposal of asset which results in a significant change in the business direction or policy of a public company or any other listed entity whether or not in relation to any proposal, scheme, transaction, arrangement or activity; shall obtain the “No Objection” approval of the Commission.