1. Introduction

The Nigeria Tax Act, 2025 (“the Act”) was signed into law on June 26, 2025, and is set to take effect from January 1, 2026. This new legislation marks a major reform of Nigeria’s tax system. It repeals several existing tax laws, including the Personal Income Tax Act, and consolidates all major tax provisions into a single, comprehensive statute.

In this article, we focus on the personal income tax aspects of the Act. Specifically, we examine the new tax rates, the allowable deductions, and how taxable income is determined under the updated framework. The aim is to explain these provisions in clear and practical terms, highlighting what they mean for individual taxpayers in Nigeria.

2. Scope of Application

The law applies to individuals whose income is considered to arise in Nigeria, whether or not that income is actually received or brought into the country.[1] In other words, if you earn money that is connected to Nigeria in some way, you may be required to pay tax on it even if the payment happens abroad.

2.1 Who is considered a resident individual?

An individual is regarded as a resident for tax purposes in a particular year if any of the following apply:[2]

• Domicile: The person’s permanent home is in Nigeria. This means Nigeria is where the person ultimately intends to live and return to, even if they temporarily live elsewhere.
• Permanent home in Nigeria: The person has a permanent place available for personal or family use in Nigeria, such as a house or apartment whether owned or rented.
• Habitual abode: The person regularly lives in Nigeria or spends most of their time here.
• Economic and family ties: The person has strong business or financial interests in Nigeria, or their immediate family (spouse, children, dependents) live in Nigeria.
• Physical presence: The person spends a total of 183 days or more in Nigeria during any 12-month period. These days don’t have to be consecutive they can add up over multiple visits.
• Diplomatic service: Nigerian diplomats or diplomatic agents serving abroad are still treated as residents for tax purposes.

A resident individual, therefore, is someone whose life, work, or family is substantially tied to Nigeria.

• What about non-residents?

People who are not resident in Nigeria are only taxed on income that is earned in or derived from Nigeria.[3]
For example, if a foreign consultant provides services to a Nigerian company and is paid for that work, that income is taxable in Nigeria. However, if the same person earns income from a source outside Nigeria that has nothing to do with Nigeria, that income is not taxable by Nigeria.

3. TAXABLE INCOME

Section 4 of the Act defines the income, profits, or gains that are chargeable to tax. For individuals, taxable income includes several categories as outlined in the relevant provisions of the law.

3.1 Employment income: covers all forms of compensation or rewards received in respect of employment. This includes salaries, wages, fees, allowances, compensations, bonuses, premiums, benefits, or any other perquisites granted by an employer to an employee.[4]

3.2 Business and professional income: includes profits or gains derived from any trade, business, profession, or vocation.[5]

3.3 Investment income is also taxable under the Act. This includes dividends, premiums, charges, or annuities; royalties, fees, rents, or interest arising from the use, exploitation, or occupation of any property; and income, profits, or gains from the disposal or lending of securities.[6]

3.4 Capital gains: these are gains accruing to any person in a year of assessment, which are chargeable to tax from the disposal of certain assets.[7] Section 34 further defines chargeable assets to include all types of property, shares, options, rights, debts, digital or virtual assets, and incorporeal property, making it clear that both tangible and intangible assets are covered.

3.5 Pension income is also taxable and it includes any pension, annuity, or similar periodic payment received by an individual.[8]

3.6 Other taxable income sources: These include fees, dues, allowances, or remuneration for services rendered; discounts or rebates; disposal of money or money instruments; prizes, winnings, honoraria, grants, or awards; as well as profits or gains from the disposal of property, fixed assets, or from transactions in digital or virtual assets.[9]

4. Exempted income

Section 163 lists the types of income that are exempt from tax under Chapter Two of the Act. Key exemptions for individuals include:

4.1 Income from Exempt Organizations
Profits or gains from educational, religious, or charitable activities of a public nature, provided the income is not from a trade or business.

4.2 Certain Investment Income
Dividends from approved collective investment schemes, dividends from wholly export-oriented businesses, and income such as dividends, interest, rent, or royalties earned abroad and brought into Nigeria through approved channels.

4.3 Pensions and Retirement Benefits
Income from pension funds created under the Pension Reform Act, pensions or gratuities paid in line with the Act, and wound or disability pensions paid to members of the armed forces.

4.4 Compensation
Death gratuities or compensation for injury, and redundancy or severance payments that are capital in nature.

4.5 Minimum Wage Earners
Income from employment is exempt where the person earns the national minimum wage or less.

4.6 Military Wages and Salaries
Wages and salaries paid to members of the armed forces are exempt.

4.7 Agricultural Income
Income from agricultural businesses is exempt for the first five years after the business begins.

4.8. Export Profits
Profits from goods or services exported from Nigeria are exempt if the proceeds are brought back through official channels (excluding petroleum operations).

5. Exempted gains

Section 163(2) also identifies certain gains that are not taxable:

5.1 Principal Private Residence
Gains from selling one’s main home and the land around it (up to one acre) are exempt, once in a lifetime.

5.2 Personal Chattels
Gains from selling personal belongings worth ₦5,000,000 or less, or up to three times the national minimum wage, are exempt.

5.3 Motor Vehicles
Up to two private or non-commercial vehicles per year are exempt from capital gains tax.

5.4 Gifts
Gains from giving or receiving assets as gifts (other than through inheritance) are exempt.

5.5 Personal Injury Compensation
Compensation up to ₦50,000,000 for personal injury, professional loss, or loss of employment is exempt. Only the excess above ₦50,000,000 is taxable.

5.6 Pension Fund Disposals
Gains from investments made by approved pension or retirement funds are exempt.

5.7 Military Decorations
Gains from selling medals or decorations awarded for bravery or service are exempt if they were not bought for money.

6. ELIGIBLE DEDUCTIONS

Section 30(2)(a) defines eligible deductions as payments made by an individual in a year of assessment in respect of the following:

6.1 National Housing Fund Contributions
Contributions made under the National Housing Fund are deductible.

6.2. National Health Insurance Scheme Contributions
Contributions made under the National Health Insurance Scheme are deductible.

6.3 Pension Contributions
Contributions made under the Pension Reform Act are deductible.

6.4 Interest on Housing Loans
Interest paid on loans taken for developing an owner-occupied residential house is deductible.

6.5 Life Insurance and Annuity Premiums
Any annuity or premium paid in the year preceding the year of assessment for insurance on the individual’s life or that of their spouse, or for a deferred annuity contract, is deductible.

6.6 Rent Relief
Twenty percent (20%) of annual rent paid, up to a maximum of ₦500,000 (whichever is lower), is deductible, provided the actual amount of rent paid is accurately declared: An individual paying ₦3,000,000 annual rent is entitled to a 20% deduction (₦600,000), but since the amount exceeds the ₦500,000 cap, the deductible amount is ₦500,000.

 

7. PERSONAL INCOME TAX RATES AND BAND

The Fourth Schedule of the Personal Income Tax Act sets out how personal income tax is calculated in Nigeria.[10] The tax is imposed on chargeable income, which is the portion of a person’s income that remains after all applicable relief allowances and exemptions have been deducted under Section 30(1) of the Act.

The Fourth Schedule establishes six progressive tax bands, meaning that the more you earn, the higher the rate of tax you pay on the additional income not on your entire income. The bands are as follows:

Band 1: First ₦800,000 at 0%

The first ₦800,000 of annual income is completely tax-free.
For example, if an individual earns ₦700,000 in a year, they will pay no tax at all since the entire income falls below the ₦800,000 threshold.

Band 2: Next ₦2,200,000 at 15%

Income that exceeds ₦800,000 but does not go beyond ₦3,000,000 is taxed at 15%.
For instance, if an individual earns ₦1,200,000 in a year, the first ₦800,000 is tax-free, while the remaining ₦400,000 is taxed at 15%. This gives a total tax of ₦60,000.
If the individual earns ₦3,000,000, the first ₦800,000 remains tax-free, and the next ₦2,200,000 is taxed at 15%, resulting in ₦330,000 in tax.

Band 3: Next ₦9,000,000 at 18%

Income above ₦3,000,000 and up to ₦12,000,000 is taxed at 18%.
For example, if someone earns ₦6,000,000 in a year, the first ₦800,000 is tax-free, the next ₦2,200,000 is taxed at 15% (₦330,000), and the remaining ₦3,000,000 is taxed at 18% (₦540,000). This brings the total tax payable to ₦870,000.

Band 4: Next ₦13,000,000 at 21%

Income above ₦12,000,000 and up to ₦25,000,000 is taxed at 21%.
For instance, if an individual earns ₦15,000,000 annually, the first ₦800,000 is tax-free, the next ₦2,200,000 is taxed at 15% (₦330,000), the following ₦9,000,000 is taxed at 18% (₦1,620,000), and the remaining ₦3,000,000 is taxed at 21% (₦630,000). Altogether, the person will pay ₦2,580,000 in tax.

Band 5: Next ₦25,000,000 at 23%

Income that exceeds ₦25,000,000 but does not go beyond ₦50,000,000 is taxed at 23%.
For example, if an individual earns ₦40,000,000 annually, the first ₦800,000 is tax-free, the next ₦2,200,000 is taxed at 15% (₦330,000), the following ₦9,000,000 is taxed at 18% (₦1,620,000), the next ₦13,000,000 is taxed at 21% (₦2,730,000), and the remaining ₦15,000,000 is taxed at 23% (₦3,450,000). The total tax payable in this case amounts to ₦8,130,000.

Band 6: Above ₦50,000,000 at 25%

Any income exceeding ₦50,000,000 is taxed at 25%.
For example, if an individual earns ₦60,000,000 in a year, the first ₦800,000 is tax-free, the next ₦2,200,000 is taxed at 15% (₦330,000), the following ₦9,000,000 is taxed at 18% (₦1,620,000), the next ₦13,000,000 is taxed at 21% (₦2,730,000), and the next ₦25,000,000 is taxed at 23% (₦5,750,000). The remaining ₦10,000,000 (which exceeds ₦50,000,000) is taxed at 25%, giving ₦2,500,000. In total, the tax payable on ₦60,000,000 amounts to ₦12,930,000.

8. Computation of Chargeable Income

Total income as an individual’s taxable income minus total deductions.[11]

Taxable income includes:

• Profits from trade, business, or profession;
• Employment income;
• Investment income;
• Income from any other source; and
• Chargeable gains from asset disposals.

Total deductions include:

• Losses;
• Capital allowances;
• Tax-exempt income; and
• Income already taxed at source as final tax.

Thus, chargeable income is what remains after deducting all eligible deductions from total income.[12]

9. Conclusion

The Nigeria Tax Act, 2025 consolidates personal income tax rules into a single framework, outlining clear tax rates, deductions, and exemptions for individuals. It provides a structured basis for determining taxable income and ensures consistency in the application of personal income tax from January 1, 2026.

Author

Felicia Ayeomoni

Associate

Email: [email protected]

____________________

Consistently ranked as the “Nigerian Law Firm of the Year” (2024 & 2025) and Tier 1 law firm by The Lawyers Global, Adeola Oyinlade & Co is recognized as a top provider of tax law services in Nigeria for its lawyers ability to handle both tax advisory (structuring transactions) and tax litigation (disputes with the FIRS now called Nigeria Revenue Service- NRS or State Internal revenue Services). You may reach out to us for more information and enquiries via [email protected] or call +234 802 686 0247 / +234 803 826 7683.

[1] The Nigeria Tax Act 2025, section 12.

[2] The Nigeria Tax Act 2025, section 202.

[3] The Nigeria Tax Act 2025, section 17 (1).

[4] The Nigeria Tax Act 2025, section 13 (1).

[5] The Nigeria Tax Act 2025, section 4 (1) (a).

[6] The Nigeria Tax Act 2025, section 4 (1) (b), (c), (q).

[7] The Nigeria Tax Act 2025, section 33.

[8] The Nigeria Tax Act 2025, section 4 (2) (b).

[9] The Nigeria Tax Act 2025, section 4 (1).

[10] The Nigeria Tax Act 2025, section 58.

[11] The Nigeria Tax Act 2025, section 28.

[12] The Nigeria Tax Act 2025, section 30.

1.0 Introduction

Cross-border mergers and acquisitions (“M&A”) offer international investors access to new markets, technologies and customers, but they also create complex legal and regulatory challenges. In addition to traditional commercial and contractual risks, contemporary cross-border transactions must navigate an expanding web of sector approvals, competition and foreign-investment screening, data-privacy obligations, sanctions and export-control regimes, as well as tax and employment considerations.

This article sets out the principal legal risks international investors should anticipate when transacting in Nigeria and comparable jurisdictions, and it highlights compliance trends that are shaping deal structuring, due diligence and post-closing integration.

2.0 Key Legal Risks

2.1 Regulatory compliance and sector approval

Cross-border investors eyeing Nigerian assets must navigate a complex regulatory landscape requiring detailed pre-approvals and permits for acquisitions in many sectors. Major deals in oil and gas can stall even after parties agree terms. In one recent case, Nigeria’s petroleum regulator (NUPRC) withheld approval of ExxonMobil’s $1.28 billion sale to Seplat for over two years, even after the former President Buhari consented. The NUPRC insisted its consent was mandatory and cited Nigeria’s national interest, and the state oil firm NNPC even asserted pre-emptive rights over the assets.[1]

Similarly, a proposed sale of Shell’s onshore oil business to a Nigerian consortium was abruptly blocked by NUPRC in October 2024 “for not meeting the regulatory test,” despite years of planning.[2] These examples demonstrate that regulatory approvals in Nigeria can be complex, especially in strategic industries. Acquirers must secure not only competition clearance but also sector permits before closing.

Sector regulators (for example, the Nigerian Communications Commission for telecoms, the Central Bank of Nigeria for banking, the Securities and Exchange Commission for companies, and Federal Competition & Consumer Protection Commission for competition) often require no-objection letters or licences. For instance, the NCC must approve any change in control or licence transfer of a telecom operator. In 2016 the NCC granted final approval to MTN’s acquisition of Visafone, but only after MTN first bought the company and then applied for licence transfers.[3]

Likewise, Nigerian banking mergers require the Central Bank of Nigeria clearance. A 2011 merger of two commercial banks was only allowed after the CBN gave in-principle approval and the SEC and shareholders signaled consent.[4] In short, any investor must plan for multiple rounds of regulatory review.

2.2 Competition Review: Under the Federal Competition and Consumer Protection Act, 2018 (FCCPA), large mergers must be notified to the Federal Competition and Consumer Protection Commission (FCCPC). [5] Even foreign-to-foreign deals involving Nigerian subsidiaries may trigger notification, if the jurisdictional thresholds are met. Failure to notify when required or implementing a notifiable merger without clearance may attract administrative penalties under the relevant regulations.  In mid-2024, the FCCPC imposed a US$220 million fine on Meta Platforms, Inc. for consumer-protection, data privacy and abuse of dominance violations, a clear demonstration that Nigerian competition and consumer-protection regulators will vigorously enforce the law.[6]

2.3 Foreign Investment Screening: Under the Nigerian Investment Promotion Commission Act, investors may hold 100% ownership in enterprises except those on the statutory “negative list.” The Act prohibits enterprises involved in producing arms, ammunition, war implements, narcotics, or other items classified as hazardous or of national security concern.[7]

In practice, some regulators insist on local equity or special approvals in strategic industries. Nigeria has no formal foreign-investment screening body, but deals involving critical infrastructure or national security interests can become political issues (as seen when Shell’s exit was tied to environmental and community concerns).[8] Investors should anticipate that government officials may interpose “national interest” reviews and that state entities (like NNPC in oil deals) may claim preferential rights.

2.4 Data Protection and Privacy

Nigeria’s data protection regime has tightened. The Nigeria Data Protection Act (NDPA) 2023 and General Application and interpretation Directive 2023 imposes broad privacy obligations on companies handling personal data. Any M&A diligence must check NDPA compliance and data transfer controls. The National Data Protection Commission (NDPC) now actively audits organizations for breaches. In 2025 it imposed N766 million fine on MultiChoice Nigeria for unlawful processing and illegal cross-border transfer of subscriber data.[9] This underscores that foreign acquirers must assess data security policies of the Nigerian target and be prepared for NDPC engagement. In practice, compliance trends include mandatory registration of data controllers and periodic privacy audits, so global buyers need to integrate Nigeria’s privacy rules into diligence and post-acquisition compliance programs.

2.5 Tax and Financial Compliance

Nigeria’s upcoming tax regime driven by the Nigeria Tax Act (NTA) 2025, the Nigeria Tax Administration Act (NTAA) and related reforms taking effect from 1 January 2026 significantly heightens tax-related risks in M&A. Buyers must now account for broader taxable events, including capital gains on share transfers, indirect disposals, and new minimum effective tax rate rules for multinationals. The NTA also consolidates several repealed laws and introduces stricter compliance obligations, meaning undisclosed liabilities (CIT, VAT, WHT, TP, CGT, development levy, CFC rules) can materially affect valuation.

On the financial-regulatory side, Nigeria’s foreign-exchange environment remains fluid. Although recent CBN reforms aim to unify the FX market, repatriation of dividends or sale proceeds may still face timing delays and documentation checks. Obtaining a CIC on capital inflows remains critical to preserving repatriation rights.

2.6 Labour and Employment Law

Under Nigerian law, employees of a target company generally remain in their positions after an acquisition. Although Nigeria lacks a statutory “automatic worker transfer” regime, any post-transaction termination must comply with the Labour Act, applicable collective bargaining agreements, and sector-specific rules. Unlawful or poorly managed retrenchment can trigger union action, strikes, or litigation before the National Industrial Court.

Labour due diligence should therefore review existing union agreements, pension and insurance compliance, pending disputes, and potential redundancy liabilities, ensuring the transaction documents allocate these costs clearly.

2.7 Foreign Exchange Controls and Repatriation

Nigeria requires all foreign investment to enter through authorised banks, with the CBN monitoring inflows. Although the law guarantees repatriation of capital and profits, transfers abroad depend on proper documentation, including tax compliance and evidence of any capital gains tax paid on share sales. FX scarcity and naira volatility have historically caused delays despite recent CBN reforms.

Cross-border deals should therefore be structured to meet CBN requirements: secure a Capital Importation Certificate, use licensed FX dealers, and obtain CBN approval for any foreign loans.

 

3.o Emerging Compliance Trends

Several developments are tightening the compliance landscape for cross-border M&A in Nigeria:

3.1 National Security and Strategic-Sector Oversight

Nigeria lacks a formal foreign-investment screening law, but regulators increasingly apply broad “national interest” tests. Sensitive sectors such as oil and gas, telecoms, media, defense and critical infrastructure face heightened scrutiny. Recent controversies in the petroleum sector show that regulators can effectively halt or reshape deals even after high-level approvals. Proposals aligned with OECD guidance suggest Nigeria may formalize security reviews in the future.

3.2 Inter-Agency Regulatory Coordination

M&A approvals now require coordinated clearances. The FCCPC typically waits for sector-regulator no-objection letters. Recent energy transactions demonstrate that approvals increasingly come with conditions, including environmental, community and decommissioning obligations. Buyers must track not only timelines but also the regulatory undertakings attached to each consent.

3.3 Sanctions and AML/CFT Compliance

Nigeria enforces UN/ECOWAS sanctions and has strengthened AML rules. Parties must be screened for sanctions exposure, especially in extractives and defense-linked sectors. Banks must report suspicious transactions, and beneficial-ownership disclosure is mandatory under Nigerian AML/CFT regulations.

3.4 Data Protection Enforcement

The NDPC is conducting more audits, especially for companies holding large customer datasets (telecoms, FinTechs, and e-commerce). New guidance for cross-border data transfers means buyers of data-heavy targets should expect privacy assessments and potential remedial obligations before closing. Expertise of a licensed Data Protection Compliance Organization (DPCO) in Nigeria may be required in this thematic area.

3.5 Corporate Governance and Anti-Corruption

Regulators (SEC, CBN, EFCC, ICPC) are tightening governance expectations, including related-party disclosures and board-independence standards. Anti-bribery due diligence is essential, as Nigerian law and foreign statutes like the FCPA may attach liability for legacy misconduct. Recent FCCPC actions show that competition, consumer protection and privacy risks increasingly overlap.

4.0 Implications For M&A Structuring And Due Diligence

Given the evolving compliance environment, foreign investors should:

1. Expand due diligence beyond traditional legal, tax and financial issues to include data privacy, consumer protection, governance, beneficial ownership, AML/sanctions, and sector-specific regulatory compliance.
2. Engage local legal practitioners early to identify potential political, regulatory or reputational red flags, especially in sensitive sectors or where user data is material.
3. Build deal protections (e.g., indemnities, escrow, post-closing compliance warranties) to guard against post-closing liabilities or regulatory remedial orders.
4. Treat regulatory clearances as a process, not a formality. Expect conditional approvals, cross-agency coordination, remedial obligations, and possible delays.

5.0 Conclusion

Nigeria’s regulatory landscape for cross-border M&A has evolved from a moderately complex environment into a sophisticated, multi-layered compliance regime.

Prudent investors must therefore adopt a compliance-first mindset, embedding regulatory strategy into deal origination rather than treating approvals as post-signature formalities. This means conducting comprehensive regulatory risk assessments during target screening, maintaining ongoing dialogue with relevant agencies throughout negotiations, and structuring transactions with sufficient flexibility to accommodate conditional clearances or remedial obligations.

 

Author

Felicia Ayeomoni

Associate

Email: [email protected]

____________________

Consistently ranked as the Nigerian Law Firm of the Year and Tier 1 law firm, Adeola Oyinlade & Co is a top full-service law firm, providing comprehensive legal support in corporate/ commercial law with strengths in Cross-border, M&A, company formation and international trade. The law firm advises a vast number of multinational and domestic companies. You may reach out to us for more information and enquiries via [email protected] or call +234 802 686 0247 / +234 803 826 7683.

[1] https://www.reuters.com/markets/deals/exxon-mobils-nigeria-asset-sale-hits-regulatory-hurdle-2022-08-09/ accessed 30^th of November 2025.

[2] https://nairametrics.com/2024/10/21/nurpc-confirms-rejection-of-1-3-billion-shell-asset-sale-to-renaissance-group/ accessed 29^th of November 2025.

[3] https://www.reuters.com/article/business/finance/nigeria-approves-transfer-of-visafone-shares-to-mtn-following-takeover-idUSKCN12C0JM/ accessed 29^th of November 2025.

[4]  https://www.reuters.com/article/ozabs-nigeria-finbank-fcmb-20110728-idAFJOE76R0JE20110728/ accessed 29^th of November 2025.

[5] Federal Competition and Consumer Protection Act, 2018. Section 93(1).

[6] https://fccpc.gov.ng/wp-content/uploads/2024/07/Release-In-the-Matter-of-Meta-Platforms-Inc.-and-WhatsApp-LLC.pdf? Accessed 28^th of November, 2025.

[7] The Nigerian Investment Promotion Commission Act, 2007. Section 31(1).

[8]

[9] https://www.reuters.com/sustainability/boards-policy-regulation/nigerian-agency-fines-multichoice-766-million-naira-data-privacy-breaches-2025-07-07/ accessed 29^th of November, 2025.

Introduction

The rapid growth of virtual assets and blockchain-based businesses has positioned Nigeria as one of Africa’s most active digital asset markets. In response to this expansion, Nigerian regulators have increasingly taken steps to provide clarity, oversight, and investor protection within the virtual asset ecosystem. For businesses seeking to operate legally and sustainably in this space, understanding the applicable regulatory requirements is no longer optional but essential.

This article provides a practical guide on how to register and obtain a licence as a Virtual Asset Service Provider (VASP) in Nigeria. It examines the key laws, regulations, and regulatory institutions governing virtual asset activities, outlines the registration pathways available to VASPs, and explains the compliance obligations at each stage, from initial assessment and regulatory incubation to full registration and regularisation. The objective is to equip promoters, startups, and established digital asset businesses with a clear roadmap for navigating Nigeria’s evolving VASP regulatory framework.

Regulatory framework

The regulatory landscape for virtual assets in Nigeria remains dynamic and evolving. The primary regulatory authority overseeing Virtual Asset Service Providers (VASPs) is the Securities and Exchange Commission (SEC). The following regulate Virtual Asset services in Nigeria;

1. Investment and Securities Act 2025

The SEC first set out its regulatory position on virtual crypto assets in a circular issued on 14 September 2020, titled Statement on Digital Assets and their Classification and Treatment, in which it affirmed that virtual crypto assets constitute securities and therefore fall within the SEC’s regulatory jurisdiction. The ISA 2025 introduces substantial provisions relating to Virtual Asset Service Providers (VASPs). Under Section 3 of the Act, the SEC is reaffirmed as the apex regulator of the Nigerian capital market, and the Act expressly extends regulatory oversight to participants in the virtual asset ecosystem, including Virtual Asset Service Providers (VASPs), Digital Asset Offering Platforms (DAOPs), and Digital Asset Exchanges. Consequently, these entities are now legally required to register with the SEC and comply with its applicable rules and regulations.

2. Rules on Issuance, Offering Platforms and Custody of Digital Assets (“Digital Asset Rules), 2022 

On 11 May 2022, the SEC issued its first regulatory framework, titled Rules on Issuance, Offering Platforms, and Custody of Digital Assets, to govern the operations of Virtual Asset Service Providers (VASPs). This framework was later amended to reflect evolving market dynamics and technological developments.

Under the Amended Rules, a Virtual Asset Service Provider may apply to the Commission for registration in any one of the following categories:

1. Digital Asset Offering Platforms (DAOP);
2. Digital Asset Exchanges (DAX)

• Digital Asset Custodians (DAC); or

1. Digital Asset Intermediaries (DAI).

A VASP may register for only one of these functions and is not permitted to combine two or more categories.[1]

3. CBN Guidelines on Operations of Bank Accounts for Virtual Assets Service Providers (VASPs)

In December 2023, the Central Bank of Nigeria (CBN), acting pursuant to the powers conferred on it by the Central Bank of Nigeria Act, 2007 and the Banks and Other Financial Institutions Act (BOFIA) 2020, issued the CBN Guidelines on the Operations of Bank Accounts for Virtual Asset Service Providers (VASPs). The Guidelines apply to institutions within the CBN’s regulatory oversight and are intended to govern their dealings with Virtual Asset Service Providers in Nigeria.

At the core of the Guidelines is the requirement that all VASPs must apply to a CBN-regulated financial institution to open a designated bank account. Such applications must be accompanied by the following documentation:

1. evidence of a valid license issued by the Securities and Exchange Commission (SEC) authorizing the entity to operate as a VASP;
2. a certified true copy of the memorandum and articles of association;

• a certified true copy of Form CAC 2 – Statement of Share Capital and Return of Allotment of Shares;

2. a certified true copy of Form CAC 2.1 – Particulars of Secretary;
3. a certified true copy of Form CAC 3 – Notice of Registered Address;
4. a certified true copy of Form CAC 7 – Particulars of Directors;

• a verifiable registered address of the company;
• a copy of the Certificate of Capital Importation (CCI), where applicable;

1. valid means of identification for all directors, principal officers, and beneficial owners;
2. the Bank Verification Number (BVN) of all directors, principal officers, and beneficial owners;
3. the home addresses of all directors, principal officers, and beneficial owners;

• the entity’s Anti-Money Laundering (AML), Counter-Financing of Terrorism (CFT), and Counter-Proliferation Financing (CPF) policies;
• all other requirements applicable to the opening of a corporate account under the CBN’s Ongoing Due Diligence (ODD) Regulations; and
• any additional requirements that the CBN may prescribe from time to time.[2]

Initial Assessment Filing

All promoters, entities, or businesses intending to undertake initial digital asset offerings (including VASPs) in Nigeria, or that are targeted at Nigerian investors, are required to complete and submit an initial assessment form together with a draft white paper. The initial assessment filing must include details of the proposed digital asset offering, the distributed ledger technology to be used, information on the issuer, and a legal opinion justifying whether the tokens to be offered should be classified as securities or otherwise.

Upon receipt of a complete initial assessment filing, the Commission is required to review the submission within 30 days to determine whether the proposed digital asset qualifies as a “security” under the Investment and Securities Act 2025. Where the digital asset is classified as a security, the issuer must subsequently apply for the registration of the securities.[3]

The Accelerated Regulatory Incubation Program (ARIP)

The result of the initial assessment filing determines whether a VASP promoter, entity, or business is eligible to apply to the SEC for participation in the Accelerated Regulatory Incubation Program (ARIP). Where an applicant is successful at the initial assessment stage, the SEC will notify the applicant of its eligibility to submit an application under the ARIP framework. The program enables crypto-related companies to obtain provisional licences.

1. Approvals granted under the ARIP regime have the following features:
   they take the form of an approval-in-principle (AIP) registration valid for a specified period not exceeding twelve (12) calendar months; and
2. Upon the expiration of the AIP period, qualified VASPs are transitioned to full registration, subject to compliance with all applicable registration requirements and any additional conditions that may be prescribed by the Commission from time to time.[4]

Regularization of registration

Applicants who are successful in the ARIP shall file an application for regularization of registration via the SEC ePortal. The application shall be accompanied with a request for registration of potential sponsored individuals/compliance officer who shall include the principal officers (i.e. CEO, COO, RO and CO) as well as the following corporate documents:

1. Certificate of Incorporation (original to be sighted)
2. Memorandum and Articles of Association which shall include the power to perform the specified function (with the object clause clearly stipulating the intended capital market activity (ies) and/or ancillary activities)
3. Company’s CAC status report showing statement of share capital, return of allotment, and particulars of directors
4. Latest audited accounts (or audited statement of affairs of the company in the case of a new company)
5. Tax identification number (TIN) and clearance certificate
6. The Commission may request such other documents as it considers necessary for registration[5]

Conclusion

Nigeria’s regulatory framework for Virtual Asset Service Providers reflects a deliberate effort by regulators to balance innovation with market integrity, financial stability, and investor protection. Through the combined effect of the Investment and Securities Act 2025, the SEC’s Digital Asset Rules, and the CBN Guidelines on VASP banking operations, a clear though evolving pathway has been established for virtual asset businesses seeking to operate lawfully in Nigeria.

While the registration process involves multiple stages, including initial assessment, regulatory incubation under the ARIP, and eventual regularization, these requirements are designed to promote transparency, accountability, and sound corporate governance within the digital asset ecosystem. Prospective VASPs must therefore approach the licensing process with careful planning, robust compliance structures, and a clear understanding of their regulatory obligations. Ultimately, VASPs that successfully navigate this framework stand to benefit from increased regulatory certainty, access to the formal financial system, and enhanced credibility in one of Africa’s most dynamic digital asset markets.

 

Author

Olamilekan Fayemi

Associate

Email: [email protected]

____________________

 

Consistently ranked as a top tier (Band 1) law firm and “Nigerian law firm of the Year” in years 2024 and 2025, Adeola Oyinlade & Co is a top full-service law firm, providing comprehensive legal support in corporate/ commercial law and the financial sector and known for handling the most complex cross-border transactions and representing major multinational corporations. The law firm advises a vast number of multinational and domestic companies. You may reach out to us for more information and enquiries via [email protected] or call +234 802 686 0247 / +234 803 826 7683.

 

[1] https://sec.gov.ng/documents/8/Rules-on-Issuance-Offering-and-Custody-of-Digital-Assets.pdf

[2]https://www.cbn.gov.ng/out/2024/fprd/guidelines%20on%20operations%20of%20bank%20accounts%20for%20virtual%20asset%20providers.pdf

[3] Part VII of A Framework on Accelerated Regulatory Incubation Program for the Onboarding of Virtual Assets Service Providers (VASPs) and other Digital Investments Service Providers (DISPs)  https://sec.gov.ng/documents/1294/ARIP-Framework-for-the-Onboarding-of-VASPs_4624.pdf

[4] Part VI of A Framework on Accelerated Regulatory Incubation Program for the Onboarding of Virtual Assets Service Providers (VASPs) and other Digital Investments Service Providers (DISPs) https://sec.gov.ng/documents/1294/ARIP-Framework-for-the-Onboarding-of-VASPs_4624.pdf

[5] Part XIII of A Framework on Accelerated Regulatory Incubation Program for the Onboarding of Virtual Assets Service Providers (VASPs) and other Digital Investments Service Providers (DISPs) https://sec.gov.ng/documents/1294/ARIP-Framework-for-the-Onboarding-of-VASPs_4624.pdf

Introduction

A Data Controller is an individual, private entity, public Commission, agency or any other body who, alone or jointly with others, determines the purposes and means of processing of personal data. They decide the objectives behind the collection and processing of personal data. A Data Processor on the other hand is an individual, private entity, public authority, or any other body, who processes personal data on behalf of or at the direction of a data controller or another data processor. They act in accordance with the directives of the data controller and are required to process personal data in compliance with data protection laws. Cross-border data transfer refers to the transmission of data from one jurisdiction to another, either electronically or physically. This can take place via the internet, physical storage media, or other forms of communication.

In certain situations, foreign-owned companies operating in Nigeria may need to transfer the personal data of Nigerian data subjects to their parent or affiliate entities in other jurisdictions. However, such transfers must comply with the requirements of Nigeria’s data protection laws. This article aims to guide organizations engaged in cross-border data transfers on how to remain compliant and avoid potential sanctions from the regulatory authorities

Data Controllers and Data Processors of Major Importance

According to the provision of Section 65 of the Nigeria Data Protection Act 2023 and Article 8 of the NDPA General Application and Implementation Framework 2025, a data controller or data processor of major importance is a data controller or data processor that is domiciled, resident in, or operating in Nigeria and

1. processes or intends to process personal data of more than Two-Hundred (200) data subjects in six (6) months;
2. Carries out commercial Information Communication Technology (ICT) services on any digital device which has storage capacity for personal data and belongs to another individual; or
3. Processes personal data as an organization or a service provider in anyone of the following sectors: Aviation; Communication; Education; Electric Power; Export and Import; Financial; Health; Hospitality; Insurance; Oil and Gas; Tourism; E-Commerce; Public Service.

In order to ensure proportionality of obligations in relation to various levels of major data processing, the NDPA classifies data controllers and data processors into 3 (three) levels or categories of major data processing, namely:

1. Ultra-High Level (UHL)

Data controllers and data processors of major importance in this category are Commercial banks operating at national or regional level, Telecommunication companies, Insurance companies, Multinational companies, Electricity distribution companies, Oil and Gas companies, Public social media App developers and proprietors, Public e-mail App developers and proprietors, Communication devices manufacturers, Payment gateway service providers, Fintechs and organisations that process personal data of over Five-Thousand (5,000) data subjects in six (6) months. They are required to pay a statutory registration fee of N250, 000.

2. Extra-High Level (EHL)

Data controllers and data processors of major importance in this category are Ministries, Departments and Agencies (MDAs) of government, Micro Finance Banks, Higher Institutions, Hospitals providing tertiary or secondary medical services, Mortgage Banks and organisations that process personal data of over One-Thousand (1,000) data subjects but less than Five-Thousand (5,000) within six (6) months. They are required to pay a statutory registration fee of N100, 000.

3. Ordinary-High Level (OHL)

Data controllers and data processors of major importance in this category are Primary and Secondary Schools, Corporate Training Service Providers, Primary Health Centres, Independent Medical Laboratories, Hotels and Guest Houses with less than fifty (50) suites, Processors who process sensitive personal data of more than Two-Hundred (200) data subjects for commercial purposes and organizations that process personal data of over Two-Hundred (200) data subjects but less than One-Thousand (1000) within six (6) months. They are required to pay a statutory registration fee of N10, 000.[1]

Cross-Border Data Transfer under the NDPA

Cross-border data transfer is the movement of data from one jurisdiction to another, either physically or electronically. This data transfer can occur through various means, such as the internet, physical storage devices, or other communication methods. Data Controllers who are subsidiaries of foreign companies in Nigeria can transfer data to their holdings in other jurisdictions, however this must be done in compliance to the provisions of the NDPA which regulates cross-border transfer of data from Nigeria.

There are various grounds for data transfer from Nigeria to another jurisdiction, namely:

1. Adequacy Decision by the NDPC
2. Cross Border Data Transfer Instrument (CBDTI) approved by the NDPC and
3. Other lawful bases.

 

1. Adequacy Decision by the NDPC

This is the determination of the adequacy of the appropriate safeguards by the Nigeria Data Protection Commission (NDPC) that permits the movement of data from Nigeria to another Jurisdiction. The NDPC may adjudge a country as affording adequate data protection based on the following conditions

1. Availability of enforceable data subject’s rights, the ability of a data subject to enforce such rights through administrative or judicial redress, and the rule of law
2. Existence of any appropriate instrument between the NDPC and a competent authority in the recipient jurisdiction that ensures adequate data protection
3. Access of a public authority to personal data
4. Existence of an effective data protection law
5. Existence and functioning of an independent, competent data protection, or similar supervisory authority with adequate enforcement powers
6. International commitments and conventions binding on the relevant country and its membership of any multilateral or regional organisations.[2]

 

1. Cross Border Data Transfer Instrument (CBDTI) approved by the NDPC

The NDPC may approve CBDTI for a data controller or data processor or a group of data controller and processors in the absence of an adequacy decision. These instruments may be referred to as:

1. codes of conduct
2. certifications
3. binding corporate rules, or
4. Standard contractual clauses.[3]

 

• Other lawful bases for Cross border transfer

The NDP Act recognizes special circumstances which may necessitate cross-border data transfer without adequacy decision or approved CBDTI.

In the absence of adequacy of protection under the NDP Act, a data controller/data processor shall only transfer personal data from Nigeria to another country if the:

1. data subject has provided and not withdrawn consent to such transfer after having been informed of the possible risks of such transfers for the data subject due to the absence of adequate protections;
2. transfer is necessary for the performance of a contract to which a data subject is a party or in order to take steps at the request of a data subject, prior to entering into a contract ;
3. transfer is for the sole benefit of a data subject and:
4. it is not reasonably practicable to obtain the consent of the data subject to that transfer; and
5. if it were reasonably practicable to obtain such consent, the data subject would likely give it;
6. transfer is necessary for important reasons of public interest
7. transfer is necessary for the establishment, exercise, or defense of legal claims ; or
8. transfer is necessary to protect the vital interests of a data subject or of other persons, where a data subject is physically or legally incapable of giving consent[4]

The NDPC is vested with the power to determine whether a country, region or specified sector within a country, affords an adequate level of protection. Where the NDPC is satisfied that Binding Corporate Rules, Standard Contractual Clauses, Codes of Conduct, Certification Mechanism or any similar instruments of data protection proposed to it meets appropriate standards of data protection, the DPA may approve such.

 

Recommended Compliance Checklist by Data Controllers and Data Processors

In order to comply with the provisions of the NDP Act, data controllers or data processors are, among others, expected to:

1. Register with the Commission as a data controller or data processor of major importance as the Commission may determine in accordance with the NDP Act.
2. Conduct a NDPA compliance audit within Fifteen (15) months of commencement of business and thereafter on an annual basis.
3. In the case of data controllers and data processors of major importance (Ultra High Level and Extra-High Level), file NDPA Compliance Audit Returns (CAR) with the Commission not later than the 31st of March of each year.
4. Prepare and keep semi-annual data protection reports which shall be a detailed analysis of data processing within six (6) months
5. Prepare and follow schedules on organization-wide, internal sensitization and training on data privacy and protection in order to foster a culture of compliance with the NDP Act and best practices.
6. Identify all obligations relating to data controllers or data processors under the NDP Act and prepare schedules of compliance
7. In the case of a data controller or data processor of major importance, designate a Data Protection Officer (DPO).
8. Develop or review its organizational privacy policies, the privacy policy shall be in compliance with the NDP Act
9. Publish its organizational privacy policies on its platforms with a view to sensitizing data subjects on data processing activities as well as their rights
10. Provide privacy and cookie notices at the homepage of its website. The cookie notice should give a data subject the opportunity to decline or accept the notice; a cookie notice must be displayed in such a way that it significantly obstructs the middle, the left or the right side of the home page of a website. Displaying a cookie notice at the bottom of a webpage where it may be ignored or be unnoticed by a data subject is tantamount to lack of transparency in data processing.
11. Ensure that the privacy policy and notice is transparent and appropriately provided on platforms/places where data processing is taking place.
12. Develop and circulate an internal data protection strategy or policy and basic privacy checklist to help members of staff and other relevant persons (such as vendors, agents and contractors) understand the organization’s direction in connection with the processing of personal data and outline the steps they are to take to ensure the organization’s direction is maintained
13. Conduct a Data Privacy Impact Assessment (DPIA) when required under the NDP Act, or when directed by the Commission.
14. Notify the Commission of personal data breaches within seventy-two (72) hours of becoming aware of the breach.
15. Notify a data subject immediately after becoming aware of a personal data breach that may pose high risk to his or her privacy;
16. Update agreements with third party processors to ensure compliance with the NDPA.
17. Design systems and processes to make data requests and access seamless for data subjects.
18. Design systems and processes to enable data subjects to easily correct or update their personal data
19. Design systems and processes to enable data subjects easily transfer data to another platform or person (natural or artificial);
20. At least within the six (6) months of commencement of business and then, at the minimum, on an annual basis, train its personnel on data protection law and practices; and 14
21. Clearly explain the complaints process to data subjects including the right to lodge a complaint with the Commission.

Conclusion

Implementing a robust data protection strategy is crucial for organizations to ensure compliance with the Nigeria Data Protection Act (NDPA) and maintain the trust of their customers and stakeholders. By following the outlined policies and procedures, organizations can protect personal data, respond to data breaches, and respect data subjects’ rights. Key measures include conducting Data Privacy Impact Assessments, notifying the Commission and data subjects of breaches, updating agreements with third-party processors, and designing systems that facilitate data subject rights. Regular training of personnel and clear communication of complaints processes are also essential. By prioritizing data protection, organizations can build a strong foundation for data privacy and security.

Author

Olamilekan Fayemi

Associate

Email: [email protected]

____________________

 

Adeola Oyinlade & Co is a leading law firm with a dedicated Data Protection & Privacy practice. As a licensed Data Protection Compliance Organization (DPCO) providing services that include data protection audits and regulatory filings, the law firm offers comprehensive services including data breach response and cross-border data transfer advisory. You may reach out to us for more information and enquiries via [email protected] or call +234 802 686 0247 / +234 803 826 7683.

[1] Article 8(4) of NDPA-GAID 2025

[2] Section 42(2) of NDPA 2023

[3] Section 42(6) of NDPA 2023

[4] Section 43(1) of NDPA 2023

What Is Share Acquisition?

At its core, acquiring a share means buying or otherwise obtaining an ownership stake in a company. Shares (also called “stock” or “equity”) are pieces of ownership. When you acquire shares, you gain rights to the company’s profits and a say in its affairs (like voting at meetings). Under Nigerian law, a share is personal property transferable under a company’s articles. In simple terms, acquiring shares is like buying a slice of a business.

Acquisition can happen in different ways: you might buy shares from existing owners, subscribe for newly issued shares, receive shares in a merger, or even get shares through a rights offering. Regardless of the method, Nigerian law provides clear rules on how to issue, transfer, and record shares.

Key Laws and Regulations

Nigerian share acquisitions are governed by several laws and regulations such as:

Companies and Allied Matters Act (CAMA) 2020: This is the cornerstone of company law in Nigeria. CAMA sets rules for how companies’ issue and transfer shares, maintain share registers, and meet formalities. For example, CAMA provides that companies must offer new share issuances first to existing shareholders (a “pre-emptive right”).[1] It also requires that share transfers be made by a formal written instrument and recorded in the company’s register.[2] Any allotment of new shares must be filed with the Corporate Affairs Commission (CAC) within one month.[3]

Investment and Securities Act (ISA) and SEC Rules: The ISA (most recently amended in 2025) and the rules of the Securities & Exchange Commission (SEC) regulate the buying and selling of shares in public companies and the capital markets.

SEC Rules and NGX Listing Rules: Beyond statutes, the SEC issues rules (e.g. on takeovers, private placements, public offerings) that must be followed by companies. NGX rules also require listed companies to notify the market of any new share issues, dividends, or substantial changes in ownership.

Foreign Exchange and Investment Regulations: The Central Bank of Nigeria (CBN) regulates foreign exchange. Under the Foreign Exchange (Monitoring and Miscellaneous Provisions) Act and CBN guidelines, funds brought into Nigeria for investment must be registered through authorized banks. Crucially, Nigeria generally allows free entry and free exit for foreign acquisition of shares in the country.[4]

Other regulations: If the target company is in a regulated industry (e.g. banking, insurance, pensions), sector regulators (CBN, NAICOM, PENCOM, etc.) may also need to approve large share acquisitions. Competition law may also be applicable where a large share acquisition may require FCCPC clearance if it triggers merger thresholds.

How Shares Can Be Acquired

Nigerian law recognises several common ways to acquire shares

1. Subscription (Buying Newly Issued Shares)

Here, the company creates and sells brand new shares when raising capital to fund operations or expansion. When a company issues new shares, existing shareholders typically have pre-emptive rights meaning they get the first opportunity to purchase these shares in proportion to what they already own. For example, if you own 10% of the company, you have the right to buy 10% of the new shares before outsiders can. These pre-emptive rights can be waived if the company’s articles of association allow it, or if shareholders vote to waive them.

Subscription is usually applicable where a company initiates Initial public offerings (IPOs), capital raising rounds, startup funding rounds.

2. Private Purchase (Transfer from Existing Shareholder)

In a private purchase, you buy shares from someone who already owns them, rather than from the company itself. Negotiation is done directly with an existing shareholder and agree on a price through a share purchase agreement. The transfer must be documented using an instrument of transfer[5] which both the seller and buyer sign. The company then updates its share register to reflect you as the new owner. Until the transfer is officially registered with the company, the seller remains on record as the legal owner. Companies have the right to refuse to register a transfer if their articles of association permit it. This commonly happens when shares are being transferred to someone outside the existing shareholder group (“outsiders”), especially in closely-held private companies.

3. Rights Issues

This is a special type of share subscription reserved exclusively for existing shareholders. The company offers additional shares, but only current shareholders can buy them, usually at a discounted price. You typically receive rights in proportion to your existing shareholding (e.g., one new share for every five you already own). Rights issues allow you to maintain your percentage ownership in the company and avoid dilution. This usually occurs where a company needs to raise capital quickly from its existing shareholder base.

4. Private Placements

The company sells shares directly to select investors without making a public offer. The company approaches specific investors (often institutional investors, venture capitalists, or high-net-worth individuals) and negotiates the sale of shares privately. This is faster and less expensive than a public offering because it avoids extensive public disclosure requirements. Despite being “private,” these transactions still require full CAMA compliance: proper board resolutions authorizing the issuance, updating the register of members, and filing with the CAC.

5. Mergers & Acquisitions (M&A) / Takeovers

This involves acquiring a significant stake or full control of a company through share purchases or exchanges. It can occur in the following instances:

• Negotiated purchase: You negotiate to buy a controlling stake (often 51% or more) directly from existing shareholders.
• Share exchange: One company issues its own shares as payment to acquire another company’s shares (common in mergers). For example, Company A might give its shareholders two shares for every one share of Company B they acquire.
• Takeover bid: For public companies, you might make a formal offer to all shareholders to buy their shares, usually at a premium.

Transactions above certain thresholds require approval from the Securities and Exchange Commission (SEC) and clearance from the Federal Competition and Consumer Protection Commission (FCCPC) to ensure fair competition. Public takeovers must comply with the SEC Rules and Regulations, including mandatory offer requirements when certain ownership thresholds are crossed.

6. Other Methods of Acquiring Shares

Gift

Shares can be transferred as a gift. The donor must execute a proper instrument of transfer, and the company must register the transfer. Some companies’ articles may restrict gifts to outsiders.

Inheritance

When a shareholder dies, their shares pass to their heirs according to their will or intestacy laws. The personal representative (executor/administrator) must produce the necessary legal documents (grant of probate or letters of administration) for the company to register the new owner(s).

Share Buybacks and Redemptions

A company may purchase its own shares from existing shareholders (subject to strict conditions under CAMA, including solvency requirements and proper authorization).  Some companies issue redeemable shares that can be bought back by the company at a predetermined time or price.

 

Who’s Involved: Regulatory Bodies

Multiple agencies oversee share transactions:

• Corporate Affairs Commission (CAC): The CAC registers companies and corporate filings. It requires companies to file certain forms when shares are issued or capital is changed. ownership must ultimately be reflected in the company’s statutory books (which the CAC can inspect).
• Securities and Exchange Commission (SEC): The SEC regulates the capital market. It oversees public offerings, private placements, corporate disclosures, and takeover bids.
• Nigerian Exchange Limited (NGX): The NGX (formerly NSE) enforces listing rules for quoted companies. Listed companies must report any share issues, transfers of significant stakes, or changes in share capital to the NGX.
• Federal Competition & Consumer Protection Commission (FCCPC): The FCCPC (Nigeria’s antitrust regulator) reviews large mergers or acquisitions that meet thresholds. If a share acquisition constitutes a merger (i.e., gives an investor significant control and/or if companies’ combined turnover/market share crosses a set threshold), FCCPC approval may be required.
• Central Bank of Nigeria (CBN): Through its Exchange Control department, the CBN ensures foreign currency transactions comply with the law. Any foreign capital inflow for buying shares must be routed through authorized dealers with a CCI. The CBN also oversees banks and financial institutions, so if the target is a bank or microfinance bank, CBN approval would be necessary for a share acquisition.
• Industry Regulators: Other regulators may be involved if the company is in a special sector. For instance, the National Insurance Commission (NAICOM) must approve changes in shareholding of insurance companies. The National Pension Commission (PenCom) does so for pension fund administrators. Each regulator has its own procedure for vetting new owners.

Key Considerations and Practical Steps

When planning a share acquisition, investors and company owners should keep in mind:

• Due Diligence: Carefully review the company’s corporate records and financials before buying shares by conducting a corporate search on the company. Confirm that all past share issues were properly approved and filed with CAC (per CAMA). Check the share register to ensure the shares exist and to verify any restrictions in the articles (e.g. rights of first refusal on transfer). Legal searches (for encumbrances, litigations, or regulatory sanctions) are also advisable.
• Documentation: Prepare clear agreements. A share purchase agreement should cover price, payment, conditions, and warranties. If acquiring new shares via subscription, board/ shareholder resolutions are needed. For takeovers, follow SEC requirements for bid documentation. In all cases, ensure share transfer forms and board minutes are correctly executed.
• SEC and CAC Filings: Remember to file required forms. Issuing new shares (or doing a rights issue) requires CAC filings.
• Foreign Ownership Restrictions: Generally, Nigeria permits 100% foreign ownership in most sectors. The exceptions are few (e.g. local content rules in oil). Always confirm the sector-specific rules.
• Payment and Repatriation: When funds cross borders, use official channels. The Central Bank requires that foreign currency used to buy shares be brought into Nigeria through authorized banks with full documentation (the CCI). Profits (dividends or sale proceeds) can be repatriated freely through the formal market, as long as taxes are paid. Always keep records (CCI, contracts, and bank documents) to avoid difficulties later.
• Get professional help: Share transactions involve legal documentation, valuation issues, tax implications, and regulatory compliance. Always consult legal and financial advisors before proceeding.

Author

Felicia Ayeomoni

Associate

Email: [email protected]

____________________

Adeola Oyinlade & Co is a top full-service law firm, providing comprehensive legal support in corporate/ commercial law and the financial sector. The law firm advises a vast number of multinational and domestic companies. You may reach out to us for more information and enquiries via [email protected] or call +234 802 686 0247 / +234 803 826 7683.

[1] Companies and Allied Matters Act, section 142.

[2] Companies and Allied Matters Act, section 175.

[3] Companies and Allied Matters Act, section 154.

[4] Section 26 of the Foreign Exchange (Monitoring and Miscellaneous) Act, 2004.

[5] Companies and Allied Matters Act 2020, section 175.