{"id":4396,"date":"2025-10-28T20:43:52","date_gmt":"2025-10-28T20:43:52","guid":{"rendered":"https:\/\/www.adeolaoyinlade.com\/?p=4396"},"modified":"2025-10-27T20:47:18","modified_gmt":"2025-10-27T20:47:18","slug":"acquiring-shares-in-nigerian-companies-a-legal-guide","status":"publish","type":"post","link":"https:\/\/www.adeolaoyinlade.com\/en\/acquiring-shares-in-nigerian-companies-a-legal-guide\/","title":{"rendered":"Acquiring Shares In Nigerian Companies: A Legal Guide"},"content":{"rendered":"

What Is Share Acquisition?<\/strong><\/p>\n

At its core, acquiring a share means buying or otherwise obtaining an ownership stake in a company.\u202fShares (also called \u201cstock\u201d or \u201cequity\u201d) are pieces of ownership. When you acquire shares, you gain rights to the company\u2019s profits and a say in its affairs (like voting at meetings). Under Nigerian law, a share is personal property transferable under a company\u2019s articles. In simple terms, acquiring shares is like buying a slice of a business.<\/p>\n

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.<\/p>\n

Key Laws and Regulations<\/strong><\/p>\n

Nigerian share acquisitions are governed by several laws and regulations such as:<\/p>\n

Companies and Allied Matters Act (CAMA) 2020:<\/strong> This is the cornerstone of company law in Nigeria. CAMA sets rules for how companies\u2019 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 \u201cpre-emptive right\u201d).[1]<\/a> It also requires that share transfers be made by a formal written instrument and recorded in the company\u2019s register.[2]<\/a> Any allotment of new shares must be filed with the Corporate Affairs Commission (CAC) within one month.[3]<\/a><\/p>\n

Investment and Securities Act (ISA) and SEC Rules:<\/strong> 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.<\/p>\n

SEC Rules and NGX Listing Rules:<\/strong> 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.<\/p>\n

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

Other regulations:<\/strong> 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.<\/p>\n

How Shares Can Be Acquired<\/strong><\/p>\n

Nigerian law recognises several common ways to acquire shares<\/p>\n

    \n
  1. Subscription (Buying Newly Issued Shares)<\/strong><\/li>\n<\/ol>\n

    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<\/strong> 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.<\/p>\n

    Subscription is usually applicable where a company initiates <\/strong>Initial public offerings (IPOs), capital raising rounds, startup funding rounds.<\/p>\n

      \n
    1. Private Purchase (Transfer from Existing Shareholder)<\/strong><\/li>\n<\/ol>\n

      In a private purchase, <\/strong>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<\/strong>. The transfer must be documented using an instrument of transfer<\/strong>[5]<\/strong><\/a> 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.<\/p>\n

        \n
      1. Rights Issues<\/strong><\/li>\n<\/ol>\n

        This is a <\/strong>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.<\/p>\n

          \n
        1. Private Placements<\/strong><\/li>\n<\/ol>\n

          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.<\/p>\n

            \n
          1. Mergers & Acquisitions (M&A) \/ Takeovers<\/strong><\/li>\n<\/ol>\n

            This involves <\/strong>acquiring a significant stake or full control of a company through share purchases or exchanges. It can occur in the following instances:<\/p>\n