In an era or country where there are corrupt leaders, this is one of the issues they face with the law. This is because most corrupt leaders use the opportunity of their position to confiscate money out of their country to foreign lands, with the hope of never being caught. However, with the amount of money laundering done in these foreign countries, it is difficult for the government to overlook such incidence. This in turn, brings the attention of foreign government leaders to every activity or operations done by these leaders. Once these leaders are caught in their dealings, they then face the issue of Asset Forfeiture.

Asset forfeiture, a practice done by the United States government, is the process of confiscating properties derived from or traceable to a broad range of domestic and foreign offences. These offences refer to criminal proceeds and instrumentalities located outside the United States, that are traceable to a criminal defendant prosecuted in the United States. Asset forfeiture may be administrative, criminal or civil. However, for purpose of this article, more emphasis will be done on civil forfeiture in the following paragraphs.

Civil Forfeiture also known as “an action in rem action” is an action taken against a property rather than a criminal defendant. The goal of this type of asset forfeiture is to remedy any harm caused to a society by criminal activity done by an individual or its leaders. Under well-established principles/law in the United States, forfeited properties are considered properties of the United States government. Just like every other civil case, this case progress with motion practices, discoveries and ultimately bench trial unless a jury trial is requested. During these proceedings, all third party claims must be litigated before the court enters a judgment for the government, by the authority of the Civil Asset Forfeiture Reform Act (CAFRA) of 2000.

Victims associated with this case, should seek the help of an attorney to represent them for asset forfeiture. These attorneys will represent the victim in the following areas:

a) Contest the entire asset forfeiture

b) Request and obtain victim compensation from the United States; or

c) Request and obtain victim compensation from the United States as to the defaulted assets and contest the forfeiture of all these assets.

The advantage of contesting an asset forfeiture is that the victim will be a party to the litigation, thereby controlling the pace and progress of proceedings, which can lead to property recovery. In contesting the entire asset forfeit, the attorney must file a notice of claim followed by an answer to the complaint. Also in this situation, the United States or Claimants can demand a jury, which then leaves the government with the burden to proof forfeitability of each property by a preponderance of the evidence. If this burden is satisfied, all interest on the property is forfeited unless claimants can prove their innocence on legit ownership of the property. That is having no knowledge of the activities leading to asset forfeiture. This aspect is called the Merits of Contesting the Forfeiture. On the other hand, Demerits of Contesting the forfeiture is when a claim, complaint and answer are not made before the deadline. If the deadline is not met and asset forfeiture is not successful, the chances of getting victim compensation might be negatively implicated. To avoid demerits of contesting forfeiture, the following should be done:

1. Motion practice to set aside the default judgment entered by the District Court as to the asset confiscated;

2. Motion practice to enlarge the time for filing a verified claim and answer to the complaint on behalf of the victim, inclusive of any appeals;

3. Preparing and filing verified claim and answer to the complaint;

4. Motion practice to dismiss or strike out the claims and answer filed by the victims’ complaint, inclusive of any appeals;

5. Defending against the victims’ claimants’ claims, if step 4 turns out to be unsuccessful;

6. Hiring additional experts and specialists including forensic accountants and investigators;

7. Conducting extensive fact and expert discovery, including interrogatories, depositions, document production.

8. Preparing for and conducting trial;

9. Appellate litigation

Aside contest filing, another area of focus is the victim’s compensation. Victim compensation in accordance with the Civil Asset Forfeiture Act (CAFRA) of 2000, states that the United States has the authority to return forfeited assets to its victims of any offense that led to forfeiture. This return can be done through remission, which is property distribution done solely by the Attorney General pursuant to the regulation of 28 C.F.R Part 9, and International Asset Sharing which is when the Attorney General has discretionary authority to share forfeited assets to the foreign country, as long as the other country assisted in the proceedings leading to forfeiture. Before this can be done, an agreement must be done between the US governments in order to share these assets with the other nation. However, it is mandatory that the United States retains a portion of the confiscated corrupt-related assets to recoup the cost incurred in confiscating those assets

The main advantage of pursing victim compensation is that there is a higher success rate of recovering all properties confiscated. On the other hand, victim compensation is more time consuming, the procedure is largely discretionary and not subject to judicial review, and the United States Congress may veto an asset sharing approval at any time.

Due to the firms experienced and well established attorneys in the industry, both in civil and bankruptcy, here at A.O.E Law & Associates, we represent victims with Asset forfeiture cases/asset recovery matters. As a firm that deals with bankruptcy cases, we are trained to have in-depth knowledge of asset tracing, asset manipulation and concealment that are often perpetrated by debtors in an effort to prevent recourse of such assets by creditors, hence our wealth of knowledge and skills in areas of asset identification. Simultaneously, our firm has successfully litigated numerous civil and criminal cases, including obtaining multiple rare unanimous jury verdicts in States and Federal Court. In addition to the above points, we are well experienced in international asset forfeiture defense, thereby broadening the firms capability to represent foreign countries in matters of asset forfeiture. This combination, alongside our intense research into Asset Forfeiture cases, makes the firm an ideal representative for victims in Asset forfeiture cases. To get more information on Asset Forfeiture or/and in dire need of a firm to represent you in such cases, I employ you to contact us for our services in this area.

War on Terror in Nigeria: Beyond U. S Military Support
Since the rise of the Boko Haram insurgency in Northern Nigeria in mid-2009, the Government of Nigeria has sought several ways of tackling insurgency and bringing a permanent end to the existence of the group and insurgency in Nigeria. Lately, there has been agitation for U.S support to Nigeria by way of arms supply and military training. There have been various informal allegations about Washington’s refusal to provide arms to Nigeria in tackling Boko Haram. In November 2014, the then Ambassador of Nigeria to the United States, Late Prof. Ade Adefuye , while addressing the U.S Council on Foreign Relations asserted that the U.S government “has refused to grant Nigeria’s request to purchase lethal equipment that would have brought down the terrorists within a short time…” In response to the allegations, the U.S government cited Human Rights Violations within the Nigerian Security forces as one of the factors limiting U.S military support to Nigeria. The preceding reason is most probably
premised on the Leahy amendment, a law which prohibits the U.S from providing military equipment and training support to countries whose security forces are found to have committed a “gross violation of human rights.” At a hearing of the House Foreign Affairs Committee in 2014, Ms. Serah Sewall, the Under Secretary of State for Civilian Security, Democracy and Human Rights also cited corruption as a limiting factor to Nigeria’s fight against Boko Haram stating that “Nigeria will need to seriously tackle corruption if it is to succeed in stamping out Boko Haram”. Likewise, Defense Analysts believe that the U.S may be limiting its support to Nigeria for fear that its highly sensitive Military equipment might fall into the hands of the insurgents who are reputed to have seized arms from Nigerian soldiers in the past. There have been commendable efforts by the current government of Nigeria to address these issues which have resulted in limited support to Nigeria for reasons of Leahy violations. New officers have been appointed to head the arms of the military to usher in much needed reforms. President Muhammadu Buhari has also expressed his commitment to investigating an end to alleged human rights violations by the military. These corrective steps, further discussed later in this paper, have been acknowledged by the U.S. President who has indicated efforts towards additional military support for Nigeria. During my discussion with President Obama in 2014, he stated, for instance, that he would like to see many African nations form a coalition to address the Boko Haram problem.1 Furthermore, these steps are likely to suffice in obtaining an exemption for the Nigerian Military as far as the application of the Leahy law is concerned.

1 Tanya Young Williams, October 21, 2014. “Exclusive: A Private Meeting with President Obama to Discuss ISIS and Boko Haram,” The Huffington Post [online]. Accessed on September 9, 2015 at:
While U.S military support and training is invaluable to the fight against terrorism in Nigeria, it is also important to consider whether the Nigerian Military forces have established the basic structures required to fight insurgency. The recent shake up in the Nigerian Military leading to the exit of top Military leaders, exposed some lapses in Nigeria’s efforts to wage a war on terror. In late 2014 during an interview, Nigeria’s immediate past Chief of Defense Staff, Rtd. Air Chief Marshall Alex Badeh stated that soldiers had rifles and therefore could not complain about lack equipment for the fight against Boko Haram. This statement was made during a time where some members of the Nigerian army had complained about a lack of sufficient equipment to fight Boko Haram. However, the outgoing Chief of Defense Staff departed from this point of view during the handover ceremony to the new Chief of Defense Staff in July 2015, and again during a subsequent television interview. Rtd. Air Chief Marshall Alex Badeh now admits that obsolete equipment; insufficient training of soldiers in handling military equipment; activities of saboteurs leaking sensitive insider information to insurgents; as well as understaffing were problems he had to deal with during his tenure as CDS. Furthermore, the outing Chief of Army Staff Rtd. Lt. Gen. Kenneth Minimah, also stated during his hand over speech that one of the challenges in the fight against Boko Haram was that the elites used the insurgency to further their sectional, political and religious interests instead of pursuing an active collaboration with the military to confront them.
With statements such as the above coming from leaders in Nigeria’s war against terror, it appears that the Military continues to grapple with understanding and mapping out the important strategies required to fight insurgency. The emphasis on rifles and arms though important is not an isolated solution to
counter-insurgency. Perhaps Nigeria should adopt the approach of countries like Israel that have successfully dealt with similar problems of insurgency and sectional violence in its territory. As a top priority, emphasis should be placed on intelligence collection and gathering which is critical to the success of Israel’s counter insurgency operations and indeed to any security operation geared towards fighting terrorism. Nigeria’s intelligence agencies include: the Nigerian Defence Intelligence Agency (“DIA”) whose mission statement is “to produce comprehensive, contextual and timely intelligence support to defense planners and decision makers in order to effectively enhance national security”.
Likewise, the statutory role of the Department of State Security Service (“DSS”) includes the prevention, detection and investigation of terrorist activities. The National Intelligence Agency (“NIA”) is responsible for foreign intelligence but defers to the DIA on military related foreign intelligence. These roles and functions are laudable but will not effectively support the Nigerian Military in its fight against terror if it not properly coordinated. To sufficiently impact security operations in fighting terrorism, these agencies should gather and analyze pertinent intelligence through inter-agency partnership; and collaboration with local communities in the North East that are mostly affected by Boko Haram.
As to the DIA, DSS and NIA collaborating with locals, it is important to mention the Civilian Joint Task Force, a group of citizens in Northeast Nigeria who were prompted to self-action after the spate of Boko Haram activities in 2013. The Civilian JTF is an unofficial network of volunteer citizens performing vigilante and paramilitary functions in communities that are frequently attacked by Boko Haram. As community members, they are not only able to identify and protect their communities from infiltration and attack by Boko Haram, they have also served the function of providing the army with useful information on the activities of members of the insurgent groups as well as capturing and delivering terrorists to the army. This collaboration contributed to the success of the security forces in combating terrorism in the Northeast until the beginning of cross allegations between the army and the civilian JTF of ranks being infiltrated by Boko Haram which has now strained the once thriving partnership. The civilian JTF has also been criticized for use of excessive force and extra-judicial killings. Those allegations are serious and should not beoverlooked.
Members of the communities are important in assisting the Military gather intelligence as they are able to easily identify members of insurgent groups within their communities. They are able to serve as undercover informants in the terrorist groups gathering information that can be used to counter terrorist activities at source. These functions are key to the Military’s effective use of arms support it may receive from the U.S as intelligence helps to ensure that arms are deployed against the right targets. Furthermore, the importance of this type of group especially for human intelligence gathering and deterring insurgency is indispensable. The U.S. achieved a critical success against al- Qaeda’s insurgency in Iraq by employing the assistance of the Sunni tribal leaders to oppose al-Qaeda fighters and also by encouraging the mixed Sunni- Shiite neighborhoods to be more homogeneous in a means to curb sectarian violence.
In addressing the criticisms of the civilian JTF, some measure of control is required on the organization and operations of the network. For example, the Borno State Government in 2013 provided training for youth vigilantes, kitted them with uniforms and provided a monthly stipend. The Nigerian government should consider drafting the vigilantes into an ad hoc paramilitary group where they are organized into ranks, compensated, trained and guided on how to properly execute their paramilitary functions without abusing or overstepping the bounds of their role as civilian forces. The functions of this group could be overseen by an arm of the Military which will, among other things, ensure proper coordination of human intelligence between the group, the intelligence agencies and the security forces as well serve as a check on the excesses of thegroup.
It is important to highlight the role of foreign intelligence especially as Boko Haram has spread its tentacles beyond the shores of Nigeria. The group recruits insurgents from Niger, Chad and Cameroon where they also carry out their deadly activities. Based on military analysis of videos obtained from former Boko Haram camps, it is also believed that there are Sudanese commanders within the group. All of these are in addition to speculations of allegiance to Al-Qaeda and most recently the openly pledged allegiance to the Islamic State (“IS”).
Public information is very limited as to how the NIA and DIA coordinate their activities especially as regards foreign intelligence relating to terrorism. It is unclear how the NIA defers to the DIA on issues of foreign military intelligence. In particular does the NIA allow the DIA to gather its own foreign military intelligence? Or does the NIA gather all foreign intelligence and then pass on foreign military intelligence to the DIA? If the latter is the case, then what are the parameters employed in determining “military intelligence” to be transmitted to the DIA. In any case, it is important that relevant information is obtained from foreign countries especially those where Boko Haram maintains a presence.
The first step should be the establishment of a separate arm of the DIA to gather foreign intelligence on behalf of the military. This proposed arm should work with the relevant local intelligence agencies in the countries with Boko Haram activity to gather information. This can be achieved by placing intelligence officers in the Nigerian embassies and/or consulate offices in these countries to work directly with the local agencies.
Information obtained can then be analyzed in collaboration with the DIA HQ for use by the Nigerian Army. A similar collaboration can also be employed to intercept Boko Haram- pertinent wireless communication.
Effective intelligence gathering and analysis will also be pivotal to disrupting insurgency operations at source. The collaboration with locals to obtain insider information on the plans and strategies of terrorist groups will help the military to identify and neutralize sources of funding and arms supplies; limit avenues for recruitment and training; and thwart general logistics.
Border security is another important structure that must be set in place to effectively tackle terrorism. Since mid-2014, Boko Haram has taken a transnational approach to its activities expanding its reach to border countries like Niger, Chad and Cameroon. The group has infiltrated these countries and established allies with militia in these countries whom they recruit and collaborate with in carrying out cross-border terrorist activities. Attacks on villages, abductions and suicide bombings characteristic of Boko Haram activities have become a frequent occurrence in these countries. Boko Haram also exploits the porous borders to transport new recruits, arms, food and other supplies to support their activities.
The cross-border expansion of the group increases the challenge in combating their activities and poses a major security and economic threat to the sub-Saharan region. The armed forces of Niger, Chad and Cameroon have joined the force in fighting Boko Haram however; Nigeria has the very important role of sealing the loop holes in its porous borders. This will effectively cut off supply of recruits, funds, food and other needs of Boko Haram that are transported across the borders. It will also isolate the group and halt its transnational expansion as a tight border will make it difficult to carry out its activities.
Attention must also be given to aviation security especially as Boko Haram recently pledged its allegiance to IS. It is not improbable that the IS may begin to provide training, recruits and logistics support to Boko Haram and vice versa. These activities can be discovered and checked at source if airport security officials are properly trained to identify suspects or react to suspicious activities. A security watch list based on intelligence information as well as a profiling system should be implemented to identify such suspects. There should be a detailed interview system in place to screen “high risk” passengers detected through the profiling system. Although the group has yet to carry out any suicide bombings in the country’s airspace, Nigeria should be proactive and extend these security measures even to the domestic airports.
While arms and training support from the U.S is invaluable towards the fight against Boko Haram, it remains just that - “support”. Nigeria needs to first look within its military force to ensure the appropriate structure and strategy is in place in order to make the most of the benefit which military support from the U.S will provide. Beyond the arms and training, Nigeria has yet to put in place the basic foundation required to fight insurgency within its territory without which the fight cannot be won. The U.S has continued to support Nigeria in its fight against terrorism despite the limits posed by the Leahy amendment. Among the benefits of the recent visit of Nigeria’s President Muhammadu Buhari to the U.S is the proposed $2.1 billion fund from the World Bank for the re- development of the northeast battered by Boko Haram. This indicates the beginning of further support from the U.S in this war.
It is noteworthy to mention recent indications of progress on the government’s resolve to fight Boko Haram as well as position the country to receive more foreign support. Following the publication of a documentary by Amnesty International depicting human rights violations in the army, the President immediately announced that there will be a thorough investigation of allegations of abuse and torture by the military. The Buhari-led administration has also created a multiregional task-force made up of about 8,700 troops from Nigeria, Chad, Cameroon, Niger and Benin to fight Boko Haram within the region. This step is reflective of the view President Obama shared with me during our 2014 discussion on Nigeria’s fight against Boko Haram. These efforts by the government are a step in the right direction.
In acknowledgement of these positive efforts by the Buhari Administration, during my recent chat with President Obama in August, 2015, on the provision of military aid to Nigeria, President Obama said that “Buhari is a good man, a very good man and we are working on it.” As a Nigerian-American lawyer, I have collaborated with several U.S congressmen and held meetings with the United States President on this issue. I will continue to push for U.S Military assistance to Nigeria in the fight against terrorism.
Anthony O. Egbase Principal Counsel & Founder A.O.E Law & Associates Email: This email address is being protected from spambots. You need JavaScript enabled to view it. Tel: +1.213.620.7070 For full access to the publication download the below attachment.


The law on company mergers and acquisition is codified in the Nigeria Companies and Allied Matters Act of 1990. Like many sophisticated laws in Nigeria, the law on company mergers and acquisition has been largely untouched by the judiciary. There are very few decided cases in this area of the Nigerian law. In fact as noted by one pundit in an article recently in a Nigerian Newspaper, only two major Nigerian companies have merged since 1960. However, various multinational companies engaged in multi-­‐billion Naira businesses in Nigeria have availed themselves of the benefits of mergers and acquisition. 

The law Firm of Anthony O. Egbase & Associates (A.O.E Law & Associates) is an international business law firm with main offices in Lagos, Nigeria and Los Angeles, California. The Associates of the firm have among them four decades’ experience in the pre-­‐litigation and litigation of business laws ranging from companies’ merger and acquisition, companies and individual business reorganization and  liquidations. 

The Associates of the firm are licensed to practice law in multiple jurisdictions including but not limited to Nigeria, California, the Fiji Islands and six other Jurisdictions in the United States. The law firm also has close association with reputable firms in the United Kingdom and other Asian countries. 

A.O.E Law & Associates has practiced law in California for about a decade. California which remains the fifth largest economy in the world had its fair share of company mergers and acquisition with the bubble burst of the dot-­‐com venture capitalist. Against this background, A.O.E Law & Associates is willing to offer the following “bare-­‐bones synopsis” on mergers and acquisition in Nigeria. 



The following position paper which is meant for informational purposes only must not be construed as legal advice. A.O.E Law & Associates has not obtained any consent from its clients to reveal matters it has handled and thus no specific reference is made to any matter herein. 


Mergers and Acquisition   

Mergers and acquisition continue to be important and sound vehicles for corporate growth and productivity. [1] There may exist many and diverse reasons for merger and acquisitions from tax purposes, expansion, legal compliance and other business considerations but the most common reason being, the bottom line, better profits derived from more efficiency. 

This treatise seeks to look at the legal issues that may be confronted in Mergers and Acquisition, especially making the case for the Banking sector on the backdrop of the new guidelines from Central Bank of Nigeria (CBN) regarding the N25 Billion minimum capital for Banks in Nigeria. [2] At face value, it is likely that only a few, if any, banks in Nigeria currently meet that requirement. The recommended solution from the Governor of CBN which echoes what professionals and informed persons in the Corporate Business Sector have emphasized that the time has come for Corporate mergers and acquisition in Nigeria for efficiency within the Banking Sector. This treatise also ventures to offer suggestions for the best way forward. 


Definition of terms  

While this legal discourse is a serious venture, we can lighten it up with our definition of terms with a “Fish Story” to make the imagery stick. “Merger” is when two near equal fishes come together and the one fish no longer has an identity afterwards. “Acquisition” is when ‘A Big fish swallows a small fish’ and “Consolidation” [3] is ‘When two or more fishes 

contribute to become one Big Fish with a completely brand new identity’ under the law. On a serious note, the major distinguishing factor is in the resultant identity of the company and the treatment of the assets and liabilities therefrom. Fox & Fox, the American authority in this regard, have this to say:

To financial analysts, management consultants, bankers and accountants, a “merger” may be a transaction in which corporations of relatively equal size combine. An attorney would view a “merger” as a transaction in which two or more corporations combine under a state corporation law with the result that all but the one of the participating corporations loses its identity.”

“Acquisition” on the other hand, is sometimes used in the financial community to mean a transaction in which a large corporation purchases a smaller corporation. An accountant probably would call this a transaction a “purchase”. An attorney would describe any transaction in which one corporation obtains another by purchase, exchange merger, consolidation as an acquisition…

“Consolidation” is another term that is sometimes used interchangeably with “acquisition” and “merger” but should be distinguished from a “merger” or “acquisition”. A “consolidation occurs when two or more organizations are combined into one legal entity. It is distinguishable from a “merger” in that neither of the consolidated corporation survives and the target corporation ceases to exist. [4]

In the Nigerian statute,

‘“Merger” means any amalgamation of the undertakings or any part of the undertakings or interest of two or more companies or the undertakings or part of the undertakings of one or more companies and one or more bodies corporate’ [5]

Reasons for Mergers and Acquisitions

There can be many and varied reasons for the purchaser seeking to acquire other companies. These reasons may include;

To enter more profitable markets;
To diversify or expand its products;
To change the direction of its business;
To increase its ability to secure financing by increasing asset base and cash flow;
To avoid the expense of starting up in a new field or industry;
To strengthen its management;
To acquire new technologies or enhance existing capabilities;
To utilize excess plant capacity or to acquire new plants;
To increase its earnings per share by adding other companies earnings to its own.
While Sellers reasons for seeking to be acquired may include the following;

The company may not have developed managers capable of leading the business in the future;

New technological developments may have damaged its competitive position;

The company may need, and be unable to secure, new or additional financing;
Its owners may need liquid assets, such as the marketable securities of the acquirer, to pay death taxes;
Its owners may want to retire;
The company may want to block a takeover bid.

Or more importantly, there may be necessitated Merger and Acquisition situation to be in compliance with the CBN Directive, taking advantage of the carrot being offered as; "The CBN would set up a technical committee of International and national consultants to provide free consulting services to banks intending to merge or are involved in the acquisitions”.[6]


One may legitimately ask since we are in a Democracy, why do the Banks have to recapitalize? The answer is simply because that is the sensible thing to do to reposition the bonafide banks leaving behind the trading societies to conduct trade. Also in the spirit of Democracy, we can always find a middle road. It is our suggestion here that while State and Community

Banks be allowed to function under the proposed guidelines, to deal in Foreign Exchange Forex) and International Trade, these must meet the minimum capitalization guidelines.


Basic Strategic Planning

One would begin the plan for a Merger, Acquisition or Consolidation as one would the Traditional African courtship leading to the exchange of palm-­‐wine and kola-­‐nuts. Boy meets girl, boy inquires about girl. Girl is shy but curious about boy’s family background. Boy tells parents; parents make enquiries, carry palm-­‐wine and negotiate bride price based on the accrued honor of the family. Price is settled; wine exchanged, ceremony done and marriage consummated. In the case of corporate mergers in spite the various reasons, there are certain parameters that must of necessity be present. [7]



While it is true that a company is an artificial legal personality, it is still run by Directors and Managers and these real life persons have diverse ways and systems of running their business. Especially in the recent proliferation of banks with the very creative, if sometimes questionable ethical values, the issue of compatibility stands out if Banks are to contemplate a successful and profitable merger. Questions to ask to determine compatibility would be:

Why does A want to acquire Z?
Why should Z sell to A and not to B?
What is their management style?
Will the buyer relocate the headquarters and offices?
Will the seller be represented at the buyer’s board of Director?
How much freedom and responsibility will be accorded to the seller’s management after the acquisition?
What is the buyer’s acquisition “track record”?
What time frame for acquisition?[8]


Planning Considerations

There are so many issues for consideration that the team of Managers, Management consultants, auditors, accountants and attorneys would have to apply their expertise to, and these may include: Consultation, investigation and negotiation of contracts and favorable positions. Employee benefits employment and labor contracts and other management and staff benefit. Compliance to the laws, pertinent administrative rules, regulations and listing requirements. Management and legal changes to the structure of the corporation. Due diligence and disclosure issues regarding property. Resolving conflict of interest issues since management owes to the shareholders a fiduciary duty. Resolving positively the question; is the seller authorized to sell and the buyer to buy under their respective articles of incorporation?





·∙ There is a fairly wide choice in form of consideration.

·∙ Procedures are relatively simple.

·∙ Large numbers of conveyance are avoided because are made by operation of law.

·∙ No minority stock interest remains.

·∙ Certificate of incorporation can be amended as part of the transaction. Disadvantages:

·∙ Acquiring corporation assumes all of seller’s liabilities –fixed, contingent, known or unknown.

·∙ Corporate representations and warranties do not survive the closing.

·∙ Shareholders of seller and buyer may dissent and exercise appraisal rights.

·∙ Shareholders of the seller and the buyer must meet and vote in favor of a merger.

·∙ Selling corporation loses its identity


Asset Acquisition



·∙ Legal limitations on merger and consolidation can be avoided

·∙ Buyer’s directors ordinarily may approve purchase without shareholder vote (unless shares listed)

·∙ Shareholders may not have appraisal rights.

·∙ There is greater control over assumed liabilities than in mergers. Disadvantages:

·∙ Procedures are relatively complex because every conveyance must be separately made.

·∙ De facto merger doctrine may be invoked

·∙ State and local transfer taxes might be payable

·∙ Disruption of customers and suppliers is more likely than in mergers

·∙ Transaction may give rise to “bulk sales” law problems.

·∙ It may be necessary to secure consents to transfers and assignments that could have been avoided in merger.


Stock Acquisition



·∙ Procedures are simple if selling shareholder group is small.


·∙ Asset transfers and need for consents are avoided.


·∙ Appraisal rights do not arise

·∙ Transaction may be in the form of takeover bid without consent of seller’s management.

·∙ Insurance and unemployment ratings may be maintained

·∙ Transactions might be consummated faster than merger or sale of assets. Disadvantages:

·∙ Asset transfers will not be avoided if corporation acquired by purchase of stock is liquidated into its new parent

·∙ Unknown and contingent liabilities are assumed

·∙ Sellers of control may be deemed to owe fiduciary duty to minority and offer may have to be extended by purchaser to minority shareholders.

·∙ Transaction is likely to require registration with SEC.

·∙ Minority interests might remain outstanding unless all shareholders sell their stock to the purchaser


Legal Issues to be addressed


The very first to be dealt with would be the legal provision for the regulation. It goes without saying that the CBN has the legal oversight authority to dole out regulations for the Banking Sector in Nigeria. Some commentators have ventured that the guidelines, while necessary, are unduly overreaching. [9] It is our view that the law permits the CBN Governor to issue the said guidelines, and he is right to do so. While in the normal course of events, companies have re-­‐positioned for the synergy created by bigger corporate entities, the CBN Governor has boldly ventured to challenge the Nigerian Banking system to compete in a global system. N25 Billion may sound like a lot of money (and it is a lot of money) in Nigeria, but if compared to the International competitors these banks intend to do business with; it does not amount to much. Why should the CBN Governor care? Because that is part of the Governor’s job to reposition the industry to be able to compete for funds and investment from serious International players.


Banks operate only as corporate legal persons incorporated under the Companies and Allied Matters Act 1990(CAMA) in addition to any other ancillary law depending on their area of concentration. Mergers and Acquisition of companies in Nigeria is governed by Sections 590 through section 920.of the Companies and Allied Matters Act. Practically speaking, there are Negotiated acquisitions and Hostile takeovers. Here, we shall deal mainly with Friendly Negotiated Acquisitions, as indeed that was the import of the guidelines from the CBN.


The special case of Nigerian merger is that the process is backed and fully guided by statute. To the extent that any scheme, proposal for a compromise, arrangement or reconstruction between two or more companies, the court may on the application in summary way of any of the companies to be affected, order separate meetings of the companies to be summoned in such a manner as the court may direct. [10]


Successor Liability

However, in all situations, whether statutory or through asset acquisition, the issue of successor liability might come up. In the United States for instance, the courts have approached the issue of successor liability from the common law perspective through statutory legislation. The common law position is that the purchasing corporation assumes the sellers liability when

1) it expressly agrees to assume them; 2) the asset sale amounts to a de facto merger; 3) the purchaser is a mere continuation of the seller; 4) the sale is for the fraudulent purpose of escaping liability for the seller’s obligations E.g., Ruiz v. Blentech Corporation (7th Cir. 1996).[11] California law for instance contemplates the kind of situation banks may find themselves in when they merge regarding successor liability. The California product line exception provides that a company that procures a business and continues in the same line of business assumes strict liability in tort for defects in unit of the same product line previously manufactured by the acquired company. Ray v. Alad Corp (Cal 1977).[12] Note that there are some states in the USA like Michigan that has relaxed this continuity exception. which requires that the selling firm owners take stock in the purchasing firm.


The Nigerian position as codified in Section 591(5) of the Companies and Allied Matters Act 1990 seems to be in line with the common law position as reflected above.


Steps to or Formalities for Mergers


From a legal perspective, the following business steps are taken in every classic merger situation


Preliminary agreement between the lawfully authorized Management team
Issuance of a Press Release detailing the fact of the merger proposal within a time frame (this, to forestall the leak of information or insider trading)
Boards of Directors of both the Target and Acquiring Company in Resolution adopt the Merger Agreement
Both or all Companies notify their shareholders of Merger Proposals for approval by majority vote in compliance with their respective Articles of association.
In the event of a public quoted companies, notification would have to include Proxy Statements which would detail:


  1. Terms of merger


  1. Consideration to be offered (cash, stock or a mixture)


  1. Information about the companies involved


  1. Upon approval, shareholders receive an exchange of stocks for pre‐approved consideration


  1. Shareholders who opt out of the merger agreement can demand to be bought out at “fair value”.


After approval by the Shareholders by themselves or through voting by proxy, the Articles of merger filed at the Corporate Affairs Commission with a stated effective date.


On the effective date, the surviving Company takes over in law all the assets and liabilities of the Target Corporation including those that are unknown, undisclosed or unforeseen.[13]


The Need for Professional Consultants


In all successful mergers, there is a need for professional hands to be consulted. Accountants, Management Consultants and Attorney are inevitable for the corporations to properly evaluate their assets risks and to ensure a blow-­‐by-­‐blow implementation of the legal requirements. Of the three major players as with most professionals, the position of the attorney is primary.

The attorney’s role in an acquisition is threefold: First, the attorney must participate in the formulation of the business bargain so that it will comply with federal and state law. Second, he or she must coordinate all investigations and analysis so that their results will be reflected in the purchase contract. Third, he or she must document the business bargain and implement its terms.


If these functions are to be performed effectively, the advice of the parties’ attorney should be sought before or soon after negotiations have been initiated. Often, though, counsel for the buyer and the seller are called upon to prepare the contract of sale after the parties have reached substantial agreement as to the purchase price and other principal terms of the transaction. In this event the attorneys for the parties will be denied the opportunity to provide all the services they are capable of rendering. Furthermore, if the parties delay the entry of their attorneys into the negotiations, they may discover that a number of terms that they have tentatively agreed upon are unwise, illegal, unenforceable, or expensive. [ 14]




Because there can never be such a thing as a “handshake merger” or a “gentleman’s agreement” regarding the process of a merger or acquisition, lawyers, love them or hate them, are necessary and central to the process of mergers and acquisition from the very beginning when the mating dance is commenced up to the consummation when the champagne bottles are popped. The attorneys, as experts are responsible for among others:


·∙ Meetings of boards of directors of each corporation to approve tentative agreement (responsibility of counsel for respective parties)


·∙ Commencement of investigations of each party’s legal affairs (responsibility of counsel for respective parties).


·∙ Preparation of the purchase contract (responsibility for first draft usually falls on purchaser’s counsel)


·∙ Preparation of subsidiary agreements such as employment or consulting contracts (responsibility is usually that of purchaser’s counsel)


·∙ Director’s meetings to approve contracts, to authorize various acquisition steps, and to call shareholder’s meetings (responsibility of counsel for respective parties)


·∙ Execution of purchase contract (responsibility of counsel for respective parties)


·∙ Preparation of material to be filed both in court and with Securities and Exchange Commission, e.g.; proxy statement, registration statement (responsibility may fall upon either counsel)


·∙ Securing approval of deeds and mortgages by title company (responsibility of counsel for purchaser)


·∙ Publication of notices of meetings of shareholders, as required under CAMA (responsibility of counsel for respective parties)


·∙ Supervision of shareholders meetings (responsibility of counsel for respective parties)


·∙ Preparation and filing of forms for qualification of purchaser to do business in the jurisdiction seller was qualified to do business (responsibility of counsel of purchaser)


·∙ Closing (joint responsibility of counsel for buyer and seller).

[1] Fox & Fox, 2004 Corporate Acquisitions & Mergers

[2] As accessed at

[3] Although the CBN regulation does not speak of or recommend consolidation, it is our view that based on the Nigerian economic culture (where every CEO is skeptical of selling his company off on account of ego), the right option for Nigerian Banks may actually be consolidation.


[4] Fox & Fox p.15

[5] Section 590 Companies and Allied Matters Act 1990

[6] See

[7] Freud, James C. The Acquisition Mating Dance and other Essays on Negotiating 1987 Prentice Hall Law & Business Clifton NJ

[8] Fox & Fox P.1‐14

[9] Ngama, Yerima Lawan Comments on Soludo’s Consolidation of the Nigerian Banking Industry asaccessed on 7/23/04 at

BusinessDay, 7/20/04 Banking Sector Reforms: Banker Advocates Cautious Implementation as accessed on 7/23/04 at

7/22/04, New N25b Capitalisation Will lead to Forced Mergers – CRIMA as accessed on 7/23/04 at

[10] Section 591 (1) CAMA

[11] See Oesterle, Dale A. Mergers and Acquisition 2001 West Group p.93[12] p.94 supra [13] Fox & Fox p.2-­‐3


[14] Fox p. 2‐16