Nigeria Squeeze-out Guide IBA Corporate and M&A Law Committee 2010

Transcription

1 Nigeria Squeeze-out Guide IBA Corporate and M&A Law Committee 2010 Contact Chinyerugo Ugoji ǼLEX

2 Contents Page INTRODUCTION 2 SQUEEZE-OUT RIGHTS 2 SQUEEZE-OUT PROCEDURE 2 SQUEEZE-OUT TIMELINES 3 Page 1

3 INTRODUCTION This Guide outlines the procedure and timelines for the acquisition of the shares of dissenting minority shareholders as provided for under the Investment and Securities Act, 2007 (ISA). SQUEEZE-OUT RIGHTS Squeeze-Out Rights are provided for in Section 146 of the ISA and may be exercised by an offeror who makes a takeover bid for all the shares of a particular class of shares in a target company which is accepted by the holders of up to 90% of the shares subject to acquisition. Under Section 146(2), the offeror is entitled to issue a notice (Squeeze-Out Notice) to each dissenting offeree (i.e. holder of shares in the class of shares subject to acquisition who have not accepted the takeover offer) informing him: that the takeover offer has been accepted by the holders of 90% of the shares subject to acquisition. that the offeror is bound to take up and pay for or has taken up and paid for, shares of offerees who accepted the take over bid. as to the election he is to make under Section 146(3) and the particulars thereof. of the effects of not making an election under Section 146(3) or not depositing any of the share certificates which he holds in respect of shares subject to acquisition within of receipt of the Squeeze-Out Notice. SQUEEZE-OUT PROCEDURE ISSUANCE OF SQUEEZE-OUT NOTICE An offeror may issue Squeeze-Out Notices within 1 month of becoming entitled to do so under Section 146(2). When an offeror issues Squeeze-Out Notices, he must within of doing so deposit with the target company sufficient funds to provide consideration for the shares of all the dissenting offerees. Upon receipt of a Squeeze-Out Notice, each dissenting offeree must deposit his share certificates with the target company within and make an election under Section 146(3) of the ISA. Under Section 146(3), a dissenting offeree may elect to be paid either: the same consideration per share that was paid to those shareholders who accepted the takeover bid, (Section 146(3)(a)); or a fair value for his shares as determined by a court, (Section 146(3)(b)). Any dissenting offeree who fails to make an election under Section 146(3)(b) within the prescribed period is deemed to have made an election under Section 146(3)(a). Page 2

4 PROCEDURE WHEN DISSENTING OFFEREE ELECTS UNDER SECTION 146(3)(a) When a dissenting offeree elects or is deemed to elect under Section 146(3)(a), the target company settles the transaction by issuing share certificates to the offeror and transferring the appropriate consideration to each dissenting offeree. PROCEDURE WHEN DISSENTING OFFEREE ELECTS UNDER SECTION 146(3)(b) When a dissenting offeree elects to receive fair value for his shares under Section 146(3)(b), he must notify the offeror of such election within of receiving a Squeeze-Out Notice. Failure to do so implies an election under Section 146(3)(a). Upon receipt of each dissenting offeree s notice of election, the offeror may apply to the court to fix a fair value for the shares of the dissenting offerees within of depositing the consideration for the outstanding shares. If the offeror fails to do so, any dissenting offeree may make the application instead within a further period of. Upon the application of the offeror or of a dissenting offeree or offerees, the court will make an order to fix the fair value payable for each outstanding share and the offeror and each dissenting offeree will be bound accordingly to abide such order. The target company holds both the consideration for the shares and the share certificates in trust for the offeror and the dissenting offerees, respectively, and is responsible for effecting settlement of the transactions between those parties once it is satisfied that the offeror has deposited sufficient funds for that purpose. PROCEDURE WHEN DISSENTING OFFEREE FAILS TO DEPOSIT SHARE CERTIFICATE Once the target company is aware that the offeror has made available sufficient consideration for the acquisition of all shares belonging to dissenting offerees, it must issue a notice to each dissenting offeree who has failed to deposit his share certificates within the prescribed period informing him as follows: that his shares have been cancelled; that the offeror has deposited sufficient consideration for the acquisition of the shares of all dissenting offerees; and that he will become entitled to receive consideration for his cancelled shares when he submits the share certificates to which such consideration relates. SQUEEZE-OUT TIMELINES Timeline T T +1 month Action Offeror acquires 90% of shares in target company Offeror issues Squeeze-Out Notices to dissenting offerees Page 3

5 Dissenting offeree may elect, within of receiving Squeeze-Out Notice whether to accept the offer on offeror's terms or to demand payment of fair value of his shares All dissenting offerees deposit their share certificates with the target company Offeror pays or transfers to the target company the amount of money or other consideration that the offeror would have to pay if all dissenting offerees elected under Section 146(3)(a) Consideration paid is held in trust by the target company for the dissenting offerees and paid into a bank account established for that purpose or placed in the custody of a bank 40 days 60 days T + 2 months Offeror sends to the target company a copy of every notice sent to dissenting offerees and notifies the target company of the election made by each dissenting offeree Offeror applies to court to fix fair value payable to dissenting offerees who elect under Section 146(3)(b) If offeror fails to make the aforementioned application to court to fix fair value for the outstanding shares, dissenting offeree who has elected under Section 146(3)(b) can apply to court to fix fair value Offeror sends a copy of every notice sent to dissenting offerees to the Securities and Exchange Commission Page 4