Legal Disclosures

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Investment & Securities Act (ISA)

The Investment and Securities Act 2007 contains comprehensive provisions on matters relating to securities and investments in Nigeria. The Act regulates mergers, acquisitions and other forms of business combination, securities transactions, including electronic transfer of registered shares, capital market operations in all their ramifications, borrowing by States, Local Government, other Government agencies and business entities, etc.

ISA provides for the establishment of:

1. Individual Investor Protection Funds (IPF) by securities exchanges and capital trade points, to compensate investors who suffer pecuniary loss from any defalcation committed by a member of a stock exchange and any directors/employees of capital market operators;
2. A nationwide scheme to compensate investors whose losses are not covered under the IPFs administered by securities exchanges and capital trade points;
3. An Investment and Securities Tribunal to settle any dispute arising from the operators of capital trade points and exchanges in Nigeria.

Expropriation

The NIPC Act of 1995 forbids nationalization or expropriation of a business or assets unless the acquisition is in the national interest or for a public purpose. In such cases, investors are entitled to fair compensation and legal redress.

Specifically, Section 25 of the Act provides that:

1.  Subject to subsections (2) and (3) of this section-

• No enterprise shall be nationalized or expropriated by any Government of the Federation;
• No person who owns, whether wholly or in part, the capital of any enterprise shall be compelled by law to surrender his interest in the capital to any other person.

2.  There shall be no acquisition of an enterprise to which this Act applies by the Federal Government, unless the acquisition is in the national interest or for a public purpose and under a law which makes provision for-

• Payment of fair and adequate compensation; and
• A right of access to the courts for the determination of the investor’s interest or right and the amount of compensation to which he is entitled.

3.  Any compensation payable under this section shall be paid without undue delay, and authorisation for its repatriation in convertible currency shall where applicable, be issued.

Nigerian Investment Promotion Commission Act

This Act established the NIPC as an investment promotion agency of the Government. NIPC is responsible for registering foreign investments in Nigeria, as well as liaising between investors and government, institutional lenders and other organisations concerned with investments.

The NIPC Act has removed the ceiling on foreign investment in Nigerian companies and introduced several positive changes such as:

• foreign portfolio investment in Nigerian-quoted companies through the NSE;
• enlargement of the modes of payment for foreign equity to include spare parts, raw materials and other business assets acquired without initial disbursement of foreign exchange from Nigeria;
• remittance of dividends and interest by guaranteeing to foreigners, the unrestricted transferability of dividends or profits (net of taxes) attributable to foreign investment in Nigeria, and capital repatriation in the event of liquidation.
• procurement and repayment of foreign loans and interest thereon by Nigerian companies without prior ministerial approval.