Cross-Border Mergers & Acquisitions In Nigeria: Key Legal Risks And Compliance Trends For International Investors

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.

Footnotes

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.

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.