Covid-19 pandemic continues to chart a devastating course all over the world leaving in its wake, a trail of illness, death, overwhelmed health institutions and crumbling economies. The index patient of Covid-19 in Nigeria was discovered in Ogun State and brought to Lagos State on the 27th day of February, 2020 and since then there has been a surge in the number of cases in the country especially in Lagos and Abuja.

In a bid to control the pandemic, the Governor of Lagos State on the 27th of March, 2020 executed the Lagos State Infectious Disease (Emergency Prevention) Regulations, 2020 (the “Regulation”) in exercise of the powers conferred on him by the Lagos State Public Health Law Cap P16, Laws of Lagos State 2015 and Section 8 of the Quarantine Act, Cap Q2, Laws of the Federation of Nigeria, 2004.

Furthermore, the Federal Government imposed a curfew on Lagos, Abuja and Ogun State with effect from 30th March, 2020 for a period of two weeks which required everyone within the affected areas to stay at home, postpone interstate travels, close down all offices and businesses except for healthcare related services and other essential services. This was further extended by another two weeks on the 13th of April, 2020. Many other states in the country also imposed similar restrictions on their states to curb the spread of Covid-19.

With respect to Lagos State, the Regulation empowers the Governor to direct the restriction of movement of persons within, into and out of Lagos State save for transportation necessary for the supply and purchase of essential services as well as movement of essential services personnel. The Regulation also empowers the Governor to regulate gathering of persons for any reason including meetings, conferences, festivals and religious gatherings except where the written approval of the Governor is first obtained for such gatherings.

Without any doubt, the restriction on movements and closure of offices and businesses has caused adverse effects on individuals, businesses and the economy as a whole. Some of these effects which many businesses are unprepared for are as follows:

Impact on Contracts in general.

Many companies will find it difficult to perform their obligations under subsisting commercial contracts. When this happens, it is important to refer to the provisions of the relevant contract to decide what to do in order to avoid potential liabilities. Most commercial contracts contain provisions for “force majeure” which is a term used to refer to supervening events such as an act of God, civil unrest, wars, strikes, etc.  This provision is usually triggered when one or both parties are unable to perform their obligations due to a force majeure event.  The peculiar circumstances of the Covid-19 pandemic and the measures put in place to combat its spread is a typical example of a force majeure event.

In contracts where force majeure is provided for, it is important for the affected party to act in accordance with the provisions of the contract to trigger same. Some contracts require that force majeure events must be declared within a specified period from the occurrence of the force majeure event otherwise the affected party may lose the opportunity to rely on same. To this end acting in a timely manner is very important.

If a contract does not contain a force majeure clause, the parties would have to agree, depending on factors such as the nature of the contract, other legal remedies available under the Laws such as suspension of the contract (which has the same effect as a force majeure) or termination of the contract where suspension is not practicable.

Impact on Employment Contracts

The restriction on movement and closure of businesses and offices will affect the cash flow of many businesses which will in turn affect the ability to pay salaries as the lock down persists.

Some businesses have been able to put measures in place that would enable their employees work remotely from home but not all jobs can be done from home and for those that can be done from home, it would eventually be difficult to sustain the volume of work required to keep the business afloat as long as the lock down persists.

With dwindling cash flow as well as the inability of the employer to provide enough work for the employee and the consequent difficulty in paying salaries, both the employer and the employee will have to agree on what to do.

It is unlikely for a contract of employment to contain a force majeure provision, but the employer and the employee can agree to alter or suspend the contract of employment to suit their peculiar needs until the resumption of normal economic activities.

A contract of employment is just like every other contract and as such can only be altered or suspended by the agreement of both the employer and the employee. Any unilateral action taken by either the employer or the employee would be considered invalid and may lead to legal liabilities. The option to terminate the employment contract can also be considered by either the employer or the employee but this must be done in accordance with the contract of employment and the law. Redundancy can also be considered by the employer, but this must be achieved through collective bargaining (where applicable) and in accordance with contracts of employment and relevant employee handbooks.

Above all, it is important for businesses to keep in constant communication with employees and to issue relevant polices for the facilitation of work during the lock down period.

Restrictions Under the Regulation

There are several restrictions under the Regulation.

Restriction on Movement: The Governor has, in accordance with his powers under the Regulation, restricted movement of persons, vehicles, aircraft and watercraft save for movement for the supply and purchase of essential services and the movement of essential services personnel. The Regulation describes essential supplies to include food, water, pharmaceutical products and medical supplies and any other essential supplies as the Governor may deem necessary. The implication of this is that people are allowed to move with no restriction for the purposes above.

Restriction on Events, Gatherings and Premises: The Governor also prohibited any gathering of more than 25 persons in line with his powers under the Regulation. This is applicable to conferences, meetings, festivals, religious services, private events, public visits etc. unless the written approval of the Governor is obtained. The Governor also ordered the temporary closure of public places such as bars, event centers, places of worship, educational institutions, markets except for markets for the sale and manufacture of food, water, pharmaceutical products, medical supplies and other places providing other essential services.

Restrictions on Trade and Commercial Activities: Similar restrictions have also been placed on trade, business and commercial activities except for essential services. is important to understand the extent of the restriction on movement.

It must be noted that any person who contravenes any of the directives given by the Governor under the Regulation is liable both under the Lagos State Public Health Law Cap P16, Laws of Lagos State 2015 and the Quarantine Act, Cap Q2, Laws of the Federation of Nigeria, 2004 and any other extant laws to a fine or imprisonment or both.


The purpose of the Regulation by the Lagos State Government is to provide a comprehensive and formidable framework and an effective emergency tool for combating the spread of Covid-19. It is therefore very important to adhere to the Regulation whilst at the same time take adequate steps to manage contractual and possible criminal liabilities during and after the lock down period.

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Chidozie Uzowulu
Principal Partner

Boluwatife Popoola

Nkechi Nduka-Odili


Mergers and acquisitions (M&A) in the oil and gas industry involves buying and selling of a business at a more complex and sophisticated level because of the hydra-headed concerns such as the sale of a whole business including the means of products production and services as well as the infrastructure that goes with it. The oil and gas sector in Nigeria has in recent times witnessed significant M&A transactions amongst indigenous oil companies, to a large extent, driven by the disposal of assets by a number of international oil companies (IOCs).

While it is settled that the most essential element of any merger & acquisition transaction is the agreement of the parties on the price to be paid, however, there remains other fundamental issues which must be settled before a deal can be effectively struck.  Also, notwithstanding each deal is unique, there is an acceptable sequence of events that most deals follow, at least to some extent. This paper will attempt a bird’s eye view of the key threshold issues involved.

Due Diligence

As it is expected, purchasers will always want to test-drive the ride before finalizing a price. While the outlines of a deal can sometimes advance quite far before due diligence is complete, at minimum “confirmatory due diligence” will be necessary at some point before money changes hands.

Some of the principal issues as far as due diligence is concerned include:

  • Confidentiality or non-disclosure agreements: Potential purchasers are usually required to agree to keep confidential any information disclosed to them. These agreements may include provisions prohibiting the purchaser from buying securities of the seller, and/or provisions preventing the poaching of employees.
  • Contracts: This begs the question: Is the seller bound by other contracts which, from a legal or business perspective, require consent before the transaction is concluded? Or which will affect the business negatively, after the conclusion of the sale?
  • Title: This covers the question, whether the seller have good ownership to its assets, especially as it concerns real estate and Intellectual Property assets? Are there assets subject to mortgages with lenders or any sort of security arrangement?
  • Employees: This in turn inquires whether the key employees can be retained by the buyer. The question centre on the following: Do they have the right to leave and be paid large settlements? Are there challenges (like different work cultures) in combining the purchaser’s work force with the buyer’s?
  • Environmental: Given the nature of the assets to be acquired, are there environmental concerns, i.e., pollution, contamination etc.
  • Litigation/Potential Liabilities: This examines whether the seller does have outstanding litigation which could lead to liability and in turn affect the business under sale? Are there other potential liabilities for, by way of example, regulatory breaches, warranties, negligence, accounting or financial misstatement or product liability?

Antitrust/regulatory approvals

M & A transactions in the oil and gas sector routinely require approvals, such as:

  • Investment and Securities Act 2007 and Securities and Exchange Commission Rules and Regulations, 2013 (“SEC Rules”): Under these laws, a determination is made whether any merger or acquisition is likely to lessen competition. Pre-merger filings and approvals are required for transactions meeting certain size thresholds.
  • The Local Content Act, 2010: This law is designed to increase indigenous participation in the oil and gas sector by prescribing a minimum threshold for the use of local services and materials and to promote transfer of technology and skill to Nigerians in the industry.
  • Regulatory: Acquisitions in the oil and gas industry requires licensing, permits and approvals for a change in ownership.


Depending on the nature of the seller’s assets and the buyer’s financial resources, financing can be a very significant element to an M&A transaction. For example, if the seller’s existing financing arrangements are to be assumed by the purchaser, the purchaser may need to negotiate with the seller’s financing parties.

On the other hand, the purchaser can explore other loan facilities with proper guidance by advisors/consultants.

Time Schedule

An M&A transaction involves a number of recognizable stages. Most of the stages may have more or less prominence depending on the way a particular deal is structured, the relationship of the parties, the financial position of the seller or any number of external factors.

From a seller’s viewpoint, the following standout:

  • Retaining advisors and consultants: This requires the retention of Legal, financial, environmental, engineering/structural and/or valuation experts.
  • Offering the target company for sale: This may possibly include steps such as soliciting bids, drafting and circulating a confidential information memorandum, as well as creating a data room to allow prospective purchasers to carry out due diligence.
  • Negotiating the deal: This includes ensuring that certain basic terms are fixed at the time of accepting a particular bid, afterwards, fleshing this out in a letter of intent or term sheet, and then finally documenting the agreed upon terms in great detail in a definitive purchase agreement.
  • Announcement: This gives the parties the opportunity to learn what the market thinks of their deal and to whether their shareholders are likely to approve the deal. It also gives the seller the opportunity to manage employee expectations.
  • Shareholder approval: This must be obtained either by way of the purchaser making a take-over bid which shareholders may accept or reject, or the target business holding a shareholder meeting at which shareholders vote upon the transaction. Depending on applicable stock exchange rules (where the purchaser is a listed company), if the purchaser is issuing shares as part of the purchase consideration, the purchaser may also need its shareholders to approve the deal. In all cases, a disclosure document, either a proxy circular for a shareholder meeting, or a take-over bid circular or directors’ circular, must be prepared and sent to the relevant shareholders.
  • Regulatory approvals: Regulatory approval applications are usually commenced following the announcement, while the applicable shareholder approval process is underway.
  • Third party consents/financing: Also at the same time, third party consents and financing arrangements, if necessary, are secured.
  • Closing: Once the above are in place, the transaction closes and the purchase price can be paid.


As noted at the beginning, M&A transactions can be complex and the timeline for a transaction is dependent on so many factors as outlined above and even more. A proper consultation with the relevant advisors will ensure that the deal is cost and time effiecient.


Written by Chinedu Aralu LLM (Aberdeen)

WHY the Acting President’s Executive Order on the Promotion of Transparency and Efficiency in the Business Environment is a welcomed development.

Executive Order on Transparency in doing business
Prof. Yemi Osinbajo


I am sure that by now you may have heard of the three executive orders signed by the Acting President, Prof. Yemi Osinbajo. I have had the opportunity of going through the text of the executive orders and for the very first time, I have the feeling that the Federal Government is directly addressing the core problems afflicting Nigeria rather than running around in circles.

The three executive orders are very important and timely but for the purpose of this post I will be commenting on the executive order in respect of doing business in Nigeria. It is no secret that one of the problems hindering the development of the Nigerian economy is the difficulty in doing business in Nigeria. The world bank has over the years consistently ranked Nigeria very low on the ease of doing business index.

One of the major constraints in the Nigerian business environment, which the executive order seeks to remedy,  is the uncertainty in dealing with Ministries, Departments and Agencies (MDAs) of the Nigerian Government. There is a lack of predictability with regards to the procedures, requirements and timelines for obtaining services (usually approvals, licenses, consents etc) from the MDAs. There is also the problem of lack of competence on the part of some officials of MDAs and the issue of lackadaisical approach towards work.

Often the stipulated procedures, requirements and timelines for obtaining services (where they exist) are usually different from what is obtainable in practice. In fact, there are situations where officers of the same agency would give different requirements and timelines for the same service. There are also instances where officers would just refuse or neglect to do their job for no reason at all. This state of confusion makes it impossible for lawyers to advise clients who require services from these MDAs with accuracy and also makes it difficult for businesses to adequately make plans and/or projections.

The executive order is very instructive and a giant step in the right direction if implemented fully. With the issuance of the new executive order, we hope to see a remarkable improvement in dealing with the MDAs.  It is expected that the issuance of this executive order will make MDAs and their officials to wake up from their slumber and realise that their actions and inactions directly affects the development of the Nigerian economy to a very large extent. There is no doubt the Acting President made the executive order from an informed standpoint being a distinguished lawyer and having actively practiced law before his election as the Vice President.

Whilst the entire content of the executive order is revolutionary when put side by side with the current business environment, I find the provision on Default Approvals very interesting. The provision is to the effect that where an agency fails to communicate approval or rejection of an application within the stipulated timeline, such an application would be deemed approved and granted. When implemented, this provision in a nutshell would ensure that the officers of MDAs would take stipulated timelines very seriously and nobody would be made to wait for approvals endlessly.

In conclusion, the importance of this executive order to the Nigerian business environment and the economy by extension cannot be over emphasized. The importance was in fact aptly summarized by the Acting President himself in his tweet on the 18th day of May, 2017 10:41 pm which states and I quote “Every time, a public servant is an obstacle to anyone seeking approvals or licenses, he/she attacks the Nigerian economy and our future”.

I do hope that the State Governors will take a cue from the Acting President and replicate the executive order at the state level.


The full text of the executive order can be found here:




Meaning of a joint venture:

A joint venture is a term that describes a commercial arrangement between two or more economically independent entities for the purposes of executing a particular business or undertaking. The commercial and legal issues that may arise in the setting up of a joint venture are vast and may differ on a case by case basis. This post will not attempt to identify all the commercial and legal issues that may arise, rather the objective here is to try and highlight some of the key commercial and legal issues that may be considered before going into a joint venture relationship.

Purposes of Joint Ventures:

There are different reasons why companies and come together to form joint ventures. Generally speaking, joint ventures are formed usually because each participant on its own lacks one or more of the resources required for the successful establishment of the business.  The participants involved therefore come together to compliment the resources of each other for the successful establishment of the business. A joint venture may also be established for the purposes of expansion of existing business or for the sharing of risks.

Legal Structure:

There are different legal structures a joint venture might take. It can be argued that some of the legal structures to be listed here are not joint ventures in the strictest sense of the word but rather alternatives to joint venture. Nonetheless, they are joint ventures in a broader sense of the word because they involve one form of collaboration or the other which results in the sharing of the resulting profits. Some of these legal structures (which are by no means exhaustive) are:

(1)  Agency Agreement

(2)  Distribution Agreement

(3)  Intellectual Property License

(4)  Franchise

(5)  Collaboration Agreement

(6)  Consortium Agreement

(7)  Partnership

(8)  Limited Liability Company

Out of all the legal structures listed above, the Limited Liability Company is by far, the most popular joint venture vehicle in Nigeria especially when the participants involved are thinking of a joint venture in the strictest sense of the word. The reasons for this are not unconnected with the inherent benefits of a limited liability company which are discussed below.

Choosing a Legal Structure:

The basic issues to be considered in choosing a legal structure are:

(i)Why? Why set up a joint venture? What are the underlying objectives?

(ii) What? What type of structure is best suitable for achieving the objectives?

(iii) Where? Where will be the physical location of the joint venture?

(iv) When? When will the joint venture be set up and will it be for a definite or an indefinite period.

(v) Who? Who are the participants to be involved? Will the legal structure of any of the participants be a hindrance to the joint venture or require particular considerations?

Notwithstanding the foregoing, there is broader spectrum of issues which must be considered especially in the planning, structure and preparation of the documentations to the joint venture.

Joint Venture Company:

As stated earlier, the limited liability company is by far the most popular joint venture vehicle in Nigeria and all over the world and as such this is the only legal structure that will be discussed in details here. The corporate structure of a limited liability company has been tried and tested all over the world and in Nigeria we have a detailed body of law and practice governing private limited liability companies. Added to this fact is that corporate participants will usually prefer to be shareholders in a company, because this is a form of business organization with which they are familiar and therefore understand.

Some of the basic features of a limited liability company which makes it very attractive as a vehicle for a joint venture are as follows:

(a)  Limited liability:

The most significant advantage of a limited liability company is the ability of the participants to limit their liabilities and losses of the joint venture business. However, the limitation of the liabilities of the participants is not always complete at the early stages of the joint venture business. This is because the participants may need to support the business at its early stage by providing guarantees and assurances to third parties.

(b)  Financial Flexibility:

In terms of general financial and tax planning, the corporate structure presents considerable flexibility through the creation of different types and classes of shares, loan capitals and different types of debentures that makes it easier for the joint venture to raise external finance.

(c)   Relationship between the Participants and Control of the Company:

The relationship between the participants and the control of the joint venture company is usually governed by the Articles of Association and usually a separate Shareholders’ Agreement which they enter into together with other related agreements like Trademark License Agreements etc. Detailed provisions relating to the control of the joint venture and its management   are usually set out in the Shareholders’ Agreement or the Articles of Association. This will cover the obligations of the participants, how the directors are appointed and removed, the powers and duties of the directors etc.

(d)  Realization of the interest of an outgoing Participant:

The goodwill of the joint venture company will belong to the company and each participant’s interest can be realized by transferring its shares which may not affect the business of the joint venture company. In practice however, there are usually restrictions to the transfer of shares and its success largely depends on the cooperation of the other participants.  The outgoing participant will have to follow the procedures stipulated in the Shareholders’ Agreement or Articles of Association in transferring its shares. This may include offering the shares first to the existing shareholders and where the existing shareholders fails or are unable to acquire the shares, the outgoing participant can then offer the shares to outsiders.


Importance of adequate Documentation:

Having decided to establish a joint venture company, the participants would be advised to spend quality time, money and effort in ensuring that the joint venture is adequately documented. This is very important to avoid misunderstandings which may ultimately lead to the premature termination of the joint venture.

A non exhaustive list of why adequate documentation should be insisted on is as follows:

(1)  To ensure that each participants obligation to each other and to the joint venture are clear;

(2)  To ensure, as far as possible, that the participants are clear as to their respective aspirations and objectives in relation to the joint venture;

(3)  To provide protection for minorities and to attempt to avoid deadlock;

(4)  To define in what circumstances the venture may be terminated and as far as practicable to provide an exit route for the participants;

(5)  To ensure the chosen structure works; etc

It is advisable to engage the services of a corporate/commercial lawyer for the purposes of drafting the documentations.




In the course of my interactions with clients I very often find that some clients do not understand the difference between being a shareholder and a director. They believe that being a shareholder is the same thing as being a director.

This misconception may be as a result of what is usually obtainable in small private limited liability companies where the promoters of the company are usually both shareholders and directors at the same time. Although there is nothing wrong with this type of arrangement under the law (especially given that it is very convenient for small private limited liability companies) there is a huge difference between shareholders and directors and a shareholder must not necessarily be a director and vice versa. Basically shareholders own the company while directors manage the company.

Another question that naturally follows after the clarification is made usually goes like this: “If we make a person who is not a shareholder a director in our company (merely because we need his skills and expertise in running the company) how does that impact on the powers of the shareholders?”  In essence the question is will the shareholders be able to control such a director? Between the directors and the shareholders who possesses the ultimate powers?

In this post we will attempt to clarify the issue regarding the status of shareholders and directors. We will also provide an insight as to the respective powers of the shareholders and directors in a company and the extent of such powers.

The Company

In this post, the word “company” simply refers to a limited liability company. It is instructive to note that a company is a legal entity that is distinct from its members (i.e. shareholders). Under the law, a company is an artificial person and for the purpose of carrying on its authorized business is deemed to have all the powers of a natural person (like you and I). The legal implication of this is that a company can, in its own name, buy properties, borrow money, sue and be sued etc.

However, being an artificial person, a company can only act through natural persons as its agents. To this end, a company acts through its members in general meetings or its board of directors or through officers or agents appointed by or under authority derived from the members in general meeting or the board of directors. This simply means that a company operates and acts through two principal organs i.e. (1) the shareholders in general meeting; and (2) the board of directors.

The relationship between the company, the shareholders and the directors is regulated by the constitution of the company which is the Memorandum and Articles of Association of the company. The Memorandum and Articles of Association has the effect of a contract under seal between the company, the shareholders and the directors and between the shareholders and the directors and as such all the relevant parties are bound to perform and observe the provisions of the Memorandum and Articles of Association as amended from time to time.

Who is a shareholder?

A shareholder of a company is any person that holds part of the shares constituting the authorized share capital of the company. Under the law a person must hold at least one share to qualify as a shareholder and is also regarded as a member of the company. The shareholders exercise their powers and make decisions in general meetings (i.e. either Annual General Meetings or Extra Ordinary General Meetings)

Who is a director?

A director is a person duly appointed by the company to direct and manage the business of the company. The responsibility of managing the day to day business of the company is vested in the board of directors unless the Articles of Association (the Articles) of the company states otherwise. Directors exercise their powers and make decisions in board meetings.

The powers of the shareholders Vs the powers of the directors:

Subject to the express provisions of the law, the powers of the shareholders in a general meeting and that of the board of directors are determined by the Articles. The shareholders can, through the Articles, delegate some powers to the directors like the power to allot shares, or to borrow money for the purpose of running the company’s business etc. The shareholders can also through the Articles restrict the powers of the directors by exclusively reserving some matters for the sole decision of the shareholders.

Notwithstanding the power of the shareholders to regulate the powers of the directors through the provisions of the Articles, there are certain powers attached to the board of directors by law which cannot be interfered with by the shareholders. For instance the shareholders can only declare dividends on the recommendation of the board of directors. Also in declaring the dividend, the shareholders have the power to only reduce the amount recommended by the directors for dividends; they cannot increase the amount recommended by the directors.

Furthermore, once the actions of the directors are in accordance with the law and the Articles, the shareholders cannot interfere with or reverse such actions. The board of directors, while acting within the powers conferred on it by the law or the Articles, is not bound to follow the instructions of the shareholders given in a general meeting in so far as the directors are acting in good faith and with due diligence.

What then happens if the shareholders are not happy with the way the directors are exercising their powers? The shareholders, in such a situation, will either wait for an opportunity to remove the director(s) whose behavior and actions are unsatisfactory or alternatively the shareholders can amend the Articles to remove such powers from the board of directors and reserve same for the shareholders.

Finally it can be argued that the shareholders have the ultimate powers basically because they have the power to appoint and remove directors from office, to regulate the powers of the directors through the Articles and to act in place of the directors where the directors neglect or are unable or unwilling to act. However, it is important to note that notwithstanding this “ultimate powers” of the shareholders, what determines at every given point in time the powers of the directors and the shareholders and the validity of their respective actions is the Articles and the law. Every power validly exercised under the Articles or the law either by the shareholders or the directors remains valid even when the Articles is later amended to provide otherwise.

7th May, 2014