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A Highlight of the Key Protections for Private Asset Management Companies
August 19, 2023The Bank and other Financial Institutions Act 2020 (the "BOFIA 2020") provides a number of protections for Private Asset Management Companies in Nigeria. In 2017, Nigeria's Central Bank ( the "Central Bank") proposed a legal framework for licensing Private Asset Management Companies ( the "PAMC Regulation"). Under this framework, Private Asset Management Companies are private entities licensed by the Central Bank, to buy, structure, manage and dispose non-performing loans of banks and other financial institutions in Nigeria ( "Financial Institutions").
Assignment or Transfer of License & Permit Regulations, 2023: Some Key Considerations for Investors
July 13, 2023Petrol stations, pipeline companies, products storage, gas distribution & oil refining companies are now required to obtain regulatory consent for a change of their names and for a transfer/sale of their licenses or permits (“License”)[1]. This requirement is as per the Assignment or Transfer of License and Permit Regulations, 2023. This legal update highlights some of the key considerations for investors looking to acquire shareholding or other economic interests in the downstream and midstream sector in Nigeria.
Recent Changes to the Operation of Domiciliary Accounts in Nigeria
June 20, 2023As part of efforts to unify the foreign exchange market in Nigeria, the Nigerian Central Bank recently announced changes to the operation of domiciliary accounts in Nigeria. This legal update summarizes the most recent changes to the operation of domiciliary accounts in Nigeria and provides a primer on the operation of domiciliary accounts in Nigeria. What is a Foreign Currency Domiciliary Account? A foreign currency domiciliary account is a special type of bank account available to bank customers in Nigeria. A domiciliary account is a special type of bank account because it allows the deposit and withdrawal of foreign currencies, notwistanding that the legal tender in Nigeria, is the Nigerian Naira.
Nigeria’s Central Bank Governor: Suspension & Immunity from Legal Actions – Matters Arising
June 11, 2023A number of legal issues have been thrown up in the wake of the suspension of the Governor of Nigeria's Central Bank (the “Governor”), by Nigeria’s President and the subsequent arrest of the Governor by Nigeria’s State Security Services. One of those issues, relates to whether or not the Governor can be liable, suspended or removed on account of the failure of the new currency redesign policy.[1] introduced by the Governor, on October 26, 2022. The other question that has arises is the question as to whether the President can suspend the Governor, in the absence of specific provision on suspension in the Central Bank of Nigeria Act, 2007 (the "CBN Act"). To the latter question, we answer in the affirmative.
The Quincecare Duty of Care: Lessons for Nigerian Banks & Fintechs
April 8, 2023The Quincecare duty is an implied legal duty of care placed on commercial banks, investment banks, fintechs[1] and other financial institutions (“Banks”) to refrain from executing a payment instruction where there are reasonable grounds for believing that, a payment instruction is given dishonestly or that such payment instruction is an attempt to misappropriate customer funds. Commercial banks in Nigeria may have some level of exposure to Fintech customers in view of the spate of authorised transactions and payment fraud in the fintech space. In the same vein, Fintechs may have some exposure to their own customers if Fintechs are found to be in breach of the Quincecare rule. With the Quincecare rule, English courts are essentially affirming that Banks have a role in preventing financial crime and must use reasonable care and skill in executing payment instructions on behalf of customers.
Bilateral Loan Agreements – A Highlight of Some Contractual Defences
April 7, 2023A March 2023 decision[1] by the English Supreme Court regarding a $3billion bilateral loan granted by Russia to Ukraine in 2013, highlights the application of English contract law principles to bilateral loan agreements between sovereigns. In this case, Ukraine failed and has refused to repay the bilateral loan which was due for repayment in 2015. When Russia sued Ukraine for repayment of the bilateral loan, Ukraine set up 4 defences
Nigerian Eurobonds – Key Contractual Terms and Considerations for Investors
April 3, 2023The possibility that a sovereign will default on its sovereign debt or will seek to restructure its sovereign debt to forestall the occurrence of a sovereign default, despite a perception of creditworthiness, is a very real one. When either of such events occur, the best protection for investors can often be a function of the contractual framework underpinning a Eurobond issuance as well as the legal framework governing the issuance of Sovereign Bonds. This legal update highlights some of the standard contractual terms which characterize Eurobonds issued by Nigeria[1].
Bail-in Powers of the Central Bank of Nigeria – Key Legal Issues for Bank Creditors
March 28, 2023The recent introduction by the extant Banks and other Financial Institutions Act 2020 ( the "Act") of Bail-in, as a tool for resolving bank insolvency is a critical discussion point for the comity of international lenders, lending to Nigerian banks and other financial institutions. This is especially important given the wide implications which the Nigerian regulatory construct of the Bail-in procedure has for the contractual and property rights of bank creditors. For instance, the application of a Bail-in, effectively suspends any existing judgements regarding an Eligible Instrument (defined below). By law, any such existing judgement debts becomes unenforceable by creditors against the relevant bank upon the application of the Bail-in procedure. What one finds generally, in the Act, is an extensive Bail-in framework which also provides the Central Bank Governor with wide discretionary powers.
Turnover and Control Considerations for Merger Clearance in Nigeria
March 26, 2023In a recent mergers clearance filing, which we undertook and successfully concluded on behalf of a South African Power and Infrastructure Conglomerate,[1] the FCCPC[2] agreed with our pre-notification submissions regarding the application of IFRS 10 towards the calculation of the relevant turnover. The object of the pre-notification submission, was to, amongst others, avoid double counting and to positively impact the amount payable as notification fees towards mergers clearance. Although, the subject mergers clearance was within the context of a strategic acquisition, in this update, we reflect on that engagement and highlight some of the most important points for strategic and financial investors to consider regarding the calculation of “turnover” and the legal concept of “control”. The law summarised herein, is stated as of March 2023
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