September 2026, Edition 3
According to recent data, Nigeria is one of the most closely monitored investment destinations in Africa, mainly as a result of its youthful population, rapidly digitising consumer economy, growing pipeline of mid-market companies in need of institutional capital, and its underpenetrated sectors (such as healthcare, logistics) which have caught the attention of institutional investors. Despite the foregoing, it is pertinent to note that capital does not flow on optimism alone, but where risk can be identified, priced, allocated, and, where possible, contracted away, which are fundamentally a legal exercise, not merely commercial.
This article sets out the principal legal architecture that a private equity sponsor should consider from the signing of a term sheet through due diligence, investment, ownership and the eventual exit. It highlights the principal statutes, recurring transaction risks, key contractual protections, tax considerations and exit routes. It is a general analysis and does not substitute for transaction-specific legal, tax, regulatory or financial advice.
Private equity transactions in Nigeria are regulated through a multi-layered statutory framework spanning across laws that are sector-specific and Nigerian laws related to companies, capital markets, competition, foreign exchange, dispute resolution, and tax laws. Treating any element of the statutory infrastructure as unimportant may cause severe delays or deal unenforceability at critical moments.
The primary corporate legal framework is contained in the Companies and Allied Matters Act (CAMA) 2020, which regulates company incorporation, share issuances, statutory books, and minority protections while modernizing options through single-shareholder structures, virtual general meetings, and simplified thresholds. More importantly, CAMA 2020 introduced dedicated federal frameworks for Limited Partnerships (LPs) and Limited Liability Partnerships (LLPs) (which are typically utilised by Private Equity players) administered directly by the Corporate Affairs Commission (CAC), establishing unified domestic vehicle structures as opposed to the previous regime under the Lagos State partnership laws.
The Investment and Securities Act 2025 (ISA 2025) is central where the transaction involves regulated capital-market activities, collective investment schemes, securities offerings or other activities falling within the Securities and Exchange Commission’s (SEC) regulatory perimeter. A private acquisition by a PE fund should not be assumed to require SEC approval merely because it is a private equity transaction; the precise structure and regulatory status of the fund, transaction, and target must be examined.
The Federal Competition and Consumer Protection Act 2018 (FCCPA) and the applicable merger-control regulations govern qualifying mergers and acquisitions. Depending on a transaction and applicable thresholds, an acquisition of control may require Federal Competition and Consumer Protection Commission (FCCPC) notification and approval. Further, SEC and sector-specific approvals may apply independently where a transaction falls within their respective regulatory mandates.
In addition, foreign investors should also consider the Nigerian Investment Promotion Commission (NIPC) Act and applicable immigration and investment rules, including NIPC registration and, where relevant, Business Permits and expatriate quotas. Foreign exchange requirements are governed by the Foreign Exchange (Monitoring and Miscellaneous Provisions) Act, Central Bank of Nigeria (CBN) rules, and the applicable authorised-dealer framework.
Sector-specific approvals may be required for investments in regulated industries. Depending on the target, these may involve the CBN, National Insurance Commission (NAICOM), Nigerian Communications Commission (NCC), Nigerian Upstream Petroleum Regulatory Commission (NUPRC), or other relevant regulators. Dispute resolution is supported by the Arbitration and Mediation Act 2023, while the New York Convention provides an important framework for recognition and enforcement of qualifying foreign arbitral awards, subject to applicable Nigerian law and the Convention’s grounds for refusal.
Finally, the 2025 tax reforms materially alter the fiscal framework. The Nigeria Tax Act 2025 (NTA), Nigeria Tax Administration Act 2025 (NTAA), Nigeria Revenue Service (Establishment) Act 2025 and Joint Revenue Board (Establishment) Act 2025 form the core of the reformed federal tax architecture. Several former federal tax statutes were replaced or consolidated within this framework. The reforms affect company taxation, capital gains, VAT, withholding taxes, stamp duties, tax administration and transaction modelling.
Legal structuring is not a formality that follows the commercial decision to invest; it is where a large share of a fund’s downside protection is actually built. Three questions dominate this stage; they are:
Many international funds use an offshore holding company between the fund and a Nigerian operating company for reasons including investor familiarity, governance, financing flexibility, succession planning and the ability to accommodate international co-investors. The choice of jurisdiction may also facilitate an agreed governing law or dispute-resolution framework.
An offshore HoldCo should not, however, be presented as a simple means of avoiding Nigerian tax. The Nigeria Tax Act 2025 extends Nigerian taxing rights to specified indirect disposals involving foreign entities where statutory Nigerian-value or ownership tests are satisfied. In particular, the Act contains rules concerning interests in foreign entities whose value is derived substantially from Nigerian assets or interests, including relevant look-back provisions.
Accordingly, an offshore structure should be tested for commercial substance, tax residence, beneficial ownership, treaty eligibility, anti-avoidance considerations, transfer-pricing implications, withholding-tax exposure and the Nigerian tax consequences of both direct or indirect exits. The ownership chain should also be consistent across corporate records, beneficial-ownership filings and transaction documents.
Ordinary shares are the simplest equity instrument but may provide limited downside protection. Depending on the transaction, investors may consider preference shares, convertible instruments, shareholder loans or other structured securities. The legal characterisation of each instrument matters because it can affect corporate approvals, securities regulation, tax treatment, withholding taxes, conversion mechanics and enforcement. Where preference shares or convertible instruments are used, the terms should be reflected consistently in the subscription or purchase agreement, the company’s constitutional documents and, where relevant, the constitutional documents of an offshore holding vehicle.
A PE sponsor/investor needs to ensure that their corporate filings of the target company are up to date to the extent of confirming its CAC status and statutory records, amending the memorandum and articles where necessary, completing NIPC investment registration for foreign participation, obtaining any applicable Business Permit or expatriate quota, establishing appropriate banking arrangements, ensuring that foreign capital inflows are properly documented through the authorised-dealer and electronic Certificate of Capital Importation (eCCI) process, completing Nigeria Revenue Service (NRS) and relevant State tax registrations, obtaining sector-specific approvals and making FCCPC, SEC or other regulatory filings where legally required.
