It takes a man who has risen to the highest of mountains to appreciate the lowest of valleys. Nigeria built ladders, got many to climb up, on merit, but we are losing that process daily now. A young lady told me here that they refused to give her graduate assistantship position she merited as the best in her class because the position, in a federal university, was reserved for the host university ethnic group. According to her, the HOD (head of department) substituted her name with the person who came 3rd!

She was evidently bitter for her nation. Who will not be? But looking at her case, the experience is the new Nigeria. At UNN, the indigenes want an indigenous professor to become the vice chancellor. In OAU Ile Ife, the same. Go to ABU, that repeats. Across the nation, we do not compete nationally but now ethnically. You just have to be the best in your ethnic group – and that is it.

Looking back I can see that things have changed badly – that ladder has been burnt, not even taken down. My greatest professional accomplishment was my HOD telling me that “Ekekwe, your job is waiting. We want you to stay back in FUTO and teach”. Sure, I declined but I was happy the offer was there. If FUTO had cut me out on any pretense of Ndubuisi being an Abian instead of an Imolite, forgiveness would be removed from my dictionary.

Nigeria – you are destroying dreams as you burn ladders for young people. Why should we be scaling bad habits? 

Nigeria – why are you leaving behind what made you great in the past? Why must you poison the minds of your future with shocks? When a nation does not believe in #merit in recruiting for those who teach, run its central bank, fix its roads, manage its water board, etc, everything will fade.

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Comment 1: There should be a place for merit and a place for quota also called affirmative action in the US. This is how countries ensure everyone is given a chance.

My Response: What the US does is not the same as what Nigeria does. The US is fixing injustice against minorities through this affirmative action calibration. Nigeria is not using its system to fix any injustice but to shock citizens. Obama possibly got into Harvard through affirmative action but became  104th president of the Harvard Law Review.

That made him among the top 1% of his class in many ways. The US system was rigged against minorities since data has shown that even though minorities may need affirmative action to ENTER, they are never the last in most of the cases. The implication is that the “merit” system is questionable since it did not pick that Obama was well qualified ahead of his white peers.

Do not put what US does to what Nigeria does because there was no tribe that was discriminated against at scale over centuries in Nigeria like the way African Americans were.

Comment 2: It has always been the underlying and undertone factor in our country in every single aspect of living. This is said with emphasis: the. factor. affecting. every. single. aspect. of. living. in. our. Country.

Quite unfortunate, if you look at it from all angles.

The solution: we need to look inward as a people, and also as a country and question ourselves truly what do we want to achieve collectively? Ask ourselves those very uncomfortable questions , come up with solutions and back it up with actions which have immediate positive or negative consequences that must be followed through by law.

Again, emphasis here on: back it up with positive or negative consequences by law which must be followed through to the letter.

We know what to do as a country, we just don’t want to do it, yet.

Comment 3: Prof this is Nigeria reality and it’s so bad that every federal and state recruitment is done based on first, ethnicity and then your religion. You can hardly get anything on merit. A look at all revenue generating agencies will buttress this. Will Nigeria ever return to those past when merit is first?

It is no secret that at different stages and situations(like overwhelming debt or the need to expand)in a company growth, certain changes might need to be carried out in the framework of a company to reflect a particular situation or decision of that company’s management.

These changes are all classified under Corporate Restructuring, which is simply the process of  significantly altering a company’s financial, operational and sometimes legal/corporate features usually as a result of financial problems in the form of overbearing debt, the need to meet up with Regulatory Compliance requirements ,as a result of a court order or the reflection of a change in the company’s ownership/operating structure, geared ultimately towards profitability and efficient operation.

Flowing from the above, this article will be dealing with the following topics:-

– The Regulatory Framework governing Corporate Restructuring in Nigeria

– The types of Corporate Restructuring in Nigeria

– A description of the sub-categories under each type class of Corporate Restructuring in Nigeria.

What is the Regulatory Framework governing Corporate Restructuring in Nigeria?

Corporate Restructuring in Nigeria is governed by the following laws and agencies:-

1. The Corporate Affairs Commission CAC through the Companies and Allied Matters Act 2020.

2. The Federal Competition and Consumer Protection Commission (FCCPC) through the Federal Compensation and Consumer Protection Act 2019.

3. The Investment and Securities Act 2007 through the Securities and Exchange Commission (SEC) and the Investment and Securities Tribunal.

4. The SEC rules 2013 through the Securities and Exchange Commission as well as the Investment and Securities Tribunal.

5. The Federal High Court of Nigeria.

What are the types of Corporate Restructuring in Nigeria?

The 2 types of Corporate Restructuring in Nigeria are:-

– Internal Corporate Restructuring.

– External Corporate Restructuring.

What are the subcategories of Internal & External Corporate Restructuring respectively?

Internal Corporate Restructuring

Under this category we have the following:-

– Arrangement & Compromise

– Arrangement on Sale

– Management Buyout

– Employee Buyout

– Share Restructuring

Arrangement & Compromise

An arrangement is any change in the rights and liabilities of a company’s members, debenture holders or creditors or any class of them in the event of a change in the company’s financial fortunes while a compromise is where a company (usually insolvent) invites its members and creditors to accept less than the value of their interests or where their rights in the company are being modified.

This process is governed by the Securities and Exchange Commission and the Federal High Court.

Arrangement on Sale

This is the process of a company going through a phoenix-like ‘death and rebirth’ by effecting through a special resolution, a members voluntary winding-up giving rise to the appointment of a liquidator to sell the company’s assets and distribute the proceeds of such a sale among the members of the company according to their rights.

Management Buyout/Employees Buyout

This is a form of Internal Corporate Restructuring which happens when a company’s management (usually the company’s directors) acquires the controlling interest/shares of the company with or without external funding in a time of the company being in financial distress.

This process usually requires:

– An application to the Securities and Exchange Commission (SEC) for approval of the buyout to be filed by the company’s management team involved in the acquisition.

– A copy of the special resolution of the shareholders of the company approving the management buyout.

– A copy of the management team to undertake the management buyout.

– A copy of the Certificate of Incorporation of the company.

– A copy of the MEMART (Memorandum/Articles of Association) of the company.

– 2 copies of the company’s prospectus.

– A copy of the sale agreement between the company and the management team.

– Any other document required by the Securities and Exchange Commission from time to time.

When this buyout process as outlined above is carried out by the employees of a company, it is called an employees buyout.

Share Restructuring

This involves altering the Share Capital of a company by either cancellation, subdivision, consolidation or conversion.

External Corporate Restructuring

Under this category we have the following:-

– Mergers & Acquisitions

– Takeovers

– Purchases and Assumptions

– Cherry-Picking

Mergers & Acquisitions

A merger is a process involving the coming together of 2 or more companies by way of an acquisition or voluntary union based on the resolutions of the management and ownership structures of the companies involved.

It should be noted that for a company to be deemed as acquiring control over another company the following must occur :-

– The purchase by one company of more than half of the issued Share capital of another company.

– The acquisition of the right to cast a majority vote in the acquired company’s general meeting.

– The ability to appoint or veto the appointment of a majority director or the other company.

– The ability to influence the policy of the other company.

Mergers come in 3 types namely:-

– Horizontal Mergers :- Which involves the coming together of two companies that are direct business competitors in the same industry e.g. 2 banks coming together via a merger.

– Vertical Merger :- This is a merger involving non-competing but complementary product/service companies e.g. Clothing Companies and Cotton/Silk farming companies.

– Conglomerate Mergers :- These are mergers involving 2 totally unrelated and non-competing companies e.g. A construction company and an electronics manufacturing company.

Mergers also come in Statutory categories based on transaction value namely:-

– Small mergers – These are mergers with a transaction value of 1 Billion Naira and below.

– Intermediate mergers – These are mergers with a transaction value of 1Billion Naira – 5 Billion Naira.

– Large mergers – These are mergers with a transaction value of 5 Billion Naira – above.

The approval of mergers are governed by the Federal Competition and Consumer Protection Commission after ascertaining the merits of the merger, most especially that :-

1. The merger will not reduce competition by way of monopoly creation.

2. The merger will not go against Public interest.

3. It will lead to technological efficiency.

Acquisitions occur when a majority or most of a company’s shares are purchased with the aim of assuming ownership of that company without creating a new company and this is a process that is commenced by the buyer filing to the SEC (through Capital Market Operators, specifically a SEC-accredited law firm & Issuing house) , an application in the form of a letter of intent.

The SEC has the statutory duty of regulating acquisitions in both public and private/unquoted companies as well as the duty of carrying out post-incorporation inspections after the approval of Acquisition applications.

Takeovers

This is where one company known as the offeror acquires enough shares of at least 30% of the share capital in another company known as the offeree to enable control of the latter while the 2 companies continue their existence as 2 different corporate entities.

Purchase & Assumption

This involves another company purchasing the liability of a failing company and assuming ownership of its assets usually at an auction price, commenced via an application to the Federal High Court for the Purchase & Assumption to be sanctioned. 

The assumed company does not go through the final winding-up process but is dissolved through a judicial sale of its assets and liabilities to the purchasing company.

Cherry Picking

This is an external restructuring option for a failing company aimed at reducing the loss of investment where the investor does not take up all the liabilities of the failing company but is allowed to inspect the books, assets, business operations/activities of the failing company with a view to cherry-picking those aspects capable of reviving to profitability levels via integration into its own business operations.

Conclusion:- Corporate Restructuring, from the above write-up, should not always be seen as a means of terminating the life of a company but as a last resort bounce-back measure geared towards managing worst-case scenarios of low profitability after prior Insolvency practice tools have been applied. You can get further guidance on the detailed procedures involved in the methods of Corporate Restructuring mentioned above from your lawyer on further consultation.

In this piece, I made a case that Nigeria and the Central Bank of Nigeria are on autopilot waiting for that miraculous Dangote Refinery to save the Naira! You may not like the idea that a nation is waiting for one man or company for its currency revival.

Yes, Nigeria waits for Dangote because only him has a credible roadmap to change the economic trajectory of his nation. His position today is very vital and critical because he could be the only cousin to make Naira stronger. Naira looks as an orphan with no one helping it to compete globally. Dangote will come to assist it to find its space in the league of global currencies. Across human history, nations rise when pioneering entrepreneurs emerge. The moment of truth is here – and Naira needs pioneers in markets to save it from the ruins of the scale of Mexico, Venezuela, Argentina and even Zimbabwe, at different times of their histories.

A great point but read the latest on the GDP: “The oil refining sector contracted by -42.12 percent in the second quarter of 2022, compared with a contraction of -46.78 percent in the same period last year. The sector has also recorded a contraction of -44.26 percent in the first quarter of 2022.” 

Simply, in the worst six performing sectors in Q2 2022 GDP, oil refining was severely bad, destroying the currency along the way! Atiku, Obi and Tinubu will continue to run the shows, but if the oil refining sector continues to show the abysmal numbers we are seeing, a political optical illusion may become evident.

While you may not like it, asking why Dangote Refinery is not up and running may be a valid campaign question right now! Yes, who can help that company move faster? Indeed, if it is well with it, many things could get better, at least when it comes to the stability of Naira/USD exchange rate.

Relax and hold your emotions: the fact is this, someone needs to deal with our unfavourable balance of payment to help Naira. Today, Dangote Group holds the ace. And I want journalists to ask Atiku, Obi and Tinubu, what they could do where possible.

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Comment: Thar refinery can become a reality in months if the Nigerian government will step aside and let the PRIVATE SECTOR function freely. KLEPTOCRACY is not a sustainable form of government.

My Response: Good point and that is why we need to ask “why is this refinery being severely delayed”.  I am waiting for many people who are betting against  the Naira to cry. But with this company yet to start operations, there is no way to actualize that.

Nigeria’s Worst Performing Sectors In Q2 2022