President Bola Tinubu has signed the Presidential Executive Order on Virtual Assets Coordination, 2026, to establish a coordinated oversight framework for Nigeria’s virtual assets industry. The Order which was made pursuant to section 5 of the Nigerian Constitution, 1999 (as amended) and which takes effect immediately, is a response to a regulatory landscape that had become fragmented across multiple agencies with overlaps and enforcement gaps that exposed Nigerians to fraud, money laundering and unchecked losses from unregulated operators.

At the heart of the framework is a new Virtual Asset Council, chaired by the Central Bank of Nigeria (CBN), with the Nigeria Revenue Service (NRS) and the Securities and Exchange Commission (SEC) as vice-chairs, and the Nigerian Financial Intelligence Unit (NFIU) and the Office of National Security Adviser (ONSA). The Council will provide strategic policy direction and work with the Attorney-General of the Federation to develop a harmonised legal and institutional framework for the sector. It will have a Virtual Asset Office domiciled in the CBN which will be its operational arm to coordinate information sharing and regulatory applications across agencies using an integrated supervisory platform.

The Order does not establish a new regulator or strip any powers from any agency and this is critically important. It is a coordination mechanism on top of the existing regime with  SEC maintaining jurisdiction over virtual assets that qualify as securities under the ISA 2025, while the CBN undertakes supervision of payment, settlement and custody services involving non-security virtual assets.  If it is not clear which regulator has regulatory jurisdiction and power over a virtual asset offering, the Council will make the decision.

The Order defines the sector’s immediate agenda. First, the CBN will introduce a regulatory sandbox to pilot virtual asset products and blockchain use cases under supervision. Second, the NRS will create a dedicated tax policy for the sector. Third, the Federal Government is currently working on finalising a Virtual Assets White Paper that will define the country’s long-term approach to the virtual assets sector. Finally, the Council has 30 days to produce a Harmonised Implementation Framework to give guidance on how agencies will apply the Order in practice.

The Executive Order, combined with the ISA 2025, represents a pivot in Nigeria’s approach to virtual assets from defining who regulates what, to ensuring that those regulators now move as one system, closing the gaps that made the sector attractive to bad actors in the first place.

Disclaimer: The information shared in this post is to provide general guidance on the subject matter and does not constitute legal advice. For guidance tailored to your organisation’s specific circumstances, contact info@goldsmithsllp.com

Nigeria’s digital payments sector grew faster than the regulatory architecture that has been built around it. Electronic transaction volumes have increased, mobile money adoption has grown and a few switching, processing and payment solutions providers are at the center of how money moves around the country. The Central Bank of Nigeria concluded that this growth created risks that its rules were not designed to deal with and in June 2026, issued a new circular focusing on data localisation, market concentration & ownership transparency in the payments sector titled “Introduction of Market Structure Requirements, Data Localisation, Ultimate Beneficial Ownership Disclosure, and Systemic Oversight Measures in the Nigeria Payments System” (the “Circular”). The Circular is issued by the CBN Payments Systems Supervision Department and was sent out to deposit money banks, microfinance banks, mobile money operators, switching and processing companies, and other licensed participants in the digital payments sector. It imposes three different sets of obligations with their own compliance timelines and real implications for how banks & fintechs structure technology, ownership and market activity in Nigeria going forward.

1. Data localisation – payment transaction data must be stored in Nigeria from 1 January 2027

All entities that process payments within Nigeria are required from 1st January 2027 to store and manage payment transaction data generated in Nigeria within Nigeria in accordance with Nigerian data protection laws. The requirement hits hardest institutions that already use offshore cloud infrastructure or cross-border data processing arrangements. For many of them, full compliance will mean new local data centre relationships/renegotiated cloud contracts and a planned data migration/migration plan. The requirement has been framed by the CBN as regulatory visibility, consumer protection and lowering operational risk of offshore data storage. It supplements, not replaces, obligations imposed by the Nigeria Data Protection Act 2023.

2. Market structure limits – concentration caps on card issuing and merchant acquiring

The Circular introduces concentration limits intended to prevent a small number of dominant operators from controlling multiple critical functions within the payments value chain. An institution with more than 25% of the card-issuing market cannot also own more than 15% of the merchant-acquiring market – and this is in reverse. Affected institutions are required to submit a monthly market share report to the CBN, which must be in full compliance by 31st December 2026 (this is earlier than the data localisation deadline & should be treated as an earlier priority for institutions assessing exposure under the circular).

3. Ultimate beneficial ownership disclosure

The Circular requires that payment system participants identify the ultimate beneficial owners of large shareholders in a way that aligns the payments supervisory framework with existing anti-money laundering and counter-terrorism financing obligations. This sits alongside and reinforces beneficial ownership register requirements for Nigerian companies in general under CAMA 2020, but it applies that requirement to the CBN in its direct supervisory relationship with the payment institutions.

Enforcement

The CBN said it will monitor compliance with this Circular closely and may levy supervisory sanctions against institutions that do not meet its requirements under applicable laws, regulations and guidance. For an industry that has so far exercised relatively light-touch oversight of things like data residency and ownership transparency in particular, this is one of those more consequential infrastructure and governance initiatives the CBN has made over the last few years in the payments space.

The Investment and Securities Act 2025 (ISA 2025), signed into law by President Bola Ahmed Tinubu in March 2025 is the most comprehensive reform of Nigeria’s capital market legislation in nearly two decades. It repealed the Investment and Securities Act 2007 and provides for a new restructured framework to accommodate new asset classes and to significantly expand the enforcement powers of the Securities and Exchange Commission (SEC) so as to align Nigeria’s capital markets with world standards.

This article highlights six changes that are important to public companies, issuers, capital market operators including virtual/digital assets businesses in Nigeria.

1. The SEC is now the primary authority for approving M&A involving public companies

The SEC now has the primary authority to approve mergers and acquisition of public companies. The Investments and Securities Act (ISA) 2025 in Nigeria reasserts the Securities and Exchange Commission’s (SEC) primary jurisdiction over public company mergers and acquisitions, following the disruption of its previous monopoly by the 2018 FCCPA. This legislation establishes a complex, dual-regulatory environment requiring simultaneous compliance for both SEC and FCCPC approvals. Advisors must recalibrate transaction strategies to navigate parallel filings and heightened regulatory coordination.

2. Digital and virtual assets are now formally regulated securities

The new ISA 2025 classifies virtual and digital assets including cryptocurrencies, tokenised securities and digital investment contracts, as securities regulated by the SEC. For FinTechs, operators of digital assets and Virtual asset Service Providers (VASPs), who have been mired in the grey area between CBN and SEC regulatory authority now have clear regulatory certainty as to their classification and the regulatory authority to be subject to in respect of licensing and their business activities. Operators must register and satisfy capital requirements and adhere to disclosure and investor protection obligations as all registered capital market operators are obligated to do.

3. Crowdfunding intermediaries are now formally recognised

The Securities and Exchange Commission (SEC) set the framework for crowdfunding in Nigeria by way of its 2021 Rule on Crowdfunding. This is now complemented by the Investments and Securities Act (ISA) 2025 which consolidates Nigeria’s crowdfunding landscape. The new law converts former regulatory guidelines into statutory law, creating a more robust legal framework for intermediaries and the protections for micro-investors. Platforms enabling raising equity or debt for retail investors should consider their registration status, operating terms and investor agreements in the light of the new legislative framework.

4. The SEC can now appoint directors to public companies

In an unprecedented expansion of its regulatory powers under the ISA 2025, the SEC can nominate independent non-executive directors to the boards of directors of public companies where it has intervened or taken regulatory action. This is material enforcement capability that the ISA 2007 did not provide for. It suggests the legislature intends to give the SEC real corporate governance intervention powers, not just ability to issue financial sanctions.

Introduction

On 10 June 2026, the CBN published an Exposure Draft of Revised Guidelines for the Licensing and Regulation of Financial Holding Companies in Nigeria. The Exposure Draft’s public consultation window ends on 9 July 2026. Among the most significant changes to the holding company framework in the draft is the move from three-pillar structures to four-pillar structures. If approved, the proposed framework would be the most significant revamp of the holding company framework since the guidelines were issued for Nigerian banking groups during restructuring away from universal banking into holding companies structures in 2014.

The proposed changes must be understood by financial holding companies, their banking and non-banking subsidiaries, shareholders, and their advisers. The comment window is brief, the required structural changes under the final guidelines have long implementation deadlines and several of the proposals including capital requirements and foreign subsidiary ownership, for example, have material implications that require modelling even before the issuance of final rules.

We outline five of the biggest proposals in the CBN exposure draft and what banking groups need to do by the time the consultation deadline passes.

1. Holding companies should not make lending decisions.

The draft guidelines limit holding companies to credit functions, restricting the company from playing any role in credit administration and approval of any subsidiary. This responds to a corporate governance issue that the CBN sees consistently across all banking groups: that the break between the holding company and operating bank, and hence between holding company management and the subsidiary bank’s lending, is functionally illusory, as holding company management does or can influence lending at the subsidiary. For those banking groups where historically holding company’s top management have been part of credit committees, or have been involved in investment decisions of the banking subsidiary, this prohibition will require that new corporate arrangements are made for the allocation of governance rights and corporate reporting lines.

2. 51% of each subsidiary is to be a minimum equity stake

Every financial holding company must have not less than 51% equity interest in all of its subsidiaries. Re-structure is required where current structures do not meet this test. The draft introduces a requirement to register holding companies as a person with significant control in the appropriate corporate authority which is a practical requirement for disclosure obligations where corporate groups have used complex sub-group structures.

3. Capital must be at least 20% in excess of the sum of minimum capital of the subsidiaries

There is a new holding company capital adequacy standard included in the draft: regulatory capital must be at least 20% greater than the sum of the minimum regulatory capital requirements of all subsidiaries. The capital implications of the requirement for a group, when that group has, or has significant plans to, have multiple regulated subsidiaries (e.g. a commercial bank, an insurance company, a fund manager, and a payment subsidiary) are potentially material and will need to be modelled against the current group capital position prior to final guidelines being published.

4. Foreign subsidiaries have to be located at the parent holding company and not the bank level.

Under the extant 2014 framework, there is an equivalence between what a Nigerian banking subsidiary may be equity-hold in a foreign-owned subsidiary. The draft reverses that: equity-hold in the foreign-owned subsidiary must flow through a holding company itself (or at most, a single-interposition holding company). For banking groups with African subsidiaries (the ownership structure of which will now flow through the Nigerian Bank), this requires that corporate restructure, regulatory approval, and the tax treatment of the transfer of the equity be conducted with immediacy. Also,any shared services have to be at arm’s length. It plugs what the CBN refers to as holes in arrangements for shared services between bank groups. Group owners have historically provided technology, compliance and operation back-up to subsidiaries in ways the CBN now considers as giving subsidiaries unfair advantages over rivals elsewhere within the group. The draft wants any shared services to operate through formal, arm’s length agreements.

5. Group customers cannot be shared without consent.

As with other regulatory frameworks, the Draft includes a clear data governance rule in the banking group framework- sharing of customer data across group entities that are closely linked without the express consent of the customer (except as permitted in NDPA 2023) is not allowed. This takes the Banking group framework in line with the NDPA and creates a compliance obligation that some will have to consider for their existing data management and technology architectures.

Introduction

IP licensing is the grant of a right to use the intellectual property, usually for a fee, royalty or other consideration. It is one of the most commercially underutilised tools available to Nigerian businesses. A trademark, established through years of investment, can generate a continuous stream of licensing revenues from franchisees, distributors or commercial partners. Software developed for internal use can be licensed to third parties in related markets. A unique proprietary method or approach distinguishing a professional services firm can be packaged and licensed into other geographies. Content developed once could generate a continuous revenue stream over its entire commercial lifespan. The primary reason Nigerian companies do not harness this value is not because the opportunity does not exist but because IP licensing is technically challenging and poorly structured licensing arrangements often create more commercial and legal problems than they solve. Nigerian IP law in this area requires strict compliance with applicable legal and regulatory requirements, and drafting errors tends to manifest themselves where their impact is most detrimental-in a commercial dispute or upon the expiry or termination of a license relationship.

In this article, we are discussing five aspects that must be addressed in any Nigerian IP licensing agreement, the most commonly encountered errors in Nigerian IP licenses, and what every company that owns valuable IP needs to know before it can licence to a third party. 

 

1. Scope

The license scope establishes precisely what a licensee is entitled to do with licensed intellectual property, and importantly what it may not do. There are two classes of risks created by under-scoping a license. Under-scoping creates an insufficient business opportunity for the licensee such that it is unable to extract the commercial value it expected. Over-scoping confers unintended rights on the licensee which could lead to exploitation of the licensed IP, adversely affecting the licensor’s interests or infringing on the licensor’s business operations and contracts. The questions every Nigerian IP license must precisely answer include: the intellectual property rights to be licensed; whether any permitted use of the IP is limited to specific uses only, or to all uses; the geographical area or territory within which a license operates; and whether any derivatives can be produced from the licensed IP, and who will be deemed to own the same. In terms of tax implications under the NTA 2025, revenue generated from Nigerian licensors’ licensing arrangements is subject to income tax rates applicable depending on company size (30% for large companies; nil for small companies with turnover below 100 million). Gains on disposal of IP assets now fall into the category of a disposal and shall be taxed as a gain to the full market value of the asset at the time of disposal rather than at a flat 10% previously applied for capital gains tax rate.

 

2. Exclusivity

The decision whether a license shall be exclusive, non-exclusive or sole is perhaps the most critical decision and commercial consideration in IP licensing, and is very often wrongly understood. An exclusive license affords the licensee exclusive rights in respect of the licensed IP to the exclusion of everyone, including the licensor, unless stated to the contrary. In the case of a non-exclusive license, the licensee is afforded a right to use the IP but may not prevent the licensor from granting equivalent or overlapping rights to third parties. A sole license sits in the middle: the licensor agrees not to license its IP to third parties, but is entitled to use the IP in its own business. The term ‘exclusive’ is frequently used incorrectly in Nigerian IP licenses where the scope of what it relates to, the territory and duration over which it subsists, are undefined. As such, the term has no precise meaning and will be interpreted more favourably to the licensee than the licensor.

Parties should also note the competition law dimension of exclusive licensing arrangements. Under the Federal Competition and Consumer Protection Act (FCCPA), agreements that have the effect of substantially lessening competition in a relevant market may be subject to scrutiny by the Federal Competition and Consumer Protection Commission (FCCPC). Exclusive licence agreements particularly those with broad territorial scope or long durations may be characterised as anti-competitive restraints, especially in sectors where the licensor holds significant market power.

Exclusivity is also crucial in determining what sublicensing rights a licensee is entitled to under Nigerian law as a licensee does not have the right to sub-license any licensed IP without the licensor’s written consent. Should the licensor permit this, the terms and conditions of sublicensing must be outlined in the agreement, including the right for the licensor to pre-approve all sublicenses before commitment and the consequences for the main license of a failed or breach sublicensing arrangement.

 

                                                                                                                                                                                                                                                                                                                                                                                                                                                

Introduction

The regulatory environment for Nigeria’s digital economy is on the cusp of its most significant shift in more than ten years. This article outlines the implications of the National Information Technology Development Agency (NITDA) 2026 policy review on businesses and the immediate steps required to achieve compliance. It is updated to incorporate recent legal and regulatory developments as of May 2026.

The NITDA Digital Economy Policy Review 2026 is an ongoing regulatory process establishing the ground rules for Nigerian technology businesses, FinTechs, software providers, digital platforms, e-commerce companies, AI developers and all other organisations leveraging digital infrastructure for the period beginning 2027. With Nigeria’s digital economy set to balloon to $18.3 billion in 2026, from $9.97 billion in 2021, the regulatory stakes for technology firms have never been higher. Under the National Information Technology Development Agency Act and the National Digital Economy Policy and Strategy, 2020 – 2030, NITDA is the principal regulator for Nigeria’s digital economy. The 2026 policy review will build upon recent advances in AI governance, data localisation and protection, the amendment of the digital tax regime, the Nigeria Startup Act 2022, the Nigeria Data Protection Act 2023 and NITDA’s expanding licensing regime. In particular, the expected passage of the National Digital Economy and E-Governance Bill which will position NITDA as a ‘super-regulator’ for Nigeria’s digital economy raises a warning flag, signalling an immediate need for all Nigerian tech businesses to achieve compliance.

In this article, we have discussed the five (5) top priority areas within the NITDA 2026 policy review and how organisations should proceed immediately.

1. AI Governance

The current regulation of AI in Nigeria has primarily drawn on general principles of the law, such as contract, data protection and product liability, rather than on AI-specific legislation. The NITDA 2026 policy review marks the end of this era. Nigeria has already launched its National AI Strategy (2024) and will likely transpose this into law via the National Digital Economy and E-Governance Bill. Subject to expected enactment in 2026, following a public hearing in November 2025, the Bill will render NITDA as Nigeria’s ‘super-regulator’ for digital technology. It will also position Nigeria as the first in Africa to establish a holistic, enforceable regulatory framework for AI. Key implications for companies deploying AI are:

• Risk-based approach and structured classification for AI systems where AI deployed in public administration, finance, automated decision-making or surveillance is subject to mandatory annual audits and stricter scrutiny or regulation;
• Mandatory licensing/registration of AI developers before AI system deployment within the Nigerian digital market;
• Organisations must explain how automated systems make decisions and disclose same to the people affected by those decisions.
• Requirement for human oversight of high-risk AI systems defined as AI systems with the potential to impact individual rights, financial standing or access to services;
• Monetary fines up to NGN10,000,000 or 2% of the AI provider’s total annual Nigerian turnover;
• A parallel framework will operate alongside the Nigeria Data Protection Commission (NDPC), which has previously announced its intent to establish AI regulatory sandboxes under the NDPA 2023.

Nigerian technology businesses using AI to automate services, for credit scoring or for fraud detection will need to assess how they implement and govern the relevant systems. Documentation will be crucial. An inventory of AI systems, their training data sources, testing procedures and human oversight mechanisms will be required by NITDA and will position companies in a stronger compliance stance.

2. Data Protection and Localisation

The Nigeria Data Protection Act (NDPA) 2023 has superseded the previous NDPR 2019 and is now directly implemented by the March 2025 General Application and Implementation Directive (GAID). The GAID, which became operative from 19 September 2025, expressly supersedes the NDPR and its Implementation Framework as the authoritative regulatory instruments.

The NDPA establishes a stand-alone enforcement authority in the shape of the Nigeria Data Protection Commission (NDPC), an enforcement agency with broad powers of investigation and penalisation. Evidence of this enforcement is already mounting; the NDPC imposed a NGN766.2M penalty against Multichoice Nigeria and a $220M fine against Meta Platforms in Q2 2025 and has also already launched 1,368 broad sector investigations into companies in the insurance, pension, banking and gaming sectors as of August 2025. The GAID sets out tiered data controller and data processor classifications based on the nature of the personal data being processed:

• Data Controller/Processors of Major Importance (DCMI/DPMI) and their sub-classifications based on an ultra-high, extra-high and ordinary high-level classifications are required to:
• Have a local Data Protection Officer registered with the NDPC.
• Undergo annual data protection audits within 15 months of operation.
• File Compliance Audit Returns (CARs) with the NDPC. The deadline for submitting CARs for 2025 was extended to 30 May 2026 and this should be viewed as an immediate priority.
• Revisit and update cross-border data transfer mechanisms to ensure compliance with formal transfer impact assessments and contractual safeguards required by the GAID.

The NITDA 2026 policy review looks set to expand existing data localisation obligations even further than mandated by the NDPA. A likely extension of what would be classified as personally identifiable information and data falling under localisation rules, will include data that touches on finances, health and government data. NITDA will likely also strengthen its audit powers of the relevant tech businesses. For any Nigerian FinTechs or tech companies utilising international cloud platforms (such as AWS, Microsoft, Google) without leveraging Nigerian-based infrastructure, the need to consider data localisation will become critical. NITDA is expected to develop an updated data classification framework which will clarify the residency requirements associated with categories of data-businesses should begin assessing likely classification categories immediately.

3. Digital Taxation

Since the Finance Act 2021 established the basis for Significant Economic Presence (SEP), a landmark piece of legislation, the Nigeria Tax Act 2025 (NTA 2025) has revised and further enhanced the rules governing digital taxes in Nigeria.  Key digital tax obligations applicable to Nigerian technology businesses and international entities with a digital presence in Nigeria include:

• Value Added Tax on digital services: Nigeria Revenue Service (NRS) may levy VAT on services provided to persons in Nigeria, even where rendered by a non-resident supplier. Where the recipient of the digital service is in Nigeria and not registered for VAT, the recipient is obliged to withhold and remit the VAT amount to the NRS under the NTA 2025.
• Withholding Tax on digital services: Software, Cloud services, technical support and similar services purchased from non-resident tech companies will attract WHT at prescribed rates, which are specified in the updated Deduction of Tax at Source (Withholding) Regulations (effective 1 January 2025). NRS has provided implementation guidelines for these regulations.
• Companies Income Tax on a significant economic presence (SEP): The NTA 2025 solidifies the existence of an SEP where a non-resident company is deriving income attributable to activities conducted within Nigeria through a digital platform, above a threshold of NGN25 million and is presumed to be deriving 6% deemed profit tax based on attributed turnover.

The Central Bank of Nigeria (CBN) framework on open banking has now transitioned from a policy document to a phased implementation. Nigeria has a comprehensive history of open banking; with the Central Bank issuing Africa’s first Open Banking Regulatory framework in February 2021, followed by the Operational Guidelines in March 2023. In April 2025, the CBN provided August 2025 as the launch date for an operation that would have seen Nigeria emerge as the first African country to launch national open banking. However, the initial launch date was deferred as the CBN stressed that a wholly automated system that offers robust data protection and stringent consumer protection mechanisms should first be in place.

By May 2026, Nigeria’s phased rollout, the implementation dates are now spread across mid-2026, confirmed in CBN’s FinTech Report which was released in February 2026. The implementation workstreams comprise 5 key areas, namely:

1. Governance & Regulation;
2. Legal & Compliance;
3. Technical & Infrastructure;
4. Data Security; and
5. Stakeholder Engagement.

Stakeholders have finalized and submitted their various deliverables in September 2025 and are currently pending review by the CBN. The Nigeria Inter-Bank Settlement System (NIBSS) has been nominated as the Open Banking Registry and will hold the public repository for all registered participants in the framework. All institutions that intend to participate will need to obtain a CBN license.

 

Legal and Regulatory Considerations for Intending Open Banking Participants

Here, we consider 5 legal questions that all banks and FinTech’s in Nigeria should now be seeking answers to, and which compliance gaps organisations in general have not addressed.

1. Do Application Programming Interface (API) Agreements meet CBN Data sharing obligations?

The legal and technical standards that apply to the application programming interfaces  that allow for the sharing of financial information under Nigeria’s Open Banking framework are not guidelines; they are mandatory requirements and should not be treated as optional. The API agreements in place between banks and technology suppliers that existed prior to the extant open banking regime were not designed with this framework in mind and most of these will not satisfy the CBN framework.

All organisations with existing API agreements should re-examine them and ensure they meet all extant requirements. The relevant questions to ask regarding every API agreement include: whether it adequately defines the categories of data allowed to be accessed and if those are consistent with the tiers prescribed by CBN data access framework; whether the security levels required of the third party supplier meet the CBN’s minimum technical specifications; what the third party supplier’s obligations would be should data breach occur, including details on notification timelines and remedies, and whether the agreement’s terms for termination effectively allow the data supplier to cease data access if the third party supplier does not comply with their obligations under the framework.

2. Are Customer Consent Frameworks Updated for Open Banking?

All data sharing arrangements under the CBN Open Banking framework will be contingent on customer consent which must be informed, specific, granular, and withdrawable. CBN has clearly stated that the open banking initiative should operate with customer ownership and control of personal data; which means that  customer should dictate who gets access to it, for how long, and must be able to revoke access at any time. Customer ownership and control over data was one of the key reasons given for the August 2025 delay.

A compliant open banking consent framework should outline; the specific data categories accessible to the third-party supplier; the purpose for which the third-party supplier would be utilizing the data; duration and frequency of third-party supplier’s access to data; customer’s right to revoke consent at any time, how that is done; and ramifications to the customer’s relationship with both bank and third-party supplier if the customer withdraws consent or withholds it.

A consent framework review should involve examining all customer-facing terms and digital interfaces where the company currently captures customer data and assesses its suitability for open banking. Where consent is not suitable for this purpose, new consent needs to be collected from existing customers before the institution’s data is shared under the open banking regime.

The legal process for restructuring is the most significant for a Nigerian company, and arguably, one that is the most often initiated incorrectly. Those who get restructuring right treat it as a thoughtful, planned process – one with clear commercial objectives and the benefit of legal advice that understands both the relevant legal and regulatory framework, and the desired business outcome. Those who get it wrong approach restructuring reactively: when time-critical, after a term sheet is signed or in the midst of a shareholder dispute that is already causing damage to the relationships the restructuring is intended to resolve. Below are the five typical triggers that can give rise to a restructuring in Nigeria: what options are available and what mistakes are the costliest when dealing with them. Please note that all references to stamp duties and other related fiscal levies apply in accordance with the Nigeria Tax Act (NTA) 2025, effective January 1, 2026.

1.  An Incoming Investor Requires a Holding Company Structure

It is quite common in Nigeria that, when dealing with private equity investors, development finance institutions or strategic acquirers, they  insist on conducting investment into a clean holding company, from which investment into the target operating company will be made. The argument for a holding company is quite clear:it gives clear access, separates investment from operating risks, and allows room for further investment, offshore subsidiaries and exiting. A restructured company will need to complete its holding structure arrangements before the close of the investment when there is a new investor already talking, a process which will likely cost more money and is more time-consuming. The following regulatory and tax procedures are needed to put in place a holding company above a Nigerian company:

• Either a share for share exchange, or a new subscription into the holding company (newly created).
• Filing with Corporate Affairs Commission (CAC) in relation to the transfer with each of the companies (if any) being transferred, and with the new holding company itself under Companies and Allied Matters Act (CAMA), 2020. Section 175 of CAMA dictates that share transfers need to be duly effected and entered into the company’s register, and as required by Section 176 of CAMA, CAC must be informed of any such transfer before it becomes effective.
• Stamp duty implications under NTA 2025 retains the exemption on shares and stock transfers. Generally, ad valorem on instruments like the shareholders’ agreements and subscription documents need to be considered under NTA 2025. If offshore entities are being used, NIPC notification might be required in addition to regulatory clearances. Under NTA 2025, there have been important changes in relation to Capital Gains Tax (CGT); it is now taxed at income tax rates (30% on the company rate, and 0% on small companies, that is, companies having less than N100 million and less than N250 million on fixed assets, respectively). CGT now applies even to offshore share sales. Where indirect foreign share transfers have taken place, a CGT charge will apply, although it is possible to obtain relief based on applicable treaties. Such issues can significantly impact the tax consequences of structuring. A company can make a deliberate and conscious decision regarding its holding company’s domicile depending on the relevant investors, sectors and countries that the company is being implemented in and operates within; these countries which include Ireland Mauritius and Netherlands can offer exemptions from double tax treaties and different treatments on the taxation of dividends.
• Nigeria Tax Act 2025’s controlled foreign company rules (CFC) which levy tax on untaxed profits from offshore subsidiary businesses, should be evaluated for all holding company choices.

2.  A Shareholder Dispute Makes the Current Structure Unworkable

No structure is ideal and shareholder disputes mean one company has become a battleground rather than a business. For co-founders who invested in an equal partnership and without reserved matters rights at inception, they have become stalemated over a major commercial decision. An early investor who failed to properly document their rights over the shares of a company might seek to impose conditions which are beyond what other stakeholders envisaged. The returning co-founder, for whom the company was always structured in an equal part despite holding no significant role, might seek a share sale based on an agreed initial valuation that no longer appears justifiable. Whatever the situation, restructures that are driven by disputes need the utmost care since they should have an immediate impact on the overall result of the disputes. Each of a share buy-back, demerger, capital reduction, or the transfer of a business into a new company has a different impact upon each shareholder, tax implications under NTA 2025 and regulatory requirements in Nigeria. The most appropriate tool will be determined based on the overall legal status of each party and the business goals being pursued through the restructure. The foremost principle is that the documentation must correctly document the arrangement agreed between the shareholders before regulatory actions can be taken. Creating additional legal risk for companies on an already fragile shareholder arrangement by attempting to justify post-facto the circumstances, rather than preceding the corporate restructuring, means there is additional legal risk.

 

 

On 1st May, Nigeria joined over 160 countries in celebrating International Workers’ Day, a public holiday that offers not just celebration, but a time for reflection. It is also a reminder of how wide the gap is between Nigerian labour law as written and the realities in many Nigerian workplaces. – This gap is not merely academic, but has real commercial consequences. For businesses that are unaware they are being targeted for unfair dismissal claims, for employees whose rights are not known, and for employers who think a one-page offer letter is sufficient for an employment contract, this article examines both sides of the employment relationship, because Workers’ Day is not about one without the other.
 

The Legal Framework: What Governs Nigerian Employment

The main legislation governing employment is the Labour Act (Cap L1), Laws of the Federation of Nigeria 2004 alongside the Employees Compensation Act, 2010, the Factories Act, LFN 2004, the 1999 Constitution (as amended) amongst others. The Act itself was passed in 1971 and has received little substantive reform since, thus, it does not adequately reflect the current realities of the modern Nigerian workplace.

Other sources of employment law in Nigeria include the Trade Unions Act Chapter T8, LFN 2004 and the National Industrial Court Act 2006 which made the National Industrial Court of Nigeria (NICN) the employment disputes court of record. In practice, however, the NICN sets the standard for how employer-employee disputes are settled in Nigeria and its judicial pronouncements in the last decade have moved decisively in the employees’ favour.

Five Things Nigerian Employers Should Audit Today

1. Your employment contracts are NOT optional

Section 7 of the Labour Act requires employers to give employees a written declaration of terms of employment within 3 weeks of engagement. Most Nigerian employers satisfy this obligation with offer letters confirming salary, job title and start date – and little else. This is legally inadequate. A legally compliant employment contract should include: probation terms & conditions; grounds for termination & procedure; discipline and grievance procedures, confidentiality & intellectual property ownership; for senior staff, non-competition obligations (which must be drafted carefully to be enforceable under Nigerian law).

An unfinished contract does not protect the employer. This creates ambiguity which courts will resolve against the drafter – the employer.

2. Wrongful Dismissal

The NIC has in a plethora of decided cases held that a fair hearing is an implied term in every employment contract in Nigeria, whether or not the contract provides for it explicitly. A company that fires an employee for gross misconduct without first investigating and without giving the employee time to respond is placing the employer at great legal risk. This is true even where the contract provides for a “termination with cause” or a “termination on notice” provision. The NICN has in several decisions required employers to exercise procedural fairness even where the substantive right to terminate is not in dispute.

Lending from development finance institutions such as the International Finance Corporation, African Development Bank, Proparco, and German Development Finance Institution, DEG, and other multilateral and bilateral development finance institutions is becoming more accessible to Nigerian businesses across sectors. There may be longer tenors, attractive pricing, or even a strategic partnership that adds credibility and capital.

However, borrowers should be aware that DFI loans are not commercial bank loans. They come with conditions, obligations and consequences that many Nigerian borrowers are not prepared for when they enter the facility agreement.

In this article, we identify the five most critical areas where DFI lending most often cause problems for Nigerian borrowers and what every borrower should know before signing.

 

1. ENVIRONMENTAL AND SOCIAL COMPLIANCE

Every major development finance institution lends under an Environmental and Social (E &S) framework – IFC Performance standards are the most common and most widely used directly (for IFC loans) or by reference (for many bilateral DFIs and funds that use IFC Standards as their benchmark). Respecting the applicable E & S framework is an obligation that goes beyond drawdown alone – it is an ongoing obligation throughout the life of the facility.

Specific E & S obligations that Nigerian borrowers most commonly fail to meet are: preparation and maintenance of an Environmental and Social Management System (ESMS) meeting the relevant performance standard; community and stakeholder engagement in accordance with DFI requirements; and reporting of adverse E1and1S incidents to the lender within specified timeframes.

Breach of E & S covenants is a default under most DFI facility agreements and DFI lenders have accelerated loans on E & S grounds. This is not a theoretical risk. By signing DFI facility agreements without understanding the E & S obligations, they are taking on a material default risk that is unrelated to their financial performance.

 

2. REPORTING OBLIGATIONS

Many times, DFI facility agreements place reporting obligations that are far more stringent than equivalent provisions in Nigerian commercial bank facilities. The typical requirements for borrowers are: an annual audited financial statement prepared under specific accounting standards (usually IFRS); quarterly management accounts are included within specified periods of each quarter; annual E & S compliance reports based on the applicable performance standard, verified by an independent E & S consultant; annual conformity certificates from the directors of the borrower show compliance with all financial and non-financial covenants. Events of default, material adverse change, or material litigation shall be made promptly known.

This creates a significant management burden that is often not realised until the first annual report cycle when the borrower is already in breach of its reporting obligations. More management time, external audit costs, and consultant costs related to DFI reporting should be budgeted by Nigerian businesses using the facility for the first time.

 

3. RESTRICTIONS ON DIVIDENDS AND RELATED-PARTY TRANSACTIONS

Restrictions on dividends and related-party transactions are typically contained in financial covenants in the loan facility agreements. Those restrictions protect the lender and they prevent value being stripped from the borrower in ways that impair its ability to service its debt obligations but they also have big commercial implications for borrowers and their shareholders.

These are some of the restrictions that Nigerian borrowers should pay attention to: dividend lock-up provisions – which may stop dividend payments entirely or limit them to a percentage of distributable profits; related-party transaction restrictions – typically, DFI approval is required for all transactions between the borrower and its affiliates that exceed a certain threshold; restrictive capital expenditure rules that may prevent the borrower from making new investments without lender consent; and they place restrictions on debt incurrence that prevent the borrower from taking on additional financial indebtedness above some level.