Entity Purchase Agreement for Nigeria

Entity Purchase Agreement Template for Nigeria

A comprehensive legal agreement governed by Nigerian law that documents the terms and conditions for the purchase and sale of an entire business entity or company. This document addresses key aspects including purchase price, payment terms, warranties, indemnities, and conditions precedent, while ensuring compliance with Nigerian regulatory requirements including CAMA 2020, Investment and Securities Act, and the Federal Competition and Consumer Protection Act. It includes detailed provisions for due diligence findings, representations and warranties, and post-completion obligations, tailored to the Nigerian business environment and legal framework.

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What is a Entity Purchase Agreement?

The Entity Purchase Agreement is a crucial document used in Nigerian business acquisitions and mergers, providing the legal framework for transferring ownership of an entire business entity. It is essential when one company or individual(s) wishes to acquire another company in Nigeria, whether through share purchase or business transfer. The agreement must comply with Nigerian legislation, particularly the Companies and Allied Matters Act (CAMA) 2020, and address specific local considerations such as regulatory approvals, tax implications, and foreign investment restrictions if applicable. This document typically includes detailed provisions on purchase price mechanics, warranties, indemnities, pre-completion and post-completion obligations, and various schedules covering aspects like assets, employees, and contracts. It's particularly important in ensuring proper risk allocation between parties and addressing specific Nigerian market considerations such as regulatory compliance, land ownership issues, and local business practices.

What sections should be included in a Entity Purchase Agreement?

1. Parties: Identification of the buyer, seller(s), and any guarantors with their full legal details

2. Background: Context of the transaction, description of the target entity, and purpose of the agreement

3. Definitions and Interpretation: Definitions of key terms and interpretation rules for the agreement

4. Sale and Purchase: Core transaction terms including the assets/shares being sold and conditions precedent

5. Purchase Price: Purchase price, payment terms, adjustments, and earn-out provisions if applicable

6. Completion: Completion mechanics, timing, and deliverables

7. Seller Warranties: Standard warranties regarding title, capacity, and business operations

8. Limitations on Seller's Liability: Limitations on warranty claims and general liability caps

9. Buyer's Warranties: Warranties from the buyer regarding capacity and funding

10. Pre-Completion Obligations: Conduct of business between signing and completion

11. Tax Covenants: Tax indemnities and allocation of tax liabilities

12. Confidentiality and Announcements: Confidentiality obligations and publicity restrictions

13. Further Assurance: Obligations to take additional steps to give effect to the transaction

14. Assignment: Restrictions on transfer of rights under the agreement

15. Notices: Process for serving notices under the agreement

16. Governing Law and Jurisdiction: Nigerian law as governing law and jurisdiction provisions

What sections are optional to include in a Entity Purchase Agreement?

1. Non-Competition Covenants: Restrictions on seller's competing activities, used when seller is an individual or operational owner

2. Employee Provisions: Specific provisions for employee transfers and protections, needed when significant workforce is involved

3. Real Estate: Specific provisions dealing with property transfers, required when target owns significant real estate

4. Intellectual Property: Detailed IP provisions, needed when IP is a key asset

5. Environmental Indemnities: Specific environmental warranties and indemnities, used for industries with environmental risks

6. Foreign Investment Provisions: Additional provisions required for foreign buyers under Nigerian investment laws

7. Regulatory Compliance: Industry-specific regulatory compliance provisions, needed for regulated industries

8. Data Protection: Specific provisions for handling personal data, required when significant personal data is involved

9. Bank Funding Provisions: Additional provisions required when purchase is bank financed

What schedules should be included in a Entity Purchase Agreement?

1. Target Details: Corporate information about the target entity

2. Properties: List and details of real estate owned or leased

3. Intellectual Property: Schedule of IP rights owned or licensed

4. Key Contracts: List of material contracts and their terms

5. Employees: List of employees and their employment terms

6. Completion Obligations: Detailed list of completion deliverables and actions

7. Warranties: Detailed warranties about the business

8. Tax Covenant: Detailed tax indemnity provisions

9. Disputed Matters: List of ongoing disputes or potential claims

10. Data Room Index: Index of due diligence materials provided

11. Disclosure Letter: Specific disclosures against warranties

12. Form of Resignation Letters: Template resignation letters for outgoing directors

13. Form of Board Resolutions: Template board resolutions for completion

Authors

Alex Denne

Head of Growth (Open Source Law) @ Genie AI | 3 x UCL-Certified in Contract Law & Drafting | 4+ Years Managing 1M+ Legal Documents | Serial Founder & Legal AI Author

Jurisdiction

Nigeria

Publisher

Genie AI

Document Type

Purchase Agreement

Cost

Free to use
Relevant legal definitions
Clauses
Relevant Industries

Oil & Gas

Financial Services

Manufacturing

Technology

Telecommunications

Real Estate

Healthcare

Agriculture

Mining

Retail

Fast-Moving Consumer Goods

Infrastructure

Energy

Transportation

Education

Relevant Teams

Legal

Finance

Corporate Development

Mergers & Acquisitions

Compliance

Risk Management

Tax

Corporate Secretariat

Strategy

Human Resources

Operations

Relevant Roles

Chief Executive Officer

Chief Financial Officer

Chief Legal Officer

Managing Director

Finance Director

Legal Director

Corporate Development Director

Head of Mergers & Acquisitions

General Counsel

Company Secretary

Investment Director

Transaction Manager

Senior Legal Counsel

Corporate Finance Manager

Due Diligence Manager

Risk Manager

Compliance Officer

Board Member

Industries
Companies and Allied Matters Act (CAMA) 2020: The primary legislation governing company operations, corporate restructuring, and business combinations in Nigeria. It provides the framework for company registration, share transfers, and corporate governance.
Investment and Securities Act 2007: Regulates securities trading, mergers, acquisitions, and takeovers, particularly important if the target entity is publicly listed or if the transaction involves securities.
Federal Competition and Consumer Protection Act 2018: Governs competition law in Nigeria, including merger control provisions and thresholds for regulatory approval of business combinations.
Nigerian Investment Promotion Commission Act: Relevant for foreign investors, as it regulates foreign investments and ownership of Nigerian businesses, including registration requirements and sector-specific restrictions.
Companies Income Tax Act: Addresses corporate tax implications of the acquisition, including transfer pricing, capital gains tax, and other tax considerations in business transfers.
Labour Act: Governs employment relationships and worker rights, crucial for addressing employee transfers and protecting worker interests during the acquisition.
Land Use Act: Important if the target entity owns land or real estate, as it governs land ownership and transfer rights in Nigeria.
Central Bank of Nigeria Act: Relevant if the target entity is in the financial sector or if the transaction involves significant foreign exchange considerations.
Nigerian Data Protection Regulation 2019: Governs the protection and transfer of personal data, relevant for due diligence and data transfer aspects of the acquisition.
Teams

Employer, Employee, Start Date, Job Title, Department, Location, Probationary Period, Notice Period, Salary, Overtime, Vacation Pay, Statutory Holidays, Benefits, Bonus, Expenses, Working Hours, Rest Breaks,  Leaves of Absence, Confidentiality, Intellectual Property, Non-Solicitation, Non-Competition, Code of Conduct, Termination,  Severance Pay, Governing Law, Entire Agreemen

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