182 OLADELE/ADELEKE: CORPORATE RESTRUCTURING AND RESCUE IN NIGERIA: [2009]I.C.C.L.R. 

The Legal Intricacies 
of Corporate 
Restructuring and 
Rescue in Nigeria 
0.0. OLADELE* AND M.O. ADELEKE** 
~ Acquisitions; Debt restructuring; 
Mergers; Nigeria; Receivership; Takeovers 
Introduction 
Companies may be compelled to restructure their 
operation, assets and organisational forms so as to 
solve a real or potential problem, or achieve effi- 
ciency. Economic development may also necessi- 
tate corporate restructuring. Restructuring could 
take the form of reconstruction, mergers, acquisi- 
tions and other forms of business combinations. 
These have the potential of conferring on the 
companies involved the strategic advantages of 
hedging against competition. They also help the 
companies to enhance their share of the mar- 
ket and shareholders' value through economies 
of scale, economies of scope and other economic 
creativity. 
While corporate restructuring may help a 
company to remain a going concern, a company 
that faces an intractable threat to its substratum 
may opt for receivership to rescue it from the 
extreme option of winding-up. 
This article appraises the current law on corpo- 
rate restructuring in Nigeria with an emphasis on 
mergers and takeovers as well as the rescue option 
of receivership. In Nigeria, the Investments and 
Securities Act (ISA)1 together with the Securities 
and Exchange Commission Rules and Regulations 
(SEC Rules and Regulations made pursuant to the 
* LL.B.; LL.M (Ife); LL.M (Georgetown, Washington D.C.); 
MDiv. (Th.) (N.B. T.S., Ogbomosa); Ph.D. (Ife); Barrister of 
the Supreme Court of Nigeria, Acting Head, Department 
of Business Law, Obafemi Awolowo University, Ile-I]e, 
Nigeria; ooiadeie@oauife.edu.ng. 
** LL.B; LL.M (Ife); Barrister of the Supreme 
Court of Nigeria; Lecturer, Department of Business 
Law, Obafemi Awoiowo University, Ile-I]e, Nigeria; 
mikeadeieke2003@yahoo.com. 
1. Laws of the Federation of Nigeria 2007. 

ISA) regulate mergers and takeovers. The Com- 
panies and Allied Matters Act (CAMA)2 regulates 
company receivership. 
This article also appraises the socio-economic 
and political goals of the anti-monopoly or 
anti -competition inhibition provisions of the 
ISA in merger and takeover authorisation, and 
concludes that the goals are more of competitors' 
protection interventionism based on "deliberate 
industrial policy" than a purely laissez-faire 
motive purposed for consumer benefit. Employing 
the American regulatory model as a tool for 
comparative analysis, the article argues in favour 
of the prevention of harm to competition with the 
ultimate goal of achieving a productive efficiency 
for price reduction in the consumers' interest." 
In taking this position, the article recognises 
the compelling and contextual need to promote 
small and medium enterprises. Thus it urges 
that the regulators strike a balance between 
efficiency and competitiveness on the one hand 
and protectionism on the other hand. 
Merger 
The ISA defines "merger" as: 
" ... any amalgamation. of the undertakings or any 
part of the undertakings or interest of two or 
more companies or the undertakings of part of the 
undertakings of one or more companies and one or 
more bodies corporate"." 
The target company ceases to exist, and the sur- 
viving company takes over the assets, liabilities, 
rights, and, possibly, the employees of the target 
company. 
A merger may take place through the purchase 
or lease of the shares and other assets of 
the target company or through other forms of 
amalgamation." 
Types of mergers 
Globally, mergers could take any of the following 
forms: 
•	horizontal mergers that involve amalgama- 
tions of direct business competitors; 
2.	Cap.C.20 Laws of the Federation of Nigeria 2004. 
3.	For a cursory appraisal of the American and European 
Union models of merger regulation, see Aditi Bagchi, 
"The Political Economy of Merger Regulation" (2005) 
50(1) American Journal of Comparative Law 1. 
4. Investments and Securities Act 2007 s.119(1). The 
repealed Investments and Securities Act, Cap.124 of the 
Laws of the Federation of Nigeria 2004 had no definition 
of "merger". However, r.227(1) of the SEC Rules and 
Regulations made pursuant to the Act defined it as "any 
amalgamation of the undertakings or interest of two or 
more companies and one or more bodies". 
5. ISA s.119. 

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•	vertical mergers that involve companies or 
firms in non-competitive relationships, but 
in the same industry; these occur where 
a manufacturing company merges with its 
source of raw materials; or 
•	conglomerate mergers covering all other 
types of mergers." 
Under the ISA, mergers could be any of three 
types, namely: 
1.	a small merger of the lower threshold value 
or below the capitalisation value of NGN 
500,000,000; 
2.	an intermediate merger resulting in a 
capitalisation that falls between the lower 
threshold of NGN 500,000,000 and the 
upper threshold capitalisation of NGN 
5,000,000,000; or 
3.	a large merger of a minimum capitali- 
sation of the upper threshold of NGN 
5,000,000,000.7 
Reasons for mergers 
•	Two or more companies may come together 
for the strategic advantage of economies of 
scale. By so doing, they may rationalise 
duplicated wastefulness. 
•	Reduction in the operating costs of compa- 
nies through elimination of duplicated pro- 
ductive and management functions. 
•	Enhancement of competitiveness and expan- 
sion of the companies' product and service 
range. 
•	Creation of a stronger company with 
enhanced competitive ability and increased 
prospects for shareholders' returns. This has 
the congenital advantage of enhancing eco- 
nomic development. 
•	Meeting regulatory/sector requirement." 
Procedure for mergers 
In negotiated and mutual mergers, the boards of 
directors of the company would have met and 
6. Atedo N.A. Peterside, "Mergers and Acquisitions: 
The Nigerian Experience" in Securities and Exchange 
Commission (ed.), Stimulating corporate growth through 
mergers and acquisition, proceedings of a seminar on 
mergers and acquisitions organised by the Securities 
and Exchange Commission in conjunction with the 
Association of Issuing Houses of Nigeria (Abuja: 
Securities and Exchange Commission, 2004), p.25. 
7. ISA s.120. The minimum threshold capitalisations 
shall be the paradigm until the SEC fixes new ones under 
s.120(1)(a). 
8. See generally Peterside, "Mergers and Acquisitions" 
in Stimulating corporate growth through mergers and 
acquisition (2004), pp.26-27. 

passed resolutions authorising the mergers. Then 
the procedures in ss.122-127 of the ISA and rr.231 
to 237 of the SEC Rules and Regulations must be 
followed, namely: 
•	Small merger: the parties to a small merger 
may not notify the SEC of the merger or 
its implementation unless the SEC requires 
them to do so. However, they may volun- 
tarily inform the SEC of the plan and its 
implementation." Keep in mind, however, 
that the SEC may compel the parties to inform 
it of the appropriate form of the merger 
implementation if, within six months of its 
commencement, the SEC is of the opinion 
that the merger is harmful to competition or 
public interest. 
•	The parties must cease to proceed with 
the merger until the SEC appraises the 
merger and approves it conditionally or 
unconditionally. After the SEC's approval, 
the parties to the merger must submit it to 
the Federal High Court for its approval." 
The SEC has 20 days" to signify its approval 
under s.122(5) of the ISA. If it fails to do 
so, the merger will be deemed to have been 
approved subject to the conditions in s.127. 
•	Intermediate and large merger: the parties 
must notify the SEC of the merger plan and its 
implementation. They must also give notice 
in the prescribed form to the affected trade 
unions, or the employees (if there are no trade 
unions) of the acquiring firm and the target 
firm." The parties to these types of mergers 
must not implement them until the SEe has 
given its approval." 
•	Large merger: the ISA requires the SEC to 
refer a notice of a larger merger to the Federal 
High Court, and to inform the court within 
40 days of the referral of the SEC's approval, 
conditional approval or prohibition. 
•	For all mergers, the SEC may investigate the 
legal, social and economic implications. It 
may also ask for more information from the 
parties involved or from any other person 
that may also freely give sworn information." 
The SEC may revoke its conditional or uncon- 
ditional approval of a merger on a number of 
grounds provided for in s.127 of the ISA. These 
are where the approval has been obtained on the 
bases of wrong or deceitful information, or where 
9. ISA s.122. 
10.	ISA s.122(3)-(6). 
11.	The SEC may, by notice to the parties, extend the 
period of approval for 40 days. 
12.	ISA s.123. 
13.	The procedure for notification to the parties of 
approval and disapproval is in s.125 of the ISA. 
Notification is made through the Official Gazette. 
14. ISA s.124. 

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the condition precedent has not been fulfilled by 
the parties. 
Challenges facing mergers 
The challenges that mergers face include: 
•	loss of jobs resulting from elimination of 
duplicated positions or tasks; 
•	possible loss of control by the existing 
majority shareholders of target companies; 
•	resistance by the employees, shareholders, 
labour unions and directors of the target 
company". 
•	regulatory concern that the emergent large 
corporate entities may result in monopolies 
or stifle fair competition. 
Defensive tactics in mergers 
A target company may, among other things, do 
any of the following to resist a proposed business 
combination: 
•	buy a business that heightens the chances 
that the proposed merger will give rise to 
competition-lessening or monopoly problems." 
It is significant, however, that antitrust or 
competition law is just emerging in Nige- 
ria with the power of the SEC to prohibit a 
merger that is harmful to competition; 
•	acquire a business that requires a difficult 
government approval; or 
•	look for a "White Knight", that is, look for a 
more congenial suitor to merge with." 
Intellectual property issues in mergers 
In mergers and acquisitions, it is important to con- 
sider intellectual property issues. Intangible assets 
could represent a large portion of a company's 
market value. Consider the scenario below. 
The failure to appreciate and consider the 
intellectual property portfolio in the early stages 
of an M & A transaction can prove to be a costly 
oversight. In 1998 Volkswagen purchased Rolls 
Royce Motor Cars Group from Vickers PIc, paying 
£493 million for the Rolls Royce business (only 
a third of which was net tangible asset value). 
15. Peterside, "Mergers and Acquisitions" in Stimulat- 
ing corporate growth through mergers and acquisition 
(2004), p.27. 
16. Panter v Marshall Field & Co 646 F. 2d 271 (7th Cir. 
1981). 
17. Robert W. Hamilton, Corporations, 4th edn (St Paul, 
Minn.: West Publishing Co, 1997), p.409. 

Only after the completion of the transaction did 
Volkswagen realise that the Rolls Royce trade 
mark had not actually been acquired in the sale, 
as it belonged to another company, Rolls Royce 
PIc.18 
Therefore in mergers it is important to: 
" ... (1) identify what the intellectual property assets 
are; (2) confirm ownership of those assets; (3) ensure 
that those assets are valid and free from any defects 
or encumbrances; and verify that those assets can be 
transferred" .19 
Tax issues in mergers 
Tax issues arise in mergers. For example, s.25(12) 
of the Companies Income Tax Act provides: 
"No merger, takeover, transfer or reconstruction of 
the trade or business carried on by a company shall 
take place without having obtained the [Federal 
Inland Revenue] Board's direction and clearance 
with respect to any tax that may be due and payable 
under the Capital Gains Tax Act." 
Section 32A of the Capital Gains Tax Act provides 
that: 
"A person not shall be chargeable under this Act 
in respect of any gains arising from the acquisition 
of the share [sic] of a company either merged with 
or taken over or absorbed by another company as 
a result of which the acquired company losses its 
identity as a limited liability company, provided that 
no cash payment is made in respect of the shares 
acquired." 
Competition-lessening or monopoly 
issues in mergers 
Antitrust regulation is just emerging with the 
enactment of the ISA of 2007. Thus the SEC is 
enjoined to approve a merger or acquisition if and 
only if it is satisfied, among other things, that it 
is not likely to cause a substantial restraint or 
lessening of competition." In reaching a decision, 
the SEC must assess: 
" ... the strength of competition in the relevant 
market, and the probability that the company, in the 
market after the merger, will behave compressively 
or cooperatively taking into account any factor that 
is relevant to competition in the market, including: 
(a) the actual and potential level of import 
competition in the market; 
18. Rohan Massey, "Intellectual Property Considera- 
tions in Merger and Acquisition Transactions" [2008] 
1.c.c.L.R. 245. 
19. Massey, "Intellectual Property Considerations in 
Merger and Acquisition Transactions" [2008] l.C.C.L.R. 
245. 
20. ISA s.121(1)(a). 

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(b) the case of entry into the market, including 
tariff and regulatory barriers; 
(c) the level and trends of concentration and 
history of collusion, in the market; 
(d) the degree of countervailing power in the 
market; 
(e) the dynamic characteristics of the market, 
including growth, innovation, and product 
differentiation; 
(f) the nature and extent of vertical integration 
in the market; 
(g) whether the business or part of the business 
of a party to the merger or proposed merger 
has failed or is likely to fail; and 
(h) whether the merger will result in the removal 
of an effective competition't." 
[Ilf it appears [to the SEC] that the merger is 
likely to substantially prevent or lessen competition, 
[the SEC shall] then determine: 
(i) whether or not the merger is likely to result 
in any technological efficiency or other pro- 
competitive gain which will be greater than 
and off-set the effects of any prevention or 
lessening of competition that may result or is 
likely to result from the merger and would not 
likely be obtained if the merger is prevented; 
and 
(ii) whether the merger can or cannot be justified 
on substantial public interest grounds by 
assessing the factors set out in subsection 
(3)."22 
The policy behind mergers evaluation as stated in 
the provisions of the ISA are not only interven- 
tionist, but also protective of the competitors, the 
ability of national industries to compete in inter- 
national markets and the competitiveness of small 
businesses. The ISA therefore envisages an inter- 
ventionist regime that would ensure efficiency, 
that is, technology-based and scientific economies 
of scale and the "ability of small businesses to 
become competitive"." 
While efficiency could lower prices in favour 
of consumers, the protection of small businesses 
while at the same time ensuring large-scale 
and efficient production is a challenge that 
the Nigerian regulators will have to address. 
This challenge assumes much more significance 
because Nigeria promotes small and medium 
enterprises to create employment. 
The provision of the ISA that requires the SEC 
to consider in authorising a merger "the ability of 
small businesses to become competitive" appears 
21.	ISA 5.121(2). 
22.	ISA s.121(1)(b). Subsection (3) of this section 
obligates the SEC: 
"to consider the effect that the merger will have on: 
(a) a particular industrial sector or region; 
(b) employment; 
(c) the ability of small businesses to become competitive; 
and 
(d) the ability of national industries to compete in interna- 
tional markets." 
23. ISA 5.121(3). 

to share the same philosophical thrust as the US 
Sherman Act passed by the Congress in 1890. 
The thrust of the latter statute was to favour and 
protect "small businesses and entrepreneurs ... 
against the 'encroaching economic leverage' of 
larger competitors, even if the result was increased 
costs to consumer"." It is significant, however, 
that the passing of the Sherman Act faced a strong 
opposition from a group in the US Congress that 
argued that "collusion" could sometimes lead to 
fair pricing and consumer benefit. 25 
The US Congress, in passing the Sherman Act, 
opted for "industrial liberty" at the expense of 
favourable consumer prices." "'Liberty' meant 
freedom from market power"," a thing that 
"was a property of producers not consumers"." 
American Congressman William Mason gave 
voice to this policy direction during the debates 
on the Sherman Act when he said that: 
" ... [T]rusts have made products cheaper ... but if 
the price of oil, for instance, were reduced to one 
cent a barrel, it would not right the wrong done to 
the people of [America] by the 'trusts' which have 
destroyed legitimate competition and driven honest 
men from legitimate business enterprise.r''" 
The provision of s.121(1)(a) of the ISA is similar 
to the provision of s.7 of the Clayton Act of 
the United States, and tlie philosophical thrusts 
of both are protective of competing producers 
at expense of consumers. The latter provision 
prohibits mergers and acquisitions: 
" ... where in any line of commerce or in any activity 
affecting commerce in any section ofthe country, the 
effect of such acquisition may be substantially to 
lessen competition, or to tend to create monopoly't.P" 
An informed opinion of a scholar on the US 
competition policy states that the competition 
statute was: 
" ... written in the explicit language of 'competition' 
. .. [Gone] was concern about industrial liberty 
and the rhetoric of 'small dealers and worthy 
men.' Gone was the explicit commitment to a 
political economy founded on tenets associated 
with a commonwealth of communities populated 
by an independent, roughly equal citizenry. In its 
24. Kenneth Hamner, "The globalization of Law: 
International Merger Control and Competition Law in 
the United States, the European Union, Latin America 
and China" (2002) 11 J. Transnat'l 1. & Pol'y 385, 396. 
25. Rudolph Peritz, Competition Policy in America, rev. 
edn (1996). p.18. 
26.	Peritz, Competition Policy in America (1996). p.15. 
27.	Peritz, Competition Policy in America (1996), p.17. 
28.	Bagchi, "The Political Economy of Merger Regula- 
tion" (2005) 50(1) American Journal of Comparative Law 
1,21. 
29. Thomas Dilorenzo, "The Origins of Antitrust: An 
Interest-Group Perspective" in Robert Himmelberg (ed.), 
The Rise of Big Business and the Beginnings of Antitrust 
and Railroad Regulation, 1870-1900 (1994), pp.70-71. 
30. 15 USC §18 (1994). 

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place stood growing admiration for the genius of 
large-scale enterprise, apprehension about the power 
of majoritarian government, and commitment to a 
federalist vision of free markets supervised by federal 
courts and agenciesv.!' 
The Nigerian merger guidelines, in providing 
some paradigms by which the SEC is to evaluate 
a proposed merger, follows a path similar to 
the one charted by the United States. In the 
latter jurisdiction, the Federal Trade Commission 
and the Department of Justice must first delimit 
the relevant product market for each corporate 
entity in the proposed merger. If they have the 
same markets, the regulatory authorities have 
to examine their concatenation levels and their 
likelihood to lessen competition. The authorities 
will then consider the ease with which other 
companies may enter the market in the future, 
real or potential financial risk of one of the parties 
to the merger, and the efficiencies, if any, that the 
merger may engender." 
In evaluating and authorising mergers, the 
Nigerian regulators will have to strike a balance 
between the protection of small businesses and 
national industries and the influx of cheaper 
foreign goods that often sound a death knell for 
small businesses and national industries and their 
competitiveness. 
Industry-specific issues 
The Insurance Act, for example, requires the 
approval of the National Insurance Commission 
(NAICOM) for the amalgamation or merger 
of insurance businesses. In the same vein, 
certain classes of insurance businesses such 
as life insurance and workmen's compensation 
insurance require the approval of the Federal High 
Court. 
Takeover or acquisition 
"An acquisition is the take-over by one company 
of sufficient shares in another company to give the 
acquiring company control of the target company.t''" 
The ISA defines "takeover" as "the acquisition 
by one company of sufficient shares in another 
company to give the acquiring company control 
over that other company"." In effect, acquisition 
and takeover mean one and the same thing. 
Sections 131-151 of the ISA make extensive 
provisions on takeover bids and their regulation 
31.	Peritz, Competition Policy in America (1996). p.l0. 
32.	57 Fed. Reg. 41,552 (1992). amended 1995. 
33.	Peterside, "Mergers and Acquisitions" in Stimulat- 
ing corporate growth through mergers and acquisition 
(2004). p.25. 
34. ISA 5.117. 

by the SEe. By virtue of s.135, persons making 
a takeover bid must sign the bid and submit the 
same to the SEC for its approval. The SEC shall 
approve such a bid that meets the requirements 
of subss.H) and (2) of s.133 of the ISA. The latter 
section specifies the procedure to be followed in 
dispatching a takeover bid to the shareholders of 
the target. It is significant that a bid must be sent to 
at least 20 shareholders of the target or whatever 
minimum of members that the SEC may from time 
to time prescribe. In the alternative, the bid may 
be sent to the holders of at least 51 per cent of the 
issued and paid-up shares of the target." However, 
a bid shall not be made to acquire the shares of 
a company with fewer than 20 members" or the 
shares of a private company." 
No persons shall make a takeover bid unless 
the SEC has granted an authority to proceed with 
the bid, and the authority to proceed remains in 
force at the date of the bid." The SEC's authority 
shall remain in force: 
" ... for the period of three months following the 
date of authority; or ... for such longer period as 
the Commission may, on an application made to it 
before the expiration of the period ... allow". 39 
In deciding: 
" ... whether or not to' grant an authority to proceed 
with a takeover bid, the [SEC] shall have regard only 
to the likely effect of the takeover bid if successfully 
made: 
(a) on the national economy of Nigeria; and 
(b) on any policy of the Federal Government with 
respect to manpower and development, and 
if the Commission is satisfied that none of the 
matters referred to [above] would be adversely 
affected, it shan grant an authority to proceed 
with the proposed takeover bid, but if not so 
satisfied it shall refuse to do so" .40 
If the SEC refuses to authorise the bid, the 
applicants may apply to the Investment and 
Securities Tribunal for a judicial review of the 
SEC's decision." 
A takeover bid by a company requires a 
prior approving resolution of its board, failing 
which every defaulting director is guilty of an 
offence, and is liable to a fine of not less than 
NGN 100,000, or a term of imprisonment for 
12 months, or to both the fine and the term of 
imprisonment." Likewise, a takeover bid made 
without a subsisting authorisation of the SEC, or 
35.	ISA 5.133(3). 
36.	ISA 5.133(3). 
37.	ISA 5.133(4). 
38.	ISA 5.134(1). 
39.	ISA s.8(a) and (b). 
40.	ISA 5.134(6). 
41.	ISA 5.135(4). 
42.	ISA 5.137. 

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without its registration, is an offence. The bid 
maker is: 
" ... liable on conviction to a fine of not less than 
N100,OOO or to an imprisonment for a term not 
exceeding twelve months or to both such fine and 
imprisonment"." 
In a situation where the offeror (takeover bidder) 
has successfully secured 90 per cent of the 
shareholding of the offerees in the target company, 
the dissenting offerees have the option to demand 
a fair value for their shares under s.147 ofthe ISA. 
The offeror has recourse to the Federal High Court 
to fix the fair value for the shares. 
Receivership 
Recei vershi p is a form of bankru ptcy that calls for 
the preservation of the corporate entity's assets 
and the management of its business for the benefit 
of its creditor and owners. 
A receiver is a court-appointed person who 
takes possession of, but not title to, the assets and 
affairs of a business or estate that is in a form 
of bankruptcy called receivership or is enmeshed 
in a legal dispute. The receiver collects rents and 
other income and generally manages the affairs 
of the entity for the benefit of its owners and 
creditors until a disposition is made by the court." 
A receiver includes a manager." 
Part XIV, consisting of sS.387-400 of the 
Companies and Allied Matters Act (CAMA)46 
regulates receivership in Nigeria. Sections 387, 
388, 389 and 400 provide for the appointment of 
a receiver, his duties, powers and liability. 
Why appoint a receiver for a company? 
A receiver may be appointed for a company: 
•	to enable persons who have rights over the 
property ofthe company to obtain the benefit 
of those rights and to preserve the property 
until realisation of the rights; 
•	to preserve the property from some danger 
that threatens it. The danger could include 
damage or dissipation by the persons in 
control of the company; 
43.	ISA s.151(1). 
44.	John Downes and Jordan Elliot Goodman (edsl, 
Dictionary of finance and investment terms (Hauppauge 
NY: Barron's Educational Series Inc, 1998), p.498. See 
also Abbas v Ajoge (1996) 4 N.W.L.R. (Part 444) 596. 
45. Companies and Allied Matters Act; Cap.C.20 Laws 
of the Federation of Nigeria 2004 s.567. 
46. Cap.C.20 of the Laws of the Federation of Federation 
of Nigeria 2004. 

•	to preserve the property of the company 
during a deadlock arising from inability to 
hold meetings of the company." 
Who appoints a receiver and when? 
A creditor of a company may apply to court to 
appoint a receiver in the following circumstance: 
"Where an application is made to court to appoint a 
receiver on behalf of the debenture holder or other 
creditors of a company which is being wound up by 
the court, an official receiver may be appointed. "48 
Section 389 of the CAMA provides that the court 
may, on the application of a person interested, 
appoint a receiver or a receiver and manager of 
the property or undertaking of a company if: 
•	the principal money borrowed by the com- 
pany or the interest is in arrears; or 
•	the security or property of the company is in 
jeopardy. 
A receiver or manager so appointed by the court: 
" ... shall be deemed to be an officer of the court and 
not of the company and shall act in accordance with 
the directions and instructions of the court". 
A receiver may also be appointed out of court, 
that is, under the instrument executed by the 
debenture holders or other creditors of the 
company. In such a situation, he is "deemed to be 
an agent of the person or persons on whose benefit 
he is appointed" .49 
Every receiver or manager must within 14 
days of his appointment notify the Corporate 
Affairs Commission (CAC) of the appointment. 
The notice must contain information on his 
remuneration and other particulars such as 
invoices, order for goods and other documents 
relating to the administration of the company 
under receivership." 
Duties and powers of a receiver 
A receiver, subject to the rights of prior incum- 
brancers, has the following duties: 
•	To take possession of and protect the 
property of the company. Where he is also 
a manager, he has the duty to manage the 
business or undertaking of the company 
47. See Ejiofor v Onwuagba (1997) 11 N.W.L.R. (Part 
529) 451. 
48.	CAMA s.388. 
49.	CAMA s.390(1). 
50.	CAMA s.392. 

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for the beneficial realisation of the security 
of those on whose behalf he has been 
appointed. 51 
•	To receive the rents and profits due to the 
company and discharge all out-goings in 
respect thereof. 
•	Where a receiver is appointed by debenture 
holders for the whole or substantially the 
whole of the company's property, he shall 
also be entitled to exercise not only the 
powers conferred on him by the debentures, 
but also all the powers in Sch.ll to the 
CAMA insofar as they are not inconsistent 
to the powers in those debentures." The 
powers include the right to take possession 
of the company's property and dispose of 
the property by private contract, the power 
to borrow money on the security of the 
company's property, the power to refer 
disputes relating to the company's property 
to arbitration, the power to execute deeds 
and, to appoint agents to do those things he 
is unable to do himself. On the whole, he 
has authority to do anything suitable to the 
achievement of the object of his appointment. 
•	Just like a liquidator, a receiver or manager 
may call up the company's uncalled capital. 
He may also make arrangements and com- 
promises on behalf of the company. He may 
present or defend a petition for winding up 
the company and do all such things as are 
incidental to the exercise of his powers. 
•	He stands in a fiduciary relationship to the 
company, and must observe the utmost good 
faith towards the company in all transactions 
conducted on its behalf." 
•	He is required at all times to act in what 
he believes to be in the best interest of 
the company's assets, advance its business 
and promote the purposes for which it was 
formed." Here, regard has to be had to the 
interests of the special class of members or 
creditors for whom he has been appointed. 
•	He is required to act in a manner in 
which a faithful, diligent, careful and ordi- 
narily skilful manager would act in the 
circumstances. 55 
On the appointment of a receiver or manager, 
all the powers of the directors or liquidator 
are automatically vested in him until he is 
discharged." However, in a creditor's voluntary 
winding-up, the liquidator or an officer of the 
court is not bound to transfer the property of the 
51.	CAMA s.393(2). 
52.	CAMA s.393(3). 
53.	CAMA s.390(1). 
54.	CAMA s.390(2)(a). 
55.	CAMA s.90(2)(b). 
56.	CAMA s.393(4). 

company in his custody to the receiver or manager 
except by the order ofthe court." 
A receiver or manager is accountable to the 
CAC, the debenture holders on whose behalf 
he has been appointed and to the court where 
appointed by it. Where the receiver has been 
appointed out of court, that is, by an instrument, 
the CAC performs the functions that the court 
performs in the case of an appointment by the 
court. The certification of the receiver is done here 
not by a verified affidavit but through a statutory 
declaration. 58 
For, and in, the performance of his duties: 
•	The receiver is entitled to receive from the 
company within 14 days of his appointment 
a statement of the statement of the affairs to 
enable him assess the state of the company's 
finances." 
•	Within two months of the receipt of the 
company's statement, the receiver must 
forward a copy of it and his own situation 
report to the CAC or the court as the case 
may be and to the company. He must 
also send the same to the trustees where 
they have been appointed for the debenture 
holders." 
•	The receiver is required to render annual 
accounts to the" CAC, the company and 
trustees from the 14th month after his 
appointment or at such other extended 
period as the court may authorise.?' 
•	A receiver or manager appointed under 
an instrument must deliver to the CAC 
for registration an abstract of the finan- 
cial affairs of the company, showing the 
receipts and payments by him during the 
preceding six months and for every sub- 
sequent six months. He must deliver the 
first one within one month after the end 
of the first six months. On cessation of 
his office, he must deliver the abstract 
within six months, showing the aggregate 
of his receipts and payments during his 
tenure." 
Liabilities of receivers and managers 
In general, the Supreme Court held in Abina 
v Tika- Tore Press" that a receiver stands in 
fiduciary position. Thus he may be liable for 
breach of his duties and for infringing the law 
57.	CAMA s.393(5). 
58.	CAMA s.397(4). 
59.	CAMA s.396(1)(a). 
60.	CAMA s.396(1)(c). 
61.	CAMA s.396(2). 
62.	CAMA s.398(1). 
63.	Abina v Tika-Tore Press [1968] A.L.R. Camm. 425. 

(2009J r.c.c.i,a., ISSUE 5 © 2009 THOMSON REUTERS (LEGAL) LTD. AND eo TRIBUTORS 

OLADELE/ADELEKE: CORPORATE RESTRUCTURING AND RESCUE IN NIGERIA: [2009jl.C.C.L.R. 189 

governing his appointment. His liability may be 
categorised into three, namely: 
1.	In the case of breach of duties, he is liable to 
compensate the creditors for any loss they 
have suffered. 
2.	In contract a receiver or manager shall be 
personally liable on any contract entered 
into by him except if the contract otherwise 
expressly provides. However, on contracts 
entered into "for the proper performance 
of his functions", he shall be entitled 
to an indemnity in respect of liability 
thereon out of the property over which he 
has been appointed to act as receiver or 
manager, subject to any prior incumbrancer. 
A receiver or manager appointed out of court 
shall likewise be entitled to indemnity he 
has contracted with the express or implied 
authority of those appointing him." 
3.	The receiver or manager is also liable for 
criminal sanction for breach of duties and 
statutory provisions. He may be fined NGN 
25 to NGN 50 for every day the default 
continues, or be imprisoned for up to six 
months in some cases." 
Who may be a receiver or manager? 
A person is qualified to be a receiver or manager 
if he is not: 
•	an infant; 
•	a person declared to be insane by a competent 
court; 
•	a body corporate; 
•	an undischarged bankrupt (except with 
the leave of the court that adjudged him 
bankrupt); 
•	a director or auditor of the company under 
in receivership; or 
•	a person convicted of any offence involving 
fraud, dishonesty, official corruption or 
moral turpitude and a person who has been 
disqualified from being a director under 
s.254.66 
Where an appointment has been made in contra- 
vention of the provision above, the appointment 
is void and the person shall be guilty of an offence 
and liable to imprisonment for a term not exceed- 
iris six months or to a fine not exceeding NGN 
o 
500. The culpable body corporate shall be liable 
to a fine not exceeding NGN 2,000.67 
64.	CAMA 5.394. 
65.	See CAMA 55.396(7), 398(2), 397(5) and 387(2). 
66.	CAMA 5.387(1). 
67.	CAMA 5.387(2). 

Remuneration of receivers 
The court fixes the remuneration of receivers and 
managers. Where the appointment is out of court, 
the court may, on the application of the company 
or of the liquidator of a company, by order fix the 
remuneration." 
Conclusion 
Corporate restructuring and rescue are intricate 
procedures that require the input oflegal, account- 
ing and other business professionals as well as 
painstaking application of their skills. The law in 
this area is dynamic, and will continually pose 
new challenges. In mergers and takeovers, Nige- 
rian rezulators face the contextual challenges of 
o 
fashioning an industrial policy that will ensure 
competitive efficiency of companies for the benefit 
of consumers and the protection of small busi- 
nesses as a deliberate politico-industrial policy. 
The balancing of these interests must promote eco- 
nomic development and employment, and ensure 
that consumers benefit from fair pricing of goods 
and services. 
It is significant, however, that most large 
mergers of recent times are negotiated and mutual, 
not hostile, as well as made pursuant to sector 
requirements. They have occurred largely in the 
financial sector to improve service delivery and 
enhance economic growth. While it may be too 
early to completely evaluate the socio-economic 
and political impacts of the mergers, they have 
posed challenges in the area of employment 
creation and the future of small businesses. At 
the same time, they seem to have enhanced 
service delivery and competition in that sector. 
Regulators should continually learn from these 
in order to give Nigeria and Nigerians beneficial 
policy direction. 
The corporate rescue option of receivership 
is a strategic fallback position for companies 
in financial difficulty. The law on the subject 
is, for the time being, substantially adequate. 
The practice, however, is just growing, but 
given the dynamism of corporate insolvency, 
fresh challenges will continually task the parties 
and regulators. The capacity of the receivership 
procedure to rescue the company and its creditors 
depends partly on transparency and candour in 
corporate governance and disclosure, as well as 
the capacity of the creditors to discover and use 
information. 
68. CAMA 5.395(1). 

[2009J I.C.C.L.R.. ISSUE 5 © 2009 THOMSON REUTERS (LEGAL] LTD. AND CONTRIBUTORS