Corporate Finance and Restructuring: Capital Raising, Mergers and Acquisitions
What the exam tests
This domain tests how companies raise equity and debt, the regulatory consents involved, and the secretarial steps in mergers, acquisitions and schemes of arrangement.
Core rules
- Equity routes: initial public offering, offer for subscription, rights issue, private placement and bonus issue. Public offers require SEC approval and a prospectus containing prescribed disclosures; private placements must respect the articles and any member approval requirements.
- Debt routes: bank facilities, bonds and debentures. Security must be registered as a charge within 90 days, and a trustee is required for debentures offered to the public.
- Acquisitions take three main forms: share purchase (buying control from shareholders), asset purchase (the company keeps its liabilities) and statutory merger. Schemes of arrangement require shareholder approval by the requisite majority and court sanction.
- CAMA 2020 provides a merger framework with CAC approval; the Federal Competition and Consumer Protection Commission must be notified where merger thresholds are met, and sector regulators such as the CBN or NCC must consent where applicable.
- Secretarial steps: board resolutions, due diligence, shareholder approval, regulatory filings, completion, updating the register of members, issuing new certificates and updating the register of charges.
Worked example
A company acquires a rival by issuing new shares to its shareholders. The board needs authority to allot; if the authority is exceeded, member approval is required; if structured as a merger, a special resolution and CAC approval follow. The FCCPC is notified if thresholds are met. Post-completion, the secretary files the return of allotment and updates the register of members.
Traps
Treating an asset purchase as a merger that transfers liabilities; assuming shareholder approval alone suffices without FCCPC or sector consent; overlooking SEC approval for a public offer; forgetting charge registration after debt-funded acquisitions.