Reconstruction, Mergers, Takeovers and Compromises
Schemes, mergers and takeovers
A compromise or arrangement between a company and its creditors or members requires a court-sanctioned scheme: application to court, meeting of the class, approval by a majority in number representing 75% in value, then court sanction. CAMA 2020 also provides a merger regime: merger agreement, board approval, shareholder approval (75%), notice to creditors and the CAC, and a certificate of merger; assets and liabilities vest by operation of law.
Takeovers of public companies are governed by the SEC Code on Takeovers and Mergers and NGX rules: mandatory offer triggers, equal treatment, disclosure of dealings, and no frustrating action without shareholder approval.
Worked example
Company A merges with Company B. Each board approves a merger agreement, shareholders pass 75% resolutions, creditors are notified, and the CAC issues a certificate. A dissenting 10% shareholder cannot block the merger but may exercise dissenters' rights if the Act provides.
Traps
Confusing a scheme of arrangement (court-sanctioned, class meetings) with a merger (statutory vesting); using a simple majority; ignoring creditor notification.