UNIT 12

BUSINESS RECONSTRUCTIONS

Business reconstruction refers to the reorganization of a company's structure, operations, or finances to improve its efficiency and profitability. This may involve activities such as debt restructuring, asset reallocation, or corporate reorganization. See section 711-715 which provides for procedures for mergers, acquisitions, and other forms of business combinations and section 102-105 which provides for regulations on the alteration of share capital during reconstructions. See also the case of African Petroleum Plc v. FHB Limited (2012) which highlighted the procedural requirements and the need for proper documentation in business reconstructions. The types of business reconstructions include the following;

1. Financial reconstruction: this is done by adjusting the financial structure of the company, such as reducing or rescheduling debt.
2. Operational reconstruction: this is done by changing the operational aspects like management processes or production methods.
3. Organizational reconstruction: this is done by modifying the company's structure, including mergers, demergers, or spin-offs.

MERGERS

A merger is the combination of two or more companies into a single entity, with one of the companies ceasing to exist and the other continuing under its original name or a new name. See sections 711-716 of CAMA 2020 which outline the process and requirements for mergers and the Investment and Securities Act (ISA) 2007 which provides additional regulations for mergers, especially regarding the role of the Securities and Exchange Commission (SEC). See also the case of UBA Plc v. Union Bank of Nigeria Plc (2006) which dealt with the regulatory approval process for mergers. Mergers can be horizontal which is between companies in the same industry, it can be vertical, that is, between companies at different stages of production and can also be conglomerate, which is between companies in unrelated businesses. The procedure for mergers includes the following;

1. Board approval: this is the initial approval by the boards of directors of the merging companies.
2. Due diligence: this is the comprehensive analysis of the companies involved.
3. Shareholder approval: this is the approval by the shareholders of each company.
4. Regulatory approval: this is done by obtaining consent from regulatory bodies like the SEC.
5. Implementation: this is done by finalizing the merger and integrating the companies.

TAKEOVERS

A takeover occurs when one company acquires control of another company, either through a friendly acquisition or a hostile bid. Take overs can be friendly which is agreed upon by both companies, it can be hostile, that is, the acquiring company goes directly to the shareholders or fights to replace management to get the acquisition approved and it can be reversed, where a private company acquires a public company. See sections 118-123 of the ISA 2007 which cover regulations and procedures for takeovers, including mandatory takeover bids and Rule 445 of the SEC Rules and Regulations which provides additional guidelines for takeovers. See also the case of Oando Plc v. ConocoPhillips (2014) which focused on the regulatory requirements and due diligence necessary for takeovers in Nigeria. The procedure for takeovers includes the following;

1. Preliminary negotiations: this is the initial discussions between the companies.
2. Offer: this is where the acquiring company makes an offer to the target company's shareholders.
3. Acceptance: this is where the shareholders accept the offer.
4. Regulatory approval: this is where SEC approval is required for the takeover.
5. Finalization: this is done by completing the acquisition and transferring control.

DEFUNCT COMPANIES

A defunct company is a company that has ceased operations, is no longer active, or has been dissolved. This can be caused by insolvency, that is the inability to pay debts, voluntary liquidation which is the decision by shareholders to dissolve the company, or regulatory action which is the compulsory winding up by a court order. See sections 407-425 of CAMA 2020 which cover the winding-up process for defunct companies and the Companies Winding-Up Rules 2001 which provide additional procedural guidelines. See also the case of Re: Savannah Bank of Nigeria Ltd (2009) which addressed the procedures and legal considerations in winding up a defunct company. The procedure for winding up includes the following;

1. Petition: this is done by filing a winding-up petition in court.
2. Court order: this is done by obtaining a court order for winding up.
3. Appointment of liquidator: this is where a liquidator is appointed to oversee the process.
4. Asset realization: this is where the liquidator sells the company's assets.
5. Debt settlement: this is done by paying off creditors.
6. Dissolution: this is the official dissolution of the company.

CONCLUSION

These notes provide a comprehensive overview of business reconstructions, mergers, takeovers, and defunct companies within the Nigerian legal context, incorporating relevant cases and statutory sections to ensure clarity and specificity.