The Court of Appeal recently held that the Tax Appeal Tribunal has jurisdiction to adjudicate tax-related disputes. The appellants in the case successfully argued that the tribunal's jurisdiction to determine tax disputes does not encroach on the exclusive jurisdiction of the Federal High Court, as bringing tax appeals before the tribunal is merely a condition precedent to approaching the court. Further, the tribunal's decisions can be reviewed and quashed by the court.
The Nigerian aviation industry has the potential to contribute in excess of 5% to the nation's gross domestic product and support over 1 million jobs. Nigeria's recent achievements and Level 3 rating in the state safety programme implementation process have positioned the country to become a travel hub. However, the inherent challenges facing the industry must be addressed before this status can be achieved.
The Nigerian business aviation industry has the potential to expand significantly as the economy grows and diversifies, but some issues must be addressed in order to maximise results. As such, the business aviation industry needs an effective policy that will harness its potential and attract more foreign investment, as well as address safety and national security concerns.
The Civil Aviation Regulations were first promulgated in 2006 in order to establish national requirements that align with the Civil Aviation Act 2006. The regulations were most recently amended in 2015, following a review by the Nigerian Civil Aviation Authority which aimed to align the regulations with recent amendments to the standard and recommended practices contained in the Chicago Convention on International Civil Aviation and industry observations.
Over the years, questions have arisen as to the effectiveness and profitability of Nigeria's bilateral air service agreements (BASAs) for the country's economy. It is apparent that certain BASAs have been negotiated or renegotiated without extensive consideration of the commercial elements required for the industry to experience the proposed targeted benefits of such agreements. Further, there has been little emphasis on the economic realities which Nigeria is facing.
The International Civil Aviation Organisation (ICAO), in conjunction with the Nigerian Civil Aviation Authority, recently commenced implementation of the Africa-Indian Ocean Plan Aerodrome Certification Project for two of Nigeria's 26 airports. The benefits of ICAO certification are considerable – for example, it will help the government to achieve its aim of attracting investors into Nigeria by boosting the country's aviation safety rating.
The Central Bank of Nigeria (CBN) has started 2017 on a bullish note by overseeing the valuation of the naira. In addition, the CBN has intervened in the foreign exchange market in an effort to narrow the significant gap between the official exchange rate and the parallel market rate. This seems to be working, but it remains to be seen how sustainable it will be in the long term.
The Central Bank of Nigeria (CBN) recently lifted its peg on the naira. Despite the CBN's decision to float the naira, which in effect is a devaluation, the foreign exchange market has experienced a high rate of volatility. As such, it remains to be seen whether the effective devaluation of the naira was the right move.
In January 2016 the Central Bank of Nigeria directed all deposit money banks to commence charging their customers N50 in stamp duty charges per eligible transaction. Many are unhappy with this, as it represents an additional charge for banking transactions, and the deposit money banks have now challenged the matter in court through an appeal to the Court of Appeal.
The foreign currency exchange controls – particularly the restriction on foreign exchange cash deposits into domiciliary accounts – imposed by the Central Bank of Nigeria (CBN) last year have been heavily criticised. Relief has now come as the CBN has lifted the ban on foreign currency cash deposits in domiciliary accounts in deposit money banks and banned the sale of foreign exchange to bureau de change operators.
The Corporate Affairs Commission recently issued a circular confirming that incorporated trusts can hold shares in limited liability companies. The circular also contains guidelines regulating the holding and acquisition of such shares by incorporated trusts and not-for-profit entities.
In order to revolutionise its economy, Nigeria must formulate policies dedicated to industrial growth, as such growth can attract foreign investment. It is hoped that the existing wave of industrialisation in Nigeria will be accompanied by a political will to implement clearly defined policies to industrialise the country and increase the number of M&A transactions.
Developing countries rely heavily on foreign direct investment to promote their economies. However, the period of unrest facing many emerging economies, including Nigeria, is a cause for concern. This instability has had far-reaching effects on Nigeria's emerging economy, especially in the context of M&A transactions. Foreign investors have been reluctant to participate in a number of potential M&A activities, undoubtedly because of the costs associated with investing in an unstable country.
M&A activity in Nigeria declined in 2015, with a 22% drop in the number of deals and a 65% drop in the overall value of deals. This decline was due to regulatory uncertainty, falling oil prices and the volatility of the naira, as well as uncertainty surrounding the 2015 general election, which resulted in investor caution. It is hoped that the government will now aggressively enforce the drive for economic diversification, thus boosting the trend for M&A transactions.
'Squeeze-out' is a right that entitles a majority shareholder with at least 90% of the shares or voting rights in a company to acquire the remaining shares or voting rights compulsorily, and allows minority shareholders to exit the company by selling their shares to the majority shareholder. However, the Nigerian squeeze-out regime remains largely untested in practice.
Brand value and innovation portfolios are key value differentiators which can lead to increased revenue and business expansion. Counsel for acquirers should ensure that thorough IP due diligence is conducted and that the target has a record of ownership for all intangible assets – or at least an appropriate licence to use such IP rights – to avoid the risk of being sued for IP infringement.