Corporate due diligence is a legal investigation of a company before a transaction. It confirms that the company exists and is in good standing, who owns and controls it, whether it holds the licences it needs, and what contracts, debts, disputes and compliance gaps come with it. The findings are then dealt with through the price, warranties and indemnities, conditions that must be met before completion or, in serious cases, a decision not to proceed.
In Nigeria, official records are not always complete, and documents provided by a company do not always match what is filed with the Corporate Affairs Commission (CAC) or held by regulators. Experienced local lawyers close that gap by checking the company's own documents against public searches and regulator records. We carry out corporate due diligence for buyers, investors, lenders, joint venture partners and multinational companies onboarding Nigerian counterparties.
What corporate due diligence covers
| Area | What we check | Common red flags |
|---|---|---|
| Corporate records | Incorporation, constitution, share capital, directors and persons with significant control | Share register that does not match CAC records, unfiled annual returns |
| Ownership | Shareholders, share transfers and allotments, options and convertibles | Unregistered transfers, undocumented promises of equity |
| Licences and regulation | Sector licences, permits and approvals | Expired licences, change of control needing regulator consent |
| Contracts | Material customer, supplier, financing and partnership agreements | Change-of-control clauses, exclusivity, onerous terms |
| Finance and security | Borrowings, guarantees and charges over assets | Undisclosed charges, defaults, negative pledges |
| Litigation | Pending and threatened claims and regulatory investigations | Large claims, judgments, freezing orders |
| Employment | Key contracts, pensions and expatriate permits | Unremitted pension or PAYE, missing expatriate quota |
| Intellectual property | Trademarks, patents, designs and technology | IP registered in a founder's personal name |
| Data protection | Compliance with the Nigeria Data Protection Act 2023 | No registration or lawful basis for processing |
| Tax | Key tax registrations, filings and exposures | Unpaid taxes, missing clearance certificates |
CAC company search and verification
The starting point is a search at the CAC. We confirm the company's registration number, status, registered address, directors, shareholders, persons with significant control and registered charges, and obtain certified true copies of key filings where needed. We then compare these with the company's own statutory registers, minutes and share certificates.
Mismatches are common. A company shown as inactive for failing to file annual returns, shareholders recorded differently on the CAC portal and in the share register, or directors who were appointed but never notified to the CAC, can all affect the validity of a transaction. We identify these issues and advise on the filings needed to fix them before completion. If you simply need to confirm that a counterparty is genuine, we can carry out a focused company verification within a short time.
Due diligence by transaction
- Acquisitions and mergers: a full review of the target before a share or asset purchase, feeding into the warranties, indemnities and conditions in the share purchase agreement
- Investments: venture capital and private equity investment into Nigerian companies, with a focus on ownership, founder arrangements, IP and licences
- Lending: borrower due diligence for loans and facility agreements, including authority to borrow, existing security and restrictions on further borrowing
- Joint ventures and partnerships: checks on the proposed partner's ownership, standing and track record
- Counterparty and supplier onboarding: know-your-customer and ownership checks on distributors, suppliers and agents, including for anti-bribery and anti-money laundering compliance
- Vendor due diligence: a review commissioned by a seller before a sale, so that problems are fixed in advance and the sale process runs faster
Regulatory due diligence in regulated sectors
In regulated sectors, a change in ownership or control often needs the prior approval of the regulator, and a missing approval can invalidate the deal or put the licence at risk. We review the licence conditions, compliance history and correspondence with regulators, and advise on the approvals needed, including from the Central Bank of Nigeria for banks and fintech companies, the Securities and Exchange Commission, the Nigerian Communications Commission, the National Insurance Commission and upstream petroleum regulators. Where the transaction meets the thresholds for merger control, we coordinate competition approval from the Federal Competition and Consumer Protection Commission.
Property owned by the company
Where the company owns or leases land or buildings, we verify title through searches at the relevant land registry, using the same checks as our property due diligence service. For a direct purchase of land or a building, rather than a company, property due diligence is the right service.
Our due diligence process
- Scoping: agreeing the areas, materiality thresholds and timetable with you, based on the size and type of transaction
- Document request: issuing a tailored request list and reviewing documents in a virtual data room
- Independent searches: CAC, court registries, intellectual property registries, land registries and regulators
- Management questions: written and live questions to the company to fill gaps and explain issues
- Reporting: a red-flag report with the key issues and our recommendations, or a full report where required
- Protection in the deal documents: turning the findings into price adjustments, warranties, indemnities and conditions precedent
Our reports
We tailor our reports to the transaction and the reader. For most clients, an executive summary of the red-flag issues, ranked by severity with a recommendation on how to deal with each, is more useful than a long descriptive document. Full reports are available where lenders, boards, investment committees or regulators require them, and we can address reports to lenders and co-investors who need to rely on them.
Why clients use us
- local knowledge of how CAC and regulator records work in practice, and where they are most often wrong
- reports focused on the decisions you need to make, not on describing documents
- experience across corporate, regulatory, finance, property, employment and IP issues in one team
- the ability to carry the findings through into negotiation and completion
Our corporate and commercial lawyers in Lagos and Abuja carry out corporate due diligence for local and international clients. To discuss a transaction, contact us.
