Joint ventures are common in Nigeria, particularly where foreign investors partner with Nigerian companies for local knowledge, licences or relationships, and in sectors such as real estate, energy, infrastructure, technology and manufacturing. A successful joint venture depends on alignment between the partners at the outset and documents that anticipate what will happen when interests diverge.
Structures
- Incorporated joint ventures: a new company owned by the partners, governed by its articles and a joint venture or shareholders' agreement
- Contractual joint ventures: collaboration under a contract without creating a new entity, often used for specific projects
- Consortiums: groups formed to bid for or deliver large projects, including public-private partnerships
The right structure depends on the duration of the venture, liability considerations, tax, regulatory licences and how profits will be shared.
Key issues we address
- Contributions of cash, assets, licences, intellectual property and expertise
- Shareholding, board composition and reserved matters requiring unanimous approval
- Funding obligations and consequences of failing to fund
- Management, operating budgets and business plans
- Transfer restrictions, pre-emption rights, and tag-along and drag-along rights
- Deadlock resolution mechanisms
- Non-compete and confidentiality obligations
- Exit routes, including put and call options and valuation methods
- Dispute resolution, often through arbitration
Regulatory considerations
Joint ventures may need to be notified to the Federal Competition and Consumer Protection Commission where they amount to a merger under the Federal Competition and Consumer Protection Act 2018. Sector rules may limit foreign participation or require local content. In real estate, development joint ventures between landowners and developers raise their own issues of title and risk allocation.
How we assist
We advise from early discussions through to signing and beyond: drafting heads of terms, conducting due diligence on the proposed partner, negotiating the joint venture agreement and ancillary agreements, incorporating the joint venture company, and advising the board during the life of the venture.
