������Ƶ

An Equity Participation Agreement sets out how investors can own shares in a Nigerian company and receive profits from their investment. These agreements are common in oil and gas ventures, where foreign companies partner with local businesses under Nigeria's Local Content Act requirements.

The agreement spells out key details like ownership percentages, profit sharing, management rights, and exit options. It helps protect both local and international investors while ensuring compliance with Nigerian investment laws, including Securities and Exchange Commission regulations. Companies often use these agreements to structure joint ventures and attract capital while maintaining clear ownership boundaries.

Use an Equity Participation Agreement when bringing investors into your Nigerian business, especially in regulated sectors like oil and gas, telecommunications, or banking. This document becomes essential when structuring investments that must comply with local ownership requirements under the Nigerian Investment Promotion Commission Act.

The agreement proves particularly valuable when partnering with foreign investors, as it clearly defines ownership stakes, profit-sharing mechanisms, and management rights. It's crucial for protecting both local and international interests while satisfying regulatory requirements for sectors with mandatory Nigerian participation thresholds.

• Simple Partnership EPA: Used for basic joint ventures, focusing on profit-sharing and basic management rights between Nigerian partners.
• Oil and Gas EPA: Specifically structured for petroleum sector investments, incorporating Local Content Act requirements and specialized profit-sharing mechanisms.
• Corporate EPA: Designed for larger companies with multiple shareholders, including detailed voting rights and board representation clauses.
• Project-Specific EPA: Tailored for single-project investments, often used in construction or infrastructure development with defined exit strategies.
• Foreign Investment EPA: Features additional provisions for international investors, including currency conversion rights and dispute resolution mechanisms.

• Corporate Investors: Both local and international companies seeking to acquire ownership stakes in Nigerian businesses, particularly in regulated sectors.
• Local Business Owners: Nigerian entrepreneurs and companies looking to raise capital while maintaining compliance with local ownership requirements.
• Legal Counsel: Corporate lawyers who draft and review these agreements to ensure compliance with Nigerian investment laws and SEC regulations.
• Company Directors: Board members who must approve and implement the terms of Equity Participation Agreements.
• Regulatory Bodies: Government agencies like SEC and NIPC that oversee and enforce compliance with investment regulations.

• Ownership Details: Gather exact shareholding percentages, valuation details, and investment amounts from all participating parties.
• Corporate Documents: Collect registration certificates, shareholder resolutions, and board approvals from both local and foreign entities.
• Regulatory Compliance: Check sector-specific ownership limits and obtain necessary NIPC approvals.
• Financial Terms: Define profit-sharing formulas, dividend policies, and capital contribution schedules.
• Management Rights: Outline voting powers, board representation, and operational control mechanisms.
• Exit Strategy: Specify share transfer restrictions, buy-out options, and dispute resolution procedures.

• Party Details: Full legal names, registration numbers, and addresses of all participating entities and authorized signatories.
• Investment Terms: Precise shareholding percentages, valuation details, and payment schedules.
• Ownership Rights: Voting powers, dividend entitlements, and preemptive rights for future share issues.
• Management Structure: Board composition, appointment rights, and decision-making processes.
• Transfer Restrictions: Share transfer limitations, tag-along and drag-along rights.
• Dispute Resolution: Nigerian jurisdiction clause, arbitration procedures, and governing law provisions.
• Regulatory Compliance: References to CAMA 2020 and relevant sector-specific regulations.

While an Equity Participation Agreement and a Simple Agreement for Future Equity both involve investment in companies, they serve different purposes in Nigerian business transactions.

• Immediate vs. Future Rights: Equity Participation Agreements grant immediate shareholding rights, while SAFEs promise future equity upon specific triggering events like funding rounds.
• Complexity Level: EPAs contain detailed governance provisions, voting rights, and management structures, whereas SAFEs are intentionally simpler documents focused mainly on conversion terms.
• Regulatory Requirements: EPAs must comply with current Nigerian ownership requirements and SEC regulations, while SAFEs often fall under lighter regulatory scrutiny as pre-investment instruments.
• Typical Usage: EPAs are common in established businesses and regulated sectors, while SAFEs are popular with startups seeking quick, flexible funding arrangements.