The Stock Buy Back Agreement is a crucial document used when a Nigerian company decides to repurchase its own shares from existing shareholders. This transaction must comply with the Companies and Allied Matters Act (CAMA) 2020, which sets specific requirements for share buybacks, including maintaining adequate distributable profits and obtaining necessary corporate approvals. The agreement is commonly used for various corporate purposes, such as returning excess capital to shareholders, adjusting capital structure, or implementing employee stock ownership programs. It includes essential provisions for price determination, payment mechanisms, regulatory compliance, and completion procedures, while addressing tax implications and foreign exchange considerations where applicable. The document must align with Nigerian Securities and Exchange Commission regulations and, for listed companies, Nigerian Stock Exchange rules.
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1. Parties: Identification of the company purchasing its shares and the selling shareholders
2. Background: Context of the share buyback, including corporate approvals and compliance with CAMA 2020
3. Definitions and Interpretation: Definitions of key terms and interpretation rules for the agreement
4. Sale and Purchase: Core terms of the buyback including number of shares, price, and payment terms
5. Conditions Precedent: Prerequisites that must be satisfied before the buyback can proceed
6. Completion: Process and requirements for completing the share buyback transaction
7. Warranties and Representations: Standard warranties from both parties regarding capacity, ownership, and authority
8. Tax Matters: Treatment of tax implications and responsibilities
9. Confidentiality: Obligations regarding confidential information
10. Notices: Process for giving formal notices under the agreement
11. General Provisions: Standard boilerplate clauses including governing law, jurisdiction, and entire agreement
1. Foreign Exchange Provisions: Required when foreign shareholders are involved, detailing currency conversion and exchange control compliance
2. Regulatory Approvals: Required for listed companies or when specific regulatory clearances are needed
3. Tag-Along Rights: Include when certain shareholders are given the right to join the buyback on similar terms
4. Escrow Arrangements: Required when payment or share transfer occurs through an escrow mechanism
5. Employee Shareholder Provisions: Include when the buyback involves employee shareholders with specific rights or restrictions
1. Schedule 1 - Share Details: Details of shares being bought back including share certificates and shareholder information
2. Schedule 2 - Completion Requirements: Detailed list of documents and actions required for completion
3. Schedule 3 - Form of Transfer: Template share transfer form compliant with Nigerian requirements
4. Schedule 4 - Corporate Authorizations: Copies of board and shareholder resolutions approving the buyback
5. Appendix A - Calculation of Purchase Price: If applicable, detailed methodology for calculating the share purchase price
6. Appendix B - Compliance Checklist: Checklist of CAMA 2020 and other regulatory requirements for the buyback
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