Business Sale Agreement (Nigeria)
BUSINESS SALE AGREEMENT
Companies and Allied Matters Act 2020 (CAMA 2020) | Labour Act (Cap L1, LFN 2004) | Capital Gains Tax Act (Cap C1, LFN 2004)
THIS BUSINESS SALE AGREEMENT is made on [Agreement Date]
BETWEEN:
(1) [Seller Name] (RC: [Seller RC]) of [Seller Address] (the "Seller"); AND
(2) [Buyer Name] (RC: [Buyer RC]) of [Buyer Address] (the "Buyer").
RECITALS
A. The Seller owns and operates the business trading as [Business Name], which is engaged in [Business Description] (the "Business").
B. The Seller has agreed to sell and the Buyer has agreed to purchase the Business as a going concern on the terms set out in this Agreement.
1. SALE OF BUSINESS
1.1 Subject to the terms and conditions of this Agreement, the Seller agrees to sell and the Buyer agrees to purchase the Business as a going concern, together with the following assets (the "Assets"):
[Assets Included]
1.2 The Business includes the goodwill and the right to use the trade name '[Business Name]' and all associated intellectual property.
1.3 Title to the Business and the Assets shall pass to the Buyer at Completion on [Completion Date].
2. PURCHASE PRICE
2.1 The total purchase price for the Business is [Purchase Price], allocated as follows:
(a) Goodwill: [Goodwill Amount]
(b) Tangible assets and other business assets: the balance of the Purchase Price.
2.2 The Purchase Price shall be paid as follows: [Payment Terms]
2.3 The Seller acknowledges responsibility for capital gains tax on any chargeable gain under the Capital Gains Tax Act (Cap C1, LFN 2004), assessed by the Federal Inland Revenue Service (FIRS).
3. EMPLOYEES
3.1 The Business currently employs approximately [Employee Count] employees. The Buyer shall offer employment to such employees as the Parties agree, on terms no less favourable than their existing terms.
3.2 The Seller shall discharge all outstanding wages, salaries, pension contributions under the Pension Reform Act 2014, and terminal benefits due to any employee not offered employment by the Buyer, in accordance with the Labour Act (Cap L1, LFN 2004).
4. NON-COMPETE OBLIGATION
4.1 The Seller undertakes that for a period of [Non-Compete Period] following the Completion Date, the Seller shall not, directly or indirectly, engage in or be interested in any business that competes with the Business within Nigeria.
4.2 The Seller shall not during the same period solicit or entice away from the Buyer any customer, supplier, or employee of the Business.
5. GOVERNING LAW AND DISPUTE RESOLUTION
5.1 This Agreement is governed by Nigerian law, including CAMA 2020 and applicable federal statutes.
5.2 Any dispute shall be referred to arbitration under the Arbitration and Mediation Act 2023, seated in [Governing State].
Seller
________________
Signature
Buyer
________________
Signature
What Is a Business Sale Agreement (Nigeria)?
A Business Sale Agreement in Nigeria governs the sale and transfer of property between buyer and seller and the obligations of each.
Business sale transactions in Nigeria are governed primarily by the Companies and Allied Matters Act 2020 (CAMA 2020), which regulates the corporate capacity of the selling and buying entities. Where the business employs staff, the Labour Act (Cap L1, Laws of the Federation of Nigeria 2004) and any applicable collective bargaining agreements govern the treatment of employees on a change of business ownership. Unlike UK law (which has the Transfer of Undertakings (Protection of Employment) Regulations), Nigeria does not have a statutory automatic transfer of employment on a business sale — employment contracts must therefore be expressly dealt with in the Business Sale Agreement.
Where the business being sold holds regulatory licences — such as a CBN licence for financial services under BOFIA 2020, a NAICOM licence for insurance under the Insurance Act 2003, a licence from the Nigerian Communications Commission (NCC) under the Nigerian Communications Act 2003, or a petroleum industry permit under the Petroleum Industry Act 2021 — those licences are personal to the holder and do not automatically transfer to the buyer. The buyer must apply to the relevant regulator for a fresh licence or consent to transfer, and the Business Sale Agreement should be structured accordingly.
A Business Sale Agreement should be distinguished from a Share Purchase Agreement — which transfers ownership of the corporate entity rather than the business itself — and from an Asset Purchase Agreement, which lists and transfers specific assets without necessarily conveying the goodwill or ongoing business relationships. The Federal High Court has jurisdiction over disputes involving CAMA 2020 matters under Section 251 of the Constitution of the Federal Republic of Nigeria 1999.
The legal framework governing the Business Sale Agreement (Nigeria) in Nigeria draws on several key statutes and regulatory bodies. Under Nigerian law, the Companies and Allied Matters Act 2020 (CAMA) regulates corporate entities through the Corporate Affairs Commission (CAC). The Labour Act (Cap L1 LFN 2004) and the National Industrial Court of Nigeria (NICN) govern employment disputes. The Nigeria Data Protection Regulation (NDPR) 2019 and the Nigeria Data Protection Commission (NDPC) protect personal data. The Federal Inland Revenue Service (FIRS) administers tax obligations under the Companies Income Tax Act. The Federal High Court and state High Courts have jurisdiction over civil matters. Parties executing a Business Sale Agreement (Nigeria) in Nigeria should confirm the document reflects current law, including any amendments enacted since the original drafting date. The Companies and Allied Matters Act (CAMA) 2020 sets the foundational requirements.
When Do You Need a Business Sale Agreement (Nigeria)?
A Business Sale Agreement in Nigeria is required whenever the owner of a business wishes to sell the entire enterprise as a functioning going concern to a buyer.
A Business Sale Agreement is needed when a sole trader or partnership operating a retail, manufacturing, or service business in any Nigerian state wishes to exit the business and transfer the entire enterprise — including goodwill, trade name, customer base, and stock — to a buyer.
A Business Sale Agreement is required when a company registered under CAMA 2020 with the Corporate Affairs Commission (CAC) sells a business division or subsidiary as a going concern, rather than using a share sale, to avoid the buyer inheriting the company's historic liabilities.
A Business Sale Agreement is needed when an entrepreneur acquires a franchise outlet, restaurant, or retail outlet as a going concern from an existing franchisee, including the assignment of the franchise agreement subject to the franchisor's consent.
A Business Sale Agreement is required in succession planning when a business owner sells to a management buyout team or to family members, with deferred consideration or earn-out arrangements tied to the future performance of the business after completion.
A Business Sale Agreement is needed when a receiver or liquidator appointed under CAMA 2020 sells the business of an insolvent company as a going concern to preserve the value of the enterprise for creditors, subject to the creditors' committee approval and any court supervision required by the Federal High Court.
Parties in Nigeria should prepare a Business Sale Agreement (Nigeria) proactively rather than waiting for a dispute to arise. Courts interpret agreements based on the written terms rather than oral representations. Under Nigerian law, the Companies and Allied Matters Act 2020 (CAMA) regulates corporate entities through the Corporate Affairs Commission (CAC). The Labour Act (Cap L1 LFN 2004) and the National Industrial Court of Nigeria (NICN) govern employment disputes. The Nigeria Data Protection Regulation (NDPR) 2019 and the Nigeria Data Protection Commission (NDPC) protect personal data. The Federal Inland Revenue Service (FIRS) administers tax obligations under the Companies Income Tax Act. The Federal High Court and state High Courts have jurisdiction over civil matters. Where the transaction involves regulated activities, prior approval from the relevant authority may be required before execution.
What to Include in Your Business Sale Agreement (Nigeria)
A valid Business Sale Agreement in Nigeria must contain the following essential elements.
Parties: Full legal names, CAMA 2020 RC numbers for corporate parties, and addresses of the seller and buyer. Where the seller is an individual trading as a business name registered with the CAC under CAMA 2020 Part B, include the business name registration number.
Business Description: A clear description of the business being sold — trading name, nature of operations, registered address, principal location(s), and any sector-specific licences or permits held (CBN, NCC, NAICOM, SON, NAFDAC).
Assets Included: An itemised schedule of all assets forming part of the sale — tangible assets (plant, equipment, stock, vehicles), intangible assets (goodwill, brand name, domain names, software), contracts (customer and supplier agreements, leases), and intellectual property rights (trademarks, patents registered with the Federal Ministry of Industry, Trade and Investment).
Excluded Liabilities: An express list of liabilities not assumed by the buyer, including outstanding Federal Inland Revenue Service (FIRS) tax assessments, employee claims, and pre-completion debts unless expressly assumed.
Purchase Price and Goodwill Allocation: The total consideration in NGN, the allocation between tangible assets and goodwill for capital gains tax purposes under the Capital Gains Tax Act (Cap C1, LFN 2004), payment terms, and any earn-out provisions.
Employees: The agreement should address which employees transfer with the business, on what terms, and whether new employment contracts will be offered by the buyer under the Labour Act. Existing gratuity, pension (Contributory Pension Scheme under the Pension Reform Act 2014, administered by PenCom-licensed Pension Fund Administrators), and leave entitlements must be addressed.
Regulatory Consents: Conditions precedent requiring the buyer to obtain all necessary regulatory approvals — including FCCPC clearance under the Federal Competition and Consumer Protection Act 2018 for transactions above applicable thresholds — before completion.
Non-Compete Obligations: Post-completion restrictions on the seller from competing with the business, approaching former customers or employees, or using confidential information, for a defined period and geographic area enforceable under Nigerian common law.
Additional compliance elements for a Business Sale Agreement (Nigeria) used in Nigeria include: Under Nigerian law, the Companies and Allied Matters Act 2020 (CAMA) regulates corporate entities through the Corporate Affairs Commission (CAC). The Labour Act (Cap L1 LFN 2004) and the National Industrial Court of Nigeria (NICN) govern employment disputes. The Nigeria Data Protection Regulation (NDPR) 2019 and the Nigeria Data Protection Commission (NDPC) protect personal data. The Federal Inland Revenue Service (FIRS) administers tax obligations under the Companies Income Tax Act. The Federal High Court and state High Courts have jurisdiction over civil matters. Forms-legal.com provides this template as a starting point for Nigeria-compliant documentation.
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Reference this free template in an article, syllabus, or research note:
Forms Legal. (2026). Business Sale Agreement (Nigeria) (Nigeria) [Legal document template]. Forms Legal. https://forms-legal.com/nigeria/business/corporate/business-sale-agreement-nigeria
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author = {{Forms Legal}},
title = {Business Sale Agreement (Nigeria) (Nigeria)},
year = {2026},
howpublished = {\url{https://forms-legal.com/nigeria/business/corporate/business-sale-agreement-nigeria}},
note = {Free legal document template. Based on Companies and Allied Matters Act (CAMA) 2020}
}
Frequently Asked Questions
A Business Sale Agreement does not itself require registration with the Corporate Affairs Commission (CAC) unless it creates a charge over assets that must be registered under CAMA 2020, Part VII. However, individual asset transfers forming part of the business sale may trigger registration requirements: land transfers require registration of the conveyance or deed at the relevant State Land Registry; intellectual property assignments (patents, trademarks) must be filed with the Trademarks, Patents and Designs Registry; and vehicle transfers must be recorded with the Federal Road Safety Corps (FRSC). The agreement must be stamped under the Stamp Duties Act (Cap S8, LFN 2004), with the Federal Inland Revenue Service (FIRS) having jurisdiction where a company is a party. Regulatory licences — such as CBN or NAICOM licences — must be transferred by separate application to the relevant regulator.
Unlike the UK's Transfer of Undertakings (Protection of Employment) Regulations, Nigeria does not have a statutory automatic transfer of employment on a business sale. The Labour Act (Cap L1, LFN 2004) does not mandate that employee contracts automatically transfer to the buyer. In practice, the Business Sale Agreement should expressly address whether the buyer will offer employment to all, some, or none of the existing employees. Employees who are not offered continued employment are entitled to their accrued entitlements — including notice pay, unpaid wages, and terminal gratuity under any applicable collective agreement or company policy — from the seller before completion. Pension fund balances held in Retirement Savings Accounts (RSAs) under the Pension Reform Act 2014 are portable and follow the employee to a new employer or remain in the PFA account.
Several taxes apply to a business sale in Nigeria. The seller is liable for capital gains tax at 10% on the chargeable gain on disposal of capital assets under the Capital Gains Tax Act (Cap C1, LFN 2004), assessed by the Federal Inland Revenue Service (FIRS). Where trading stock is included, the proceeds are treated as trading income subject to companies income tax under the Companies Income Tax Act (Cap C21, LFN 2004) or personal income tax under the Personal Income Tax Act (Cap P8, LFN 2004). Value Added Tax (VAT) at 7.5% under the Value Added Tax Act (as amended by the Finance Act 2019) may apply to the supply of goods and certain services. Stamp duty under the Stamp Duties Act applies to the agreement itself. The Business Sale Agreement should include provisions allocating tax liability between the parties and requiring each party to cooperate with FIRS assessments.
The Federal Competition and Consumer Protection Commission (FCCPC), established under the Federal Competition and Consumer Protection Act 2018 (FCCPA 2018), has jurisdiction to review mergers and acquisitions — including business sales — that meet prescribed thresholds. Under the FCCPC Merger Review Regulations 2020, a transaction requires FCCPC notification and approval if the combined annual turnover or assets of the parties in Nigeria exceed the thresholds set by the Commission. Failure to notify a notifiable transaction is an offence under Section 97 of FCCPA 2018. The FCCPC also has jurisdiction to prohibit transactions that substantially prevent or lessen competition in any market in Nigeria. Early legal advice on whether a particular business sale triggers FCCPC notification obligations is advisable, particularly in concentrated markets such as banking, telecommunications, or petroleum.
Goodwill in a Nigerian business sale represents the value of the business over and above its net tangible assets — reflecting the customer relationships, trading reputation, supplier relationships, and earning capacity of the business. The seller and buyer typically agree the goodwill value through negotiation, informed by a valuation report from a licensed valuer or accountant. For capital gains tax purposes under the Capital Gains Tax Act (Cap C1, LFN 2004), goodwill is a chargeable asset, and any gain realised on its disposal is subject to CGT at 10%, assessed by the Federal Inland Revenue Service (FIRS). The Business Sale Agreement should clearly allocate the total consideration between tangible assets and goodwill to provide a clear basis for each party's tax calculations. Unlike some other jurisdictions, Nigeria does not provide a formal mechanism for the buyer to amortise purchased goodwill against tax.
This template is provided for informational purposes only and does not constitute legal advice. Laws vary by jurisdiction and change over time. Consult a qualified attorney for advice specific to your situation.Full disclaimer
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