Assignment of Debt (Nigeria)

An Assignment of Debt in Nigeria transfers the assignor's rights or interests to the assignee on the terms it specifies.

A legal assignment of a debt in the southern states of Nigeria — including Lagos, Rivers, Oyo, Ogun, and Cross River — is governed by Section 15 of the Conveyancing Act 1881, which is the received English statute applicable in those states. Section 15 requires that a legal assignment must be absolute (not by way of charge), in writing signed by the assignor, and that written notice must be given to the debtor. Once these conditions are satisfied, the assignee may sue the debtor in its own name without joining the assignor. In the northern states, which apply Northern Nigeria law, the equivalent provision derives from the Administration of Justice Law applicable in those states.

An equitable assignment does not require written notice to the debtor to be valid between assignor and assignee, but the assignee must join the assignor as a party in any action against the debtor unless notice has been given. The Court of Appeal of Nigeria has affirmed in multiple decisions — including in First Bank of Nigeria Plc v T.S.A. Industries Ltd [2010] — that a creditor's right under a contract, loan agreement, or judgment debt is freely assignable unless the underlying contract contains an anti-assignment clause. Anti-assignment clauses in commercial contracts registered with the Corporate Affairs Commission (CAC) are enforceable under CAMA 2020.

An Assignment of Debt should be distinguished from a Deed of Novation, which extinguishes the original debt and creates a new obligation between the assignee and debtor, and from a Charge over Receivables under a debenture registered under CAMA 2020, Part VII, which creates security rather than transferring ownership of the debt.

The legal framework governing the Assignment of Debt (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 Assignment of Debt (Nigeria) in Nigeria should confirm the document reflects current law, including any amendments enacted since the original drafting date. The Contract Law (received English common law) sets the foundational requirements.

An Assignment of Debt in Nigeria is required when a creditor wishes to monetise or transfer the right to collect money owed to it by a third party.

An Assignment of Debt is needed when a bank or microfinance institution licensed by the Central Bank of Nigeria (CBN) sells a portfolio of non-performing loans to a debt recovery company or an Asset Management Corporation of Nigeria (AMCON) Special Purpose Vehicle, requiring formal transfer of each loan receivable.

An Assignment of Debt is required when a supplier who has delivered goods to a buyer under a trade credit arrangement assigns the invoice receivable to a factoring company or invoice discounting facility provider operating under CBN guidelines, to access immediate liquidity before the invoice due date.

An Assignment of Debt is needed when a judgment creditor holding a money judgment from a State High Court or Federal High Court of Nigeria assigns the benefit of that judgment to a debt recovery agency authorised to enforce it in the creditor's name, allowing the original creditor to exit the collection process.

An Assignment of Debt is required in construction and engineering contracts in Nigeria where a subcontractor assigns its right to receive retention money or progress payment from the main contractor to a lender as collateral security for a project finance loan.

An Assignment of Debt is needed in restructuring transactions where a parent company assigns inter-company loan receivables owed by its Nigerian subsidiary to a new holding structure, as part of a group reorganisation requiring approval under the Federal Competition and Consumer Protection Act 2018.

Parties in Nigeria should prepare a Assignment of Debt (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.

A valid Assignment of Debt in Nigeria must contain the following essential elements.

Parties: Full legal names and addresses of the assignor (original creditor), the assignee (transferee), and identification of the debtor. For corporate parties, include Companies and Allied Matters Act 2020 (CAMA 2020) registration numbers.

Debt Description: A precise description of the debt being assigned — including the original agreement or instrument giving rise to the debt, the outstanding principal amount in Nigerian Naira (NGN), any accrued interest, the due date, and any judgment or court order reference where applicable.

Absolute Assignment: A clear statement that the assignment is absolute (not by way of charge) to satisfy the requirements of Section 15 of the Conveyancing Act 1881 for a legal assignment in southern Nigeria states. A conditional or partial assignment will be treated as equitable only.

Consideration: The price paid by the assignee for the debt, or a statement that the assignment is by way of gift or security. Stamp duty under the Stamp Duties Act (Cap S8, LFN 2004) is assessed on the consideration by the Federal Inland Revenue Service (FIRS) for company transactions.

Representations: Warranties by the assignor that the debt is genuine, enforceable, and not subject to any set-off, defence, or counterclaim by the debtor; that the assignor is entitled to assign; and that no prior assignment of the same debt exists.

Notice to Debtor: A written notice of assignment served on the debtor, which is mandatory for a legal assignment under Section 15 of the Conveyancing Act 1881 and which determines priority among competing assignees — the rule in Dearle v Hall applies in Nigeria.

Governing Law: Nigerian law, specifying the applicable state law (Lagos State, Rivers State, etc.) and the forum for dispute resolution — either the State High Court or the Federal High Court, or arbitration under the Arbitration and Mediation Act 2023.

Additional compliance elements for a Assignment of Debt (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.