Sierra Leone’s M&A market has shown modest growth in the past 12 months compared to the previous year. There has been increased interest from foreign companies and investors in the country’s natural resources and infrastructure projects. Deal volumes are lower than in more developed markets but there has been a moderate and noticeable upturn in activity in the mining, energy and banking sectors as global investors seek to capitalise on the country’s rich mineral deposits.

Economic challenges such as currency instability and regulatory uncertainties have tempered enthusiasm, but government efforts to attract foreign direct investment through various initiatives have generated cautious optimism in investors.

In the last 12 months there has been a marked increase in foreign direct investment in renewable energy and mining, especially iron ore and diamonds, as companies seek to secure long-term supply chains.

There has also been a rise in public-private partnerships in infrastructure projects and an increase in regulatory scrutiny of deals involving strategic assets.

Digital transformation is also emerging as a trend, with tech start-ups attracting smaller-scale M&A interest. In addition, ESG considerations are gaining importance, which is influencing deal structures and due diligence processes.

The mining and natural resources, agriculture and infrastructure sectors have witnessed the most significant M&A activity. Sierra Leone’s abundant mineral deposits continue to attract foreign investment, while agricultural projects are expanding due to global interest in food security and export potential.

Infrastructure and the energy sectors are also attracting investment as the government focuses on boosting economic development. The government of Sierra Leone launched the “Big Five” project, which outlines key priorities for the next five years, with agriculture, technology and infrastructure being among the main focus areas. This initiative has increased foreign investment interest, particularly in agriculture and tech. The UK, EU, Turkey, China and Japan are increasingly involved in the energy sector.

The primary techniques for acquiring a company in Sierra Leone include share purchases, asset acquisitions and mergers, each primarily governed by the Companies Regulations 2015, with other incidental issues governed by the Companies Act 2009, its amendments and other related regulations.

Share purchases are common, in which the buyer acquires a majority or all of the shares of the target company, transferring ownership and control. Asset acquisitions typically involve buying specific assets or liabilities, and are often used when only parts of a business are targeted. Mergers require approval from shareholders and the regulators.

A Companies and Allied Matters Bill is currently under consideration in Sierra Leone, aimed at modernising corporate governance, strengthening shareholder rights and enhancing regulatory enforcement mechanisms. Although not yet enacted, the proposed reforms are expected to introduce structural changes that may influence M&A activity once implemented, particularly in relation to governance standards, approval processes and disclosure obligations.

Each method of acquisition involves due diligence and compliance with local corporate laws.

The primary regulator for M&A activity in Sierra Leone is the National Investment Board (NIB), which oversees company registrations and regulation. The Bank of Sierra Leone monitors financial transactions and foreign exchange.

Other sector-specific regulators may play a role in M&A activity, such as ministries or ministry department agencies. The National Revenue Authority ensures tax compliance, while the Ministry of Mines and Mineral Resources may seek to review deals in strategic sectors like mining. The Sierra Leone Electricity and Water Regulatory Commission may also play a role, depending on the industry.

Sierra Leone imposes some restrictions on foreign investment to protect national interests, particularly in strategic sectors like mining, telecommunications and energy.

The NIB is responsible for facilitating and registering all foreign investment in Sierra Leone. Investors must comply with local content laws, aimed at capacity building; this includes hiring Sierra Leonean workers and using local suppliers where possible.

Certain industries require government approval or joint ventures with local partners. However, there are no outright prohibitions. Incentives like tax holidays are offered to attract foreign capital, balancing protectionism with economic growth.

Sector-Specific Restrictions

The government imposes restrictions/caps on foreign ownership and participation in the mining, fisheries and banking industries. In mining, foreign investors may need to enter into partnerships with local companies and obtain government approval before starting operations.

Sierra Leone does not currently have standalone competition or antitrust laws. However, every merger or acquisition is subject to prior review and approval by the NIB.

Formal notification of any merger or acquisition must be given to the NIB containing, inter alia, a list of the major competitors and the market position or market share of each company and an analysis of the effect of the transaction on the relevant market, including the post-transaction market position of the merging or resultant company.

Approval will be given if the NIB is satisfied that the acquisition is not likely to cause a “substantial restraint of competition or tend to create monopoly in any line of business enterprise”. Where a merger is likely to restrain competition, approval will be granted if one of the parties to the merger is failing and there is evidence that all liabilities of the company being acquired have been or will be settled within a reasonable time.

The Ministry of Trade and Industry is responsible for overseeing and addressing anti-competitive business practices.

Sierra Leone is not a member of the International Competition Network, but it maintains co-operative ties with the ECOWAS Regional Competition Authority through its membership in ECOWAS.

Acquirers in Sierra Leone must comply with the Employment Act of 2023, the Work Permit Act 2023 and collective bargaining agreements (CBAs), each of which regulate matters that affect deal planning, due diligence and post-acquisition integration.

Employment Act 2023 and Employment Regulations 2023

The Employment Act 2023 consolidates and regulates all aspects of the employer/employee relationship. It provides for continuity of employment contracts during business transfers, requiring acquirers to honour existing terms unless renegotiated with employee consent.

For redundancies, the Act regulates severance payments and imposes consultation with the Ministry of Labour and Social Security. Non-compliance with the act and/or the regulations risks incurring penalties or legal challenges.

Work Permit Act 2023

The Work Permit Act 2023 governs foreign employees. In cross-border M&A, acquirers inheriting expatriate staff must ensure that such staff hold valid work permits, which are renewable through the Ministry of Labour. Non-compliance can lead to the imposition of fines or deportation. Due diligence should confirm permit status and local content compliance, as Sierra Leone prioritises hiring nationals and capacity building.

Collective Bargaining Agreements

CBAs negotiated between employers and trade unions apply to all sectors and are sector-specific. They often set minimum wages that are above the statutory minimum, and provide for enhanced leave or job security terms. Acquirers must assume these obligations post-transaction, as the Employment Act of 2023 enshrines CBA applicability and enforceability.

There is no formal national security review of acquisitions in Sierra Leone, but the government may scrutinise deals involving strategic assets. Relevant ministries, like Internal Affairs, may intervene if a transaction is deemed to threaten national stability or sovereignty. Although there is no specific law that provides for such reviews, political and economic considerations may lead to informal assessments, particularly for foreign investors.

The National Investment Board Act 2022 and the Employment Act 2023 have indirectly had the most significant impact on M&A, having helped to create a more predictable environment for transactions, leading to a gradual increase in deal activity. The NIB is intended to act as a “one-stop shop” for investors.

There have been no significant changes to takeover law in the past 12 months.

Pre-offer stakebuilding is not customary in Sierra Leone. Although there is a stock exchange, it is very limited in its functioning.

The Companies Act, 2009 requires that anyone with a “substantial” shareholding in a public company should disclose the shares they hold. A substantial shareholding for such purposes is a minimum of 10%. The notice must be given within 14 days of acquiring the holding.

Companies in Sierra Leone cannot introduce different reporting thresholds in their articles of incorporation or by-laws as these are governed by statute, and statutory requirements cannot be evaded by the articles of incorporation or shareholders’ agreements.

Other hurdles include the limited functionality of the stock exchange, a stringent regulatory regime and resistance from target company boards, which tend to be risk averse and to view stakebuilding as hostile.

Derivatives are not currently used in Sierra Leone. Deals rely on more traditional forms of consideration and risk management.

See 4.4 Dealings in Derivatives.

Shareholders acquiring a significant stake must disclose their purpose and intentions regarding control of the company. Any shareholder crossing the 10% threshold must disclose the shareholding. This is designed to protect minority shareholders and prevent covert takeovers.

For publicly listed companies, disclosure obligations may arise when negotiations become formal, such as when definitive agreements are signed or once material information is available.

In private transactions, disclosure is usually governed by contractual terms rather than statutory requirements. While deal volumes are not high in Sierra Leone compared to more developed markets, common law and the statutory rules of duties owed to shareholders apply here in that a deal should be disclosed to the shareholders if/when an offer is made.

In practice, parties in Sierra Leone tend to disclose material information earlier than the legal minimum to maintain transparency and manage market expectations, especially where public companies are concerned.

Due diligence usually covers corporate structure and legal, financial, operational and regulatory aspects. Particular attention is paid to local compliance issues, corporate governance practices and potential liabilities in areas such as labour, tax and environmental regulation. In certain sectors (most notably mining), cultural due diligence in respect of land rights and local customs is conducted.

Standstills are rarely demanded. Exclusivity is more common, with buyers seeking short-term agreements to lock in negotiations, particularly in competitive mining deals.

It is permissible but not common for tender offer terms and conditions to be documented in a definitive agreement in Sierra Leone; however, tender offers are rare. Most mergers and acquisitions occur through private negotiations, with terms finalised in share purchase or asset transfer agreements.

Acquiring or selling a business typically takes between six and 12 months. This timeline reflects the time needed for due diligence, regulatory review and negotiation, although the actual duration will depend on the complexity of the deal and the specific sector involved. Further delays may occur from a lack of full digitalisation, bureaucratic processes and stakeholder consultations.

The takeover rules require a person or group to make a mandatory offer for a company when that person or group acquires interests in shares carrying 40% or more of the voting rights of a company. They must make a cash offer to all other shareholders at the highest price paid in the 12 months before the offer was announced.

Cash is the predominant form of consideration in Sierra Leone. In certain transactions, a mix of cash and shares may be used. Common tools to bridge valuation gaps include earn-outs, escrow arrangements and contingent payments.

Common conditions for takeover offers in Sierra Leone include securing the necessary shareholder approvals, obtaining regulatory consents and completing satisfactory due diligence.

Although the regulatory framework does not impose overly restrictive conditions, it does require any conditions to be disclosed to all market participants. In mining or energy deals, government clearance may be needed.

Ownership of 40% of the voting rights of a company is the level at which effective control is obtained.

A business combination in Sierra Leone can be conditional on the bidder obtaining financing. Such conditions are common in cash-heavy deals, especially with foreign buyers reliant on loans or parent funding.

Bidders in Sierra Leone can seek deal security measures like break-up fees or non-solicitation provisions, although these are uncommon. Break-up fees can be used to compensate failed bids, while non-solicitation clauses are commonly used in mining deals.

Match rights or force-the-vote provisions are rare due to the size of the market. A bidder is able to include standard provisions to protect their interests. There have been no changes in the regulatory environment that have impacted the length of interim periods.

A bidder not seeking full ownership can negotiate governance rights like board seats or veto powers over major decisions. This can be secured via shareholder agreements. Rights to appoint key executives or access financial data are common in joint ventures, especially in the mining industry.

Shareholders in Sierra Leone are expressly permitted by statute to vote by proxy.

Squeeze-out mechanisms are not commonly used in Sierra Leone.

It is not common to obtain irrevocable commitments to tender or vote from principal shareholders of the target company.

A bid in Sierra Leone becomes public when definitive agreements are signed, with private companies notifying the NIB.

For publicly listed companies, although rare, there may be an earlier announcement, often at negotiation commencement. Due to the size of the market, underdeveloped capital markets and the limited stock exchange, there are very few public takeovers that require the development of a cogent procedure for making bids public.

Issuing shares in a Sierra Leone business combination requires disclosing the number, price and purpose to the NIB, via filings. Public companies may file detailed prospectuses with the Sierra Leone Securities and Exchange Commission, outlining impacts on capital structure to protect investor interests.

Bidders need to provide IFRS accounts in their disclosure documents.

Full disclosure of transaction documents is not mandatory in Sierra Leone. Private deals require only summary filings with the NIB, while public companies may need to submit key terms to the Securities and Exchange Commission. Confidentiality prevails unless regulators or shareholders demand full transparency, balancing openness with commercial sensitivity.

The principal directors’ duties in a business combination are to act in the best interests of the company and its shareholders, and to consider whether a particular transaction is in the best interests of the company. Their responsibilities include ensuring that the transaction is conducted transparently, obtaining independent advice and diligently managing conflicts of interest.

It is common practice for boards to establish special or ad hoc committees during M&A transactions. These committees focus on overseeing negotiations, reviewing independent advice and ensuring that the interests of all shareholders are fairly represented, particularly in situations where conflicts of interest might otherwise arise.

Sierra Leonean courts tend to defer to the judgement of the board of directors, subject to it being compatible with local laws and regulations, and subject to the court being satisfied that the board has acted in good faith and with due diligence, and has based its judgement on a rational business strategy supported by independent advice.

Directors in Sierra Leone commonly seek independent legal and financial advice in a business combination. The advice typically covers compliance with the relevant regulations, notification requirements and labour laws, while financial advisers assess valuation, viability and risks.

There has been very little judicial scrutiny of conflicts of interest in Sierra Leone. However, regulators expect full disclosure and independent review of any potential conflicts, reinforcing the need for directors to balance their duties to the company with their personal or affiliated interests.

Hostile tender offers are legally permitted in Sierra Leone, but they remain rare. Most companies are privately held with concentrated ownership. The market’s relatively small size and a prevailing preference for negotiated, co-operative deals typically mean that aggressive takeover tactics are rarely deployed.

Sierra Leone permits directors to use defensive measures, provided they serve the company’s best interest.

Common defensive measures in Sierra Leone include issuing new shares to dilute a bidder’s stake, securing white knight investors and using contractual provisions that may delay or deter unsolicited offers. In private firms, shareholder agreements often block hostile moves.

When implementing defensive measures, directors have a duty to ensure that any defensive actions are justified, transparent and backed by independent advice, thereby protecting both the company and its shareholders from unnecessary or overly aggressive interventions. They have an overriding duty to act in the company’s best interests.

While directors do have the discretion to reject offers they believe are not in the best interests of the company, such decisions must be supported by a clear, rational business basis and appropriate independent advice. A blanket “just say no” approach without thorough evaluation may expose directors to legal challenges.

Litigation in connection with M&A deals is not common in Sierra Leone. This is due to several factors, including but not limited to a preference for negotiation, mediation or other ADR mechanisms. Parties also tend to be wary of litigating locally due to the unpredictability of the local courts. As a result, parties involved in disputes prefer settlement over litigation.

In the few cases in which litigation arises, it is usually post-closing, and typically where parties disagree on the payment method. Litigation may be related to a broad range of issues, including shareholder grievances or employee challenges based on labour laws.

There have not been any major “broken-deal” disputes in recent years. This is partly due to the low M&A activity as a result of global uncertainty, regional tension and political volatility.

Shareholder activism is not prevalent in Sierra Leone. Where it exists, the focus is usually on seeking better profit sharing, transparency and improved working conditions.

It is rare for activists to seek to encourage companies to enter into M&A transactions, spin-offs or major divestitures.

Activists seldom interfere once transactions are announced. However, minority shareholders sometimes raise concerns privately if they feel a transaction will be inimical to them or will adversely affect them.