The investment committee has approved the headline price. The seller has provided an ownership chart, recent management accounts and a data room. Then a local operating licence appears in the name of an affiliate that is not included in the proposed acquisition.

That is where due diligence Africa becomes a transaction issue rather than a document exercise. We approach M&A and transaction advisory in Africa country by country, testing what the target owns, owes, employs and is permitted to do before a buyer signs.

There is no single African companies regime, tax authority or merger-control system. A group may hold land in one jurisdiction, invoice customers from another and employ staff in a third. Each location can create a separate legal, tax, regulatory and commercial exposure.

Start by mapping every relevant jurisdiction

Before reviewing the virtual data room, build a jurisdiction map. List every country in which the target is incorporated, holds assets, earns revenue, employs staff, maintains a bank account, owns intellectual property or requires a licence.

This step prevents a common and costly error: treating the country of incorporation as the only country that matters. A holding company registered in Kenya may have Ghanaian assets, South African directors and contracts governed by a different law. The diligence scope must follow the business activity, not only the seller’s structure chart.

Request a current group chart, then test it against each relevant registry. Check incorporation records, constitutional documents, share registers, beneficial ownership records, directors, registered charges and annual filings. Also identify dormant subsidiaries and nominee arrangements, because an inactive entity can still hold a material liability or licence.

Do not accept a seller-prepared chart as conclusive evidence. It helps us frame questions, but registry filings and underlying records carry more weight because they show what the public authority has recorded.

Key point: A share purchase transfers more than the operating business. It can transfer historic tax exposures, employment claims, governance failures and obligations attached to subsidiaries.

Worked example: a regional distribution business

Take an illustrative East African distributor with annual revenue of US$18 million and operations presented as a single Kenyan business. During diligence, the buyer finds that the Kenyan company invoices customers, while a separate entity owns warehouse equipment and another entity employs the sales team in a neighbouring jurisdiction.

If the buyer acquires only the invoicing company, it may not obtain the equipment, workforce or operating permissions needed to deliver contracts. A US$250,000 retention, or a pre-completion restructuring at the seller’s cost, may be more appropriate than relying on a general warranty. We would define the deal perimeter before negotiating price adjustments, because the purchase agreement cannot fix an asset that the seller does not own.

Verify ownership, beneficial owners and governance

Ownership diligence asks two separate questions. Who legally owns the shares, and who ultimately controls the company? Those answers can differ where trusts, nominees, shareholder agreements or layered holding companies exist.

Kenya: test beneficial ownership against the statutory threshold

In Kenya, beneficial owners include natural persons who hold at least 10% of shares or voting rights, have appointment or removal rights, or exercise significant influence or control. Confirm the relevant Forms BOF1, BOF2 and BOF3 with the Registrar of Companies, alongside annual returns.

A person who receives a beneficial-owner notice has 21 days to respond. That deadline matters because incomplete beneficial ownership information can indicate that the target has not completed its statutory process or that control needs further investigation.

We would compare the beneficial ownership filings with the securities register, board minutes and shareholder agreements. The form identifies the reported beneficial owner. The underlying documents explain how that person holds control and whether a consent, pre-emption right or change-of-control provision affects the transaction.

South Africa: review historic conduct, not only current appointments

In South Africa, inspect CIPC beneficial-ownership filings, the securities register, memorandum of incorporation, annual returns and financial statements. Investigate director conduct and any business-rescue exposure as part of governance diligence.

The Companies Second Amendment Act extended the time bar for director-delinquency applications from 24 months to 60 months, subject to a potential court extension. The change took effect on 27 December 2024. This makes a narrow review of current directors and recent minutes insufficient where the business has a longer governance history.

Further provisions of South Africa’s Companies Amendment Act commenced on 22 May 2026. Confirm the provisions relevant to remuneration, reporting, access to records and transactions before signing, because the precise diligence request may depend on the provision engaged.

Tip: Ask for the securities register itself, not merely a cap table exported by management. The register helps establish legal title, while the cap table often reflects management’s working view of ownership.

Reconcile tax, investment and transaction documents

Tax diligence should establish the target’s registrations, filings, assessments, arrears, incentives and tax-clearance position. It should also test whether the proposed deal structure creates transfer taxes, stamp duty, withholding or other transaction costs.

A share sale does not automatically remove tax or regulatory risk. The buyer inherits the company and its historic compliance position. An asset sale can avoid some historic liabilities, but it can introduce transfer, consent and stamping issues of its own.

Ghana: test GIPC status before relying on the business plan

In Ghana, a foreign buyer that will acquire or operate a target should test Ghana Investment Promotion Centre, GIPC, status and capitalisation. Current GIPC guidance states minimum foreign equity of US$200,000 for a qualifying joint venture and US$500,000 for a wholly foreign-owned enterprise.

For general trading, GIPC guidance states a US$1 million minimum foreign equity requirement plus 20 skilled Ghanaian employees. Manufacturing and export enterprises are among the stated exemptions, so the target’s actual activity matters more than the label used in its pitch deck.

We would ask for the GIPC registration record, evidence supporting the relevant capitalisation and the operational facts supporting any claimed exemption. If the target operates mixed activities, do not assume one exemption covers all revenue streams. Obtain country-specific legal advice before signing or completing the acquisition.

Ghana tax diligence should reconcile Ghana Revenue Authority, GRA, registrations, tax clearance, incentives and arrears. GRA states that the general corporate income tax rate is 25%. The rate provides a starting point for assessing historic filings, but incentives and sector-specific treatment require separate testing.

Treat stamp duty as a document-by-document issue

Ghana lists share transfers as exempt from stamp duty. That does not mean every document connected to a share deal is exempt.

Asset transfers, land instruments, debt documents and security documents require separate analysis. GRA guidance states that unstamped or insufficiently stamped security documents are inadmissible and unenforceable. This can affect financing enforcement when the buyer needs security most.

Worked example: an acquisition with secured borrowing

Take a Ghanaian manufacturer acquired for US$12 million, with a lender taking security over equipment and receivables. The buyer assumes that the share-transfer exemption resolves all stamp-duty questions and signs the finance documents without a document-by-document review.

If a security instrument is insufficiently stamped, the lender may face an enforceability problem despite having completed the acquisition. The cost of reviewing and correctly documenting the security before completion will usually be modest relative to a US$12 million transaction, but the consequence of missing it can be substantial. We would separate the share-transfer analysis from the analysis of asset, land, debt and security documents.

Test licences, contracts, people and operating reality

A target can be properly incorporated and still be unable to operate as the buyer expects. We therefore test the commercial facts behind the financial model.

Identify every licence, permit, concession, registration and approval required for the target’s actual activity. Record the issuing regulator, legal entity named on the approval, expiry date, territory, conditions and whether a change of ownership requires consent.

Do not rely on an unsigned spreadsheet from management. Request the underlying approval and compare its legal name and permitted activity with the target’s registration documents and revenue model. A licence may sit with an affiliate, cover only one site or exclude an activity that has become material.

Step 3: Read material contracts for control rights

Review customer, supplier, financing, lease, distribution, technology and shareholder agreements. Focus on assignment restrictions, change-of-control clauses, exclusivity, termination rights, minimum-volume obligations and governing law.

A contract can remain legally in the target after a share deal while giving the counterparty a right to terminate because control has changed. We would identify these contracts early, because a required consent can affect closing conditions, valuation and the timing of an announcement.

Step 4: Test the employment position

Ask for employee lists, payroll records, contracts, disciplinary matters, collective arrangements, immigration permissions and contractor agreements. Match the employee list to the entity that employs each person and the country where that person works.

The most common mistake is to treat a regional workforce as though it belongs to the holding company. Employment obligations generally follow the employing entity and local law. A buyer needs a country-by-country review where staff work across borders or provide services through related entities.

Step 5: Check disputes, assets and data

Obtain litigation schedules, demand letters, insurance notifications and regulatory correspondence. Verify title to key assets, including land, machinery, intellectual property and domain names, against the relevant records where available.

For businesses that process customer or employee information, identify where data sits, who can access it and which entity controls it. A commercial diligence report can identify concentration and churn risks. Legal diligence must establish whether the contracts and compliance arrangements support the operating model.

Turn findings into a decision, not a long issue list

A diligence report should help the buyer decide what to do with each issue. We classify findings by whether they should change price, delay completion, require a condition precedent, sit behind an indemnity or be accepted as a managed risk.

If ownership is unclear, a core licence is held outside the acquisition perimeter or a required consent is unavailable, do not treat the issue as a routine disclosure. Consider restructuring the deal, deferring completion or walking away. Those are commercial decisions, but they depend on clear evidence.

If the issue is a historic filing gap with a known cost and a practical remedy, a price adjustment or specific indemnity may be more proportionate. The right answer depends on the jurisdiction, deal structure, regulatory exposure and the seller’s ability to stand behind its promises.

Keep a closing checklist that assigns an owner, evidence required, deadline and consequence of non-completion for every material finding. This turns diligence into transaction governance rather than a report that sits unopened after signing.

Frequently Asked Questions

Is there one due diligence checklist for all African acquisitions?

No. A core checklist can cover corporate records, tax, contracts, employees, disputes and licences, but each country requires separate registry, revenue authority and regulatory checks. The jurisdiction map should determine the final scope.

Does buying shares avoid tax and regulatory diligence?

No. A share buyer acquires the target’s historic compliance exposure and must still test transaction taxes, stamp duty, investment conditions, licences and contractual change-of-control rights.

What should a buyer verify in Kenya’s beneficial ownership records?

Confirm Forms BOF1, BOF2 and BOF3 with the Registrar of Companies, then reconcile them with the securities register, annual returns and underlying control documents. Kenya’s beneficial ownership tests include a 10% ownership or voting-rights threshold, among other control indicators.

Why should a Ghana buyer review finance documents separately from the share transfer?

Ghana lists share transfers as exempt from stamp duty, but asset, land, debt and security documents need separate analysis. Insufficient stamping can affect the admissibility and enforceability of security documents.

A buyer earns confidence through evidence, not a well-organised data room. Explore M&A and transaction advisory in Africa with our team before you commit capital.