Corporate Law Practice

NIGERIAN LAW SCHOOL -CORPORATE LAW PRACTICE
POWERPOINTS
ON
Corporate Law praCtiCe
NIGERIAN LAW SCHOOL

2020/2021
CAVEAT: This compilation is intended to serve only as a Mobile access to the topic from the
Nigerian law school virtual classroom for students who could not access the NLS Virtual
Classroom and the compilers hereby disclaim any malfeasance or misfeasance arising from
the wrongful or unlawful application of the material or information contained herein.
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TABLE OF CONTENTS
1. (Week 3) Legal Framework and Regulatory Bodies -3

2. (Week 4) Choice of Business Organization and Formation -8
3. (Week 5) Corporate Law Practice - 17
4. (Week 6)
5. (Week 7) Pre-Incorporation Matters & Promotion Activities - 27
6. (Week 8) Foreign Participation in Nigeria - 34
7. (Week 9) Part 1: Preliminary Matters Before Commencement
of Business - 59
8. (Week 10) Corporate Governance 1 - 76
9. (Week 11) Directors and Secretary - 85
10. (Week 12) Corporate Governance 3 Meeting -95
11. (Week 13) Financial Statements Auditors and Audit
Committee (1) -113
12. (Week 14) Corporate Governance V -123
13. (Week 15) Company Securities 1 -132
14. (Week 16) Company securities 2 -147
15. (Week 17) Cooperate Restructuring 1 -160
16. (Week 18) Corporate Restructuring 2 -168
17. (Week 19) Company Proceedings -174
18. (Week 20) Winding Up And Dissolution -180
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(WEEK 3)
CORPORATE - LEGAL FRAMEWORK AND
REGULATORY BODIES
BY
M. O. EGBE (MRS.)
PRINCIPAL LAWS & SUBSIDIARY LEGISLATIONS

• Companies & Allied Matters Act 2004 Cap c20
• Companies proceedings rules
• Companies winding up Rules
• Investment & securities act 2007
• Securities & exchange commission rules 2013
• Federal High Court Act
• Federal High Court Rules
• Nigerian investment promotion commission Act Cap N117 LFN 2007
national office for technology acquisition and promotion Act Cap.18 LFN
2004. Immigration act.cap 111 LFN 2004
• Companies income tax Act
• Banks & other. Financial Institutions Act
• Federal Consumer and Consumer protection Act, 2018.
• Federal Inland Revenue Establishment act
ASSIGNMENT
• MENTION OTHER LAWS
REGULATORY BODIES
• Corporate Affairs Commission.
• See ss.1-17 CAMA
• Status-s.1
• Membership- s.3
• Registrar- General- s.8, s. 654(1)
• Functions- s.7
FUNCTIONS OF CAC
• Administer the Act, regulation, supervision of the formation, incorporation,
registration, management and winding up of companies.
• Establish a companies registry and offices in all the states of the federation.
• Arrange and conduct investigation into the affairs of companies in d interests
of shareholders and the public.
• Undertake other activities that are necessary to give full effect to the Act.
• Perform other functions as may be specified by any other Act or law.
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ABC PLC
(Address)
• Internal Memorandum
• To: the Managing Director
• From: the Company secretary
• Date: may 22, 2020
• Subject: functions of the corporate affairs commission
• Thank you.
• Moe (Mrs.)
• Company secretary
Securities & exchange commission

• Body corporate- s.1
• Composition- chairman, dg, 3commissioners etc- s.3
• Tenure- s.5
• Functions of sec s.13
• Regulate investment & securities business in Nigeria.
• Register security exchanges, e.t.c
• Register securities of public companies
• Register and regulate corporate and individualcapital market operators.
• Maintain register of foreign portfolio investment.
NIGERIAN INVESTMENT PROMOTIONCOMMISSION

• Headed by a Secretary- Permanent Secretary in the civil service
• Tenure
• Governing Council- Chairman, Secretary, Gov Central Bank etc
Section 4
• Agency of FG to co-ordinate and monitor all investment opportunities to which
the
Act Applies.
• Initiate and support measures to enhance investment climate in Nigeria.
• Promote investment in Nigeria
• Register& keep records of enterprise which the Act applies etc
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NATIONAL OFFICE FOR TECHNOLOGYACQUISITION and

PROMOTIONCOMMISSION
• Functions?
• Effect of Non- Registration with not AP?
• See the Case o f FRCN V Stanbicibtc.
FINANCIAL REPORTING COUNCIL OF NIGERIA

OTHERS
• Fill in GAP
SECTORS
• Aviation
• Oil & Gas
• Communication
• Hotel & Tourism- NTDA
• Power & Electric
• Financial Institutions
• Food & Drugs
ACCREDITATION - CAC
• Legal Practitioners, Chartered Accountants, Chartered
Secretaries.
• PART A
• Note- First Directors, Subscribers can Incorporate their own Companies.
PROCEDURE
• Accreditation Form
• 2 Passport Photographs
• Copy of Qualifying Cert.
• Practising Fees
• NYSC Discharge
• Fee- N2,500 & N5,000
REGISTRATION- CAPITAL MARKETOPERATOR

• S.38 ISA- Operators must Be registered
• Rule 178 Sec Rules (2013)- Capital market Experts/ Professional
Legal Practitioners, Accountants, Auditors, Engineers, Estate Surveyors, Property
Managers, & or Professionals as may be determined by the Commission.
• S.E.C V. KASUNMU (SAN) & ANOR.(2009) 10 NWLR (PT.1150) 509.
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REGISTRATION- SEC RULES2013- RULE 178(2)

Capital market experts or professionals to register as-
• Limited liability companies
• Firms & other Persons doing business in their true names.
FIRMS & PERSONS DOING BUSINESS

INTHEIR TRUE NAMES
• Form Sec 2
• CTC of bus. Name
• CV of the applicants
• Profile of the firm
• Partnership deed(if applicable)
• Postal address or electronic add of past employer.
• Sworn statement that requirement have been complied with.
• Annual practicing fees
• Proof indemnity insurance
Corporate bodies
• Sponsored application form sec 3
• form sec2- principal officer & Anor
• cv of sponsored individuals
• cert of in corporation corporate bodies
• sponsored application form sec 3
• form sec2- principal officer & Anor
• cv of sponsored individuals
• cert of incorporation
• Evidence of minimum capital ofn5m
• Profile of the co. – Past &present activities.
• ctc of me mart
• Audited accounts or statement of affairs- signed
• Postal add of. Sponsored individuals.
• Sworn undertaken to keep records.
QUALIFICATION
• Principal partners- 5yrs
• sponsored officers – 2yrs
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FRC V. STANBIC IBTC

• Google and Read.
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CLP WEEK 4
CHOICE OF BUSINESS ORGANIZATION AND FORMATION
BY
S.A. OSAMOLU
LEARNING OUTCOMES
 State the different types of business organizations that can be registered and
advice on their features and suitability
 Prepare a checklist of documents required for registration of business
organizations
 Conduct client interview and apply client instructions towards preparation of
documents for registration of business organizations.
 Identify the professional responsibilities involved
MEANING:
• A Business Organization is a going concern
• Profit – oriented
• Duly formed and incorporated/registered under the extant laws in Nigeria
• Sections 18 & 20 CAMA
TYPES OF BUSINESS ORGANIZATIONS
• Limited Liability Companies
• Sole Proprietorship
• Partnership
• Business Names
TYPES OF COMPANIES
• Company Limited by Guarantee
• Company Limited by Shares
• Unlimited Liability Company
• Section 21 (1)(a)(b)(c) CAMA
• Any of the above Companies may be;
• A private company or
• A public company
COMPANY LIMITED BY GUARANTEE

• Coys Lt/Gtee: Sections 21(1) (b) &26
• shall not be registered with a share capital.
• The liability of the members to contribute to the assets shall not be less than
N10,000.00.
• Does not carry on business for the purpose of
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• making profit for distribution as dividend to members
Company Ltd/Gtee Cont’d

• May carry on limited Business to promote its aims and objectives.
• Formed to promote commerce, art, science, religion, sport, culture,
education, research, charity or other similar objects.
UNLIMITED LIABILITY COMPANY
• An Unlimited Liability Company is a company not having any limit to the
liability of its members.
• At liquidation, members are personally liable to the Company’s
indebtedness.
• Section 21(1) (c)
COMPANY LIMITED BY SHARE
• A Company limited by share is one that has the liability of its members at
winding up limited to the amount, if any, unpaid on the shares held in the
company.
• A Coy Ltd/Shares may create classes of shares as stipulated by law – Section
117 – 118CAMA
CHECKLIST OF COMPANIES
• A Company Ltd/Shares may be registered as:
1. Private company limited by shares
2. Public company limited by shares
3. Private company limited by guarantee
4. Public company limited by guarantee
5. Private unlimited companies
6. Public unlimited companies
Section 21(2) CAMA
FACTORS THAT MAY DETERMINE THE CHOICEOF BUSINESS
ORGANIZATIONS
1. Nature of Business.
2. Available Capital
3. Number of members
4. Desired extent of liability of members
5. Commercial expediency.
6. The scope of operations.
7. Position of the Law/statutory requirements.
e.g. Commercial Banks/Chambers of Commerce .
8. The cost of registration and expenses.
9. Speed of processing and completion of registration.
10. Post registration compliance issues.
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11. The desire of the client himself

FEATURES OF A PRIVATE COMPANY
• 1. It is stated in the Memo that it is a private company
• 2. Authorized minimum share capital isN10,000
• 3. Every private company shall by its articles restricts the transfer of its shares.
• 4. Members shall not exceed 50 except thee excess are persons in the bonafide
employment of the company.
6. • Not required to hold statutory meeting or file statutory reports. Sec 211.
• Written resolutions can be passed by both Directors /members
• Public cannot subscribe its shares and debentures unless authorized by law.
• No restriction on the appointment of persons over 70 years as Directors.
• The company Secretary need not have certain professional qualifications.
• The removal of the Secretary does not require special procedures.
• No additional Notice of Section 222
WHEN RECOMMENDED
• Where the capital available to start off business is relatively small
• Where small and medium scale business organizations need to acquire
incorporated status.
• Where family and friends want to engage in business expected to last over a long
period
PECULIAR FEATURES OF A COMPANYLIMITED BY GUARANTEE

• The consent of the Attorney – General of the Federation must be obtained before
its memo can be registered.
• It does not carry on business for the purpose of making profit to be distributed to
members.
• It has no share capital.
• The liability of its members is upon winding up and where the company cannot
satisfy the debts.
• The numbers of people forming it must be clearly stated.

• Upon winding up, after the discharge of its debts, any assets the company
remaining shall not be distributed among the members but shall be transferred to
some organization with similar objects.
• Its name must include the word “Limited by Guarantee” Ltd/Gte e.g. Chambers
of Comm.
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WHEN RECOMMENDED
• Where the company’s object is for the promotion of commerce, art, science,
religion, sports, culture, education, charity.
• Where the company’s profit is not to be distributed to members as dividend.
• It is a subsidiary company set up to render corporate social responsibility,
obligations for the parent company.
FEATURES OF A PUBLIC COMPANY

• It is stated in its memorandum to be a public company
• It can invite members of the public to subscribe to its shares and debentures
• It has the tendency of being larger and having more funds than many private
companies because they offer shares to the public
• It has an unlimited number of members
• The name ends with “Public Limited Company” Plc
• The authorized minimum share capital is N500,000 and at least 25% of the
share capital must be allotted to members at incorporation
• Where a person who is above 70 years is to be made a Director, special
notice of his age must be given to the members in general meeting.
• It must hold its statutory meeting within 6 months of incorporation – Sec.
211
• It must publish additional notice of its Annual General Meeting to its
members in Newspapers. Sec 222.
• The Secretary must be qualified in accordance with Sec. 295
• The removal of the company Secretary must accord with the procedures laid
down by law.
WHEN RECOMMENDED:
• Where the capital available to start off business is relatively large
• Where the business organization desires to have access to public funds through
offering shares to the public for subscription
• Where membership is not limited or restricted Distinguishing between Private
&Public
• Meeting
• Secretary
• Directorship
• Share Capital
• Resolution – written resolution
• Records and Returns
• Membership
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Contrast Company Ltd/GTEE WITH Coy

Ltd/Shares
• Consent of Attorney General required for Company Ltd/Shares
• Distribution of Profit as Dividend
• Subscription clause/Undertaking and Special clause
• Authorized minimum Shares
• Tax Implication
• Dissolution and Winding up and Distribution of surplus assets
CLIENT INTERVIEW Quiz

• READ SECTIONS 18, 20, 21, 22, 26, 27, 30,31,35,39,65,66,71,72,40
• Prepare a checklist of the questions to be asked during interview for formation of
business org.
Client Interview Questionnaire
• Read Sections 257 & Sections 573 to 575, Part B of CAMA
• Proposed Name of Company/ Alternative
• Registered Office Address/ Head Office
• Nature of Business
• Location
• What is the proposed sphere of coverage?
• How many members/shareholders/proprietors will you have for a start?
• What is the maximum number of members

• Ages of the persons forming the company
• Who are the Proposed Directors
• Any known legal disability
• Proposed minimum share capital
• Shareholding structure – Ratio
• Control and Management / Leverage on investment
GTE
• 1. What would be the extent of members undertaking to contribute
• 2. Name of the Company
• 3. What are the objects of business
• 4. Are the objects for promotion of commerce, art, science
• 5. Details of Subscribers
• 6. Permits and Approvals
• 7. What is the proposed NAME of the business
• 8. Control and Management
• 9. Raising and Borrowing Power
• 10. Registered Office Address.
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• 11. Company Secretary

• 12. Directorship
1. Personal details
❖ Name in full ❖Nationality ❖ Gender ❖Age ❖Residential address
Essentially to answer the question of
capacity under Section 20.
2. Shareholders/ ownership
• How many persons to start up the business.
✔membership
✔Details of such members
✔Nationality
✔Age
3. Details of Directorship
• Who are to be Directors.
✔Age
✔Qualification = expertise
✔Mental capacity
✔Number of Directors
✔Contact address
4. Sphere/dimension of Business
• Need for registered office address in Nigeria
• Leveraging on ECOWAS Protocol, WTO/GATT, etc
• Incentives - manufacturing and rural location
5. SHARES
• Share Capital
• Shares Allotment
• Types/Classes of Shares
6. Restrictions on Power of the Company
Sec 38. provides for full power except curtailed
in memo
・ Borrowing Power of the Company
To be expressly stated and with limitation if any.
・ Biz and investment. etc
7. Registered Office Address
• To capture details such as ・ Number ・ Street ・ Quarters/District ・ Town ・
LGA, State ・ No12, Ebuka Street, Kajola Quarter, Kabba,
Kogi State, Nigeria.
8. Control and Management
• Use of Common Seal
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• Life Director
• Chairman
• Majority Shareholding
• Preferential shareholding
• Power to appoint and remove Director
• Compulsory signatory to the account
9. Secretaryship
• Details of Company Secretary
• Qualification
•etc
Type of company
• As envisaged under Section 21 (1) & (2)
11. The date for completion of registration

• Express service at CAC
NOT AVAILABLE AGAIN
▪ Professional Fees
▪ Commencement of Business – after
incorporation – sections 37 & 38 CAMA
▪ NB: Coys have no power of commencement of
Business before Inc unlike Business Name
which enjoys the 28 days rule.
12. Nature and objects of Business

・ What is the nature of business ・ What are the objects of business. This will help
the Solicitor to advice along
a. Share capital prescription. e.g. banking, insurance, security, aviation, shipping,
capital market, asset management
b. need for proficiency certificate
c. Obtaining needed permits, license, approval and consents.
d. Regulatory agencies, Bodies, etc
13. Foreign Participation

• JVA
• Necessary permits from NIPC, CBN, NIS etc
• Nature of the foreign participation FPI/FDI.
▪ Importation of Capital to avoid violation of money laundering statutes.
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14. What is the proposed NAME of the

business
Preferred name and Alternative Name
• REGISTRABLE AND NON-REGISTRABLE NAMES
・ Conflicting Names: Registered corporate Name
・ Restricted Names: Names to be used subject to consent of CAC or solely
reserved for a particular type of company
・ Prohibited Names: Names that cannot be approved because of their illegal,
offensive or deceptive nature.
Restricted name
• cannot be registered except with the consent of CAC
•Names which contains the words “National”, Government”, “Municipal”, “State”,
Federal”, “Regional” which in the opinion of the CAC suggests or is calculated to
suggest that it enjoys the patronage of the Federal/State Government Nig. or any
ministry or Contains the word “Municipal” or “Chartered” or in the opinion of
CAC suggest connection with any municipal or other local authority;
• Contains the words “ co-operative” or the words “Building secured
• Contains the word “Group” or “Holding”
• Name that contains the words “Chamber of commerce”
CHECKLIST OF PROHIBITEDCORPORATE NAMES

Either because such name conflict with an
1. Already registered
2. Reserved names or
3. Deceptive or
4. Illegal or offensive to public policy
DOCUMENTS TO BE SUBMITTED TO CAC FOR INCORPORATION OF

COMPANIES
Incorporation of companies limited by shares whether private, public or unlimited
company
THE STATUTORY FORMS

1. FORM CAC 1
Availability Check and Reservation of Name
2. FORM CAC 1.1 – now composite – embodies: ❑ Statement of Share Capital
and Return of Allotment of Shares (duly stamped at the Stamp
Duties Office FIRS) ❑ Notice of Registered Office Address
❑ Declaration of compliance with the
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Requirement of CAMA (duly sworn to by Legal Practitioner before a

Commissioner for Oaths/Notary Public)
❑ Particulars of Secretary of the Company
❑ Particulars of First Directors
OTHER DOCUMENTS/ITEMS
 Memorandum and Articles of Association (2printed and signed copies duly
stamped at stamp Duties –FIRS)
 Original receipts of CAC Filing/Registration fees, stamp duties and
compliance oath.• Any other Document required by any other law
/Regulation to satisfy the requirements of section 35(2) (e)
Incorporation of companies Limited by Guarantee

STATUTORY FORMS:
1. FORM CAC 1- Availability and Reservation of name• (within 60 days of
reservation)
2. Duly completed FORM CAC 1.1;
 Declaration of Undertaking in compliance with the requirement of CAMA
 Particulars of first Directors
OTHER DOCUMENTS
 Memorandum and Articles of Association (With requisite special clauses &
duly stamped at FIRS; 2 copies)
 Letter of consent from the Attorney General of the Federation
 Receipt of CAC Filing fee and stamp duties for the memo and articles
 Any other Document required by any other law – S.35(2) (e)
ETHICAL MATTERS
 Duty to act in good faith
 Duty to take full instruction.
 Duty to Disclose Conflicting Interest Rule 17.
 The money collected must be disbursed in accordance with client’s lawful
instructions.
 Preserve Confidential Information - Sec 170 EA
• It is the duty of the lawyer to devote his attention, energy and expertise to the
service of his client in accordance with Rule 14 (2 - 5) RPC 2007.
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WEEK 5
CORPORATE LAW PRATICE
CHOICES OF BUSINESS AND NON-BUSINESS ORGANISATION
• Partnership
• Company limited by guarantee
• incorporated trustees
WHAT IS PARTNERSHIP?
Partnership is the relationship which subsists between Persons carrying on
business in common with a view of profit ( Section 1 (1) Partnership Act 1890,
Section 3 (1) Partnership Law Lagos.
CHARACTERISTICS OF PARTNERSHIP
• There must be business
• The business must be carried on in common by two or more persons
• The intention must be to make profit
CAPACITY OF PARTNERS
• Minors
• Persons of unsound mind
• Bankrupts
• Aliens
See: S. 126 (g) Bankruptcy Act 2004. Sections 34 (a) and 36 (a) partnership
Law Lagos
PARTNERSHIP AGREEMENT
• Oral
• Written
• By Deed
Necessity for formal Agreement
• Prevention of presumptions of law
• It forms a benchmark for reference time of crisis
• Easy enforceability of the terms
• Avoidance of bad faith, cheating and oppression
• Makes the terms easily ascertainable
CONTENT OF PARNERSHIP AGREEMENT

• Commencement: date ;parties; addresses
• Names and Style of partners
• Payment of salaries
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• Name and Style of Partnership (Note: prohibited and restricted names)

• Nature of business
• Place of business
• Capital of business
• Profits and losses
• Payment of salaries
• Management
• Duration
• Retirement
• Expulsion and Suspension
• Termination
• Banker and Signatories to account
• Drawings
• Insurance
• Limits of Authority
• Arbitration
See: Sections 6,7, 25,26, 27, 33 and 37 Partnership Law Lagos.
Contrasting Partnership with Company

1. Legal Personality
2. Limitation of Liability
3. Number of Members ( S. 19 CAMA)
4. Management
5. Management
6. Formality and Publicity
7. Capital
8. Dissolution
COMPANY LIMITED BY GUARANTEE
What are Companies Limited by Guarantee used for?
Promotion of:
• Commerce
• Art
• Science
• Religion
• Sport
• Culture
• Education
• Research
• Charity
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FEATURES OF A COMPANY LIMITED BY GUARANTEE

• Income and Property for the promotion of object only
• No distributable Profit
• Has no share capital
• Liability of members is limited to amount guaranteed/ undertaken (not <
N10000)
• Implementation of Liability delayed till occurrence of winding up
• Memo must contain Special Clause ( section 26 CAMA)
• Assets not distributable upon dissolution
• Enjoys tax Exemption
• Consent of Attorney-General of Federation required for registration
NON-BUSINESS ORGANISATIONSINCORPORATED TRUSTEE
Incorporated Trustees may be used by:
Section 590 (1) CAMA
• Charitable bodies ( i.e NGOs)
• Religious bodies
• Clubs
• Foundations
• Social associations
• Educational bodies
• Sporting associations, etc.
Appointment and Registration of Trustees
• One or more persons may be appointed
• Registration not mandatory
• It can legally carry out objectives of association prior to registration Section
590 (1) CAMA
• Unless registered the Trustee/ Trustees will not be a corporate body Section
596 CAMA
Effects of Registration
The Trustee or Trustees become body corporate with:
• Perpetual succession
• Common seal
• Power to sue and be sued
• Power to hold and dispose property or any interest therein Section 596 (1)
CAMA
Who cannot be a Trustee?
• An infant
• A person found by the court to be of unsound mind
• An undischarged bankrupt
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• A convict of an offence involving fraud or dishonesty within 5 years of his

proposed appointment
Constitution of the association
Make provisions for:
• Name or Title of the association beginning with “Incorporated Trustee of
………….”
• Aims and Objective of the association
• Appointment, powers, duties, tenures and replacement of trustees
• Use and custody of common seal
• Meetings of the association
• The numbers of members of governing body, their powers, appointment and
removal
• Disbursement of funds, keeping and auditing of accounts if subscriptions
and other contributions are to be collected. Section 593 CAMA
• Special clause Section 603 CAMA
• Address of the association
• Particulars of Secretary Section 591 (c ) CAMA
Registration of Trustees
sections 591,593,594,595 CAMA
• Name search and Reservation of name
• Publication of application inviting objection within 28 days in 2 national
Newspapers. Section 594 CAMA. Note: Name and Object of association,
full names of Trustees must appear on the publication
• Duly completed application form with the impression of common seal of the
Association. Note: illiterate jurat required for thumb print of Trustees.
• A formal application for application signed by chairman and Secretary or the
solicitor
• Two printed copies of the constitution
• Trustees declaration form duly deposed to by each Trustee
• Means of Identification of Trustees
• Extracts of minutes of meeting appointing Trustees and adopting Special
Clause Showing members present and the voting pattern
• Cuttings of Publications
• Pay for the filing of the application
• Upload all required documents after 28 days of the invitation for objection
• If no objection or query, or objection rejected within the specified period the
Trustees will be registered and certificate issued
• If CAC has reason to withhold assent it will do so
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COMPANY LIMITED BY GUARANTEE AND

INCORPORATEDTRUSTEES
DIFFERENCES AND SIMILARITIES
• Business and Non Business
• Special Clause
• Attachment of liability and Legal entity
• Profits not distributable
• Requirements of registration
• Requirements for registration
• Effects of registration
• Management
• Mode of Dissolution
• Application of Surplus assets upon dissolution
WEEK 5 ASSIGNMENT
ANSWERS TO SCENARIO: CHOICE OF BUSINESS AND NON-
BUSINESS ORGANIZATION AND FORMATION (PARTNERSHIP AND
INCORPORATED TRUSTEES)
Nathan Abayomi and Jeriel Uchendu just got enrolled for the mandatory National
Youth Service Corp where they met at Sokoto state, their state of posting. During
the service year, they started collecting and recycling plastic waste out of their
passion for a clean and healthy environment. They eventually made a business out
of it when they started supplying their recycled plastic to a plastic company in
Kano and they want to run the business themselves with much ease because of
their little resources. Still in pursuit of their passion for a clean environment, they
started teaching people on how to properly dispose waste and creating awareness
on the use of biodegradable materials for packaging goods and other products, they
want this campaign to be a continuing one and to reach other parts of the country.
Answer the following questions:
1. Assuming you were engaged to register the business for them, what
questions will you ask them during your meeting with them?(8 Marks)
a. The firm name and alternate name
b. The general nature of business
c. Postal address of the principal place of business and of any branches
d. Full names of the individual proprietor or partners
e. Full particulars of the principals
f. Date of commencement of business
2. The documents you will require from them for registration are as follow:(8
marks)
a. 2 Copies of Application Form (CAC/BN/1)
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b. Form CAC 1-Availability and Reservation of Name

c. Passport photographs of each individual
d. Registration Fee
3. The legal implications of the registered name upon registration are as
follow: :(8 marks)
a. Registration does not give legal personality to the business or
association but apprises the public of the true identity of the persons,
who trade under the name. See Domingo v The Queen (supra).
b. Registration gives priority to use of the name even against registered
companies. See 31(4) of CAMA.
c. Registration will not be construed as authorising the use of the name,
if apart from such registration; the use of the name could be
prohibited. See S. 579(1) of CAMA.
d. Registration is not proof of partnership. See Henshaw V Roberts
(supra) but raises a rebuttable presumption of the existence of
partnership. See Nwankwo V Nwankwo (supra).
4. The name options available to them that will require no registration are as
follow: (5 marks)
The true surnames of all partners without any addition other than, the true
forenames or the initials of the partners. The illustrations are as follows:
a. Nathan Abayomi and Jeriel Uchendu
b. N.Abayomi and J. Uchendu
c. Abayomi and Uchendu
5. Assuming they want to register the business as Nat and Jer Cooperative
Ventures, the implications is that:: (4 marks)
The Registrar may refuse to register the business name because the word
‘Cooperative ‘in the proposed name of the business falls under restricted
unless the consent of Corporate Affairs Commission had been obtained.
Restricted names are names which in the opinion of the Registrar of
Corporate Affairs Commission is capable of misleading the public.
6. Three (3) presumptions that can be made as a result of their joint business
are as follow:: (15 marks)
a. Partnership Capital:
It will be presumed in the absence of a provision for capital
contribution in the Partnership Agreement that the partners
contributed the capital equally and must share the profit and losses
equally.
b. Remuneration/Salary:
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It will be presumed in the absence of a provision for payment of

salary/remuneration in the Partnership Agreement that the partners
will not be entitled to receive salary/remuneration.
c. Profit and Loss Sharing:
It will be presumed in the absence of a provision for profit and loss
sharing in the Partnership Agreement that the profit and loss will be
equally shared by the partners.
d. Expulsion:
It will be presumed in the absence of a provision for expulsion in the
Partnership Agreement that the partners lack the power to expel any
partner. If they attempt to expel any partner, the partnership stands
dissolved.
e. Partnership Property:
It will be presumed that the partners have equal rights to the
partnership property if nothing is provided on the contrary in the
Partnership Agreement.
f. Dissolution of Partnership:
The partnership will be presumed to be partnership-at-will which can
be dissolved at the instance of any of the partners (notice). Death,
incapacity, expulsion or resignation of a partner may also signify the
dissolution of the partnership if there is no provision in the
Partnership Agreement for continuation of the partnership after such
occurrences.
7. Five clauses that will be included in the agreement that will regulate their
joint business are as follow:: (5 marks)
a. Parties
b. Name and style
c. Place of business
d. Nature of business
e. Commencement
f. Duration
g. Capital
h. Property of Partnership
i. Profits and drawings
j. Bankers and signatories to bank account
k. Salary/Remuneration
l. Accounts
m. Powers, rights and duties
n. Retirement
o. Expulsion and Suspension
23
p. Dissolution
q. Arbitration
8. The appropriate form of registration for their campaign on a clean
environment is to register Incorporated Trustees under Part C of CAMA.
This is because the aims and objectives of the organization they want to
form is to educate the entire people of Nigeria on how to properly dispose
waste and creating awareness on the use of biodegradable materials for
packaging goods and other products, as well as the organization being a
non-profit organization falls under Part C of CAMA.: (3 marks)
S. 590 of CAMA: (1 mark) provides that, “where one or more trustees are
appointed by any community of persons bound together by custom, religion,
kinship or nationality or by anybody or association of persons established for
any religious, educational, literary, scientific, social, development, cultural,
sporting or charitable purpose, he or they may, if so authorized by the
community, body or association (in this Act referred to as “the association”)
apply to the Commission in the manner hereafter provided for registration
under this Act as a corporate body”.
9. The steps involved in getting the body registered are as follow:: (15
marks)
a. Taking instructions
b. Holding of meeting of the body where the trustees are appointed and
the Special Clause adopted
c. Writing of letter authorising the person handling the registration
d. Conduct availability check and reservation of name
e. Publication in two (2) daily newspapers of which one must be
circulating in the local area and the other one circulating nationally,
calling for objection within 28 days
f. Preparation of incorporation documents (filling of application form,
constitution, Trustee Declaration Form, obtaining passport
photographs of trustees, etc)
g. Preparation of the Common Seal of the body
h. Formal application addressed to the Registrar-General, of the
Corporate Affairs Commission requesting for his consent/approval for
the registration of the body by the person registering the body
i. Payment of filling fees
j. Filing
k. Obtaining the certificate of incorporation and CTCs of the constitution
and application form (CAC /IT FORM I) of the body.
24
10. The person that may join in the registration of the body must be:: (5
marks)
a. An adult
b. A person of sound mind
c. A person who is not bankrupt
d. A person who has not been convicted of an offence involving fraud or
dishonesty within five (5) years of his proposed appointment. See S.
592 of CAMA.
11. The minimum number of person that is registered for the body to have
corporate personality is one person. CAMA provides that one or more
trustees are required for registration of an Incorporated Trustees.: (2 mark)
See. S 590 of CAMA.
12. The documents required for registration of the body are as follows:: (14
marks)
a. Form of approval of name Form CAC 1
b. CAC /IT FORM I -Duly completed set of Incorporation Form
c. Trustees Declaration Form
d. Formal application letter for registration signed by the chairman and
secretary
e. Extracts of minutes of general meeting appointing trustees and adopting
special clause in the constitution signed by the chairman signed by the
chairman and secretary
f. Two printed copies of the constitution
g. Trustees declaration from duly deposed to by each trustee in the High Court
h. Impression of the common seal of the association on the application form
i. Payment of filing fee
j. Evidence of newspaper publication of advertisement of trustees
k. Impression of common seal
l. Evidence of land ownership
m. Two passport photograph of each Trustees
n. Letter authorising the Solicitor handling the registration
13. Five (5) provisions that must be contained in the constitution of the body are
as follows:: (5 marks)
a. Name
b. Aims and objectives
c. Common seal
d. Special clause
e. Trustees
f. Governing body
25
g. Meetings
h. Accounts
26
WEEK 7
PRE-INCORPORATION MATTERS & PROMOTION ACTIVITIES
Word of Wisdom
Successful people have fear, successful people have doubts, and have worries: they
just don’t let these feelings stop them. So don’t allow fear, self doubt and worries
stop your dreams.
AND THE WORK FOR TODAY
• Promotion Of Companies
&
• Pre –Incorporation Contracts
LESSON OUTCOME
 State the relevance of promotion activities and duties of promoter.
 Discuss the incidences, types and features of pre-incorporation contracts
(Joint venture and Shareholders agreement.).
 Discuss the relationship between MEMART & pre-incorporation contract
 List the contents of Shareholders Agreement, JVA and Commercial
Memorandum of Understanding
 Draft Pre-incorporation Contracts.
 Identify ethical issues involved in pre-incorporation matters.
CONTENT
• 1. Promotion and Nature of Promotion activities and duties of promoter.
• 2. Types and feature of different pre-incorporation contracts (Joint venture
and Shareholders Agreements)
• 3. Drafting of Pre-incorporation contract
• 4. Ethical issues involved
COMPARING A PROMOTER
1. Nurse/Mid Wife
2. Concert and Event Planner
3. A Forerunner
PROMOTION OF A COMPANY
• For a company to come into existence, there must be persons who would
promote and float it.
• Promotion activities usually involve
I. Fund raising
II. Obtaining requisite permits
III. Packaging of incorporation documents
IV. Land acquisition
V. Personality Shopping/Employment/Staffing etc
27
WHO IS A PROMOTER?
• Sec 61 CAMA says a promoter is any person who takes part in forming a
company or undertakes a given project or takes steps to accomplish the
purpose of a newly formed company or participates in raising funds for a
newly incorporated company.
WHAT OF PROFESSIONALS ENGAGED IN COMPANY
FORMATION?
• But a person who acted in a professional capacity and was briefed by the
Promoter is not a promoter.
• Accountant who prepares financial analysis or a solicitor who prepares the
memorandum and articles and registers the company for client and is paid
his professional fees is not a promoter.
They may not be Promoters:

• Solicitor
• Engineer
• Architect
• Surveyor
• Estate Agent. etc
• In Garba v. Sheba Int. (Nig) Ltd the court set up a test of determining who is
a promoter, thus:
• “ A promoter is one who undertakes to form a company with reference to a
given object and set it going and who takes necessary steps to accomplish
that purpose”
QUERIES: PLS NOTE
• However, A Professional Who Does Beyond His Professional Engagement
May Be Treated As A Promoter.
• For Instance, A Lawyer Who After Incorporation, Assist In Employment,
Securing Accommodation, Personality Shopping, Equipments, Etc.
Principles
• A promoter is not a trustee or an agent.
• A company as a corporate body may promote another company.
• See Garba’s case
28
LEGAL RELATIONSHIP BETWEEN A PROMOTER & THE

COMPANY
• A promoter stands in a fiduciary relationship to the company thus must
observe utmost good faith towards the company in any transaction with it or
on its behalf.
• Where he fails to observe utmost good faith, the promoter shall be liable to
compensate the company for any loss incurred. Se 62 (1)
DUTIES OF PROMOTERS
a) Duty to account for money/ properties received in the course of the
promotion activities
b) He must disclose any property or information which is acquired on behalf of
the company especially where he has used the information or property to
gain a benefit S. 62 (2)
c) Duty to disclose conflicting interest in transactions with the company
d) Duty not to expose the company to loss
e) Duty not to make secret profit; where made, it must be refunded to the
company
LIABILITIES OF PROMOTERS
Where there is a breach of the duties imposed on a promoter, the company can
take any of the following actions for redress
i. Action to render account of money or property received in the course of
promotion activities
ii. Action to account for secret profit made
iii. Action for damages for wrongful exploitation of confidential information
iv. Refusal to ratify pre-incorporation contract tainted with conflict of interest
v. Action to refund.
vi. Rescission (strongest tool)
REASON FOR RESCISSION
• A promoter is in a fiduciary relationship to the company, thus any breach of
this duty entitles the company to rescission from such contracts.
IS THE RIGHT OF RESCISSION OF A COMPANY ABSOLUTE?
• NO, it is not absolute.
• The court may in its equitable jurisdiction stop a company from rescission
• For instance, a company may not rescind where there is full disclosure of
material facts known by the promoter and the contract has been ratified on
behalf of the company:
29
Where rescission not possible, the company may take option

of Recovery of Profit
• Where it is not possible for the company to rescind the contract the company
may recover the profit made in the transaction.
• Sometimes, recovering profit only may not be sufficient thus company is
entitled to sue for damages for the breach of the fiduciary duty.
• Also, a subscriber has a right to sue for damages where he relied on the false
information given to him by the promoter subscribing for the shares
Is there Limitation of time in action against a promoter?

 Action against a promoter by a company is not limited by time.
 But the court has the discretion to relieve a promoter in whole part from
liability considering the circumstances and lapse of time.
RATIFICATION OF CONTRACT ENTERED BY PROMOTER
a. By the company’s Board of directors independent of the promoter
b. By all the members of the company; or
c. By the company at a general meeting at which neither the promoter
shareholders of any shares in which he is beneficially interested shall vote
on the resolution to enter into or ratify the transaction. S. (2) (3)
REMUNERATION OF PROMOTERS
 A promoter has no right against the company for payment of services
rendered before incorporation.
 The law is that unless the company’s Articles of Association permits the
Directors to pay, a promoter is not entitled to remuneration for services
secured as a promoter.
 Where the promoter enters into a contract with the proposed company he can
recover his fees and preliminary expenses where the contract is ratified by
the company.
Issues of Remuneration Generally?
I. Promoter
II. Executive director
III. Managing director
IV. Non – executive director
V. Trustees
VI. Company secretary
See the case of Gluckstein v Barnes
The forms of Remuneration available to a Promoter:

1. He may negotiate on behalf of the company for a sale / purchase but with
commission
30
2. He may also take shares which are to be credited as fully paid.

3. He may be paid agency fees
4. He may be given appointment as director.
5. The promoter may purchase a property and sell it to the company at inflated
price = profits.
Consequence of a promoter convicted of fraudulent practices in the

course of promotion
• Where a person has been convicted by a court for any offence in connection
with the promotion or formation of a company he may be barred/suspended
from being a director or from taking part in the management of any company
for a period not exceeding 10 years as may be specified by the court . S.
254 (1) of CAMA
PRE-INCORPORATION CONTRACTS
• Pre-incorporation contracts entered into by person on behalf of a company
before its incorporation.
Gestation contracts
• Pre-incorporation contracts such as promotion agreements, preliminary
agreements formation agreements, shareholders agreement, memorandum of
undertaking, Pre-incorporation agreements etc
LEGAL STATUS OF PRE-INCORPORATION CONTRACTS
POSITION AT COMMON LAW
• At Common law, a company is not bound by contracts purported entered
into on its behalf by its promoters or other persons before incorporation. And
the company cannot, after incorporation ratify or adopt such a contract.
Common law position
• The rationale is that since a company has no legal existence before
incorporations, it is incapable of entering into a contract itself and also
incapable of acting through an agent. - KELNER V. BAXTER
• It was held that where a contract is signed by a person as “agent” but who
has no principal existing at that time, the contract would be wholly
inoperative, binding upon the person who signed it.
• A stranger cannot relive him of the liability by subsequent ratification.
• See also Leopold New Borne (London) Ltd v. Sensolid (Great Britain)
Ltd
• In that case, the court further held that to be able to enjoy the benefits of a
pre-incorporation agreement. The company ought to have entered into a
fresh agreement upon the same terms of the previous one after its
incorporation
31
WHAT IS THE LEGAL REGIME UNDER CAMA?

• By S. 72 (1) CAMA, a company upon incorporation can ratify all the pre-
incorporation contracts entered on its behalf. Thus, the company becomes
bound and is entitled to the benefits and obligations thereto.
CAMA position
• However, before such ratification, the person (or promoter) who purported
to act in the name or on behalf of the company shall be personally bound by
the contract or transaction and entitled to the benefits and obligations thereof
-Se 72(2)
S. 72 judicially tested
• The Supreme Court confirmed the provisions of Section 72(1) as to
ratification of pre-incorporation contracts in the case of Society Generale
Bank (Nig) Ltd v. Society General Favouraiser
Right to Rescind
• A company has a right to rescind from any contract entered into on its behalf
before its incorporation. However, this right of rescind must be applied
considering and according with the general principles of law on rescission of
contracts.
CONFLICT BET PROVISIONS OF MEMART & PRE-
INCORPORATION CONTRACT
• Where there is a conflict between the memo and articles on one hand and the
pre-incorporation contract on the other hand, the provision of the
memorandum & articles shall prevail.
• Even where a “Supremacy clause” is inserted into the pre-incorporation
contract, it would still not go to erode the clear provision of the CAMA
which in Section 41(1) describes the memo and articles as superior contract
of the company.
EFFECTS OF PRE-INCORPORATION CONTRACT ON THE
MEMO AND ARTICLES
• The inclusion of the terms of a pre-incorporation contract in the object
clause is the intention to carry out such objects.
• PLS NOTE, the inclusion of a pre-incorporation contract in the MEMO of a
company does not impose extra liability on the COY, but amounts to no
more than a serious desire by the promoters that the proposed coy after its
formation should execute the terms of the contract. EDOKPOLOR & CO
LTD V. SEM- EDOWIRE
Binding clause
32
• Provisions made in the Articles of Association on rules of management of

the company, the management and members of the company are bound to
observe them.
TYPES OF PRE-INCORPORATION CONTRACTS
• Joint venture agreement
• Shareholder’s agreement
• Contract for payment of promoter’s expenses
• Directors’ service contract
• Contract for conversion of partnership into incorporated company
• Contract for acquisition of property.
• Contract of Transfer of Technology.
CONTENTS OF SHAREHOLDERS AGREEMENT
• Parties and their capacities, Date, Recital, Consideration, Registered office,
Companies business, Dividend policies, Directors, Secretary Auditors and
Bankers, Warranties, Guarantees and indemnities, Financing Accounts,
Transfer of shares and loans, Restrictive covenants, Procedure to resolve
Deadlock, Important management decisions, Confidentiality, Dispute
Resolution, pre emptive rights, Winding up Shareholders consent etc
JOINT VENTURE AGREEMENT
• A joint venture Agreement is more specific and formal than the
Memorandum of Understanding in terms of binding and enforceable terms.
• At this stage, parties are certain as to the terms of the venture.
• This also contains consideration or contributions.
• It is not unusual to find clauses in the MOU also in the JVA.
CONTENT OF JOINT VENTURE AGREEMENT
• Parties and their description, Date, Recital
• Nature of business, Registered office
• Dividend policies, Financing accounts
• Confidentiality, Restrictive covenants
• Directors and Secretary, Winding up
• Consideration, Dispute Resolution, applicable law, capital contribution,
admission of new partner, transfer of technology, etc
• Sample draft of Resolution for Ratification/Adoption of Promoter contract
33
WEEK 8
FOREIGN PARTICIPATION IN NIGERIA
4. List the various incentives, permits and approval available under the law to
encourage foreign participation in business in Nigeria.
5. Give a checklist of documents to be attached in support of application to
relevant Regulatory Agencies (NIPC, NOTAP & Immigration)
• Identify the various laws regulating participation in business in Nigeria by
foreigners.
• 2. Identify companies / entities exempted from registration.
• 3. Identify the difference between foreign direct investments and foreign
portfolio investment.
Overview
• Categories of Foreigners
• Incorporate a Nigerian company
• legal regulatory framework
• Register with NIPC
• Import Capital
• Assurances
• Licence, Approval
• Incentives;
INTRODUCTION
• A foreigner is free to do business alone or in partnership with any other
person.
• See Section 20(4) of CAMA and Section 17 of Nigerian Investment
Promotion Commission Act
Negative list
 Prohibition:
 to everybody (negative list):
 Production of arms, ammunition etc;
 Production of and dealing in narcotic drugs and psychotropic substances;
 Production of military and paramilitary wears including those of the police,
customs, immigration and prison
 Such other items as the Federal Executive Council may determine: 18 and
32 NIPC Act
Categories - “Foreign Investors (FIs)”
1. Foreign Institutional Investors (FIIs) Foreign Portfolio investors (e.g.
pension fund managers, unit trust investment managers, institutional
portfolio managers registered in other jurisdiction(s), who buy into a
Nigerian company without actual participation: section 26 of FEM
34
2. Direct investors who invest in the Nigerian market (primary or secondary)

with foreign currency.
3. Individual Investors who are foreigners and Nigerians resident abroad…
…who are investing with foreign currency. See Rule 208
4. A foreign company could also be exempted from registration upon an
application to the President – S. 56(1) CAMA - or by virtue of a treaty to
which Nigeria is a party. S.54(3)(b) CAMA.
Portfolio investors
• SEE reg. 410. Sec Securities and Exchange Commission Rules 2013
• Foreign companies in Nigeria for a specific purpose can apply to the
President for exemption from registration
1. s 26 FEM Act Cap. F34 L.F.N. 2004
LEGAL REGULATORY FRAMEWORK

• CAMA Cap. C20 L.F.N. 2004 (CAMA) and Companies Regulations 2012
• ISA 2007 and SEC Rules 2013
• NIPC Act Cap. N117 L.F.N. 2004 (NIPC Act)
• IMMIGRATION ACT, NO. 8 2015 and Immigration Regulations 2017
• Foreign Exchange (Monitoring & Miscellaneous Provisions) Act Cap. F34
L.F.N. 2004
• National Office for Technology Acquisition and Promotion Act Cap. N62
L.F.N. 2004
• Industrial Inspectorate Act Cap. I8 L.F.N. 2004
• Companies Income Tax Act Cap. C21 L.F.N. 2004
• Personal Income Tax Act Cap. P8 L.F.N. 2004
OVERVIEW- CAMA
• A foreign company must first register as a separate entity before they can
operate: section 54 of CAMA, and until incorporated, it cannot carry on any
business in Nigeria or exercise any of the powers of a registered company.
• It cannot even have a place of business for service of documents or
processes in Nigeria, except receipt of documents as a prelude to
incorporation
Consequence of non-compliance
• If Foreign coy does not register, any transaction entered into is void and
illegal
• The court will therefore not enforce the contract at the instance of any party
to the transaction:
• Can a party at wrong use the section as a sword or defence?
35
• Unlikely to sue if he has benefitted but if the aggrieved party sues on it the
court will not allow the party who is wrong to raise the illegality as a
defence. See SOLANKE V. ABED, 1962 1 ANLR 230.
Can a foreign company sue or be sued in Nigeria?
• Yes: section 60 CAMA.
• Ritz Pumenfabrlk GMBH & Co KG v Techno Continental Engineers
Nig. Ltd (1999) 4 NWLR (pt.598) 298.
• NBCI v Europa Traders (U.K.) Ltd (1990) 6 NWLR (Pt. 154) 36
• Watanmal (Singapore) Pte Ltd. Vs. Liz Olofin and Company Plc [1998]
1 NWLR pg 311
• Fabno Industries Limited v United Distillers Plc. (1999) 5 NWLR (Pt.
602) 314
Exempted companies
• A company may also be exempted under a treaty to which Nigeria is a party.
S. 54(3)b of CAMA
• Foreign companies in Nigeria for a specific purpose can apply to the
President for exemption from registration
• These companies are (Sec. 56(1)):
• foreign companies invited to Nigeria by or with the approval of the Federal
Government to execute any specified individual project;
• foreign companies which are in Nigeria for the execution of specific
individual loan projects on behalf of a donor country or international
organisation;
• Foreign government-owned companies engaged solely in export promotion
activities and
• Engineering consultants and technical experts engaged on any individual
specialist project
Application for exemption
• An application for exemption from registration as a Nigerian company is
addressed to the Secretary to the Federal Government: s 56 Of CAMA
• However, the application is considered and given by the President
Application for exemption docs +info to attach
• a. The name of the company
• Address outside Nigeria.
• The proposed company name in Nigeria
• Address in Nigeria
• Names of directors
• Attach CTC of memart of the company
• Are there Nigerian representatives?
• Disclose the proposed business in Nigeria
36
• Have they previously carried on any business as exempted foreign

company? S 56(2) CAMA
Period of Exemption
• Where exemption is granted, the company is given an exemption order.
• It is granted for a specified period.
Revocation of exemption
• The President may revoke the exemption if he is of the opinion that the
company has contravened CAMA or has not fulfilled any condition of the
exemption order or for any good or sufficient reason. [s 56 CAMA].
Filing of reports with CAC
• FORM CAC 10C
• Annual report shall disclose the following -
(1) Place/country of registration
(2) Date of registration and certificate number
(3) Principal place of business in place/country of registration
• (4) Share capital of the company (if any)
(5) Principal place of business in Nigeria
(6) Date of exemption
(7) Description of business in Nigeria
• (8) Expected date of completion of business in Nigeria
(9) Name and address of each director, partner or other principal officers of
the company since date of exemption and any changes therein
• See Regulation 28 of the Companies Regulations 2012 (as amended)
Status of an exempted company
• It has the status of an unregistered company. [Section 58].
Registration Process
• Registration Process at the CAC (already discussed) first before anything
else
• In the meantime, Draft Joint venture agreement if in partnership with
Nigerians/Nigerian company
Application by Foreign investor
• A foreign investor must, after incorporation as a Nigerian company but
before starting business, apply to the NIPC on the prescribed form for
registration
• (NIPC) has a Governing Council consisting of a Chairman, a representative
each from some Federal Ministries: section 2(2) NIPC Act, and
• An Executive Secretary
Application to NIPC
37
• NIPC is the agency of Government that co-ordinates and monitors all

investment promotion activities. It houses One Stop Investment Centre
(OSIC)
• One Stop Investment Centre(OSIC) is an agency that helps foreigners to
interface with agencies like Immigration CAC, SEC,
• Foreigner can choose to apply directly to those Agencies
Functions of NIPC
• Registers all foreign investors
• Promotes investments in and outside Nigeria through effective promotional
means
• Identifies specific projects and invite interested investors for participation in
those projects
• Disseminates information about investment opportunities in Nigeria
• disseminates up to date information on incentives available to investors;
• provides support services;
• organizes exhibitions conferences and seminars
• Advises Government on policy matters to promote development of the
economy
• Performs such other functions as are supplementary or incidental to the
attainment of the objectives of the Act
Documents to accompany the application to NIPC
• Government treasury receipt evidencing the purchase of NIPC Form;
• NIPC Form 1
• Certificate of Incorporation
• Tax Clearance Certificate
• Memorandum and Articles of Association;
• receipts of stamp duty on the authorised share capital of the company
• Formal Application Letter to Executive Secretary of NIPC
• Memorandum and Articles of Association;
• receipts of stamp duty on the authorised share capital of the company
• Formal Application Letter to Executive Secretary of NIPC
• Evidence of having sourced the plant and machinery to be used in the
company’s business;
• Deed(s) of Sub-Lease/Tenancy Agreement for the premises to be used for
the company’s operation.
• a list of the directors of the company; and their particulars / their
nationalities;
• Job title designations of expatriate quota positions required, and CVs of
people proposed for employment
38
After submission
• NIPC to register within 14 working days from receiving a completed
registration or otherwise advise the applicant accordingly. s 20(2) of the
NIPC Act.
Certificate of Capital Importation
• Having submitted the documents to NIPC the foreign company (now a
Nigerian company) must then import its foreign equity through an
authorized bank and obtain a Certificate of Capital Importation (CCI) from
the bank. This is then taken to NIPC as part of documents.
• The capital importation could be in cash, consideration other than cash, e.g.
importation of equipment or raw materials, or through the Debt equity
conversion programme (see later).
Advantages of CCI
• Entitles the foreign investor to:
• Open a foreign currency Dorm Account with any authorised dealer: s 17
FEM Act.
• Open a special non-resident Naira account
• Buy shares in Nigerian companies out of the naira account.
• Repatriate the capital, dividends and incomes at autonomous market rates
minus taxes
Acquisition of a foreign enterprise and payment of compensation
• No enterprise shall be nationalized or expropriated by the Federal
Government, unless the acquisition is in the national interest or for public
purpose
Consequence of expropriation
• Payment of compensation; and a right of access to the courts as to quantum
of compensation
• Compensation to be paid promptly and in foreign exchange: s 25(3) NIPC
Act.
Dispute settlement procedures
S. 26 of the NIPC Act
• 1st by mutual discussion to reach an amicable settlement.
• Dispute between a Nigerian investor and Government - the rules of
procedure for arbitration are in the Arbitration and Conciliation Act Cap.
A18 L.F.N. 2004 ; or
• Dispute between a foreign investor and Government
• Does Nigeria have any bilateral or multilateral treaty with the country
of the investor?
39
• If so then they can use any machinery for settlement of investment disputes
agreed on by the parties: see for example the (UNCITRAL) Conciliation
Rules Of 1980.
IPPA
• Investment promotion and protection agreement
• An IPPA provides the baseline minimum protections for foreign
investments.
• So in case of dispute between foreigner and Nigerian Govt. you could use
provisions of the IPPA for resolution
IPPA -countries
China, Finland, France, Germany, Italy, Korea Republic, Netherlands, Romania,
Singapore, South Africa, Spain, Algeria, Sweden, China, Finland, France,
Germany, Italy, Korea Republic, Netherlands, Romania, Singapore, South Africa,
Spain, Algeria, Sweden,
ICSID
• For other countries with no treaty or investment protection agreement with
Nigeria, you look at rules made by International Centre for Settlement of
Investment Disputes (ICSID)
One Stop Investment Centre
• This is an investment facilitation mechanism where relevant government
agencies are brought to one location, coordinated and streamlined, to
provide efficient and transparent services to investors
Foreign Exchange (Monitoring And Misc. Provisions) Act
– Foreign currency held or imported by –
Nigerian citizens home and abroad,
Foreigners resident in Nigeria;
– Nobody is required to declare any foreign currency at the port of entry into
Nigeria unless its value is in excess of US $5,000 or its equivalent and even
then, the amount that is declared is for statistical purposes only.
– Nobody is required to declare any foreign currency at the port of entry into
Nigeria unless its value is in excess of US $5,000 or its equivalent and even
then, the amount that is declared is for statistical purposes only.
– See Money Laundering (Prohibition) (Amendment) Act 2012.
– Forfeiture of undisclosed funds or negotiable instrument or to imprisonment
of not less than 2 years or to both.
– Amount increased to $10000
– Agency commissions, professional fees and other forms of invisible
earnings;
40
– Non-oil export proceeds earned by exporters of Nigerian goods;

– Foreign currency held by Nigerian citizens resident in Nigeria;
– Foreign currency imported or held by foreign Embassies, and international
organizations from external sources;
– Foreign currency provided by the Central Bank;
– Foreign currency imported for direct or portfolio investment in Nigeria; and
– Foreign currency from such other sources as the Minister may, from time to
time, specify by order published in the Gazette.
Debt-equity programme
• Capital can be brought into the country through the debt-equity programme
of the federal government, whereby Nigeria's debt instrument is bought at a
discounted value from any stock exchange anywhere in the world the foreign
investor will get the naira equivalent of the face value of the instrument
• Debt for Equity programme was introduced by the Babangida regime in
1988.
• It is implemented by the DMO later renamed DMB
Participation
• To participate a company must have a minimum paid-up capital of
N5,000,000.00.
• the minimum amount of debt to be considered under the Scheme shall be
$250,000
ELIGIBLE PARTICIPANTS
• Companies and individuals, Nigerians and non- Nigerians
• Residents and non-residents
REPATRIATION OF INCOME
• The repatriation of the profits/capital dividends derived from the initial
capital outlay can be done at any time
Ease of doing business in Nigeria
• The Federal Government put in place policies affecting the ease of doing
business in the country, support for local content, and timely submission of
annual budgetary estimates by all government agencies.
• Undoubtedly these policies increased our ranking in the Ease of Doing
Business Index in the world from 169 in 2017 to 145 in 2018.
VISA
Executive Orders
• Visas must be issued or rejected with reason by the Consular Office of
Nigerian Embassies and High Commissions within 48 hours of receipt of
valid application.
41
• Government agencies are required to publish a complete list of all

requirements for obtaining permits, licences and approvals, including fees
and timelines, in their premises and on their websites
• They are required to streamline all activities e.g at the airport instead of a
foreigner to be subjected to scrutiny by Immigration, NDLEA, Customs etc.
The different regulatory agencies at the airports are mandated to merge their
respective departure and arrival interfaces into a single customer interface.
• An application is deemed granted if after a certain period, he does not hear
from the government agency he can then at the expiration of the application
period apply to the supervising Minister to issue any document or certificate
required
Executive Order 2017
• All registration processes must be automated at the CAC including
integration of an online payment platform, which is now merged
TYPES OF VISA pre 2020.

 Transit
 Diplomatic
 Business
 Tourist
 Temporary work permit (TWP)
 Subject to regularisation (STR)
Nigerian Visa Policy (NVP 2020)
• Introduction of 3 categories of visas and
• expansion of visa classes from 6 to 79
• Introduction of e-visa
• The New Visa classes include:
• 28 New Short Term Visas(STV) Classes: - 3months
• 36 New Temporary Residence Visas Classes: two years, (TRV)and
• 15 New Permanent Residence Visas
• STV - tourism, study tour, academic exchange program, humanitarian
services, relief/emergency works and temporary work permit
• Note that STR has now been renamed Temporary Residence Visas Classes:
• 36 New Temporary Residence Visas Classes: two years, multiple entry visa
• 15 New Permanent Residence Visas Classes: highly skilled individuals as
well as some categories of retirees.
• Permanent Residence Visa (PRV)
• This status can be conferred on spouses of Nigerian citizens, Nigerians by
birth who have renounced their Nigerian citizenship, and their spouses,
42
investors who import an annual minimum threshold of capital, highly skilled

individuals and some classes of retirees
Investor Visa
• Investor Visa- The new policy introduces the 'Investor Visa' with various
thresholds for small, medium large and ultra-large-scale investors. Investors
are to have evidence of an amount (dependent in the class of investor) as
importation and retention of capital, provide a
• police report from applicant's country of residence in the last five years and
documentary proof of investment(s) in Nigeria
• applicable to specific individuals that intend to permanently reside in
Nigeria.
• Application for Investor visa must be done at the Embassy. The visa is valid
for five (5) years, multiple entries and is subject to renewal.
'Investor Visa -Threshold
• a) Small Scale Enterprise: Evidence of 250,000 USD-500,000 USD
• b) Medium Scale Enterprise: Evidence of 500,000 USD-1,000,000 USD
• c) Large Scale Corporation: Evidence of 1,000,000 USD – 10,000,000 USD
• d) Ultra Large Scale Corporation: Evidence of 10,000,000 USD e) Oil, Gas
and Power Sector: Evidence of 100,000,000 USD
Visa application channels
• three visa application channels, a. Visa on arrival: at the point of entry.
• b. Visa Application Centers: establishment of visa centers in some
countries.
• The proposed visa center will be responsible for the collection and
submission of visa application on behalf of applicants to the Nigerian
Embassy for processing and approval.
• c. Visit at the Embassy:
VOA
• Fill the Application
• Pay fee online
• Wait for approval letter from Immigration
• Take approval letter to Nigeria where you obtain VOA
Visa Exemptions
• Ecowas Nationals do not need visas to enter the country.
• Visa Abolition Agreement Countries: Citizens can travel to Nigeria for a
short visit based on the bilateral agreement
• Holders of official travel documents from United Nations Organizations
(UNO). African Union Commission (AUC), ECOWAS Commission and
African Development Bank can visit Nigeria without a visa.
43
• c. Reciprocity Visa Waiver Agreement Countries: Citizens of Brazil,

Venezuela, Kenya, China, Cuba, Sudan, Namibia, South Africa, Mauritius,
Singapore, Turkey, Tanzania and Rwanda holding diplomatic and/or official
passport can travel to Nigeria visa-free.
• Ecowas Nationals do not need visas to enter the country. However, they are
required to register with the Nigerian Immigration Service (NIS). The
registration is satisfied by obtaining the ECOWAS Residence Card (ERC).
ECOWS Citizens (Resident in Nigeria) must have entered into the country
before applying for the ERC.
(e-visa)
• The e-visa is only applicable to some classes of short term visa. E.g. VOA
(classes of voa)
• Frequently Travelled Executive Visas.
• Tourism Visa
• Emergency Relief Work Visa
• Returning holders of other national passports who are Nigerians by birth.
(voa)
• See Immigration Regulations, S.I.3 2017
• A prospective applicant applies online to our High Commission in his
country
• 48 hours after submitting his application, he will receive Visa on Arrival
Approval Letter or letter of rejection with a reason
Expatriate quota Approval
• S. s. 38 and 105 of the Immigration Act
• This is the permission given to a business concern to employ non-Nigerians
in the numbers and capacities in the quota.
• Offence for failure to obtain the prior permission of Comptroller General is
N1m fine or imprisonment of the officers of the company or both
• Application letter addressed to the Permanent Secretary, Federal Ministry of
Interior;
• Lease agreement for opening premises;
• Joint venture agreement for partnership venture between Nigerians and
foreigners;
• Business plan/feasibility report;
• Reference letter from the bank;
• Copies of incorporation documents of the company;
• Business permit form;
• Certificate of capital importation (CCI);
• Current tax clearance certificate;
Expatriate quota
44
• Details of the expatriates (including their proposed annual salaries,

qualifications/CV and copies of credentials and job descriptions);
• Training program for Nigerians and management succession schedule; and
• Evidence that the skills of the required personnel are unavailable in Nigeria.
Exempt: Expatriate quota
• Expatriates of companies operating in the free zones
• foreign students,
• expatriate technical officials of missions, expatriates of international non-
governmental organizations (INGO) and government officials.
• Businesses with a capitalization of N15m and above - maximum automatic
quota of two positions
• Capitalization of N30m naira and above - four automatic quota positions.
• All others on merit.
2 types Expatriate quota
• Temporary Expatriate Quota: This is usually granted to the directors or
other employees of the company. 5years years subject to renewal two years.
Permanent until Reviewed (PUR): Chairman or the Managing Director.
permanent until there is a supervening circumstance, which will necessitate
its review
Business permit
 An expatriate who intends to take up employment consent of Comptroller-
General of Immigration called Business Permit {s. 18 IA 2015 S 36
Immigration Act 2015
 Santos M. Batalha V. West Construction Co. Ltd. [2001] 18 N.W.L.R.
(Pt. 744) 95
 OILFIELD SUPPLY CENTRE LIMITED V JOSEPH LLOYD
JOHNSON(1987) 2 NWLR (Pt.58)’625
 Consequence of not obtaining a business permit as outlined above is that
expatriate has committed an offence and the punishment is deportation as a
prohibited immigrant, and
 49(3) his employer shall bear the cost of removing him from Nigeria to his
country
Business Permit and Expatriate Quota Positions
• The Ministry of Interior is responsible for the grant of both to companies in
line with Part V, Section 36 (1) of the Nigerian Immigration Act, 2015
and Part III, Subsection 12 (1&2) of Immigration Regulations. The
services rendered which can be accessed on the eCitiBiz Portal are:
• Quota: for a period of three (3) years in the first instance and renewable
every 2 years within a life span of ten (10) years.
45
• Renewal of quota
• Additional quota
• Application for Business Permit
• Amendment of Business Permit
• Etc
Business Permit
• For Business permit, the Authorized share capital must not be less than 10
million in respect of each Company.
Certificate of Incorporation;
• Memorandum and Article of Association;
• Feasibility Report (should be certified or registered with Corporate Affairs
Commission (CAC)
• Corporate Affairs Commission’s Form CAC 2.3& 2.5 or CAC C02 & C07
• Joint Venture Agreement Company’s Current Tax Clearance Certificate
(Original to be presented for sighting);
• Lease agreement for C of O for operating premises (original to be presented
for sighting).
Expatriate Quota
• Certificate of Incorporation;
• Memorandum and Article of Association;
• Feasibility Report (should be certified or registered with Corporate Affairs
Commission (CAC)
• Corporate Affairs Commission’s Form CAC 2.3& 2.5 or CAC C02 & C07
• Joint Venture Agreement for partnership venture between Nigerian and
foreigners (original to be presented for sighting);
• Company’s Current Tax Clearance Certificate (Original to be presented for
sighting);
• Lease agreement for C of O for operating premises (original to be presented
for sighting).
• Evidence of imported machinery, such as, Form M, Proforma invoice,
shipping documents and Clean Certificate of Inspection issued by
Government appointed Pre-shipment Inspection Agents.
• License / Permit / Certificate from relevant Government Agencies /
department / Ministries for the operation or execution of project if company
is engaged in oil services, health care services, fishing, mining, constructions
(Work Registration Board), etc. (original to be presented for sighting);
• Evidence of work at hand, its duration and value attached to the contract(s)
if the company is engaged in building, civil engineering, construction, etc.
(original to be presented for sighting);
46
• Proposed annual salaries to be paid to the expatriates to be recruited

indicating designation, names, jobs description and qualifications (CV and
copies of credentials of expatriates to be attached).
• The quota position attaches to a particular post hence different persons can
be covered by the same quota. It is the duty of the company to apply for the
quota and not that of the employee see Oliver v Dangote Industries Ltd
(2009) 10 NWLR (pt 1150) 467.
Industrial Inspectorate Act Cap. I8 L.F.N. 2004

• To stop Nigeria from being a dumping ground for obsolete machinery
• A company intending to incur capital expenditure of N500, 000 or more
must inform Industrial Development and Inspectorate Department of the
Federal Ministry of Industry Trade and Investment.
• The department will value and certify capital expenditure
• On being satisfied that the valuation is ok they will issue the company with a
Certificate of Acceptance of Fixed Assets (CAFA).
COMPANIES INCOME TAX ACT
• The Federal Government has exclusive jurisdiction over the taxation of
companies.
• The profits of any company accruing in, derived from, brought into, or
received in, Nigeria in respect of its business are taxable by FBIR
Personal Income Tax Act Cap. P8 L.F.N. 2004
• This Act governs taxation of income of individuals, families, communities
and trustees.
• In practice, the majority of those paying personal income tax in Nigeria are
in paid employment and subject to the Pay As You Earn Scheme (PAYE).
NOTAP
• NOTAP registers contracts/agreements which deal with the transfer and
acquisition of foreign technology and issue a certificate of approval or
refuses registration of same. The obligation to register is both on the licensor
and licencee of such technology.
NOTAP - Procedure
• A duly completed NOTAP Application Form Form NOIP 1- 84) must be
lodged with NOTAP by the recipient or transferee of the technology.
• Application Form must be accompanied with the following docs:
• -Application fee
- Memorandum and Articles of Association of the Company;
- Two certified true copies of the Agreement to be registered;
• Certificate of Incorporation of the company
47
• - Two copies of duly completed Questionnaire (Revised Form NOIP 2-84);

-A copy of the relevant feasibility study;
- Annual audited accounts for 3 years (if not a new company), and if it is a
new company, a copy of the exemption from FIRS
• Evidence of Tax payments (Company tax) for the last 3 years
• Tax Payer Identification Number (TIN)
• Profile on Transferor/Technical Partner (Website, Brochure, etc)
• NOTAP then vets the Agreement in order to determine its conformity with
its own evaluation criteria.
• When the Agreement is finally accepted by NOTAP (either in its original
form or in an amended form) a “registration fee” becomes payable to
NOTAP.
• A presentation fee of N50,000 is made upon submission of the agreement
and the supporting documents. N100,000
is payable upon approval where the fee or royalty payable under the
agreement is lees than N5m. Fee graduates to N20m for royalties of N10b
and above
• The NOTAP Certificate is usually issued within a period of two weeks
(max- 6 months) of the application and valid for a period of between one to
ten years.
Registrable contracts/agreements
- Contracts involving
• the use of trademarks;
• The right to use patented inventions.
• the supply of technical expertise in the form of technical assistance of any
description whatsoever;
• the supply of detailed engineering drawings;
• the supply of machinery and plant; and
• The provision of operating staff, managerial assistance and the training of
personnel.
Effect of non-registration
• Does not render the contract void, only that repatriation of fees profits,
royalties thru CBN is disallowed unless a certificate of registration
accompanies the application to repatriate in respect of such contract s. 7
NOTAP Act
Refusal
• The Director of NOTAP may refuse registration of contract on many
grounds (18) : s 6(2) NOTAP Act
E.g
• If the technology is available here
48
• Where the contract involves the transfer of obsolete technology,

• Where the price is not commensurate with the technology to be acquired.
• Where the transferee is obliged to submit to foreign jurisdiction in any
controversy arising for a decision concerning the interpretation or
enforcement in Nigeria of any such contract.
OPERATING LICENCES
• Apart from the requirement to register under CAMA,
• A bank – CBN license; Central Bank Of Nigeria (Establishment) Act Cap.
C4 L.F.N. 2007
• Insurance company - National Insurance Commission license
INSURANCE ACT NO.1 2003
• Oil companies are required to obtain oil exploration licences, oil prospecting
licences and oil mining leases. These licences are granted by the Department
of Petroleum Resources: Petroleum Act Cap. P10 L.F.N. 2004 and,
• The telecommunications sector obtains licenses from the Nigerian
Communications Commission; Nigerian Communications Commission Act
NO. 19 2003
• Companies in manufacturing activities must obtain certification for their
products from the Standards Organization of Nigeria (SON).
• Companies manufacturing and processing foods, drugs and allied products
must obtain certification for their products and factory sites from relevant
institutions such as NAFDAC, Pharmacists Council of Nigeria etc.
INCENTIVES
 So far we have discussed regulatory framework in form of Executive orders
and the laws aimed at attracting and keeping foreigners in our economy
TAX INCENTIVES
• MAIN CATEGORIES
• Exemption
• Relief
• Grants
• Tax credits
INDUSTRIAL DEVELOPMENT (INCOME TAX RELIEF) ACT CAP
I7 L.F.N. 2004
• Pioneer Status Certificate is issued by NIPC to the effect that the company is
exempted from payment of tax for (3 years - 5 years
• Issued only to companies listed as such:
• In 2014 the PIONEER STATUS INCENTIVE REGULATIONS S. I No.
2 of 2014 was released with an effective date of 30 January 2014.
49
• In 2017, a Gazetted list was released with the sectors under which
companies may apply for the Status. There are 99 sectors on the list.
Requirements
• Applicant to show
• The industry is not being carried on in Nigeria on a scale suitable to the
economic development and requirements of Nigeria or at all, or there are
favourable prospects for further developments in Nigeria of such industry.
Pioneer status
• is a tax holiday granted to qualified or (eligible) industries
Requirements
• That it is of public interest to encourage a given industry by declaring it a
pioneer industry.
• The industry must be listed as one eligible to be granted the status
• This designation is not necessarily a reflection that a company was pioneer
per se in the industry, it must be listed
• Where the activities of a company include the production of pioneer and
non-pioneer products, the tax exemption is only available on income derived
from pioneer products only.
• Where the activities of a company include the production of pioneer and
non-pioneer products, the tax exemption is only available on income derived
from pioneer products only.
• See 2014 Regulation a service charge of 2% based on estimated
• Tax savings to be paid to the NIPC.
• Dividends paid out of pioneer profits during the tax exempt period are also
tax-free.
Double Taxation Treaties
• If a Nigerian company that has paid or is, liable to pay tax, proves that it has
paid the tax in a Commonwealth or another country that has double taxation
agreement with Nigeria, then, such a company will be entitled to relief from
tax paid or payable by it.
COUNTRIES
• See also Double Taxation Relief (Between The Federal Republic Of Nigeria
ANDCanada; Pakistan; Belgium; France; Romania; Netherlands; United
Kingdom; China; South Africa; Italy; Philippines; Czech and Slovakia ss 33-
35 of CITA) Spain and a shipping and air transport DTA with Italy.
50
Nigerian Rate N20 Relief is one half of the foreign N5
Foreign Rate N10
Illustration
Foreign rate Relief is N10. The relief will be equal to the maount b which
is N20 the foreign rates exceeds the Nigeria rate: s 6 CITA
Nigeria is
N10
DUTY DRAWBACK/SUSPENSION SCHEME

• Importers of Materials used in the manufacture of exported goods may claim
repayment of import duties earlier paid in respect of the materials Export
(Incentives And Miscellaneous Provisions) Act Cap. E19 L.F.N. 2004;
Customs Duties (Dumped And Subsidised Goods) Act Cap. C48 L.F.N.
2004
• Raw materials including packaging materials used in manufacturing goods
that are exported - 100% of import duty.
• Goods exported in the same state as that in which they were imported –
Customs and Excise Management Act Cap. C. 45 LFN 2004 and Drawback
(Customs) Regulations 1959.
• Paper used for the manufacture for educational purposes to educational
establishments recognized by the Federal Adviser on Education; 100% of
import duty.
• The new Duty Drawback scheme shall give automatic refunds (60%) on
initial screening by the Duty Drawback Committee but the exporter must
provide a Bank bond to back the 60% and at the end of processing, exporter
gets his balance
• The Duty Drawback Scheme is administered by the Duty Drawback
Committee established under the Export (Incentives And Miscellaneous
Provisions) Act Cap. 118 L.F.N. 1990 Act Cap. E19 L.F.N. 2004
Time Limit:
• Duty Drawback application must be made within a maximum of two years
from the date of exportation.
Companies Income Tax (Exemption of Profits) Order, 2012
• The reliefs under this Order will be in force for 5 years from the
commencement date.
51
• Three categories of tax reliefs, namely

• Employment Tax Relief
• Work Experience Acquisition Programme Relief, and
• Infrastructure Tax Relief.
Work Experience Acquisition Programme Relief
• Company with minimum of 5 new employees
• Company retains employees for at least 2 years
• Then, an exemption from CITA of 5% of its assessable profits.
Employment Tax Relief
• Any company, with a minimum of 10 employees of which 6 are new
graduates or been looking for job for 3 years after graduation
• There is Income tax relief of 50% of its assessable profits
Infrastructure Tax Relief.
• Paragraph 3 of the Order grants qualifying companies a CIT exemption of
30% of the cost incurred in providing infrastructure or facilities of a 'public
nature’.
• E.g. power roads and bridges; water; health, educational and sporting
facilities
• Compare with Rural Investment Allowance (infra)
Tax exemption
• The profits of an exporter are exempted from taxation, provided that the
proceeds are repatriated to Nigeria and are used exclusively for the purchase
of raw materials, plants, equipment and spare parts, s 23 CITA
• The profits of a 100% export oriented manufacturing company are exempted
See s 23 CITA
• Dividend, interest, rent, or royalty derived by a company from abroad and
brought into Nigeria through CBN or any bank: s 23 CITA
• The interest on foreign currency domiciliary account in Nigeria
• Dividend distributed by Unit Trust and Government organisations
• Dividend received from small companies in the manufacturing sector in the
first five years of their operation
• A new company going into the mining of solid minerals shall be exempt
from tax for the first three years of its operation: See s 36 Of CITA
• 25% of incomes in FX collected by a hotel shall be exempt from tax
provided that such income is put in a reserved fund to be utilised within five
years for the expansion of new hotels, conference centres and new facilities
for the purpose of tourism development: See s 37 Of CITA
52
• Interest on any loan to a company engaged in agricultural business, the

fabrication of local plant Etc.) Act Cap. F3 L.F.N. 2004 is exempt from tax
See s 11 Of CITA
• Interest on bonds and short-term securities, and proceeds of the disposal of
Government and corporate securities
CIT (Exemption of Bonds and Short Term Government Securities) Order
2011 i.e. treasury bills and promissory notes issued by Federal, State and
Local Government
• Foreign loans to Nigerian Coys S.11 CITA minimum of N150, 000
• The loan agreement must be approved by the Federal Ministry of Finance
and copies deposited with them and Federal Inland Revenue Service (FIRS)
• Note the extent of exemption will depend on the moratorium period. For e.g.
if loan is not repayable for up to 10 years then the total amount of interest in
the hands of the foreign lender is exempted from Nigerian tax
• If repayment is below 2 years no exemption
INVESTMENT TAX CREDIT
• Companies that are engaged in R&D activities for commercialisation are
allowed 20% investment tax credit on their expenditure
Petroleum investment allowance
• A coy in Production Sharing Contract with the NNPC is entitled to
petroleum investment allowance – 50% of chargeable profit s 22 Petroleum
Profits Tax Act cap P13
Investment tax credit

• A company which engages wholly in the fabrication of spare parts, and
equipment for local consumption and export shall be allowed 25%
investment tax credit on its qualifying capital expenditure: See S. 38 Of
CITA
• A company, which purchases a locally manufactured plant, machinery or
equipment for use in its business, is allowed 15% investment tax credit on
such fixed asset. See S 30 Of CITA
• Where a company buy a new machinery to replace an obsolete plant and
machinery, there shall be allowed to that company, 15% investment tax
credit: See s 41 Of CITA This tax credit is no longer available: see Finance
Act no 1 2019
BONUS FOR FILING RETURN ON TIME
• A company which files return within the time stipulated for filing is granted
a bonus one percent of the tax payable:S 56 Of CITA
53
RURAL INVESTMENT ALLOWANCE

• Provision of electricity, water, tarred road, located at least 20 kilometres
away from such facilities, - rural investment allowance: See s 34 Of CITA
telephone was removed in 2007
Level of development Rate
No Facilities 100%
No electricity 50%
No water 30%
No tarred road 15%
EXPORT FREE ZONE

• A free trade zone is an area within which goods may be landed, handled, and
re-exported freely. The purpose is to remove obstacles to trade and to permit
quick turnaround of ships and planes.
• Unrestricted remittance of profits and dividends earned by foreign investors
in EPZs
• Though called EPZ Coys are allowed to sell in the domestic market
• No import or export licenses required,
NIGERIAN EXPORT PROCESSING ZONES AUTHORITY (NEPZA)
NEPZA is a Federal Government Agency established in 1992 by the Nigerian
Export Processing Zones Decree No. 63 1992 Act Cap. N107 L.F.N. 2004.
• NEPZA promotes and facilitates local and international investments into
licensed free zones in Nigeria.
EXPORT FREE ZONE
• These can be operated by the public or private sector or a combination of
both.
• Onne and Calabar
• The profit of a 100% export oriented undertaking established within and
outside an Export Free Zone shall be exempt from tax for the first three
consecutive assessment years
Oil and Gas Export Free Zone Authority
• The Authority was established in 1996 by Oil and Gas Export Free Zone
Decree No.8 of 1996 Act Cap. O5 L.F.N. 2004 to manage, control and
coordinate all activities within the zone as they relate to the export of oil and
gas operations
ENTERPRISE IN THE FZ
• The Corporate Affairs Commissions does not have any authority over the
enterprise in the FZ. Section 10 of the NEPZA Act CAP N107 LFN 2004
54
INVESTMENT PROCEDURES WITHIN EPZ

• Apply to NEPZA using the prescribed form.
• Apply to undertake an approved activity
• Upon receipt of approval to undertake approved activity in a Zone, an
applicant shall further apply for licensing as an approved enterprise.
• Upon licensing, the said approved enterprise shall apply to NEPZA for
serviced land or factory space in the Zone
• Before the start of operation, further apply for permit to commence
operations.
• Minimum of US$500,000.00 must be invested in an approved activity
• The enterprise must further pay ground rent calculated on monthly basis and
Zone Management and Marketing/Promotion Fees for services provided.
OUTSIDE A ZONE
• Application letter indicating interest to establish a zone and its location
• Payment of US$1,000.00 or its Naira equivalent to NEPZA H/Q as
application fee
• Inspection of proposed site by NEPZA Officials
• Site is inspected, if satisfactory, the Investor to submit the following:
• An unencumbered piece of land with Certificate of Occupancy;
• Perimeter and topographic survey of the site;
• Master Plan of the proposed site;
• Environmental Impact Assessment Report;
• Detailed Feasibility Study. Issues to be covered by the study should include
amongst others:
• Brief description of the project
• Names and Resumes of the Promoter/Directors
• Location and site of the Free Zone
• Feasibility report
• Meet other requirements as may be determined by NEPZA;
• Any other information such as MOU or any agreement entered with other
partners that will assist in the consideration of the project proposal;
• Submit application with documents to NEPZA
• Zone Licensing fee starts from US$400,000.00 upon declaration by Mr.
President
• Zone Management Company Registration fee of US$200,000.00
EXPORT FREE ZONE

• Unrestricted remittance of profits and dividends earned by foreign investors
in EPZs
55
• Though called EPZ coys are allowed to sell in the domestic market
• No import or export licenses required,
• Sale of up to 25% of production permitted in domestic market
• No quotas on products from Nigeria exported to the European Union, (EU)
and the united States of America
• Made-in Nigeria goods are entitled to preferential tariffs in the EU.
Conditions
• New business
• New plants and machinery
• Export proceeds form 75% of its turnover;
• Coy repatriates at least 75% of the export earnings to Nigeria and places it in
a dorm account
REGISTRATION AS AN EXPORTER WITH NEPC
• Complete NEPC registration form obtainable at the price of N250.00
• Accompanying documents
Incentives
• 100% foreign ownership of investment allowed
• 100% repatriation of foreign capital investment, profits and dividends at any
time
• 100% exemption from VAT & Withholding tax
• No taxes, levies and duties apply
• No foreign exchange regulations apply
• 100% import and export tax exemptions
• 100% of the FZ goods can be sold in Nigeria
• No personal income tax for expatriates.
• No strikes and lockouts for 10 years
EXPORT EXPANSION GRANT FUND SCHEME ("EEGF")

• Inducement to exporters who have exported a minimum of (N500,000)
worth of processed products.: Export (Incentives and Miscellaneous
Provisions) Act Cap. E19 L.F.N. 2004
• Prior to the 1999 grant was in cash now it is in form of negotiable instrument
that can be used to settle all Federal Government taxes such as company
income tax, VAT, WHT. import and Excise Duties.
• EDF is a special fund (established under section 4 of the Export (Incentives
and Miscellaneous Provisions) Act Cap. E19 L.F.N. 2004 under which the
government is to give financial assistance to exporting companies…
• …to cover part of their initial expenses in respect of export promotion
activities including training courses, symposia, seminars and workshops,
research, advertising and publicity campaigns
56
LOCAL RAW MATERIALS UTILISATION:

• Tax concession for five years to industries that attain minimum local raw
materials utilization
Marginal field
• Profits on dividends earned by investors in marginal field operations do not
suffer withholding tax.
Capital Allowance
• All expenses which are wholly, exclusively and necessarily incurred in
furtherance of a business are deductible from the company’s revenue before
• Ascertaining the taxable profit
LABOUR INTENSIVE MODE OF PRODUCTION:
• Tax concession for five years. The rate is graduated in such a way that an
industry employing one hundred will enjoy only 6%, while those employing
two hundred will enjoy 7%, and so on.
Road Infrastructure Development and Refurbishment Investment Tax

Credit Scheme
• President Muhammadu Buhari, GCFR, on 25 January 2019, signed the
Executive Order No. 007 on Road Infrastructure Development and
Refurbishment Investment Tax Credit Scheme (“the Scheme”). The Scheme
is for a period of 10 years from its commencement date.
• private sector companies who spend funds on constructing and refurbishing
eligible roads can recover the value of their investment as tax credits against
future tax payable. The project has to be verified and approved based on set
criteria.
• The Scheme is a public-private partnership intervention.
• Open to Nigerian companies wishing to construct or refurbish any road
identified and designated by the FGN as an “eligible road”under the
Scheme.
• Participants will be entitled to utilize the total cost, referred to as “Project
Cost”, incurred in the construction or refurbishment of an eligible road as a
Tax Credit against their future Companies Income Tax (CIT) liability, until
full cost recovery is achieved.
Ecowas Trade Liberalization Scheme-Treaty and Protocols
• It involves total exemption of duties and taxes;
• Free movement of products and citizens
Achievements
• In 2001 ECOWAS started a container-handling facility, based in Lome,
called ECOMARINE. with funding from the World Bank.
• The ECOWAS Community Court that functions in an advisory capacity,
57
• No visas for its member citizens for travel in the sub-region

• Construction of the trans West African highway network.
• Implementation of West African Gas Pipeline (WAGP) project.
Ecowas Trade Liberalisation Scheme-Treaty and Protocols
• Common Agricultural Policy (ECOWAP).
• Inter-connection of electricity grids between Nigeria and Ghana.
Achievements
• The ECOWAS Parliament that is essentially a forum for dialogue,
consultation and consensus
• ECOWAS recently adopted a Common Agricultural Policy (ECOWAP).
• ECOWAS Passport
• See motor vehicles (third party liability insurance) (ecowas brown card
scheme) act cap. 234 l.f.n 1990 act cap. m23 l.f.n.2004
58
WEEK 9
Part 1: PRELIMINARY MATTERS BEFORE COMMENCEMENT OF
BUSINESS
WEEK 8: POST-INCORPORATION MATTERS.
BY
Dr. (Mrs.) Precious-Ann Ahiarammunnah (Enugu Campus)
POST-INCORPORATION MATTERS
Preliminary steps before commencement of business
Conversion of companies and alteration of registered documents
CERTIFICATE OF INCORPORATION
Upon registration of a company by Corporate Affairs Commission, a
certificate of incorporation will be issued. The certificate must be displayed
conspicuously by the company in all its offices. S.
NAME PLATE
Every company after incorporation shall paint or affix its name and
registration number, on the outside of all its offices, in a conspicuous position and
in legible letters. See S. 548(1) (a).
COMPANY SEAL
A company after incorporation must have its name engraved in legible
characters on its common seal. See S. 548(1)(b).
OFFICIAL PUBLICATION OF NAME
Every company after incorporation must have its name and registration
number mentioned in its documents e.g, business letters, advertisements, cheque,
bills of exchange, invoices, receipts, etc. See S. 548(1)(c).
CORPORATE NAME AND TRADE NAME
• Corporate name is the name by which a company is registered with
Corporate Affairs Commission.
• While trade name is the name a company is using for business purposes.
STATUTORY BOOKS
• The following are statutory books to be kept by companies:
• Register of members;
• Index of members;
• Register of substantial interest in shares;
• Register of Director’s Shareholding;
• Register of Directors and Secretaries;
• Register of charges;
• Register of debenture holders;
• Minutes book; and
59
• Accounting Records.
STATUTORY BOOKS TO BE KEPT BY A PRIVATE COMPANY

• Register of members;
Register of Director’s Shareholding;
• Register of Directors and Secretaries;
• Register of charges;
• Register of debenture holders;
• Minutes book; and
• Accounting Records.
REGISTER OF MEMBERS S. 83
• Contains the names of members of the company.
• It can be kept in a bound book form, or a loose leaf card or a computer
device.
• It is open for inspection to the members and public at least 2 hours during
working hours except when the register is closed.
• It is usually kept at the registered office of the company
• It can be kept at another office of the company or where it is made up, but
must be within Nigeria and Corporate Affairs Commission must be notified.
INDEX OF MEMBERS – S. 85
Is required where a company has more than 50 members to facilitate
inspection of register of members.
It is kept where the register of members are kept and is also open for
inspection by the members and the public.
REGISTER OF INTEREST IN SHARES – SS. 95 & 97
• A public company must have and keep a register of its substantial
shareholders at the same place where the register of members is kept.
• The same rule as to inspection of register of members applies to it.
REGISTER OF DIRECTORS SHARE HOLDING – S. 275
• Every company must keep a register showing as respects each director, the
number, description and amount of any shares or debentures of the company
or its parent company or subsidiaries.
• It is kept at the registered office or head office.
• It is open for inspection to members, debenture holders of the company and
REGISTER OF DIRECTORS AND SECRETARIES – S. 292
• Every company must keep register of directors and secretaries at its
registered office. The register must contain the full name, residential
address, nationality, occupation, date of birth and particulars of other
directorship by a director.
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• The register must also contain in case of a company secretary that is an

individual, the full name, any former name, and residential address. Where
the company secretary is a corporation its registered name and
registered or head office
• The same rules as to inspection of other registers applies to it.
REGISTER OF CHARGES – S. 191
• Every limited company must keep at its registered office, a register of
charges containing all charges affecting the properties of the company.
• Copies of the instruments creating the charges and the register of charges is
open to creditor, members and the public.
REGISTER OF DEBENTURE HOLDERS S. 193
• A company that issued debentures shall maintain a register of the holders.
• The register except when closed shall be open to debenture holders,
members of the company and the public.
MINUTES BOOK – S. 241
• Every company shall cause minutes of proceedings of all its meetings to be
entered in the book kept for that purpose.
• It is kept at the registered office of the company in the form of
MINUTES BOOK
bound book, computer device, or non-readable device.
• It is open to members at least 6 hours daily during working hours.
• Minutes are written records of decisions taken at a meeting.
ACCOUNTING RECORDS – S. 331
• Every company must keep accounting records that will be sufficient to show
and explain the transactions of the company, so as to disclose with
reasonable accuracy, the financial position of the company and ensure that
the financial statements comply with the requirement of the law as to
contents and form.
• It must be kept at the registered office of the company or any other place
within Nigeria as approved by the directors.
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WEEK 9 Part 2: CONVERSIONS AND ALTERATIONS

POST – INCORPORATION MATTERS.
CONVERSION OF COMPANIES AND ALTERATION OF REGISTERED
DOCUMENTS
• Change of name of a company

• Change of registered address of a company
• Alteration/Change of business or object clause
• Re-registration/Conversion of Change of name of a company
• Re-registration/Conversion of Change of name of a company
• Re-registration/Conversion of
CHANGE OF NAME OF A COMPANY – SS. 31 & 45 of CAMA
• A company may either change its name at the instance of Corporate Affairs
Commission; or
• Voluntarily changes its name.
• The alteration may be at theinstance of Corporate Affairs Commission
where:
• The name is identical or so nearly resembles an existing registered name; or
• Conflicts with existing business name or trade marks.
PROCEDURE FOR CHANGE OF NAME
 Board resolution
 Search for availability and reservation of name
 Convene general meeting wherespecial resolution will be passed
 Deliver to Corporate Affairs Commission the following:
a. Copy of the special resolution;
b. CAC 1A - Availability and reservation of name;
c. Original certificate of incorporation;
d. Memorandum and articles of association as altered;
e. Letter requesting its consent to the change; and
f. f. Evidence of payment of Annual Returns
g. Corporate Affairs Commission if satisfied will approve and register
the new name in the register of companies
 Corporate Affairs Commission will issue a new certificate of incorporation
reflecting the new name
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 Corporate Affairs Commission will advertise the change of name in the

official gazette of the federation.
 The company after the change of name has been approved by the Corporate
Affairs Commission will:
 Alter the common seal, certificates, letter heads; etc of the company;
 Alter the memorandum and articles of association of the company; and
 Advertise the change of name in a daily newspaper circulating nation-wide
CHANGE OF REGISTERED ADDRESS OF A COMPANY - SS. 45

&46
• Board resolution
• Convene general meeting where
special resolution will be passed
• Deliver to Corporate Affairs Commission:
a) Form CAC 3 duly signed by a director and company secretary; and
b) evidence of payment of Annual Returns
• Upon approval by the Corporate Affairs Commission, the company will
publish the change of its registered address to its customers and the rest of
the public
PROCEDURE FOR CHANGE OF OBJECT CLAUSE – S. 46
• Board resolution approving the change of object clause
• Passing of special resolution approving the change of object clause
• 28 days period is allowed for objection and application to the court to
cancel the special resolution.
• Application for cancellation of the resolution for alteration of the object
clause may be made by the following:
• By holders of not less in aggregate than 15% in nominal value of the
company’s issued share capital or any class thereof
• b) Where the company is not limited by shares, not less than 15% of the
members of the company
• c) By holders of not less than 15% of the company’s debentures secured by
floating charge
• A person who consented to or voted in favour of the resolution for alteration
cannot bring an application for cancellation of the resolution to the court.
• The court on getting such an application can make any of the following
orders:
a. An order confirming the alteration either wholly or in part and on such
terms and conditions as it thinks fit;
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b. An order for an arrangement to be made to purchase the interests of

dissenting members of the company; and
c. Give such directions and make such orders as it thinks expedient for
facilitating or carrying into effect any such arrangement.
• Where an application to cancel the resolution is made to the court, the
company must notify the Corporate Affairs Commission immediately.
• The company shall within 15 days from the date the court made the order
deliver to Corporate Affairs Commission the following:
a. A certified true copy of the court order in case of refusal to confirm
the resolution; and
b. A certified true copy of the court order in case of confirmation of
the resolution together with a printed copy of the memorandum as
altered.
• Where no application is made to the court to cancel the resolution for
alteration of the object clause of the company, the company shall within 15
days from the end of the 28 days period set apart for objection, deliver to
Corporate Affairs Commission a copy of the special resolution passed and if
Corporate Affairs Commission –
a. is satisfied, a printed copy of the memorandum as altered shall be
delivered to it;
b. is not satisfied, it shall give notice in writing to the company of its
decision.
• Any body aggrieved with the decision of Corporate Affairs Commission
rejecting the alteration shall appeal against this decision to the court within
21 days from the date of the receipt by the company of the decision of
Corporate Affairs Commission
• If the appeal succeeds, within 15 days from the court order deliver to
Corporate Affairs Commission, a certified true copy of the court order and
printed copy of the memorandum as altered.
ALTERATION OF SHARE CAPITAL – S. 100

• Share capital can be altered by ordinary resolution in the following
circumstances:
• Consolidate and divide all or any part of its shares into shares of larger
amounts;
• Subdivide its shares or any of them into shares of smaller amounts;
• Conversion of all or any of its paid -up shares into stocks and re-conversion
of stock into paid -up shares; and
• Cancellation of unissued shares.
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• After such alterations the company shall within one month of this alteration
notify Corporate Affairs Commission of the fact of the alteration.
TYPES OF SHARE CAPITAL
• Issued share capital
• Unissued share capital
• Paid-up share capital
• Unpaid share capital
• Authorised minimum share capital
• Called up capital
• Un-Called capital
INCREASE OF SHARE CAPITAL – S. 102

• Passing of special resolution
• Deliver to Corporate Affairs Commission within 15 days of passing the
resolution the following:
a. Printed copy of the Notice of increase;
b. Statement of Increase duly stamped;
c. A copy of the resolution; and
d. Evidence of payment of Annual Returns
• Within 6 months of giving notice of the increase, ensure that not less than
25% of the share capital including the increase has been issued
• Have the directors deliver to Corporate Affairs Commission statutory
declaration verifying the fact that 25% of the shares have been issued
• Obtain certificate of increase from corporate Affairs Commission; and have
a copy each of the resolution and certificate of increase annexed to the
memorandum
REDUCTION OF CAPITAL – S. 106

• A company may reduce its shall capital by any of these:
a) Extinguish or reduce the liability on any of its shares in respect of share
capital not paid up; or
b) Either with or without extinguishing or reducing the liability on any of its
shares, cancel any paid-up share capital which is lost or unrepresented
by available assets; or
c) c) Either with or without extinguishing or reducing the liability on any of its
Shares, cancel any paid-up share capital which is in excess of the
company’s wants.
 Reduction of share capital of a company is done by special resolution which
is subject to confirmation by the court.
65
 After successful reduction of share capital, the memorandum of

association will be altered accordingly.
REDUCTION OF CAPITAL – S. 105 – 109

• Preparation of scheme of reduction
• Convene general meeting and the notice must be accompanied by the
scheme of reduction and explanatory circular
REDUCTION OF CAPITAL
• Passing of special resolution
• Application to the court to confirm the reduction and approve the scheme of
reduction
• Deliver the following to Corporate Affairs Commission:
a) Copy of the special resolution;
b) The order approving the scheme and extract of minutes of meeting
approving the scheme;
c) Duly completed Form CAC 2.4 (Notice and Statement of Reduction of share
capital)
d) Evidence of payment of Annual Returns
 Obtain certificate of registration of court order confirming the reduction and
the extract of minutes of meeting adopting the scheme from Corporate
Affairs Commission; and
 Annex the certificate from Corporate Affairs Commission, the approved
minutes and court order of reduction and resolution to the memorandum of
association
 Comply with any special court directives in respect of:
a. Adding to the company’s name as its last words “and reduced”; and
b. Publishing the reasons for reduction of capital.
 The special resolution for reduction of share capital will only take effect
upon the registration of the court order and minutes of the reduction by the
ALTERATION OF MEMORANDUM OF ASSOCIATION – SS. 44 &

45
• Other clauses in the memorandum of association can be altered like the
object/business clause.
66
ALTERATION OF THE ARTICLES OF ASSOCIATION – S. 48

• Convene general meeting and passing of special resolution
• Deliver to Corporate Affairs Commission printed copy of the resolution and
the article of association as amended
• Evidence of payment of Annual Returns
• Receipt of payment of filing fee
RE-REGISTRATION OF PRIVATE COMPANY AS PUBLIC - S. 50
OF CAMA
• Convening general meeting and passing of special resolution
• Application to Corporate Affairs Commission in the prescribed form signed
by a director and the secretary accompanied by thefollowing documents:
a. Printed copy of the memorandum and articles of association as altered;
b. A copy of a written statement on oath by the directors and secretary showing
that the paid up capital as at the date of the application is not less than 25%
of the authorised capital;
c. A copy of the balance sheet as at the date of the resolution or the preceding 6
months, which ever is later;
d. A statutory declaration by a director and the secretary to the effect that:
i. the special resolution has been passed; and
ii. the company’s assets are not less than the aggregate of the paid up
capital and undistributed reserves; and
e. A copy of any prospectus or statement in lieu of prospectus delivered within
the preceding 12 months to Securities Exchange Commission.
f. Copy of the special resolution
g. Evidence of payment filing fee
 If Corporate Affairs Commission is satisfied with the application for re-
registration, it will issue the company a new certificate of incorporation,
stating that the company is a public company.
 A company shall not be re-registered under this section if it has previously
been re-registered as an unlimited company.
RE-REGISTRATION OF PUBLIC COMPANY AS PRIVATE S. 53

• Board resolution approving the registration
• Convene general meeting and passing of special resolution approving the
registration
• 28 days period is allowed for objection and application to the court to cancel
the special resolution.
67
• Application for cancellation of the resolution for alteration of the object

clause may be made by the following:
a. holders of not less in the aggregate than 5 % in nominal value of the
company’s issued share capital, or any class thereof; or
• (ii) not less than 5% of the company’s members.
• A person who consented to or voted in favour of the resolution for alteration
cannot bring an application for cancellation of the resolution to the court.
• The applicant will give notice of application to court for cancellation of the
resolution to Corporate Affairs Commission and also to the company
• The court on getting such an application can make any of the following
orders:
a. An order either cancelling or confirming the resolution; and
b. Make such orders or give such directions as it thinks expedient in the
circumstance
• The company shall within 15 days from the date the court made the order
deliver to Corporate Affairs Commission the following:
a. A certified true copy of the court order confirming the resolution;
b. A printed copy of the resolution;
c. Application in prescribed form;
d. Printed copy of the memorandum and articles as altered;
e. Evidence of payment of Annual Returns; and
f. Evidence of payment of filing fee
• If Corporate Affairs Commission is satisfied that the company should be re-
registered, it shall:
a. Register the application and the other documents; and
b. Issue the company with certificate of incorporation as a private
company.
• Where the court cancels the resolution, deliver to Corporate Affairs
Commission:
a. A certified true copy of the court order; and
b. Printed copy of the special resolution
• Where no application is made to the court to cancel the resolution, within the
28 days allowed for applying for cancellation of the resolution, an
application will be made to Corporate Affairs Commission within 15 days of
the
• expiration of the 28 days period for objection for re-registration of the
company.
• The following documents will accompany the application in the prescribed
form signed by the director and secretary of the company:
a. Printed copy of the special resolution;
68
b. Printed copy of the memorandum and articles as altered;

c. Evidence of payment of Annual Returns; and
d. Evidence of payment of filing fee
• If Corporate Affairs Commission is satisfied that the company should be
b. b) Issue the company with certificate of incorporation as a private
company
RE-REGISTRATION OF COMPANY LIMITED BY SHARES AS

UNLIMITED – S. 51
• Convene general meeting of the company
• Obtain assent of all the members of the company;
• Deliver to Corporate Affairs Commission the following documents:
a. Application in the prescribed form signed by a director and the
secretary;
b. The prescribed form of assent subscribed by all the members of the
company or on their behalf;
c. A statutory declaration by the directors of the company that:
i. The persons who subscribed to or on whose behalf the form of
assent is subscribed to, constitute the whole membership of
the company;and;
ii. ii. If any of the members did not subscribe to the form of assent
themselves, that the directors took all reasonable steps to satisfy
themselves that each person who subscribed on behalf of a
member was lawfully empowered to do so; and
d. A printed copy of the memorandum and articles of association
incorporating the alterations
b. Issue the company with certificate of incorporation as unlimited
company
• Re-registration from limited to unlimited is prohibited where;
• The company is limited by virtue of prior re-registration from unlimited to
limited, or
• It is a public company, or
• Has been re-registered previously as unlimited
69
• Convene general meeting and passing of special resolution

• The special resolution shall state the proposed authorised share capital of the
company
• Deliver to Corporate Affairs Commission the following documents:
a. Application in the prescribed form signed by a director and the
secretary;
b. Printed copy of the special resolution;
c. Printed copy of the memorandum and articles as altered;
d. Evidence of payment of Annual Returns; and
e. Evidence of payment of filing fee
• The application and other documents shall be lodged with Corporate Affairs
Commission not earlier than the day on which the resolution was filed.
b. Issue the company with certificate of incorporation as a limited
company
• Re-registration of companies is prohibited in the following cases;
• An unlimited company will not be re-registered as a public company or as a
company limited by guarantee; and
• A previously re-registered company from limited to unlimited cannot be re-
registered from unlimited to limited.
STATUTORY CORPORATION
• Statutory corporation can be privatised and unbundled and registered with
Corporate Affairs Commission as private or public company limited by
shares
ALTERATIONS IN RESPECT OF BUSINESS NAME - S. 577 OF

CAMA
• Change of Business Name
• Change of Business Name Objects
• Change of Registered Address of Business Name
• Change of name of proprietors of registered Business Name
• Any time there is change in the registered particulars of a Business Name,
the firm or individual shall within 28 days after the change notify the
Registrar of Business Name of such a change.
• The notice required shall be in writing and signed by the individual or
partners in the firm
• Formal application stating reason for change
70
• Duly completed form for change of business name

• Original certificate of registration
• Evidence of payment of annual returns
• Evidence of payment of filing fee
CHANGE OF BUSINESS NAMEOBJECTS

• Duly completed application form for change of nature of business
CHANGE OF REGISTERED ADDRESS OF BUSINESS NAME

• Duly completed form for change of registered address
• Formal application for change of registered address
CHANGE OF NAME OF PROPRIETORS OF REGISTERED

BUSINESS NAME
• Duly completed application form
• Formal application for change of name
• Evidence of change of name
• Evidence o payment of filing fee
ALTERATION IN RESPECT OF INCORPORATED TRUSTEES

• Change of name of Incorporated Trustees
• Change of objects of Incorporated Trustees
• Replacement and appointment of additional trustees of Incorporated
Trustees
• Alteration of provisions of the constitution of Incorporated Trustees
CHANGE OF NAME OF INCORPORATED TRUSTEES - S. 597

• Formal application addressed to the Registrar-General of Corporate Affairs
Commission requesting for his consent/approval for the change
accompanied by the following:
• Duly completed Form CAC 1A -Availability and Reservation of Name
• Evidence of publication in two daily newspapers of which one must be
circulating in the local area, calling for objection within 28 days
71
• Display a notice of the proposed change conspicuously mounted at the

association’s headquarter, branches or such places where a majority of
the members are likely to see it
• Copy of the resolution of the general meeting approving the change;
• Extract of minutes of the meeting held where the resolution was passed,
signed by the chairman and secretary of the Board of Trustees
• Evidence of payment of filing fees
CHANGE OF OBJECTS OF INCORPORATED TRUSTEES - S. 597

REPLACEMENT AND APPOINTMENT OF ADDITIONAL

TRUSTEES OF INCORPORATED TRUSTEES
• Duly completed Trustees Declaration Form in respect of the new trustees
• 2 passport photographs of each of the new trustees to be attached to the
application and the declaration forms
72
ALTERATION OF PROVISIONS OF THE CONSTITUTION OF

INCORPORATED TRUSTEES - S. 598
• Copy of the Constitution as altered

STATUTORY REGISTERS TO BE KEPT BY

INCORPORATEDTRUSTEES
• Register of members
• Register of trustees
• Asset register
• Property acquisition register
• Minutes book
• Accounting records
CORPORATE SEARCHES
• Corporate search is conducted at the Corporate Affairs Commission to
ascertain the status, legal compliance of a company to legal requirements
and standing of a company
• It is necessary in the following circumstances:
a. Opening of bank account
b. Application of loan facility from bank or other financial institutions
c. Conducting due diligence/ legal auditing
d. Verification of profile of a company
73
e. Ascertaining whether a company is registered or not

f. During investigation of a company
PROSEDURE OF CONDUCTING CORPORATE SEARCHES

• Complete CAC prescribed form for search and CTC of documents
• Write application to Corporate Affairs Commission to conduct search
• Payment of search and CTC prescribed fees
• After the search, prepare the search report attaching the CTC of relevant
documents
CONTENTS OF CORPORATE SEARCH REPORT
• Clients Name:
• Address of Client:
• Date of Search:
• Place of Search:
• Name of Company:
• Change of name (if Any):
• Registered Office address:
• Registered Certificate Number:
• Date of Incorporation:
• Business/Object:
• Directors and addresses:
• Share Capital:
• Increase in share capital (if any):
• Allotted shares:
• Allotees and addresses:
• Any change in the registered particulars:
• Any charge/encumbrance:
• Discharge from encumbrance:
• Annual Returns:
• Secretary:
• Remark:
74
75
WEEK 10
CORPORATE GOVERNANCE 1
LEGAL FRAMEWORK, CONCEPTS AND INTERNATIONAL BEST
PRACTICES IN CORPORATE GOVERNANCE
THE MEANING OF CORPORATE GOVERNANCE

• This refers to the mechanism of internal and external controls of the actions and
inactions of the organs of a company in a manner that ensures:
Compliance with public policy
The interest of stakeholders, and
The avoidance of corporate failure/corporate collapse and abuse.
THE BASIS FOR CORPORATE GOVERNANCE

•It is aimed at building and strengthening the following:
i. Corporate transparency
ii. Accountability
iii. Credibility
iv. Integrity and
v. trust
MAJOR LAWS ON CORPORATE GOVERNANCE

1. Companies and Allied Matters Act
2. Investments and Securities Act
3. Banks and other Financial Institution Act
4. Central Bank of Nigeria Act
5. Insurance Act
6. National Insurance Commission Act
7. Financial Reporting Council of Nigeria Act ETC
Then why the codes?
THE NEED FOR THE CODES

• The available laws do not adequately provide for all the different sectors of
the economy.
• The process of passing or amending laws is lengthy and substantial delay
may affect the business sectors involved.
• The Codes allow the quick and effective response to the dynamics of
corporate governance.
• Etc
HIGHLIGHTS OF C.G. MECHANISMSPROVIDED UNDER CAMA
Checks and balances in the management of a company – 63 (3) CAMA
76
• The BOD exercises management powers in the company while some corporate
decisions cannot be taken without the members in general meeting. Examples:
Change of the name of the company
Change of business/ objects
Capital increase
Reduction of capital
Conversions or re-registration of the company
Mergers
ETC
HIGHLIGHTS OF C.G. PROVISIONS UNDERTHE ISA

1) Corporate Responsibility of Public companies – see generally ss. 60-65 ISA
2) Auditors of Public companies to register(accredited) with SEC – s. 62 ISA
3) The requirement for a listed company to disclose Quarterly earning forecast to
the SEC S64
4) Periodic or annual audited financial statement to be filed with SEC
5) System of internal controls over financial reporting and security of assets – s. 61
ISA
6) Duty of the auditors of a company to report on the internal control system of the
company. SEC S63
NB: contravention of any of the above provisions is sanctioned by a fine of
N1,000,000 and for every subsequent day N25,000
THEORIES OF CORPORATE GOVERNANCE

I. Agency Theory/Shareholders Theory
II. Stakeholders Theory
AGENCY/SHAREHOLDER THEORY
• The agency/shareholder or stock holder theory posits mainly that the
shareholders are the principal while the directors are their agents.
• The share holders or the stock holders provide the equity or money with
which the coy does business and they bear the risk of the business.
• The directors are appointed by the shareholders to bring in their skills and
expertise and provide a high return on the investment of the share holders.
• This theory therefore watches for the best interest of the shareholders which
is basically maximum profit.
• Under the shareholder theory the main organs of the company are the
General Meeting and the Board of Directors as the decision making organs
of a company.
77
• The importance of the interface between members and Directors on the

platform of the general meeting is sacrosanct and underscored by the
principles under part C of the NCCG 2018.
STAKEHOLDER THEORY
• This theory recognizes that there are other persons in the company structure
outside the directors and members that impact meaningfully on the
performance and sustainability of the company.
• These persons could include long term employees who have acquired
valuable skills over time. They might even have benefitted from some
trainings from the coy and they are valuable to the coy as much as the coy is
valuable to them.
• They bring in ethical considerations into the business of the coy and may
prompt the company to perform certain CSR (e.g. oil spillage and flaring
issues)
• Part D of the NCCG is relevant here.
RECENT CODES ON C.G. IN NIGERIA

• The new codes are as follows:
1. The Nigerian Code of Corporate Governance, 2018 (NCCG) - issued by the
Financial Reporting Council of Nigeria. It came into force from the 1st of
April, 2019.
2. Code of Corporate Governance for Finance Companies in Nigeria
(CCGFCN) -Issued by the CBN came into force 1st April, 2019.
OTHER SECTOR BASED CODES OF C.G.

Apart from the above some other many other codes which are sector based, some
of which include;
1. Code of Good Corporate Governance for Banks and Discount Houses
2. Code of Good Corporate Governance for the Insurance Industry in Nigeria
3. NCC Code of Corporate Governance for the Telecommunication Industry
ETC
AUTHORITY OF THE NCCG, 2018

• It is based on SS.11 (c) and 51 (c) of the FRCN Act, which confer on the
Financial Reporting Council of Nigeria with the following powers:
• The power to ensure good corporate Governance practices in the public and
private sectors of the Nigerian economy; and
• The power to issue the code of corporate governance and guidelines
78
• The code was approved by the FRCN pursuant to the above-mentioned

statute and recommended to the minister for issuance in accordance with S
76 of the FRCN Act
APPLICATION OF THE NCCG

• The NCCG is applicable to the following companies:
1. All public companies.
2. Private companies that are holding companies of public companiesor
regulated entities.
3. All concessioned or privatized companies.
4. All regulated private companies being private companies that file returns to
any regulatory authority other than the FIRS and the CAC
AIMS AND OBJECTIVES OF THE NCCG, 2018

1. Institutionalising corporate governance best practices in Nigerian
companies.
2. Promoting public awareness of essential corporate values and ethical
practices that will enhance the integrity of the business environment
SIGNIFICANT ASPECTS OF THE NCCG,2018
• Applicability of the Code: Aimed at companies of varying sizes and
complexities and across industries.
• It is applicable by companies of different sizes and at different phases of
growth. The apply and explain principle aids that. Thus companies can apply
the code in a manner suitable and explain why it is applied it that way.
MONITORING METHODS
• Responsibility for Monitoring the Implementation of the code: The Financial
Reporting Council (FRC) is the authority responsible for monitoring the
implementation of the NCCG
• This may be done through the sectoral regulators and registered exchanges,
who are empowered to impose sanctions based on the specific deviation
noted
• Review of implementation methods of the code, by the FRC, in response to
recurrent cases of deviation.
STRUCTURE OF THE CODE

• 7 (parts) and 28 Principles together with the practices recommended for
implementing the code. The 7 parts cover the following:
79
A. Part A deals with the BOD- provision is made for the appointment of an
Independent Non Executive Director who is not a member of the coy to bring a
high level of objectivity and judgment into the Board.
• The MD is also prevented from being a part of some committees which include
audit, remuneration, nomination and governance.
Part B deals with assurances, internal and external control mechanisms as well
as effective whistle blowing framework that will prevent the recurrence of
deviant conduct.
C. Part C deals with relationship with members on the platform of the General
Meeting as well as safeguard for the rights of members especially minorities.
D. Part D deals with conduct of business and ethical issues to build confidence
in investors. It checks issues like insider trading, conflict of interest and other
corrupt practices
E. Part E deals with sustainability principles to ensure the long term success of
the business performance of the coy.
F. Part F deals with transparency- here we mean openness to stakeholders, they
should know what the company is doing.
G. Part G deals generally with definitions.
RECOMMENDED PRACTICES ON THE ROLE OFTHE BOARD

The BOD, in view of its central position in corporate governance, should have a
charter (document) setting out responsibilities, which, among other objectives,
ensures the following:
i. That the oversight and control of the company is such that promotes the
continued survival and prosperity of the company
ii. Compliance with laws and regulations
iii. Integrity of the annual reports and accounts
COMPOSITION OF THE BOARD OF DIRECTORS

• The BOD is constituted of the following persons or categories of persons:
1. The Chairman of the Board
2. The Managing Director
3. Executive Directors (ED’s)
4. Non Executive Directors (NED’s)
5. Independent Non Executive Directors (INED’s)
NB. The secretary is normally in attendance on the Board in other to guide them
for the purposes of compliance and building a sound corporate governance
culture and practice.
80
FUNCTIONS OF MEMBERS OF THE BOARD

• The members of the board have various responsibilities depending on their
designation which may include the following:
1. The Chairman presides over the proceedings of the Board and has the
right to cast a second ballot to break a tie when the need arises.
2. The Managing Director is the Chief Executive Officer and oversees the day
to day affairs of the coy.
3. The ED’s assist the MD, they may be assigned certain responsibilities or
portfolios.
4. The NED’s bring in their business experience and expertise to help the Board
make critical decisions.
5. The INED should have little or no interest in the coy and should be able to
bring dispassionate view into the Boards decision making process.
BOARD STRUCTURE AND COMPOSITION

• This should be organised in such a way as to ensure a balance of skills and
diversity (including experience and gender) without compromising competence,
independence and integrity.
• It is not advisable for a director to be on several Boards although it is not
prohibited, there should be disclosure- reason effectiveness.
CRITERIA FOR THE APPOINTMENT OF THEINED

• The criteria for the appointment of the INED are broadly contained in section
7.2 of the NCCG and they include some of the following:
1. Should not hold more than 0.01% of the shares of the coy.
2. Should not be a representative of a substantial share holder of the coy.
3. Should be in the employment of the company or group and should not have
been within the past 5 years.
4. Not a close family member to a key decision maker of the coy auditor etc.
(Brainstorming on requirements)
CODES ON CORPORATE GOVERNANCE

• Essentially, the various codes of corporate governance were initiated to check
the recurrence of corporate financial failures otherwise known as corporate
collapse.
CODE OF CORPORATE GOVERNANCE FORFINANCIAL

COMPANIES IN NIGERIA (CCGFCN)
• The code is made pursuant to the CBN Act and the BOFIA and aimed at
encouraging investment, access to finance (especially to SME’s) and growth of
81
the economy it is not only applicable to banks, but to all licensed Financial
Companies as well.
• Some key provisions of the code concerning the BOD include the following:
i. Size and composition of the BOD- the minimum size is 5 while the maximum
size is 9 and more than 50% of them should be NED’s.
ii. It limits the number of family members that can be on the Board to 2.
iii. There must be one INED on the Board that has no relationship with coy or any
subsidiary, someone completely dethatched from the coy.
iv. At least 2 members of the BOD shall be experienced in Banking.
• The following provision relate to share holders of the coy:
i. Right to receive information on a timely and regular basis from the FC,
e.g. in newsletters, websites and other media in addition to the General
Meetings.
ii. Dealing with the Shareholders Association shall be in strict compliance
with the Code of Conduct for Shareholders Association issued by SEC.
HIGHLIGHTS OF OTHER PROVISIONS IN THECODE

• Rights and duties of stakeholders are entrenched.
• Prevention of insider from insider trading and other unethical practices.
• In the event of malpractices in the FC stakeholders are to comply with the
Guidelines for Whistle Blowing for Banks and other Financial Institutions in
Nigeria for raising alarms.
• Stakeholders also include customers.
• Emphasizes good corporate governance for stakeholders including the host
community.
• Provisions on disclosure and transparency.
• Auditing and reporting to CBN on an annual basis.
• Semi-annual report on compliance with the code to be filed with the CBN.
• Non-compliance is sanctioned under S64 of BOFIA.
HIGHLIGHTS OF THE CCG FOR BANKS ANDDISCOUNT

HOUSES
1. The Board shall act in the best interest of the banks employees and other
stakeholders (employees are therefore recognized as stakeholders).
2. There must be in place a succession plan for the CEO, ED’s and other top
management staff.
3. The size of the Board should be between 5 and 20.
4. Banks shall have 2 INED’s while discount houses shall have 1 INED.
5. Not more than 2 members of the same extended family shall be on the Board
at the same time.
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6. No 2 members of the same extended family shall hold the positions of CEO
and Chairman at the same time.
7. NED’s can only serve for a maximum of 3 terms of 4 years each only.
8. The maximum term for a CEO is 10 years which may be broken into two
tenures of 5years each.
9. No director can serve as a member of the Board of the Bank and a holding
company within the group at the same time.
10. The remuneration of the ED’s is determined by a committee constituted of
only NED’s
11. Other remuneration committees are to be constituted by NED’s alone.
12. The Chairman shall not be a member of any Board Committee.
CORPORATE SOCIAL RESPONSIBILITY AND CORPORATE

GOVERNANCE
• Corporate Social Responsibility (CSR) has been defined in different ways by
difference people.
• A simple definition of CSR is that it is a self regulating business model that
helps a company to be socially accountable to itself, stake holders and the
public.
• CSR is relevant in Corporate Governance because it can be used to identify
with and address the needs of stake holders like employees, customers, host
communities etc.
• CSR is therefore relevant and related to the stake holder theory of Corporate
Governance
THANK YOU
WEEK 10 ASSIGNMENT
Tantaloom (Nigeria) Plc was incorporated in October 2018. Later, it was as a listed
public company. Since incorporation however, it is yet to hold an AGM (Annual
General Meeting) or even a statutory meeting. As contained in the Memorandum
of Association, the objects of the company are as follows: Haulage, Warehousing,
production of palm kernel cake (PKC), Palm Kernel Oil (PKO) and Palm Kernel
Sludge (PKS).
Led by Mr. Onyemere Onuku, the Chairman and Chief Executive Officer, the
company has not kept a proper record of its substantial shareholders. There is also
no indication that an internal audit function has been established, even though an
annual report is ready to be filed on behalf of the company.
As a result, many shareholders are aggrieved with the way the affairs of the
company is being managed by the four-man Board of the company. Some have
83
also argued that the family ties between Mr. and Mrs. JaiyeOwopo, makes them
ineligible to serve on the Board of Tantaloom (Nigeria) Plc.
Answer the following questions:

1) List the codes of corporate governance applicable to the company and the
issuing authority for each code.
2) What are the applicable laws on corporate governance in the present
circumstance?
3) Assuming that Tantaloom (Nigeria) Plc is an insurance company, what
additional laws on corporate governance will apply?
4) Comment on the following:
(a) The absence of the internal audit function in the company; and
(b) The relevant time frame for holding the statutory meeting of the
company.
5) What would be your answer in respect of the following matters:
(a) The propriety or otherwise, that Mr. and Mrs. JaiyeOwopo are
ineligible to serve on the company’s Board; and
(b) The composition of the entire Board of Tantaloom (Nigeria) Plc.
84
WEEK 11
DIRECTORS AND SECRETARY
BY
MOTUNRAYO EGBE(MRS.).
DIRECTORS AND SECRETARY

Read relevant Sections of CAMA & CAC Regulations.
Compare with the Codes Of Corporate Governance
Draft relevant Resolutions and Notices like Appointment of Directors, Removal of
Secretary, Agenda of 1st Board Meeting
Fill Forms CAC 7A, CAC 2.1
DIRECTORS
 Preliminary point
 Note-s.63
 The division of powers in corporate governance-
 1. Board of directors
 2.annual general meeting
POWERS OF THE BOARD

 S.63(3) &(4)
 The board is vested with power to manage the company and has the default
power to exercise all the powers of the company subject to the Act or any
power of the AGM.
 EXAMPLE- It is the prerogative of the Board to propose Dividend.
 Note –
 S.63(4)
 The Board shall not be bound to obey the AGM provided they act in good
faith and due dilligence.
ANNUAL GENERAL MEETING

 See S.63.
DEFINITION OF DIRECTORS
 SS.244,245 & 567S CAMA
 Olufosoye V.Fakorede (1993) 1 NWLR (PT272) 747.
LEGAL POSITION
 S. 283
 TRUSTEES
 AGENTS
85
TYPES OF DIRECTORS
 SHADOW-SS.245&650
 EXECUTIVE- NON-EXECUTIVE-ss.244(2),s.282(4).
 MANAGING- SS. 64(b), 263(5),268 -LONGE V.FBN (2006) 1 CLRN105.
 ALTERNATE-
 DIRECTORS (SIMPLICITA)- YALAJU-AMAYE V.ASSOCIATED
REGISTERED ENGINEERING CONTRACTORS LTD 1990 4 NWLR
422.
 LIFE DIRECTOR- S.255.
 RETIRING DIRECTOR- S.259.
 LIFE DIRECTOR- S.255.
 RETIRING DIRECTOR- S.259.
 DIRECTOR APPOINTED BY CAUSAL VACANCY-S.249
 Director appointed to Replace a director removed at the same meeting-
S.262(2)
 Independent Director- See Codes of Corporate Governance.
 FIRST DIRECTORS
 SUBSEQUENT DIRECTORS
APPOINTMENT OF FIRST DIRECTORS
 S.247- Appointed at the time of Incorporation.
 By Majority or all the subcribers to the memorandum and articles of
association
 OR
 By Being named in the Articles.
APPOINTMENT OF SUBSEQUENT DIRECTORS.
 S. 259(4).
 1.Recommendation by directors
 2. nomination by member
 notice in writing by member & person to be elected – 3-21days before
meeting.
 note- retiring directors exempted.
 Secretary convenes a general meeting of the company-21days Notice
 Pass an Ordinary Resolution
 Fill Form cac 7a- notice of change of directors etc.
 Apply to cac with relevant documents within 14 days
 Alter the register ofdirectors & secretary- See Regulations 38.
APPOINTMENT BY CASUAL VACANCY
 S.249
 Reason: death, retirement,resignation or removal of a director.
 Appointment by Resolution of the Board
86
 Must be approved at the next Annual General Meeting.

 If not approved appointment lapses
APPOINTMENT OF THE MANAGING DIRECTOR
 S.64 (b),S.263(5)- See YALAJU’s Case.
 LONGE v FBN
 Articles
 Resolution of the Board
 Confirmation by the General meeting.
 Note-Confirmation by the AGM is not required where he is appointed as a
first director.
APPOINTMENT OF EXECUTIVE DIRECTORS
 Not directly provided in CAMA. Inference may be drawn from s.64(b) &
s.263(5)
 LONGE V.FBN P.116 PARA. 25
 IWUCHUKWU V. NWIZU (1994) 7 NWLR 379.
 Articles
 Board Resolution, confirmation by the General Meeting.
REPLACEMENT OF A REMOVED DIRECTOR AT THE SAME
MEETING-S.262(2)
 Note- additional requirement of special notice.
LIFE DIRECTOR-S.255
 Applicable to private & public companies.
 Mode of appointment IS usually by the Articles.
 Removable-S. 262.
 Advantage-
 Means of exercising control in the company
 Not subject to the rule on rotation.
MODE OF VOTING ON APPOINTMENT-261
 private company- single resolution for all directors.
 public company- separate resolution each director.
 NOTE-1. for General Meetings only 2.single resolution may be used for a
public co.if a unanimous resolution has been passed earlier.
NUMBER OF DIRECTORS
 No.to be appointed- s.246. Minimum/maximum-s.249 (3)
 Increase/decrease - 249 (3)
 Compare with the Codes of Corporate Governance.
AGE OF DIRECTORS
 PRIVATE&Public CO.- 18yrs and above
 public co. – 70 yrs and above requires-
 1.Disclosure- to members by the person to be appointed-s.252
87
 2.special notice to the Co.&

 3.Notice to members by the Co.- S.256.
REMUNERATION- s.267
 Non- Executive Directors.
 Are not entitled to remuneration-s.267(4)
 Entitled to travelling, hotel, other expenses and allowances in connection
with meetings.
 Compare with the codes.
 Managing director/executive directors-
 Entitled to remuneration-S.268- salary,commission,participation in profit.
 Director’s service contract
 Fixed by articles
 Determined by the general meeting
 Note remuneration of directors if not fixed by the Articles must be approved
by the General Meeting.
 Compare with the provisions of the Codes.
 Note also-
 Payment of compensation for loss of office must be approved by the General
meeting –s.271
ROTATION OF DIRECTORS.- S.259
 Retirement-
 1st agm – all retire
 Subsequent agm- 1/3 retire
 Those to retire?
 Longest in office
 Agreement
 Lot
 Note- The Articles may exempt some directors from being subject to
the rule e.g executive directors,MD.
 1.Re- election-
 retiring director deemed re-elected, except-
 director did not offer himself
 members resolved not to fill that vacancy
 lost resolution to re-elect.
DISQUALIFICATION-S.257
 INFANT
 LUNATIC
 Insolvent-s.253
 Conviction for fraud-s.254-Note there has to be a Disqualification Order.
 a corporation other than its representative appointed for a given term.
88
 What is the qualification for directors(if any) under the Codes?

 What is the procedure for Appointment of Directors under the Codes?
VACATION-S.258 CAMA
 Lack of share qualification-s.251
 Bankruptcy or insolvency-
 Conviction for fraud-s.254
 Insanity
 Resignation by notice in writing.
REMOVAL
 S.262 cama
 Longe v.fbn
 Any director may be removed irrespective of the provisions of the Articles,
contract or Agreement before expiration of his tenure.
 Removal contrary to the Articles or Contract may entitle the director to
Compensation.s.262(6).
Procedure for Removal- S.262
 Person proposing to remove must give 28 days Special Notice to the Co.
 The Co. Must send the Notice to the director.
 The Co.Sec must give 21 days Notice of general meeting to the members.
 Send a copy of the representation (if any) made by the director to members
 At the General Meeting, director must be heard on the resolution.
 Pass Ordinary Resolution removing the director.
 Fill Form CAC 7A with accompanying documents within 14 days- Reg 38
 Alter the Register of Directors and Secretaries.
 Change letter head etc.
 See Longe v FBN to the effect that a director can only be removed under
s.262.
 See however, s.262(6) to the effect that the powers under s.262 does not
derogate from any power to remove a director apart from the section.
 See Yalaju Amaye v AREC to the effect that a managing director can be
removed
 By the Board of directors.
 NOTE
 The decision of the SC in LONGE to the effect that a director of any kind
whether executive , non-executive, managing director can only be removed
under s.262(1)-(3) is the operating law.
Retirement/Resignation/death- Reg 38.
 Note-
 There is no need to pass a resolution in a general meeting.
89
 The letter of Resignation /death certification/ proof of retirement with other

documents within 14 days of the event must be taken to CAC
 Follow other steps like in removal.
DUTIES OF DIRECTOR-s.279
 Fiduciary duty of utmost good faith
 Acting in the best interests of the company
 Exercise powers for the purpose they were created
 Shall not fetter his discretion to vote in a particular way.
 Shall not delegate his power in such a way as to amount to breach of duty
 He shall not make any secret profit
 Personal interests shall not conflict with his duties.
 Shall exercise the degree of care dilligence and skill which a reasonably
prudent director would exercise in comparable circumstances.
NOTE
 Duties of directors are owed by each director to the company.
 Compare with Power of directors in s.63 which cannot be exercised by one
director but by directors as a group.
REMEDIES FOR BREACH
 Injunction/ declaration
 Damages or compensation
 Restoration of company’s properties
 Recission of contract
 Account of profit
 Summary dismissal
PROCEEDINGS OF DIRECTORS-S.263
 First board meeting-not later than 6 months after incorporation
 Agenda
 Appointment of Chairman
 Appointment of Managing Director
 Appointment of Auditors
 Appointment of Bankers
 Fixing of Financial Year
 Ratification of Pre-incorporation contracts
 Allotment of shares.
 Formal Receipt of Incorporation Documents.
 Fixing of quorom for committee of directors.
 Etc.
Chairman
 Appointed by the Board-s.263(4)
 Power of the chairman- s.263(2).
90
 Note
 Chairman is also a director especially with respect to rotation of directors.
BOARD MEETINGS
 Notice of meeting- 14 days-s.266
 Failure to give notice invalidates meeting-s.266(3)
 Note-s.266(4).
 Quorom- s.264
 2 if directors not more than 6
 1/3 where directors are more than 6.
 Effect of not having a quorom- s.265- The general meeting may act.
 Voting : s.263(2)- one director, one vote
 Chairman may have a second casting vote.
CLASS EXERCISE
 OUTLINE THE PROCEDURE FOR THE APPOINTMENT OF A
CHAIRMAN
SECRETARY
 No longer a servant.High ranking officer and may be part of management of
a company.
 Wimpey v. Balogun 1986 3 nwlr pt 28 324
 Panorama development (guildford) ltd v. Fidelis furnishing fabrics 1971 2
qb 711.
 Every company must have a Secretary.-s.293
 A director may also be the Secretary-s.294
 Note the exception.
Qualification
 Private Company
 A person who in the opinion of the directors has the requisite knowledge and
experience to discharge the functions of a secretary.S.295.
 note- answer is not that anybody can be the co.sec of a private company.
 public company –S.295
 A member of the institute of chartered secretaries and administrators.
 Legal practitioner within the meaning of the Legal Practitioners Act 1975.
 A member of the Institute of Chartered Accountants of Nigeria or such other
bodies of Accountants as are established from time to time.
 A person who has held the office in accordance with subsection (d)
 A firm consisting of members in (a)-(d).
APPOINTMENT OF FIRST SECRETARY
 PRIVATE/PUBLIC
 BY the subscribers to the Memorandum & Articles of Association
91
 Fill relevant portion of Form CAC 1.1- Application for Registration of a

Company.
 After Incorporation- Register the name in the Register of Directors and
Secretaries.
APPOINTMENT OF Subsequent SECRETARY
 Private / Public Company
 Company to give 14days Notice of Board meeting
 Pass Resolution appointing the Secretary
 Fill Form CAC 2.1- Particulars of persons who is the company secretary or
any change therein.
 File with CAC within 14days with
 Attach necessary documents.
 Alter Register of Directors and Secretary Accordingly.
 See Regulations 39.
REMOVAL OF SECRETARY
 PRIVATE COMPANY
 Company to give 14days Notice of Board meeting
 Pass Resolution removing the Secretary
 Fill Form CAC 2.1- Particulars of persons who is the company secretary or
any change therein.
 File with CAC within 14days with
 Attach necessary documents.
 Alter Register of Directors and Secretary Accordingly.
 See Regulations 39.
REMOVAL OF THE SECRETARY OF A PUBLIC COMPANY
 Procedure
 Give him Notice.
 Notice to state the following-
 Stating intention to remove him
 Stating the grounds on which the intended removal is based.
 Giving him a period of not less than 7 working days to make his defence.
What can the secretary do ?

 He may either resign within 7 working days or make a defence.
 What if the secretary neither resigns or make a defence?
 The board may remove the secretary and shall make a report to the General
Meeting.
What if the secretary makes a defence?
 If the defence is acceptable, he shall not be removed. If defence is not
acceptable then he shall be removed.
92
WHERE SECRETARY’S DEFENCE IS NOT SUFFICIENT.

 If the allegation against him is that of fraud or serious misconduct, the board
may remove him from office and shall report to the next General Meeting.
 If it is other than fraud or serious misconduct, the board shall not remove
him without the approval of the GM.
May suspend him and shall report to the GM.
DUTIES OF A SECRETARY-s.298
 Attending meetings of the board, company and committee
 Maintaining registers and other records
 Rendering proper returns and notification to CAC
 Carrying out admnistrative duties as directed by the company.
FIDUCIARY DUTIES
 A Secretary has no fiduciary duties to the company but where he performs
admnistrative duties he becomes an agent of the company and therefore a
fiduciary
CLASS EXERCISE
 Outline the duties of the company secretary before during and after the
General Meeting.
 Note
 To answer this question,it will not suffice to merely re-state section 298.
STATUTORY FILINGS
 Special Resolution altering objects-15 days after the end of the period
allowed for confirmation by the court- S.46(7)& (9), S.53(3)
 Notice of change of Particulars of directors &secretaries-14days-S.292(4)
 Registration of charges-S.197- 90 days.
 Special Resolution altering objects-15 days after the end of the period
allowed for confirmation by the court- S.46(7)& (9), S.53(3)
 Notice of change of Particulars of directors &secretaries-14days-S.292(4)
 Registration of charges-S.197- 90 days.
 Annual Returns- SS 370& 374- 42 days
 Return on allotment-S.129- one month
 Returns on the alteration of share capital- SS.101,102,106,109-15days.
 Statutory Report- S211(6) – immediately after sending report to the
members. NOTE – members are to be sent the report at least 21 days before
the Statutory meeting.
 Returns on Auditors. S362(2)- S.365(3)-14 days notice to be given after
removal& resignation respectively
 Returns during receivership and winding up-S.392- 14 days.
93
 S.553 Filing-Statement by Banks, insurance companies etc to be made every

1st Monday in February & every 1st Tuesday in August.
NOTE
 Ordinary Resolutions usually require 14 days
 Special Resolutions-15 days
 There are however exceptions.
94
WEEK 12
CORPORATE GOVERNANCE 3 MEETING
SCOPE OF CORPORATE GOVERNANCE III

MEMBERSHIP
• MEETINGS
• RESOLUTIONS
SCOPE 1: MEMBERSHIP OF A COMPANY

• A member is a person who has subscribed the memorandum of a company
or any person who has agreed in writing to become a member of a company
and whose name is entered in the register of members.
• Section 79 (1) (2) CAMA
1. Subscriber to memorandum
A subscriber to the memorandum becomes a member on the incorporation of the
company. They are deemed to have taken the shares set opposite their names.
Other Members
• Every person other than subscribers must meet two conditions to become a
member of a company
A. An agreement in writing to become a member: and
B. Entry of his name in the register of members.
HOW TO ACQUIRE MEMBERSHIP

• 1. Subscription: only available to the first subscribers, promoters
• 2. Allotment & being placed on the register of members
• 3. Transfer of shares from existing shareholders and being placed on the
register of members
• 4. By Transmission i.e by succeeding to the estate of deceased/bankrupt
member, and being placed on the register of members.
ALLOTMENT and TRANSFER of shares.
ALLOTMENT is the application for shares in a company by desirous members
of the public. The company where it accepts the offer, will allot shares to that
person.
• Within 42 days of allotment, the company writes a letter of Allotment to the
applicant notifying him of the allotment and the number of shares allotted to
him
• SECTION 125 (1) CAMA The company shall within 2 months after
allotment, issue a certificate of Allotment to the allotee .Section 146 (1)
95
TRANSFER OF SHARES
• is the assignment of sale of shares held in a company by the holders of the
shares called Transferor or to another person with whom agreement has been
reached known as the Transferee For a gift or upon consideration
• Upon the transfer, steps are taken to register the transfer with the company
so that the name of the transfer is substituted with the name of the transferee.
Se 152
• It is possible to transfer only part of the shares held by a member and the
member would still retain the share certificate where all the shares belonging
to a member are transferred, a new share certificate shall be issued to the
transferee within 3 months
Rectification of the Register of members
• Se 90 CAMA
• The Transferee should first notify the company that he is the holder of the
shares in question. Where the company does not respond to this notification,
the Transferee may apply to the court for rectification of the Register of
members. Which Court?
• By Motion
TRANSMISSION OF SHARES
• occurs where the shares of a deceased shareholder or shareholder who is
bankrupt devolves or transmits to the successors in title or his personal
representatives. Se 155
• Automatic & Operation of Law
Capacity as to Membership
 COMPANIES :A company may take shares and be a member of another
company and be attending the meetings of the other company by a
representative authorised by resolution of its BOD. Sec 231
 A company in liquidation is not capable of becoming a member of a
company. S 20 (3)
 Aliens An alien may join in forming a company or acquire shares in a
company but must comply with the laws relating to alien participation.
 Enemy Alien & Infant.
INCIDENTS /RIGHTS OF MEMBERSHIP

• Right to dividends ( Debts due & recoverable)
• Right to bonus shares if declared (shares at premium)
• Right to attend meetings. Longe v 1ST BANK
• Right to receive notice of meetings
• Right to vote at meetings and be voted for
96
• Right to demand poll

• Right to appoint proxy
• Right to requisition Extra-ordinary general meeting
• Right to own shares
• Right to transfer shares
• Right to sell, mortgage or otherwise dispose of shares
• Return of capital on reduction of capital/winding up if there is surplus
• Right to object to alteration of objects clause, shares etc
• Right to take up minority action
• Right to petition for investigation by CAC, SEC
• Right to petition for winding up
• Right to copies of memo and articles
• Right to financial Reports
• Right to inspect minutes of meetings
• Right to remain a member unless restructured out and shares acquired.
Current trends in Codes of Corporate Governance

Not more than 5% shares in the Banking Sector
CESSATION OF MEMBERSHIP
• TRANSFER
• FORFEITURE OF SHARES
• RIGHT AND EXERCISE OF LIEN BY COMPANY
MEETINGS
Types of General meetings of a company
1. Statutory meeting
2. Annual General Meeting (AGM)
3. Extra – Ordinary General Meeting (EGM)
STATUTORY MEETING: S 211

• Every public company shall, within a period of six months from the date of
its incorporation, hold a general meeting of the members of the company to
be referred to as the “Statutory Meeting” PLC only
Facts to Note About Statutory Meeting

 Solely for Public Companies (PLC)
 It is compulsory
 It is to hold within 6 months of the date of incorporation of the company
 It must be held in Nigeria S 216
97
 Notice must be sent to members at least 21 days before the meeting S.217(1)
Business Transacted at Statutory Meeting
• The members of the company present at the statutory meeting may
• i. Discuss any matter relating to the formation of the company and
commencement of business
• ii. Consider the statutory Report
• iii. Consider matters arising from the statutory report
SECTION 211 (8)

STATUTORY REPORT
• The directors shall, at least 21 days before the day on which the statutory
meeting is held forward to every member of the company statutory report.
S.211 (2)
• The statutory report shall be certified by not less than two directors or by a
directors and the secretary of the company S.211(3)
• The directors shall also deliver a copy of the statutory report so certified, to
the CAC S 211(6)
Contents of Statutory Report

• 1.The total number of shares allotted, either as fully paid up, party paid up or
partly paid up otherwise than in cash; for shares partly paid up the extent to
which they are so paid up, or the consideration for which they have been
allotted.
• 2. The total amount of cash received by the company in respect of all the
shares allotted, distinguished as aforesaid.
• 3. The names, address and descriptions of the directors, auditors, managers,
if any, and secretary of the company.
• 4. The particulars of any pro-incorporation contract together with the
particulars of any modification or proposed modification
• 5. Any underwriting contract that has not been carried out and the reasons
therefore
• 6. The arrears, if any due on calls from every director
• 7. The particulars of any commission or brokerage paid or to be paid on the
issue or sale of shares or debentures to a director or manager S.211(3)
• 8. An abstract of the receipts of the company and of the payments made
form them up to date. S.211(4)
• 9. The statutory Report as it relates to shares and capital account (receipts &
payment shall be certified by the auditors S.211
98
Resolution on Statutory Report

• By S. 211(9) CAMA, if a member wishes to propose a Resolution on any
matter arising out of the statutory report, from the date of his receipt of the
statutory report, he must give a further 21 days notice to the company, of his
intention to propose such a resolution in the general meeting.
Penalty on Failure to hold statutory meeting /deliver statutory Report
• Non-compliance and penalty on Failure to hold statutory meeting or deliver
statutory Report would result to
1. The company and any officer in default shall be guilty of an offence and liable
to a fine.
• Section 212
2. Winding up of the company by the court
• S.408 (b) CAMA (Discretion of Judge)
ANNUAL GENERAL MEETING

Section 213
• Every company shall in each year hold a general meeting as its annual
general meeting a addition to any other meeting in that year and shall specify
the meeting as such in the notice calling it and not more than 15 months
shall elapse between the date of one AGM of a company and that of the
next.
Essential features of AGM

• It is compulsory for all companies
• A company should hold its first AGM within 18 months of incorporation
• Not more than 15 months may elapse between the date of one AGM and the
next but so long as a company holds its first AGM within 18 months of its
incorporation, it need not hold it in that years or in the following year –
S.213(1)(a)
• Apart from the first AGM, CAC can extend the time of holding any
subsequent AGM by not more than 3 months S.213(1) (b)
• The AGM must be held in Nigeria S 216
• Notice must be sent to members at least 21 days before the meeting but
shorter notice is allowed if agreed to by all the members entitled to attend
and vote S.217(2) (a)
Procedure/Power of CAC to compel BOD to Hold AGM
• i. A member can apply to the CAC urging the CAC to call or direct the
calling of a meeting.
• ii. If a member’s application is timely and the CAC grants the order to hold
the meeting in that year, the meeting is an AGM of that same year.
99
• However, where a meeting so held is not held in the year in which the
default in holding the AGM occurred, the meeting is not to be treated as the
company’s AGM of the previous year in which it is held, unless at that
meeting the company resolves that it shall be so treated S.213(3)
• iii. The CAC can also give a direction that one member of the company
present in person or by proxy may apply to the Federal High Court for an
order to take a decision which shall bind all the members S.213(2
PENALTY FOR NON-COMPLIANCE

• The company and every officer who is in default shall be guilty of an
offence and be liable to a fine
• S.213(5)
Business Transacted at Annual General Meeting

• Two types of businesses are transacted at the AGM of a company
A. Ordinary Business
B. Special Business.
ORDINARY BUSINESS OF AGM

• i. Declaration of dividend
• ii. Presentation of the Financial Statement – the Report of Directors and
Auditors
• iii. Election of directors in place of those retiring
• iv. Appointment of Auditors
• v. Fixing of remuneration of the auditors
• vi. Appointment of members of the Audit committee
B. SPECIAL BUSINESS OF AGM

• Any other business not listed as ordinary business of AGM is deemed
special business of AGM
SECTION 214
EXAMPLES OF SPECIAL BUSINESS

a) To alter the object/ memart
b) Change of Name
c) Re registration of all types
d) Reduction of capital
e) Removal of auditor before expiration of tenure
f) etc
100
EXTRA-ORDINARY GENERAL MEETING

Section 215
• Extra-ordinary General Meeting (EGM) is the General meeting held at any
time to transact business that cannot comfortably wait for the next Annual
General Meeting (AGM).
TIME AND PLACE FOR EGM

• An EGM can hold at any time and
• Need not hold in Nigeria – S.216
• As many as possible and desirable
WHO CAN CONVENE AN EGM?

• i. Board of Directors
• ii. Any Director if other Directors are not within Nigeria & quorum may
not be formed for BOD
• iii. Requisition by members holding not less than one tenth of the paid up
share capital of the company, carrying the right of voting
• IN CASE OF LIMITED BY GURANTEE?
or in the case of a company without a share capital, members holding one-
tenth of the total Voting rights of all the member.
PROCEDURE FOR MEMBER’S REQUISITIONED EGM

• The Requisitionists qualified as described in (iii) above must deposit
assigned requisition at the registered office of company, stating “the object
of the meeting” : the Resolution which they intend to propose. S. 215(3)
Where Directors Fail to Convene?

• If the directors do not within 21 days from the date of the deposition of the
requisition proceed duly to convene a meeting, the requsitionists, or any one
or more of then, representing more than ½ of the total voting rights of all of
them, may themselves convene a meeting. Section 215 (4)
Expenses incurred by Requisitionist

• Any reasonable expenses of the requisitionist in convening the meeting shall
be repaid to the requisitionist by the company Section 215(6)
101
Absence of Quorum at a requisited Meeting?

• If no quorum is present at the requisitioned meeting, within one hour from
the time appointed for the meeting, it is dissolved. i.e. that would be the end
of the matter, there is no adjournment.
• Section 239 (3) AMG
Business Transacted at Extra-ordinary General Meeting

• By section 215 (8) CAMA, businesses transacted at an extra-ordinary
general meeting shall be deemed “Special Business”.
• Therefore, a matter which constitutes ordinary cannot be discussed at EGM.
• Query: Removal & appointment of a director in EGM.? Removal is
possible, leading to casual director
COURT – ORDERED MEETING

Section 223
• The Federal High Court can upon an Application, by interested party, order
a company’s meeting in the following circumstance.
 If for any reason it is impracticable to call a meeting of a company
or
 for the Board of directors in any manner prescribed by the Articles or
CAMA
.
ORDERS COURT MAY MAKE
Upon the application of any director of the company or of any member of
the company who would be entitled to vote at the meeting the court can
make all or any of the following orders.
A. That the meeting be called, held and conducted in any manner it thinks
B. B. Give such ancillary or consequential directions as it thinks expedient
including a direction that one member of the company present in person or
by proxy may apply to the court for an order to take a decision which shall
bind all the member S 223(2)
C. The directions should be confined to matter that will facilitate the meeting
and the court should not pronounce on matters reserved for the meeting.
In case of absence of all Directors& Shareholders.

• Where all the directors and shareholders does not/ are dead, any of their
personal representatives can apply to the court for an order to convene a
meeting of all the personal repr. of the shareholders entitled to attend and
vote at a general meeting to appoint new Directors to manage the company
102
and if they fail to convene a meeting the creditors, if any can do so. Section
248 (2)
ISSUES /VALID CONVENING OF MEETING

• The issues affecting the validity of a meeting bother mainly on notification
and how to notify, where and who attends the meetings
such issues are:
1. Venue of meeting
2. Eligibility to attend,
3. Notice of meeting,
4. Proxy attendance and
5. Corporate Representation
VENUE OF MEETING
• By virtue of Section 216 CAMA, company meetings that must be held in
Nigeria are Statutory meeting and Annual General meeting.
• Thus, Extra-ordinary general meeting needs not hold in Nigeria
ELIGIBILITY TO ATTEND COMPANY MEETING. S 219

• Entitled to receive Notice and eligible to attend:
• 1. Every member
• 2. Legal representative, receiver or a trustee in bankrupt of a member
• 3. Every director of the company
• 4. Every auditor of the company
• 5. Company Secretary
• Apart from the listed person, no other person is entitled to receive Notice of
GM. S 219 (2)
AUDITOR?
• Section 363 (1) CAMA reconfirms the fact that a company’s auditor shall be
entitled to attend any general meeting of the company and to receive all
notices
NOTICE OF MEETING
• No business may be transacted at any GM unless notice of it has been duly
given. Se 218 .Contents of Notice. Se 218
• A valid notice of a meting must specify
1. The place of the meeting
2. The type of meeting
3. Agenda ie general nature of the business to be transacted
• For AGM, it is to be stated in the Notice, that the meeting is to transact
“Ordinary Business” and need not state them
• For special Business, terms of the Resolution should be set out
103
4. Provision should be made for proxy attendance

5. It should be expressed to be by order of the board or requisioned by members
6. Signed by company secretary
7. Time
8. Date
Length of Notice Section 217
• The notice required for all types of general meetings shall be 21 days from
the date on which the notice was sent out.
• However, a shorter notice may be agreed by all the members entitled to
attend and vote at the AGM or by members represents 95% of the voting
rights /shares for other General meetings. Section 217 (2)
Service of Notice Section 220
• A notice may be served personally or by post to the person entitled or to his
registered address or if he has not registered address within Nigeria to the
address if any supplied by him to the company for giving of notice to him.
• Where a notice is sent by post and the letter is properly addressed and
stamped, then the addressee is deemed to receive it 7 days after the letter is
posted: section 220 (2)
• Thus, the 21 days is calculated from that time
Failure To Give Notice Section 221
• Failure to give notice of meeting to a person entitled to receive it shall
invalidate the meeting.
• The exception is where such failure is an accidental omission on the part of
the persons giving the notice. 1st Bank v Longe
• However, if the failure was due to a misrepresentation or misinterpretation
of the provisions of CAMA or the Articles this shall not amount to
accidental omission. – section 221 (2) Instances of
• Additional Notice section 222 CAMA
• In addition to the normal individual notices sent out, every Public company
(PLc) shall, at least 21 days before any (General meeting)
• Advertise a notice of such meeting in at least two daily Newspapers
Current trend in Corporate Governance
• Adequate notice
• Service of notices
• Proof of services
PROXY
• Proxy means a person nominated by any member to attend a accompany
meeting on his behalf, takes part in the voting and can exercise the same
right as the member appointing him.
104
• NB: That member who appoints a proxy must be entitled to attend and vote
at the meeting.
• A proxy may not be a member of the company Se 230 (1)
• Proxy is not allowed in company without share capital unless its Articles
permit. Proviso to Section 230 (1)
How Proxy is appointed
• Notice must provide for members right to appoint proxy Se 230 (2). Breach
of this constitutes on offence Section 230 (2)
• The instrument appointing a proxy shall be in writing under the hand of the
appointer or of his Attorney duly authorized in writing. If the appointer is a
corporation, the proxy instrument shall either be under seal or under the
hand of an officer or Attorney duly authorized. Se 230 (6)
• The proxy instrument shall be deposited at the registered office or head
office of the company or at such other place within Nigeria as is specified
for that purpose in the Notice of the meeting Section 230 (7)
Revocation of proxy’s appointments

• Proxy form /instrument is to be lodged not later that 48 hours before a
meeting section 230 (3)
• It has to be deposited NOT LATER than 24 hours before the time appointed
for the taking of poll Section (7)
The appointer may have a change of mind after appointing;
• He is allowed to revoke the Proxy and attend the meeting But unless he has
successfully revoked the Proxy, he can no longer be allowed in the meeting
as he could have double attendance.
• For the proxy to be validly revoked, the Revocation must be communicated
to the company. Timely before the commencement of meeting or adjourned
meeting in which the Proxy is to be used
• The revocation, transfer, death or insanity of principal does not affect proxy
unless information in writing of such death etc has been receive by the
company before commencement of the meeting. Section 230 (5)
CORPORATE REPRESENTATION
• By S 231 CAMA a company which is a shareholder or member of another
company is required to appoint any person by a Resolution of the Board or
governing Council, to be it representative in the general meetings of the
company of which it is a member.
• NB: Such a Representative is not thereby a Proxy and therefore exercise the
right of the company- S 231 (2) e.g can appoint Proxy under S 230 (1)
105
• A creditor company being a Debenture Holder of another company can also

appoint a Representative to be attending the creditors meeting in the Debtor
company. S 231 (1) (b)
ISSUES AFFECTING VALIDITY OF PROCEEDINGS AT MEETING

• Examples of such issues touching on proceedings of the meeting include:
 Quorum
 Voting
 Resolution
 Adjournment
 Minutes of Meting
QUORUM
• Quorum refers to the total Nos of members present in person or by proxy,
whose presence satisfies the required minimum number of members that
would be present for the meeting to start & progressively proceed to the
expected end.
How is Quorum determined?
• Section 232 (1) CAMA provides thus
Unless otherwise provided in the articles, no business shall be transacted at
any general meetings unless a quorum of members is present at the time
when the meeting proceeds to business and through out the meeting.
• For the purpose of determining a quorum, all members or their proxies shall
be counted Section 232 (3)
• Unless otherwise provided in the articles, the quorum for a meeting shall be
• 1/3 of the total number of members of the company or 25 members
(whichever is less) present in person or proxy
• Where the number of members is not a multiple of 3, than the number
nearest to 1/3
• Where the number of members is 6 or less, the quorum shall be 2 members.
THE RULE OF 1/3 & 25
• Unless otherwise provided in the articles, the quorum for a meeting shall be
• 1/3 of the total number of members of the company or 25 members
(whichever is less) present in person or proxy
• Where the number of members is not a multiple of 3, than the number
nearest to 1/3
• Where the number of members is 6 or less, the quorum shall be 2 members.
106
Quorum during the progress of the meeting

• Unless the Articles otherwise provides, quorum is to be maintained from the
starting of the business of the meeting and throughout the meeting. S 232 (1)
• Where quorum was formed at the commencement of a meeting but the
quorum was last as the meeting progressed, then the Chairman ought to
direct on the fate of the meeting.
MEMBERS WITHDRAWAL?
• The Chairman’s direction depends on whether the reason for withdrawal
from the meeting was for “sufficient or insufficient Reason”
GOOD REASON?
• If it is for sufficient reasons, the meetings shall be adjourned to the same
place, and time in a week’s time. If there is no quorum still at the adjourned
meeting. The member present shall be the quorum and their decision shall
bind all shareholders. If only one member is present at the adjourned
meeting, he may seek direction of the FHC to take decision S 232 (5)
MALICIOUS WALKING OUT

• If it is for insufficient reason OR for the purpose of reducing the quorum the
meeting can continue with the number present, and their decision shall bind
all the shareholders and where it remains only one member, he may seek
direction of the court to take a decision S 232 (4)
VOTING
• Voting is done to ascertain the support of a particular Resolution by
members. There are basically two types of voting at any General meeting
I. Show of hand
II. By demanding a poll. Sect 224 (1)
Show of Hand
• This is voting according to the number of persons present and entitled to
vote even by proxy. It is determined by counting the number of members
supporting or opposing a Resolution.
Demand of a poll
• Voting on a poll entails the shareholders voting according to the number of
share he owns
• Although one share attracts one votes, certain classes of share are permitted
to have weighted vote i.e. attracts more than one vote e.g. preferential shares
Section 143
• Proxies also vote according to the number of shares which the member they
are representing hold.
107
Procedure upon demand of poll

• If a poll is duly demanded, the result of the previous show of hands is then
disregarded. Poll shall be taken in such manner as the Chairman directs, and
the result of the poll shall be deemed to be the Resolution of the meeting at
which the poll was demanded S 226 (2)
• However a poll demand on the election of a chairman or any question of
adjournment shall be taken forthwith and any business other than that upon
which a poll has been demanded may be proceeded with pending the taking
of the poll. S 226 (4)
Restriction on demand of poll
• The right to demand poll shall not be limited by Articles except on the
Election of Chairman & Adjournment of meeting. Where the Articles limits
the right, the Articles shall be void. Se 225 (1)
• Company’s articles can validly restrict the use of poll voting in respect of
election of the Chairman or Adjournment of meeting.
• However, there SHALL BE NO RIGHT to demand on poll on the election
of members of the Audit Committee under S 359 CAMA
• This is an absolute bar S 225 (3)
Who can demand on polls
• The following persons can demand on poll
• i. The Chairman, where he is a shareholder or a proxy
• ii. At least three members present in person or by proxy
• iii. Any member or members present in person or by proxy and who
represent not less than 1/10 of the total voting rights
• iv. Any member or members holding shares not less that 1/10 of the total
fully paid up shares in the capital of the company S 224 (1) a-d
Chairman’s Casting Vote

• In the case of an equality of votes, whether on a show of hands or on a poll,
the Chairman is entitled to a second or casting vote Se 226 (3)
Result of Vote
• For show of hands, the Chairman’s declaration of the results is conclusive.
Thus, no one can re-count hands after such declaration unless a poll is
demanded.
• An entry to that effect in the Minutes Book shall be conclusive evidence of
the result, without proof of the number or proportion of the votes recorded in
favour of or against the resolution Section 224 (2)
• For poll, in competing the majority, the number of votes cast for and against
the resolution should be counted.
108
RESOLUTIONS
• Resolutions refer to decisions taken at the company meetings, arrived at
through voting, or unanimous agreement by members entitled to vote.
• Types of Resolution
• There are two basic types of Resolutions
• i. Ordinary Resolution
• ii. Special Resolution
ORDINARY RESOLUTION
• This is a resolution passed by a simple majority of votes cast by members
bang entitles to vote either person or by Proxy section 233 (1)
WRITTEN RESOLUTION
• Written Resolution is resolution passed without formal physical meeting of
members who are entitled to attend the meeting & vote. S 234 Provides thus
All resolution shall be passed at general meeting and shall not be effective
unless so passed
• Provide that in the case of a private company, a written resolution signed by
all the members entitled to attend the vote shall be as valid and effective as if
passed in a General Meeting.
• Private Companies Only.
• Be signed by All the members entitled to vote
SPECIAL RESOLUTION
• This is a resolution passed by not less than ¾ (three-four) of the votes cast
by such members being entitled to vote either in person or by proxy; of
which 21 days notice, specifying the intention to propose the resolution as a
special Resolution has been duly given
• NB: Notice of less than 21 days may be given where members so agree. S
233 (2)
12 Examples of matters requiring special Resolution

• 1. Change of Name S. 32
• 2. Alteration of the Articles S. 48
• 3. Alteration of objects s. 46
• 4. Reduction of capital s. 106
• 5. Voluntary winding up S. 457
• 6. Compulsory winding up s. 408
• 7. Re-registration of LTD as PLC s. 50 (1)
• 8. Re-registration of PLC as LTD S.
109
• 9. Rendering liability of Directors unlimited S. 289

• 10. Re- registration of ULTD as LTD S. 51
• 11. Variation of class rights S.
• 12. Payments of interest out of capital S 113
RESOLUTIONS REQUIRING SPECIAL NOTICE

• Special Resolution deals with the number of votes to be cast for a decision;
whereas Special Notice deals with how to inform those entitled to attend and
vote on the Resolution.
• The Procedure is:
• The member gives special Notice of his intention to the company at least 28
days before the date of the meeting at which he intends to move the
resolution is enclosed on the
• On receipt of the members notice as well as enclose the Resolution in the
notice
• Where the company fails to call a meeting for a date 28 days less after the
notice has been given, this will not invalidate the meeting.
Examples of special notice

• Examples of Resolutions that require special Notice are
• 1. Appointment of a person other than a retiring Auditor
• 2. Removing Auditor before expiration of his term of office Se 364
• 3. Appointing or re-appointing a Director aged more than 70 for a Public
company Se 256
• 4. To Remove a Director from office S. 262
• 5. To appoint new Director or replace a removed Director in the same
meeting after removal. S 262 (2)
DATE OF PASSING OF RESOLUTION
• Resolution passed at company meetings even on adjourned meeting shall be
treated as passed on the date on which it was actually passed and not an
earlier date. Section 238
• For written Resolution, it is deemed to be passed when the last signature is
affixed to the resolution
REGISTRATION OF CERTAIN RESOLUTION

• By S. 237 (1) (4) CAMA, printed copies of the following Resolution and
agreement must be forwarded to CAC for registration within 15 days after
the passage
• Special resolution
• Unanimous resolution on issue which requires special resolution
110
• Unanimous class resolution

• Resolution requiring a company to be wound up voluntarily under S. 457 (a)
CAMA
REQUISITION OF RESOLUTION
• Members holding 1/20 of the total voting rights in a company can
requisition a notice of their Resolution on an issue, and cause the company
to circulate it to members entitled to attend the meeting in which the
resolution is proposed to be moved .S. 235(1) (4)
ADJOURNMENT OF MEETINGS SECTION 239 CAMA

A meeting may be adjourned either because
• 1. No quorum is formed at the original meeting or
• 2. D Business was unfinished at the original meeting
• The Chairman, may with the consent or directive from them at the meeting,
adjourn the meeting from time to time and from place to place
• No new business is allowed at the adjourned meeting, only the unfinished
business from the original meeting shall be transact.S.239 (1)
• It is not necessary to give notice of adjourned meeting if it is adjourned for
not more than thirty days. where more, then notice must be given .S. 239 (2)
Quorum at Adjournment Meeting

• If within 1 hour from the time an adjourned meeting is declared starts, a
quorum is not present
• If the meeting is convened upon the requisition of members, the meeting
shall be dissolved.
• If not a requisitioned meeting, it shall stand adjourned to the same day in the
next week, at the same time & place or such other day, time & place as
directed by chairman or director S. 239 (3)
• At the second adjourned meeting, any two or more members present shall
form a quorum and their decisions shall bind all.
• Shareholders; and if only one member is present,; he may seek the direction
of the court to take a decision S. 239 (4) S. 263 (4)
MINUTES OF PROCEEDINGS
• Every company shall keep minutes of all proceedings of general meeting,
Board meetings and meeting of its managers if any , SEC 244 (1) Where
there is default, the company & every office in default shall be guilty of an
offence & liable to a fine. S. 241 (4)
111
• The Minutes when signed by the chairman of the meeting or the chairman of
the next succeeding meeting, shall be prima facie evidence of the
proceedings. S. 241 (3)
• And that the meeting was duly held and convened, and matters agreed to the
meeting are deemed to be valid – S. 241 (4)
Forms of Minutes
• The minutes can be kept in any of the following forms
• 1. Bound books
• 2. Loose leaves
• 3. Photographic film form
• 4. Stored on any informative storage device capable of being reproduce into
eligible written form e.g. Compact Disk (CD), Flash Drives etc.
112
WEEK 13
FINANCIAL STATEMENTS AUDITORS AND AUDIT COMMITTEE (1)
FINANCIAL STATEMENTS
• Financial Statements of a company show the annual state of affairs of a

company and they are important not only to members of the company but to
the public, so as to decide whether to invest or de-invest
• From the company.
• Examples, Profit and Loss Account, Balance Sheet, etc.
• S.331 of CAMA provides that, every company must keep accounting
records that will be
• Sufficient to show and explain the transactions of the company, so as to
• (a) disclose with reasonable accuracy, at any time, the financial position of
the company;
• (b) enable the directors to ensure that financial statements comply with the
requirements of the Act.
• CONTENTS OF ACCOUNTING RECORDS:-
• It must contain;
• (a) entries from day to day of all sums of money received and expended by
the company;
• (b) a record of the assets and liabilities of the company; and
• (c) statements of all goods sold and purchased.
• LOCATION AND PRESERVATION OF ACCOUNTING RECORDS:-
• The accounting records shall be kept at the company’s registered
• Office or such other place in Nigeria as the directors think fit and will be
open at all times to inspection by officers of the company.
• The company is required to preserve the accounting recordsFor a period of
six years though subject to any direction with respect to the disposal of
records given under winding up rules.
DIRECTORS’ DUTY TO PREPARE ANNUAL ACCOUNTS:-

• The directors of a company must yearly prepare financial statements.
• At the first board meeting of a Company, the directors must determine
thedate each year, when financial statements shall be made up and notify
CAC within 14 days of the determination. This date is known as the
Accounting Company, the directors must determine the date each year, when
financial statements shall be made up and notify CAC within 14 days of the
determination. This date is known as the Accounting
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• (a) statement of the accounting policies,

• (b) the balance sheet as at the last day of the year,
• (c) profit and loss account or an income and expenditure account
For a company not trading;

• (d) notes on the accounts;
• (e) the auditor’s report;
• (f) director’s report which accompanies annual account.
• (g) a statement of the source and, Application of fund;
• (h) value added statement for the year which is the wealth created by the
company during the financial year.
• (i) a five year financial summary; And;
• (j) in the case of a holding company, the group financial statements i.e.
consolidated profit and loss account and balance sheet.
• It must be noted that , the financial statements of a private company need not
include matters stated in paragraphs a, g, h and I above. See S.334(3) of
CAMA.
• See also, SS 335, 336,337, 340
• And 341 of CAMA that deals with additional contents of a financial
statements as the circumstances permit.
• DIRECTORS’ REPORT:-
• The directors of a company must
• Prepare a report yearly which is annexed to the balance sheet;
• Containing a fair view of the development of the business of the company
and its subsidiaries during the year; and Stating the amount, if any, which
they recommend should be paid as dividend and the amount if any, which
they propose to carry to reserves. See S. 342(1).
PERSONS ENTITLED TO RECEIVE FINANCIAL STATEMENTS:-
• The following are entitled to receive financial statements;
• Every member of the company;
• Every debenture holder;
• All persons other than members and debenture holders, being
• Persons so entitled; and
• With respect of company not having share capital, only members and
debenture holders entitled to receive notices of AGM of the company. See S.
344 of CAMA.
THOSE NOT ENTITLED:-
• Members or debenture holders who are not entitled to notices of general
meeting and members whose addresses are unknown;
• More than one of the joint
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• Holders of shares and debentures, who are not entitled to receive notices of
meeting; and
• Other joint holders of shares and debentures not entitled to receive such
notices. See S. 344(3).
• S. 349 provides for sending of financial statements on demand to members
and debenture holders who as of right are not entitled to receive them.
• Failure to send after demand attracts penalty.
DIRECTOR’S DUTY TO LAY AND DELIVER FINANCIAL
STATEMENTS:-
• S.345(1) provides that, the
• Directors must at a date not later than 18 months after the incorporation of
the company and subsequently once at least in every calendar year, lay
before the company in general meeting, copies of the financial
• Statements of the company, made up to a date not exceeding 9 months,
previous to the date of the meeting.
• Also, the directors shall in each year, deliver the notes on the Statements
which were laid before the general meeting .See S. 345(3).
MODIFIED FINANCIAL STATEMENTS BY SMALL COMPANIES:-
• A small company may deliver to CAC, modified financial statements in
accordance with Part 1 of Schedule 7 and SS. 350 – 353.
• The modified balance sheet shall be an abbreviated version of the Full
balance sheet. In this circumstance, the profit and loss account, director’s
report and auditor’s report need not be delivered to CAC as annextures to the
balance sheet. The abridged balance sheet must be Signed by 2 directors.
• By the provision of S. 351(1), a small company is one that;
• (a) is a private company having share capital;
• (b) the amount of its turnover
• For that year, is not more than N2 million or such amount, as maybe fixed
by CAC.
• (c) its net assets value is not more than N1 million or such amount as maybe
fixed by CAC;
• (d) none of its members is a government or a Government Corporation or
agency or its nominee; and
• (e) the directors between them hold not less than 51% of its
• equity share capital.
PUBLICATION OF FINANCIAL STATEMENTS:-
• SS 345 & 355 provide for publication of financial statements of a company.
• Publication refers to laying the account before the general meeting of the
company, reading auditor’s report before the company in general meeting
and delivering to CAC, a copy each of the balance sheet, profit and loss
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• Account and notes on the statements laid before the company in general
meeting along with annual return of the company.
• Note that, an Unlimited Company is exempted from
• Delivering to CAC, its financial statements and the annextures unless, it is a
subsidiary or a holding company of a limited liability company.
• S 345 deals with publication of full financial statements while,
• S.355 deals with publication of abridged financial statements.
•
AUDITOR
• An auditor is a person appointed and saddled with the responsibility of
examining company’s books and accounts, make a report to the members on
the accounts examined by him including every balance
• Sheet, profit and loss account and all group accounts, laid before a company
in general meeting, during his tenure of office.
APPOINTMENT OF AUDITORS:-
• Every company must at each annual general meeting, appoint an auditor or
auditors to audit the financial statements of the company. See S. 357(1) of
CAMA.
APPOINTMENT OF AUDITORS BY DIRECTORS:-
• The directors have the powers to appoint auditor(s) for the company under
the following circumstances;
• (a) the first auditor(s) usually at the 1st board meeting to hold office till the
conclusion of the
• 1st AGM. See S. 357(5) of CAMA.
• Any auditor(s) appointed by the directors may be removed by the company
at a general meeting and the company appoint in his place, any other
person(s) who has been nominated for
• Appointment, by any member of the company and notice of whose
nomination, has been given to the members, not less than 14 days before the
date of the meeting – S. 357(5)(a);
• (b) the directors may fill any casual vacancy in the office of the auditor –
357(6); and
• (c) if members at AGM fail to appoint or re-appoint auditor(s), the directors
may appoint a person to fill the vacancy–357(3).
• Members at AGM also have powers to appoint auditor(s) under the
following circumstances;
• (a) where the directors fail to exercise their power to appoint the 1st
auditor(s) – 357(5)(b);
• Subsequent appointments of auditor(s) are made by members at each AGM
with the exception of filling casual vacancies –S.357(1).
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• At any AGM, a retiring auditor however appointed, shall be re-

• Appointed without any resolution being passed unless;
• (a) he is not qualified for re-appointment; or
• (b) a resolution has been passed at the meeting appointing some
• Other person instead of him or expressly providing that, he should not be re-
appointed; or
• (c) he has given the company written notice of his unwillingness to be re-
appointed S.357(2).
QUALIFICATION OF AUDITORS:-
• A person shall be qualified to be appointed as a company auditor if, he is a
member of a body of accountants in Nigeria e.g, ICAN and ANAN – S.
358(1) of CAMA.
• The following persons shall be disqualified for appointment as auditor of a
company;
• (i) an officer or servant of the company;
• (ii) a person who is a partner of
• Or in the employment of an officer or servant of the company;
• (iii) a person or firm who or which offers to the company, professional
advise in a consultancy capacity, in respect
• of secretarial, taxation or financial management; and
• (iv) a body corporate.
• See S. 358(2) of CAMA.
• A person disqualified to be an auditor of a holding company or
• Subsidiary company cannot be qualified to be appointed an auditor of any
other company that is , a member of that group of companies.
SPECIAL NOTICE:
• A special notice is a notice given by a member to the company, at least 28
days before the holding of the general meeting, expressing desire to include
a particular business in the agenda of the general meeting.
• S. 364(1) provides that, a special notice is required for a resolution at a
general meeting of a company, for any of the following purposes;
• (a) appointing as auditor, a person other than a retiring
• Auditor; or
• (b) filling a casual vacancy in the office of auditor; or
• (c) re-appointment as auditor a retiring auditor appointed by the directors to
fill a casual vacancy;
• Or
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• (d) removing an auditor before the expiration of his term of office.

• Copy of the special resolution must be sent to the concerned
• Auditor(s) that is, auditor to be appointed, to be retired, to be removed or to
resign as the case may be, to enable him make representations to the
company and request the company to circulate them to members of
• The company – S. 364(2) & (3) of CAMA.
• However, the company or an aggrieved person may apply for court order
that, the representation should not be sent out or read out on the
• Ground that, the right to do so, is being abused to secure needless publicity
for defamatory matter.
AUDITOR’S REPORT:-
• The auditor(s) of a company, shall make a report to the members on the
account examined by him and on every balance sheet and profit and loss
account and on all group Financial statements, copies of which are to be laid
before the company in a general meeting, during the auditor’s tenure of
office.
• It must be noted that auditor’s report must be countersigned by
• A legal practitioner.
• A similar report shall be made to the audit committee in the case of a public
company.
• See S.359 of CAMA.
REMOVAL OF AUDITORS:-
• An auditor may be removed by ordinary resolution of which special notice
was given notwithstanding, any agreement between them, before the
expiration of his tenure provided
• He shall be paid compensation or damages for such termination, if he is
entitled to them.
• See SS. 362 & 364 of CAMA.
• Notice must be given to CAC within 14 days of the removal.
RESIGNATION OF AUDITOR(S):-
• SS. 365 & 366 provide for the resignation of auditor(s) and the right of a
resigning auditor to requisition general meeting of the company respectively.
• An auditor may resign his appointment by depositing a notice of his
resignation in writing at the registered office of the company.
• Any such notice shall operate to end the auditor(s) appointment,
• On the date of which the notice is deposited or on a later date as maybe
specified in the notice.
• The notice of resignation shall not be effective unless, it contains either;
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• (a) a statement that there are no circumstances connected with his

resignation which he considers, should be brought to the notice of the
members or creditors of the company; or
• A statement of any such
• Circumstances connected with his resignation, which he considers, should be
brought to the notice of the members or creditors of the company.
• The company shall within 14 days of the deposit of the notice
• Of resignation, send to CAC or if court orders against sending the notice,
shall send to CAC, a statement setting out the effect of the order.
• Note that, an aggrieved person or the company may apply to
• Court, within 14 days of the receipt of the notice, containing statement that,
the notice of resignation should be brought to the notice of members or
creditors, for an order that the auditor is using the notice to
• Secure needless publicity for defamatory matters.
• It is upon such an application that, the court may order that such notice may
or may not be sent. See S.365 of CAMA.
• By the provisions of S. 366(1) of CAMA, an auditor may deposit together
with his notice of resignation containing statements that the notice of his
resignation should be brought to the notice of the members or
• Creditors, a requisition signed by him, calling the directors to convene an
extra-ordinary general meeting of the company for the purpose of receiving
and considering such explanation, of the circumstances connected
• With his resignation, as he may wish to place before the meeting.
• Copies of the statement need not be sent out and the statement need not be
read out at the meeting if, on the
• Application either of the company or of any other person who claims to be
aggrieved, the court is satisfied that, the rights conferred by this section, are
being abused to secure needless publicity for defamatory matter.
• An auditor who has resigned his office shall be entitled, to attend any
general meeting convened on his resignation or at which his term of office
would have expired or at which it is proposed to fill the vacancy
• Caused by his resignation and to receive all notices of and other
communications, relating to any such meeting, which any member of the
company is entitled to receive, and to be heard at any such meeting,
• Which concerns him as former auditor of the company.
• See S. 366 of CAMA.
AUDIT COMMITTEE
• Audit committee is applicable to only public companies. The purpose of
setting it up is to act as watchdog on the company’s records and accounts,
ensures probity by moderating the expenses incurred by the
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• Company, help the external auditor(s) in performing their duties, makes it

impossible for the internal and external auditors to liaise and defraud the
company and questioning the directors on the findings of the
• Auditor(s).
COMPOSITION OF THE AUDIT COMMITTEE:-
• The audit committee is made up of an equal number of directors
• And representatives of the shareholders of the company, subject to a
maximum of 6 members.
• Nomination of a shareholder as a member of the committee maybe made by
a member,
• Giving notice of such nomination to the secretary of the company at least, 21
days before AGM.
• A member appointed to the committee maybe re-elected annually and shall
not be entitled to remuneration – S.359
OBJECTIVES AND FUNCTIONS OF AUDIT COMMITTEE:-
• S. 359(6) of CAMA provides that, subject to other additional functions and
powers that a company’s articles may stipulate, the following shall be the
• Objectives and functions of the audit committee;
• (a) to examine the auditor’s report and make recommendations thereon to
AGM.
• (b) to ascertain that the accounting and reporting policies of the company are
in accordance with the legal requirements and agreed ethical practices;
• (c) to review the scope and planning of audit requirements
• planning of audit requirements (d) to review the findings on management
matters in conjunction with the external auditors and departmental responses
thereon;
• (e) to keep under review the
• Effectiveness of the company’s systems of accounting and internal control;
• (f) to make recommendations to the board of directors regarding the
appointment, removal and remuneration of the external
• Auditors of the company; and
• (g) to authorize the internal auditors to carry out investigations into any
activities of the company, which maybe of interest or concern to the
committee.
• Annual Returns is one of the returns made by a company to CAC.
• S. 370 provides that, every company shall, once at least in every year, make
and deliver to CAC, an annual return provided
• That a company need not make a return either, in the year of its
incorporation or, is not required by S. 213, to hold AGM during the
following year.
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FORM OF ANNUAL RETURN:-

• The ANNUAL Return shall be in the following form;
• (a) Schedule 8, which is for company having share capital other than small
company-S. 371
• Schedule 9, which is for small Company-S. 372; and
• Schedule 10, is for company limited by guarantee –S. 373.
TIME FOR COMPLETION OF ANNUAL RETURN:-
• Annual return must be
• Completed within 42 days after AGM for the year and the company must
forthwith forward to CAC, a copy signed by a director and the secretary of
the company.
CONTENTS OF ANNUAL RETURN BY COMPANY HAVING
SHARE CAPITAL OTHER THAN SMALL COMPANY:-
• (a) address of the registered office;
• (b) situation of the register of members and the register of debenture holders;
• (c) summary of share capital and debentures;
• (d) particulars of indebtedness;
• (e) list of past and present members; and
• (f) particulars of directors and secretary.
DOCUMENTS TO BE ANNEXED TO ANNUAL RETURN:-
• Subject to the provisions of S. 377, exempting unlimited companies and
small companies, the annual returns must have annexed to it, the following;
• (a) a written copy, certified by a director and the secretary to be
• True copy of every balance sheet and profit and loss account laid before the
company in general meeting, held in the year to which the return relates;
• (b) a copy certified by a director and the secretary of the
• Auditor’s report and the report of the directors accompanying the balance
sheet.
• If a balance sheet after laying it before the general meeting is amended, it
must be stated on the balance sheet that is
• Delivered to CAC, as annexture to the annual returns -375.
• In the case of a private company whether small company or limited by
guarantee, the annual return will be accompanied by
• The following;
• (a) a certificate by a director and the secretary of the private company, to the
effect that, the company has not since the date of its incorporation or last
annual return, as the case maybe
• Issued any invitation to the public to subscribe for any of its shares or
debenture;
121
• (b) where the annual return discloses the fact that the number of members of
the company exceed 50, also, a Certificate signed by a director and the
secretary that the excess number consists wholly of persons who under
S.22(3) are not included in reckoning the number of 50;
• (c) a small company in addition
• To the above certificates, shall send with the annual report, a certificate
signed by a director and the secretary that it is a small company, containing
all the conditions specified in SS. 351 & 376(2) of CAMA, to
• Qualify as a small company. See S.376 of CAMA generally.
•
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WEEK 14
CORPORATE GOVERNANCE V
MAJORITY RULE, MINORITY PROTECTION, AND INVESTIGATION
OF COMPANIES
LEARNING OUTCOMES
 Identify the principles of Corporate Sovereignty and the scope of the Rule in
Foss v. Harbottle.
 Describe the various ways minority protection action can be
constituted/formulated.
 Prepare relevant petitions to CAC, resolutions and court processes relating to
the institution of minority protection actions at the FHC.
 Apply the procedure for litigating minority protection suits.
 Discuss the necessity, procedure and consequences of investigation of
companies.
CORPORATE SOVEREIGNTY
 The rule of corporate sovereignty was laid down in the old English case of
FOSS v. HARBOTTLE (1843)2 Hare 461; See also SPDC Nigeria Limited
v. Nwawka (2003) 6 NWLR (Pt. 815) 184 SC; Elufioye &Ors, v.
Halilu&Ors. (1993) 6 NWLR (Pt. 301) 570; Abubakri v. Smith (1973) 6 SC
31; Yalaju-Amaye v. Associated Registered Engineering Contractors Ltd
(1990) 4 NWLR (Pt 145) 422; Edokpolor& Co Ltd v. Sem – Edo Wire
Industries Ltd (1984) 15 NSCC 553.
 The rule is codified in s.299 CAMA, thus;
subject to the provisions of this Act, where an irregularity has been committed in
the course of a company’s affairs or any wrong has been done to the company,
only the company can sue to remedy that wrong, and only the company can ratify
the irregular conduct.
RATIONALE FOR CORPORATE SOVEREIGNTY.

 Prevents multiplicity of suits over one or similar incidents or arising from
the same set of facts.
 Members in a general meeting can ratify the wrongful acts of the directors.
 Logical consequence of separate legal personality.
 Preserves the principle of majority rule.
MINORITY PROTECTION – EXCEPTIONS TO THE RULE IN
FOSS V. HARBOTTLE.
 Illegal or Ultra Vires Acts – s. 300(a).Acts of the company beyond the
memart cannot be ratified by the members. They can only ratify the ultra
123
vires acts of the directors which are within the powers of the company. By
s.39(1)(2)(4) CAMA, ultra vires acts of the company can be challenged by
any member or debenture holder secured by floating charge in an action
pursuant to s.300 – 313 CAMA. Parke v. Daily News (1962) ALL ER 929.
 Purporting to do by ordinary resolution any act which by its constitution or
the Act requires to be done by special resolution – s. 300(b) CAMA;
Edwards v. Halliwell (1950)2 ALL ER 1064.
 Any act or omission affecting the applicant’s right as a member – s. 300(c)
CAMA. Pendar v. Lushington (1877) Ch. D 670.
 Committing fraud on either the company or the minority shareholders where
the directors fail to take appropriate action to redress the wrong done – s.
300(d) CAMA. Cook v. Deeks(1916) AC 554.
 Where a company meeting cannot be called in time to be of practical use in
redressing a wrong done to the company or to minority shareholders – s.
300(e) CAMA.
 Where the directors are likely to derive a profit or benefit, or have profited
or benefited from their negligence or from their breach of duty – s. 300(f)
CAMA. Daniels v. Daniels (1978) Ch D 408.
WHO CAN SUE UNDER THE EXCEPTIONS?

 Shareholders;
 Personal representative of a deceased member; and
 Any person to whom shares have been transferred or transmitted to by
operation of law.
 RELIEFS TO BE SOUGHT:
 Injunction; and
 Declaration.
RELIEF ON GROUNDS OF UNFAIRLY PREJUDICIAL AND

OPPRESSIVE CONDUCT – S. 311 CAMA.
 Pursuant to s.310 CAMA, an application by petition for an order under s.
311 CAMA in relation to a company may be made by any of the following:
a. A member of the company;
b. A director or officer of the company, or former director or officer of the
company;
c. A creditor;
d. CAC;
e. Any other person who in the discretion of the court is the proper person to
make the application under s. 311 CAMA.
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RELIEFS BY THE COURT – S. 312 CAMA.

 An order that the company be wound up;
 An order regulating the affairs of the company in the future;
 Order for the purchase of the shares of any member by other members of the
company;
 Order for the purchase of the shares of any member by the company and for
the reduction accordingly of the company’s capital;
 Order directing the company to institute, prosecute, defend or discontinue
specific proceedings, or authorizing a member(s) to institute, prosecute,
defend or discontinue specific proceedings in the name or on behalf of the
company;
 Order varying or setting aside a transaction or contract to which the
company is a party and compensating the company or any other party to the
transaction or contract;
 Order directing an investigation by CAC;
 Order appointing a receiver or a receiver - manager of property of the
company;
 Order restraining a person from engaging in specific conduct or from doing
a specific act or thing;
 Order requiring a person to do a specific act or thing.
TYPES OF MINORITY PROTECTION ACTIONS

 Personal Action;
 Representative Action; and
 Derivative Action.
PERSONAL ACTION – S. 301(1) CAMA
 Personal action relates to infringements of individual members rights in the
company such as:
 Entitlement to notice of meeting, voting, attendance to meeting, payment of
dividend when declared, observance of class rights in the articles, etc. S.
301(1) CAMA empowers a member to bring personal action to enforce any
of the rights under the exception to the Rule in Foss v. Harbottle – S. 300
CAMA.
 A member who takes up a personal action to enforce his membership right is
not entitled to damages as of right. He is only entitled to a declarative relief
and an injunction restraining the company and/or the directors from doing a
particular act.
 However, the court may under s. 301(3) CAMA, award costs, whether or not
his action succeeds.
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 By s. 301(4) CAMA, in any proceedings by a member under s.300 CAMA,

the court may, if itthinks fit, make an order that the member shall give
security for costs.
REPRESENTATIVE ACTION – S. 301(2) CAMA
 This type of action affects the rights of group or class of members of the
company against the directors or majority of the members.
 Where a member institutes a representative action on behalf of himself and
other affected members to enforce any rights due to them, he shall not be
entitled to any damages but to a declaration or injunction to restrain the
company and/or directors from doing a particular act.
 However, the court may under s. 301(3) CAMA, award costs, whether or not
his action succeeds.
 By s. 301(4) CAMA, in any proceedings by a member under s.300 CAMA,
the court may, if it thinks fit, make an order that the member shall give
security for costs.
NB: By s. 302 CAMA, for the purpose of ss. 300 & 301 CAMA, member
includes:
a. Personal representative of a deceased member; and
b. any person to whom shares have been transferred or transmitted by
operation of law.
DERIVATIVE ACTION – S. 303 CAMA

 Derivative action can be distinguished from personal and representative
actions.
 The plaintiff does not only sue for himself or on behalf of other members of
the company, but also on behalf of the company.
 The plaintiff’s right of action derives from that of the company.
 The action is suitable for infringements affecting the mgt of the company,
and oppressive mgt of the company for the benefit of those in control of the
company, who would frustrate any action for or against the company, to
remedy the anomaly.
 The benefit of the success of the action accrues to the company.
 It may also enhance the members’ fortunes and psychological satisfaction of
checkmating the mgt of the company.
 By s. 303(1) CAMA, a member may apply to court for leave to bring an
action in the name or on behalf of the company, or to intervene in an action
to which the company is a party, for the purpose of prosecuting, defending
or discontinuing the action on behalf of the company.
 By S. 307 CAMA, the applicant shall not be required to give security for
costs unlike personal and representative actions.
126
 The court may order the company at any time to pay to the applicant interim
costs before the final disposition of the action.
WHO CAN INSTITUTE A DERIVATIVE ACTION? – S. 309 CAMA.

 Registered holder, or beneficial owner and a former registered holder or
beneficial owner, of a security of a company;
 A director or an officer or a former director or officer of the company;
 The commission;
 Any other person who in the discretion of the court, is a proper person to
make the application under s. 300 CAMA.
MODE OF COMMENCING DERIVATIVE ACTION – S. 303(2) CAMA

 Apply for leave of court by way of originating summons with verifying
affidavit in support of the application showing that:
a) The wrong doers are the directors of the company who are in control of the
company and would not take necessary action for the interest of the
company;
b) Directors have been given reasonable notice of the intention to apply to
court for leave to sue or intervene, if the directors fail to diligently bring,
prosecute or defend or discontinue the action;
c) The applicant acts in good faith;
d) From the totality of the facts and circumstances of the case, it appears to be
in the best interest of the company that the action be brought, prosecuted,
defended, or discontinued; and
e) The suit is commenced by originating summons.
f) See Agip Nigeria Limited v. AgipPetroliInternationale (2010) 5 NWLR
(Pt.1187) 349.
ORDERS THE COURT CAN MAKE UPON A SUCCESSFUL

DERIVATIVE ACTION – S. 304(2) CAMA
a) An order authorizing the applicant or any other person to control the conduct
of the action;
b) An order giving directions for the conduct of the action;
c) An order directing that any amount adjudged payable by a defendant in the
action shall be paid, in whole or in part, directly to former and present
security holders of the company, instead of the company.
d) An order requiring the company to pay reasonable legal fees incurred by the
applicant in connection with the proceedings.
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RELIEF ON GROUNDS OF UNFAIRLY PREJUDICIAL AND

OPPRESSIVE CONDUCT – S.310 CAMA
 A member who alleges that the affairs of the company are being conducted
in a manner oppressive or unfairly prejudicial to a member(s) may apply to
court for relief by petition. – ss. 310 & 311 CAMA.
 The petition under s. 311 CAMA may be made by any of the following
persons:
a) A member of the company;
b) A director or officer or former director or officer of the company;
c) A creditor;
d) The commission; or
e) Any other person who in the discretion of the court, is the proper person to
make an application under s. 311 of the Act.
GROUNDS UPON WHICH THE APPLICATION MAY BE MADE – S.

311(2) CAMA
 An application to court by petition for an order under this section in relation
to a company may be made by:
a) a member of the company who alleges
i. that the affairs of the company are being conducted in a manner that is
oppressive or unfairly prejudicial to, or unfairly discriminatory against a
member(s), or in a manner that is in disregard of the interest(s) of a
member(s) as a whole; or
ii. that an act or omission or a proposed act or omission, by or on behalf of
the company or a resolution, of a class of members, was or would be oppressive or
unfairly prejudicial to, or unfairly discriminatory against a member(s) or was or
would be in a manner which is in disregard of the interests of a member(s) as a
whole; or
b) by any of the persons mentioned under s. 310(b) (c) & (e), who alleges
i. that the affairs of the company are being conducted in a manner oppressive
or unfairly prejudicial to or discriminatory against or which is in a manner
indisregard of the interests of that person;
ii. that an act or omission, or a proposed act or omission was or would be
oppressive or unfairly prejudicial to, or unfairly discriminatory against, or
which is in a manner in disregard of the interests of that person, or
c. by the commission in a case where it appears to it in the exercise of its
powers under the provisions of the Act or any other enactment that
i. the affairs of the company are being conducted in a manner that is
oppressive or unfairly prejudicial to, or unfairly discriminatory against a
member(s) or in a manner which is in disregard of the public interest; or
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ii. Any actual or proposed act or omission of the company (including an act or
omission on its behalf) which was or would be oppressive, or unfairly
prejudicial to, or unfairly discriminatory against a member(s) in a manner
which is in disregard of public interests.
POWERS OF THE COURT/ RELIEFS/ ORDERS THE COURT CAN

GRANT UPON SUCCESSFUL PETITION – S. 312 CAMA
a) That the be wound up;
b) Regulating the conduct of the affairs of the company in the future;
c) The purchase of the shares of any member by other members of the
company;
d) The purchase of the shares of any member by the company and for the
reduction accordingly of the company’s capital;
e) Directing the company to institute, prosecute, defend or discontinue specific
proceedings, or authorizing a member or the company to institute, prosecute,
defend, or discontinue specific proceedings in the name or on behalf of the
company;
f) varying or setting aside a transaction or a contract to which the company is a
party and compensating the company, or any other party to the transaction or
contract;
g) directing an investigation to be made by the CAC;
h) appointing a receiver, or a receiver and manager ofthe property of the
company;
i) restraining a person from engaging in specific conduct or from doing a
specific act or thing;
j) requiring a person to do a specific act or thing.
NB:
i. By s. 312(3) CAMA, where an order that a company be wound up is made
under this section, the provisions of the Act relating to winding up of
companies shall apply mutatis mutandis, as if the order had been made upon
an application duly filed in the court by the company.
ii. By s. 312(4) CAMA, where an order under this section makes any alteration
or addition to the memart of a company, the alteration or addition supersedes
provisions of the Act, and shall have effect as if it had been duly made by a
resolution of the company, and cannot be altered without the leave of the
court.
iii. By s. 312(5) CAMA, a CTC of the order shall, within 14 days of the making
of the order, or such longer period as the court may allow, be delivered by
the company to CAC for registration.
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INVESTIGATION OF THE COMPANY BY CAC – S. 314 CAMA

1. The commission may appoint inspectors to investigate the affairs of the
company.
2. The appointment may be made:
a) In the case of a company having a share capital, on the application of
members holding not less than ¼ of the class of shares issued;
b) In the case of a company not having a share capital, on the application of not
less than ¼ in number of the persons on the company’s register of members;
and
c) In any other case, on the application of the company.
NB: The application(s) shall be supported by such evidence as the
commission may require for the purpose of showing that the applicant(s)
have good reason for requiring the investigation.
d) By the commission pursuant to the order of the court that the affairs of the
company ought to be investigated – s. 315(1) CAMA;
e) By s. 315(2) CAMA, the commission, if it appears to it that there are
circumstances suggesting that:
a) the company’s affairs are being or have been conducted with intent to
defraud its creditors or the creditors of any other person, or in any manner
which is unfairly prejudicial to some part of its members; or
b) any actual or proposed act or omission of the company (including an act or
omission on its behalf) is or would be so prejudicial, or that the company was
formed for any fraudulent or unlawful purpose; or
c) persons concerned with the company’s formation or the management of
its affairs have in connection therewith been guilty of fraud, misfeasance, or
other misconduct towards it or towards its members; or
d) the company’s members have not been given all the information with respect
to its affairs which they might reasonably expect.
NB: By s. 315(3) CAMA, s. 315(1)(2) shall be without prejudice to the powers
of the commission under s. 322 CAMA, and the power conferred by subsection
2 of this section shall be exercisable with respect to a body corporate,
notwithstanding that it is in the course of being voluntarily wound up.
USES OF THE INSPECTION REPORT

 CIVIL PROCEEDINGS – S. 321 CAMA:
1. Pursuant to the inspection report, if it appears to the commission, that any
civil proceedings ought in the public interest to be brought by the company,
or any body corporate, the commission may itself bring such proceedings in
the name and on behalf of the company, or the body corporate - s. 321(1)
CAMA.
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2. CAC shall indemnify the body corporate against any costs or expenses
incurred by it in connection with the proceedings, and any costs or expenses
so incurred shall, if not otherwise recoverable, be defrayed out of the
Consolidated Revenue Fund.
 CRIMINAL PROCEEDINGS – S. 322 CAMA
1. If a company, or body corporate is guilty of an offence for which it is
criminally liable, the report shall be referred to the AGF for criminal
prosecution or other proceedings – s. 322(1) & (2) (3) CAMA.
 WINDING UP PETITION – S. 323 CAMA

Pursuant to the Investigation Report, if it appears to the Commission to be
expedient in public interest that the body corporate be wound up, it may (unless
the body is already wound up by the court), present a petition for it to be wound
up, if the court thinks it is just and equitable to do so.
EVIDENCE IN LEGAL PROCEEDINGS – S. 325 CAMA

A copy of the Inspectors’ Report, certified by the Commission, as true copy of
the original shall be admissible in any legal proceedings as evidence of the
opinion of the inspectors in relation to any matter contained in the report.
OWNERSHIP OF A COMPANY – S. 326 CAMA

The Report may be used to ascertain the actual membership of a company, and
the true persons who are or have been financially interested in the success or
failure of the company, or liable to control or materially influence the policy of
the company.
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WEEK 15
COMPANY SECURITIES 1
BY
DR. (MRS.) PRECIOUS-ANN AHIARAMMUNNAH
(ENUGU CAMPUS)
Company Securities
 Shares
 Debentures
 Enforcement of securities.
Company Securities
• Company’s securities are basically funds available for company’s operations
which may be either internally or externally obtained. It is made up of
shares, debentures and bonds among others. Shares are internally generated
while debentures are externally generated.
Shares
• Shares are fixed identifiable units of capital that represent a member’s stake
in a company’s share capital.
• It confers rights and obligations on a holder.
• It is a transferable property.
• Rights accruable from share ownership include:
• Right to notice of meeting, right to attend meeting, right to vote or be voted
for, right to residual assets of the company in event of winding up, right to
right issue and payment of dividend, etc.
• Obligations on share holding include:
• Payment for shares whenever a call is made and payment of outstanding on
shares allotted in event of winding up of the company.
Types of Shares
• Shares can be classified as ordinary shares, preference shares and
founders/deferred shares.
• ORDINARY SHARES:
• They bear the major financial risks of the company and are often the
Ordinary Shares
“equity shares” of the company.These are shares which give the holder the
right to participate in the company’s surplus profit and capital.
Preference Shares
• These are shares which do not entitle the holder to any right to participate
beyond a specified amount in any distribution either by way of dividend or
return of capital on redemption, in winding up or otherwise.
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• Redeemable preference shares;
• Convertible preference shares;
• Cumulative preference shares;
• Non-Cumulative preference shares; and
• Participatory preference shares.
Cumulative Preference Shares

Cumulative Preference Shares are preference shares that are entitled to payment of
arrears of dividend whether dividend was declared for that year or not. Except
where it was expressly stated that the type of preference shares that was being
issued are Non-Cumulative Preference Shares, all preference shares are deemed
cumulative.
Non-Cumulative Preference Shares

Non-Cumulative Preference Shares are preference shares that are not entitled to
payment of arrears of dividend that were not declared.
CONVERTIBLE PREFERENCE SHARES

 Convertible Preference Shares are class of preference shares that can
exercise the option of converting from preference shares to ordinary shares.
 This must be agreed upon before issuing such preference shares.
REDEEMABLE PREFERENCE SHARES

 Redeemable Preference Shares are issued for a specific period after which
the company will redeem or take up the preference shares and the holders
will cease being preference shareholders of the company.
 In other words, they are preference shares which shall or at the option of the
company be liable to be redeemed
PARTICIPATORY PREFERENCE SHARES

 Participatory Preference Shares are the class of preference shares that have
the right to participate in the company’s surplus profit and capital.
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 They are specie of preference shares that are entitled to participate in any
additional dividend over and above their specified rate.
FOUNDERS/DEFERRED SHARES
 Deferred shares are so called because payment of dividend and return of
capital are deferred until payment has been made in respect of other classes
of shares.
 They are also called founders shares because they are taken up by founders
or promoters of the company and are cheaper than the other classes of
shares.
CLASSES OF SHARES
 The different classes of shares include the following: Authorised Shares,
Issued Shares, Unissued Shares, Paid-up Shares, Unpaid Shares, Called Up
Shares and Un-Called Shares.
AUTHORISED SHARES
 This is the minimum shares a company must have to be able to register with
the Corporate Affairs Commission. The authorised share capital varies
depending on the type of company.
o For a private company, theauthorised share capital is N10,000.
o For public company, the authorised share capital is N500,000.
Issued Shares
 Issued shares are that portion of the total shares of a company that has been
alloted to members of the company and shall not be less than 25% of the
total shares of the company.
Unissued Shares
 Unissued shares are the portion of the authorised shares of a company that
has not been alloted to members of the company. They can be issued later
when the company hasneed to raise additional capital. They can be issued to
existing shareholders as right issues or bonus issues. They can also be issued
to non-members during public offer of shares or private placement.
Paid-Up Shares
 This is the portion of the issued shares of a company that members of the
company had paid for. Under the law, provisions are made for share holders
to pay for all the shares that are allotted to them at once or pay for the shares
in.
 tranches depending on what the company wants. The aspect of the shares
that has been paid for is known as paid-up shares.
Unpaid Shares
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 This is the aspect of the issued shares of a company that members of the
company had not paid for.
 The members may not pay for the shares until the company makes request
for the payment which is technically known as Call on Shares.
 The members cannot vote or receive dividends on the unpaid shares.
CALLED-UP SHARES
 These are the aspect of the unpaid shares of a company that the company
wants the members to pay up as a means of raising additional capital for the
company. The company makes request for the payment of the unpaid
sharesalready alloted to the members by making call on the shares.
 Once call is made on shares and the members did not pay up within the
stipulated period for payment for the shares, those shares affected will be
forfeited.
UNCALLED SHARES
 These are the aspect of the unpaid shares of a company that the company has
not made request/call for the payment of the unpaid shares alloted to the
members.
PROHIBITION OF NON-VOTING AND WEIGHTED SHARES
 S.116 of CAMA abolished and prohibits the issue of non-voting and
weighted shares with the exception of preference shares in certain
circumstances.
 Circumstances where preferences shares are permitted to carry more than
one vote per share are as follows:
 Resolution in respect of preferential dividend;
 Resolution varying the rights
 attached to such shares;
 Resolution as to the removal and appointment of the auditor, and
 Resolution for the winding up of a company.
ISSUE OF SHARES
 ISSUE OF SHARES PAR VALUE:
 The par value of a share is the value stated in the memorandum and articles
of association of the company, below which shares of that class may not be
sold. This is when shares are sold at theirnominal value. It gives investors of
the company confidence that no one else will receive a more favorable issue
price. But there are circumstances when a company shares can be sold below
the par value of the shares or above the par value of the shares.
 ISSUE OF SHARES AT A PREMIUM
 It is a situation whereby shares are issued at a price higher than the nominal
value of the company’s shares.
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SHARE PREMIUM ACCOUNT

 It is an account held by a company where the value of the premium realised
after issuance of shares at a premium is paid into.
 The share premium account is used for the following purposes:
 Paying up bonus shares/scrip issue
SHARE PREMIUM ACCOUNT
issued to members of the company;
 Writing off preliminary expenses of the company;
 Writing off expenses, commission paid, discount allowed; and
 Writing off premium payable on redemption of any redeemable shares of the
company.
ISSUE OF SHARES AT A DISCOUNT

 It is where shares are issued at a price lower than the nominal value of the
shares.
 For a company to issue its shares at a discount, there are requirements to
fulfill.
ISSUE OF REDEEMABLE PREFERENCE SHARES
 A company is allowed if permitted by its articles to issue redeemable
preference shares.
 It is redeemable through a fund known as “the Capital Redemption Reserve
Fund”,which is also used to pay for bonus shares issued to members of the
company.
 Redemption of redeemable preference shares shall not be seen as reduction
of the share capital of the company.
MODES OF ACQUISITION OF SHARES
 In a company registered with a share capital, whether limited or unlimited,
membership can be acquired by subscribing to the memorandum and articles
of association as provided in S. 79 of CAMA, by allotment as providedin S.
125, by transfer as provided in S. 151 and by transmission as provided in S.
155, followed by registration in the register of members.
SUBSCRIPTION
 One can become a member of a company by subscription. By subscription
we mean the members who signed/subscribed to the memorandum and
articles of association of a company. The are known as the subscribers and
are the first members of the company.
 The subscribers must together subscribe to shares amounting in value to at
least 25% of the authorised share capital as provided in S. 27(2)(b) of
CAMA. Upon the registration of acompany, the subscribers are
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deemed to have agreed to become members of the company and their

names must be entered in the register of members.
ALLOTMENT
 It is the allocation of a specified number of shares of a company to an
applicant. Upon receipt of an application, a company shall where it wholly
or partially accepts the application, makes an allotment to the applicant and
within 42 daysnotify the applicant of the fact of the allotment and the
number of shares allotted to him as provided under S. 125(c) of CAMA. The
notification is by way of letter of allotment or a letter demanding payment
for the shares allotted.
 The company will subsequently enter the name of such allotee in the register
of members thereby, making him a member of the company.
TRANSFER
 S. 115 of CAMA provides that, the shares or other interests of a member in a
company shall be property transferable in the manner provided in the articles
of association of the company. A person may become a member of
acompany by having the shares of that company transferred to him by the
holder of those shares and entering his name in the register of members.
TRANSMISSION
 This is the vesting of shares on the personal representatives of a deceased
share holder. S. 155(1) of CAMA provides that, in case of death of a
member, the survivor or survivors where the deceased was a joint holder, or
the legal/personal representative of the deceased where he was a sole holder,
shall be the only persons recognised by the company as having any title to
his interest in the shares. It is the personal representative, if he elects to be
registered in the register of members or a person he executes a transfer of the
shares that will be registered in the register of members to become a member
of that company. See S. 155(3) of CAMA.
 This is done through what is called letter of request. It is aninstruction to the
company for the purpose of transferring the shares to himself or somebody
else.
RIGHTS OF SHAREHOLDERS OF A COMPANY
 The following are the rights of a member of a company:
 Entry of name in the register of members;
 Participate in the sharing of dividends;
 Receive copy of memorandum and articles of association;
 Receive notice of company’s meeting;
 Attend meetings of the company;
 Vote and be voted for at the company’s meetings;
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 Be represented by proxy at any general meeting of the company;

 Inspect the company’s record;
 Transfer of shares;
 Transmission of shares; and
 Participate in sharing of any surplus at winding up.
METHOD OF APPLICATION FOR ALLOTMENT.

 In the case of a private company or public company where the issue is not
public, an applicant applies in writing stating the number of shares he wishes
to purchase.
 In the case of a public company where the issue is public, the application is
made by the applicant completing, signing and returning the form of
application to the company.
PROCEDURE FOR ALLOTMENT OF SHARES
 After issuing of prospectus, open a subscription list.
 Receive applications and record in Application and Allotment Sheets.
 Convene board(or AllotmentCommittee) meeting to pass a resolution of
allotment.
 Issue letters of allotment (and letters of regret.
 Deal with letters of renunciation if any.
 Prepare share certificates.
 Enter allottees’ names in the register of members.
 File Return of Allotment (Form CAC 2A) within one month of allotment.
 If shares are issued for a consideration other than cash;
 Have the consideration valued and by an independent valuer and obtain
particulars of valuation.
 If consideration involves capital
 investment of N500,000 (20,000) or more, apply under the Industrial
Inspectorate Act for approval.
 Prepare and file along with Form CAC 2A,
 Particulars of valuation;
 Agreement for sale of property or for services of other consideration;
 Agreement constituting the title of the allottee to the allotment.
RETURN OF ALLOTMENT
 Every company within one month of allotment of shares must file with
Corporate Affairs Commission Return of Allotment that is, CAC Form 2A.
CALL ON SHARES
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 This is a demand made by a company upon a member to pay an amount

outstanding on his partly paid shares.
PAYMENT FOR SHARES
 Shares can be paid for either in cash or by valuable consideration. It can also
be paid for partly in cash and partly by a valuable consideration if permitted
by the articles of association of the company.
 If paid by valuable consideration, an independent valuer will be to determine
its true value of the consideration and makes a valuation report to the
company. Examples of valuable considerations are: transfer of property,
machinery, good will, know how, stock etc.
 Payment in cash includes: cash, cheque, bank draft or other securities for
money.
LIEN ON SHARES
 Lien are described as a right to retain possession of property until a debt is
paid.
 It is an equitable charge on the shares and entitles a company to sell the
shares in case of default.
 A company has lien on shares not fully paid up.
FORFEITURE OF SHARES
 Forfeiture of shares is a situation where a shareholder ceases to be owner of
the shares of a company and the forfeited shares become the property of the
company, which may be re-issued or sold to another person.
 Although a shareholder ceases to be a member of a company, once his
shares are forfeited, he is notwithstanding liable to pay any outstanding
liability on the shares as at the date of forfeiture.
 The forfeiture may be cancelled before sale or disposition.
 A statutory declaration must be made by either a director or secretary that
shares had been forfeited as evidence of such forfeiture.
NUMBERING OF SHARES
 Every share of a company must be numbered to differentiate it from others
especially where a company issued different classes of shares.
 Numbering of shares may not be necessary if all issued shares arefully paid
up or the shares rank pari-passu/equally for all purposes.
SHARE CERTIFICATE
 A company must within 2 months of allotment issue share certificate and in
the case of transfer, the period is 3 months.
 It is not a document of title but a prima-facie evidence of ownership.
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DIVIDEND WARRANT
 It is an instrument used for paying dividend which is usually posted.
Currently there is a shift to e-dividend warrant.
 It is a negotiable instrument.
METHOD OF TRANSFER OF SHARES

 Shares are transferred by delivery of a proper instrument of transfer to the
company and subsequent entering of the name of the transferee in the
register of members.
 The directors may refuse to register any transfer of shares.
PROCEDURE OF TRANSFER
 The procedure varies depending on whether the transferor is selling all his
shares to one purchaser or only part of his shares or all his shares to different
purchasers.
 Where he is selling all his shares, the procedure is:
 The transferor completes and signs the instrument of transfer and delivers it
with the share certificate to the transferee.
 The transferee completes and signs the instrument and
 delivers it with the share certificate to the company for registration.
 The transferee becomes the holder once his name is entered in the register of
members.
 The company issues him a new certificate within 3 months and cancels the
old one.
 If what is transferred is part of the shares or all the shares but to more than
one purchaser, the procedure is as follows:
 The transferor executes the instrument of transfer and delivers it together
with the share certificate to the company.
 The company on receipt of the instrument and the certificate endorses on the
instrument the words “certificate lodged”
 The endorsed instrument is delivered to the transferee in exchange for the
price.
 The transferee executes and sends the instrument to thecompany for
registration and issuance of share certificate.
 This process is called certification of a transfer.
PROCTECTION OF BENEFICIARIES
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 The interests of a beneficiary under a will are equitable only until the shares
are transferred to him and he has been registered as a member of the
company.
 Any person claiming interest in any shares or dividends or interestin them
may protect his interest by serving on the company concerned a notice and
affidavit of interest. S. 156 of CAMA.
MORTGAGE OF SHARES
 Shares are property transferrable as security for an advance. In other words,
it can serve as a collateral for grant of facilities. The mortgage may be legal
or equitable.
ATTACHMENT OF SHARES
 Shares held by a judgment debtor in public company or corporation may be
attached and sold by the judgment creditor. This is provided for in Judgment
Enforcement Rules (Order v Rule 1) under the Sheriffs and Civil Process
Act.
DEBENTURES
 A debenture is a legal document which states the terms on which a company
had borrowed money that is; a written acknowledgement of debt. Put
differently, debenture is a loan agreement by which the lenders provide
money to a company to be repaid at a later date while bearing interest at an
agreed rate.
 Debenture is usually secured on company’s property though, it need not
always be so, as there are unsecured debentures. Unlike shares, debenture is
an external source of capital of a company for a company’s business or
objects.
 See General Auction Estate Co. V. Smith (1991) 3 Ch. 43; Intercontractors
(Nig) Ltd V N.P.F.M.B. (1988) 2 NWLR (pt. 76) 280 at 292 and Union
Bank of Nig. Ltd V Tropic Foods Ltd (1992) 3 NWLR (pt. 228) 321.
 Debentures are transferable securities and the normal conditions require the
company to maintain a register of debenture holders (except bearer
debentures).
 Types of debentures:
 The types of debentures are:
 Perpetual Debentures;
 Convertible Debentures;
 Secured and Naked Debentures;
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 Redeemable Debentures;
 Registered Debentures; and
 Bearer Debentures
PERPETUAL DEBENTURES
 These are debentures at the time of their creation were made irredeemable
and are only redeemable on the happening of an event/contingency however
remote or on the expiration of a period however long. Such contingency
maybe winding up of a company, take over bid etc. See S. 171 of CAMA.
CONVERTIBLE DEBENTURES
 These are debentures issued with a proviso that at a determinable future date
and at the option of the debenture holders shall be converted into ordinary
shares.
 But no debenture so converted into shares shall appear as if the shares were
sold at a discount. See S. 172 of CAMA. The conversion is in lieu of
redemption or repayment.
SECURED AND NAKED DEBENTURES

Secured Debentures:-
 A secured debenture is that which is secured by a charge over the company’s
property and it may be so secured by a fixed charge or by a floating charge.
 Naked Debentures:
 While a naked debenture is one which is not secured by a charge also called
an unsecured loan note. See S. 173 of CAMA.
REDEEMABLE DEBENTURES
 These are debentures at the time of issuance are said to be redeemable at an
agreed date. Redemption of this type of debenture is out of the profit of the
company or from a Sinking Fund, which is a fund set aside for redemption
of debentures at a future or agreed date. See S. 174 of CAMA.
REGISTERED DEBENTURES
 These are debentures registered in the register of debenture holders and
payable only to the registered holders. It can be transferred and the transfer
becomes effective after registration in the register of debenture holders.
BEARER DEBENTURES
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 These are negotiable instruments and payable to the bearer. Bearer

debentures do not require the company to maintain a register of debenture
holders.
ISSUE OF DEBENTURES
 Debentures are issued in accordance with the provisions of the memorandum
and articles of association of a company. If the debentures are issued to the
public, apart from complying with the memorandum and articles
ofassociation, must also meet up with the requirements of S. 71 of the
Investments Securities Act, to the effect of issuance of prospectus. A
prospectus is the basis of the contract between the company and the public.
FORMS OF DEBENTURES
 There are two forms of debentures namely Simple debenture and Debenture
stock.
 Simple Debenture:-
 This type is used where the loan is from one or few people. It is an
agreement stating the sum borrowed, signed, sealed and delivered on behalf
of the lender/holder and the borrower/company with the conditions of
borrowing endorsed at the back.
DEBENTURES STOCK
 Where the loan is from a large number of people, debenture stock is used. A
debenture stock is a securitised loan stock by which loans are made by way
of securities, which are alloted inthe same way shares are allotted except that
debenture stock holders are creditors to the company. Debenture stock is
issued under a trust deed between the company and the trustee of the
debenture holders.
CHARGES SECURING DEBENTURES

 Debentures maybe secured by fixed or floating charges. A charge over a
company’s assets gives to the creditor/chargee, a prior claim over other
creditors to payment of his debt out of those assets.
FIXED OR SPECIFIC CHARGES

 It is a charge attaching to a particular asset on creation. In other words, it is a
mortgage of a specified property of the company like land, machinery,
building, etc. It is best suited to fixed assetswhich the company is likely to
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retain for a long period. A fixed charge maybe a legal mortgage or an

equitable mortgage.
FLOATING CHARGE
 A floating charge has been described as a charge on a class of assets or
whole assets of a company present or future, which class is, in the ordinary
course of the company’s business, changing from time to time and until the
holders enforce the charge, the company may carry on business and deal
with the assets charged. A floating charge can be created over the current
and fixed assets of a company, the book debt, stock in trade, cash, uncalled
capital, etc but only attaches to the relevant assets when the charge
crystallises. See SS. 178-179 0f CAMA
REGISTRATION OF CHARGES
 S. 197 of CAMA provides that where a company creates a charge on its
property, the company must within 90 days of the creation, deliver to
Corporate Affairs Commission certain particulars for registration like, the
particulars of the charge and the instrument by which the charge is created.
The registration is done by filling CAC Form 8. Corporate Affairs
Commission must issue a certificate once a charge is registered, which is a
prima-facie evidence of compliance with the requirements of registration.
EFFECT OF NON-REGISTRATION OF CHARGES

 Failure to register a charge as required will render it void against the
liquidator and any creditor of the company. See S. 197(1) of CAMA. The
obligation to pay the debt is however, not thereby discharged as held in
Capital
DEBENTURES
 Finance Co. Ltd V Strokes (1969) 1 Ch. 261. When a charge becomes void,
the money secured shall immediately become payable.
RECORDS TO BE KEPT AFTER CREATING DEBENTURES

 A company keeps the following records after issuing debentures:
 Register of Charges;
 Record of Instruments; and
 Register of Debenture holders.
REMEDIES FOR DEBENTURE HOLDERS
144
 See generally S. 209 of CAMA.

 Recovery of Principal and Interest;
 Petition for Winding Up;
 Debenture holders’ Action;
 Sale;
 Foreclosure; and
DEBENTURES
 Valuation of security and proving the balance on winding up.
SATISFACTION OF CHARGES
 By the provisions of S. 204 of CAMA, where the company repays its debt to
the debenture holder, it must file a Memorandum of Satisfaction of the
charge. This is done by using CAC Form 9 which is delivered to CAC and
entered in the register of charges.
RECTIFICATION OF REGISTER AND EXTENSION OF TIME
 S. 205 of CAMA provides that a company and any person interested, may
apply to court for rectification of the register of charges and extension of
time for registration in respect of omission to register a charge within time
orS. 205 of CAMA provides that a company and any person interested, may
apply to court for rectification of the register of charges and extension of
time for registration in respect of omission to register a charge within time or
NOTICE OF ENFORCEMENT OF SECURITY

 Any person who appoints a Receiver or Manger by order of court or by
powers conferred by the debenture instrument must within 7 days from the
date of the court order or appointment of the Receiver or Manager, give
notice of the fact to Corporate Affairs Commission, which will then register
the fact in the register of charges. See S. 206 of CAMA.
PROCEDURE ON CREATION OF CHARGE

 The following steps are taken in creating a charge:
 Convene a board meeting to pass resolution authorising the loan and
preparation of loan documents including the prospectus if necessary;
 Preparation, Execution and Stamping of the documents:
 a). Deed of Mortgage;
 b). Power of Attorney (if any);
 c). Debenture Trust Deed (if any);
 Application for Governor’s Consent if necessary; See N.I.D.B. V Olalomi
Ind. Ltd (2002) 5 NWLR 76.
 File documents for registration at Corporate Affairs Commission:
145
 a) Mortgage/Charge;
 b) Trust Deed;
 c) Particulars of Charge in CAC Form 8;
 File documents at Lands Registry;
 Leave copies of documents for inspection at the registered office of the
company that is, in the Record of instruments;
 Enter particulars of charges in the Register of Charges and also in the
Register of debenture holders where applicable;
 Obtain Certificate of registration from CAC and have a copy of the charge
endorsed on every debenture or certificate of debenture stock issued by the
company, the payment of which is secured by the charge;
 On the satisfaction of the charge, file Memorandum of Satisfaction of
Charge using CAC Form 9 along with Deed of Release or other instruments;
and
 Notify CAC of the appointment of a Receiver or Manager upon enforcement
of the security.
146
WEEK 16
COMPANY SECURITIES: 2
FLOATATION OF SECURITIES & COLLECTIVE INVESTMENT
SCHEMES
Prepared by: A.P.P. Mbagwu, NLS, Yola Campus
Learning Outcomes
1) List the methods of public offer/ sale of securities – Direct offer, offer for
sale & placement
2) Identify and list the steps and procedure for flotation of shares, debentures,
Global Depository Receipts (GDR) & bonds in the capital market
3) State the legal nature of Collective Investment Schemes (CIS) & their
significant difference from shares and other forms of investments
4) List the procedure for the creation and management of collective investment
Schemes
5) Identify the role of solicitors in capital market transaction
Legal Framework and Regulatory Authorities for capital market practice/

floatation of securities
B. Legal Framework
 Include:
1) Investments and Securities Act (ISA)
2) Companies and Allied Matters Act (CAMA)
3) Federal Competition and Consumer Protection Act (FCCPA)
4) Federal High Court Act
5) Securities and Exchange Commission Rules (SEC Rules)
A. Regulatory Authorities
 These include:
1) Securities and Exchange Commission (SEC) – main Regulator -see s. 13
ISA
2) Nigerian Stock Exchange (NSE)
3) Corporate Affairs Commission (CAC)
4) Federal High Court (FHC)
5) Debt Management Office
The Capital Market

 The capital market is a financial market for the buying and sale of securities,
such as shares, debentures, bonds and units of collective investment
schemes (see s. 567 CAMA for the definition of securities)
147
 The capital market is a platform for companies and governments to raise

medium and long term capital
NB
 For companies:
 Capital market financing, (through the issuance of securities, such as shares,
debentures and bonds) provide the required capital to implement the
company’s business objects
 For governments:
 The issuance of securities, such as bonds and sukuk, provide funds for
infrastructural development.
- Sometime ago, the Federal government of Nigeria, in order to raise funds for the
construction of roads, issued some sovereign “sukuk”
The division of the Capital market in Nigeria

1) The Primary Market
2) Secondary Market
 Primary Market: In this part of the capital market fresh securities are
issued by companies, for the purpose of raising capital.
 New securities in this regard may be traded by way of:
 Initial Public Offer
 Subsequent public offer
 Hybrid issue
 Secondary Market: Here, investors can buy shares and other securities that
have been previously issued and traded.
Capital market operators and Consultants

1. Capital market operators
 They are to be registered with SEC. These include:
i. Issuing Houses
ii. Securities Dealers
iii. Stock Brokers
iv. Trustees
v. Portfolio Managers
vi. Underwriters
vii. Custodians
B. Capital Market Consultants

 They offer expertise service in the capital market.
148
 To operate in the capital market, they must be registered with SEC.

 Examples of capital market consultants:
i. Solicitors
ii. Accountants
iii. Valuers
iv. Investment Advisers
v. Rating Agencies
vi. Engineers
Registrable securities
NB: Security offers by the following entities must be registered with SEC:
 All securities of public companies
 Securities of collective investment schemes
 Securities of Investment trust companies
 Securities of government and its agencies
 Securities of Supranational bodies
– see Rule 279 (1) (a) & (b) SEC Rules, 2013
Modes of public offer of Securities

All securities subject to registration may be offered through the following
methods (see Rule 279 (1)(c) SEC Rules 2013)
1) Initial public offer
2) Offer by Introduction
3) Direct offer to the public (offer for subscription)
4) Offer for sale
5) Private placement by public companies and other entities*
6) Rights issue
7) Bonus Issue
8) Debt equity conversion
9) Debenture/ loan stock
10) Sukuk
11) Bonds
(1) Initial public offer (IPO)

• In this type of offer, a company invites members of the public, for the very
first time, to subscribe to its shares or debentures
 IPO’s represent the first entry of the company into the capital market.
 Subsequent offers made by the company are no longer called IPO but are
rather known as Public offers or Offer for subscription
149
(2)Offer by Introduction
• By this method, the shares of a company can be listed without the conduct of
an initial public offer (IPO).
• The company will usually have raised capital, prior to the initial listing of
the company’s shares on the trading board
(3) Direct offer to the Public (Offer for subscription)

• The company offers its shares or debentures to the public through an issuing
house. This is done by means of a document called the prospectus.
 In such case, the issuing house merely acts as an agent in the transaction,
becoming a link between the company, the regulatory authority and the
investing public.
• Since the issuing house dose not bear the risk of failure of the offer, the
company usually protects itself by arranging for the issue to be underwritten
at an agreed commission.
• NB: An issuing house, in this case, may be a bank or some other financial
institution.
(4)Offer for sale
• This involves the following:

 The company sells the whole issue of shares or debentures to an issuing
house, which then invites the public to buy from it, usually at a higher price.
 The issuing house, while acting as the official liaison for the company,
bears the risk in the event of under subscription.
 To protect itself, the issuing house underwrites the issue
(5) Placing
 Involves the issuance of the securities of public companies, not to the public
at large but to an issuing house, which then sell to clients or institutional
investors (e.g. banks, pension funds, etc)
Placement (also known as private placement by public companies)

 This is a means by which an unquoted public company may arrange to offer
its shares to the public
 Private Placements shall not be advertised, mentioned and/or discussed in
the print and electronic media.
150
 violation of this rule may lead to the suspension of any Capital Market
Operator engaged in an advisory role on the private placement
Conditions for the approval of private placement by SEC- ( seeRule 340 (2)
SEC Rules, 2013
1) The company shall show evidence of dire need of fresh funds or technical
expertise and shall satisfy the SEC that private placement is the only viable
option.
2) The securities shall not be offered to more than 50 subscribers
3) It shall be authorised by a special resolution of the company
4) The notice of the general meeting authorizing the placement shall be
published in two national daily newspapers and evidence of the
publications shall be filed with the SEC
5) The aggregate number of shares to be offered through private placement by
a public quoted company shall be 30% of its existing issued and paid-up
capital prior to the offer
(6) Rights issue
• An invitation to existing shareholders to subscribe to new securities being
issued by the company, at a special price and in proportion to their existing
holdings.
• E.g. The issuance of 2 new shares for every 10 shares held in the company.
• It requires prospectus but an abridged prospectus may be sufficient
(7) Bonus Issue

• The proportionate issuance of new shares to the existing shareholders of
the company at no cost to the shareholders by the capitalisation of
accumulated reserves from the profits earned in the previous year
• NB: No need for the issuance of prospectus
(8) Debt equity conversion

 This is a process that enables the conversion of debt instruments into
equity, based on certain conditions reached by the parties involved in the
transaction.
• E.g. Where the company owes a person, an agreement can be reached
between both parties for the debt to be converted into shares. Hence, the
creditor is paid with the shares of the company.
• (10) Debenture
A debenture is a medium or long-term debt instruments used by companies to
borrow money.
(11) Bonds
151
1) Bonds are tradable security issued by the following authorities:

(a) Governments at the Federal, State and Local government/ FCT levels;
(b) Companies
(9) Sukuk
 It is an Islamic financial certificate that is similar to a bond.
 It represents aggregate and undivided shares of ownership in a tangible
asset, as it relates to a specific project or specific investment activity.
The difference between bond and sukuk
• The sukuk holder receives, on a periodic basis, a portion of the profit
generated by the associated asset. While the bond holder receives periodic
interests, arising from the debt obligation owed to him by the bond issuer
Electronic offer and Transfer of Securities - s. 55(1) ISA & Rule 345 SEC
Rules
• A company can opt for the electronic mode of offer and transfer of
securities, subject to other rules and regulations
• NB: Even where this method is adopted, the company shall issue a share
certificate to any shareholder who elects to have same
Issuance of prospectus in offers of securities made to the public

 Offers of securities made to members of the public must be accompanied by
the issuance of prospectus – see s. 71 ISA
• Exception:
This may be granted under s. 76 of the ISA
Registration of the prospectus

 Persons or bodies which issue an advertisement or make an invitation to the
public to buy the securities of a company shall, within 6 months prior to
the making of such invitation, deposit a prospectus relating to the offer,
with the SEC for registration – see ss. 75, 76, 79 ISA
 They are also required to supply to every person to whom the invitation is
made, a true copy of such prospectus – s. 78 (1) (a) ISA
Statements of Experts on the Prospectus

• To valid for registration by SEC, every prospectus inviting members of the
public to subscribe for securities must contain a written statement by an
expert, consenting to the issue
– s. 77 ISA
What is a prospectus?
152
 Any written or electronic information, notice, advertisement or other forms

of invitation made to the public, for the purchase of shares, debentures or
other approved and recognised securities of a company and other issues or
schemes
– s. 315 ISA
 For the contents of a prospectus – see s. s. 79 ISA; and the third Schedule
(pt. 1) ISA
The Relevance of prospectus

To keep potential subscribers and purchasers of securities informed of all the facts
that are material to the offer
Forms of Prospectus
1) Full prospectus
2) Abridged Prospectus
3) Deemed Prospectus
4) Statement in Lieu of Prospectus
1) Full prospectus
• Contains a full or detailed description of the offer
2) Abridged Prospectus
• It is a summarised version of the prospectus,
• containing the key requirements of a prospectus
• Takes the place of a full prospectus, which is bulky and contains many
documents
(3) Deemed Prospectus
• It does not bear the title “prospectus”, yet, it contains the basic requirements
of a prospectus which are relevant to a public offer.
(4) Statement in Lieu of Prospectus
 This is a statement delivered to the SEC in place of a prospectus.
 A public company may deliver this document to SEC in any of the following
instances:
a) Where it intends to allot shares to the public but has not issued a prospectus
b) Where it has issued a prospectus but has not allotted the shares
Civil and Criminal Liability for Misstatements in the prospectus (or statement
in lieu)
A. Civil liability
 Subscribers who suffered loss, as a result of the untrue statement or miss-
statements in the prospectus shall be compensated by:
 The issuing house and its principal officers
153
 Employees of the company and directors who facilitated or participated in

the issuance of the prospectuses – See Rule 292 SEC Rules, 2013
B. Criminal Liability
 Where criminal liability arises, the following penalty applies:
 Any director or officer who authorised the issuance of the prospectus
commits an offence and is liable on conviction to:
 A fine of not less than N1, 000,000,000 (one billion naira); or
 To imprisonment not exceeding three years; or to both fine and
imprisonment.
Steps and procedure for the flotation of Shares in the Capital Market
1. Preparation of a Draft Prospectus
2. The Issuing House submits the prospectus to the SEC, along with
Application for the Registration of the Securities
3. Printing the final copy of the prospectus, as approved by SEC
4. Obtaining the consent of experts whose reports or statements are contained
in the prospectus
5. Having the final copy of the prospectus duly signed by every person named
in it as a director
6. Submission of the printed prospectus to SEC for registration
7. Sending the Approved and registered prospectus to NSE and CAC for record
purposes
8. Publishing the prospectus which contains the invitation for the public to
subscribe to the securities of the company
Flotation of Bonds
 Bonds may be floated by the government or a corporate organisation in
order to raise funds
 Features
i. Interest is paid at periodic intervals but the principal sum is paid at specified
maturity dates.
ii. It is traded at the NSE like debentures, shares
iii. It is a means by which the government raises money to finance projects. A
corporate body can also issue bonds, in order to raise the capital needed to
fund its business objects
 Public bonds may be issued by the government or a public company
 Where the bonds are issued by the government or any of its agencies, they
are referred to as government bonds
 On the other hand, if issued by a company, they are known as corporate
bonds
154
 In both situations, all public bonds are regulated by the SEC
 Government Bonds and corporate Bonds

A. Government bonds: Issued by government at all levels ( Federal, State, Local
governments)
 Government bonds consist of the following categories:
i. Sovereign bonds – Issued by the Federal Government
ii. Revenue bonds – Issued by the states, Local Governments and government
agencies
iii. Municipal bonds – Issued by cities within local governments
 B. Corporate bonds - They are issued by the following entities:

i. Public companies.
ii. Foreign companies.
iii. Multinational Bodies
Those who can issue public bonds

i. The Federal government and its Agencies
ii. State governments and their agencies
iii. The Federal capital Territory and its agencies
iv. Local governments
v. Companies wholly owned by the federal and state governments
-see s. 222 ISA
Flotation of Global Depository Receipt (GDR)
 It is a type of investment by a foreigner, whereby the foreigner buys the
shares of a foreign company in his home country and in the local currency
 Dividend on GDR is paid in the local currency of the foreigner
Creation and Management of Collective Investment Schemes (CIS)

 Meaning of CIS:
This is a scheme in which members of the public are invited to, or permitted to
invest money in a portfolio, which is then managed on their behalf by a fund
manager who may invest same in ventures capital, bonds and other forms of
securities.
 Sharing of risks and benefits: Investors share risks and benefits in
proportion to their participatory interest in the scheme
Organs of Collective investment Scheme

1) Manager (Fund or portfolio Manager)
2) Holder
155
3) Custodian
4) Trustee
5) Issuer
Types of Collective Investment Schemes

1) Unit Trusts Scheme
2) Investment Trust Scheme
3) Real Estate Investment Schemes (REIS)
4) Community Savings Scheme
Distinction between Collective Investment Scheme and investment in shares

S/NO Investment in Shares Investment in Collective investment
schemes
1 A person who owns shares in a Participation in a collective investment

company is called a shareholder scheme makes the investor a unit holder
2 A shareholder is a member of the A unit holder is not a member of the

company in which his money is company in which his money is
invested and is entitled to invested and is not involved in the
exercise running of the company
the rights of membership
3 The Board of Directors manage A Collective Investment Scheme is

the company managed by the fund manager
4 For their investments, A participant in the Collective
shareholders Investment Scheme is entitled to pro
are rewarded with dividends rata distribution of profits
(1) Unit Trusts

 It is an investment arrangement which affords members of the public to pool
their resources together under a trust deed.
 It is essentially a trust
 Members of the public pool their resources together for investment (in
stocks, shares and other securities), which are then managed on their behalf
by a corporate entity
- NB: The managing company is called the manager
• The investors in the scheme are known as Unit holders
156
• Investors subscribe various amounts to make up the capital of the scheme,

called Fund
• The Fund is vested in trustees, usually a bank or an insurance company
• Investors participate as beneficiaries in profits or income, arising from
their investment– see s. 153 ISA
• Regulation of Unit Trusts is vested in the Securities and Exchange
Commission – see s. 160 (1) ISA
Elements of UTS
i. Units: Interests created under the scheme are divided into units
ii. The trust Deed: Any agreement drawn up between the trustees and the
manager of the scheme. It contains rights, responsibilities, investment
objectives, policies, etc
iii. The holder: An investor in the Unit trust scheme
iv. The Fund: The total pool of contributions made by the investors
iv. The manager: Persons who manage the property under the scheme
 The manager must be an incorporated company; and
 Must be registered as a fund or portfolio manager by the SEC
v. The trustee: The person in whom the property, subject to any trust created
under the scheme, is vested in accordance with terms of the scheme.
 The trustee must be a corporate body, such as a bank or an insurance
company
Contents of the trust deed
a) Definition of terms
b) Provision as to certificates
c) Provision as to holders (of units), Register of holders, Transfer &
transmission
d) Constitution of the trust
e) Issue of Units
f) Realisation of Units
g) Investment of property held on the trust
h) Distributions
i) Voting right on assets held on the trust
j) Interest upon deposited cash
k) Remuneration of Trustee and Manager
l) The trustee and the Manager
m) Accounts
n) Retirement of Trustee
o) Removal or retirement of Manager
p) Termination f the trust
157
q) Notices
r) Reconstruction and amalgamation
s) Meeting of holders
(2) Investment Trust Scheme (ITS)/ Ethical Mutual Investment

 It is regulated like the Unit Trust Scheme as both are similar but different in
operation – see Rule 41 SEC Rules
 It complies with ethical or moral principles;
 It is usual
 lly packaged as a specialised ITS, whereby unit holders define in advance,
what type of securities their money would be invested in.
 E.g. IBTC Ethical Fund which prohibits investments in tobacco and alcohol
beverage companies
(3) Real Estate investment Scheme

• It is established for the purpose of acquiring immediate and long-term
interest in real estate or property development.
• It may raise funds from the capital market through the issuance of securities
(4) Community Savings Scheme

 It is the oldest form of CIS in various communities
• Popular among low-level workers and voluntary organisations in Nigeria
• Required to be registered at the local government, where they operate – Rule
41 SEC Rules
• They are required to maintain a register of all their members
• Known variously as esusu, adashe, ajoamongst others
Procedure for the creation & Management of collective Investment Scheme

1) The manager, trustee or custodian of the Collective Investment Scheme
must:
a) Obtain incorporation under CAMA
b) Register with SEC
c) Have the capital and reserve fund as may be prescribed by SEC –s. 160 (3)
(b) ISA
2) Preparation of Trust deed or Custodian Agreement - s. 160 (3) (d) ISA
3) Registration of the Scheme with SEC – s. 160 (1) ISA
4) Registration of Units or securities with SEC – s. 161 ISA
5) Approval of prospectus and other offer documents of the scheme
NB: Liability will arise for any untrue statement in the publication
158
6) Determining the market price of unit or security. The mode, in this regard,
may be prescribed by SEC – s. 170 ISA
7) Investing of the fund by the manager, in accordance with the provisions of
the trust deed - s. 171 ISA
8) The manager of the Collective investment scheme may invest the fund and
assets of a scheme in units of any investment fund, provided it is within the
approved category of investments set out in s. 171 (2) ISA
9) Where the interest of the scheme or that of its beneficiary demands, SEC
may impose additional restrictions on the category of investments that may
be made by the manager
10) The manager shall have due regard to the risk rating of instruments
that has been undertaken by a rating company, which is registered under the
Act (ISA) – see s. 171 ISA
Role of Solicitors in capital market transaction

1) Advising the issuer on the legal structure of the transaction, and the legal
risks involved therein
2) Advise on compliance with the requirements of CAMA, SEC, the listing
rules of the stock exchange as they relate to the transaction
3) Ensuring that shares to be issued are registered with SEC
4) Drafting and registration of prospectus and ensuring that they do not contain
untrue or misleading statements.
5) Carry out due diligence to ensure that all information related to an offer are
disclosed in the documents of the transaction.
6) Filing the necessary applications in court in support of transactions
7) Obtaining the written consent of experts who are named in the prospectus
-END-
THANK YOU
159
WEEK 17
Corporate Restructuring 1
ARRANGEMENTS AND COMPROMISES
 an internal reorganization with its members
 a compromise with its creditors
 or a scheme of arrangement with creditors
Alteration of share capital. – Share reconstruction

 Increase the share capital
 Increase share capital if company has exhausted the entire share capital then
increase
 After increase, allotments could be made and cash called up immediately
 If no increase is needed because of sufficient authorised capital,
 Then Unissued shares could now be allotted
 Calls could then be made
 Shares will be sold at a premium to shore up the cash flow recall that the
price paid minus par value is the premium –Share premium account
Reduction of share capital
 It is so authorised by its articles
 It passes a special resolution and
 It obtains confirmation from the Federal High court section106.-(1)
 Section 105-108 CAMA
 Relevant here:
 To cancel any paid-up share capital which is lost or unrepresented by
available assets; e.g 100m paid up assets=N2m
Internal
 Buy-out (e.g management buy-out, shareholders buyout, employee buy-out)
 Management buy out – Rule 449 SEC Rules
 Management buy in.
 Management buy out – Rule 449 SEC Rules
 Management buy in.
Management buy-out
• A management buyout (MBO) concerns a deal when the existing
management team of a business purchases all or part of that business from
its current owners. A Management Buy-In (MBI) is where all or part of a
business is purchased by an external management team. (Rule 449)
160
• Management team to apply to SEC for the approval of the scheme

accompanied by prescribed documents
i. resolution of company approving the management buy-out;
ii. resolution of the management team to undertake the management buy-
out;
iii. a copy of the Certificate of Incorporation of the company;
iv. a copy of the Memorandum and Articles of Association of the
company;
v. two copies of the Prospectus (if applicable) which shall contain the
following, among others—
a. profile of the company;
b. profile of the management team
• objectives of the management buy-out;
• five (5) years audited financial statement of the company (or if less than five
(5) years, the statement of affairs for the number of years in existence);
• claims and litigation;
Terms of sale agreement

• Sale Agreement to contain
• indemnity against contingent liabilities by the seller (company) to:-
a. third-parties;
b. pay tax not provided for in the account;
c. if employees of the target company operate a pension scheme, the
agreement must have a clause that the scheme will continue
Management buy-out
• sale and purchase of assets;
• contracts and creditors;
• employees: the liabilities and obligations under the existing contract of
employment will pass to the management team with accrued contractual and
statutory rights unaffected;
• If company has debtors: the debt should be paid to the sellers (former
shareholders) unless assigned to the buyer (management team).
• And if assigned The purchase price must reflect the fact that the debts are
assigned;
Name of company
• Agreement to state company name will be retained or will change
• copies of relevant documents shall be filed SEC
• (i) Trust Deed (where applicable);
• (j) any other document required by SEC
Arrangement with members
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• Another arrangement - Downsize

• Variation of the rights of its members, or any class of members,
Variation of class rights
• There is no difficulty over alteration of the rights of unissued shares
• unissued shares may be consolidated, divided, converted into stock (or vice
versa), or cancelled.
• holders of issued shares have vested rights, which can only be varied by the
company in certain circumstances.
• agreement with ordinary shareholders to surrender part of their holding to
the preference shareholders
• agreement with preference shareholders to cancel their dividend arrears
• Agreement with preference shareholders to
• A. convert their preference shares into ordinary shares
• cancellation of their dividend arrears
• Scheme means the rights attached to the class of shares affected must be
altered but the shareholders must agree to it
How?
• With the consent in writing of the holders of threefourths of the issued
shares of that class (i.e. without a formal meeting); or
• (b) if a meeting is called the resolution must be a special resolution (section
141 (1)).
Application to cancel variation

• 15 per cent of the issued shares of that class may apply to court within 21
days of the consent or the passing of the resolution to cancel the variation
• The court can either approve the variation as made or cancel it as “unfairly
prejudicial”, such a decision is final See Section 142
• Note Once an application has been made to court, for cancellation the
variation will not take effect unless and until it is confirmed by the court.
• The company must, within 15 days of the making of the order for
cancellation or confirmation deliver a copy of the order to the CAC for
filling Section 142(5).
Compromise or arrangement with creditors

• E.g. banks or debenture holders ask them if they will agree to relinquish
their security, or to permit the creation of a prior or pari passu charge; or
undertake to pay them off prior to the reconstruction.
• conversion of convertible debentures to shares under section 172 or taking
part shares and part cash in satisfaction of their debts.
162
• debt instruments in lieu of cash payments for satisfaction of debt.

• Convince them to take convert debt to equity i.e. to shares, or part shares and
part cash, in satisfaction of their debts.
• A compromise with creditors to forgive part or all of the loan
Arrangement on sale unders.538 CAMA
• Shareholders of 2 companies (A and B) agree independently to transfer their
businesses to Company C which may be specifically formed for that purpose
or Company D in existence.
• All shareholders of A and B to wind up its company and become
shareholders in Company C or D
• A variation will be for Company A to transfer its business to Company B in
existence.
• Company A will go into members VWU resulting in All shareholders of A
becoming shareholders in Company B
Arrangement on sale Procedure

• The members of the company in general meeting pass a special resolution
for the voluntary winding up of the company and to appoint a liquidator
(ss.457(b) & 538)
• Resolution will authorize the liquidator to sell the assets to another company
consideration may be cash, or shares, debentures in the second company
• Once appointed the liquidator convenes a meeting of the shareholders and/or
creditors to approve scheme of arrangement and compromise
• The directors make a declaration of solvency as the basis of the members
voluntary winding up. This declaration will express their belief in the
solvency of Company(s.462).
• Within thirty days after the passing of the resolution the dissenting member
will write to the liquidator and leave the letter at the company’s registered
office, restating his dissent and
• the liquidator then has two options
o either abstain from carrying the resolution into effect or
o purchase shares of dissenting shareholder
At What price?
- private company with no alien participation - price is mutually agreed
upon
- private company with alien participation – SEC
- public company -SEC
163
• Estimate what the member would have received had the assets of the
company been sold as a going concern for cash to a willing buyer less the
cost of winding up, and proceeds divided amongst the members in
accordance with their rights;
• the company must pay him before the company is dissolved
Arrangement on sale under s.538

• The liquidator convenes a final dissolution meeting where the accounts of
the entire winding up exercise and his report would be considered by the
members (s.478).
• Under this procedure, an application need not be made to court unless:
• a. a member obtains an order under sections 310 -312 within one year of
the special resolution, granting relief on the ground that the affairs of the
company have been or are being conducted in an illegal, unfairly
prejudicial or oppressive manner; or
• Creditors insist that the company is not solvent so they can go to court
asking for an an order to convert from members to creditors voluntary
winding up. Of course, this is not obtainable if the company is factually
solvent.
• If the liquidator abstains from carrying the resolution into effect then any
of the shareholders could go to court to compel the liquidator to proceed
to carry out the effect of the resolution 538(4) CAMA.
Arrangement not involving sale :s.539

• Could involve members or creditors or both
• No sale of assets is contemplated
• It may or may not involve w-up
• Unlike s. 538, here an application is made to the Court for an order calling
the meeting and then sanctioning the scheme
• The company prepares the scheme of arrangement and/or compromise either
between company and members or company and creditor. If the company is
in liquidation, then the scheme is prepared by the liquidator.
• Application is made to the FHC, in a summary way, by the company,
members or creditor or liquidator to order a court ordered meeting.
• A notice of the court ordered meeting is issued and served. In accordance
with section 540(1)(a) CAMA, the notice shall be accompanied by a
statement explaining the general effect of the arrangement and compromise
and the material interests of the directors and debenture holders
164
• Creditors or members can request for copies of this statement and the
company must oblige without charge
• Its an offence to refuse to comply but no liability if the person can show that
the non compliance was not his fault
FORMAT OF COURT ORDERED MEETING

• IN THE FEDERAL HIGH COURT OF NIGERIA
• HOLDEN AT LAGOS
• SUIT NO: FHC/L/C/123/2015
• in the matter of an application under section 539 of cama

• In the matter of ara nigeria ltd
• In re: ara nigeria ltd ---------------------------------------- applicant
• Court-ordered meeting of the holders of the fully paid ordinary shares of ara
Nigeria ltd
DRAFTING
• Notice Is Hereby Given that by an Order of the FHC holden at Lagos
(hereinafter called “the Court”) dated the __________ day of
_______________, 2015 made in the above matter, the Court has directed
that a meeting of the holders of the fully paid ordinary shares of ARA
Nigeria Ltd (hereinafter called “the Company”) be convened for the purpose
of considering and if thought fit, approving (with or without modification), a
proposed Scheme of Arrangement pursuant to Section 539 of the CAMA.
The Scheme is explained in detail in the Explanatory Statement on Pages 15
to 20 of the Scheme Document.
• The meeting will hold at the Eliel Centre Main Hall at No 15 Gold and Base
Street, Airforce Road, Jos Plateau State, Nigeria on Wednesday the
_____________day of __________, 2015 at 11am at which place the above
mentioned shareholders are requested to attend. The following resolutions
will be proposed and if thought fit, passed as special resolutions at the
meeting with or without modifications:
• • “That the holders of the fully paid ordinary shares hereby agree to
surrender ten (10%) percent of their fully paid ordinary shares to the
preference shareholders who have agreed to take fully paid ordinary shares
in lieu of their dividend which is cumulative and in arrears “, (by way of a
Scheme of Arrangement and Compromise pursuant to section 539 CAMA)
”.
165
• ““That the company be and is hereby authorised to effect the transfer of the
designated fully paid ordinary shares to the preference shareholders who
have agreed to take fully paid ordinary shares in lieu of their dividend which
is cumulative and in arrears, (by way of a Scheme of Arrangement and
Compromise pursuant to section 539 CAMA)”
• By the said Order, the Court has appointed Dr. I. D. Bolu, a director of the
Company or failing him, Mr. Ike Obi, also a director of the company or
failing them both, any other director so appointed in their stead, to act as
Chairman of the meeting.
• A member of the company entitled to attend and vote at the Meeting is
entitled to appoint a proxy to attend, speak and vote instead of that member.
A proxy need not be a member of the company
• Such a member must complete and return the attached form of so as to be
received by the Company Secretary at the Registered Office of the Company
at ….. not less than 48 hours before the date of the meeting. Dated this
______ day of ____________, 2015
• Toun Oni-Adebiyi
• For: Toun Oni & Co.
• (Solicitors to Ara Nigeria Ltd)
• Address
COURT ORDERED MEETING

• At the court ordered meeting, scheme must be approved by a vote of the
majority representing not less than three-quarter (¾) in value of the shares of
members or interests of creditors or classes thereof being present and voting
in person or by proxy After approval Return to FHC to sanction the scheme
• section 539(2) CAMA. Where is not so approved, court will not sanction it.
Re SAVOY HOTEL LTD [1981] 3 All ER 346;

• the court may refer the scheme to SEC to investigate the fairness of scheme
• SEC appoints one or more inspectors to investigate the fairness of the
scheme or compromise and make a report to the court. Within time specified
by Court
• Re NTU Development Trust Ltd where it was held that a scheme of
arrangement and compromise must always be fair and equitable or else it
will not be sanctioned by the court
• When Sanctioned, the scheme becomes binding on all:
• -creditors or class of creditors
• -all members of class of members
166
• -on the company

• -on the Liquidator and Contributors(in the case of a company being wound
up) See section 539(3) CAMA; Re LIPTON (NIG) LTD
• A CTC of the court order sanctioning the scheme shall be delivered to CAC
for registration.
• The order shall NOT become effective unless and until a CTC of it is
delivered to CAC for registration. See section 539(4) CAMA
• A copy of the court order sanctioning the scheme must be annexed to every
copy of the Memo of the company issued after the order has been made. See
section 539(4) CAMA
167
WEEK 18
Corporate Restructuring 2
REASONS FOR EXTERNAL OPTIONS IN CORPORATE
RESTRUCTURING
 To consolidate in order to maximize market opportunities.

 Govt. directive in order to avoid corporate collapse which may dent
public/international perception of the Nigerian economy.
 To leverage on the economy of scale in order to reduce production cost and
optimize profit.
OPTIONS IN EXTERNAL RECONSTRUCTION
 Mergers/ Amalgamation
 Take –Over
 Acquisition
 Purchase and Assumption
 Management Buy -In
Mergers/ Amalgamation
 Meaning: Amalgamation of the undertakings or any part of the undertakings
or interest of two or more companies. S. 92 (4)
 May result from –acquisition of shares/ assets or corporate combination.
 Merger –Amalgam of 2 or more Coysor Acquisition of 51% shares in
anorCoy-See Generally: Sections 92 to 94 FCCPC
Economic Forms of Merger

 Horizontal –Same Mkt, same level of Production e.g. 2008 to 2010 Merger
of commercial Banks in Nigeria. West to East. Standard Trust Bank Plc and
United Bank for Africa (UBA)
 Vertical –Same mkt but diff levels of production e.g. Merger of Sack
producing Coy with a Cement manufacturing Coy. North to south e.g. Bagco
Super Sack Plc and Dangote Cement Plc
 Conglomerate –Same/Diff mkt with unrelated products-Aims at mkt control
Categories of Merger –
mergers are classified in terms of the combined monetary value
(combination of turnover and assets in Nigeria) of the merging entities.
 Small Merger
 Large Merger.
168
Preliminary steps to a Merger

•Need for Pre-merger Notification to FCCPC
•Need for a Memorandum of Understanding (MoU)
•Technical Implementation Agreement (TIA)
•Legal Due Diligence
•Drafting of Merger/ Acquisition Agreement
STEPS TOWARDS APPROVAL OF MERGER BY FCCPC

FCCPC will set out the Notification threshold from time to time. Therefore,
regardless of the categories, a proposed merger within the notification threshold
shall not be implemented unless there is prior notification and approval from
FCCPC. SEC 93(1)
Stages:
Merging Companies are mandated to take the following steps:
•Pre Merger Notification
•Formal Application for approval
•Post Merger notification of compliance/ consequential filings with FCCPC, CAC,
SEC
PROCEDURE FOR MERGERS

1. Pre –Merger notification for FCCPC’s review, evaluation and clearance of
scheme documents.
2. FCCPC considers whether proposed scheme will cause substantial restraint of
trade or monopoly.
•NOTE companies exempted –Holdings; Private companies or unquoted public
companies below prescribed threshold.
2a. Letter of consent by the merging companies under oath.
•3. FCCPC’s approval-in-principle to proceed
•4. Application to the FHC for an order to convene simultaneous meeting of
merging company.
•5. Special resolution at the court ordered meeting approving the merger scheme.
•6. Application to FCCPC for formal approval accompanied by:
 Extract of the minutes of the court ordered meeting approving the merger
scheme duly signed by a director and Secretary.
•2 copies of the Merger Scheme duly signed by the merging parties.
•Resolutions passed at the separate Court ordered meetings of the companies.
•Scrutineer’sreport showing votes for and against the scheme
 Clearance by FIRS
169
•Copy of resultant memartwhere applicable

•CAC 7/ CAC 7A as the case may be
•CAC 2/ CAC 2 A (only private companies)
•Evidence of payment of filing fee
•Any other Form
7. FCCPC notifies the Court in writing of approval or otherwise.
•8. Court order sanctioning the scheme.
Post Merger Compliance

•File the following:
-a copy of court order that sanctioned the scheme.
-Copy of newspaper publication of the order
-Statement of the actual cost of the scheme
-Notification of completion of merger within 3 months of the Court order
orotherwise.
-Situation of employees, shareholders, shares
Post Merger Inspection R. 431

•3 months after approval, FCCPC shall inspect the merged companies.
•Aimed at ascertaining level of compliance with the scheme of merger.
Registration at CAC
•Resolution of the companies
•Merger scheme as approved by FCCPC
•Court orders.
•Evidence of publication of Court order in Gazette and 1 newspaper.
•Original certificate of incorporation of companies dissolved in the merger for
cancellation.
•Updated Annual Return
Salient Clauses in a Merger and Acquistion Agreement

(iv) Introduction
(v) Parties and the date
(vi) Recitals
(vii) Basic terms of the acquisition
(viii) Representations and warranties
(ix) Corporate authority
(x) Consents and authorisations
(xi) Financial statements
(xii) Title to properties of the various parties to the merger
170
(xiii) Litigations (pending)

(xiv) Employee matters (e.g. NITEL workers)
(xv) Licenses (e.g. NITEL)
(xvi) Compensation plans for employees
(xvii) Full and complete disclosures
(xviii) Covenants and undertakings
(xix) Notification of default or any adverse developments
(xx) Indemnity and insurance
(xxi) Conduct of sellers business prior to closing
(xxii) Conduct of purchaser’s business prior to closing
(xxiii) Conditions to closing
(xxiv) Amendments of the scheme
(xxv) Termination and effect of termination
(xxvi) Extension
(xxvii) Miscellaneous
(xxviii) Definition
TAKE-OVER
• Take Over-Acquisition of up to 30% or more but not more than 50% of
shares- s.131(1)(a & b).
• Cannot be made to fewer than 20 shareholders representing 60% of company
membership.
• Private company.
• Take Over Bid
TAKE 0VER BID

• Invitation to treat
• Deemed dated on dispatch date
• Contain matters specified in s. 136
• Subject to SEC’s approval.
• Approval lasts for 3 months
Docs to be filed with a TOB r. 447

a) Application letter
b) Copies of information memorandum
c) Letter of ‘no objection’ from regulatory body
d) Shareholders’ and BOD resolutions
e) Certificate of incorporation of offer or company
f) Memart of offer or company
g) Letter appointing financial adviser to the offer
171
Appeal against SEC refusal

 Within 30 days to the IST s 135 ISA
 Filings at SEC and CAC
ACQUISITION
 Acquisition-Taking up less than 30% of shares in anor Company.
Purchase and Assumption
 Purchase & Assumption –Acquisition of the assets and undertakings of a
moribund Coy by a ‘Going Concern’ and Assumption of its liabilities with a
view to turning it around.
 E.g. Trade Bank Plc by UBA Plc;
 All States Trust Bank Plc by ECOBANK Plc
 Role of CBN, NDIC in collation of assets and liabilities –Cherry –Picking
by Purchasers.
P & A involves
 Legal Due Diligence
 Purchase of assets
 Assumption of liabilities
 Winding up and dissolution of P&A entities
 Settlement of investors, depositors and creditors
ETHICAL ISSUES
1. Duty to disclose the true state of the company in preparation for the scheme of
merger.2.
2. Duty not to allow conflict of interest under Rule 17 of the Rules of
Professional Conduct for Legal Practitioners 2007
3. Duty to act with care and skill as required under Rule 14 of the Rules of
4. It is also the duty of the solicitors to the scheme of merger to devote their
attention, energy and expertise to the course of the newly merged company and
minimize post merger conflict
SOME ETHICAL ISSUES INVOLVED IN MBO AND PURCHASE AND

ASSUMPTION
1. Duty to disclose the true state of the company in preparation for the
management Buyout and Purchase and Assumption.
172
2. Duty not to allow conflict of interest and insider trading on the part of the
managers in a MBO under Rule 17 of the Rules of Professional Conduct for
Legal Practitioners 2007
3. Duty to act with care and skill as required under Rule 14 of the Rules of
4. It is also the duty of the solicitors to the Purchase and Assumption
transaction to devote their attention, energy and expertise to the course of the
financial institution assuming liabilities and minimise post assumption
conflicts and undisclosed liabilities.
173
WEEK 19
COMPANY PROCEEDINGS 2020 Updated
COMPANY PROCEEDINGS
OUTCOME
 Identify suitable applications for company’s proceedings.
 State the ADR options available to companies in lieu of litigation
 Draft heading and prayer clauses of an Originating Summons and Petition
for winding up.
 Evidential issues in companies proceedings- authentication of documents,
companies contract, common seal and official seal’
 Valid service of court processes and documents on companies.
 Draft and incorporate ADR clauses in commercial agreements involving
companies.
 Identify ethical issues involved in company proceedings.
Introduction
 Types of disputes involving companies
 Modes of commencement of actions involving companies
 Courts/Tribunals with jurisdiction in Company Proceedings
 Applicable laws/Rules
 Services of processes on companies
 authentication of documents, uses of common seal and official seal.
 Various ADR options available to companies
 Drafting heading and prayer clauses of an Originating Summons and
Petition for winding up, and drafting ADR Clause.
COMPANY PROCEEDING UDNDER CAMA

JURISDICTION
Federal High Court (Exclusive) for civil matters.
 Section251(1)(e) 1999 CFRN
 Section 567 CAMA
 Rules 21 and 19 Companies Proceedings Rules
 Nahtex International Ltd v Habib (Nig) Bank ltd
 Inland Bank (Nigeria) Plc v Ruhanti (Nigeria) Enterprises Ltd &ors
(2010) LPELR 4324 (CA)
MODES OF APPLICATION/COMMENCING ACTIONS
 Originating summons
 Originating motion
 Petition
 Writ of summons
174
See Rule 2(1) and rule 19 CPR

APPLICATIONS TO BE MADE BY ORIGINATING MOTION
a. Application for relief from consequences of breaching the requirements of a
private company under Sec 23(2) CAMA
b. Application for an order directing that any shares or debentures of a
company shall cease to be subject to restrictions imposed under section
329(3) CAMA
c. Application for an order declaring dissolution of a company which has not
been wound up to have been void under section 524(1) CAMA
d. Application for an inquiry into any such case as is therein mentioned under
section 319(3) and (4) CAMA
e. Application for the rectification of the registers of members under section
90(1) CAMA
f. Application for extension of time to file documents under section 46(8), 129
(2) or 312(5) CAMA
g. Application for an order declaring that the affairs of a company ought to be
investigated by an inspector appointed by the CAC under section 315
CAMA
APPLICATIONS TO BE MADE BY PETITION

1. Applications to cancel the alteration of a company’s Business objects under
section 46(1) and (2) CAMA
2. Application to confirm a reduction of the share premium account of a
company under section 120 CAMA
3. Application to cancel the alteration of a condition contained in a company’s
memorandum under section 47(1) CAMA
4. Application to cancel a special resolution for re-register PLC as LTD under
section 53(3) CAMA
5. Application to confirm a scheme of reduction of the share capital of a
company under section 106(1) CAMA
6. Application to sanction issuance of shares at a discount under section 121(2)
CAMA
7. Application to confirm a reduction of the capital redemption reserve fund of
a company under section 158 CAMA
8. Application to cancel any variation or abrogation of rights attached to any
class of shares in a company under section 142(1) CAMA
9. Application for relief on the ground that the affairs of the company are being
conducted in an illegal or oppressive manner under section 311(1) CAMA
175
10. Application for an order restoring the name of a company to the register
where the application is made with an application for the winding up of the
company under section 525(6) CAMA
11. Application to sanction a scheme for a merger between two or more
companies Under section 591(3) CAMA
12. Application for relief from liability of an officer of a company or a person
employed by a company as auditor Under section 641 CAMA
ORIGINATING SUMMONS
Applications under CAMA are commonly made by Origination except the
rules required the applications to be made by another means.
Examples of proceedings requiring Originating are:
 Application for an extension of time within which to register a charge under
section 205 CAMA
 Production of documents and evidence of inspection under section 317
CAMA.
 INVESTMENT DISPUTES UNDER ISA
Jurisdiction :
 Administrative Proceedings Tribunal (APC)
 Investment and Securities Tribunal (IST)
Section 284 ISA, Section 251(1) 1999 CFRN
APPLICABLE LAWS/RULES
1. Companies and Allied Matters Act 2004
2. Companies Proceedings Rules
3.
4.
5. Investment and Securities Act 2007
6. Company Winding up Rules 2001
7. Constitution of the Federal Republic of Nigeria 1999 (CFRN as amended)
8. Federal High Court of Nigeria Act
9. Arbitration &Conciliation Act (ACA)
10. Federal High Court Civil Procedure Rules
11. Investment & Securities Tribunal Procedure Rules
12. Securities and Exchange Commission rules
 Effect of Defect in Commencing with Proper Originating Process

See Agip (Nig.) Ltd v Agip Petrol Int’l
 CRIMINAL PROCEEDING UNDER CAMA
See Section 554 (1) CAMA
176
HEADING OF COURT PROCESS

in the federal high court of nigeria
in the ………………………judicial division
suit no:…………
in the matter of ………………………………………….………………….ltd
in the matter of the companies and allied matters act 1990
between:
See Rule 1(1) CPR
Including all affidavits, notice and all processes in the proceedings
NOTE: The prayer of process.
SERVICE OF ORIGINATNG PROCESSES ON COMPANIES

 Proper Service
• Section 78 CAMA
a) By serving a Director, Secretary or other principal officer of the company
b) By leaving it at the registered office of the company
see MTN (Nig.) Communications Ltd v Bolingo Hotel & Towers Ltd .
Matters relating to Company documents (Evidential issues)

 Common seal- see section 37, 71 and 74 CAMA
 Official seal- see Section 75 CAMA
 Authentication of documents- Section 71, 77 CAMA, See SPDC (Nig) Ltd v
Allaputa
 Effect of failure to use Common seal it when necessary.
ADR OPTIONS
 Negotiation
 Mediation
 Conciliation
 Arbitration
• Note the Disadvantages of litigation and advantages of ADR
ADR PROCESS UNDER SECTION 26 NIPC ACT

 Section 26 NIPC Act applies where:
 The dispute involves any level of government in Nigeria (Federal, state or
local) or its agency
 The dispute involves the business enterprise
 The dispute involves a local or foreign investor
ADR Process:
177
Step 1: Mutual discussion via Negotiation or mediation

Step 2: where step 1 fails, the parties will resort to arbitration.
 The applicable arbitration rule will depend on if the investor is a local or
foreigner
 Where the investor is a local (national), recourse will be had to the
provisions of the Arbitration and Conciliation Act
 Where the investor is a foreigner, recourse will be had to any bilateral or
multilateral treaty to which the Federal Government and the country of
which the investor is a national are parties
 In the absence of any such bilateral or multilateral treaty, recourse will be
had to any other national or international machinery for the settlement of
investment dispute agreed to by the parties.
 Where they fail to agree, the parties must adopt the International Center for
Settlement of Investment Disputes (ICSID Rules
IST – ADR CENTRE
• It is an ADR centre of the IST
• Provides sessions for the various ADR options
• Such as mediation, negotiation, arbitration and other hybrid processes
• R34(1) IST Procedure Rules issues directive for effective management and
resolution of disputes
• More so, IST is empowered to promote reconciliation among parties to an
action and encourage and facilitate amicable settlement of disputes
GUIDES IN DRAFTING AN ADR CLAUSE

Sample
“If at any time disagreement or dispute or question shall arise between the
parties in connection with this agreement or its validity, construction; or
performance, then the same shall be referred to an Arbitrator nominated by
Settlement House upon request on the request of any of any party and the
decision of the Arbitrator shall be binding on all the parties.”
ETHICAL ISSUES INVOLVED IN COMPANY PROCEEDINGS

1. Duty not to forge documents in relation to the proceedings involving
companies in consonance with Rule 1 RPC 2007
2. Duty to ensure that the right originating process is applied to client’s action
R16 RPC
3. Duty of confidentiality
4. Duty to appear in litigation on behalf of client corporate or individual.
5. Duty not to aid unauthorized practice of law.
178
179
WEEK 20
WINDING UP AND DISSOLUTION
CORPORATE LAW PRACTICE
Winding Up and Dissolution of Business and Non-Business Organizations.
Modes of winding up?

1. Winding by the court
2. Voluntary winding up:
a. members voluntary winding up
b. creditors voluntary winding up
3. Winding up subject to the supervision of court
Winding up by the court
• Jurisdiction: Federal High Court
• Commencement:
(a) By passing a resolution
(b) Presentation of petition
• Effect of Commencement of winding up
Grounds of winding up by the court
• By special resolution
• Default in filing statutory report at CAC or in holding Statutory meeting
• Numbers of members reduced below two
• Inability of the company to pay its debts
• It is just and equitable to wind up
Who may petition for winding up?
• The company
• A creditor
• Official receiver
• A contributory
• A trustee in bank rupcy
• CAC
• A receiver
• All or any of above separately or together
Procedure for winding up by the court
• Filing of petition
• Verification of Petition by affidavit
• Service of petition
• Advertisement of petition
• Filing of memorandum of compliance
• Filing of notice of intention to appear
• Appointment of provisional liquidator
180
• Filing of affidavit in opposition and affidavit in reply

• Filing of Summons for security for costs
• Filing of list of persons appearing
• Hearing of petition
• Making of winding up order
• Service of winding up order
• Delivery of statement of affairs
• Official receiver’s preliminary report
• First meeting of creditors and contributories
• Appointment of liquidator
• Advertisement of appointment of liquidator
• Appointment of committee of inspection
• Winding up by the liquidator
• Dissolution of the company
• Notice to CAC
Voluntary winding up
• Commencement: passing of resolution
• Effect of commencement
(a) company carrying business for beneficial winding up of the company only
(b) Company remains corporate entity
(c) transfer of assets, alteration members status void without sanction of
liquidator
How to wind up voluntarily
1. Expiration of fixed duration of the company
2. Occurrence of event stipulated for dissolution. Resolution to wind up needed
in both 1 and 2
3. Passing of special resolution to wind up
Members voluntary winding up
• Declaration of solvency
Creditors voluntary winding up
• No declaration of solvency
• Meeting of creditors required
Winding subject to supervision of court
• Petition of creditors, contributories or others may caused it
Cessation of business name
• Notice of not carrying on business to the Registrar
• Notice to company to enquire if carrying on business by the Regisrar
• Removal of name from the register by the Registrar upon notice
Dissolution of partnership
• Modes of dissolution
181
a. parties
b. operation of law
c. court
Dissolution of Incorporated Trustee
• Governing body or Council
• One or more Trustees
• 50 % of total membership of association
• CAC
Grounds for dissolution
• Aims and objectives realized
• Specified period for existence expired
• Aims and objectives become illegal or contrary to public policy
• Just and equitable to be dissolved
182
183

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NIGERIAN LAW SCHOOL -CORPORATE LAW PRACTICE

Corporate Law praCtiCe

NIGERIAN LAW SCHOOL

1. (Week 3) Legal Framework and Regulatory Bodies -3

PRINCIPAL LAWS & SUBSIDIARY LEGISLATIONS

Securities & exchange commission

NIGERIAN INVESTMENT PROMOTIONCOMMISSION

NATIONAL OFFICE FOR TECHNOLOGYACQUISITION and

FINANCIAL REPORTING COUNCIL OF NIGERIA

REGISTRATION- CAPITAL MARKETOPERATOR

REGISTRATION- SEC RULES2013- RULE 178(2)

FIRMS & PERSONS DOING BUSINESS

FRC V. STANBIC IBTC

COMPANY LIMITED BY GUARANTEE

• making profit for distribution as dividend to members

Company Ltd/Gtee Cont’d

11. The desire of the client himself

PECULIAR FEATURES OF A COMPANYLIMITED BY GUARANTEE

• The numbers of people forming it must be clearly stated.

FEATURES OF A PUBLIC COMPANY

Contrast Company Ltd/GTEE WITH Coy

CLIENT INTERVIEW Quiz

• What is the maximum number of members

• 11. Company Secretary

11. The date for completion of registration

12. Nature and objects of Business

13. Foreign Participation

14. What is the proposed NAME of the

CHECKLIST OF PROHIBITEDCORPORATE NAMES

DOCUMENTS TO BE SUBMITTED TO CAC FOR INCORPORATION OF

THE STATUTORY FORMS

Requirement of CAMA (duly sworn to by Legal Practitioner before a

Incorporation of companies Limited by Guarantee

CONTENT OF PARNERSHIP AGREEMENT

• Name and Style of Partnership (Note: prohibited and restricted names)

Contrasting Partnership with Company

FEATURES OF A COMPANY LIMITED BY GUARANTEE

• A convict of an offence involving fraud or dishonesty within 5 years of his

COMPANY LIMITED BY GUARANTEE AND

b. Form CAC 1-Availability and Reservation of Name

It will be presumed in the absence of a provision for payment of

They may not be Promoters:

LEGAL RELATIONSHIP BETWEEN A PROMOTER & THE

Where rescission not possible, the company may take option

Is there Limitation of time in action against a promoter?

The forms of Remuneration available to a Promoter:

2. He may also take shares which are to be credited as fully paid.

Consequence of a promoter convicted of fraudulent practices in the

WHAT IS THE LEGAL REGIME UNDER CAMA?

• Provisions made in the Articles of Association on rules of management of

2. Direct investors who invest in the Nigerian market (primary or secondary)

LEGAL REGULATORY FRAMEWORK

• Have they previously carried on any business as exempted foreign

• NIPC is the agency of Government that co-ordinates and monitors all

– Non-oil export proceeds earned by exporters of Nigerian goods;

• Government agencies are required to publish a complete list of all

TYPES OF VISA pre 2020.

investors who import an annual minimum threshold of capital, highly skilled

• c. Reciprocity Visa Waiver Agreement Countries: Citizens of Brazil,

• Details of the expatriates (including their proposed annual salaries,