SYNOPTIC GUIDE ON CORPORATE LAW PRACTICE IN NIGERIA

Description

CHAPTER ONE:

Legal Framework in Corporate Practice and Commercial Transaction in Nigeria.

 

Legal framework in Corporate Practice and Commercial transactions in Nigeria

Regulatory Ministries, Bodies, and Agencies in Corporate Practice and Commercial Transactions in Nigeria

Selected Regulated Businesses in Nigeria and Regulatory Bodies

Accreditation at CAC

Accreditable Professionals with the Corporate Affairs Commission

Requirements by CAC for Accreditation

Accreditation by Securities and Exchange Commission

Regulatory Bodies

Regulatory Bodies, Agencies, Ministries and Parastatal

Corporate Affairs Commission

Securities and Exchange Commission ( SEC)

Nigerian Investment Promotion Commission (NIPC)

Institute of Chartered Accountants of Nigeria

National Office for Technology Acquisition and Promotion

National Pension Commission

Nigerian Deposit Insurance Corporation

Bureau of Public Enterprises

Asset Management Corporation of Nigeria (AMCON)

Federal High Court of Nigeria

Federal Competition and Consumer Protection Commission(FCCPA)

 

 

 

CHAPTER TWO

CHOICE OF BUSINESS FORMATION IN NIGERIA

2.0.0: Types of Business Organisation……………………………………………14

2.1.0: Types of Companies…………………………………………………….….14

2.1.1.0: Company Limited by Guarantee…………………………………………14

2.1.2.0: Unlimited Company……………………………………………….………15

2.1.3.0: Company Limited by Shares……………………………………..………15

2.2.0: Factors affecting choice of business organization…………………………16

2.3.0: Features of a private company………………………………………………16

2.3.1.0: When is private company recommended…………………………………17

2.4.0: Features of a company limited by guarantee……………………………….17

2.4.1.0: When is a company limited by guarantee recommended…………………18

2.5.0: Features of a public company……………………………………………….18

2.5.1.0: When is a public limited company recommended……………………….19

2.6.0 Distinguishing between private company and public company……………..21

2.7.0: Distinguishing between company limited shares and company limited by guarantee…………………………………………………………………..……..….21

2.8.0: Meaning of holding and subsidiary company………………………………….21

 

 

 

CHAPTER THREE

QUESTIONS, DETAILS AND INFORMATION TO INCORPORATE A COMPANY

3.0.0: Client Interview………………………………………………………..……23

3.1.0: Questions, details and information to incorporate a company……………23

3.2.0: Some selected questions, details, applicability, justification and relevance during incorporation……………………………………………………………………….24

3.3.0: Selected business objects for memorandum of a company……………….26

3.4.0: Sample draft of memorandum and articles of association of a company limited by shares……………………………………………………………………………36

3.5.0: Company limited by guarantee…………………………………………….39

3.6.0: Sample draft of memorandum and articles of association of a company limited by guarantee…………………………………….………………………37

3.7.0: Registrable and non-registrable………………………………………….….45

3.7.1.0: Checklist of restricted corporate name……………………………………45

3.7.2.0: Checklist of prohibited corporate name…………………………………..46

3.8.0: Procedure for availability check and reservation of name…………………46

3.9.0: Documents to be submitted to CAC for incorporation of companies………47

3.10.0: Registration of the company…………………………………………….…48

3.11.0: Refusal of CAC to register a company………………………………..……49

3.12.0: Certificate of Incorporation………………………………………………..49

3.13. Effect of Incorporation……………………………………………………….49

3.14.0: Ethical matters………………………………………………………………50

 

CHAPTER FOUR

Registration of Business Name

4.0.0: Options under business name…………………………………………………..51

4.1.0: Features of a partnership…………………………………………………..…51

4.2.0: Distinction between partnership and company limited by shares………….52

4.3.0: Features of Sole Proprietorship……………………………………………….52

4.4.0: Registration of business name……………………………………………….52

4.5.0: Prohibited name………………………………………………………………52

4.6.0: Restricted name………………………………………………………………53

4.7.0: When registration of business is not compulsory ………………………….53

4.8.0: Compulsory registration of business……………………………………….54

4.9.0: Checklist of specific instructions to take for the registration of business name…………………………………………………………………………..…..…54

4.10.0: Checklist of items needed to register business name………………………54

4.11.0: Can a minor be involved…………………………………………………….55

4.12.0: Commencement of business before registration…………………………..56

4.13.0: Procedure for registration……………………………….……………..….56

4.14.0: Effects of registration……………………………………….…………..…56

4.15.0: Partnership deed in partnership business……………….….…………..…57

4.16.0: Reasons for business deed……………………………….….………..….…57

4.17.0: Drafting of the Partnership deed………………………………………..….58

4.18.0: Examples of such common law presumptions………………………….….58

4.19.0: Specific clauses and matters to include in a partnership agreement…….…58

4.20.0: Justification for clauses and matters to be included in partnership deed clauses………………………………………………………………………….……59

 

CHAPTER FIVE

INCORPORATED TRUSTEE AND REGISTRATION OF NON GOVERNMENTAL ORGANISATION (NGO)

6.0.0: Incorporated Trustee………………………………………………………….61

6.1.0: Features of Incorporated trustee……………………………………………..61

6.2.0: Distinction of Incorporated trustee and limited by guarantee………………62

6.3.0: Similarities between Incorporated Trustee and Limited by Guarantee…….62

6.4.0: Comparative advantages of limited by guarantee over Incorporated Trustee…………………………………………………………………………….…63

6.5.0: Specific Instructions to take for the formation of Incorporated Trustee.….63

6.6.0: Checklist of items needed to register Incorporated Trustee………………..63

6.7.0: Who cannot be a trustee……………………………………………………..64

6.8.0: Copy of the extract of the Minutes…………………………………..………64

6.9.0: Advertisement………………………………………………………………..65

6.10.0: Special Clause………………………………………………………………65

6.11.0: Procedure for appointment of additional trustees………………………….65

6.12.0: Conclusion and Ethical Issues………………………………………………66

 

 

 

 

CHAPTER SIX

PRE-INCORPORATION MATTERS AND PROMOTERS

6.0.0: Comparing a promoter……………………………………………………..…..67

6.1.0: Promotion of a company………………………………………………..….…67

6.2.0: Who is a promoter………………………………………………………….….67

6.3.0: What of professionals engaged in company formation…………………..…68

6.4.0: Legal relationship between a promoter and the company……………….….69

6.5.0: Duties of promoters…………………………………………………………..69

6.6.0: Liabilities of promoters………………………………………………………69

6.7.0: Reasons for rescission…………………………………………………….….70

6.8.0: Is the right of rescission of a company absolute……………………………..70

6.9.0: Is there limitation of time in action against a promoter………………………70

6.10.0: Ratification of contract entered by promoter……………………..……….71

6.11.0: Remuneration of promoters………………………………………..………71

6.12.0: Issues of payment of remuneration generally under CAMA and Nigeria Corporate Law Practice…………………………………………………………..…71

6.13.0: The forms of remuneration available to a promoter………………………..72

6.14.0: Consequences of a promoter convicted of fraudulent practices in the course of promotion……………………………………………………………………………..72

 

 

 

 

CHAPTER SEVEN

 

PRE-INCORPORATION CONTRACTS

7.0.0: Legal status of pre-incorporation contract: position at Common law……….73

7.1.0: Legal status of pre-incorporation contract: position under CAMA…….….74

7.2.0: Conflict between provisions of MEMART and pre-incorporation contract………………………………………………………………………………74

7.3.0: Effects of pre-incorporation contracts on memo and articles………………74

7.4.0: Types of pre-incorporation contracts……………………………………….75

7.5.0: Contents of Shareholders agreement………………………………………..75

7.6.0: Joint Venture agreement…….……………………………………………….76

7.6.1.0: Content of Joint venture agreement………………………………………..76

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CHAPTER EIGHT

Foreign Participation in the Nigerian Business Sector

8.0.0: Limitation to the liberation of policy…………………………………………77

8.1.0: Laws regulating foreign participation………………………………………..77

8.2.0: Regulatory institutions……………………………………………………….78

8.3.0: Guarantees for investment in Nigeria………………………………………….78

8.4.0: Classification of foreign participation……………………………………….78

8.4.1.0: Portfolio Investment………………………………………………………..78

8.4.2.0: Procedure for portfolio investment…………………………………………80

8.4.3.0: Foreign direct investment………………………………………………….80

8.4.4.0: Why registration……………………………………………………………81

8.4.5.0: Consequences of failing to register with CAC…………………………….82

8.4.6.0: Foreign companies exempted from registration…………………………..82

8.4.7.0: Status of an exempted company……………………………………………83

8.4.8.0: Limitations of exempted companies………………………………………83

8.4.9.0: Procedure for Foreign Direct Investment…………………………………84

8.4.10.0: Application for exemption……………………………………………….84

8.5.0: Nigerian Investment Promotion Commission……………………………….85

8.5.1.0: Procedure for registration with NIPC………………………………………86

 

CHAPTER NINE

POST INCORPORATION MATTERS

9.0.0: Publication of name……………………………………………..……….…117

9.0.1.0: Publication of name in the name plates…………………………………117

9.0.2.0: Publication of name in the common seal………………………………..117

9.0.3.0: Publication of name in official document/ bill of exchange…………….118

9.0.4.0: Consequences of default…………………………………………………118

9.1.0: Statutory books……………………………………………………………..118

9.1.1.0: Register of members………………………………………………………119

9.1.2.0: Index of members………………………………………………………….119

9.1.3.0: Register of substantial interest in shares………………………..……….119

9.1.4.0: Register of directors and secretaries……………………..……………….119

9.1.5.0: Register of directors and shareholding……………………………………119

9.1.6.0: Register of charges…………………………………………………….…119

9.1.7.0: Register of debentures holders………………………………….………120

9.1.8.0: Minute books……………………………………………………………..120

9.1.9.0: Accounting records………………………………………………..….….120

9.2.0: Statutory returns and time frame…………………………………………..120

9.3.0: Company contracts……………………………………………………..….121

9.4.0: Corporate searches…………………………………………………………121

9.4.1.0: Use of corporate search report…………………………………………..121

9.4.2.0: Procedure for conducting corporate searches…………………………..121

9.4.3.0: Sample draft of a search report………………………………………….123

9.5.0: Examples of alteration……………………………………………….…….123

9.5.1.0: Change of name………………………………………………………….124

9.5.1.1: Procedure………………………………………………………….……..124

9.5.1.2: Sample draft of change of name resolution……………………………..126

9.5.2.0: Alteration of share capital……………………………………………….126

9.5.2.1: Increase of share capital…………………………………………………127

9.5.2.2: Reduction of share capital……………………………………………….128

9.5.2.3: Distinction between reduction and cancellation of shares capital….….128

9.5.2.4: Conditions for reduction……………………………………………..…..128

9.5.2.5: Procedure for reduction of share capital…………………………………129

9.5.2.6: Effective Date………………………………………………………………130

9.5.3.0: Alteration of business/objects………………………………………………130

9.5.3.1.0: Who can challenge the alteration of object clause of a company……..…131

9.5.3.2.0: Grounds for challenge of the alteration…………………………………..132

9.5.3.3.0: Sample draft of resolution for alteration of business object…………….133

9.5.4.0: Alteration of articles…………………………………………………………133

9.5.4.1: Sample draft of resolution for alteration of article of association………..134

9.6.0: Conversion and re-registration………………………………………………134

9.6.1.0: Types of conversion and re-registration of companies…………………135

9.6.2.0: Procedure………………………………………………………………….135

9.6.3.0: Documents to be attached ………………………………………………..135

9.6.4.0: Consequential alterations to be made…………………………………….136

9.6.5.0: Objection at the Federal High Court……………………………………..138

9.6.6.0: LTD to ULTD………………………………………………………………138

9.6.6.1.0: Items and documents needed……………………………………………138

9.6.7.0: ULTD to LTD……………………………………………………….……..139

9.6.8.0: Re-registration of statutory corporation as company limited by shares…139

9.6.9.0: Essential features of conversion………………………………………….140

9.6.10.0: Prohibited re-registration………………………………………………..141

9.6.11.0: Alteration of registered documents of business name…………………141

9.6.12.0: Alteration of constitution of IT………………………………………….141

9.6.13.0: Change of trustees……………………………………………………….142

9.6.14.0: Alteration of change of name of IT………………………………………142

 

CHAPTER TEN

CORPORATE GOVERNANCE: DIRECTORS AND SECRETARY

10.0.0: What is corporate governance……………………………………………..143

10.1.0: Why corporate governance……………………………………….…………143

10.2.0: Historical background to modern corporate governance…………………144

10.3.0: Code of corporate governance in Nigeria…………………………………144

10.4.0: Theories of corporate governance…………………………………………145

10.5.0: Salient points of codes……………………………………………………..145

10.6.0: Compliance, enforcement and conflicting provision in codes…….…….145

10.7.0: Directors……………………………………………………………………146

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CHAPTER ELEVEN

DIRECTORSHIP

11.0.0: Who is a director………………………………………………………….147

11.1.0: Who is not a director………………………………………………………147

11.2.0: Implication of not being duly appointed as directors……………….……147

11.3.0: Types of directors………………………………………………………….148

11.3.1.0: Executive director……………………………………………………….148

11.3.2.0: Non Executive director…………………………………………………..148

11.3.3.0: Managing Director……………………………………………..…….….148

11.3.4.0: Chairman of the board of directors…………………………..…………149

11.3.5.0: Alternate Director……………………………………………………….149

11.3.6.0: Shadow Director……………………………………………………….…149

11.3.7.0: Nominee Director………………………………………………………..149

11.3.8.0: Life Director…………………………………………………………….150

11.3.9.0: First Director……………………………………………………..….…..150

11.3.10.0: Casual Director………………………………………………………….150

11.4.0: Number of director………………………………………………………..151

11.5.0: Appointment of first director…………………………………………..…151

11.6.0: Appointment of subsequent directors…………………………………….151

11.7.0: Resolution for appointment……………………………………………….151

11.8.0: Disqualification for directorship………………………………………….152

11.9.0: Vacation of office of directorship…………………………………………152

11.10.0: Age of director……………………………………………………………152

11.11.0: Duties of directors……………………………………………………….153

11.12.0: Fiduciary duties………………………………………………………….153

11.13.0: Remuneration of directors……………………………………………….157

11.14.0: Remuneration of managing director………………………………….…157

11.15.0: Retirement and rotation of director…………………………………………157

11.15.1.0: Exception of retirement and rotation rule…………………………….158

11.16.0: Removal of directors……………………………………………………..158

11.17.0: Post removal steps/consequential steps………………………………….160

11.18.0: Further points to note on removal of directors………………………….160

11.19.0: Draft on removal of director………………………………………….…160

11.20.0: Publications required of director………………………………………..164

11.21.0: Board of directors meeting………………………………………………164

11.22.0: Sample draft of notice of board of directors meeting…………………..165

11.23.0: Special Notice…………………………………………………………….165

 

CHAPTER TWELVE

COMPANY SECRETARY

12.0.0: Who appoints company secretary……………………………….………..167

12.1.0: Status of company…………………………………………………….……167

12.2.0: Company Secretary…………………………………………………….….168

12.3.0: Who can be a secretary………………………………………………..….168

12.4.0: Corporate Affairs Commission Form CAC 2.1 particulars of persons who is the company Secretary of a company…………………………………………….169

12.5.0: Duties of company secretary………………………………………………170

12.6.0: Some of the statutory filing at CAC…………………………………….….171

12.7.0: Company Secretary and fiduciary duties…………………………………173

12.8.0: Dual position as director and secretary /legal adviser……………………173

12.9.0: Dual position as director/legal adviser……………………………………173

12.10.0: Resignation and removal of a company secretary………………..……..174

12.11.0: Procedure for removal of a company secretary………………………….174

12.12.0: Vacancy in the office of company secretary…………………………….175

12.13.0: Certain publication in respect of directors………………………..…….175

12.13.1.0: Register of director’s shareholding……………………………………175

12.13.2.0: Register of directors and secretaries…………………………………..175

12.13.3.0: Particulars of directors in Trade catalogue…………………………….176

12.13.4.0:Register of contracts for which directors have interest…………..……176

12.14.0: Draft of instrument of appointment of first directors……………….….176

 

CHAPTER THIRTEEN

SCOPE OF CORPORATE GOVERNANCE

13.0.0: Membership of a company…………………………………………….….177

13.1.0: How to acquire membership………………………………………….…..177

13.1.1.0:Subscription………………………………………………………………177

13.1.2.0: Allotment…………………………………………………………………178

13.1.3.0: Transfer………………………………………………………………….178

13.1.4.0: Transmission……………………………………………………………..179

13.2.0: Capacity as to member…………………………………….………………179

13.3.0: Incidents/rights of membership……………………………………………179

13.4.0: Cessation of membership……………………………..…………………..180

 

CHAPTER FOURTEEN

MEETING

14.0.0: Types of General Meetings of a company…………………………….….181

14.0.1.0: Statutory meeting……………………………………………………..…181

14.0.2.0: Facts to note about statutory meeting……………………………….…..181

14.0.3.0: Business transacted at statutory meeting………………………………..181

14.0.4.0: Statutory report…………………………………………………….…….181

14.0.5.0: Contents of statutory report……………………………………………..182

14.0.6.0: Resolution on statutory report……………………………………….…182

14.1.0: Annual general meeting……………………………………………………183

14.1.1.0: Essential features of Annual General Meeting……………………..….183

14.1.2.0: Procedure /power of CAC to compel BOD to hold annual general meeting………………………………………………………………………….…184

14.1.3.0: Penalty for non-compliance…………………………………………….184

14.1.4.0: Business transacted at Annual general meeting……………………..…184

14.1.5.0: Ordinary business of Annual General Meeting…………………….….184

14.1.6.0: Special business of Annual General meeting……………………….…185

14.2.0: Extra-ordinary general meeting………….……………………………….186

14.2.1.0: Time and place for extra ordinary general meeting…………………….186

14.2.2.0: Who can convene an extra ordinary general meeting…………………..186

14.2.3.0: Procedure for member’s requisitioned extra ordinary general meeting……………………………………………………………………………..186

14.3.0: Where directors fail to convene……………………………………….….186

14.4.0: Expenses incurred by requisitionist……………………………………….187

14.5.0: Absence of quorum at a requisited meeting………………………………187

14.6.0: Court ordered meeting……………………………………………………..187

14.6.1.0: Orders court may make…………………………………………………188

14.7.0: Issues/ valid convening of meeting…………………………………..…..188

14.8.0: Venue of meeting………………………………………………………….189

14.9.0: Eligibility to attend company meeting……………..……………………..189

14.10.0: Notice of meeting……………………………………………………..…189

14.11.0: Contents of notice………………………………………………………189

14.12.0: Length of notice…………………………………………………………191

14.13.0: Service of notice…………………………………………………………191

14.14.0: Failure to give notice……………………………………………………191

14.15.0: Instances of Additional notice………………………………………….191

14.16.0: Current trend in corporate governance…………………………..…….191

14.17.0: Proxy……………………………………………………………….……192

14.17.1.0: How proxy is appointed………………………………………….…..192

14.17.2.0: Revocation of proxy’s appointment …………………………………192

14.18.0: Corporate representation………………………………………………..193

14.19.0: Issues affecting validity of proceeding at a meeting……………….….193

14.20.0: Quorum………………………………………………………………..…193

14.21.0: Voting…………………………………………………………………….195

14.21.0: Procedure upon demand of poll……………………………………………195

14.21.1.0: Restriction on demand of poll…………………………………………..196

14.21.2.0: Who can demand on poll………………………………………………..196

14.22.0: Chairman’s casting vote……………………………………….…………196

14.23.0: Result of vote………………………………………………….………….196

14.24.0: Resolutions……………………………………………………………….197

14.24.1.0: Types of resolution……………………………………………………..197

14.24.1.0: Ordinary resolution…………………………………………………….197

14.24.2.0: Written resolution………………………………………………………197

14.24.3.0: Duties of a Chairman at the general meeting………………………….198

14.24.4.0: Special resolution……………………………………………………….198

14.24.5.0: Examples of matters requiring special resolution…………………….198

14.24.6.0: Resolutions requiring special notice……………………………………199

14.24.7.0: Examples of resolutions that require special notice………………….199

14.24.8.0: Date of passing of resolution………………………………………..…199

14.24.9.0: Registration of certain resolution………………………………………200

14.24.10.0: Requisition of resolution…………………………………………..….200

14.25.0: Adjournment of meetings………………………………………………..200

14.26.0: Quorum at adjourned meetings…………………………………………..201

14.27.0: Minutes of proceedings……………………………………………….…..201

14.28.0: Forms of minutes…………………………………………………………201

14.29.0: Importance of minute books……………………………………………..202

 

CHAPTER FIFTEEN

ACCOUNTING RECORDS AND FINANCIAL STATEMENT

15.0.0: Duty to keep accounting records……………………………………………203

15.1.0: Essence of accounting records ……………………………………………..203

15.2.0: Contents of accounting records……………………………………………..203

15.3.0: Location and preservation of accounting records………………………..204

15.4.0: Directors power to fix financial year for company…………………….…204

 

CHAPTER SIXTEEN

FINANCIAL STATEMENTS

 

15.1.0: Financial statement……………………………………………………..…205

15.2.0: Forms and contents of financial statement………………………….……205

15.3.0: Group financial statement…………………………………………………206

15.4.0: Meaning of holding company and subsidiaries………………………..…206

15.5.0: Failure to deliver copy to those entitled…………………………………..206

15.6.0: Director’s duty to deliver financial statement at Annual General Meeting……………………………………………………………………………..207

15.7.0: False or defective financial statement……………………………….…..207

 

CHAPTER SEVEENTEEN

AUDIT IN CORPORATE GOVERNANCE

17.0.0: Appointment of auditors…………………………………………………..208

17.1.0: Internal and external auditors………………………………………….…..208

17.2.0: Who appoints first auditors…………………………………………….…..208

17.3.0: Failure of the directors to appoint first auditors…………………………209

17.4.0: Re-appointments of auditors……………………………………………….209

17.5.0: Vacancy based on non-appointment of auditor…………………….……209

17.6.0: Qualification of auditors……………………………………………….…..209

17.7.0: Prohibited persons…………………………………………………………210

17.8.0: A disqualified auditor in appointment……………………………………210

17.9.0: Auditor’s right to attend company meeting……………………………….210

17.10.0: Resignation of auditors………………………………………………..…211

17.11.0: Defamatory notice of resignation…………………………………….…211

17.12.0: Requisition for extra ordinary meeting…………………………………211

17.13.0: Auditor’s report or liabilities of auditor………………………………..212

17.14.0: On liability of auditors………………………………………………..…212

17.15.0: What if the board of directors fails to institute action………………….212

17.16.0: False statement to auditors……………………………………………….212

17.17.0: Audit committee………………………………………………………….213

17.18.0: Membership of audit committee………………………………………….213

17.19.0:Reappointment/remuneration/qualifications……………………….……213

17.20.0: Objectives and functions of the audit committee……………….………213

17.21.0: Provisions of the codes of corporate governance in Nigeria on audit committee……………………………………………………………………….….214

17.22.0: Contents of annual returns of a company having share capital other than small company…………………………………………………………………………….214

17.23.0: Documents to be annexed to annual returns…………………………….215

17.24.0: Obligation to file annual returns…………………….…………………..216

17.25.0: Forms of annual returns by companies……………………………….…216

17.26.0: Consequences of failure to file annual returns…………………………..217

17.27.0: Enforcement of returns……………………………………………………217

17.28.0: CAC strike off defunct company……………………………………..….218

17.29.0: Procedure to restore struck off company………………………………..218

17.30.0: Who may make the application/ power of court…………………………218

17.31.0: Existing liabilities if a company is struck off……………………….…..218

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CHAPTER EIGHTEEN

MAJORITY, MINORITY PROTECTION AND INVESTIGATION OF COMPANIES

17.0.0: Majority rule……………………………………………………………….219

18.1.0: Basis and the scope of the rule……………………………………….……219

18.2.0: Cases on minority protection………………………………………………219

18.3.0: The rationale for the rule in Foss v Harbottle………………………….….219

18.4.0: Codification of the rule in CAMA…………………………………………221

18.5.0: Principle of minority protection…………………………………….…….221

18.6.0: Exception to majority rule…………………………………………………221

18.7.0: Who can sue under the exceptions………………………………………..224

18.8.0: Possible reliefs………………………………………………………….….224

18.9.0: Types of action…………………………………………………………….225

18.9.1.0: Personal action……………………………………………………….….226

18.9.2.0: Representative action…………………………………………………….226

18.9.2.1.0: Reliefs……………………………………………………………….…226

18.9.2.2.0: Power of court to award cost ……………………………………..……226

18.9.3.0: Derivative action…………………………………………………………227

18.9.3.1.0: Who can be an applicant for derivative action……………………..….227

18.9.3.2.0: Procedure……………………………………………………………..….227

18.9.3.3.0: Conditions/ procedure for application for derivative action……….…228

18.9.3.4.0: Remedies the court can grant…………………………………………..228

18.9.4.0: Distinguishing features between personal action and derivative action………………………………………………………………………………..228

18.10.0: Title of court process…………………………………………………….229

18.11.0: Investigation of company…………………………………………….….229

18.12.0:Who can prompt an investigation into company’s affairs………………..229

18.13.0: Uses of the inspection report………………………………………..……230

18.14.0: Other statutory protection for minority ……………………..………….231

 

 

 

CHAPTER NINETEEN

COMPANY SECURITIES

19.0.0: What is share………………………………………………………..…..…232

19.1.0: Non voting and weighted shares…………………………………………..232

19.2.0: Exception of preferential shares……………………………………..……232

19.3.0: Classes of shares……………………………………………………..……232

19.4.0: Issuance of shares………………………………………………………….234

19.5.0: Issues of shares at a premium……………………………………………..235

19.6.0: The need for share premium account………………………………….….235

19.7.0: Issues of shares at discount………………………………………….……235

19.8.0: Authorized share capital……………………………………………….…236

19.9.0: Issue share capital…………………………………………………………236

19.10.0: Fully paid up shares……………………………………………………..236

19.11.0: Unpaid capital……………………………………………………………236

19.12.0: Unissued shares/ reserve capital …………………………………….…236

19.13.0: Call on shares…………………………………………………………….236

19.14.0: Lien on shares……………………………………………………………237

19.15.0: Payment for shares……………………………………………………….237

19.16.0: Acquisition of shares……………………………………………………..237

19.17.0: Transfer of shares…………………………………………………….….238

19.18.0: Method of transfer………………………………………………………..238

19.19.0: Procedure for transfer of shares………………………………………….238

19.20.0: Effects of endorsement certificate lodged……………………………….239

19.21.0: Refusal by the company to recognize and register instrument of transfer………………………………………………………………………………240

19.22.0: Rectification of register of members……………………………….…….240

19.23.0: Items/ requirements for filing return of allotment…………….……..…..241

 

CHAPTER TWENTY

DEBENTURE

20.0.0: What is debenture……………………………………………………….….242

20.1.0: Types of debenture…………………………………………………….……242

20.1.1.0: Perpetual debenture……………………………………………………….242

20.1.2.0: Convertible debenture…………………………………………….………242

20.1.3.0: Secured or naked debenture………………………………..…………….242

20.1.4.0: Redeemable debenture………………………………………….………..242

20.1.5.0: Bearer debenture……………………………………………………….…243

20.1.6.0: Registered debenture…………………………………………………..…243

20.2.0: Charge securing a debenture………………………………………………..243

20.3.0: Fixed charge…………………………………………………………..……243

20.4.0: Floating charge……………………………………………………………..244

20.5.0: Registration of charges………………………………………………..……244

20.6.0: Effect of non-registration of charges………………………………………..245

20.7.0: Remedy upon non-registration………………………………………….…..245

20.8.0: Records kept by company upon issue of debenture………………….….246

20.9.0: Procedure on creation of charge securing debentures………………………246

20.10.0: Corporate Affairs Commission Form CAC 8 particulars of charge…….248

20.11.0: Remedies of debenture holders……………………………………………249

 

CHAPTER TWENTY – 0NE

FLOTATION OF SECURITIES AND COLLECTIVE INVESTMENT SCHEME

21.0.0: What is flotation……………………………………………………….….250

21.1.0: Financial market……………………………………………………….……250

21.2.0: Money market……………………………………………………………….250

21.3.0: Capital market………………………………………………………..……..250

21.4.0: Advantages of capital market to money market…………………………….251

21.5.0: Registration of a legal practitioner as capital market solicitor……….….251

21.6.0: Regulatory authorities and applicable laws……………………………..….251

21.7.0: Applicable laws……………………………………………………………..252

21.8.0: Nigerian Capital Market………………………………………………..…..252

21.9.0: The primary market…………………………………………………………..252

21.10.0: Initial public offer…………………………………………………………253

21.11.0: Subsequent public offer………………………………………………..….253

21.12.0: Right issue…………………………………………………………………..253

21.13.0: Hybrid issue…………………………………………………………….…253

21.14.0: Secondary market…………………………………………………………254

21.15.0: Investment opportunities in the Nigerian capital market……………..…254

21.16.0: Who can offer securities to the public……………………………….….254

21.17.0: Capital Market operators and consultants………………………………..255

21.18.0: Capital corporate bodies registered with SEC…………………………..255

21.19.0: Capital corporate consultants/ professionals registered with SEC………255

21.20.0: The role of the capital market…………………………………………….256

21.21.0: Method of offer of securities to the public………………………..…….256

21.21.1.0: Direct offer for sale………………………………………….………..256

21.21.2.0: Offer for sale……………………………………………………………257

21.21.3.0: Difference between direct offer for sale and offer for sale…………..257

21.21.4.0: Placement………………………………………………………………..257

21.21.5.0: Conditions for placement by company……………………………..….258

21.21.6.0: Placing…………………………………………………………………..258

21.21.7.0: Placement and placing……………………………………………………258

21.21.8.0: Right issue………………………………………………………………..259

21.21.9.0: Challenges of right of issue………………………………………………259

21.22.0: Roles of solicitor in public offer of securities…………………………….259

21.23.0: The procedure for public offer of shares………………………………..260

21.24.0: Registration of securities with SEC ……………………………………..261

21.25.0: All professional must consent……………………………………………261

21.26.0: Prospectus…………………………………………………………..………262

21.26.1.0: What is prospectus…………………………………………………..….262

21.26.2.0: Purpose and why prospectus……………………………………….…..262

21.26.3.0: Forms of prospectus………………………………………………….…263

21.26.4.0: Contents of prospectus……………………………………………….…263

21.26.5.0: Procedure for issue of the prospectus……………………………….…264

21.26.6.0: Date and publication of prospectus…………………………………..…264

21.26.7.0: Deemed prospectus………………………………………………………265

21.27.0: Collective Investment scheme…………………………………………….266

21.27.1.0: Defining collective investment scheme…………………………………266

21.27.2.0: Features of a collective investment scheme……………………………267

21.27.3.0: Types of collective investment scheme……………………………..….267

21.28.0: Unit trust scheme…………………………………………………..………267

21.28.1.0: Essential elements of a unit trust scheme…………………………..….268

21.29.0: Difference between a company and unit investment…………………..…269

21.30.0: Investment trust fund/ ethical mutual investment……………………..….269

21.31.0: Real estate investment trust……………………………………………….269

21.31.1.0: Features for real estate investment scheme………………………….…270

21.32.0: Community savings scheme…………………………………………..….270

21.33.0: Bonds………………………………………………………………………270

21.34.0: Who can issue government bond………………………………….……..270

21.35.0: Conditions for issuance of government bonds…………………………….271

21.36.0: Global depository receipt………………………………………………….271

 

CHAPTER TWENTY TWO

COMPANY PROCEEDINGS

22.0.0: Types of disputes involving companies………….……………………..…..272

22.1.0: Jurisdiction…………………………………………………………………..272

22.2.0: Rules applicable……………………………………………………….……273

22.3.0: Company disputes/ applicable under CAMA ………….…………………..273

22.4.0: Modes of commencing corporate actions…………………………………..273

22.4.1.0: Applications to be commenced by originating motion………………274

22.4.2.0: Applications to be commenced by petition………………………….274

22.4.3.0: Application to be commenced by originating summons……………275

22.5.0: Effect of defect in commencing with proper originating process………275

22.6.0:Service of originating processes on companies…………………………..276

22.7.0: Service of other documents……………………………………………….277

22.8.0: Common seal………………………………………………………………278

22.9.0: Official seal…………..……………………………………………………278

22.10.0: Authentication of documents………………………………………..….278

22.11.0: Commercial disputes involving companies…………………………..…278

22.12.0: Labour disputes…………………………………………………………..279

22.13.0: Investment disputes………………………………………………………279

22.14.0: ADR process under section 26 NIPC ACT……………………….………279

22.15.0:Capital market disputes……………………………………………………280

22.16.0: Jurisdiction of Investment and Securities Tribunal…………………….280

22.17.0: Proceedings at the Investment and Securities Tribunal………….…….280

22.18.0: Jurisdiction issue between Federal High Court and Investment and Securities Tribunal……………………………………………………………………………281

22.19.0: ADR in matters involving companies ………….………………………281

 

 

 

CHAPTER TWENTY THREE

CORPORATE RESTRUCTURING

23.0.0: Internal corporate restructuring………………………………………….…282

23.0.1.0: Arrangement and compromise……………………………………………282

23.0.2.0: Increase and reduction of sales capital……………………………………284

23.0.3.0: Share reconstruction and reconstruction………………………………….284

23.0.4.0: Buy out……………………………………………………………………284

23.0.5.0: Management buyout………………………………………………’’’’’…284

23.0.6.0: Employee buyout ……………………………………………………..…285

23.0.7.0: Arrangement on sale…………………………………………………..…285

23.0.8.0: Difference between arrangement on sale and arrangement on compromise…………………………………………………………………………285

23.0.9.0: Procedure for arrangement on sale……………………………………..285

23.1.0: Ethical issues………………………………………………………….….287

23.2.0: External options in corporate restructuring……………………………….288

23.3.0: Reasons for external options in corporate restructuring……………….….288

23.4.0: Options in external restructuring………………………………………….288

23.4.1.0: Mergers/ Amalgamation…………………………………………..……288

23.4.2.0: Steps towards approval of merger by SEC ………………………..…..290

23.4.3.0: Procedure for immediate and large mergers……………………….…..290

23.4.4.0: Post merger compliance……………………………………………..…292

23.4.5.0: Post merger inspection………………………………………………….292

23.4.6.0: Revocation of merger……………………………………………………292

23.4.7.0: Take-over…………………………………………………………….….293

23.4.8.0: Documents to be filed with a take-over bid………………………….…293

23.4.9.0: Acquisition………………………………………………………………293

23.4.10.0: Purchase and Assumption………………………………………………294

 

 

 

CHAPTER TWENTY- FOUR

WINDING UP, CESSATION AND DISSOLUTION OF COMPANIES, BUSINESS NAME AND INCORPORATED TRUSTESS RESPECTIVELY

24.0.0: Winding up of companies……………………………………………..295

24.1.0: Applicable laws………………………………………………………..295

24.2.0: Regulatory agencies……………………………………………………295

24.3.0: Difference between liquidation and dissolution of a company………..…296

24.4.0: Modes of winding up.………………………………………………….…296

24.5.0: Courts with jurisdiction………………………………………………..…296

24.6.0: Point of commencement of winding up proceedings………….…………296

24.7.0: Effect of commencement of winding up proceedings……………………296

24.8.0: Effect of winding up proceeding on the company……………………….297

24.9.0: Effect of winding up order ……………………………………………….297

24.10.0: Dissolution of a company………………………………………………..298

24.11.0: Effect of non compliance………………………………………………..298

24.12.0: Effect of dissolution order………………………………………………299

24.13.0: Compulsory winding up of the court…………………………………….299

24.13.1.0: Member’s special resolution for compulsory winding up…….………….299

24.13.2.0: Default made in delivering statutory report…………………………….300

24.13.3.0: Reduction of members below two…………………………………….…300

24.13.4.0: Inability to pay debts………………………………………………..……300

24.13.5.0: Exceptions……………………………………………………………….301

24.13.6.0: Winding upon just and equitable grounds………………………………301

24.14.0: Who may petition winding up…………………………………………….302

24.15.0: Sample draft of winding up petition………………………………………..302

24.16.0: Procedure for compulsory winding up……………………………………..303

24.17.0: Staying of winding up after winding up order……………………………..304

24.18.0: Appointment of liquidator……………………………………………….…304

24.18.1.0: Powers of liquidator in winding up by the court….……………………..304

24.19.0: Voluntary winding up………………………………………………………304

24.19.1.0: When a company can be wound up voluntarily…………………………305

24.19.2.0: Types of voluntary winding up………………………………………….305

24.19.2.1.0: Members’ voluntary winding up………………………………………305

24.19.2.2.0: Procedure for members’ voluntary winding u…………………………305

24.19.2.3.0: Circumstances where members’ voluntary winding up will be converted to creditors’ voluntary winding up ………………………………………………..307

24.19.2.4.0: Requirements for members’ voluntary winding up …………………… 307

24.19.3.0: Creditors voluntary winding up…………………………..……………..308

24.19.3.1.0: Procedure for creditors voluntary winding up…………………………308

24.19.4.0: Consequences of a voluntary winding up……………………………….310

24.20.0: Winding up subject to the supervision of the court…………….…………310

24.20.1.0: Procedure for winding up subject to the supervision of the court……….311

24.20.2.0: Effect of supervision order……….………………………………………311

24.21.0: Major officers of winding up………………………………………………311

24.21.1.0: Liquidators……………………………………………………………….312

24.21.1.1: Disqualification for appointment as liquidator…………………………..312

24.21.1.2: Other powers of a liquidator……………………………………………..312

24.21.2.0: Official receiver…………………………………………………………..313

24.21.3.0: Provisional liquidator…………………………………………………….313

24.21.4.0: Receiver……………..…………………………………………………..313

24.21.5.0: Receiver manager……………………………………………….…..313

24.21.6.0: Special manager…………………………………………………….314

24.21.7.0: Powers of the receiver/ manger………………………………………314

24.22.0: The order/priority of payments of liabilities upon winding up of a company…………………………………………………………………………314

24.23.0: Winding up of business/ partnership under part B of CAMA………….315

24.23.1.0: Dissolution of a sole proprietorship or partnership registered under part B of CAMA……………..…………………………………………………………….. 315

24.23.2.0: Dissolution of partnership………………….………………………….316

24.23.3.0: Procedure for dissolution of partnership………………………………317

24.24.0: Winding up of non-business/ organizations (Incorporated trustees/ associations) under part C of CAMA……………………………..……………..318

24.24.1.0: Who can bring petition for dissolution………………………………318

24.24.2.0: Grounds for dissolution………………….……………………………318

24.24.3.0: The procedure for dissolution………………………………………….318

24.24.4.0: Notice of dissolution…………………………………………………….318

24.24.5.0: Distribution of assets of a dissolved Incorporated trustee………………319