Law Notes, Past Questions and Answers At: ND ST

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com
BASED ON 2017 CURRICULUM AND PRACTICE BOOK

WEEK 3.
TOPIC: AN OVERVIEW OF THE LEGAL FRAMEWORK AND
REGULATORY BODIES ON CORPORATE LAW PRACTICE IN NIGERIA.
HIGHLIGHTS OF THE CAMA 1990.
- Promulgated on 2nd January, 1990 and commenced on 31st December 1990.
- It incorporates various principles of law and equity, has detailed provisions on Directors,
Members, Secretaries, Accounts, Auditors, Meetings, Memo and Articles, e.t.c. It also
establishes the CAC as a body corporate with perpetual succession and a common seal
capable of suing and being sued1.
:: OSIC:
:: ACCREDITATION AND REGISTRATION: To ensure best practices, CAC and SEC
often require accreditation or registration (respectively) of professionals dealing with it.
:: ACCREDITATION WITH CAC: Legal Practitioners, Accountants and Chartered
Secretaries who are the only professionals that can deal with the CAC on matters of PART
A (companies), CAMA must be formally accredited with the CAC. This is by filling and
returning Accreditation Form A or B with –two passport photographs, Qualifying
Certificate (e.g. Call to Bar Certificate for Lawyers), Practicing Fee receipt for the year,
NYSC discharge or exemption Certificate, and Accreditation Fee of 2,500 or 5,000 for
individual or firms respectively. An Identity Card with unique serial number2 is then
issued. The lawyer is at an advantage because only him can fill CAC Form 4 statutory
Declaration of Compliance with the Requirement of CAMA for the registration of a
company” Section 35(3) CAMA.
:: REGISTRATION WITH SEC: though challenged in S.E.C v Professor A.B
Kasunmu, ISA 2007 now provides that professionals are to register with SEC. This is
done by filling SEC Form 2, evidence of payment of current practicing fee, payment of
application fee (1k individual, 20k firm), statement that ISA has been complied with.
Additionally, businesses are to forward CTC of business name/partnership deed, CV of
at least 2 officers, full postal and electronic address, evidence of minimum net worth
(2,000,000 firm, 500k individual). Then applicant participates in SEC Training School.
See Section 38 ISA, 178 SEC Rules.
1
The chief executive officer of the CAC is the Registrar-General who must be a legal practitioner
qualified for not less than 10 years with 8 years in Company Law Practice.
2
This number shall be used in CAC forms he uses.
1
Law Notes, Past Questions and Answers at www.isochukwu.com
WEEK FOUR.
TOPIC: CHOICE OF BUSINESS ORGANIZATION AND FORMATION (1)-
COMPANIES.
Under CAMA, Organizations are broadly classified into business3 and non-business4.
CAC registers such except statutory corporations and cooperative societies.
:: STATE THE TYPES OF COMPANIES THAT CAN BE REGISTERED. The types
are largely 6.
A company may be a PRIVATE or PUBLIC company in which the liability of members
are; 1. Limited by Shares. OR 2. Limited to the amount in which each member
guarantees/undertakes to contribute in the event of the company’s winding up. OR 3.
Unlimited.
The type of the company is determined by the MEMO.
A Private Co should have authorised share capital of 10,000, restrict transfer of shares
(excluding authorized private banking business) and membership should generally be
within 2-50.
:: ADVISE ON SUITABILITY OF EACH. In doing so wo appraise the object, size of
members and company, sphere of operation, transferability of shares (Section 22 CAMA),
formalities, capital, whether the company would be issuing shares to the public (then
better go for public co), and cost of registration.
:: PREPARE A CHECKLIST OF DOCUMENTS REQUIRED FOR REGISTRATION
OF COMPANIES. They include:
First, have the requisite CAC form(s). 1. FORM CAC 1 – Availability check and
reservation of name. 2. FORM CAC 1.15
3. The Memorandum of Association (MEMO): Tables B, C, and D of Schedule 1 to the
Act could be adopted with necessary and permitted modifications. It should contain the
following clauses indicating (Section 27 CAMA) –the Name (which must end with Plc,
Ltd, Gte, Ultd, depending), - Registered Office, - Object (precisely stated6), - Restrictions
if any, - Status (public or private), liability (limited, unlimited, etc.). NRSL.
3
The three business organizations are sole proprietorships, partnerships, and incorporated
companies.
4
The two non-business organizations are incorporated trustees and companies limited by guarantee.
5
It appears the rest; i.e. FORM CAC 2-10 below are no longer necessary (for only incorporation). The
forms shall be discussed at the end.
6
Could have the main object, Ancillary object, omnibus clause.
2
For Limited Liability Company: add; Capital (10k and 500k for private and public co
respectively), Subscription (which should be to at least 25% of the authorised capital).
For GTE: add; undertaking by members to contribute to the tune of their guarantee (which
should not be less than #10,000) upon winding up and a special clause that income would
be applied to promotion of its objects and not paid to members except as permitted by the
act. GTE is suitable for public spirited and CSR undertakings.
4. The Articles of Association: subject to the Memo-Edokpolor and Co ltd v Sem Edo
Wire Industries Ltd7. Can be adopted as in Parts I, II, III and IV of Table A Schedule 1
with necessary and permitted modifications-Section 34. The Article … and be divided
into paragraphs and numbered consecutively. May contain: interpretation, stipulations on
borrowing, meetings of shareholders and directors (quorum, voting, notice, proxy,
resolutions…) secretary, shares (like class right, variation, transfer restrictions,
transmission, increase, reduction) appointment (duties, remuneration, removal, tenure
and vacation of directors and auditors) common and official seal, dividend, financial
statements and accounts, winding up, etc.
The MEMO and Articles should be signed by each subscriber in the presence of at least
one witness and must be stamped as a deed-Section 27 and 34(4) respectively. Therefore
making it binding on the members-Yalaju Amaye v AREC Ltd [1990] 4 NWLR (Pt. 145)
422.
5. other documents required by the Commission like a copy of the information page of
the International Passport or National I.D Card of each director and subscriber, evidence
of proficiency, permit or license to operate, letter of consent from the AG where required
etc.
:: TAKE INSTRUCTIONS FROM CLIENT AND APPLY THE INSTRUCTION TO
PREPARE DOCUMENTS REQUIRED FOR REGISTRATION OF COMPANIES AT
CAC.
Note that formation of a company would involve:
- Taking instructions from promoters: The proposed name (and alternative name) and
type of company (Ltd, Ultd, Gte, Public or private), - The objects, sector and sphere of
operation, proposed address, capital, details of subscribers and first directors (like their
capacity, (age, mental, financial, fraudulent) address passport, TCC, professional
certificates), (foreigners/expartriates may need some regulatory permits), tax reliefs to be
claimed, fees, other matters). If professional, certificate of professional services
- Conduct Search in Registry and Reserve name (for 60 days).
7
[1984] NSCC 553
3
- Then prepare the statutory registration and incorporation documents discussed earlier.
- Next Stamp the necessary documents. (2 copies of MEMO, 2 Copies of Article and 2
Copies of the Statement of Authorized Share Capital8). Consent of the AG should be
obtained for Gte.
- Next you are to file the incorporation documents (together with proficiency/qualifying
certificate, means of identification, receipts for payment of stamp duties and other
documents) at CAC registry wherein it would be registered by CAC if fees have been
paid and the substantive and procedural laws have been complied with (as regards
capacity of parties concerned (18+9, sound mind, not bankrupt or in liquidation or
fraudulent, illegal object, conflicting name and so on.
Where CAC refuses to register10, an aggrieved applicant can ask CAC to apply to the
FHC within 21 days for directions-Section 36(2) CAMA. If after 21 days no positive
response from CAC, aggrieved can apply to FHC for determination of the complaint.
Court orders CAC to register.
This order is annexed to the incorporation documents and CAC is bound to register. Get
the procedure-CAC V Ayedun.
- Next you obtain certificate of incorporation from CAC. This certificate is prima facie
evidence of registration and compliance with the act.
Registration makes members a body corporate with powers and functions of an
incorporated company (perpetual succession, common seal, etc.
:: Restriction on Choice of Name: Section 30 and 579 CAMA:
The following names cannot be registered (Prohibited) Conflicting names; names that
are already in use, misleading, identical, offensive, contrary to public policy, a trademark
lacking the owner’s consent and any name showing ‘Chamber of Commerce’;
The following names cannot be registered without the consent of the CAC (Restricted):
National, Federal, Regional, Government11, Chartered, Municipal, Co-operative,
8
Although it appears that this one is no longer a part of the pre-incorporation document.
9
Unless there are two other adults. A corporate personality may join in formation of a company.
10
Maybe MEMOART does not comply with CAMA, Object is illegal, disqualified members (e.g. minor
or company under liquidation), prohibited/restricted names, non-compliance with other
requirements of law
11
and any other name that suggests government patronage
4
Group12/Holding13, Consortium14 Guarantee, Investment, Insurance are outside the scope

of registration.
 Compulsory Change of Company Name (Section 31 CAMA): - An identical name be
changed upon an application by first registerer to CAC within 6 months of second
registration. CAC will direct the second company to change its name within 6 weeks of
the application or pay N25 every day—same thing for trademarks.
- Regulation 10 Compaies Regulation 2012 also provides for power of CAC to cancel
name which approval was obtained by fraud.
:: IDENTIFY THE PROFESSIONAL RESPONSIBILITIES AND ETHICAL ISSUES
INVOLVED IN THE FORMATION OF A COMPANY.
WEEK 5
TOPIC: CHOICE OF BUSINESS AND NON BUSINESS ORGANIZATION AND
FORMATION (2).
:: SOLE PROPRIETORSHIP.
:: PARTNERSHIP. Not more than 20 else should be registered as a company except a
professional partnership. Sued thus: “{name of partners}--trading under the name and
style of {name of the business}”. The partnership agreement should be in writing so as to
negate certain common-law presumptions15.
The difference between partnership and Company can be found in cost, capital,
registration formalities, membership, liability, legal personality, capacity, borrowing
powers and dissolution.
Partnership has juridical personality but lacks perpetual succession or director.
Partnerships may be dissolved by acts of the parties, court or operation of law.
Annual Returns should be filed < 30th June.
:: BUSINESS NAME: PART B is the name or style under which a business is carried-
Section 588 CAMA.
12
For consent, they need evidence of existence of at least three sister companies associating to form
the group.
13
Applicant should provide evidence of at least two companies which are to become subsidiaries of
the holding company-338 CAMA.
14
Reg 22 Companies Regulation requires evidence of at least three companies forming the consortium
with resolution consenting to the consortium.
15
Like the presumption of dissolution upon death of a partner, that partner cannot be suspended or
paid salaries, presumption of equal contribution, equal sharing of profit and loss.
5
Administered by CAC registrar general of Compnaies as Registrar general of BN too-571

CAMA. There are BN Registries having offices in branches of CAC under Assistant
Registrars.
WHEN TO REGISTER BUSINESS NAME: a business name that is not the full name,
surname, and (or) initials, or surname of the business owner (s) must be registered within
28 days of commencing business16.
Partners who wish not to register must use their surnames, full names, or initials and
surnames only. If one partner puts forename and another puts surname or adds ‘&sons’,
the appellation must be registered17 by no more than 20 people Section 573 and 574
CAMA.
A company would be required to register its business name where there is an addition or
subtraction to the company’s registered name.
Registration NOT needed if a business is carried on by Receiver or manager appointed
by court (just put In Receivership) or addition merely indicates that the business is carried
on in succession (just add under new Management).
Note prohibited names discussed earlier. Also prohibited form registering are minors,
fraudulent trade practices, etc. 579 CAMA.
PROCEDURE FOR REGISTRATION OF BUSINESS NAME:
- Taking instructions: noting the name, type, principal place of address, full particulars of
partners/proprietor, date of commencement of business, postal address, (if company,
corporate name and registered office). Branches, whether the business is carried on as
agent, trustee, agent of a foreign concern, etc.
- Application for registration should be submitted to the registrar within 28 days of
commencement of business. With the above particulars (disclosed in the application) and
then signature18 of individual or each partner or director or secretary (though signature
may be dispensed with where necessary).
- In applying, the following should be attached; - Appication form CAC 1, CAC/BN/1,
Two passport photograph of each individual/proprietor, TCC of each individual or
partner, Qualifying Certificate for professionals, Any other document like Certificate of
Proficiency.
16
a non-lawyer/unaccredited person can register business name
17
The addition of ‘s’ after two surnames that are the same will not warrant registration, nor will a
business carried on in succession or by a receiver/manager.
18
For illiterates, a jurat should be included and then for minors, their signature should be countersigned
by magistrate, LP or police up to ASP.
6
- Business name is entered in Register and you are handed over a Certificate of
Registration. Domingo v The Queen on registration and registrar’s functions in
registration.
- Original certificate of registration is to be displayed in conspicuous part.
- True name be published in all trade Catalogues, business Letter, etc.
- Notice of changes should be lodged at the office where registration was effected. Once
they have terminated business, Registrar should be notified within 3 months.
Annual Returns to be filed not later than 30th of Each month. Registrar may refuse illegal
and fraudulent registrations.
Registration gives priority and raises a rebuttable presumption of partnership19 but does
not give legal personality20 -Domingo.
Note the relevant CAC Forms under Part B for registration of Companies21. They are
discussed at the end.
:: INCORPORATED TRUSTEE22: previously under the L(PS)A 195823 now Part C
CAMA. Any community of persons bound by custom, kinship or nationality or any
association established for educational, literary, scientific, social, development, cultural,
sporting or charitable purpose Section 590(1) may register. This may be summarised into
Religious Bodies, Clubs and Social Cultural Associations, Schools, foundations.
PROCEDURE FOR REGISTRATION OF INCORPORATED TRUSTEES: (SECTION
592)
After taking instructions;
- Application as in CAC/IT/FORM 1 in triplicates with details of the trustees of the
applicant body (name, residence, occupation, signature, etc.), name must contain
“Incorporated Trustees of …………..”.
- Application be accompanied by;
19
Nwankwo v Nwankwo
20
It appears default of registration of BN bars him from enforcing partnership right-584 and contracts
entered into during default are unenforceable but not void and disability can be remedied by order of
the High Court granted if satisfied that the default was accidental or inadvertent or order is deserving
and just.
21
CAC/BN/A1, A2, A3, A4, B1-6.
22
Trustees to take advantages of the incidences of incorporation. The Trustees must be persons with
legal personality not infant, unsound, bankrupt or convicted for fraud or offence involving dishonesty
within 5 years preceding his appointment. Useful where affins want corporate status, also professional
bodies like NBA, NMA, Foundations, and so on.
23
Although repealed, previous registrations are still valid S 612.
7
- CAC/IT Form 1 for availability and reservation of name, - 2 duly signed copies of the
Constitution stating its objects; Impression of the Common Seal of the Body, Evidence
of Ownership of Land or an undertaking in lieu to own land within 2 years of
incorporation. 2 passport photographs of the trustees, Trustees Declaration Form duly
sworn to at the High Court (that they are not disqualified from acting as Trustees under
the CAMA), document of proficiency, Original Receipt of payment of Prescribed
registration fees (20,000); duly signed copy of minutes of the meeting where the trustees
were appointed; copy of resolution adopting the special clause; evidence of advertisement
in 3 National Dailies.
Read up Section 596-603 very important. On change of name, effect of registration,
alteration, etc.
Effect of Registration: The trustees become a body corporate
Change of Name: resolution-> Trustees notify CAC, 28 days publication to entertain
objections-> New certificate with altered name.
Alteration of Constitution: by simple resolution of its members and approval of the CAC.
:: COMPLETE STATUTORY FORMS FOR REGISTRATION OF BUSINESS NAMES
AND INCORPORATED TRUSTEES.
:: IDENTIFY ETHICAL ISSUES ARISING.
NOTE: THE CONTENTS OF WEEK 6 WERE FUSED WITH THE CONTENTS

OF WEEK 4 AND 5.
WEEK 7
PRE-INCORPORATION MATTERS.
:: PROMOTERS: A promoter is one who takes part in forming a company. provided that
a person acting in professional capacity (like lawyer engaged to do the documentations)
would not be deemed to be a promoter-Garba v Sheba Int. (Nig) Ltd, Twycross v Grant.
Section 61 CAMA.
:: NATURE AND RELEVANCE OF PROMOTION ACTIVITIES: fiduciary. Relevance
is to float the company.
:: DUTIES AND LIABILITIES OF A PROMOTER:
Duties: Duty to account for money received during promotion: Duty to return secret
profits (they may keep it after telling the company). Duty to disclose all property and
8
information gotten for the company; duty to reveal conflicting interest and to ensure the
company is not exposed to loss or they will be personally liable Garba v Sheba Ltd.
Liabilities:  the company may institute an action for the promoter to render account of
money and property received during promotion, and to return secret profits. The company
may claim damages for exploitation of confidential information and fraudulent
misrepresentation; it can refuse to ratify pre-incorporation contracts showing conflict of
interest Section 62 CAMA. As once ratified (by general meeting after disclosure of
relevant facts by promoter), it may be estopped from going back but rather should sue
promoter for damages. There is no time limit to sue a promoter. a promoter who
committed an offence while breaching his fiduciary duty shall be suspended from being
director or manager of any other company for 10 years maximum Section 254 CAMA.
:: REMUNERATION OF PROMOTER.
Not automatic unless: - Authorised by Articles; - Mandated in Pre-incorporation
contract24; - Fees/agreement to be paid by the person instructing promoter to form the
company; - Receives commission on sales (if he is not a lawyer, R.7 RPC).
Promoter may also; resell the property; be given the option to subscribe to the company’s
shares; etc.
:: TYPES OF PRE-INCORPORATION CONTRACTS.
- Joint Venture Agreement.
- Memorandum of Understanding.
- Shareholder’s Agreement.
- Promoter’s/Directors Service Contracts.
- Payment of Promoters Expenses.
- Formation Agreement.
- Takeover agreement.
:: FEATURE OF PRE-INCORPORATION CONTRACTS.
A pre-incorporation contract is not binding upon the company unless it ratifies it upon
incorporation through its members in general meeting and after the promoter has
disclosed relevant facts to them.
24
This is risky because the ‘company’ does not yet exist in the eyes of the law
9
Until ratification, the promoter(s) is personally liable on the contract. Section 72

CAMA25 Garba v Sheba International (Nig) Ltd.
:: LEGAL RELATIONSHIP OF A PROMOTER WITH THE COMPANY.
He is not an agent or trustee but rather; he is a fiduciary.
Note that the State High Court presides over pre-incorporation matters.
:: RELATIONSHIP BETWEEN MEMORANDUM & ARTICLES WITH PRE-
INCORPORATION CONTRACT: Edokpolor Ltd v Sem-Edo Wire Industries (1984)
NSCC 553; (1984) 7 S.C. 119. The MEMO prevails over the ARTICLE which in turn
prevails over a pre-incorporation contract although pre-incorporation contracts can be
inserted in the company’s object clause in Memo to show a strong desire (rather than
bindingness) that the company should after incorporation execute/ratify the agreement
so included.
:: ETHICAL ISSUES INVOLVED.
WEEK 8
POST-INCORPORATION MATTERS.
:: PRELIMINARY STEPS BEFORE COMMENCING BUSINESS.
The law requires the company to do the following after incorporation but before
commencing business:
1. Publication of Name26: in its Name Plate, Common Seal and Official Documents
(including Bills of Exchange) (Section 548 1a-c). N100 and 500 fines per day
respectively.
Veil could be lifted on directors and shareholders.
2. Keep Statutory Books: at the head office of the incorporated company or anywhere
else within Nigeria after CAC has been notified.
:: RELEVANT STATUTORY BOOKS (WITH USES).
The Law mandates the Company to keep the following statutory books before
commencing business:
25
At Common law, there could not be ratification at all since the company was a non-entity during the
time of contracting-Kelner v Baxter (1878) 8 Ch.D3 88, Newborn v Sensolid [1954] 1 Q.B. 45, Societe
Generale Bank v Societe Generale Favouriser etc. [1995] 3 NWLR (Parrt 384) 497.
26
NB: name as used here refers to both corporate and trade name
10
a. Register of Members: Section 83 and 84 CAMA shows the names and addresses of
past and present members and the number and class of shares held by each member
entered within 28 days of the member acquiring shares.
b. Index of Members.
c. Register of Substantial Interest in Shares:
d. Register of Directors and Secretaries: S. 292 records particulars of past and current
directors and secretaries. Company notifies CAC 14 days within appointment or removal
of director or secretary.
e. Register of Directors’ Share Holdings:
f. Register of Debenture holders:
g. Register of Charges:
h. Accounting Records:
i. Minutes Book: (Section 241 CAMA) of meetings signed by the Chairman and secretary
may be physical or electronic.
: SIGNIFICANCE FOR DISTINCTION BETWEEN CORPORATE NAME AND
TRADE NAME.
Corporate name is the legal name the company registered with. Trade name can be its
alias or what people know it as.
A company should always be sued in its corporate else the action may be void. Bank of
Baroda v Iyalabami Ltd.
:: CORPORATE SEARCHES: conducted at the Companies Registry at CAC upon
application (maybe by letter or prescribed form) to inspect information contained in files
of company and (where necessary) obtain copies upon payment of prescribed fees.
Only CTC of such documents are admissible. A search report should be drafted to reflect
result of search endeavour to aid the inquirer to make an informed opinion. Search report
would come in handy in –confirming incorporation status of the company, opening a
Bank account for the company, granting loans by banks, due diligence/legal audit for
charges and dealing with co, etc., investigation of the company be CAC or other
regulatory agencies, for granting contracts, etc.
:: CONVERSION OF COMPANIES.
After incorporation, Companies may wish to convert based on any of the following
arrangements viz:
11
- Private to Public: this is done by the private company’s Board proposing the conversion
and authorising secretary to arrange GM and send notice of the intended special
resolution. At the GM, the special resolution is passed that it be converted to public.
Then it applies to CAC in a prescribed form (Section 50) signed by a director and
secretary. Attaching the –Special resolution, - Altered MEMO and Articles of
Association27; -A copy of the company’s balance sheet as at the date of resolution; - A
written statement on oath/statutory declaration by directors and secretary that the special
resolution has been passed and that the company’s paid up capital is not less than 25
percent of the authorised capital.
Then the company is to deliver a prospectus (or statement in lieu of prospectus) to the
SEC within 12 months.
A new certificate of incorporation is then issued.
- Public to Private: Section 53 CAMA. Same procedure as above (private to public) just
that 1. the alteration in the MEMO and Article should accord with private company
restrictions (on transfer and number as contained in Section 27 CAMA).
Members of the public co (of not less than 15% of total members OR shareholding ratio)
may challenge the special resolution at the FHC within 28 days after it has been passed28.
Provided they had not voted in favour of the resolution.
After the objection; the CAC should be notified forthwith and the CTC Order of the Court
(for or against the conversion) should be attached to other documents in the application
to CAC.
Note that special resolution be signed by director and secretary.
- Conversion of Co Limited by Shares (Ltd) to Unlimited (Unltd.): Section 51. Same
procedure as private to public just that instead of special resolution i.e. ¾ of the members,
here all the members of the company must assent.
All the directors must make a statutory declaration that (in actuality) all the members (Or
their duly empowered representative) assented to the absolute resolution. This is because,
the conversion makes the hitherto limited liability of the members now unlimited.
- Unlimited Co to Co Limited by Shares: Section 52 same procedure as private to public
(Just that the documents should be lodged within 15 days of passing the resolution)
27
Remember that the director should not be more than 70 years (except with notice) and the secretary
should be a professional upon conversion.
28
Note that after this 28 days grace (for objection), the company has 15 days to apply to CAC and
continue the conversion process.
12
Conversion of Statutory Corporation to company limited by Shares: handled by the

Bureau of Public Enterprises after obtaining Government White Paper to privatise. The
government interest would be converted to shares and sold to private investors.
The resultant consortium no longer uses the statute29 so it should prepare MEMOART
and send to CAC.
Note that:
- A company limited by shares can convert to unlimited but cannot subsequently convert
to ltd.
- An unlimited company cannot convert to a public company.
- An unlimited company cannot convert to a company limited by guarantee.
- Unlimited Companies can convert to Ltd but cannot convert back to Unlimited.
:: ALTERATION OF REGISTERED DOCUMENTS AND PROCEDURES.
A Co may wish to alter the contents of the MEMO and Articles of Associations.
** Alteration of contents of the MEMO is possible-Section 44 CAMA. May come in
form of:
- Alteration/Change of Name: Section 31 and 32 CAMA. The Board of Directors would
pass a resolution authorising change of name, there is a search for availability and
reservation of the name then the members pass a special resolution authorizing.
The company then make formal application to CAC attaching; duly authorised Form CAC
1; the notice of special resolution; Original Certificate of Incorporation; and altered
MEMOART reflecting the new name.
After registration/approval, the co then makes necessary changes to the company seal,
certificates, letter heads, etc. and advertises change in a circulating newspaper CAC
advertises the change in the official gazette of the FG.
Note that existing rights and obligations are not affected by change of name.
- Alteration of Objects Clause (46): Board pass resolution proposing alteration then
special resolution passed at GM of which at least 21 days notice in writing has been given
to all members30. 28 days is allowed for objection by holder(s) of not less than 15 percent
29
Nor enjoy pre-action notice protection
30
Whether or not they entitled.
13
members/debenture holders/issued shareholders to apply to FHC for cancellation of the

resolution31.
Afterwhich the company will deliver altered MEMO, a copy of the special resolution to
the CAC (if there was a challenge; attach the court order) within 15 days from resolution
or court order respectively. CAC may deliver printed copy of altered memorandum or
notice of rejection (if satisfied or not respectively). Aggrieved person may apply within
21 days (of receipt of notice) to the FHC.
- Alteration of Share Capital Clause: Section 45 (4) and 100-111). By ordinary
resolution32 and notification to CAC within one month.
: For increase; Board resolution for increase, then in duly convened GM where Ordinary
resolution to this effect is passed and notify CAC33 within 15 days of passing the
resolution.
The following should be attached; - A printed copy of the resolution should be attached.
- Statutory declaration verifying (that at least 25 percent of the shares have been paid up
at least 6 months before delivering the notice of increase).
Ad valorem Stamp duties would be paid on new shares. Copy of resolution and Certificate
of Increase should be annexed to MEMOASS.
: For Reduction 106: reduction may be done to protect creditors, third parties and maintain
capital. Articles of association must allow reduction and it should not be below the
statutory minimum.
Procedure is that: - Directors have resolution that share capital be reduced, - board
prepares proposed scheme of reduction, - duly convened GM (with notice explaining the
reduction), - pass special resolution approving the scheme, then order of the court
confirming the reduction and minutes of meeting of reduction. Both delivered to CAC
and certificate of such registration obtained. The approved minutes and order of reduction
are to be annexed to the MEMO.
For Amendment of provisions in Articles of Association: BOD pass resolution on
alteration, duly convened notice GM pass special resolution altering the articles, printed
copy of the resolution and articles as amended and stamped is delivered to CAC within
28 days of passing the resolution. Add evidence of payment of annual returns up to date.
:: ETHICAL ISSUES ARISING FROM POST INCORPORATION MATTERS.
31
Maybe on grounds of minority protection or non-compliance with condition precedents like notice.
These are because change of objects has far reaching effects.
32
Although in practice, special resolution is required by CAC (See Section 29 Companies Regulations,
2012.
33
Notice should have particulars of increase, class of shares affected, conditions.
14
WEEK 9
FOREIGN PARTICIPATION IN NIGERIAN BUSINESS SECTOR.
:: LAWS AND AGENCIES REGULATING FOREIGN PARTICIPATION.
S/N LAW REGULATORY PERMITS/APPROVA
BODY LS
1. Companies and Allied Corporate Affairs
Matters Act 1990. Commission.
2. Investments and Securities Securities and Exchange
Act 2007 Commission.
3. Nigerian Investment Nigerian Investment
Promotion Commission Promotion Commission
Act
4. Foreign Exchange CBN, Minister of
(Monitoring and Finance.
Miscellaneous Provisions)
Act.
5. National Office for National Office for
Technology Acquisition Technology Acquisition
and Promotion Act and Promotion.
6. Industrial Inspectorate Act Industrial Inspectorate
2007 Division (Federal
Ministry of Industry).
7. Immigration Act
8. Industrial Development
(Income Tax Relief) Act,
2014.
An Alien/non-Nigerian may invest in or participate in any enterprise here in Nigeria

except those in the negative list (i.e. production and dealing in arms, ammunition, Military
or Paramilitary uniforms, hard drugs, etc.) and subject to provisions of regulatory laws-
Section 20 CAMA, 17 NIPCA, etc.
** FIRST: The Company/Alien should make preparations: Like prepare necessary pre-
incorporation agreements (JVA,) considering feasibility, securing premises, stamping,
etc.
** SECOND: The Company should decide how it can participate.
15
** THIRD: If the company wishes to participate directly, it should Register with the CAC
(Check Week 4 discussed earlier on what this involves). Otherwise, it could go by way
of Foreign Portfolio Investment or apply for exemption.
A foreign company may participate through:
1. Foreign Direct Investment: if the co wishes to set up an endeavour in Nigeria/own
local productive assets (like Factories) it should be registered with the CAC and NIPC.
2. Foreign Portfolio Investment: by buying shares or bonds in a Nigerian company.
Note CSCS.
3. Foreign Exempted Company: Section 56 NIPCA These companies are exempted
from the requirement of registering locally. After applying for exemption (to the Secretary
to the FG with requisite particulars and procedures complied with). Honest and fully
detailed34 application for exemption to the President through the Secretary to the Federal
Government CURRICULUM MANDATES YOU STATE HOW SUCH EXEMPTION
CAN BE APPLIED FOR (STEPS)).These include:
- Foreign companies coming to execute a specified loan project either on
invitation/approval by FG OR on - behalf of a donor country or international organization.
- Foreign Companies which are engineering consultants and technical experts to execute
individual specialist project with FG or (if with individual) on authorization of FG.
- Foreign government-owned companies engaged solely in export promotion activities.
Exemption is for a particular duration and can be revoked. Such exempted companies
have the status of an unregistered company but can still sue and be sued in Nigeria.-
Section 60 CAMA. Ritz etc., & Co KG v TCE Nig Ltd 4 NWLR (Pt. 598) 298.
Watammal Singapore Ltd v Liz Olofin & Co. Ltd.
Where a co is not registered or exempted, it appears the contract would be valid but
unenforceable- Solanke v Abed
A co can receive correspondence, notices and documents preliminary to its incorporation-
UNIPETROL v AGIP Plc.
** FOURTH: The foreign company or individual should apply for other requisite permits.
1. Under the NIPC Act:
Apply for Business Permit35, Expatriate Quota and Pioneer Status, Technical Assistance
Agreement, and other Fiscal incentives. #10,000 for each application. Complete NIPC
34
Names and address of foreign and propsed local offices and officers, MEMART/constitution,
proposed endeavour and duration. Names and address of Nigerian Agent.
35
Given by Minister of Interior.
16
Form 1 and attach applicant’s (foreign Company’s) Memorandum and Articles of

Association, Partnership/JVA, 2 photocopies of application form payment receipt, TCC,
stamp duties receipt, feasibility report of proposed business, training programme for
Nigerian Staff, details of proposed directors, title deeds of land evidencing firm
commitment to acquire requisite business premises for company’s operations, expatriate
quota positions and qualifications for such position.
2. Under the Immigration Act: Apply for and get;
- Business permit (for foreigner to operate business in Nigeria) from the Minister of
Internal Affairs-Section 8 IA.
- Expatriate Quota/Work Permit: (from director of immigration… to be able to employ a
foreigner in Nigeria). It may be Temporary (for 5 years renewable for additional 2 years)
OR Permanent Until Reviewed (usually for Chairman or Managing Director). It is the
Employer Company that applies as in Immigration Form T/2 together with pre-
incorporation documents, personell policy of the co, TCC, business plan/feasibility
report-Oilfields Supply Centre Ltd v Johnson (No.2) [1987] NWLR 625, Oliver v
Dangote Industries.
-Residence Permit/Visa: to be able to stay in Nigeria for more than 3 months. Apply to
Director of immigration by letter (2 copies) accompanied by alien’s passport, letter of
employment, and a copy of his expatriate quota to the Immigration Department.-Section
10 IA who then grants Cable or STR Visa which is temporary or subject to regulation
respectively which should be regularised (within 3 months of the expatriate arriving
Nigeria) into– CERPAC: the Combined Expatriate Residence Permit and Aliens Card
was introduced in 2002 for foreigners (except ECOWAS citizens, accredited diplomats
and children below 15 years) in Nigeria to carry the card.
3. Under the Industrial Inspectorate Act: any person wishing to start a new undertaking
or incur additional expenditure of not less than 500,000 should notify the Director of
Industrial Inspectorate Division of the Federal Ministry of Industry-Section 3.
Application as in Form 1.
** FIFTH: Company should apply to SEC for the registration of security/investment-
Section 54 ISA. Section 8 ISA.
** SIXTH: To ensure guaranteed transferability and repatriation of funds, the investment
should be effected with foreign currency imported into Nigeria through an Authorised
Dealer who should issue a certificate of Capital Importation (enjoy repatriation,
domiciliary account, -Section 13,14 and 15 of Cap F34 lfn and 24 of Cap N117.
The company may also import capital through the debt-equity conversion programme
(implemented by the Debt Conversion Committee in CBN) by buying Nigeria’s debt
17
instrument at a discounted value (it appears the minimum consideration should be

$250,000) Certificate of Capital Importation is issued36
** SEVENTH: Contracts involving the transfer of technology (like use of trademark,
patent, supply of technical or managerial expertise/ assistance/ information/ engineering
or training of personnel) from a foreign party to Nigerian partners should be registered
with the National Office for Technology Acquisition and Promotion (through the Director
of NOTAP accompanied with CTC of the contract) within 60 days from execution or
conclusion of the agreement-Section 5 NOTAPA. Apply, pay Application fee, attach
MEMO, Article and CTC of the agreement, feasibility Study and annual audited account.
Can be rejected if the technology is already obsolete or common place in Nigeria or the
price is outrageous or provides that disputes should be submitted to foreign jurisdiction.
Non-registration does not vitiate contract but could frustrate free transfer of funds due
under the contract out of Nigeria.
** EIGHT: The Company should apply for the various incentives. Some of which
includes:
a. Pioneer Status: for 3 years (or further 2 years) tax exemption for new public companies
engaged in investment in industry or pioneer products37. For indigenous and foreign
controlled cos (150k and 5 Mil) respectively.
b. Tax Relief Under the Companies Income Tax Act: Section 23 and 29 CITA for
charitable/public spirited companies, -for exporting co (provided the proceeds of export
is brought back to Nigeria and used to purchase of machinery and equipment), -for first
6k of profit (Section 29 CITA), relief in respect of Commonwealth Income Tax Section
33, - Reliefs in respect of foreign loans38 and Bank Loans for Agriculture, Fabrication of
local machinery –Section 9 CITA… or loan to be used as working capital for cottage
industry established under the Family Economic Advancement Programme.
c. Duty Drawback/Suspension Scheme: which allows import duties on the following
endeavours to be refunded… Viz –Raw materials to be used in manufacturing goods to
be exported, - Paper for manufacture of educational materials, goods exported in the same
state as they were brought.
36
Just that repatriation would be postponed until after at least 5 years with only 20 percent exportable
per annum.
37
(e.g. agro allied export goods, solid minerals, exports, iron, steel, mining, limestone, industrial
chemicals, manufacture of machinery, book printing, cattle and piggery of not less than 500 herds,
manufacture of computer, tools, aircraft, communication equipment, manufacture of gas, bitumen, fire
fighting equipment, cables, medical equipment, mineral oil prospecting and production, lubricants,
oven, air-conditioners, alum, enzymes, concentrates, ICT, Estate development, utility services, (Section
22 Minerals and Mining Act, etc.).
38
Not less than N150k and more than 10 years. If 5-10 years, it is half of the interest that would be
deducted. It is the interest that is exempted from taxation.
18
D. Export Incentive Under the Export (Incentive and Miscellaneous Provisions) Act Cap.
E19, LFN 2004. They include: -Incentive to Compnay engaged in utilization of associated
gas, -3 years exemption from tax payment for investment in the Export Processing Zone
provided up to 75 percent of the proceeds get exported.
e. 7 years tax relief for Investment in economically disadvantaged areas, exemption for
local raw materials utilization.
f. Rural investment Allowance –Section 28 CITA. Tax deduction for expenditure incurred
on provision of facilities (electricity, water, etc.) in areas at least 20km from the nearest
one provided by the government.
g. Investment Tax Credit: 20 percent for Companies engaged in Research and
Development-Section 22(3) CITA. 25 for those engaged in fabrication of spare parts and
equipment for export or local consumption, 15 percent ITC for co which purchases locally
manufactured equipment for its business
h. Double Taxation Treaty agreement. Section 44 CITA
Other Guarantees to encourage foreign participation include: - Full transferability and
repatriation of funds and assets, - Assurance against nationalization else prompt and
adequate compensation, - Promise on quick and effective ADR.
** NINTH: Where there is a dispute, the parties should try and amicably settle… failing
which it would be submitted to Conciliation and Mediation and then to Arbitration which
may be subject to the ACA, Multilateral/Bilateral International Agreement or other
International Machinery for the settlement of investment dispute agreed on by the parties.
Failing which, the International Centre for Settlement of Investment Dispute Rules would
apply-Section 26 NIPCA.
Note that other sector specific licenses and permits should also be obtained.
::DRAFT DOCUMENTS / APPLICATION FOR EXEMPTION.
WEEK 10
CORPORATE GOVERNANCE 1.
TOPIC: LEGAL FRAMEWORK, CONCEPTS AND INTERNATIONAL BEST
PRACTICES IN CORPORATE GOVERNANCE.
:: MEANING AND RELEVANCE OF CORPORATE GOVERNANCE: mechanism of
internal and external control of the actions of organs of a company to promote integrity,
transparency, ethical behaviour, etc.… for the ultimate benefit of the stakeholders. Caters
for interplay of interests of various company stakeholders.
19
:: LEGAL FRAMEWORK AND CODES OF CORPORATE GOVERNANCE IN

NIGERIA. Evolved based on a series of CG theories.
1. Code of Corporate Governance for Public Companies39: by SEC in 2003 now 2011
version. Certain issues like composition and responsibilities of the board (in a way to
ensure diversity, experience, diligence and independence), Chairman (who should be a
non-ED and shall not be CEO), Multiple Directorship should be disclosed to prevent
reduced conflict/divided dedication, Not more than 2 members of the same family should
sit on the board of public companies at the same time-Article 7.1, Board should meet at
least 3 times a year and carry shareholders along, empathy, disclosures, whistle blowing
on unethical behaviours and illegalities
2. Code of Corporate Governance for Banks and Discount Houses 2014 (initially
2006 then 2013). Strict adherence to laws. Similar to discussion above especially directors
and whistleblowing, MD/CEO be separate. Non-ED serve 12 years maximum at 3 per
term, MD/CEO serve 10 years maximum at 5 per term, remuneration should not be
excessive. See whole of Article 2, 3, 4 and 5 of the Code.
3. Code of Corporate Governance for Non Profit Organisations 2013
4. Code of Corporate Governance for Insurance Industry in Nigeria by NAICOM 2009.
5. Code of corporate governance for pension operators 2008 by National Pension
Commission (PenCom).
6. Code of Corporate governance for Telecommunication Operators 2014 by NCC.
: In the international Level, we have:
- Code of the Organisation for Economic Co-operation Development (OECD) September
2014. Which principles are, ensuring the basis for an effective CG Framework
(transparency and efficiency), Rights of Stakeholders and equitable treatment of them,
integrity and due diligence.
:: THEORIES AND INTERNATIONAL BEST PRACTICES OF CORPORATE
GOVERNANCE. (CURRICULUM NOTES AGENCY THEORY, ECONOMICS
THEORY THEN IN BRACKET (STOCKHOLDER AND STAKEHOLDER
THEORIES).
- The Stockholder/Shareholder Theory: maximisation of profits/returns of investment for
the shareholders should be the main aim.
39
Applicable to all public companies and Companies whose securities are listed on any recognised
securities exchange in Nigeria and those seeking to raise funds from the capital market.
20
- The Stakeholder Theory: that ethical considerations mandates interests of entities which
(in one way or the other) impact on the success of the company should be catered for to
ensure long term growth and interest of the company.
- The Agency Theory: that the officers of the co are its agents who carry out its wishes.
:: CSR AND ITS IMPACT OF CORPORATE GOVERNANCE.
:: ETHICAL ISSUES IN CORPORATE GOVERNANCE.
WEEK 11
CORPORATE GOVERNANCE (2): OFFICERS OF THE COMPANY-(DIRECTORS
AND SECRETARY).
:: WHO ARE DIRECTORS? They are persons appointed by the company to direct and
manage the business of the company-S 244 CAMA. Not servants per se but alter ego-
Yalaju Amaye v AREC Ltd.
:: TYPES OF DIRECTORS: we have;
- Shadow Director; not formally appointed but the BOD is accustomed to obey his
instructions and directions. Removal implied upon BOD’s disobedience.
- Executive Director; responsible for day-to-day running…
- Managing Director; A director appointed by the Board delegating its duties to it-
Yalaju Amaye v AREC Ltd
- Alternate Director; a person appointed by a director to sit on the board in his place. A
representative/nominee director is appointed by a company-director.
- Life Director: is not subject to retirement by rotation but may be removed under Section
262 and vacation of office under Section 258.
- Chairman of the BOD: is also the chairman of the co and presides over BOD and GMs
(another person presides where he is up to 5 minutes late (for GM it is one hour).
Appointed by BOD.
:: DUTIES OF DIRECTORS: the first meeting of the board must be held within 6 months
of incorporation-Section 26340. Resolution in writing signed by all directors can may
suffice.
40
To usually deal with sighting incorporation documents and CofI, election of Chairman, MD,
Secretary40/Legal Adviser, Bankers of the Company and Signatories of the Co, Auditors, allotting
Shares and approve previous allotment of shares, adopting Common Seal, fixing period of future
meetings.
21
Quorum generally is as prescribed by articles OR two (or at least 1/3rd of total number if
they are more than 6 directors)-S 26441.
Section 282 provides that every director of a company shall exercise his powers and
discharge the duties of his office honestly, in good faith42 and in the best interest of the
company43 and shall exercise that degree of care, diligence and skill44 which a
responsible, prudent director would exercise in comparable circumstances.
Therefore, by connotation, the directors are trustees and agents of the company saddled
with the duty of care and other fiduciary duties-Section 283.
:: APPOINTMENT OF DIRECTORS:
First directors may be appointed in writing by the subscribers of the MEMO or named
in the Articles of Association (Section 247). Subsequent directors are appointed by
members in general meeting45 (or other person authorised by articles). Where all
shareholders die all their personal representatives (or creditors where PR fail) would
apply to court for an order to convene a meeting of all personal representatives of the
shareholders.
RESTRICTIONS
41
Quorum should be maintained throughout the meeting unless articles allow otherwise. If there is no
quorum within 1 hour it shall be adjourned for one week at the same place and time and on the adjourned
date any two or more persons may form quorum and may take decisions to bind the company. If only
one member is present, he may seek direction of the court to take a decision.
42
This would include the 1. duty not to make secret profits: or gain unnecessary benefits or bribery.
The only way to be exculpated is that such gains should be disclosed to the board who approves it and
enters same in the minutes book of directors (it isliek such must be made before making the secret
profit not after)-Section 280 CAMA. Otherwise, company can sue him to recover the benefit-Regal
(Hasting) Ltd v Gulliver.2. Duty not to fetter his discretion to vote in a particular way except with
consent of the company, etc.
43
This would include 3. Duty not to allow personal interest conflict with duties and responsibilities
to the company-Section 280 CAMA. Where this is the case, Section 277 allows him exculpation if he
discloses the nature of his interest in at a meeting of the directors of the company. else punishment
of N100. Although GM may use it as a ground to remove erring director. 2. Duty not to exploit
corporate Assets and Information: also on officers both during and after employment. 3. When he
has multiple directorship, he should ensure his dedication is still unflinching as such multiple
directorship does not exculpate him-Section 281 Lord Denning in Scottish CWS Ltd v Meyer.
44
At common law, the standard was subjective (that reasonably expected from a person of his
knowledge and experience)-Re City Equitable Fire Insurance Co per Romer J. However, CAMA makes
it objective Section 282 CAMA above imposes that which a responsible and diligent director in like
circumstances would apply-Delta Steel Nigeria Ltd v American Computer Tech Inc. this is because of
the far reaching effect their acts could have on the co. Director can delegate his duties but shouldn’t
be an abdication.
45
A private co may do so in a single resolution but a public co must appoint one director at a time or
unanimously appoint at once.
22
An infant, lunatic, insolvent, fraudulent, corporation… is disqualified from appointment

as a director. A person above 70 years should not be appointed director of a public
company except by special notice of his proposed appointment disclosing the age-Section
257
VACATION OF OFFICE: Director should vacate his office where he cannot meet share
qualification, become bankrupt, Section 254 things, becomes unsound or resigns his
office by notice in writing Section 258.
:: ELECTION OF DIRECTORS: by ordinary resolution in GM except articles provide
otherwise.
But bod can appoint someone to fill casual vacancy46 pending next AGM to ratify.
Remuneration is not compulsory but Remuneration of directors can be determined from
time to time by the general meeting or may be fixed by the articles and such is a debt…
amount alterable only by special resolution. Also, although remuneration not mandatory,
directors should be refunded for expenses properly incurred.
:: RETIREMENT/ROTATION OF DIRECTORS: At the first annual general meeting, all
directors (except life directors) shall retire from office and in subsequent AGMs, 1/3 shall
retire based on first in first out principle-259.
A retired director is considered re-elected unless there is a resolution expressly rejecting
him and another director is elected in his place47 OR another was nominated or
recommended for appointment in his place.
A new director must be nominated (recommended) by the directors or a member qualified
to vote at the meeting of his appointment. In the latter case, he is to leave a signed notice
of his intention in this regard at the registered or head office of the company within 3-21
days before the General Meeting. The proposed director will also submit the notice of his
willingness to be elected.
:: REMOVAL OF DIRECTORS: Generally, Longe v FBN. Iwuchukwu v Nwizu a
company (through general meeting or requisition) may by ordinary resolution, remove a
director at any time notwithstanding anything in the articles or an agreement to the
contrary-Section 262 CAMA. Provided due process is complied with.
Removal by Company: First; the person seeking his removal should issue special notice
of the resolution to the company at least 28 days before the date of the meeting. The
secretary upon receipt would transmit to director and intimate in notice of meeting (with
directors representation accompanied where any). At the meeting director should be heard
46
This vacancy arises from death, resignation, retirement or removal of a director
47
This replacement’s tenure is merged with the removed’s.
23
and then an ordinary resolution is passed removing director. CAC is notified within 14
days by filling Form CAC 7 (particulars of directors and change therein).
The vacancy created at the meeting can be filled at the same meeting if prior notice was
given of such.
Director is entitled to: - Compensation for wrongful removal, - Declaration of nullity, -
Order of reinstatement, - Compensation for breach of contract and loss of office.
Removal by Members: Requisition: shareholders of at least 1/10th paid--up capital (or
voting right) send special notices of 28 days to the directors asking to remove one of
them and for a meeting in that regard to be summoned by them (BOD); directors must
respond within 21 days.
If directors do not respond, a simple majority of requisitionists will hold a meeting for
removal within 3 months (after the 21 days of sending the notice… after sending at least
28 days notice to the company accompanied with proposed resolution and notice of the
requisitioned EGM. Director can respond.
If the requisite quorum is not present within one hour of this meeting, the meeting will
be dissolved (not adjourned) and the expenses of the meeting be deducted from the pay
of the directors.
If the quorum is formed, the written representation/defence of the director is read or
circulated to which the affected director answers questions.
Simple majority can then remove the director and elect replacement. Such should be
notified to the CAC within 14 days48.
Removal by regulatory Authority: Section 33 and 35 BOFIA allows CBN
:: COMPANY SECRETARY: (S 293). Services the board and takes care of day to day
running. Can also be a director but acts required to be done by a director and secretary
must be done by separate persons. E.g. signing of certain documents. Oke-Owo v
Migliore. He should have requisite experience to discharge functions of a secretary.
Additionally, secretaries of public companies must; be a member of the Institute of
Chartered Secretaries and Administration OR a Legal Practitioner OR a member of the
CAN OR 3 years (within last 5 years) secretary of Public Company, Company or firm of
secretaries, legal practitioner or Accountants. Then be accredited with CAC
:: APPOINTMENT OF SECRETARY: by the BODirectors and may be removed by
BOD.
:: DUTIES: Attending Board, Member and Committee meetings and rendering secretarial
duties, advising on compliance and applicable rules thereon. Like logistics, agenda,
48
The various resolutions used should be annexed to the cac 7a.
24
counting show of hands. He maintains registers and other statutory books/records.

Keeping the CAC informed/intimated (of court orders, change in particulars of directors,
charges, resolutions, annual returns, return of allotment, alterations, statutory reports,
returns on auditors, receivership, winding up, etc. note the period to file each. He/she also
carries out such other administrative or secretarial duties necessary. 298 CAMA.
:: DUAL STATUS: A person can be both director and secretary in the same company,
but cannot sign documents in both capacities or do a thing required to be done both by a
company secretary and a director Section 294 CAMA.
 Status of Company Secretary: is a principal administrative officer whose due duties
should not be interfered with. Barnett Hoares’s case.
:: REMOVAL OF SECRETARY: he should be given notice (informing him of such, the

ground and giving him not less than 7 working days within which to make his defence or
resign)-296. Failing which board may remove him and make a report to the next GM. But
if he makes a defence, the board considers if it is sufficient. If not, he can be removed if
the misconduct complaint of is gross. Where it is not fraudulent or serious, then he can
only be suspended and then removed with approval of the GM. Notify CAC within 14
days as in form CAC2.1
WEEK 12- CORPORATE GOVERNANCE (3): MEMBERSHIP, MEETINGS &

RESOLUTIONS.
:: IDENTIFY VARIOUS WAYS OF ACQUISITION OF MEMBERSHIP OF
COMPANY. From Section 79 CAMA, members include;
-Subscribers to the Memorandum of the company. who are automatic members and the
Register of members should reflect.
- Others who agree in writing to become a member: These include those that become
members by 2. allotment49, transfer of shares or transmission (of shares of deceased
shareholder)… provided in all these instances, their names are entered in the register of
members.
Each member should be a shareholder and hold at least one share (for co’s that have
share).
49
i.e. allocation of specified number of shares upon application to be accepted within 42 days and
applicant intimated
25
Rights of Shareholders: are determined by Section 114.

Shareholders are entitled to; receive notice of meeting, attend and vote thereat; right to
dividend when declared; right to company assets upon winding up Kotoye v Saraki.
Duties: He is to pay the amount unpaid on shares he holds50, and to receive dividends
lawfully.
A person entitled to have his name registered should notify the co failing which he sues
in FHC to have his name entered in register.
Note that he can also proceed (as beneficial owner) against the transferor (registered
owner) for benefits and dividends derived.
A person entitled to have certificate can demand for it and if no response after 10 days
sue (by Originating Summons supported with verifying affidavit showing chronology of
facts and necessary documents) in FHC for recovery of certificate with damages for
detinue.
:: IDENTIFY TYPES OF COMPANY MEETINGS: company meetings may be
Statutory, Annual or Extra-Ordinary.
1. Statutory Meeting Section 211: a public company must hold this meeting within 6
months from the date of its incorporation… usually to consider; issues in respect to
company’s formation, commencement of business, Statutory Report51 (which must have
been served on members at least 21 days before the meeting and to be delivered to CAC
else may be a ground for petition for winding up of the company), etc. there is a N50
penalty for every day of default.
2. Annual General Meeting: held annually (not more than 15 months must elapse between
each… extendable by not more than 3 months by the commission) but the first AGM may
be held within 18 months of incorporation. 213. 21 days notice. Needed.
3. Extra-Ordinary General Meeting: held at any time to deal with matters that cannot wait
until the next Annual General Meeting. It may be called by Directors (Board or one or
more) or requisitioned by Members of not less than 1/10 paid up voting share capital
where directors fail to call after 21 days from deposit of notice of requisition52 or by the
Court (pursuant to application by PR of Directors or Shareholders (where they dead) or
Creditors (where PR’s refuse to act). All Businesses transacted in EGM are deemed to be
special.
50
Purchasers of shares by SATT are liable to pay any amount unpaid on them.
51
Contains share allotment details, names address and descriptions of directors, auditors, secretary,
particulars of commission or brokerage paid, receipts of the company so far.
52
Where no quorum is met within one hour, that is the end of the matter and there can be no
adjournments.
26
4. Court Ordered Meeting: where it is impracticable or impossible to call a meeting.

Ordered on application of directors or a person entitled to vote53 at such meeting Okeowo
v Migliore
Ordinary Business may include; declaration of dividend, presentation of financial
statement, directors report54, Auditors report, rotation of directors, appointment and
remuneration of auditors).
Special businesses may include;
:: TYPES OF RESOLUTIONS. Ordinary (at least 50 percent), Special (at least 2/3rd)
:: ETHICAL ISSUES IN COMPANY MEMBERSHIP, MEETINGS AND
RESOLUTIONS
:: PREPARATION OF MEETINGS AND PROCEEDINGS OF MEETINGS.
Venue: SGM and AGM must be held in Nigeria Section 216.
Notice (218-222): to adequately inform the members of the kind of meeting, venue, time,
agenda, items to be discussed, special resolution(s) (if any), etc.
For AGM notice should be served at least 21 days to the date of meeting. But shorter
notice may be given if all members entitled to attend and vote agree so. For other
meetings, 95 percent holders with right to attend and vote at the meeting. Note that public
companies should additionally advertise notice of meeting in at least one daily newspaper
21 days to the meeting.
Failure to give notice invalidates the meeting at the instance of the person entitled to
receive notice of it. Accidental omission to give notice may be pardoned.
Quorum 232: the minimum number of members to be present before meeting can
commence should be determined by articles but where articles are silent, 1/3 or 25
whichever is less.
Voting (224): is by show of hands except a poll is demanded55. The right to poll may only
be taken away on issues of election of a chairman or adjournment. In other matters, the
right to demand for poll cannot be taken away not even by articles.
Where resolution tallies, chairman is entitled to a second/casting vote to break the tie.
53
Note that persons entitled to attend meetings (every member, legal representative, director,
auditor, company secretary) should get notice of the meeting. Failure to serve notice may invalidate
meeting at the instance of the aggrieved party except it was an accidental ommission.
54
On how the company has been faring.
55
Poll can be demanded by chairman, at least 3 members or holder of not less than 1/10 th of total
voting rights or fully paid up shares
27
Proxy: may be appointed by a member to represent him and act in his stead at meeting.
While a company appoints a representative56.
Resolutions: decisions are made by the company through passing resolutions at the
general meeting.
Resolutions may be ordinary or special. The former requires simple majority while the
latter requires at least ¾ majority of votes.
For private companies, written resolution signed by all members can be valid as if passed
in General Meeting-234.
Where a resolution requires special notice, notice of intention to move it should be given
to the company which in turn gives at least 21 days-notice to members.
Certain resolutions (special resolutions, unanimous resolutions, voluntary winding up
resolutions) should be registered with CAC within 15 days of passing it.
Minutes of meeting: records of proceeding of GM, BOD meetings, Management
Meetings… must be kept at the company’s registered office and be available for
inspection. International Agricultural Industries (Nig) v Chika Brothers Ltd.
Class meetings: may be held by a class of the company’s shareholders. The afore-
discussed also apply.
:: ETHICAL ISSUES INVOLVED IN COMPANY MEMBERSHIP, MEETINGS AND
RESOLUTIONS.
WEEK 13- CORPORATE GOVERNANCE 4: FINANCIAL STATEMENTS, AUDITS

AND ANNUAL RETURNS.
GENERAL OVERVIEW OF AUDIT, FINANCIAL STATEMENTS AND ANNUAL
RETURNS.
Every company should keep accounting records which should contain daily entries and
receipts and a record of assets and liabilities of the company such that can explain/disclose
its financial position and activities as a going concern. Section 331. Should be ordinarily
kept in registered office and preserved for up to 6 years from date made.
:: IDENTIFY VARIOUS ASPECTS OF FINANCIAL STATEMENTS. 336 334. It
should give true and fair view of state of affairs. It is an offence to lay false FS.
56
A co ltd by guarantee needs its articles to authorise it before it can accept proxy since there is really
no share proportion like that.
28
Financial Statement comprise:

- Statement of Accounting Policies.
- Balance Sheet (as at the last day of the year);
- Profit and Loss Account (for non profit company it would be income and expenses for
the year);
- Auditor’s Report.
- Directors’ Report.
- Statement of Source and application of Fund;
- Value Added Statement for the year;
- Five year Financial Summary.
- Group financial statement (for a holding company).
Private cos do not need to show Accounting policies, statement of application of funds or
Five year financial summary.
:: PERSONS ENTITLED TO RECEIVE FINANCIAL STATEMENT, AND
CONSEQUENCES AND REMEDIES FOR BREACH.
The directors must (not later than 18 months from incorporation and subsequently at least
every calendar year) lay before the company in general meeting copies of the financial
statement. Shareholders, debenture holders and other persons that may be entitled have a
right to obtain a copy and can demand in this regard which should be complied within 7
days.
On publication of financial statements see Section 345 and 355 CAMA.
:: APPOINTMENT OF AUDITORS: first auditors can be appointed by the directors
(usually in BOD first meeting) to hold office until conclusion of the First AGM where co
may replace them with another who has been nominated for appointment by any member
and notice of whose nomination was given to the members not less than 14 days before
the date of the meeting.
Auditors as used here refers to independent external persons who verify financial status
of the co. As distinct from internal auditors. Auditor has right to attend the company’s
meetings.
Auditors hold office till conclusion of next AGM-357 to be automatically reappointed
except he is not qualified for reappointment or resolution appointing another person in
his stead or rejecting his re-appointment, or he has given the co notice of his unwillingness
to be re-appointed. 357.
29
Special notice is required for a resolution at general meeting for appointment of new
auditor, filing casual vacancy, re-appointing director appointed by directors to fill casual
vacancy, removing an auditor before the expiration of his term of office.
Auditors are not paid by the company but entitled to sitting allowance.
:: DUTIES AND LIABILITIES OF AUDITORS. Sequel to the inspection and
examination, the auditors are to make an auditor’s report which would be laid before the
members of the company which should not be negligent else liability may arise. For
public co, similar report should be made to the audit committee. 359.
:: RESIGNATION AND REMOVAL OF AUDITORS. Section 362, 365 and 366. Can
be done by auditor giving notice to registered office of co or ordinary resolution of which
special notice was given. In all, CAC be notified within 14 days. Removal is by ordinary
resolution of which special notice was given and CAC be notified within 14 days. He may
be entitled to compensation/damages for termination of his employment.
:: COMPOSITION AND FUNCTION OF AUDIT COMMITTEE (359)
Made up of directors and shareholders on equal representation subject to maximum of six
members. Mandatory in public companies. A member of the committee may be re-elected
annually.
FUNCTIONS include: - authorise auditors to carry out investigation, scrutinise auditor’s
report and make recommendation thereon, -ascertain accounting and reporting policies
are ethical and in compliance with legal requirements, -look at external auditors
findings/reports, -ascertain effectiveness of the company’s system of accounting and
internal control, - make recommendation to the board on appointment, remuneration
authorization and removal of external auditors. The CCG 2011 advocates for integrity
and diligence.
:: FILING OF ANNUAL: Annual returns should be completed within 42 days after the
AGM and a copy (signed by both a Director and Secretary) must be filed with CAC once
at least in every year except company did not hold meeting in the said year. 213 CAMA
Form CAC 10 (Annual Returns Form)57.
:: ANNUAL RETURN FORMS: Are provided in Schedule 8, 9 and 10 for companies
having share capital, small company, co. ltd by guarantee respectively.
Annual return should contain address of registered office (certificate number), situation
of register of members and register of debenture holders, summary of share capital and
57
The obligation to file is also on BN, IT to confirm that they are a going concern. IT files every June
30th or December 31st.
30
debentures, particulars of indebtedness, list of past and present members, particulars of

directors and secretary.
Other than ultd and small companies, Section 77 requires The following documents to be
annexed to the annual return;
- CTC of every balance sheet certified by Director and Secretary, Profit and Loss account
laid before company in GM held in the year to which the return relates, auditor’s report
(certified by director and secretary) and the report of the directors accompanying the
balance sheet.
Annual returns of private companies would be accompanied by certificate by director and
secretary to the effect that the co has not since the date of incorporation or last annual
return issued any invitation to the public to subscribe for any share or debentures of the
company. Anonther certificate should be given if the number of members exceeds 50.
:: CONSEQUENCES FOR FAILURE TO FILE ANNUAL RETURNS: Penalty fine of
N1000, - It is an offence to which the veil may be lifted on Directors. – Striking off a
company’s name for being defunct58,- CAC can enforce compliance by giving 14 days
notice and petitioning the court to compel the company to comply, - Petition from
Members and Creditors to company to comply.
:: FILL ANNUAL RETURN FORMS.
:: ETHICAL ISSUES ON PUBLICATION OF FINANCIAL STATEMENT.
WEEK 14- CORPORATE GOVERNANCE 5:

MAJORITY RULE, MINORITY PROTECTION AND INVESTIGATION OF
COMPANIES.
:: THE PRINCIPLES OF CORPORATE SOVEREIGNTY AND THE RULE IN FOSS
V HARBOTTLE. Pursuant to the notion that a company is a separate entity (as upheld in
Salomon v Salomon and Section 3759), The principle in Foss v Harbottle stipulates that
only the company can ratify an irregularity or sue to remedy a wrong done to it. Yalaju
Amaye v AREC. Edopkpolor and Co v Sem-Edo Wire Industries Ltd.
58
CAC first writes to the co to confirm whether it is still a going concern within one month then a
second letter allowing one month again and referring to the first letter and stating that it would
publish a notice in the Gazette with a view to striking off the name from the register and actually do
so if no response letter. An application can be made to the FHC within 20 years from striking out for
an Order restoring after convincing the court that the company was carrying on business
59
Veil would be statutorily lifed where number of members is below legal minimum, directors is below
2, Fraud by officer of a company, misappropriation of loan/money-Section 290 , investigation into
related companies, political donations, etc.
31
:: MAJORITY RULE: majority carries the day. Usually by resolutions.

:: MINORITY PROTECTION. In certain qualified instances.
:: WAYS MINORITY PROTECTION ACTIONS CAN BE
CONSTITUTED/FORMULATED.
1. Members’ Direct Action (Section 300) for Injunction or Declaration to restrain: - the
company from entering illegal or ultra vires transaction, the company from circumventing
special resolution (Edwards v Halliwel), - any action affecting the applicant’s individual
right as a member, -committing fraud on the company or minority shareholders (Cooks v
Deeks), -where a co meeting cannot be called in time to redress the wrong, -where
directors are likely to have profited from their breach or negligence.
2. Representative Action: members who share common interest in the matter can with
leave of the court nominate person(s) to represent them in court.
 3. Derivative Action: bring an action in the name or on behalf of the company-Section
303. By originating summons with leave of court, verifying affidavit, and written
address. The affidavit must show: the directors of the company who are also wrong doers
refused to address the illegality after notice; a notice of intention to approach the court
was given to the directors; the applicant (who may be a past or current member or director)
is acting in good faith and in the interest of the company. The company and directors
should be joined as defendant.
AGIP Nigeria v AGIP Petroli International.
4. Petition for a relief on the Ground that the affairs of the company are being conducted
in an oppressive and Unfairly Prejudicial manner60.
5. Winding up on Just and Equitable Ground.
5. Application to CAC for investigation of the Company.
:: INVESTIGATION OF A COMPANY AND IMPORTANCE OF INVESTIGATION.
The CAC can investigate into how the company’s affairs are being run to ensure good
practices.
:: PROCEDURE AND CONSEQUENCES OF INVESTIGATION.
a. Investigation could be instigated or initiated pursuant to (314 and 315):
- application/petition of Members of not less than 25 percent shareholding or number (for
co without shares), - application by the company itself; - Court Order or Commission on
60
A member, director/officer (present and past), a creditor, CAC or other person permitted may apply
by petition.
32
its own volition/discretion on grounds of fraud, unfairly prejudicial conduct, illegality,

misfeasance, unfairness to members, etc. Spectre v Stabilini Visionini Ltd.
b. Competent inspector(s) is/are to be appointed and shall make a report.
c. The CTC of inspector’s report can form basis or evidence of CAC’s bringing civil
proceedings on behalf of the company or winding up petition and Criminal proceedings
by the AG Section 321-325. The commission can also conduct investigation on the
company’s ownership and determine the true persons in control or financially interested
in the success or failure of the co Section 326.
WEEK 15- TOPIC: COMPANY SECURITIES 1

SHARES & DEBENTURES AND ENFORCEMENT OF SECURITIES.
Company securities consist mainly of shares, stock61, bonds and debentures which are
transferable choses in action-Okoya v Santili
:: TYPES OF SHARES WITH THE RIGHTS/OBLIGATIONS ATTACHED.
The general rule is one share one vote but such can be varied provided in accordance with
the Act S 11662.
The types of shares include:
- Preferential Shares; entitle the holder to a fixed dividend no matter how well or sadly
the company has done. Preferential shareholders have priority over other shareholders.
Unpaid dividends will roll over/accumulate to the next/subsequent year(s) until dividends
are paid as preference shares are considered cumulative.
- Ordinary/Equity: and their holders are known as the risk-bearers because they get no
dividend when the company has made no profit but get exponential profit if the company
has had a very good year.
- Deferred/founders share:
:: METHOD AND PROCEDURE FOR ACQUISITION OF SHARES.
- Subscription: Signing to the memorandum of association and taking at least one share
and having name put in the register of members.
- Issue of Shares: by the company in accordance with the articles. The shares may be
issued at a premium (price higher than its nominal value) provided such sums received
61
Shares v Stocks: shares are a member’s interest in the company’s capital. Stocks are groups of shares
forming the company’s capital.
62
For example; Section 143 entitles preference shareholders to more than one vote.
33
on such issue are transferred to the share premium account to be applied for only the
purpose listed in s 120(3). Section 120. The shares may be issued at a discount-121.
- Allotment of Shares (124 and 125): by the company after -an applicant has applied for
a particular number of shares in writing and signed and -company through its BOD or
Allotment Committee considers such applications; -within 42 days notifies applicant of
regret/allotment of the said shares to him, -prepares share certificate (which should be
ready for delivery within 2 months from allotment) and enter allotee’s name in the register
of members. Okoya v Santili.
Company then files Return of Allotments (Form CAC 2.A) within one month of
allotment-S 129.
Note that if shares were issued for a consideration other than cash, the consideration
should be valued by an independent valuer and CAC 2.5 should be filed which shows the
agreement and particulars of valuation, application may also be made under the Industrial
Inspectoral Act where consideration is more than 500k.
The directors may call on the allotee to pay full price of shares-S 133. Company can have
lien on share not full paid and may sell to another where allotee refuses to honour calls
(and he is notified in the calls that he would forfeit). S 140.
- Transfer of Shares (151-157): by a holder of the shares to another. Effected by delivery
of a proper instrument of transfer (duly executed by the transferor and transferee)
alongside the share certificate to the company which registers the transferee in the register
of members- Starcola (Nig) Ltd v Adeniji.
Where more than one transferee or a part of the share is given, then “certificate lodged”
is endorsed on the instrument. This right may be restricted by articles especially for
private companies See Section 22. Okoya v Santili on all on shares.
- Transmission of Shares: the shares of a shareholder who dies can be vested in his PR
(upon production of probate of will or letters of administration) or on his survivor (in the
case of joint ownership of shares. Section 155 Tika Tore Press Ltd v Abina.
The PR would elect (within 90 days) whether to have his name or another person’s name
(usually beneficiary) entered in the register of members. Failing which (after due notice)
all benefits and dividends on the shares would be suspended until he elects-155 CAMA.
The interest of a beneficiary is equitable until he is registered as a member.
A person claiming interest in the shares can serve upon the company a notice and affidavit
of interest and can also petition the FHC for an order of mandamus compelling the
company to enter his name in the register.
34
Share Certificate is evidence of ownership and issued within 2 or 3 months from transfer
or transmission respectively.
A person may mortgage his shares legally or equitably. Shares may be attached to satisfy
judgment debt of the holder in public company under SCPA.
Classes of Shares (PIA): authorized share is that with which a company is incorporated
and its share capital at any given time; issued share (at least 25% of authorized share) is
that given to the public63; and paid up share (at least 25% of issued share) the part of
issued shares that have been paid for fully64.
:: DEBENTURE: is an instruments/certificate acknowledging indebtedness by a company
to the holder65.
It may be by deed-UBN Ltd v Tropic Foods Ltd. Where the loan is to a large number of
people (e.g. issued to the public), it should be done by issue of debenture stock under a
trust deed entered into between the company and trustee of the debenture holders. 183.
Issue of debenture should be in accordance with the MEMOART and where issued to the
public, it should be accompanied with a prospectus-S 44 ISA.
:: TYPES OF DEBENTURES: 171-174.
- Perpetual debentures: 171 redeemable only on the happening of a contingency or the
expiration of a period however remote or long;
- Convertible debentures can be converted into shares of par value instead of redeemed.
- Secured debentures: Secured by Charged (fixed or floating).
- Naked/ unsecured debentures: not secured by charge.
- Bearer debenture repayable only to the bearer of the debenture. It is a negotiable
instrument and transferable by mere delivery.
- Registrable debenture repayable only to whoever appears on the debenture certificate
and in the register of debenture holders66.
63
Share is issued at a premium when issued above the nominal value, at a discount (subject to
resolution) when below the nominal value, and per value when at the nominal value. The total of
shares issued at a premium must be transferred to the ‘share premium account’ Section 120 CAMA.
64
Call on shares (made by directors) is the demand to pay outstanding sums on allotted shares.
65
Section 168 mandates certain statements like principal amount borrowed, maximum discount,
maximum premium, rate of and payment of principal and interest, (for convertible debentures) date and
terms of conversion, other modulations thereto. Statements in debentures are binding on the company
and prima facie evidence of title, estoppel on the company and liability where relied upon.
66
Debentures issued to the public must be issued with a prospectus. Debentures are issued within 60
days.
35
- Redeemeable Debentures: Section 174

:: PROCEDURE FOR CREATION, PERFECTION, REGISTRATION AND
DISCHARGE OF CHARGES.
Debenture may be secured by fixed or floating charge.
A fixed charge is a mortgage by deed on a specific asset of the company such as a plot of
land. The company cannot dispose of such an asset or create other charges ranking higher
than the present debenture-holder’s charge in respect of it. On the downside, the
debenture—holder cannot proceed against other assets of the company. Siebe Gorman
and Co Ltd v Barclays Bank Ltd67
A floating charge on the other hand is an equitable charge over the present and future
assets and undertaking of the company. It crystalises on the due date or upon liquidation
and a receiver can be appointed to possess the assets.
PROCEDURE ON CREATION OF CHARGES: -A board resolution is passed
authorizing the loan; - The requisite loan documents (e.g. Deed of mortgage or POA or
Debenture Trust deed) are prepared and perfected (e.g. executed, stamped, governor’s
consent, registered at lands registry- etc. where necessary); Next;- registration of
Charge: within 90 days from creation of charge CAC 3 (Particulars of Charge) and
requisite documents are Filed with CAC and Certificate of Registration of Charge is
gotten;
Copies of loan Document are to be available for inspection at registered office of the
company; - A copy of the Charge is endorsed on every debenture certificate.
Upon satisfaction of the charge, a memorandum of satisfaction of charge Form CAC 6.2
along with deed of release or other instrument would be filed in CAC
- If the loan/charge cannot be repaid (i.e. satisfied) Security can be enforced by
appointment of a receiver. CAC is to be notified of appointment of receiver or manager
within 7 days.
EFFECT OF NOT REGISTERING CHARGE: renders the charge void against the
liquidator and all creditors of the company, but the company becomes obliged to settle
the debt immediately Stokes v Capital Finance, Section 197 CAMA.
The company or any person interested can apply to the Federal High Court by originating
motion to extend time for registration and rectify any omission in the register of charges.
67
(1979) 2 Lloyds Rep. 142.
36
:: ENFORCEMENT OF SECURITIES, PARTICULARLY BY WAY OF

RECEIVERSHIP68.
See Section 209 CAMA, Nashtex Case, Taiwo v Adegboro.
1. He may sue to recover principal and interest69.
2. He may petition for winding up on the ground that the company is unable to pay up its
debts See Section 408(d).
3. May appoint a receiver or manager70 (where empowered by the debenture deed or FHC)
to enforce/realize the security. Nashtex Int’l Ltd v Habib (Nig) Bank Ltd;
4. May sell the property if authorised by debenture instrument or FHC. Provided the
power of sale has arisen and become exercisable. Sale should not be at gross undervalue-
Taiwo v Adegboro.
Where sale is done pursuant to order of the FHC, the money is usually paid into court
first.
5. All the Debenture holders of every class may apply to court for foreclosure of the
Company’s Right to Redeem the mortgaged/charged property. 209 CAMA. Court may
order sale instead of foreclosure.
6. He may value his security and if it is insufficient, he may prove for the balance like
any unsecured creditor.
:: RECORDS A COMPANY MUST KEEP UPON CREATION OF DEBENTURE.
Register of charges, Record of Instruments, Register of Debenture holders, See Section
190, 191, 193 and 209.
:: ETHICAL ISSUES INVOLVED IN SHARES AND DEBENTURES.
WEEK 16.
A. TOPIC: COMPANY SECURITIES 2: (FLOATATION OF SECURITIES AND
COLLECTIVE INVESTMENT SCHEMES).
Regulatory bodies here include; SEC, CBN, FHC, CAC, NSE.
68
Where there are many debenture holders, a representative debenture holders’ action may be brought-
209 (a).
69
When successful, he may levy execution on the property of the company. FIFA on the company’s
property
70
CAC be notified within 7 days
37
Regulatory laws include: CAMA, ISA, FHCAct, SEC Rules.

Administration is largely vested in the SEC.
:: PUBLIC OFFER AND SALE OF SECURITIES (SHARES, DEBENTURE, GDR
AND BONDS).
Only a public company can offer its securities to the public (i.e. invite public to deposit…
in compliance with the regulatory laws)71.
Further, only quoted public companies and Government issuing bonds can be listed at the
Stock Exchange. These securities should be registered with SEC.
All securities proposed to be offered to the public must be registered with the SEC-
Section 54, 70 ISA.
All issues of securities must be accompanied with prospectus which should be signed,
dated and with experts’ statements and their endorsement thereon-Section 69, 73, 77, 79
ISA.
The Prospectus should contain certain key features as contained in the Part I and II of
the Third Schedule ISA.
The prospectus may be abridged (summarised and containing key requirement of a
prospectus) or Deemed i.e. a document containing the basic requirements of a prospectus
(notwithstanding that it is not titled “prospectus”) or a statement in lieu of prospectus
(which must be delivered at least 3 days before first allotment of shares and is capable of
serving the same purpose of a prospectus. See general 4th Schedule.
Bonds may be classified into government and corporate bonds issued by the government
and a public company respectively.
A government bond is safer and more reliable for the following reasons; - it is less likely
for government to be insolvent - the bonds are paid from the consolidated fund of the
federation – the funds are encumbered by a sinking fund indemnity.
Government bond is classified into Sovereign (by FG), Revenue (by State, Gov. Agency
and LGs) and Municipal bonds (issued by cities within a L.G.).
:: METHODS OF PUBLIC OFFER AND SALE OF SECURITIES-DIRECT OFFER,
OFFER FOR SALE & PLACEMENT.
71
The others should use private placement. Public co offering by way of private placement should
have prior approval of SEC and should convince SEC that private placement is the only viable option
to achieving its objectives for obtaining funds it direly needs and the securities should not be offerefd
to more than 50 subscribers. Special Resolution in GM authorising same published in two national
dailies and the amount should not exceed 30 percent of its existing issued and paid up capital prior to
the offer (if higher, needs approval of the commission). Offer shall be for not exceeding 10 days.
38
- Direct Offer: by the company to the public by means of a prospectus. Here the company
bears risk but could underwrite it.
- Offer for sale: the company sells to an issuing house which in turn invites the public to
buy from it (at a higher price).
Here the issuing house bears risk.
- Placement: the company sells its shares to an issuing house which invites selected clients
(like insurance companies) to buy. The company pays brokerage to the issuing house.
Section 55 ISA now provides for electronic mode of offer and transfer of securities72
provided the investor is entitled to have a physical Share Certificate at his request.
The Central Securities Clearing System (CSCS) provides an electronic platform in this
regard.
:: COLLECTIVE INVESTMENT SCHEME; TYPES, CREATION, ORGANS AND
MANAGEMENT.
From section 152-162 ISA, it is a scheme wherein members of the public are invited to
invest in a portfolio and share the risk and benefit in proportion to their participatory
interest.
CIS must be registered with (and authorised by) SEC-Section 160 ISA 2007.
Types include:
- Unit Trust Scheme: people pool resources for the purpose of investment and returns
are shared according to rate of investment. An investor is regarded as a Holder. Then
Legal title/interest in the pool/property is vested in the trustee(s) (which must be a body
corporate with minimum paid up capital of 25 or 15 billion Naira if bank or insurance co
respectively). Then the power of management is vested in a manager(s) (which must be
an incorporated company registered with SEC as a fund or portfolio manager). Then a
trust deed73 under seal is drawn up to regulate the scheme.
Finally, the UTS should be registered (Form SEC 6A) with SEC who would accept if it
is satisfied that; -the scheme (holders, trustees, managers and set-up) is competent, -its
trust deed complies with the provisions of the ISA and the name of the scheme is not
undesirable.
72
Usually done for over the counter (OTC) transactions.
73
Some contents of the trust deed may include; -definition of terms, -constitution of
the trust, -Issue of Units, -Distribution, -remuneration of Trustee and Manager,
Termination of the trust, Notices, Transfer and Transmission, Accounts, Retirement
and Removal, Meeting of Holders, Restructuring and Amalgamation, etc.
39
A holder of a unit may redeem them by requesting the Manager to buy them within the
time specified by the SEC. Upon revocation of the scheme, the manager must buy all the
units.
- Real Estate Investment Scheme: investment in real estate or property development.
Similar discussion as earlier.
- Investment Trust Scheme: just like UTS, just that here the holders can define in
advance the types of securities their money would be invested in.
- Community Savings Scheme: the oldest form of CIS. Popular amongst market women
(esusu) and low level workers and voluntary organizations. To be registered at the LG
where they are to operate and shall have a register of all members. Rule 41 SEC Rules.
Trust, Honesty, Fairness, diligence and protection of interest of investors should be
guiding principles in Collective Investment Schemes.
Custodians/ persons would be liable for loss/prejudice occasioned from indolence, non-
compliance with the scheme/laws/rules or fraud, unlawful alienation of assets of the
scheme.
The custodian should be independent from the scheme’s fund manager and trustee
:: DISTINCTION BETWEEN INVESTING IN SHARES AND CIS.
:: CAPITAL MARKET PRACTICE AND PROCEDURE.
The capital market is where securities are bought and sold. Securities constitute the
bundle of intangible rights and obligations in form of chose in action viz shares,
debentures, bonds, CIS, mortgage-backed securities etc.
Capital Market is divided into;
-Primary Market; for raising fresh funds. Payments go the company.
- Secondary Market: dealing in existing securities. Payments go to the sellers/investors.
USEFULNESS OF THE CAPITAL MARKET; The Capital Market facilitates
borrowing, raising of funds, international business, privatization, efficiency, employment
opportunities, public participation in corporate sector, employment, distribution of
financial resources, level playing field and transparency, etc. which results in productivity
and economic development.
CAPITAL MARKET OPERATORS; Those that deal in the capital market include;
issuing houses, Security dealers, Stockbrokers, Trustees, Portfolio Managers,
Underwriters, Custodians...
40
CAPITAL MARKET CONSULTANTS; Solicitors, Accountants, Investment Advisers,

Valuers, Rating Agencies, Engineers, Financial Advisers, Investment Banks, Should
register with SEC pursuant to Section 38 ISA. Section 13 ISA empowers SEC to regulate
Capital Market.
:: ROLES OF SOLICITORS IN CAPITAL MARKET TRANSACTION.
It may be solicitor to the Company, to the Issuer, to the Trustees, or solicitor in a merger
transaction.
He should examine the MEMOART, documents, correspondence to ascertain powers and
capacity of the Company or any encumbrance therein; Ensure compliance with laws and
procedures (due resolution passed through properly called meetings, filed at CAC,
prospectus, requisite stamping, etc..), Due Diligence and corporate searches and filing,
disclose and elicit disclosures, negotiations, certify compliance by company and the
issuer of all statutory requirements, give due advice in all.
:: ETHICAL ISSUES IN FLOATATION.
WEEK 17: CORPORATE RESTRUCTURING 1 (INTERNAL OPTIONS)

:: REGULATORY BODIES IN CORPORATE RESTRUCTURING. SEC, CAC, NSE,
CBN, FHC, other Sector Specific Regulators.
Operators Involved here are: Financial Advisers/Issuing House. Solicitors, Auditors,
Registrars, Stockbrokers (deal with the NSE area), Reporting Accountants, etc.
DOCUMENTATIONS INVOLVED: Exclusivity Agreement, MOU, Confidentiality
Agreements, Scheme of Merger.
:: INTERNAL RESTRUCTURING OPTIONS. The options available for internal
restructuring include
- Arrangement on Sale Section 538: here, the company sells its assets for the purpose of
winding up and reviving itself to a new company. There is need for the company to make
a declaration of solvency.
- Arrangement and Compromise with Creditors and Shareholders-Section 540
respectively.
:: STEPS AND PROCEDURES FOR INTERNAL CORPORATE RESTRUCTURING.
1. Arrangement on sale Under Section 538
Usually embarked upon to windup and resurrect the company into another form. Usually
where it has enough assets which outweigh its liabilities.
41
There is first a Member’s Voluntary Winding Up and then the proceeds of sale of the
assets is used to revive a new company.
In essence; Directors pass a statutory declaration of solvency. Notice of meeting is issued
by secretary. Then MGM pass a special resolution for member’s voluntary winding up
and appoint a liquidator to give effect to the resolution74. After sale of assets, it is revived
into a new company or arrangement.
2. Arrangement and Compromise with Creditors and Shareholders-Section 540.
(For a company facing difficulty and wants creditors and shareholders to grant some
concession to it).
First; the scheme of arrangement is prepared by the company or member or creditor or
liquidator.
Second; summary application is made to the FHC for an order to call a meeting of those
that would be affected by the scheme of arrangement.
Third; the meeting is called as directed by court.
Fourth; a special resolution sanctioning the scheme is passed in the meeting.
Fifth: the report of the meeting shall be made to the FHC.
Sixth: The FHC refers the scheme to the SEC.
Seventh; SEC appoints inspectors to investigate the fairness of the scheme and make
reports thereon which shall be forwarded to the FHC.
Eight; if the FHC is satisfied that the compromise is fair, it may sanction it75- Re Liption
of Nigeria Ltd.
Ninth; a copy of the court order approving the scheme should be delivered to the CAC
for registration and a copy of the order must be annexed to every copy of the
Memorandum of Association of the company issued subsequently.
:: ETHICAL ISSUES INVOLVED.
74
A dissenting member may deposit notice at the company’s head/registered office (within 30 days from
resolution) requiring the liquidator to abstain from putting the resolution into effect OR to purchase his
shares at a price to be determined by agreement or by SEC if aliens participate in the co. An application
may be made to the court under 310-312 on the ground that the affairs of the co are being conducted
illegally, oppressively or in an unfairly prejudicial manner.
An application may also be made to the court where an order is obtained for a creditor’s voluntary
winding up instead.
75
Forthwith the scheme shall become binding on the affected parties-Re Liption of Nigeria Ltd.
42
WEEK 18: CORPORATE RESTRUCTURING 2 (EXTERNAL OPTIONS).

Third parties are involved in the process of external restructuring.
:: RATIONALE, LEGAL FRAMEWORK AND REGULATORY BODIES
INVOLVED: for growth, expansion, diversification, development, leveraging on
economies of scale, survival strategy (e.g. merger of various banks), stock exchange
quotation, technological Drive, Management Expertise, etc.
:: EXTERNAL RESTRUCTURING OPTIONS.
- ACQUISITION: Where one company buys sufficient shares (but below 30%) in
another (private/unquoted) company as to give it sufficient control. SEC Rule 421-434.
Letter of intent76 should be given to SEC prior to acquisition.
After acquisition, the purchase agreement, evidence of settlement of the purchase
agreement and evidence of settlement of severance benefits of affected employees should
be given to SEC.
SEC can then conduct a post-acquisition inspection three months after the approval and
consummation of the exercise. 439 SEC Rules 2013.
- TAKE OVER: where a person or company77 (with the intention of taking over control
of a public company) makes a takeover bid to the target public company so as to
acquire 30-50 percent of the shares in the target company. See generally Section 117
and 131 ISA. 445 SEC Rules 2013.
The takeover bid should be signed by the maker, contain name and address of the offeror,
shares sought to be acquired, terms of acquisition and state whether he is going to acquire
the shares of dissentients at a fair market value.
Up to 60 percent of members of the company sought to be taken over should be served
the bid. See Section 142 ISA. Bid is to be registered with SEC before dispatch and
authority to proceed with the bid should be granted by the SEC78. The authority last for 3
months (but can be renewed for another 3 months provided application for renewal is
made within 14 days from current expiration). The SEC may carry out a post takeover
inspection not less than 3 months after the registration of the bid.
76
Accompanied with acquirer and acquiree’s CTC MEMOARTs, Board Resolutions, Certificates of
Incorporation, CTC form CAC 07, Annual reports, Report of Valuation of assets, Sharepurchase
agreement, N 50k application fee, etc.
77
For company, must be pursuant to resolution of its board of directors and company.
78
Application accompanied with Particulars of directors of the offeror company, 5 years Annual Report
of the offeror company, Evidence of payment of N50,000 application fee, newspaper publication, etc.
If SEC refuses, request SEC to refer the fact of refusal to the IST for review.
43
- MERGER: is the amalgamation of the undertakings (or a part of the undertakings) of

two or more companies-Section 119 ISA.
There should be prior approval of SEC which it would grant if it is satisfied that such
merger is not likely to cause substantial restraint of competition or monopoly in the line
of business or economy-121 ISA, 423 SEC Rules.
Although prior approval is not needed where merger is between holding companies or
small mergers.
Forms a merger may be Horizontal (fusion of enterprises in the same line of
business/field), Vertical (symbiotic fusion of complementary enterprises e.g.
manufacturer and supplier) or Conglomerate (fusion of totally unrelated business usually
for diversification).
Pursuant to Section 120 ISA, the SEC divided mergers into 3 Categories/thresholds
based on the combined assets and or assets of merging companies viz:
} Small Merger: if the combination is below one (1) billion. They need not notify SEC.
Although the SEC can require notification (within 6 months from commencement of the
merger) if it is of the opinion that the merger may substantially prevent or lessen
competition or cannot be justified on grounds of public interest. 122 ISA. After
notification, if SEC does not respond after 20 days, it is deemed to have approved. It
appears they only notify sec after concluding the merge.
} Intermediate Merger: combined assets or turnover of merging companies is between 1-
5 billion Naira. Need approval of SEC before consummating the merger. Approval is
deemed after 20 working days here too.
} Large Merger: where combined threshold is more than 5 billion. Note procedures for
all.
PROCEDURE FOR INTERMEDIATE AND LARGE MERGERS:
- Prepare scheme document.
- Pre-merger notification to SEC79. (Pay 50k merger notification fee).
- Apply to FHC to sanction/approve. Afterwhich;
- Pass a special resolution.
79
Need board resolution, detailed information on the proposed scheme, MEMO ART of merging
companies, certificate of incorporation of Merging companies, market effect and competitors.
44
- Get another SEC Approval filing the following; a copy of court order sanctioning the
scheme within 7 days of the order, copy of newspaper publication of court order,
statement of the actual cost of the scheme,
- Upon completion (which must be done within 3 months from courts order); SEC is to
be notified.
- SEC may inspect within 3 months after approval to ascertain the level of compliance.80
Note that SEC may revoke its decision on approval if there was misrepresentation, deceit
or breach of terms and obligation attached to the merger by the merging parties-Section
127 ISA.
Furthermore, SEC can direct a company to break up and re-register them as separate
entities within the time specified in the notice81. The commission must refer the order to
the FHC for sanctioning.
- MANAGEMENT-BUY-OUT: 449 SEC Rules 2013. Here the management of the
company acquire controlling shares.
Procedure being that;
1. The management team passes resolution undertaking to buy-out.
2. Shareholders pass resolution approving buyout.
3. Company and Management team enter into agreement detailing (or containing
documents on) terms, conditions, settlement of/arrangements for employees, creditors,
existing contracts, assets, trust deed (where applicable), third party and taxation.
4. A copy of MEMO and ART, Certificate of Incorporation, Prospectus82 and Documents
of No. 1,2 and 3 above (and any other document required) are submitted to SEC by the
management team for approval.
Note that management buy-in is where outsider managers try to buy into the co.
In practice, there may be a combination of the two (management buy-in and buy-out).
- PURCHASE AND ASSUMPTION: another company or investor is allowed to purchase

the liabilities of a failing company and assume ownership over its assets. A duly executed
Deed of Purchase and Assumption should be drafted.
80
Remember to attach Special Resolution, Court Order, evidence of publication of court order, original
certificate of incorporation of the companies, updated annual returns, updated filing and payment of
fees.
81
Where it considers that company setup substantially prevents or lessen competition or in public
interest.
82
2 copies detailing Profile of the Co and Management Buyout, 5 years audited financial statement,
claims and litigation.
45
The assumed company undergoes dissolution through judicial sale of its assets and
liabilities.
- RESTRUCTURING OF GROUP OF COMPANIES: needs formal approval of SEC83
and court order sanctioning the scheme to be filed with the SEC within 7 days of order
alongside a copy of newspaper publication, statement of actual cost of the scheme, report
on settlement of shareholders, etc.
: CHERRY PICKING: also aimed at reducing loss as above but here the other company
does not take up liabilities but just picks the viable assets that it could save by integrating
it into its own operations. This was offered to investors during the Post-Banks
Consolidation Exercise in 2005.
:: REGULATORY ROLES OF SEC AND OTHER INSTITUTIONS FOR EXTERNAL
RESTRUCTURING:
SEC: receives pre-merger notification, formally approves and sanction the scheme and
post-merger notification of compliance. Then inspection.
CAC: Registration/filing and certification of Corporate resolutions, documents,
sanctions/order, merger notice and de-registration notice.
FHC: to ensure compliance and justice. Deal with objections, sanctions the scheme, etc.
Re Lipton Nigeria Ltd, in the Matter of John Holt Investment Ltd Scheme of
Arrangement. Order Shareholder’s meeting, sanction the scheme.
NSE: self regulatory organisation which provides trading floor for securities of
companies quoted at the exchange.
Other industry specific laws like CBN-CBNA pursuant to Section 7 BOFIA, NCAA-
NCAAA, NCC-NCCA.
: Legal84 and financial85 due diligence should be carried out to ascertain veracity and
accuracy of information supplied.
:: ETHICAL ISSUES ARISING, PROFESSIONAL RESPONSIBILITY AND
DISCLOSURE IN EXTERNAL RESTRUCTURING.
:: CHECKLIST OF DOCUMENTS NEEDED.
83
Remember to attach Shareholders Resolution, Certificate of incorporation, CAC CTC of Directors, No
Objection Letter, Financial Statement.
84
Ascertain ownership, MEMOART details and compliance, sector specific requirements, directors,
statutory books, charges, titles of properties and status of properties, encumbrances, land and
corporate searches, contingent liabilities,
85
Checkign Accounting records, valuation of assets and liabilities, product development and
competition, tax implication, ability to raise loan, predictions for the future, etc.
46
WEEK 19- TOPIC: COMPANY PROCEEDINGS AND INVESTMENT DISPUTES

RESOLUTION
PART A
:: CHECKLIST OF RELEVANT RULES: CPR 1992, CWR 2001, FHCCPR 200986,
SEC Consolidated Rules 2013, IST Procedure Rules 2003.
REGULATORY LAWS: ISA, CAMA, CFRN, ETC.
:: NATURE OF COMPANIES PROCEEDINGS.
:: IDENTIFY SUITABLE APPLICATIONS FOR COMPANY’S PROCEEDINGS.
:: ADR OPTIONS AVAILABLE TO COMPANIES IN LIEU OF LITIGATION.
:: MODES OF APPLICATION FOR COURT PROCEEDINGS INVOLVING
COMPANIES.
- ORIGINATING SUMMONS: As in Form 1 CPR For interpretation and construction of legal
document.
- ORIGINATING MOTION: For Section 23(2), 46 (8), 129(2), 312 (5), 90(1), 315, 319 (3), 329, 524
CAMA applications be made by originating motion. Used for mixture of fact and law. E.g. appointment
of inspector, rectification of company’s register, etc.
- PETITION: 46(1), 47(1), 53(3), 120(2), 121(2), 158, 170(1), 142(1), 311(1), 525(6), 591(3), 641 CAMA
by petition.
- Originating application is the mode for IST under Section 6.
- Writ of summons is sparingly used but may be used for contentious matters where facts
are in dispute.
The principles of Jurisdiction, Service and frontloading also applies here87. AGIP (Nig.)
Ltd v AGIP Petroli International See generally; Rule 3.
:: DRAFT THE HEADING AND PRAYER CLAUSE OF AN ORIGINATING
SUMMONS AND PETITION FOR WINDING UP.
Answer: Rule 1(1) CPR “IN THE MATTER OF (Company Name) AND IN THE MATTER
OF THE COMPANIES AND ALLIED MATTERS ACT”
86
Note however that if it is a criminal offence, it can be tried by a court of competent jurisdiction in
the place of the offence (not necessarily the FHC)).
87
47
:: JURISDICTION OF FEDERAL HIGH COURT IN COMPANY PROCEEDINGS.

Section 251(1a) of the 1999 Constitution grants exclusive jurisdiction to the FHC for
issues on Company Proceedings or administration of CAMA-Nashtex International
Limited v Habib Bank ltd. Appeals from FHC lies to the Court of Appeal and then
Supreme Court.
The Investments and Securities Tribunal (IST) is established under Section 224 of the
ISA 1999 (now 2007) being a civil court (with original and appellate jurisdiction) for
speedy, just and efficient resolution of investments and capital market disputes-284 ISA
(from operation of ISA) within 90 days (from commencement of the action.
Appeal lies from the IST to the Court of Appeal and then to Supreme Court on matters of
law with its decisions enforced as that of the FHC.
The IST operates a litigation and ADR Centre to promote speedy reconciliation, and the
attendant advantages in ADR.
Section 284 ISA and 251 of the 1999 Constitution appear to be clashing on jurisdiction.
In Nospecto Oil and Gas v Olorunnibe, the court held that the constitutional provisions
are overriding. FIS Securities Ltd v SEC also.
It appears an effective resolution as suggested by Ogbuanya88; we are to look at the nature
of the dispute. Where it specifically relates to the workings of the Capital market and
actions (or inactions) of stakeholders therein (SEC, Public Quoted Companies, etc.) as it
relates to the ISA and SEC Rules, it would be more appropriate for the IST to adjudicate
being presumably more experienced and speedy.
On the other hand, where it relates to substantive corporate issues, MEMO, Articles and
other modulations arising from CAMA, then the FHC should have exclusive jurisdiction
as provided under Section 251 of the 1999 Constitution.
:: EVIDENTIAL ISSUES IN COMPANIES PROCEEDINGS- AUTHENTICATION OF

DOCUMENTS, COMPANIES CONTRACT, COMMON SEAL AND OFFICIAL
SEAL.
Common Seal is the engravement capable of inscribing the company’s name on paper
used when required by law.
The official seal is used in place of common seal outside Nigeria.
Authentication of documents can be done by the Secretary, Director or other authorized
Officer of the Company
:: PROCEDURAL RULES IN COMPANY PROCEEDINGS.
88
Nelson C. S. Ogbuanya Essentials of Corporate Law Practice in Nigeria, Novena Publishers Ltd 2nd
Edition 2014. At page 681.
48
:: VALID SERVICE OF COURT PROCESSES AND DOCUMENTS ON COMPANIES

To a principal officer of the company (like director, secretary) or by leaving the process at the company’s
head office Mark v Eke,Section 78 CAMA, Order 6 Rule 8 FHCCPR. Service on an ancillary staff is void
and annuls the court’s jurisdiction upon a preliminary objection from the defendant’s lawyer MTN
Communications Ltd v Bolingo Towers. Service of process on a foreign company is by its local agent (if
any), otherwise by service outside jurisdiction or by post.
:: IDENTIFY ETHICAL ISSUES INVOLVED IN COMPANY PROCEEDINGS

PART B.
REGULATORY FRAMEWORK: include; ADR, Arbitration, Amicable Settlement,
Self-regulatory Organisation, Administrative Proceedings Committte of SEC, IST/FHC.
:: NATURE AND INCIDENCES OF INVESTMENT DISPUTE:
Here we are concerned with disputes arising from the operation and application of the
ISA and rules and regulations made therefrom.
Usually resulting from actions or inactions of Government/Regulatory Agency. E.g.
revocation of operating license.
Parties would usually be; Capital Market Operators (or their clients), Self-Regulatory
Organizations, Investor, Securities Exchange, Capital Trade Point, Clearing or Settlement
House, CMO, Issuer of Securities, Collective Investment Schemes, etc.
:: STATE THE JURISDICTION, POWERS AND FUNCTIONS OF THE IST,
TRIBUNALS AND THE COURT IN INVESTMENT DISPUTE RESOLUTION:
Established in 274 ISA to provide an efficient and fair dispute settlement mechanism for
investment disputes. Discussed earlier.
The Tribunal is composed of 10 members and constituted by any 3.
For Powers; it can generally do what civil courts can do like; summon attendance, require
discovery and production of document, call for examination of witnesses and documents,
review its decisions, ancillary functions, etc.
Original and Appellate Jurisdiction over appeals from decisions of SEC, Administrative
Proceedings of Committee of the SEC.
The SEC should be given at least 14 days written notification by aggrieved person and
appeals should be filed within 30 days from a receipt of a copy of the decision sought to
be appealed against-289 ISA.
The Tribunal must adjudicate and decide the case within 90 days and give its judgment
in writing which would be enforceable as though it were a judgment of FHC-293(3) ISA.
Appeals from IST goes to COA then SCourt.
49
:: STATE THE ADR OPTIONS AVAILABLE TO PARTIES TO INVESTMENT

DISPUTES IN PLACE OF LITIGATION.
See Section 16 NIPC Act:
First, the disputing parties are to attempt amicable settlement.
Where they cannot reach an amicable settlement, the parties are advised to exhaust
available ADR Processes terminating with Arbitration (the NIPC Act provides for
international and domestic Arbitration89).
Where ADR fails, they should resort to the Administrative Proceedings Committee of the
SEC.
Where such fails, they can resort to litigation (by instituting in the IST (for securities
matters) or FHC (for substantive corporate matters).
A dissatisfied party can appeal to the Court of Appeal and Supreme Court.
:: IDENTIFY SUITABLE APPLICATIONS (MODE) TO COURT IN RESPECT OF
INVESTMENT DISPUTES RESOLUTION. IST uses Originating Application. Other
possible modes have been discussed earlier.
WEEK 20- WINDING UP AND DISSOLUTION OF BUSINESS AND NON-

BUSINESS ORGANIZATIONS
A. WINDING UP OF COMPANIES:
It is the process by which a company is liquidated and dissolved and its assets is
distributed in accordance with the rules of priority for the benefit of the creditors,
members and employees-Tate Industries v Devcom MB Ltd. FHC has jurisdiction
:: APPLICABLE RULES GOVERNING THE WINDING UP AND DISSOLUTION OF
COMPANIES IN NIGERIA.
- CAMA, WUR, FHCA, ISA, SEC Consolidated Rules, CPR, BOFIA, NCC.
:: TYPES OF WINDING UP UNDER CAMA AND PROCEDURE FOR EACH.
1. Winding Up By the Court/Compulsory Winding Up: - File petition with affidavit; -
Serve and proof; - Advertise the petition with leave of the court; - File Memo of
Compliance; - Respondent files notice of intention to appear with affidavit in opposition
and affidavit in reply; -Provisional Liquidator is appointed; Filing of List of persons
89
There is UNCITRAL Conciliation Rules 1980, Rules of Lagos Regional Centre for International
Commercial Arbitration established under the Auspices of The Asian-African Nigerian Government.
Some institutions like; Chartered Institute of Arbitrators (London) Nigeria Branch, Negotiation and
Conflict Management Group (NCMG), Centre for Dispute Management and Resolution administered
by NOCS Consults and ADR Practice Group International. Where government and foreign party are
involved and they fail to agree on what rule governs their dispute, government can suggest and if
foreign investor still rejects, then they are to submit to the provisions of the ICSIDRules.
50
appearing; - Hearing of petition; - Making of Winding up order. By 408 CAMA. It may

be done where;
a. Company by special resolution agrees that it be wound up by the court: the Special
Resolution be filed at CAC within 14 days of passing, CTC of Court Order for Winding
Up, Publication of notice of appointment of Liquidator in gazette or two dailies,
Liquidator’s notice of his appointment to CAC within 14 days of appointment; -
Liquidator’s account of receipts and payments at least twice a year (with verifying
statutory declaration), CTC of Court Order for dissolution of the Company, Updated
Annual Return, Original Certificate of Incorporation, payment of fees-Reg 43 CR 2012
b. Default is made in holding the Statutory Meeting or delivering the statutory report to
the CAC: only shareholder(s) may bring petition within 14 days from default (i.e. when
the meeting should have held)90.
c. The number of Members is reduced below 2.
d. The Company is unable to pay its debts: which by 409 CAMA means where it has
neglected to pay due debt to (or secure or compound for it) a creditor (to the tune of more
than N2,000) for more than three weeks after service of formal demand letter notice91 by
the creditor (in co’s registered office).
The debt must be due and undisputed-Tate Industries Plc v Devcom M B Ltd 2004.
Persons entitled to bring petition for compulsory winding up are the Company, Creditor92
or contributory93 or their PR, Official or authorised Reciever, CAC (Director cannot
petition) it appears shareholder too cannot petition.
e. The court (FHC within jurisdiction of company’s registered office) is of the opinion
that it is just and equitable for the company to be wound up: i.e. that the company is
formed for fraudulent purposes, is a bubble, unfairly prejudicial/discriminatory to
minority or if a small going concern; that circumstances that would warrant dissolution
of partnership exists in it.
:: SIGNIFICANCE AND LEGAL EFFECT OF WINDING UP AND DISSOLUTION
OF COMPANY.
Upon commencement of winding up, there can be no disposition of the company’s
assets/shares except with court sanction. Floating charge created within 3 months of
commencement shall be invalid.
90
Although courts would usually order compliance rather than winding up
91
Stating these facts and intention to wind up upon default. Signed by creditor or if co with common
seal and sign of director and secretary/authorised officer
92
A contingent creditor needs to fulfil Section 410(2) conditions.
93
May be required to give sufficient security for cost.
51
There can be no attachment, distress, executing or sequestration where co is in the process

of court winding up-414 CAMA.
After winding up order, court may still stay the winding up process on such terms and
conditions as it deems fit.
2. Voluntary Winding Up by Creditors or Members94: where the period fixed for the
duration of the co has lapsed or a determining event has occurred (then resolution would
be used to wind up) OR if the company resolves by special resolution that the co be wound
up.
For members; first there is a statutory declaration of solvency (duly signed by all/majority
of directors accompanied by statement of assets and liabilities) to the effect that the
company would be able to pay its debts in full within such period not exceeding 12 months
from the commencement of the Winding Up95;
- The Statutory Declaration of Solvency should be filed at CAC alongside statement of
company’s assets and liabilities;
- Within 5 weeks from the DOS Members should pass a special96 resolution for voluntary
winding up signed by the director and secretary/two directors. This be filed with CAC
within 14 Days of making.97)
- Resolution for appointment of Liquidator (published in Newspaper and notified to CAC
within 14 days of appointment;
-Liquidator gives notice of his appointment too;
- Liquidator to lay report of account before Members yearly same filed with CAC within
7 days after meeting (up till the final dissolution meeting where the final report and
account on winding up is presented);
- Original Certificate of Registration is returned to CAC for cancellation… updated
Annual Return and payment of fees. Check 467 and 470 CAMA.
For Creditors Winding Up;
- Publication of notice of Creditor’s meeting in Gazette and 2 National Dailies;
- Creditor meeting held
94
Winding up would be deemed to have commenced at the time of passing the resolution for
voluntary winding up or presentation of the petition whichever comes first.
95
If this is false, the winding up may continue as creditor’s voluntary winding up.
96
Regulation 44 Companies regulation 2012.
97
Given to CAC before that date embodying a statement of the company’s assets and liabilities. Costs
incurred in the winding up have priority over other claims.
52
- Directors are to lay a full statement of the company’s affairs before the meeting.
- Resolution for voluntary winding up may be passed;
- The resolution is filed with CAC within 14 days;
- Liquidator is appointed and notice of his appointment is published in Gazette or 2
National Dailies98.
- Liquidator gives notice of his appointment.
- in the end; publication of final meeting in the gazette or 2ND circulating in the locality
of where the meeting is being called;
- Return and account of liquidation is laid in the meeting; Liquidator within 7 days send
these to CAC99 and Original (or CTC) for cancellation; Updated annual Return; Updated
Section 533 filing where applicable; payment of fees.
Company CAC and gazette or newspaper should be notified within 14 days of passing
the resolution.
3. Winding Up Subject to Supervision of Court: An interested person may petition that a
voluntary winding up should be supervised by the court.
Court may appoint additional liquidator, remove the one so appointment, fill vacancy
occasioned by death or removal. Note that order of supervision does not change the date
of commencement of the winding up (i.e. the day of resolution).
Note that winding up may be refused where other remedies can avail.
:: OFFICERS INVOLVED IN WINDING UP OF COMPANIES.
– Liquidator (appointed to wind up the affairs of the company (can sell alienate, negotiate
bills, raise loans using assets of the co, obtain monies due etc.)… he represents the interest
of creditors);
- Official Receiver; is the deputy chief registrar of FHC or other officer designated by the
CJ FHC. To collate information about the company in winding up and can act once court
order for winding up is made until appointment of liquidator.
- Provisional Liquidator;
- Receiver/Manager; appointed by secured creditors under power contained in the
debenture deed to assume managements and collect profits therefrom. A mere receiver
can only do the latter. Receiver must not be an infant, unsound, body corporate,
98
The powers of directors cease here.
99
After three months from doing this, the company is deemed to have been wound up.
53
undischarged bankrupt, director or auditor of the company, any person that has been
convicted of an offence involving fraud, dishonesty, corruption or moral turpitude
- Special Manager: when the official receiver becomes liquidator he may apply to court
to appoint a special manager.
First pay up cost of winding up then pay outstanding rates-charges-taxes for the past 1
year then pay junior staff then preferential debts are paid, then other claims would be
satisfied in order of priority (secured creditors->unsecured creditors->preferential
shareholders -> ordinary shareholders etc.
:: IDENTIFY THE RELATIONSHIP BETWEEN WINDING UP AND DISSOLUTION
OF COMPANIES.
:: IDENTIFY ETHICAL ISSUES IN THE WINDING UP OF COMPANIES.
B. CESSATION OF BUSINESS NAME; DISSOLUTION OF (PARTNERSHIP AND
INCORPORATED TRUSTEES).
:: APPLICABLE LAWS/RULES
:: PROCEDURE FOR THE DISSOLUTION OF INCORPORATED TRUSTEE: there
should be a petition100 for dissolution on any of the following grounds;
- Realization of established object or pre-determined time and no useful purpose to keep
it alive;
- Aims and objects of the association have become illegal or contrary to public policy;
- Just and equitable that the association be dissolved-608 CAMA.
After satisfaction of debts and liabilities, what remains is transferred to another institution
having similar objects or some other charitable object determined by the member at or
before the time of dissolution-Section 608
:: PROCEDURE FOR DISSOLUTION OF PARTNERSHIP AND BUSINESS NAME:
Upon - death of sole proprietor/partner or agreement of the parties or order of the court,
the business name is deemed dissolved and removed from Register of Business Names at
the CAC. Provided that CAC should be notified by a partner or PR of deceased Proprietor
of the occurrence of any of the above three facts and that business has ceased to do
business. This is by filing notice of cessation of business accompanied by business
100
Which can be brought by the governing body/council, one or more of the trustees, members of not
less than 50 percent, CAC-See Section 608 CAMA.
54
certificate (to be handed in), Evidence of Annual Returns, Evidence of payment of Filing
Fees101.
:: IDENTIFY ETHICAL ISSUES IN THE WINDING UP AND DISSOLUTION OF
INCORPORATED TRUSTEES, PARTNERSHIP/BUSINESS NAME.
SOME CAC FORMS.

CAC 1- Availability check and reservation of name
CAC 1 A – Change ACnR
CAC 2 – SSC & RoA
CAC 2. A – RoA (Post Incorporation)
CAC 2.1 – Company Secretary or any change therein.
CAC 2.4 – NOCOAuthorised Share Capital.
Cac 2.7 – Rr&Conv
CAC 3 – S/CoRA
CAC 4 - DoCwRoCAMA
CAC 7 - PoPwaFD
CAC 7A – Change of Directors or change of Director’s Address
CAC 8 – Particulars of Charge.
CAC 9 – Declaratoin Veryfying Memorandum of Satisfaction of charge
CAC 10 – ARSmall Co
CAC 10 A – AR for co having Shares other than Small Co.
CAC 10 B – AR GTE
CAC 10 C – AR Exempted Foreign Co.
CAC 11 – Statement by Liquidator as to Pending Liquidation and Disposal of Unclaimed
Assets.
BUSINESS NAME
CAC/BN/1 – Application for Registration.
101
Provided that in the case of partnership, the consent of all partners is needed. Then on dissolution
of partnership trustees, there is need for petition at FHC (with affected persons put on notice).
55
CAC/BN/2 – Notice of Change of BN

CAC/BN/3 – Notice of CoRBN Objects
CAC/BN/4 – NoCoRBNAddress.
CAC/BN/5 – NoCoRBNProprietors.
CAC/BN/6 – NoCessation of Business
CAC/BN/7 – Annual Returns for Business Name.
INCORPORATED TRUSTEE
CAC/IT/1 – IT Application Form.
CAC/IT/2 – Change of ITName.
CAC/IT/3 – Change of Trustees.
CAC/IT/4 – Annual Returns for IT.
Some documents to file and duration. (put the section in exam).

- Alteration of Objects (special resolution OR Court Order)-15 days. Section 46.
- Notification of Change of Director also that of Secretaries and Also that of Auditors all
of them 14 days Section 292 (for Director).
Appointment of Auditors 1 week.
Resignation of Auditors 14 days.
Registration of Charges-90 days Section 197
Consolidation of shares 1 month.
Special Resolutions-15 days.
Returns during receivership and Winding up-14 DAYS
Statement by banks, insurance co before commencement of business-first Monday
of Feb or First Tuesday August of every years.
Filing annual returns within 42 days after AGM-Section 374.
56

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What are the types of companies that can be registered under CAMA?

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What documents are required for registration of companies?

Law Notes, Past Questions and Answers at www.isochukwu.

BASED ON 2017 CURRICULUM AND PRACTICE BOOK

Group12/Holding13, Consortium14 Guarantee, Investment, Insurance are outside the scope

Administered by CAC registrar general of Compnaies as Registrar general of BN too-571

NOTE: THE CONTENTS OF WEEK 6 WERE FUSED WITH THE CONTENTS

Until ratification, the promoter(s) is personally liable on the contract. Section 72

Conversion of Statutory Corporation to company limited by Shares: handled by the

members/debenture holders/issued shareholders to apply to FHC for cancellation of the

An Alien/non-Nigerian may invest in or participate in any enterprise here in Nigeria

Form 1 and attach applicant’s (foreign Company’s) Memorandum and Articles of

instrument at a discounted value (it appears the minimum consideration should be

:: LEGAL FRAMEWORK AND CODES OF CORPORATE GOVERNANCE IN

An infant, lunatic, insolvent, fraudulent, corporation… is disqualified from appointment

counting show of hands. He maintains registers and other statutory books/records.

:: REMOVAL OF SECRETARY: he should be given notice (informing him of such, the

WEEK 12- CORPORATE GOVERNANCE (3): MEMBERSHIP, MEETINGS &

Rights of Shareholders: are determined by Section 114.

4. Court Ordered Meeting: where it is impracticable or impossible to call a meeting.

WEEK 13- CORPORATE GOVERNANCE 4: FINANCIAL STATEMENTS, AUDITS

Financial Statement comprise:

debentures, particulars of indebtedness, list of past and present members, particulars of

WEEK 14- CORPORATE GOVERNANCE 5:

:: MAJORITY RULE: majority carries the day. Usually by resolutions.

its own volition/discretion on grounds of fraud, unfairly prejudicial conduct, illegality,

WEEK 15- TOPIC: COMPANY SECURITIES 1

- Redeemeable Debentures: Section 174

:: ENFORCEMENT OF SECURITIES, PARTICULARLY BY WAY OF

Regulatory laws include: CAMA, ISA, FHCAct, SEC Rules.

CAPITAL MARKET CONSULTANTS; Solicitors, Accountants, Investment Advisers,

WEEK 17: CORPORATE RESTRUCTURING 1 (INTERNAL OPTIONS)

WEEK 18: CORPORATE RESTRUCTURING 2 (EXTERNAL OPTIONS).

- MERGER: is the amalgamation of the undertakings (or a part of the undertakings) of

- PURCHASE AND ASSUMPTION: another company or investor is allowed to purchase

WEEK 19- TOPIC: COMPANY PROCEEDINGS AND INVESTMENT DISPUTES

- Originating application is the mode for IST under Section 6.

:: JURISDICTION OF FEDERAL HIGH COURT IN COMPANY PROCEEDINGS.

:: EVIDENTIAL ISSUES IN COMPANIES PROCEEDINGS- AUTHENTICATION OF

:: VALID SERVICE OF COURT PROCESSES AND DOCUMENTS ON COMPANIES

:: IDENTIFY ETHICAL ISSUES INVOLVED IN COMPANY PROCEEDINGS

:: STATE THE ADR OPTIONS AVAILABLE TO PARTIES TO INVESTMENT

WEEK 20- WINDING UP AND DISSOLUTION OF BUSINESS AND NON-

appearing; - Hearing of petition; - Making of Winding up order. By 408 CAMA. It may

There can be no attachment, distress, executing or sequestration where co is in the process

SOME CAC FORMS.

CAC/BN/2 – Notice of Change of BN

Some documents to file and duration. (put the section in exam).

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