MOST IMPORTANT TOPICS IN CORPORATE LAW PRACTICE

1. DRAFTS: This constitutes at least 40-45% of your success.(resolutions,

notice of meetings)

2. Foreign Participation in Nigeria

3. Incorporation of Companies

4. Business names, Partnership and Incorporated Trustees

5. Corporate Governance (Directors & Secretaries)

6. Membership, Meetings and Resolutions

7. Post Incorporation Matters (Re-registration/Statutory Books)

8. Company Securities (Shares & Debentures)

9. Corporate Restructuring

10. Winding up

PART A: ESTABLISHMENT AND FUNCTIONS OF CAC

PART B: INCORPORATION OF COMPANIES
PART C: REGISTRATION OF LIMITED LIABILITY PARTNERSHIP
PART D: LIMITED PARTNERSHIP
PART E: BUSINESS NAME & PARTNERSHIP
PART F: INCORPORATION OF TRUSTEES

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 CHAPTER ONE
LEGAL FRAMEWORK AND THE REGULATORY BODIES IN
CORPORATE PRACTICE IN NIGERIA
In the exam, you may be asked to highlight the applicable laws and regulatory
bodies regulating corporate law practice in Nigeria. Below is your answer:
Laws Regulating Corporate Law Practice in Nigeria And Their Relevance
(Exam Focus; August 2019 Q 5a, January 2020 Q 4a, March 2021) Know
atleast 10 relevant to the scenario!!
1. Companies and Allied Matters Act Cap C. 20 LFN 2020
a. The CAMA makes provisions for the incorporation of companies under Part B,
the registration of business names under Part E and the incorporation of trustees
under Part F.
b. It also makes provisions regarding the officers of a company, the constitution of
a company, its management as well as winding up procedures.

2. Investment And Securities Act 2007

a. The ISA established the Securities and Exchange Commission.
b. This Act regulates the activities of the Nigerian capital market i.e. it regulates
investments and securities business in Nigeria.
c. The ISA regulates all offers of securities by public companies as well as
registration of securities

3. Nigerian Investment Promotion Commission Act Cap N117 LFN 2004

a) This Act was enacted to regulate and promote investment in the Nigerian
economy by both Nigerian and non- Nigerian investors

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 b) Houses the One Stop Investment Centre (OSIC), an investment window
through which most of the important investment regulatory bodies can be
found.

4. Foreign Exchange (Monitoring and Miscellaneous Provisions) Act

This provides for foreign investment by aliens to be done in convertible currency
freely imported into Nigeria through an authorized dealer

5. Immigration Act.
This Act requires aliens who wish to set up business in Nigeria to obtain Business
Permit, expatriate Quota and Residence Permit for foreigners who wish to work in
Nigeria.

6. National Office for Technology Acquisition and Promotion Act

This Act provided that every contract or agreement entered into by any person in
Nigeria with any person outside Nigeria which involves the transfer of foreign
technology to Nigerian partners must be registered with NOTAP not later than 60
days from execution of the agreement.

7. Companies Income Tax Act Cap C21 LFN 2004

This Act provides the income tax payable upon the profits of any company in each
year.

8. Constitution Of the Federal Republic of Nigeria 1999 (As Amended)

The constitution under S. 251 (1)(e) confers on the Federal High Court exclusive
jurisdiction in civil cases and matters arising from the operation of the CAMA or

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any other enactments regulating the operation of companies incorporated under
CAMA.

9. Banks And Other Financial Institutions Act 2020

This Act regulates the banking sector of the economy.

10. Federal High Court Act

Section 7 of this Act provides that the Federal High Court shall have original
jurisdiction over matters stated in S. 251(1)(e) CFRN

11. Stamp Duties Act Cap S. 8 LFN 2004

This Act provides that the nominal share capital of any company registered with
limited liability or any increase thereto shall be charged with ad valorem duty.

12. Central Bank of Nigeria Act 2004

the apex regulatory body for Banks and other Financial Institutions in
Nigeria. Serves as an adviser to the Federal Government and licenses and
regulates the activities of Banks and Other Financial Institutions.

13. Nigerian Deposit insurance Act

14. Federal Competition and Consumers Protection Commissions Act
15. Industrial inspectorate Act
16. Partnership Law
17. Asset Management Corporation of Nigeria
18. Standards Organization of Nigeria Act
19. National Agency for Food and Drug Administration Agency
20. Industrial Development Income Tax Relief Act Cap I7 LFN 2004
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 21. Pioneer Status Incentive Regulation SI NO 2 2014
22. Patent and Designs Act

NOTE: the Highlighted Ones are of General Application

Regulatory Bodies Governing Corporate Law Practice in Nigeria And Their
Roles/Functions (Bar Final 2017 Q 1d & August 2019 Q 5b, January 2020 Q
4a)
1. Corporate Affairs Commission (CAC)
The CAC is established under S. 1 CAMA, headed by the Registrar-General -
Role/Functions of CAC- S. 8 CAMA
1) administer this Act, including the registration, regulation and supervision of
(a) the formation, incorporation, management, striking off and winding
up of companies,
(b) business names, management and removal of names from the register,
and
(c) the formation, incorporation, management and dissolution of
incorporated trustees;

2) establish and maintain a company’s registry and office in each State of the
Federation suitably and adequately equipped to perform its functions under
this Act or any other law;

3) arrange or conduct an investigation into the affairs of company,

incorporated trustees or business names where the interest of shareholders,
members, partners or public so demands;

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 4) ensure compliance by companies, business names and incorporated trustees
with the provisions of this Act and such other regulations as may be made by
the Commission;

5) perform such other functions as may be specified in this Act or any other
law; and
6) undertake such other activities as are necessary or expedient to give full
effect to the provisions of this Act

NOTE the following about CAC

i. It has a governing board composed of 10 members (including a chairman
and a Registrar General)
ii. The chairman of the Governing board is appointed by the President on
the recommendation of the Minister while other members are appointed
by the Minister.
iii. All its members except the Registrar General are part-time members
iv. Anybody that wants to sue CAC must give it 30 days pre-action notice
Section 17

2. Securities and Exchange Commission (SEC) established by Sect 1 ISA

Role/Functions of SEC-section 8 Investments and Securities Act
a. To regulate investment and securities business in Nigeria
b. To regulate and register offers of securities by public companies.
c. To register and regulate corporate and individual capital market operators.
NOTE: SEC must be given 30 days pre-action notice by any person intending
to sue the commission.

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 3. Nigerian Investment Promotion Commission (NIPC)
Established under Section 1 of NIPC Act and headed by an Executive secretary
Role/Functions of NIPC: Section 4 of NIPC
a. To encourage, promote and coordinate investment in Nigeria.
b. To monitor all investment promotion activities.
c. The provision and dissemination of up-to-date information on incentives
available to investors
d. The NIPC houses a One – Stop Investment Centre/Shop. OSIC
e. To register and keep records of all enterprises.

4. National Office for Technology Acquisition and Promotion Commission

established by NOTAP Act.
Functions - Section 3 NOTAP Act
a. They register contracts of transfer of foreign technology between Nigerians
and Aliens and issue certificate of registration.
b. It acts as a catalyst between research institutions and industries in Nigeria

5. Nigerian Deposit Insurance Corporation established under NDIC Act

a. This is an insurer to Banks and financial institutions.
b. In collaboration with CBN, they monitor the activities of Banks.
c. When a bank falls into distress, the NDIC manages and assumes
responsibility of these failing banks.
d. The NDIC intervenes through purchase and assumption of the debt of failed
bank.

6. Asset Management Corporation of Nigeria (AMCON)

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 Functions of AMCON
a. To resolve liquidity problems in the financial sector.
b. To assist banks in moderating the cost of bank distress.
c. To manage and dispose toxic assets of Nigerian banks including Non –
performing Loans

7. Federal High Court established by Sec. 249 CFRN

Functions/Powers of the FHC
a. A company may be wound up by the court
b. Court may appoint or remove a liquidator in any voluntary winding up
c. The court may cancel the alteration of a company’s objects.
d. May order the rectification of register of members.
e. May order a meeting of creditors or class of creditors, when necessary,
amongst others.

8. Nigerian Immigration Service: established under the Immigration Act;

it basically issues visas and resident permits to foreigners entering into
Nigeria. It regulates the influx of foreign nationals into the country and
regulates the issuance of the requisite permits including residence permit,
visa, expatriate quota etc.

9. Federal Competition and Consumer Protection Commission (FCCPC);

established under the FCCPC Act to regulate mergers and other business
combination in Nigeria.
NOTE the following about FCCPC: (Dec 2020 MCQ 16-20)
a. It is a body corporate with perpetual succession and the power to sue and be
sued in its name.
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 b. It is composed of 8 members which includes:
i. A chairman
ii. A Chief Executive (who is the Vice Chairman)
iii. Two Executive commissioners
c. The members of the commission are appointed by the President FRN from
the six geo-political zones subject to confirmation by the Senate.
d. All complaints against the FCCPC must first go to the Competition and
Consumer Protection Tribunal

10. Industrial Inspectorate Office: a division of the Ministry of Trade and

Investment; regulates the grant of incentives to companies especially
companies involved in the manufacturing sector to encourage participation
in business in Nigeria.

ACCREDITATION WITH CAC

As a legal practitioner, it is required that you apply to CAC for accreditation to be
able to do some official transactions relating to Part A of CAMA i.e. companies.
The process of accreditation will authorize a person to be able to deal with the
CAC as agents on behalf their clients.

PROCEDURE FOR ACCREDITATION: focus

1. Fill the Application Form for Accreditation online (pre.cac.gov.ng)
2. Attach the following accompanying documents and upload
a. Passport photograph
b. Electronic Signature
c. Qualifying Certificate
d. National Youth Service Corps discharge certificate or exemption
e. Payment receipt of the current year practicing fee

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 3. Make payment of the prescribed fees via Remita
a. Individual
b. Firm
4. Send the filled form online and upload the accompanying documents
5. CAC will send an email to the email address supplied to CAC confirming
accreditation for the year.

PROCEDURE FOR SEC REGISTERATION

1. Duly completed SEC application form - FORM SEC 3 for firms and FORM
SEC 2 for sponsored individuals
2. Evidence of payment of the application fees: Firm –N50, 000; and for each
Sponsored individual- N10, 000
3. Submit the application Form accompanied by documents specified below:
a. Evidence of qualification as a legal practitioner five years before
application
b. Evidence of demonstrable knowledge of capital market operations
as may be determined by SEC
c. Verifiable office address for inspection by the SEC
d. Security report on the applicant
e. 3 passport photographs
f. Evidence of payment of prescribed fees
g. Applicants’ banker statement
S. 38 of the ISA, Rule 178-182 of the SEC Rules 2013.
POSSIBLE EXAM QUESTIONS:
1. State five (5) laws that will regulate corporate practice in Nigeria.
2. Highlight four (4) regulatory bodies/agencies that the company must
interface with in the course its operations.
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3. State at least 2 functions each of the regulatory bodies listed by you above
4. List the documents you will file to CAC for accreditation as a legal
practitioner

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 CHAPTER TWO
INCORPORATION/ REGISTERATION OF BUISNESS AND NON
BUISNESS ORGANIZATIONS IN NIGERIA
Here, we will be examining the various business and non-organizations in Nigeria.
By business organization we mean those established for the purpose of making
profit and by non-business organizations are non-profit oriented organizations.
Types of Business and Non-Business Organization (August 2018 Q 1)
There are 5 types of business organizations viz:
1. Sole Proprietorship
2. Business Name
3. Limited Partnership
4. Limited Liability Partnership
5. Incorporated companies
a. Private company limited by share
b. Private company unlimited
c. Public company limited by shares
d. Public unlimited company
There are two types of non-business organization viz:
1. Company limited by guarantee; and
2. Incorporated Trustees.

COMPANIES
This part includes the various types of companies a person can incorporate
including all provisions relating to every feature, practice and procedure of such
companies.

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TYPES OF COMPANIES - Section 21
This depends on the liability and membership as follows:
1. Companies limited by shares.
2. Companies limited by guarantee.
3. Unlimited company.
Any of the above companies may be:
i. A private company or
ii. A public company. Section 21 (2) CAMA

Advantages of E-registration
1. Speed
2. Convenience
3. Saves Cost
4. Reduces corruption
5. Increases productivity

CAPACITY TO FORM A COMPANY– (January 2020 Q 1e)

Two or more persons may form and incorporate a company by complying with
the provisions of the CAMA- S. 18 (1) CAMA.

One person can form company in Nigeria S. 18 (2) CAMA.

Persons who are disqualified from joining in the formation of a company S. 20

(1) He is less than 18 years

EXCEPT two other persons who are not disqualified have subscribed to the
memorandum.

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 (2) He is of unsound mind and have been so found by a court in Nigeria or
elsewhere
(3) He is an undischarged bankrupt.
(4) He is disqualified under S. 283 (disqualification of directors) of CAMA
from being a director.
(5) A corporate body in liquidation.

Position of a person under the age of 18 in the Formation of a Company

1) two other adults of full capacity must have subscribed to the

memorandum of the company- S 18; S.20 (2)
2) He cannot be counted for the purpose determining the legal minimum of
members of a company - S 106 (2) CAMA

NOTE- Section 20(4) CAMA provides that an ALIEN may join in the formation
of a company provided he complies with the provisions of any enactment
regulating the rights of aliens to engage in business in Nigeria.

STEPS/SCHEDULE TAKEN TO REGISTER A NEW COMPANY (Focus)

1. Taking instructions from the Client/promoters of the company
a. Client’s Personal Details;
b. Date for completion of registration;
c. Name of company
2. Conducting a check on the availability of name Form CAC 1 (filled online)
3. Preparing the incorporation documents:
a. MEMO & ART, (to be adopted online with little alteration allowed)
b. Statement of Compliance

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 4. Online completion of pre-registration form (Form CAC 1.1) and
uploading of the incorporation documents i.e valid means of ID, electronic
signatures of directors
5. In the case of a company limited by guarantee, obtain the consent of the
AGF
6. Obtain the certificate of incorporation, as prima facie evidence of
incorporation.

FEATURES OF A PRIVATE COMPANY ‘’LTD’’

1. It has the liability of its members limited, to the amount unpaid on the shares
respectively held by them - S. 21CAMA

2. The minimum issued share capital is N100,000 (100k)- S.27(2) (a)

NOTE: Shall not be registered with a share capital that is less than the minimum
issued capital. S. 124

3. The membership is between 1 to a maximum of 50 persons –S. 22(3), S

18(2)
4. It may, by its articles, restrict the transferability of its shares - S. 22(2).

5. No specific qualification of a secretary is needed EXECPT the possession

of the requisite knowledge and experience to perform the functions of the
office. S. 332 CAMA,
NB: It is NOT compulsory for a small company to have a secretary S. 330
(1) CAMA

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 6. The name of a private company must end with the word limited (or the
abbreviation "Ltd') - S. 29 CAMA

7. No age restriction in the appointment of directors. Persons of 70yrs and

above can be appointed as directors without the requirement of special
notice to the company and its members – Section 282 CAMA

8. Unless authorized by law, it shall not invite the public to deposit money, for
a fixed period or payable at call, whether or not bearing interest -S. 22(5) (b)

9. The consent of ALL members must be obtained before any sale of assets
having a value of more than 50% of the total value of the company's assets.
see s. 22 (2) (a) CAMA

10. No member or group of members acting together can sell or agree to sell
more than 50% of the shares of the company to a person who is not then a
member, unless the non - member has offered to buy all the existing
members shares on the same terms S. 22 (2) (c) CAMA

WHEN RECOMMENDED (in exam watch out for these elements in the
scenario)
a. Where the capital available to start off business is relatively small.
b. Where small and medium scale business organizations need to acquire
incorporated status.
c. Where family and friends want to engage in business expected to last over a
long period and enjoy corporate personality.

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FEATURES OF A PUBLIC COMPANY
1. It is stated in its memorandum to be a public company; S. 24 CAMA

2. has the liability of its members limited, to the amount, unpaid on the shares
respectively held by them - see s21(1)(a) CAMA

3. It has an unlimited number of members. S. 22(3) CAMA

4. The name ends with “Public Limited Company” PLC.-S.29(2) CAMA

5. The minimum issued share capital is N2,000,000 (2 million). S. 27(2)

6. There is no restriction on transfer of shares in a public company-S.151(1)

7. There is age restriction in the appointment of director of 70 years, he

must give special Notice of his age to the members. S. 282

8. It must hold its statutory meeting within 6 months of incorporation – S.

235

9. The Secretary of a public company must be qualified in accordance with the

332 CAMA

10. It can invite the public to subscribe to its shares and debentures
NB: The power to allot shares of a public company is subject to the provisions of
the ISA – see S.149 (2) CAMA

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WHEN RECOMMENDED
a. Where sector regulations require it in order to be permitted to operate.
b. Desire to raise capital from the public through the subscription of
shares or debentures
c. Where the capital available to start off business is relatively large.
d. Where membership is not limited or restricted.
e. Where the business organization is not driven by family ties or relationships.
f. Where 50 persons or more, want to join in the formation of a company as
subscribers and do not intend to be joint holder of shares.
(You should be able to discern the differences between a public and private
company from its features above)

FEATURES OF A COMPANY LIMITED BY GUARANTEE (focus)

1. It does not carry-on business for the purpose of making profit for
distribution to its members but for the attainment of its objects – S. 26(1)

2. Members have no right to participate in the profits of the company or to

divide the company's undertaking into shares or interests - see S. 26(2)

3. It has no share capital upon incorporation. S.26(2) CAMA

4. It is permitted to do business, but not with a view to making profits for

distribution to its members – see S. 26(3) CAMA;

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 Consequences of violation of S. 26 (11) CAMA

I. All officers and members who are cognizant of the fact shall be jointly
and severally liable for the payment and discharge of all debts and
liabilities of the company incurred in carrying on such business;
II. The company and every such officer and member shall be liable to
penalty as prescribed by the CAC for everyday during which it carries
on such business

5. Consent of the AGF is required for registration. section 26(5) of CAMA

6. Liability of the members:

limited to the amount which they undertake to contribute to the assets of the
company, in the event of winding up such an amount shall not at any time
be less than N100, 000 (One hundred thousand naira) S. 26(12)
NB: Such amount is not payable at call, but is only at the point of winding
up. In other words, liability arises at winding up.

7. Special Clause: Upon winding up, after the discharge of its debts, any assets
of the company remaining shall not be distributed among the members,
but shall be transferred to organizations with similar objects. Section 26(15)

8. Its name must include the word “limited by guarantee” Ltd/Gte.- S. 29(3)

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WHAT AN APPLICANT CAN DO WHEN THERES NO DECISION FROM THE AG
SECTION 26 (7) OF CAMA

1. Where all the valid documents have been furnished and no decision has been
made by the AGF within the 30-day period, the applicant is at liberty to
a) place the advertisement of the incorporation in 3 national dailies
b) and invite objections within 28 days. S.26(7)
2. If after the 28 days have elapsed and there is no objection, the CAC shall, if
satisfied that the MEMOART have complied with the provisions of
CAMA, shall assent the application, registration the company and issue
a certificate of incorporation to the applicant. S.26(10)

WHEN RECOMMENDED
a. Where the company’s object is for promotion of commerce, art, science,
religion, sports, culture, education, charity. S. 26(1)
b. Where the company’s profits is not to be distributed to members.
c. It is recommended as a subsidiary company set up to render corporate
social responsibility obligations for the main company.

ADVANTAGES OF COMPANY LTD/GTE

1. The company enjoys legal personality distinct from its members
2. It can engage in skeletal business solely for the purpose of promoting its
object
3. It’s exempted from payment of tax
4. It’s not required to have a share capital
NOTE- IT IS NOT SUITABLE FOR ANTI GOVERNMENT PROGRAMMES

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DOCUMENTS Required For Incorporation of Company (Private/public) at
CAC (Bar final August 2018 Q 4a, January 2020 Q 3e)
1) CAC 1 - Availability check and Reservation of Name (fill online)

2) CAC 1.1- Form for Application to Register a company (to be adopted online
with little alteration allowed)

3) Memorandum and Articles of Association (fill online)

4) Means of identification for every director, subscriber and secretary in the

company (uploaded online)

5) Electronic signatures of the subscribers, directors, secretary and legal

practitioner or agent incorporating the company (uploaded online)

6) Other documents required by the Commission to satisfy the requirement of

any law relating to the formation of a company (uploaded online):
a. Where an infant is a subscriber, the infant’s birth certificate duly issued
by the National Population Commission should be attached.
b. Residence permit (where foreigner’s residential address is in Nigeria)
(uploaded online)

REQUIREMENTS/DOCS FOR REGISTRATION OF COMPANIES GTE Commented [MOU1]:

1.CAC 1- Availability Check and Reservation of Name

1. Availability and Reservation of Name; (CAC 1) (fill online) 2.CAC 1.1- Form for Company Registration
3.Memorandum and Articles of Association
4.Recognized means of Identification of the Directors of the
Company
5.Evidence of the Attorney-General of Federation’s Consent
2. Form CAC 1.1- Application to Register a company; (to be adopted online
with little alteration allowed)

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 3. Memorandum and Articles of Association duly stamped; (fill online)

4. Valid means of identification for subscribers, directors and company

secretary e.g., International Passport, Driver’s License, National Identity
(uploaded online)

5. Approval of the AGF consent

a) The AGF shall within 30 days grant authority to register where there
are no objections
b) Where after 30 days the AGF has not granted authority, the promoters
shall place an advertisement in 3 national newspapers and invite
objections (forward objections to CAC within 28 days).
c) Where there are no objections, the commission shall register the
company

6. Electronic signatures of the subscribers, directors, secretary and legal

practitioner or agent incorporating the company (uploaded online)

7. Any other document that may be required to comply with the law.
(Uploaded)

NAME OF COMPANY
A company may adopt any name for incorporation provided that such name is not
a prohibited or restricted name. The first step towards incorporation of a company
is to conduct availability search on the proposed name.

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 RESERVATION OF NAME – SECTION 31(1) & (2)
The CAC may, upon receipt of an application delivered to it in hard copy or
through electronic communication and on payment of the prescribed fees, reserve a
name pending registration of a company or change of name by a company upon
confirmation of the availability of such name.
A name when approved is reserved for 60 days within which the company is to
claim the name. Section 31(2)

N.B - focus

If the proposed Company fails to register with the Commission before the
expiration of the 60 days that the name was reserved for it, the company will go
through the process of availability check and reservation of name all over again.

PROCEDURE/STEPS For Conducting Availability Search and Reservation Commented [MOU2]:

ABUJA PRE BAR – Answer

of Name at CAC (Bar final 2017 Q 4d, April 2018 Q 4b, January 2020 Q 3c) The steps to be taken for the Reservation of the proposed Name
are;
1. Log onto the CAC portal: pre.cac.gov.ng 1.Log on to CAC Website www.cac.gov.ng

2. Select the tab marked “new reservation” and enter the preferred name and 2.Click on new reservation and select new name reservation

3.Complete Availability Check and reservation of name form

the alternative name (if any); online

3. Click on the next page to select type of company i.e. whether limited, 4.Pay for conducting online search

5.CAC will either approve one of the two names and reserve it
GTE, I.T or Business name; for 60 days or reject both names.

4. Click on preview and make on-line payment through remita or any other 6.Where CAC reject both names, the Applicant will conduct
another online search using two different names again.

means. 7.CAC will inform the Applicant of its decision through email.

5. Check e-mail after 24 hours for status of the availability.

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POSER:
As a Solicitor engaged to facilitate the incorporation of a Company, what
instructions will you take in respect of the name of the proposed company?
Explain what steps you will take regarding the instructions. 2010 No 1(b)
• Obtain two names from the promoters of the company: preferred name and
alternative name
• Log onto the CAC portal and follow the procedure outlined above

Prohibited names - Section 852 CAMA (focus)

1. identical names of an existing company as to be calculated to deceive;

Niger Chemists Ltd v. Nigeria Chemists Ltd
Exception
a. Where the existing company is in the course of being dissolved
b. signifies its consent to the use of such name - S. 852 (1) (a);

2. A name or trademark containing the words "chamber of commerce"

UNLESS it is a company limited by guarantee - S. 852(1) (b); Lagos
Chamber of Commerce v. Registrar of Companies

3. A name which is capable of misleading, as to the nature of its activities, or,

offensive or contrary to public policy - S. 852 (1)(c)

4. A name which violates or conflict with any existing trade mark or business
name registered in Nigeria, UNLESS the consent of the owner is obtained-
S. 852 (1) (d).

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 RESTRICTED NAMES - S. 852 (2) (a – d) - MCQ

They are only registered with the consent of the CAC:

1) Names that contain the words: Federal, National, Regional, or State-

2) Names containing the word "Government" to suggest that it enjoys patronage

from the FG or SG of Nigeria or 'Municipal' or 'Chartered' -

3) Names that contain the word 'Cooperative' or 'Building Society'

4) Names that contain the word "Group'' or "Holding" -

CHECKLIST OF POSSIBLE INSTRUCTIONS/MATTERS A LAWYER

WILL TAKE TO REGISTER A COMPANY: (Exam Focus)
1. instruction as to the preferred name and alternative name.
2. The Capital involved. (this is to enable you advise him appropriately as the
choice of company)
3. The number of persons involved.
4. The object or intended business of the company.
5. The proposed registered address of the company.
6. Type of company intended to be incorporated. (etc.)
7. Liability envisaged by the members
8. Restrictions on the powers of the company
9. Particulars of the subscribers.
10. Whether a foreigner or a minor is involved in the formation
11. Minimum issued share capital (where the company has a share capital)

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Clauses To Be Included in The Articles of Association to Gain Control in A
Company (August 2018 Q 4f JULY 2022 resit)
1. Taking majority shares in the company
2. Taking different classes of shares (e.g., preference shares in order to have
more votes and special rights).
3. To be appointed a life director,
4. Be appointed chairman of the company
5. Be in custody of the common seal and countersign any document to which
the common seal is affixed.
6. Be signatory to all the documents of the company
7. Secure a pre-emptive right

Instances where the CAC will refuse to register a company S. 41(1) (a-e)
(focus)

1. Non-compliance of MEMO & ART with the provisions of CAMA

2. Illegality of object/ business
3. Where a subscriber to the memo is disqualified by virtue of S. 20 see
S.41(1)(c)
a. An individual below 18 years except two other qualified persons are 18 and
above,
b. An individual found to be of unsound mind by a court in Nigeria or
elsewhere,
c. An individual who is an un-discharged bankrupt,
d. An individual disqualified from being a director under section 280 i.e a
fraudulent person,

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 4. Where there is non-compliance with the requirement of any other law as to
the registration and incorporation of a company
5. conflict or likelihood of conflict of the proposed company's name with that of an
existing company, trade mark or business name registered in Nigeria

Procedure to challenge the CAC Refusal to Register a company – S. 41(2)

CAMA

A. Giving notice to the CAC requiring the Commission to apply to court for
directions
B. Upon the receipt of such notice, the CAC shall, within a period of 21 days,
apply to the Court for directions

CONTENTS OF THE MEMORANDUM OF ASSOCIATION (NOOR

SLSSA)
1) The name clause
2) The Registered office clause
3) The business/ objects clause
5) The Restriction clause, if any
4) The Status Clause
6) The liability clause
7) The share capital clause
8) The subscription clause
9) Attestation Clause
You may be asked to draft the MEMO
Commented [MOU3]:
NOTE: Focus (new position of CAMA): Statement of Compliance to be signed by the applicant or his
agent confirming that the requirements of the law with respect to
registration has been complied with thereby expunging the need
for a legal practitioner or Notary Public attestation under Section
40 CAMA.

27
It is no longer compulsory to engage a legal practitioner in respect of incorporation
of companies because any promoter or any of the first directors of the
proposed company can now apply to incorporate a company. S. 40 January
2020 Q3

EFFECTS OF INCORPORATION
As from the date of incorporation mentioned in the certificate of incorporation, the
members of the company, shall be a body corporate by the name contained in the
memorandum, capable of exercising all the powers and performing all functions of
an incorporated company including
A. the power to hold land, and
B. having perpetual succession,
but with such liability on the part of the members to contribute to the assets of the
company in the event of its being wound up as is mentioned in the Act. Section. 42

BUSINESS NAMES (very important usually as question 2/3 or 5/6) Commented [MOU4]:
Registrar General of Corporate Affairs Commission is referred to as
Registrar of Business Name in Nigeria at the Business Name
This includes small scale businesses usually registered with CAC to protect the Registry Headquarters. Section 812 of CAMA.
However, there is also the provision of Business Name Registry’s in
names of such business from being used by others. It does not confer legal each state of the Federation which is headed by a Registrar. Section
812 of CAMA.

personality on such business.

Advantages of Business Name over Companies (August 2019 Q 6a)
1. It is cheaper to establish.
2. Ease of registration.
3. It is more private.
4. It is less formal.
5. Ease of decision making and management
6. Ease of dissolution
7. Registration is not mandatory in certain circumstances.
28
 8. It gives priority to the use of the name against subsequent registered
companies.
9. Does not have distinct legal personality
10. Minor may register

TIME FOR REGISTRATION - focus Commented [MOU5]:

The date the business was commenced is excluded from the
computation
A business name must be registered within 28 days AFTER commencement of
business - Section 815 (1).
Persons that Can Register Business Name in Nigeria
a. Individuals
b. Partnership/firms
c. Companies

RESTRICTIONS ON REGISTRATION OF BUISNESS NAMES

a. INFANTS: The Registrar may refuse to register an individual or firm if the age
of the individual or partner in a firm is less than 18 years (section 852 (3)).
UNLESS the signature is countersigned by magistrate, legal practitioner or
police officer above rank of Assistant Superintendent of Police -S. 815 (6)

b. Persons involved in fraudulent trade practices-

the registrar shall refuse to register a name if he has irrefutable evidence that the
individual, firm or company applying has previously been involved in
fraudulent trade malpractices in local or international trade (section 852 (4)

c. Where illiterate or blind persons are involved in the formation of business

name, a jurat must be affixed

29
When Registration of Business Name Is Not Compulsory (Exam Focus)
Where the persons doing the business intend to avoid the requirement of
registration, they may adopt the following names: (August 2017 Q 5b)
1. For an individual, if he uses his/her: Section 814(b).
a. full name
b. initial and surname
c. surname only

2. Firm/Partnership, if it uses the: S. 814(a) Commented [MOU6]:

Partners having the surname. If there is an addition of an “S” at the
end of the surname. E.G. OKON”S”
a. full name of all the partners only
b. their initial and surname
c. their surnames only without any addition.

3. Company/Corporation, when it uses its corporate name without any addition

Examples: see Dec 2020 Re-sit Q 3b

a) OBI MARTINS, HUSSAINAT OLORIEGBE & UYANNA GEORGE (full
name only)
b) M. OBI, H. OLORIEGBE & G. UYANNA (Initials & Surnames only)
c) OBI, OLORIEGBE & UYANNA (surnames only)

Importance/Reasons for Registration of Business Name (April 2019 Q 3b)

a. A certificate of registration of business name is issued.
b. It raises conclusive presumption of partnership.
c. It gives priority over the name registered so that no company/business
will be registered in that name.
d. It gives the public the true identity of the persons behind the business name.
30
 e. It aids in official transactions using the business name
f. It creates trust in the mind of members of the public.

SCHEDULE FOR REGISTRATION OF BUSINESS NAMES/PARTNERSHIP

1. Taking Instructions
2. Search for Availability
3. Preparation of Registration documents
4. Filing; and
5. Obtaining certificate of registration.

Checklist of Items needed to Register Business Name

1. Obtain Certificate of proficiency from proprietors in the relevant field if the
business is for professional services. (In Practice
2. Obtain two passports from each of the proprietors/partners.
3. Obtain evidence of change of name (married woman).
4. Result of availability check and reservation of name.
5. Tax Clearance Certificate
6. Valid Mode of Identification;
7. Evidence of Payment of Annual Returns in Case of Corporation
8. In case of Corporation, a copy of the resolution authorising the registration.
9. Completed Application Form (CAC/BN 01)
10. Evidence of Payment of Filing Fee.

Procedure For the Registration of a Business Name (August 2017 Q 5a) Commented [MOU7]:
Procedure for Registration
1.TAKE INSTRUCTIONS
Within 28 days of commencing business, an online application must be delivered 2.CONDUCT AVAILABILITY CHECK AND RESERVATION OF NAME
3.COMPLETE APPLICATION FORMS ON LINE
to the Registrar for registration of the business name. 4.ATTACH ALL THE RELEVANT Documents
5.PAYMENT OF FILING FEES
6.OBTAIN CERTIFICATE OF REGISTRATION
1. Form CAC 1 - availability search and reservation of name (filled online)
31
 2. Form CAC/BN 01 - Application for Registration of Business name. (Filled
online)
3. Upload the following documents with the application: (Dec 2020 Q 3e)
a. Two passports photograph of each individual – S. 815(2)
b. Valid means of Identification
c. Electronic signature
d. If any of the partners is a minor then attestation by a legal practitioner or
a Magistrate or assistant superintendent of police will be required.
e. Tax clearance certificate of each individual of partner
f. Qualifying Certificate (in case of a professional)
g. evidence of payment of the processing fees
4. Obtain Certificate of Registration of Business name from CAC

EFFECT REGISTRATION OF BUSINESS NAME

1. gives priority to use of the name even against registered companies S.
852 (1) (d); S. 41(e).
2. Not proof of partnership but Raises a rebuttable presumption of the
existence of partnership Nwankwo v Nwankwo
3. Registration will not be construed as authorising the use of the name if apart
from such registration the use of the name would be prohibited
4. Registration does not give legal personality to the business or association but
merely apprises the public of the true identity of the person(s) who trade
under the name. Domingo v The Queen
5. It constitutes common knowledge as to the identity of the persons who trade
under the name.
6. It absolves the people carrying on business name from criminal liability for
failure to register.
32
 EFFECT OF A BUSINESS NAME CONVERTING TO A COMPANY
1. The Subscribers to the MEMO & ART together become members of the
company
2. The company shall become a body corporate capable of suing and being
sued and having perpetual succession
3. There shall be liability on the part of the company to contribute to the assets
of the company in the event of winding up

ANNUAL RETURN - Section 822 Form CAC/BN 06 Commented [MOU8]:

The returns shall be accompanied by the financial statement of the
individual, firm or corporation in the business during the preceding
To be delivered not later than 30th June in each year EXCEPT the calendar year period of January 1 to December 31

in which the name was registered

Instructions to be Taken for the Registration of Business Name (FOCUS)

1. The proposed Business Name and Alternative Name to be reserved for 60 days.
2. The General nature of Business
3. The Full Address of the principal place of Business and Branches if Applicable.
(for service of processes)
4. Full Particulars and Personal Details of Proprietors
5. Whether or not a minor is involved as partner -Section 815 (6)
6. Date to commence business (28 days Rule)
7. Residential Address of Proprietor.

GENERAL PARTNERSHIP (always asked together with Business Name)

The Major Elements of a Partnership:
1. there must be a business
2. The business must be carried on in common by two or more persons
3. The business must be carried on with a view to make profit- Uredi v. Dada
33
 4. Membership is limited to between 2 and 20 EXCEPT for law and
accountancy firms.

NOTE: Commented [MOU9]:

EFFECT OF Registration of a General Partnership: FOCUS

Partnership does not exist where these elements are absent a.Appraises the public of the existence of the partnership

b.Gives the partnership priority over the use of the

partnership name even against an incorporated company.

ADVANTAGES OF PARTNERSHIP c.Registration must not be construed as authorizing the use

of that name, if apart from such registration, the use of the
name would be prohibited
1. It is easier to raise funds
2. It encourages specialization FEATURES OF A General Partnership

1.Shall have a minimum of 2 and maximum of 20 partners

3. There is quality decision making except for partnership of professionals.

2.The relationship must be between persons carrying on

4. Profits are mutually shared amongst the partners business in common with a view of making profit.

5. It is easier to get more customers/clients since every partner is involved 3.It can commence business before its registration but must be
registered within 28 days of commencement of business

4.Registration does not confer legal personality on the

partnership
DISADVANTAGES 5.In a general partnership, its necessary to have a formal
partnership agreement to prevent the presumptions at common
1. There is shared liability since each partner is deemed an agent of others. law.

2. There is likelihood of delay in decision making.

3. There is high likelihood of disagreement amongst the partners which
may lead to dissolution of the partnership.
4. Greed and envy amongst the partner may also hinder its growth

NUMBER OF PARTNERS (Dec 2020 Q 3a)

The MINIMUM NUMBER of persons required for partnership business is at
least 2 persons while the maximum number is 20 persons. Uredi v Dada
EXCEPT for a firm of
1. legal practitioners or
2. chartered accountants; Section 19 CAMA.

34
If at any time the number of members of an association or partnership exceeds 20
and it carries on business for more than 14 days while the contravention
continues, each person who is a member of the company, association or
partnership during the time it so carries on business is liable to a fine as prescribed
by the Commission for every day during which the default continues
NOTE: a Minor can join the partnership but the signature of the minor must be Commented [MOU10]:
PARTNERSHIP AGREEMENT
Once a business is carried on in partnership, it is advisable for the
countersigned by a legal practitioner, a magistrate or a senior police officer. partners to execute a written partnership agreement or deed.

The reasons/Importance of Written Partnership Agreement (April 2016, April

2018, April 2019 Q 3c)
a. It helps to avoid common law presumptions on partnership.
b. For ease of official transactions.
c. For ease of conflict resolution.
d. Obligations, liability and privileges can be determined easily.
e. It will be binding on the parties.
f. The terms of the partnership will be clearly stated.

Important Clauses that should be in A Partnership Agreement:

1. Profit sharing equilibrium
2. Capital contribution ratio
3. Partnership property
4. Remuneration of partners
5. Suspension/Expulsion of partners
6. Dispute resolution
7. Death of partner
8. Dissolution of partnership

35
The Implied Terms/Common Law Presumptions in Partnership (Exam Focus) Commented [MOU11]:
Capital & Capital contribution:
There is a presumption of equality in the absence of a contrary
Where the partnership Deed is silent, the following is implied; (Dec 2020 Q 3d, intention. By S. 25(a) Partnership Law Lagos, all the partners are
entitled to share equally in the capital of the business and must
May 2022 resit ) contribute equally to the capital of the business. This is the position
implied by law in the absence of an express provision to the contrary.
Therefore, if the partners intend otherwise, then instructions should
1. Equal sharing of profits be taken to include a clause in the deed which will provide the
proportions or percentage of partners share in the capital and their
contributions thereto. It should clearly state how much each partner
2. Equal sharing of losses should contribute.

3. Equal contribution of capital/ assets of the business Sharing of Profits and Losses:
The formula of this must be expressly stated or the law will imply
equal division, in the absence of an express provision to the contrary.
4. The death of a partner dissolves the partnership By 25(a) Partnership Law Lagos each partner is entitled to share
equally in the profits and losses of the partnership. Therefore, if the
parties intend to share the profits and losses unequally, a clause
5. A partner cannot be suspended otherwise it is dissolved should be inserted to reflect the sharing formula according to the
intention of the partners
6. No payment of salaries to partners

POSER
Assuming Partners have agreed to have a written partnership agreement, explain
why they must specifically agree on partnership capital, partnership property and
dissolution of partnership. May 2012 No 5(c)
1. Capital: The amount contributed by each partner or the proportion of
the contribution should be stated. There is a presumption of equality of
shares unless otherwise provided Section 25 (a) P. L. Lagos. Halaby
vs Halaby.

2. Partnership property: there is a presumption in respect of property

bought with Partnership money as being partnership property unless
otherwise provided. Section 22 Partnership Law, Lagos; Hanein v
Nasir.

DISSOLUTION OF PARTNERSHIP
A partnership may be dissolved in 3 ways; which are: May 2012
1) Act of the parties:
a) By Notice (Section 33(1)(c) Partnership Law, Lagos);
b) By Illness (section 36(b)) PL. (L);

36
 c) By charge of partner's share of Partnership Property (section
34(1)(b) P.L.;
d) By special clause in agreement e.g. power of expulsion.

2) By Operation of Law:
a. Expiration of term (section 33 (1) Partnership Law, Lagos;
b. Termination of venture or undertaking S. 33(l) PLL. Uredi vs Dada;
c. Death or bankruptcy of partner unless otherwise provided S. 34(a) PL
d. Supervening illegality (section 35(L)).

3) By the Court (section 36 Partnership Law, Lagos)

On application to the court by a partner of a firm, the court may dissolve

the partnership on the following grounds:

(a) A partner is a lunatic or permanently of unsound mind;

(b) A partner is permanently incapable of performing his part of the

agreement i.e illness;

(c) A partner is guilty of such conduct that is calculated to affect

prejudicially, the carrying on of the business of the partnership,

(d) Where the partnership business is only carried out at a loss;

(e) Where the court considers it just and equitable to dissolve the
partnership like incompatibility of the partners.

Procedure for Dissolution of the Partnership

1. Notice of retirement, dissolution, or expulsion is served on other partners
referring to the appropriate clause in the partnership agreement.

37
 2. The partners prepare and execute the dissolution agreement.
3. Distribution of assets and liabilities will commence
4. Notice of dissolution/cessation is given to:
a) Corporate Affairs Commission, if registered
b) Published in the gazette and national newspapers.
c) Clients or customers

Instructions To Take in Preparation of Partnership Agreement

1. Name of the parties
2. The Nature of Business
3. Contribution of Capital
4. Profit and Loss Sharing Formula
5. Remuneration
6. Power of Suspension and Expulsion
Commented [MOU12]:
7. Commencement of Business FEATURES OF LIMITED PARTNERSHIP: FOCUS

8. Name and Style of Business 1.Must be registered before commencement of business;

2.Does not have distinct legal personality from its partners

9. Admission of New Partners
3.Name must end with the words “limited partnership” or “LP”
10. Duration/Dissolution
4.Both general and limited partners contribute to the capital of
the firm;
11. Retirement
5.Must carry on business in common with the view of making
12. Power, Rights and Duties profit;

6.Minor maybe a partner provided there are at least two adult

13. Banker and Mandate/Signatories partners

14. Dispute Resolution 7.Must have minimum of two partners and maximum of 20;

8.Must have at least one limited partner and at least one

general partner;

LIMITED PARTNERSHIP – PART D 9.Must have partnership agreement;

10.Gives priority to use of the name;

Constitution of Limited Partnership: Minimum of 2 and maximum of 20 EFFECT OF REGISTRATRION
Certificate shall be evidence that the Limited Partnership came into
Persons of which: existence on the date in which it was registered.

38
 a. 1 or more persons are general partners and
b. 1 or more persons are called limited partners – Section 795 CAMA

Who can be a Partner: An individual or corporate body can be a partner;

However, the following persons CANNOT be partners;

(a) Persons of Unsound Mind and

(b) An Undischarged Bankrupt – Section 796 CAMA

Note: A minor can be a partner.

Registration of Limited Partnership – An individual or corporation can register

as a limited Partnership.

Commented [MOU13]:
Where there is failure of registration, then it is deemed as a general Instructions to Obtain in Registering the Limited Partnership:
1.Type of partnership;
partnership. Section 797(2) CAMA 2.General nature of the business of the limited partnership;
3.Principal place of business; address of branch office (if any);
4.Partners details (for example, name, nationality, gender, date
of birth; phone number; email address, identity type, identity
Documents Required for the Registration of the Limited Partnership: FOCUS number, occupation and partner’s status);
5.Partners usual address;
6.Partners service address;
1. CAC FORM 1 - Availability and Reservation of Name Form; 7.Contribution of partners;
8.Profit and losses;
9.Remuneration;
2. Form CAC/LP 01 – Application to Register a Limited Partnership; 10.Details of authorized person (for example name, email
address and phone number);
11.Management of the partnership; powers, rights and duties;
3. Recent passport photographs of all partners; 12.Accounts;
13.Partnership property;
14.Expulsion;
4. Copy of Valid means of identification e.g., driver’s license (birth 15.Dispute resolution;
16.Dissolution; and
certificate in case of a minor) must be submitted for every individual partner 17.Winding up.

5. Partnership agreement; Partnership Agreement of Limited Partnership:

The partnership agreement should contain the following:
1.Name of the partners;
6. Evidence of payment of filing fee. 2.Name of the limited partnership;
3.place of business;
LIABILITY: 4.Commencement date;
5.Duration;
6.Capital contribution;
7.Profit and loss sharing
A Limited Partner is only liable to the amount he contributed, HOWEVER, 8.property of the partnership
9.Salary/remuneration
he should NOT TAKE PART IN THE MANAGEMENT OF THE BUSINESS 10.powers

39
If a limited partner participates in the management of the business of the limited
partnership, he will be liable for all the debts and obligations of the partnership
incurred while he participated in the running of the firm as if, he was a
general partner of the firm - Section 806

General Partner has unlimited liability for the debts of the LP and is
responsible for the running of the affairs of the LP.

NOTICE OF CHANGE IN STATUS OF GENERAL PARTNER OR

ASSIGNMENT OF SHARE OF LIMITED PARTNER

General partner can become a limited partner if:

a. such an arrangement is agreed upon by the other partners and

b. a notice of the arrangement or transaction specifying the change from
general partner to limited partner is filed with CAC within 5 days of the
change - Section 801.

Notice of any arrangement: Commented [MOU14]:

Example is where general partner is absent and limited partner
needs to run the affairs of the business,

When A limited partner changes to a general partner such change is to be put

in a statement signed by the firm and submitted in 7 days. Section 800 CAMA

Registers to be kept: Section 805

(a) Register of Limited partners

(b) Index of Members of Limited Partnerships
(c) Minutes book

40
ANNUAL RETURN Commented [MOU15]:
The annual return will be accompanied by the statement of
account and solvency for the year of return

The annual return is filed within 60 days after closure of the financial year of a
limited partnership in a Form CAC/LP 04.

Failure to file annual return and statement of account and solvency for 10
consecutive financial years is one of the grounds for winding up of a limited
partnership by the court.

Dissolution:

1. It is Voluntarily wounded up by Partners.

2. By the court

Following can bring petition for winding up of limited partnership:

a. The limited partnership or all partners of the limited partnership;

b. Creditors of the limited partnership; and

c. Corporate Affairs Commission.

The application for winding up of limited partnership is by petition.

The court with jurisdiction is the High Court of a State where the limited
Commented [MOU16]:
PERSONS WITH SIGNIFICANT CONTROL:
partnership has its principal place of business or carries on business. Person with significant control means any person who directly or
indirectly holds: at least 5% of the shares or interest in a limited
liability partnership; or at least 5% of the voting rights in limited
Death, Bankruptcy, Lunacy of a limited Partner DOES NOT bring a Limited liability partnership

Partnership to an end unlike a general partnership. Section 806 (3). Instructions to Obtain in Registering the Limited Partnership
1.name and alternative name of the partnership;
2.type of partnership;
3.business of the LLP;
LIMITED LIABILITY PARTNERSHIP – PART C 4.registered address and head
5.contribution of partners;
6. profit and losses;
A Limited Liability Partnership is a Body Corporate –Section 746 7. remuneration;
8.management of the partnership;
9. powers, rights and duties;
10. accounts;
11. partnership property;
12. retirement

41
Who can be a Partner: An individual or corporate body can be a partner;
HOWEVER, the following persons CANNOT be partners;

(a) Persons of Unsound Mind and

(b) An Undischarged Bankrupt –Section 747 CAMA

Minimum number: At least two (2) persons but NO maximum–Section 748

Designated Partners: Every LLP shall have at least 2 designated partners who
are individuals and at least 1 should be resident in Nigeria – Sect 749
Commented [MOU17]:
Characteristics/features of Limited Liability Partnership: Focus CONTINUATION

1.Must carry on business in common with the view of making

profit;
1. Must be registered before commencement of business;
2.Must have minimum of two partners and no maximum
2. Has distinct legal personality from its partners; partners;

3.Partners can be corporate bodies as well as individuals;

3. Can enter into contracts in its own name;
4.Must have at least two designated partners;
4. Can acquire and dispose property; 5.The partners has limited liability for the debts of the firm;

5. May have common seal (if it desires); 6.Partners are agents of the firm and not of the other partners.

7.Partners are not responsible for the errors, omissions,

6. Has perpetual succession; misconduct, negligence, incompetence, or malpractice
committed by other partners or by employees of the firm;
7. Name must end with the words “limited liability partnership” or “LLP”; 8.A partner involved in wrongful or negligent acts in the
running of the firm is personally liable;
8. Partners can be corporate bodies as well as individuals;
9.All the partners may participate in the management of the
affairs of the limited liability partnership;
Rights of Limited Liability Partner: focus
10.Flexibility in terms of management and how profits are
shared that is; easy to manage;
1. Right to take part in the management of the LLP; 11.Tax benefits may be available; and

2. Right to share in the profits of the LLP

12.Easy dissolution of the partnership.

3. Right to notice of meeting;

DISCLOSURE OF SIGNIFICANT CONTROL IN A LIMITED
4. Right to vote and be voted for; LIABILITY PARTNERSHIP
Where a partner becomes a person with significant control over a
limited liability partnership, he shall within 7 days of becoming such
5. Right to introduce and to consent to introduction of a new partner; a person, indicate to the limited liability partnership in writing the
particulars of such control the partnership shall within 1 month from
the receipt of the information or any change therein, notify Corporate
6. Right to access to, inspection and copy of partnership books; Affairs Commission of that fact. See section 791 of CAMA

42
7. Right to retirement from partnership at will provided notice is given to other
partner; and
8. Right to advise other partners of the firm.

Obligations of Partner to Limited Liability Partnership: focus

1. Contribute an agreed sum as capital of the limited liability partnership;

2. Share in the losses of the limited liability partnership;

3. Liable for the debts of the LLP to the sum contributed or agreed to
contribute;

4. Not to draw out or receive back any part or all his contribution while the
LLP subsists;

5. Personal liability for wrongful or negligent acts in the running of the

LLP;

6. Account to the limited liability partnership for any benefit or private profits
derived by him without the consent of the other partners from any
transaction concerning the LLP

7. Rendering true accounts and full information of all things affecting the
partnership to any partner or his legal representatives;

Documents Required for Incorporation of the LLP: focus

1. Form CAC 1- Availability and Reservation of Name Form

2. Form CAC/LLP 01 – Application to Register a Limited Liability

Partnership filled online;

3. Partnership Agreement;

4. Valid means of identification must be submitted for every individual

partner uploaded online;

5. Qualifying certificate uploaded online;

43
 6. Electronic signature uploaded online; and

7. Evidence of payment of filing fee made online.

CAC will register LLP within 14 days S. 754 CAMA

Effect of Registration: 757 CAMA

a. The certificate of registration shall be prima facie evidence that the limited
liability partnership came into existence on the date of registration
b. Confers legal personality and Legal status on them.
c. Can Sue and be sued in its name
d. Acquire, own and dispose of property (moveable and immoveable)
e. If it decides it can have a common seal
f. Do and suffer such acts as bodies corporate may

Extent and Limitation of Liability: Only liable for acts done by a partner who
has authority or in the course of business of the LLP.

But not liable for partner who has no authority or where a person is aware he has
no authority or is a partner. – Section 765 – 766

REGISTER TO BE KEPT - 772

A. Register of Limited Liability Partnerships

B. Index of Limited Partnerships
C. Register of Persons with Significant Control
D. Register of members
E. Books of account
F. Minutes book

44
 INVESTIGATION OF LLP Commented [MOU18]:
THOSE THAT MAY APPLY FOR INVESTIGATION OF
LIMITED LIABILITY PARTNERSHIP
Limited Liability Partnership can be investigated on the following grounds:
1.The court by its order;
1. Where the CAC is of the opinion that the business is being or has been 2.Corporate Affairs Commission on its own motion;
3.At least one-fifth of the total number of partners;
4.The limited liability partnership itself.
conducted for a fraudulent or unlawful purpose;
USE OF THE INSPECTOR’S REPORT:

2. Where the CAC is of the view that the business of the LLP is being or has 1.Corporate Affairs Commission may institute civil proceedings in
the name and on behalf of the limited liability partnership on the
been conducted in a manner oppressive or unfairly prejudicial to some basis of the inspector’s report, where it appears to the Commission
those civil proceedings ought to be brought by the partnership in
the public interest.
or any of its partners,
2.Where from the inspector’s report a person appears to have been
convicted of an offence for which he is criminally liable, the
report shall be referred to the Attorney-General of the Federation.
Where the Attorney-General of the Federation considers that the
3. Where the CAC believes that the affairs of the LLP are not being case referred to him is one in which a prosecution ought to be
instituted, he shall direct action accordingly.

conducted in line with the provisions of CAMA;

3.Where from the inspector’s report, it appears to the Commission
that proceedings ought, in the public interest, be brought by the
partnership dealt with by the inspector’s report for the recovery of
damages, in respect of fraud, misfeasance or other misconduct in
4. On receipt of a report of the CAC or any other investigating or regulatory connection with the promotion or formation of the partnership or
the management of its affairs, or for the recovery of any property
of the partnership which has been misapplied or wrongfully
agency, the CAC is of the opinion that there are sufficient reasons to retained, it may refer the case to the Attorney- General of the
Federation for his opinion as to the bringing of proceedings for
show that the affairs of the partnership ought to be investigated. that purpose in the name of the partnership. If proceedings are
brought, all past and present designated partners and partners of
the partnership, other than the defendants in the proceedings, must
give to the Attorney- General of the Federation all assistance in
connection with the proceedings.

4.Where it appears to the Commission from the inspector’s report

Winding Up and Dissolution – S. 789 that it is desirable in the public interest that the partnership be
wound up, the Commission may present a petition for it to be
wound up if the court deems it just and equitable to do so, unless
1. Voluntary Winding Up by the partners- Company passes a UNANIMOUS the partnership is already wound up by the court.

DECISION and not special resolution, then it proceeds to court winding up. 5.A copy of the inspector’s report authenticated in such manner, as
may be prescribed shall be admissible in any legal proceeding as
evidence in relation to any matter contained in the report.
2. Court –Provides that the court can wind up and the process below:
Commented [MOU19]:
1.By process of winding up as provided in CAMA

Circumstances in Which LLP May be Wound Up by the Court – Section 790 2.By striking off the name of the LLP from the Register of
Limited Liability Partnership -Section 692 (For companies) and
793 (Where CAC believes that it is not carrying on business in
accordance with the provision of the Act.
1. All the partners decide that the LLP be so wound up by the Court.
2. The number of partners falls below two (2) For a period of more than 6
months,
3. The LLP is unable to pay its debt

45
4. The LLP has acted against the interests of the sovereignty and integrity of
Nigeria or against her security or public order.

5. The LLP has made a default in filing with the commission, the statement of
Account, Solvency or Annual Return for any 10 consecutive financial years
6. The court is of the opinion that it is just and equitable that the LLP be
wound up.

WHO CAN BRING A PETITION?

The following can bring petition for winding up of LLP by the court:
1. Partners of the Limited Liability Partnership;
2. Creditors of the Limited Liability Partnership; and
3. Corporate Affairs Commission

ANNUAL RETURN

A LLP shall once a year apart from the year of its registration file Form
CAC/LLP 07 – Annual Return of Limited Liability Partner within 60 days
after closure of the financial year and will be accompanied by evidence of filling
fee

Differences between a Private Company Limited by Shares and a Limited Commented [MOU20]:
STRUCTURE TO REMEMBER
1.NAME ending
Liability Partnership. 2.MEMBERSHIP number
3.BINDING DOCUMENT
4.LIABILITY
PRIVATE COMPANY LIMITED LIABILITY PARTNERSHIP 5.MANAGEMENT
6.SECRETARY

LIMITED BY SHARES

NAME OF COMPANY ENDS NAME ENDS WITH LLP

WITH LTD

46
MINIMUM MEMBERSHIP IS MINIMUM MEMBERSHIP IS TWO
ONE

REGISTERED UNDER PART B REGISTERED UNDER PART C

HAS SHARE CAPITAL HAS NO SHARE CAPITAL

MAXIMUM 50 MEMBERS NO MAXIMUM ON MEMBERS

MEMBERS LIABILITY IS MEMBERS LIABILTY IS LIMITED BY

LIMITED BY SHARES THEIR CONTRIBUTION

CAN BE BROUGHT TO AN CAN BE BROUGHT TO AN END BY

END BY WINDING UP DISSOLUTION

HAS MEMORANDUM AND HAS PARTNERSHIP AGREEMENT

ARTICLES OF ASSOCIATION

MANAGED BY A BOARD OF MANAGED BY DESIGNATED

DIRECTORS PARTNERS

STATUTORY PROVISION NO STATUTORY PROVISION FOR

FOR SECRETARY SECRETARY

FOREIGN LIMITED PARTNERSHIP (FLLP) (Focus)

If they do not register, then they cannot: S. 788

a. carry on business
b. Exercise the Powers of a Corporate Body

47
c. Have a registered address or Place of Business
d. No Address for Service Except Receipt of Notices, and other documents.
POSER

1. Can the Foreign LLP be exempted? Who gives the exemption?

2. What Procedure will you follow?
3. What are the Circumstances in which a Foreign LLP can be exempted?
See Section 788 CAMA and Regulation 25 CR.

ANSWER

1. It must be registered however, Yes, The FLLP can be exempted by Virtue of

Section 788(2) of CAMA. The Exemption is given by the Minister of Trade
and Investment.
2. An application for exemption is made to the minister of trade Section 80 (2)
3. The circumstance which a FLLP can be exempted from incorporation are – Reg
25 Companies Regulation
1. LLP invited to Nigeria with the approval of the Federal Government to
execute any specified individual project.
2. LLP in Nigeria for the execution of specific individual loan projects on
behalf of a donor country or international organization.
3. LLP owned by a foreign government and engaged solely in export
promotion activities.
4. An engineering and technical expert engaged on any individual specialist
project under contract with any of the governments in the Federation or any
of their agencies or with any other body or person, where such contract has
been approved by the Federal Government.

48
A FLLP within 30 days of the grant of exemption shall deliver to the Commission
upon payment

INCORPORATED TRUSTEES OF ASSOCIATIONS – PART F

WHO MAY REGISTER? Commented [MOU21]:
Instruction for Registering Incorporated Trustees
1.Name of the association
Two or more trustees appointed by any community of persons bound together by 2.Aims and objectives
3.Names, addresses, occupation and ages of Trustees.
custom, kinship or nationality or any association established for educational, 4.Powers, duties and tenure of office of Trustees.
5.Use and Custody of Common Seal.
6.Source of funding and application of funds.
literary, scientific, social, development, cultural, sporting or charitable purpose – 7.Accounting and Auditing Procedure.
8.Availability of landed property.
may if so authorized apply to the commission to register section 823 (1) 9.Address of Registered Office.
10.Minutes of Required Meetings.

SUITABILITY OF INCORPORATED TRUSTEES

1. Suitable for a group people bound by a common tie which could be religious
cultural, social, sport etc. S. 823
2. They come together for the furtherance of a charitable purpose
3. Corporate personality is granted to the trustees of such association and not the
association itself. S. 830

Features of Incorporated Trustees (Exam Focus, April 2019 Q 6a)

1. The Trustees are the only persons who obtain legal personality not all the
members
2. Incorporated Trustees makes use of Constitution which must contain clauses
provided under CAMA
3. The Name must start with the words “Incorporated Trustees of …” S. 825(1).
4. It does not do business and does not distribute profits.
5. It receives incomes from grants, levies, dues to undertake its objects.
6. The body is run by trustees Board of trustees
7. Can sue or be sued in the name of incorporated trustees
49
8. The Association must show within two years of registration, evidence of
acquisition or interest in landed property.
9. The minimum number of trustees/members is two (2) trustees Section 823(1)
(focus)
10. Non-payment of tax
11. Assets transferred to bodies with similar objects or charitable organisations on
dissolution (SPECIAL CLAUSE)

NOTE:
Organizations that are registrable under Parts F of CAMA as incorporated trustee
can operate or carry out its objects without registration but cannot take
advantage of the incidence of incorporation unless registered. (April 2017 Q 2,
January 2020 Q 1b)
POSER:
Advise the Trustees of a proposed Association on the legality or otherwise of
carrying outs its objectives prior to registration. 2010 No 3(a)
The Trustees of an Association can legally carry out its objectives prior to
registration and may even decide not to register at all if not so authorized by the
association.

ADVANTAGES OF INCORPORATED TRUSTEES

1. It can carry on its aims and objectives prior to its registration (exam focus)
2. Its more flexible to register since the requirement for consent of AGF is
not applicable
3. Its suitable for associations or organizations that might be anti-government
4. It’s also exempted from paying tax.

50
Contents/Clauses of The Constitution of Incorporated Trustees (Bar final
August 2018 Q 2c, April 2019 Q 6b) - Section 827
1. The name or title of the association;
2. The aims and objects of the association
3. Appointment, powers, duties, tenure of office and replacement of the
trustees,
4. The use and custody of the common seal, if there is one
5. The meetings of the association
6. The number of members of the governing body, if any, the procedure for
their appointment and removal, and their powers,
7. Source of funds, application of fund, accounts to be kept and auditors.
8. Special clause

N. B Commented [MOU22]:
PROCEDURE FOR ALTERATION OF THE OBJECT/NAME OF THE IT

An Incorporated Trustee may alter its constitution by resolution passed by simple 1.the trustees shall apply to the Commission in the prescribed
form setting out the alterations desired and attaching a copy of
majority of its members and approved by the CAC. S. 833 CAMA the resolution approving the change and duly certified by the
trustees

2.the Commission on receipt of the application shall consider it

and, if satisfied that the change or alteration is prima facie
lawful shall:
Qualification of Trustees (August 2018 Q2a, August 2019 Q3b, Dec 2020 Q5b)
Everyone is qualified to be appointed as a Trustee EXCEPT the following (a)cause the application to be published in two daily
newspapers

persons: Section 826 CAMA (b)the corporation to display for at least 28 days a notice of
the proposed change or alteration conspicuously mounted at
a. A person of unsound mind; the corporation headquarters, or at any branch office, or
any such place where a majority of the members are likely
to see it
b. An un-discharged bankrupt;
(c)The publication and notices shall call for objections
which, if any, shall state the grounds of objection and be
c. A person that has been convicted for an offence involving fraud or forwarded to reach the Commission not later than 28 days
after the last of the publications in the newspapers.
dishonesty within 5 years of his proposed appointment. (d)If the Commission assents to the application, the
alterations shall be made and in the case of a change of
d. He is a minor or infant below 18 years. (exam focus) name, the Commission shall issue a new certificate in the
new name in place of the former certificate.
NB-
Trustees can be changed at a general meeting with the approval of CAC S. 834
51
A person disqualified that acts as a Trustee shall be liable to a penalty.

Suspension of Trustees Commented [MOU23]:

Section 839(1) allows the CAC to by order suspend the trustees of
an association and appoint an interim manager or managers to
Trustees can be suspended under Section 839 on the following grounds: manage the affairs of an association.

1. Misconduct or mismanagement. REG 28

The Commission shall not suspend a trustee unless such trustee
has been
2. For the Protection of the property of the organization. 1.notified of details of the allegation of wrong-doing against
him in writing by the CAC,
3. For Securing a proper application of the property of the organization 2.given fair opportunity to respond to the allegation of
wrong-doing against him,
towards the achievement of the objects.
3.refused, after a period of 30 days or such other period as
may be extended by the Commission, to remedy any wrong-
4. On the ground of public interest. doing established against him by a board of enquiry,
provided that in granting any extension, the Commission
5. On the ground that the affairs of the organization are run fraudulently. shall have regard to the particular activities, tasks or
requirements necessary to remedy the wrong-doing.

Persons That May Apply for Suspension of Trustees

The trustees may be suspended on an application by way of PETITION by the
following:
a. By the CAC.
b. One fifth (1/5) of members of the organization.
Note: The petitioner must provide reasonable evidence – Section 839(2)
Upon hearing the application, the court may appoint interim managers with
specific powers which may include exercising all the powers of the trustees.
Suspension of trustees must not exceed 12 months from the date of the order.
Court may suspend other officers of the organization as well. The court may
appoint additional trustees. Appoint an official custodian upon whom the property
of the organization may be vested.

Procedure for the Incorporation of Incorporated Trustees (Exam Focus)

1. Obtain instructions
2. Form CAC 1.1 Availability search and reservation of name (filled online).

52
 3. Preparation and submission of incorporation documents to CAC - Form
CAC/IT 01 and other necessary documents
4. Make a newspaper publication in at least two national daily newspapers to
last for 28 days
5. Collect the Certificate of Incorporation of the Association from CAC

Documents Required for Registration of Incorporated Trustees (August 2017

Q 2b, August 2019 Q 3a): the documents required for registration of I.T are:
Section. 825
1. Form CAC 1 -Availability check and reservation of name with the name
stated as “Incorporated Trustees of …”
2. Duly filled CAC Form CAC/IT 01 (Application for registration IT)
3. Two Copies of the Constitution of the association
4. Duly signed of the extract of the minutes of the meeting where the
Trustees were appointed or elected, having the list of members present
and votes scored.
5. A Copy of the Resolution adopting the Special Clause
6. Impression of the proposed common seal of the body.
7. Evidence of land ownership or an affidavit in lieu
8. Evidence of advertisement in Two National Daillies calling for objections
to the registration of the Association within 28 days.
9. Two passport photographs of each of the Trustees
10. Trustees Declaration Form duly sworn to by each trustee
11. Application letter (addressed to the registrar)
12. Evidence of payment of the prescribed fees
13. Means of identification of each trustee

53
Statutory Books To Be Kept By Incorporated Trustees (August 2019 Q 3d,
Dec 2020 Q 5c)
1. Register of members
2. Register of trustees
3. Minutes Book
4. Books of Account
5. Asset register /property acquisition register

EFFECT OF REGISTRATION – Section 830

From the date of registration, the company shall become a body corporate and shall
have
(a) perpetual succession
(b) a common seal if they so wish
(c) power to sue and be sued in its corporate name as such trustees

Differences between Company Limited by Guarantee (GTE) and

Incorporated Trustees (I.T) (Highly Exam Focus see Bar Final 2016 Q 2,
April 2017 Q 2, & April 2018 Q 3, January 2020 Q 1C)
1. A GTE is required to have a Memo and Articles of Association while I.T
should have a constitution.
2. A company Limited by GTE may be allowed to engage in small business
without sharing profit but I.T is not allowed to engage in business. S. 26(1)
and S. 823 (1)
3. For I.T, there must be evidence of advertisement in two National dailies;
this is not required for GTE. S. 828

54
 4. A company Ltd by GTE requires the consent of the AGF before it can be
registered; I.T requires no consent of AGF (consent of the registrar general
needed for IT). S. 26(4) & (5)
5. There must be evidence of land ownership or undertaking in lieu for I.T; it is
not required for GTE
6. For I.T the Association can carry out its object without registration but
GTE must be incorporated before it can execute its object.
7. Incorporated trustees have trustees while GTE has guarantors
8. Extract of minutes of meetings appointing trustees and adopting special Commented [MOU24]: Number of people in attendance
Number of people elected
Votes for and against
clause required for IT, but none for Ltd/Gte
The special clause must be explained before they adopted it
9. Two passport of each Trustee is required for registration of I.T but not
required for GTE.
10. For Incorporated Trustees, only the trustees acquire legal personality S. 830
but for company limited GTE all the members have legal personality.

Similarities between a GTE and IT

a. They are both non-profit making organizations.
b. Both bodies enjoy tax exemption. – S. 23 Companies Income tax Act
c. They are both administered by CAC and governed by CAMA
d. Both have no share capital.
e. In the event of dissolution of these bodies and the remaining assets must be
transferred to an association/body with similar objects. (SPECIAL Commented [MOU25]:

The existence of a Special Clause which states that in the event of

CLAUSE) S. 26(9) and S. 850 (4) & exam focus (STRIKING FEATURE) the winding up/dissolution of the Association, and after the
satisfaction of all its debts and liabilities, there remains any
property whatsoever, the same shall not be paid to or distributed
among the members of the association, but shall be given or
transferred to some other institutions having objects similar to the
NB – With regards to the special clause for incorporated trustees: objects of the body. Such beneficiary institutions shall be
determined by the members of the association at or before the
beneficiary institutions shall be determined by the members of the association AT time of the dissolution

OR BEFORE the time of the dissolution. S. 850(4).

55
If distribution under S. 850(4), cannot be achieved then the remaining property
shall be transferred to some other charitable object. S. 850(5).

MERGERS OF Incorporated Trustees:

1. Can be voluntary by the organization – S. 849
2. Compulsorily by the CAC – S. 831

Two or more associations with the same aim and objectives may merge on the
following grounds: Section 849, Regulation 35
a. Where the organizations have similar objectives
b. Resolution passed by 75% of the members of each organization
c. Publication in 2 dailies giving room for objection to be raised
d. Display of notice of the proposed merger at the HQ and branches of each
of the associations for at least 28 days
e. Scheme of merger sanctioned by the federal high court

Note – Bar final August 2022

A Company is prohibited under Section 43 (2) CAMA from directly or
indirectly making any donation or gift of any of its properties or funds to a
Political Party or Political Association

ANNUAL RETURNS FOR INCORPORATED TRUSTEES – March 2021

Q.4 – Section 848 CAMA
The trustee of the association shall not earlier than 30th June or not later than
31st December (other than the year in which it is incorporated) submit to the CAC
Form CAC/IT 04 a return showing the following:
1. the name of the association,
56
 2. the names, addresses and occupations of the trustees, and members of the
council or governing body,
3. particulars of any land held by the corporate body during the year,
4. Any change which has taken place in the constitution of the association
during the preceding year.
5. Audited statement of accounts for the year of return.

Bi-Annual Statement of Affairs

This is provided for under Section 845 CAMA. It is made up to the 30th day of
June and filed not later than the 15th day of the following month.

The second Annual Report is made on the 31st day of December of each year
and filed not later than the 15th day of the following month. The Statement is filed
in form CAC/IT 5. Penalties ensues for failure to file in the past.

NOTE: Accounting Records is to be kept for six (6) years.

EFFECT OF INCORPORATION: August 2011 No 4(a)(ii)

1. Legal Personality: upon incorporation a company becomes a person at law

distinct from the members that formed it – Salomon v Salomon
2. Power to own land
3. Power to sue and be sued – Kate enterprises v Daewoo
4. Perpetual succession
Commented [MOU26]:
Community in which the organization is operating can petition
through CAC.
Dissolution of Incorporated Trustees - S. 850(1) CAMA
Community can initiate such petition where the activities of the
organization are contrary to public policy or violates the values of
Persons that petition for dissolution of I.T, (April Bar final 2019 No 6d) the people of the community.
Persons that may be put on notice pursuant to Section 850(3)
The Petition for dissolution of I.T can be brought by any of the following persons: include creditors and person instrumental to the dissolution. In this
case the petition is filed by CAC not the community because the
Community lacks locus.
1. The Governing Council or Board of Trustees
57
 2. One or more trustees of the association
3. Members of the Association constituting at least 50% of the members
4. The Corporate Affairs Commission

Grounds For Dissolution Section 850 (2) CAMA (April Bar Final 2019 No 6e)
The grounds for the dissolution of incorporated trustees may be any of the
following:
1. Realization of the aims and objects no useful purpose would be served
by keeping the corporation alive
2. That the body corporate is formed to exist for a specified period and
that the period has expired
3. Aims and objects of the association have become illegal or contrary
to public policy;
4. That it is just and equitable to do so in the circumstances
5. The certificate has been withdrawn or cancelled by the commission

PROCEDURE FOR THE DISSOLUTION

1. It is dissolved voluntarily by an Ordinary Resolution passed by not
less than 50 % of the members on any of the grounds stated above
2. File a Petition to the Court for a formal and effectual dissolution

All the persons likely to be affected by the dissolution (e.g. creditors/trustees) shall
be put on Notice.
The rule guiding the distribution of the assets of an Incorporated Trustee is
that: May 2012 No 6(d)
1. the income and assets of the association shall be applied solely towards
the promotion of the objects of the body
58
 2. no portion of it shall be paid or transferred by way of profit to the
members of the body; and that if,
3. in the event of a winding up or dissolution of the body, there remains,
after the satisfaction of all its debts and liabilities, any property, the same
shall not be paid to or distributed among the members of the association,
but shall be given or transferred to some other institutions having objects
similar to the objects of the body, or transferred to some charitable
objects. Section

What is a Special Clause? 2010 No 3(g)

The Special Clause is a Clause in the Constitution of an Incorporated Trustee that
provides for the application of the income and property of the association to the
effect that the income and assets of the association shall be applied solely towards
the promotion of the objects of the body and no portion of it shall be paid or
transferred by way of profit to the members of the body; and that if, in the event of
dissolution of the body, there remains, after the satisfaction of all its debts and
liabilities, any property, the same shall not be paid to or distributed among the
members of the association, but shall be given or transferred to some other
institutions having objects similar to the objects of the body, or transferred to some
charitable objects.

Draft the special clause of the Constitution of an Incorporated Trustees May

2012 No 6(b)
In the event of dissolution of the incorporated trustees, there remains, after the
satisfaction of all its debts and liabilities, any property, the same shall not be paid
to or distributed among the members of the association, but shall be given or

59
transferred to some other institutions having objects similar to the objects of the
body, or transferred to some charitable objects.
OR
In the event of Dissolution and after the discharge of its debts, any assets of the
company remaining shall not be distributed among the members, but shall be
transferred to organizations with similar objects.

Instructions for registering IT

1. Name of the association and alternative if any
2. Aims and objective
3. Name, addresses, occupation and ages of trustees
4. Powers, duties and tenure of office of Trustees.
5. Use and custody of common seal
6. Sources of funding and application of funds
7. Accounting and auditing procedure
8. Availability of landed property
9. Address of registered Office
10. Minutes of required meetings

ETHICAL ISSUES
ethical implication of a Legal Practitioner who was given instructions and paid
money to incorporate a company and he failed to incorporate the company and
refused to take the calls of the client. 2009 No 1(h)
It amounts to a breach of trust and a breach of professional responsibility for a
legal practitioner to fail to carry out the instructions of his clients for which the
legal practitioner may face disciplinary actions and punishable punishments under
Section 11 LPA.

60
 PROMOTION AND PRE INCPRPORATION-MATTERS
Promoters are those that undertakes to take part in the forming of a company in
reference to a given project and to get it going and who takes steps to bring a
company into existence; Section 85 CAMA, Twycross v Grant.

Persons rendering professional/technical or ministerial services e.g Solicitors,

Accountants, Valuers or Business Consultants in the formation of a company are
not promoters. Garba v Sheba Intl (Nig) Ltd

DUTIES OF A PROMOTER
1. Duty to account for money/properties received in the course of the promotion
activities - Garba v. Sheba Intl. Ltd, Section 86(2)
2. Duty not to make secret profit; where made, it must be returned to the
company.
3. Duty to disclose conflicting interests in transactions with the company.
4. Duty of Skill and Care
5. duty not to expose the company to loss – Section 86 (1).

Implication of Promoter not making full disclosure is:

The company may rescind the contract or the company may refuse to ratify the
contact if it hasn’t been ratified (But if it has been ratified you cant rescind it)
You can’t also rescind if the company cannot be rescinded to its status quo so you
sue for damages. Gluskstein v Barnes

LIABILITIES OF PROMOTERS - Section 86 CAMA

Where there is a breach of the duties imposed on a promoter, the company can take
any of the following actions for redress:

61
 1. Action to render account of money or property received in the course of
promotion activities.
2. Action to account for secret profits made which was discovered by company.
3. Action for damages for wrongful exploitation of confidential information.
(Fraudulent misrepresentation)
4. Refusal to ratify pre-incorporation contract tainted with conflict of interest.
5. Action to rescind contracts perfected not by the Promoter.
6. Action for rescission of the contract after the contract has been ratified
Section 86 (3)
There is no time limit for instituting action against promoters Section 86(4). The
court in equity may look at lapse of time due to circumstances of the case.

REMUNERATION OF PROMOTERS
Promoters are generally not entitled to remuneration
EXCEPTIONS to the above are:
a. The Articles of Association of the company allows the directors to pay
b. The promoters entered into a pre-incorporation contract with the
proposed company to pay
c. The promoters entered into a personal contract with the persons instructing
them to float the company.
d. In lieu of payment a promoter may take up shares in the company which will
be credited as fully paid up or be given shares to be paid for within a
specified period at par where such shares would have appreciated

ADDITION – YOLA CAMPUS

1. they can only be remunerated based on an agreement duly ratified.
2. Articles may provide for the payment of preliminary expenses to promoters.
62
ENUGU CAMPUS, THEY CAN BE RENUMERATED BY:
1. Reselling property to the company at an enhanced price
2. Receiving commission provided he discloses it to board of directors
independent of him, existing or potential members or members at GM
3. Taking up Deferred or Founders Shares; or given options to subscribe for
shares at a particular price within a specified limit.

PRE - INCORPORATION CONTRACTS (Exam Focus)

Pre-incorporation contracts are contracts entered into by any person on behalf of a
company before its incorporation; Sparke Electrics Nig. v. Ponmile

LEGAL STATUS OF PRE- INCORPORATION CONTRACTS

v Common Law Position: under the common law, the company is not bound by
the contract and cannot ratify it upon incorporation; Kelner v. Baxter;
Edokpolor v. Sem Edo Wire Industries Ltd

v CAMA: the promoters are personally liable but upon incorporation the
company may ratify the pre-incorporation contracts and it becomes binding-S.
96 CAMA, Societe General Bank (Nig) v. Societe General Favouriser.
It is only when the contract is ratified that it WILL BE ENFORCEABLE
against the company and the company can derive benefit from the contract as if
the company was in existence at the same time of the formation of the company
Section 96
NOTE
Before such ratification, if there is no express agreement to the contrary, the
promoter will be personally liable and can benefit therefrom.

63
 Essence/Importance/Need of Pre-Incorporation Contracts (Exam 2018 Q 1e)
3. It enhances privacy by ensuring that private matters are not necessarily included
in the MEMOART
4. It allows for detailed issues relating to operation of the company to be addressed
5. It helps to define the role of parties in the operation and management of the
company
6. It facilitates for amicable settlement of disputes.
7. It helps to ensure compliance with the provisions of relevant laws

RATIFICATION OF PRE- INCORPORATION CONTRACTS

The company cannot ratify an oral contract or promise to pay sums of money
incurred by the promoters on behalf of the company, so there must be a formal
contract executed to that effect, Garba v. Sheba International (NIG) Ltd
PIC may be ratified by the following: Section 86(3)(a)-(c).
(a) the company’s board of directors independent of the promoter;
(b) all the members of the company;
(c) the company at a general meeting at which neither the promoter nor the
holders of any share in which he is beneficially interested shall vote on
the resolution to ratify that transaction.

RELATIONSHIP BETWEEN MEMOART AND PIC

When the pre-incorporation documents contradict with the object clause of a

company, then it will be declared Ultra vires, meaning it cannot be ratified.

The implication or effect of incorporating a pre-incorporation agreement into the

MEMOART does not make it binding but a strong indication that the
company will ratify it

64
N.B Where there a conflict between MEMOART and pre-incorporation contract,
the memorandum prevails. Edokpolar and Co. Ltd V. Sem-Edo Wire
Industries

Types of Pre-Incorporation Contracts (April 2018 No 4, April 2019 Q, April

2019 Q 4c)
1. Joint Venture Agreement; (where there is Aliens/foreigners in the Company)
2. Shareholders’ Agreement.
3. Memorandum of Understanding
4. Conversion, Merger and Take Over Contracts
5. Directors’ Service Contract
6. Confidentiality/Non-disclosure Agreements
7. Contract for payment of promoter’s expenses.
8. Contract for acquisition of property.
9. Technological Acquisition Agreement
State clauses you will include in the (Pre incorporation contract)
Memorandum of Understanding. 2010 No 1(d)(ii)
CONTENTS:-

1. Authority;
2. Signatories;
3. Management;
4. Employment requirements;
5. Employment conditions;
6. Wages/Salaries;
7. Capital contribution;
8. Effective Date;
9. Subcontracts;

65
 10. Community development;
11. Termination;
12. Dispute resolution;
13. Governing law;

Clauses in JOINT-VENTURE AGREEMENT (exam focus)

1. Parties;
2. Commencement date;
3. Management structure;
4. Capital contribution;
5. Profit and loss sharing;
6. Supremacy clause;
7. Confidentiality clause;
8. Duration;
9. Determination;
10. Accounts;
11. Governing Law;
12. Arbitration Clause; etc

66
 CHAPTER FOUR
FOREIGN INVESTMENT AND PARTICIPATION IN BUSINESS IN
NIGERIA
INTRODUCTION (Mostly compulsory question)
Foreigners willing to do businesses in Nigeria can participate subject to the
provisions of Nigerian law - Section 20(4) CAMA

LEGAL FRAMEWORK & REGULATORY AUTHORITIES ON FOREIGN

PARTICIPATION IN NIGERIA
ENABLING REGULATORY PERMIT/APPROVAL/FUN
LAW AGENCY CTIONS

1 Companies and Allied Corporate Affairs Incorporation of Nigerian

Matters Act (CAMA), Commission (CAC) Companies for FDI and
cap C20 LFN 2020 companies without
exemption saddled with the
responsibility of registering
the company.

2 Nigerian Investment Nigerian Investment Regulates & Promotes

Promotion Commission Promotion investment activities.
Act, Commission (NIPC) Registers a foreign company
after incorporation in Nigeria
and before start of business-
s.17 NIPC act

67
3 Investment Securities Securities & Regulates the registration of
Act (ISA) Exchange securities, records of FPI and Commented [MOU27]:
Any securities of a public company allotted to an alien must be
registered with the Securities and Exchange Commission.
Commission (SEC) FDI-s.8

4 Immigration Nigerian Immigration Regulates the entry of aliens

Act Service (NIS) into the country. Supervises
and grants visa, Business
Permits, Residence perm,
expatriate quota and work
permit-S. 8 of the Act

5 National Office for National Office for Registration of technology

Technology Acquisition Technology transfer from foreigners to
and Promotion Act Acquisition & their partners in Nigeria.
Promotion (NOTAP) Gives Certificate of Commented [MOU28]:
Any contract or agreement between a Nigerian and an alien that
has to do with transfer of technology not yet known in Nigeria
Approval must be registered with NOTAP.

6 Customs & Excise Board of Regulates importation and

Management Act Customs exportation of goods.
Imposes import & export
duties

7 Federal High Court Federal High Resolution of disputes arising

Act Court from company matters

8 Foreign Exchange Central Bank of Capital importation through

(monitoring & Nigeria (CBN) an Authorized Dealer. Issues
miscellaneous Certificate of Capital
provisions) Act Importation Commented [MOU29]:
An alien must import capital through an authorised dealer and
obtain certificate of capital importation.

68
9 Stamp Duties Federal Inland Prescribes the quantum of
Act Revenue Service duties or taxes to be paid
before registering certain
document for incorporation
(Memo & Art )

10. Industrial Inspectorate Act Commented [MOU30]:

Any company that is going to incur additional expenditure of not
less than N500,000 may apply to the Director of the Industrial
Inspectorate Division of the Federal Ministry of Industry, Trade and
Investment for waiver.
ASSURANCES/GUARANTEE FOR INVESTMENT PROTECTION OF
FOREIGNERS UNDER THE CURRENT REGIME (August 2018 Q 1h, Commented [MOU31]:
GUARANTEES UNDER THE NIPC ACT: short form

August 2019 Q 1b) 🔄 A.100% Ownership: Section 17 and 18 of the NIPC Act

1. Free importation of capital through authorized dealers. B.Purchase of shares in convertible currency – Section 21

C.Non-nationalization and expropriation – Section 25

2. Companies can repatriate the whole of their profits net of taxes
D.Effective Dispute Resolution Mechanism – Section 26
3. Effective dispute resolution mechanism based on international arbitration E.Guaranteed repatriation of profits, proceeds and capital

and treaty (bilateral investment treaties exist between Nigeria and other
countries which may contain some dispute resolution mechanisms). S.26(2)
NIPC
4. Guarantee for non-nationalization of companies or prompt and adequate
compensation in the event of nationalization. S. 25 NIPC
5. freedom to invest in any sector in Nigeria Except with respect to the
negative list
6. There can be wholly owned foreign companies.

MODES OF FOREIGN PARTICIPATION IN BUSINESS IN NIGERIA

1. FOREIGN DIRECT INVESTMENT (FDI)
This is a process where foreign investors participate directly in business in
Nigeria by incorporating a company in Nigeria either solely or through joint

69
venture with Nigerians. (April 2019 Q 2b). The investors may or may not have
already existing company in their home country. In either case, a Nigerian
company must be formed and registered in Nigeria with the CAC S. 19 NIPC and
thereafter with the NIPC S. 20 NIPC (unless the company is exempted).
A non-Nigerian may now freely invest and participate in the operation of any
enterprise in Nigeria EXCEPT enterprises in the “Negative List” S.17 NIPC

Negative list is defined under Section 31 NIPC Act to include:

a. Production of Arms and Ammunition.

b. Dealing in narcotics and psychotropic drugs.
c. Production of military and paramilitary wears and accruements.
d. Any other item that may be included by the FEC.

2. FOREIGN PORTFOLIO INVESTMENT

Portfolio investors participate by purchasing shares in existing PUBLIC companies
(listed/not listed) S. 21 NIPC. Passive investment is FPI and is provided for
under S.21 NIPC

STEPS TO REGISTER A COMPANY WITH FOREIGN PARTICIPATION Commented [MOU32]:

The question can be framed: WHAT TO DO WHEN A
FOREIGNER WHO WANTS TO DO BUSINESS DOES NOT
–2009 2016, WANT TO OFFEND THE LAWS

1. Securing an address in Nigeria for service of documents NB- APPLY TO THESE OTHER BODIES WHEN IT FITS
THE SCENARIO –SEE POINT 7
2. Prepare a Joint Venture Agreement or other pre-incorporation contracts suitable
a.Application to NOTAP for registration of agreements for
transfer of technology
to the case (where there will be Nigerians involvement).
b.Application to the Director of the Industrial Inspectorate
3. Take steps to form a company to be Registered with CAC. S. 19 NIPCA Division of the Federal Ministry of Industry, Trade and
Investment for waivers

4. Import Capital from authorized dealers and obtain certificate of capital

importation from CBN through the dealer.
5. Register with NIPC. S. 20 NIPCA

70
6. Application to the SEC for the registration of Securities/investment S. 154 ISA
7. Apply for relevant permits. This depends on the industry that the company will
be operating in.
8. Apply for reliefs and incentives where applicable

REQUIREMENTS (DOCUMENTS) FOR REGISTRATION

WITH NIPC – 2010
Note that all companies with foreign participation must be registered
with NIPC and the requirements are as follows:
1. Complete NIPC Form 1
2. Pay a non-refundable fee of N15,000.00 (15k)
3. Partnership or Joint Venture Agreement where applicable
4. 2 Copies of receipt of payment of application fee
5. Copy of certificate of incorporation of the company
6. Copy of MEMO & ART
7. Tax Clearance Certificate for the applicant company
8. Receipt of payment of stamp duties of the applicant company
9. Feasibility report and project implementation program
10. Title deed or lease for business premises
11. Training program for Nigerian Staff
12. Particulars (name, address, occupation and nationalities) of directors
including NRD
13. Job title and designation of positions to be filled by expatriate quota
Information brochure on foreign partner.
14. Information brochure, if any, on the foreign company

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 FOREIGN COMPANY
A foreign company is a company registered elsewhere than Nigeria- Section 868
A foreign company cannot carry on business in Nigeria UNLESS it is registered
as a Nigerian Company – Section 78 of CAMA, Agip (Nig) Ltd v. Agip Petrol
International.
Any company or officer that permits a foreign company to carry on business
without registration is subject to criminal and penal liability. Section 79.
The effect of carrying on such business without registration is that any such
contract entered therein is void and a nullity.

EXEMPTED COMPANIES:
FOREIGN COMPANIES QUALIFIED FOR EXEMPTIONS. 80 (1)(a) – (d);
(August 2017 Q 1C, August 2019 Q 1C)
The class of foreign companies qualified for exemptions are:
1. Section 80 (1)(a) companies invited to Nigeria by or with the approval of Commented [MOU33]:
Foreign companies invited to Nigeria by the federal government to
execute any specified individual project
the FG for a SPECIFIED INDIVIDUAL PROJECT,

Note paragraph (d) has to do with consultancy, technical expert and specialist.
Therefore paragraph (a) has to do with a project that is not a specialist project.

2. Section 80 (1)(b) foreign companies in Nigeria for the execution of a

specified loan project on behalf a donor country or international
organizations. (Key - SPONSORED PROJECTS).

3. Section 80(1)(c) foreign government owned companies involved

SOLELY in EXPORT promotion activities - (key: ownership structure
(government) scope of business (export).
72
 4. Section 80(1)(d) engineering consultant, technical experts, engaged in a
specialists project under contract invited by the government, or any of
its agencies or any other body or person for a contract approved by
Federal Government.

Carrying on Business v. Suing and being sued

Section 84(b) permits for a foreign company to sue or be sued in its name or
the name of its agent without registration as a Nigerian Company
N.B
Foreign company have the right to sue and be sued in Nigeria

APPLICATION FOR EXEMPTION (always asked to draft the letter of

exemption; August 2017 Q 1a, April 2019 Q 2a) 🔄
An application for exemption shall be in writing addressed to the Minister of
trade Section 80 (2);
Documents To Be Attached to An Application of Exemption: (August 2019 Q Commented [MOU34]:
In your letter add this as ENCL

1. Name and Place of business outside Nigeria

2. Name and place of business in Nigeria
3. The name and address of each director, partner or other principal
officer of the foreign company.
4. A certified copy of the charter, statutes, or MEMOART of the company
a certified copy of the translation of the instrument where necessary.
5. Business or proposed business in Nigeria and duration
6. Particulars of any project previously carried out by the company as
an exempted foreign company

73
 7. Name(s) of the person(s), resident in Nigeria, who are authorized to
accept on behalf of the company, documents and notices required to
be served on the company.
8. Such other documents as may be required by the minister or secretary to
the government of the federation

NOTE THE FOLLOWING:

Approval is given by minister for a project or series of projects Section 80 (3)
Exemption may be revoked where the company: Section 80(5).
1. breached the provisions of CAMA
2. failed to meet to meet any condition contained in the exemption order
Approved exemption is published in a gazette by the minister. S.80(6)
Notice is given to CAC within 30 days of the grant of such exemption S. 80 (7).
Failure to notify the CAC the FC is liable to a penalty. S. 80 (8).

STATUS OF AN EXEMPTED COMPANY

a) An Exempted Foreign Company has the status of an Unregistered Company.
Section. 82. The effect is that the company is exempted from payment of all
company taxes.
b) An exempted company can only execute the project contained in the exemption
order, if it intends to carry out any other project; it must take steps to be
incorporated with CAC; section 78 CAMA. (focus)
c) An exempted company must deliver/file Annual Reports every year with the
CAC in the prescribed form- Section. 81 CAMA

74
POSER:
State the position of law in Nigeria on the issue of a foreign company, carrying on
business in Nigeria in its own name without registering a Nigerian Company. 2010
No 4(a)
The position of law on the issue of a foreign company seeking to carry on
business in Nigeria is that a company having the intention of carrying on
business in Nigeria shall first obtain incorporation as a separate entity in
Nigeria for that purpose. Section 78 CAMA

However, Section 80(1) of CAMA provides that a foreign company may be

exempted from registration if it belongs to any of the following categories or
types of companies –

a) A foreign company invited to Nigeria by or with the approval of the

Federal Government to execute a specified individual project.
b) A foreign company which is in Nigeria for the execution of a specific
individual loan project on behalf of the donor organisation or agency.
c) A foreign government-owned company engaged solely in export
promotion activities.
d) Engineering consultants and technical experts engaged on any individual
specific project under contract with any of the governments of the
Federation or any of their agencies or with any person where the
Government has approved such contract.
To benefit from such exemption, the company needs to apply for exemption
from the minister of trade through the Secretary to the Government of the
Federation.

IMPORTATION OF CAPITAL BY FOREIGN INVESTORS

After a foreign company /investor have obtained registration with the NIPC, its
capital can be imported by any of the following:
a. Importation of equipment/ raw materials
b. Importation of cash

75
c. Importation of cash indirectly through the Debt-Equity Conversion Programme
(DMO)

Importation of Capital through Foreign Exchange (Monitoring &

Miscellaneous Provisions) Act
A foreign investor wishing to buy shares or import foreign capital/loan for doing
business in Nigeria should freely import the capital through an Authorized Dealer,
which currency is convertible into the Naira at the official foreign exchange
market.- S. 12, 13, 15 Foreign exchange (monitoring &miscellaneous provisions
Act)

PROCEDURE (in the exam you may be asked to advise the foreigners on
what to do to bring in the foreign capital or loan; this is the answer)
a. This can be done by buying Nigeria Debt instrument abroad from any Stock
Exchange at a discount rate.
b. A Certificate of Capital Importation will be issued to the Foreigner.
c. The foreign company/investor will then present the CCI-Certificate of
Capital Importation to the Central Bank of Nigeria through authorized
dealers usually Banks.
d. The CBN will pay the face value of the Certificate of Capital Importation in
naira.

Incentives/Advantages of Capital Importation/Foreign Loan (April 2019 Q 2c)

a. It enables the opening of foreign currency domiciliary accounts with Banks
in Nigeria
b. The foreigner can open a Special Non–Resident Naira Account.

76
 c. The foreigner can buy shares in Nigerian companies out of the naira
account.
d. It aids repatriation of capital, dividends and incomes without restrictions at
autonomous market rates minus taxes.
e. Unconditional transferability of funds through an authorized dealer in freely
convertible currency S. 24 of the NIPC Act
f. The company will be exempted from Money Laundering investigations.

Necessary Permits Required by Foreign Investors (August 2018 Q 4e)- S. 8

Immigration Act Commented [MOU35]:
The Immigration Act, makes it mandatory for every company with
foreign equity participation to obtain a business permit from the
A foreigner must obtain the following in order to do business in Nigeria as follows: Minister of Interior before it commences business in Nigeria. This
applies to a company that is wholly owned by foreigners or a joint
1. VISA venture company between locals and foreign partners irrespective
of the percentage shareholding of the foreign partners in the
company.
This is a permit to enable a foreigner to enter a country. This is a major The guidelines for the issuance of a business permit are issued by
the Minister of Interior
immigration requirement of a foreigner that intends to do business in Nigeria. The Ministry of Interior issued a revised Handbook on Expatriate
Quota Administration 2022 (the “Handbook”) which prescribed the
minimum share capital requirement of such companies to
There are two types of visas; NGN100,000,000 (One Hundred Million Naira).

a. Cable visa (Temporary Work Permit)(TWP) and The issued shares must be fully paid up and evidence of inflow of
payment for the shares by the foreign partner must be provided in
support of the application for a business permit. The shares may be
b. Business Visa/STR Visa for Residence Work paid for in cash/foreign currency inflowed into the company’s local
bank account in Nigeria or by consideration other than cash, in
A foreigner who is granted cable visa to visit Nigeria within three months on which case the import value of equipment or machinery imported
into the country would serve as the evidence of value of the
inflow. The only acceptable evidence of payment for foreign
Subject to Regularization (STR) is to regularize the visa by changing his status currency inflow is a Certificate of Capital Importation (CCI) issued
by the local bank or an authorised dealer.
from that of a visitor to that of a resident by converting it into CERPAC-
(Combined Expatriate Residence Permit and Alien Card) within 56 days.

2. RESIDENCE PERMIT
An alien desirous of entering Nigeria for the purpose of residence shall, unless
exempted may be issued a residence permit; S. 10(2) Immigration Act;
CERPAC is compulsory for aliens staying for more than 56 days.

77
 3. EXPATRIATE QUOTA AND WORK PERMIT
Expatriate quota- is a permission given to a business concern to employ non-
Nigerians.
Expatriate Quota is given to a Nigerian registered company or a foreign company
to employ foreigners granted by the Minister of Internal Affairs (Minister of
Interior).

It is the duty of the Company employing a foreigner to obtain the expatriate

quota/work permit; Oliver v. Dangote Industries PLC; Oilfields Supply Center
Ltd v Johnson S. 34 Immigration Act (MCQ)
Types of Expatriate Quota:
a. Permanent Until Reviewed (PUR) issued to the Chairman/Managing
Directors of the company
b. Temporary granted for an initial period of 3 years renewable
biennially for two consecutive times within a lifespan of seven (7) years-
Para 2.3 Revised Handbook on expatriate quota administration.

4. BUSINESS PERMIT
This is the consent given by the Minister of Internal Affairs (Minister of
Interior) to a foreign owned company to carry on business in Nigeria.

It applies to wholly foreign owned company, where there is Nigerian

Participation, Business permit is dispensed with (MCQ)

Where the foreigner is carrying on business under a registered business name, the
individual foreigner not the company that applies for the business permit.

A foreigner who intends to practice his profession in Nigeria needs a business

permit whether or not he will do it with Nigerians

78
Application may be made through the executive secretary of NIPC Commented [MOU36]:
INCENTIVES: SHORTER:

The authorized share capital of the applicant company must not be less than N10 1.Where the company exports not less than 60% of what it
manufactures, the company will not pay tax for three (3)
years.
million.
2.Where the company continues to export not less than 60% of
what it manufactures in the subsequent years, the company
will have 10% tax relief.
NOTE- if you are asked in exam to state the necessary permit a foreigner requires
3.If the company obtains foreign loan, interest from such loan
for doing business in Nigeria you state: will not be taxed.

4.If the company obtains loan from a Nigerian Bank, interest

1) Visa, from such loan will not be taxed.

2) Residence permit 5.If the company uses all the profit it makes to purchase raw
materials or machineries, the company will not be taxed for
that year.
3) Business permit (if there’s no Nigerian participation)
6.If the company is located within an area designated as
Export Processing Zone (EPZ), the company will not pay tax
4) Expatriate quota. for three (3) years and will import free of import duties.

NB: Only residence permit and Expatriate Quota have been combined to be 7.Relief from double taxation

8. Utilisation of local raw materials attracts tax waivers.

CERPAC
9.Pioneer status

10.Relief from double taxation

Incentives/Reliefs To Foreign Investors In Nigeria (Exam focus) 11.Relief from commonwealth taxation

12.Importation of raw materials to manufacture goods for

1. Pioneer Status: export will attract duty drawback/suspension scheme

A company which enjoys pioneer status is granted tax exemption on its 13.If the company is located within an area designated as
Economically Disadvantaged Area, the company will not pay
statutory income. It is a five-year tax holiday granted to industries tax for seven (7) years.

14.The foreign currency earned from such export will be

located in economically disadvantaged LGA’s (Local Government deposited in a domiciliary account without converting it to
Naira and interest from such domiciliary account will not be
Areas) of the Federation (Granted for 3 years and can be extended for taxed.

another 2 years). 15.Expenses incurred in research and development will be

deducted before taxing the company. In other words, the
company enjoys 20% tax credit for engaging in research
development
QUALIFICATION FOR PIONEER STATUS ... [1]
Commented [MOU37]:
Pioneer Status Certificate is issued by NIPC to the effect that the
a. Incur a capital expenditure of not less than One hundred Million Naira company is exempted from payment of tax for three years, which
can be extended for a period of one year and thereafter another
(an indigenous company may also enjoy pioneer status) one year, or for one period of two years (Section 10(2)(a)(b)
IDITRA); INDUSTRIAL DEVELOPMENT (INCOME TAX RELIEF) ACT

b. Bring the application within one year of commencement of production

Three regulatory Agencies are:
activities 1.Nigerian Investment Promotion Commission
2.Industrial Inspectorate Division
3.Ministry of Trade and Investment

79
c. The application is made to the NIPC in the prescribed form accompanied
with the necessary document
Requirement for Application for Pioneer Status check

a. Company must be registered with NIPC as a company with foreign

participation.
b. Company must fall under the category for the exemption
c. The application must be submitted within the first year of capital
expenditure.
d. Complete NIPC Form II
e. Payment of processing fee
f. Payment of service charge deposit.

2. Repatriation of all (100%) capital imported without seizure is guaranteed to

foreign investors.

3. Tax relief on double Taxation Treaties: The foreign Nigerian company is

exempted from taxation provided its parent company abroad has paid its
tax. S. 33 of the Companies Income Tax Act

4. Tax Relief on Foreign Loan - S. 11(1) CITA provides for tax

exemption/relief on foreign loan
a. If the loan is to be repaid after 10 years, the interest is exempted from
tax.
b. If the loan is to be repaid between 5 – 10 years, then the tax the interest
accruing should be half of the chargeable tax.

80
5. In-Plant Training: Applicable to industrial establishments that have set up in-
plant training facilities. Industries in this category enjoy 2 percent tax
concession for five years.

6. Investment infrastructure incentives: Granted to industries that ordinarily

should have been provided by the government e.g. access road, pipe borne
water and electricity. They enjoy 20% of the cost of providing these facilities.

7. Export Free Zone Allowance The profits of export oriented businesses are
given 100% tax exemption. No payments of import / export duties or
permits are needed in export free Zones. The conditions are:
a. It is a new business
b. The business uses new plants and machinery
c. The export proceeds is solely up to 75 % of its turn over
d. The business is registered with the National Export Promotion
Commission. S. 35 of the Companies Income Tax Act.

8. Duty drawback/ suspension scheme

This provides for the refund of duties or surcharges on raw materials,
including packing and packaging raw materials used for the manufacturing
of products, upon effective exportation of the final products. Must be made
within 2 years from date of importation

9. Incentives Under Bi-Lateral Investment Treaties: Some of the incentives

under this category include:

81
 a. ECOWAS trade liberalization scheme- removal of import and export
duty on some products from the West African sub-region including
free movement of goods and services.
b. Common Wealth Tax relief- reciprocal tax relief arrangement among
common wealth countries.

10. Special Incentives: Section 22 of the NIPC Act empowers the NIPC to
negotiate, with the appropriate government agencies, special incentives for
strategic or major investments

INDUSTRY BASED RELIEFS

(1) Oil and Gas Free Zone (2010): This encourages investments within the oil
and gas sector. It is characterized by
a) exemption from income tax, while promoting 100% repatriation of
capital, profit and
b) no pre-shipment inspection of goods imported into the free zone. The
zone encompasses Onne, Calabar and Warri.
Some other incentives under the oil and gas industry include;

I. upstream gas exploitation,

II. downstream gas utilization,
III. gas production,
IV. gas transmission and distribution,
V. other petroleum incentives for companies in joint venture with NNPC.

82
AGRIC AND AGRO ALLIED

A. Enhanced Capital Allowance

B. Agriculture Credit Guarantee Scheme (Loan guarantee of up to 75%). The
fund guarantees the repayment of principal and interest for those in the Agri-
industry up to 75%.
C. Exemption from minimum Companies Income Tax for 4 years initial period
and same can be extended.
D. Indefinite carry forward of losses (benefit for tax in subsequent years).

HOSPITALITY/TOURISM INDUSTRY

A. Provision of social amenities in tourism zones.

B. Loans with longer moratorium.
C. Provision of land for tourism development at affordable rates etc.

INCENTIVES UNDER SOLID MINERALS

A. Exemption from Companies Income Tax for the 3 years for a new company
going into mining of solid minerals.
B. Depreciation on Capital Allowance
C. Extension of infrastructure to mining sites.
D. Deferred royalty payment.
E. Exemption from payment of custom and import duties etc.

83
MANUFACTURING INDUSTRY

A. Manufacturing in bond scheme – incentive companies that import raw

materials to produce goods for export with a bond issue by a financial
institution to repatriate export proceeds.
B. 60% interest repayment for those in cassava processing under the ACGS
(Agricultural Credit Guarantee Scheme)

84
 CHAPTER FIVE
POST- INCORPORATION MATTERS
PRELIMINARY MATTERS BEFORE COMMENCEMENT OF BUSINESS
After incorporation but before a company commences operation, it must do the
following:
PUBLICATION OF CERTAIN PARTICULARS
a) Publication of company name - S. 729 CAMA.
b) Production of company seal, if authorised by the company’s articles – S. 98,
99 and 840.
c) Submission/Display of statement of affairs in the prescribed form-
applicable to banking & insurance companies (s. 733 CAMA).
d) Certificate of incorporation – the company is required to display the
certificate conspicuously in all its offices.

1. PUBLICATION OF THE NAME OF THE COMPANY; S. 729(1)(a) –

(c) CAMA provides that a company preparing to commence business must
publish its Name in 3 main forms as follows: -
a. Publication of Name in the Name Plate-if trade name is used, RC NO
must be affixed
b. Publication of Name in the Common Seal.
c. Publication of Name in official documentation and Bills of Exchange.

Consequences of Failure to Publish Names: S.729(2)(3)

a. The company shall be liable to a fine as fixed in the company’s
regulation for everyday it carries on business during which its name is
not so published in its name plate. Section S.729(2);

85
 b. Every officer of that company who knowingly and willfully authorizes
or permits default shall be liable to like penalty; S.729(3);

c. The company shall be guilty of an offence and liable to a fine for not
publishing its name in the common seal, official documentation and Bills
of exchange. S.729(3);

2. KEEPING OF STATUTORY BOOKS/RELEVANCE (August 2018 Q

5a, August 2019 Q 2a &b March 2021)
A company upon incorporation is to keep some statutory records/books at its
registered office which include the following:
1) Register of Members: Section. 109, CAMA (All companies)
A. To keep records of names and particulars of existing and former
members
B. it shall be done within 28 days of incorporation or becoming or
ceasing to be a member.
C. This is kept in the registered office or other arranged accessible place
within Nigeria and if kept outside the Registered Office, CAC must be
notified. – Section 110
D. Failure to keep the register of members will attract such penalties as may
be fixed by CAC on the company and its officers Section 109(4)

2) Register Of Charges-S. 216, CAMA

a) This Register is to be kept by Private and Public Limited
Companies
b) It records charges – fixed and floating, created by the company on
its assets.
86
 c) It is open for inspection to creditors and members.
d) It is to be kept in the company’s registered office.

3) Register Of Debenture Holders-S.218 CAMA

i. This Book is to be kept by Private and Public Limited Liability
companies as well as Unlimited Liability Companies only.
ii. It records the names and particulars of Debenture holders and the
details of the term of issue, The 30 days of creation and 30 days of
ceasing.

4) Minutes Book- Section. 266 CAMA (all companies except small)

i. The minutes Book is to be kept by all the types of companies except
a single member company.
ii. It records proceedings of meetings, signed by Chairman as prima,
facie evidence of events at the meeting.
iii. It is kept in bound book or leaflets or electronic storage device
easily retrievable.
iv. The Minutes Books is available for inspection by members within 6
hours per business day without charge, but fee is to be paid for
making a copy to be certified by the Company Secretary.

5) Register of Directors Shareholding-S. 301 CAMA (except of Gte)

i. This Statutory Book is to be kept by Private and Public Limited
Companies only.
ii. It is used to record shares or debentures in which Directors hold in
the company.
iii. It is open for inspection to CAC always.
87
 iv. It is also open for inspection by members and debenture holders 14
days before and 3 days after AGM.

6) Register of Director - S. 318 (all companies)

i. This applies to all companies. It used to record the Names and
Particulars of current and past Directors
ii. The company is to notify the CAC within 14 days of appointment
or ceasing to be a director or Secretary.

7) Accounting Records - S. 374 CAMA (all companies)

i. This “book” is to be kept by all the types of companies
ii. This reflects the Financial Records of the company sufficient to
show and explain the transactions of the company.

8) Index of Members- S.111 CAMA (public companies)

This is to be kept once the members exceed 50 members. It contains the
name and particulars of members. Applies only to a public limited
company.

9) Register of Substantial shareholding in a public company - S. 120

(Public companies)
i. It applies to only a Public Limited Company.
ii. It is used for recording acquisition of 5% unrestricted voting
right in AGM of PLC
iii. This is to be kept at the Registered Office or another arranged
place with notice to CAC Section 122(2)

88
 10) Register of interest in shares – S. 122
a. It applies to only a Public Limited Company.

11) Register of Secretaries 336 CAMA (Public companies)

i. It used to record the Names and Particulars of every Secretary of
the company. its applicable to Public companies
NOTE: not compulsory for small companies S. 330(1)

STATEMENTS REQUIRED UNDER S.733

• It is required from Banks, Insurance Companies, deposit, provident or

benefits societies BEFORE COMMENCING BUSINESS.
• The return gives the position of the authorized share capital of the company,
called shares and uncalled shares.
• It also gives a statement of the assets and liabilities of the company
• In addition, the statement is required to be filed every 1st Monday in
February and every 1st Tuesday in August
• Requirement for the display of the statement conspicuously at the registered
office.
• Members and creditors are entitled to a copy of the statement upon payment
of necessary fees
• Liability in the event of default upon the company, is on the director and
manager S733(4)
• The statement filed before commencement of business is called statement of
affairs.

89
 3. CORPORATE SEARCHES
Reasons for Corporate Searches:
1) It is a means of verifying the profile of the company.
2) It is also useful in determining how the company has operated or
complied with the law.
3) used to verify entries made by applicants, who wish to open an account
for a corporate organization.
4) Used to confirm whether the company was duly incorporated

Procedure for Corporate Searches at CAC

1. Formal application (could be made in the prescribed form).
2. Payment of the prescribed fee.
3. Payment of CTC fee (where requested for).
4. Payment of Annual Returns (not in all cases)
5. Preparation of search report and attach CTC where applicable.

CONTENTS OF A SEARCH REPORT

1) Date of search
2) Place of search
3) Name of company
4) Company Number: (Registered Certificate Number)
5) Registered office address of the company
6) Date of Incorporation
7) Business/objects of the company
8) Borrowing powers
9) Share capital
10) Shareholders

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 11) Shareholding
12) Directors
13) Company secretary
14) Any change in the registered particulars such as alteration conversion or
re-registration
15) Any encumbrance
16) Filing of annual returns
17) Remarks (If any)
18) Name and signature of the legal practitioner who conducted the search
A forwarding/covering letter should accompany the search report

CONVERSION AND RE-REGISTRATION OF COMPANIES (Big focus)

PROHIBITED RE-REGISTRATIONS
A. Unlimited -Limited- Limited - Unlimited
B. Limited - Unlimited - Unlimited - Limited
C. Private-Public-public-private
NB: Form CAC 4 is used for notifying the CAC of re-registration. See
Schedule to Companies Regulation 2021

1. Re-Registration of A Private Company (Ltd) To A Public Company (PLC)-

S. 56 of CAMA; The main reason for doing so is usually to raise or increase the
share capital of a private company. (this is usually comes out in exam)
THE PROCEDURE: - focus
1. Board Resolution proposing the conversion and Re-registration from Ltd-Plc
2. Board authorizes the Company Secretary to issue Notice of GENERAL
MEETING usually Extra-Ordinary General Meeting, but may come up as a
special business in AGM

91
3. At the General Meeting board passes Special Resolution authorizing the re-
registration and alteration of the MEMO & ART in line with the status of the
company
4. At the time of passing the special resolution, the following conditions have
been met: Section 57 FOCUS Commented [MOU38]:
The requirements are as follows; Section 57.
a.Passing of a special Resolution.
a) The company must have a share capital (Note implication on b.Requirements as to capital.
c.Requirements as to assets.
LTD/GTE) d.Recent allotment of shares for non cash consideration.
e.Consequential alterations to be made to the written
documents.
b) Minimum issued share capital is is not less than N2 million in
accordance to Section. 27(2)
c) Paid up share capital is not less than 25% of the nominal share
capital

5. Application is made to CAC for re-registration in FORM CAC 4 with the

following attached documents
a. Copy of the Special Resolution that the company should re-register as
a public company
b. copy of the altered MEMOART as proposed to be amended
c. Balance sheet made not more than 7 months before application for
re-registration was made to CAC Section. 58 (1).
d. A copy of valuation report pursuant to Section 60 (2) (d)
e. receipt of filling Annual returns up to date
f. Duly signed statement of compliance. S. 56(1) (c) (ii)
6. If CAC is satisfied, a new Certificate of Incorporation indicating that it is a
PLC is issued-Section 62 (3) CAMA

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Consequential Alterations after Conversion (August 2017 Q 5d, April 2018
and August 2019 Q 4b)
Alterations To the Memorandum of Association
1. Alteration of name clause to end with PLC
2. Alteration of the Minimum issued share capital clause to meet legal
minimum for PLC
3. Alteration of status clause to show that it is a public company

Alterations To The Articles Of Association – August 2011

1. The name must be changed to PLC
2. Removal of the restriction on the transfer of its shares
3. Regulation on appointment of Directors (with respect to 70 years age
requirement)

4. Amendment of the qualification of the company Secretary

5. Written Resolutions not to be allowed.

2. Re-Registration of A Public Company (PLC) To A Private Company

(LTD)- Section. 63 of CAMA.
THE PROCEDURE: S. 66 CAMA, focus
1. Board Resolution proposing the conversion and Re-registration from Plc-Ltd
2. Issuance of notice of GM by the secretary
Commented [MOU39]:
3. At the General Meeting pass a Special Resolution authorizing the re- They are
Section 64(1) members who can make an application for
cancellation
registration and alteration of the MEMO & ART in line with the status of the
a.holders of at least 5% in nominal value of the company’s
company issued share capital

b.if the company is not limited by shares at least 5% of its

4. Wait after 28 days of passing the resolution for any application to cancel members;

the resolution at the FHC by dissentient members, the court may:

c.by at least 50 members of the company, but not by a person
who has consented to or voted in favour of the resolution.

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 a. confirm resolution
b. Cancel the resolution or
c. make such orders as it deems fit in accordance with the circumstances
5. If no application is made to cancel the re-registration, then within 15 days
after the end of the 28 days, deliver a copy of the order to CAC and
make an application to the CAC using Form 4 and attach the following
documents:
6. Document to accompany application for re-registration under S. 63
include:
a) Copy of the special resolution
b) Copy of the proposed amended memo and art
c) Evidence of availability of name
d) Copy of Court order where applicable
e) Statement of compliance
f) Payment of annual returns to date
g) Payment of filing fees

7. Issuance of a certificate of incorporation if CAC is satisfied that the

company is entitled to re-registration S.67(2)
N.B – MCQ
After re-registration a company must forward to members a copy of the
statutory report at least 21 days before the day on which the statutory meeting
is held

RE-REGISTRATION OF PRI. COMPANY LIMITED BY SHARES AS

UNLIMITED- LTD-UNLTD Section 68 CAMA, while the procedure and
documents are provided under S. 69
94
PROCEDURE:

1) Board resolution proposing the conversion and re-registration

2) Issuance of notice of GM by the secretary
3) General meeting is convened where the Unanimous assent of all members
of the company is passed in support of the re-registration S.68(1)(a).
Note the position of a trustee in bankruptcy and a personal rep.
4) Consequential amendment to the MEMO and ART
5) Application is made using Form CAC 4 to the CAC authorized by a director
or secretary
6) Documents accompanying the application:
a. Prescribed assent duly authenticated by all members or persons
lawfully authorized by them S.69(2)(a).
b. Proposed amended MEMO and ART
c. Statement of compliance to include the fact the assent was
executed by the whole members personally or their lawful
representatives, S.68(1)(c) (ii).
d. Annual return
e. Filing fee
f. Certificate of re-registration issued

RE-REGISTRATION OF UNLIMITED COMPANY AS PRIVATE

COMPANY LTD BY SHARES Section 71 CAMA

PROCEDURE:

1. Board resolution proposing the conversion and re-registration (special

resolution to state if company will be Itd by shares or Ltd/Gte)

95
 2. Issuance of notice of GENERAL MEETING
3. At the meeting Pass a special resolution authorizing the conversion to re-
register as ltd The resolution shall state the proposed authorized share
capital and the necessary consequential alterations in the MEMOART for
the private company Ltd by shares.
4. At the time of passing the special resolution, the following conditions must
have been met:
a. The company must not have been previously re-registered as
unlimited
b. The resolution for the re-registration shall specify whether the
company is to be limited by shares or by guarantee

5. Application is made to the CAC using FORM CAC 4 with the following
documents;
a) Copy of the special resolution duly passed
b) Proposed MEMOART as altered in line with the resolution.
c) Payment of registration fees
d) Evidence of filing of Annual Returns to date
e) Statement of guarantee if the company is to be Ltd/Gte,
f) Statement of compliance
g) Return of allotment of shares to be made 15 days after re-registration.

6. Issuance of certificate of incorporation if CAC satisfied that the company is

entitled to be so re-registered. S.73(1)(2)

RE-REGISTRATION OF PLC AS ULTD

S.75 provides for the re-registration of a PLC as ULTD
96
 a) It requires the assent of all members
b) The company must not have been previously re-registered as Ltd or ULTD

Note the position of trustee in bankruptcy or personal rep to assent on behalf

of member represented.
The following documents are to be accompany the application:
1. Duly completed assent form
2. Amended MEMOART
3. Statement of compliance, to include that all the members signed the assent
form or it was signed by their lawful representatives
4. Evidence of availability
5. Annual return
6. Filing fee
7. Certificate of re-registration issued.

CHANGE OF CORPORATE NAME – Section. 30(1)(4)

Circumstances Warranting Compulsory Change of Name – resit 2022
a. Inadvertent registration of a new company by a name of already existing
company or so nearly resembling it as to be likely to deceive. Niger Chemists v.
Nigeria Chemists – S.30(1)
b. That the company’s name conflicts with an existing trade mark or business
name registered in Nigeria without the consent of the owner of the trade
mark. S.30(4)
c. Upon a successful passing off action; see Halifax PLC v. Halifax Re-
Possession Ltd &Ors.
PROCEDURE:

97
 1. Amendment and request letter: existing company writes to the erring
company to voluntarily change its name within a reasonable time
2. Protest letter: if the erring company fails to comply within time, the
aggrieved company will write a protest letter to the CAC requesting that the
commission direct the erring company to change its name
3. Investigation by the CAC: to know who registered first
4. Direction by the CAC

Guide to drafting letter of protest and request the CAC to direct a company to
change its name:
a) Use company's letter head paper or solicitor's letter head paper as the case
may be
b) The CAC may direct that a company changes its name if it discovers by
itself that the there is a conflict with an earlier registered name
c) Title of the letter should read "Protest and request to Compel…..to
change its name pursuance to section 30(1) CAMA
d) Preamble: history of both companies (date of incorporation and RC No.
e) Body: state the effects or consequences of allowing both to continue using
their names and request the CAC under S. 30(1) to compel the other
company to change its name
f) Conclusion: attached relevant doc and director/secretary/solicitor signs.
g) The commission may request change of name after reservation before
registration if it discovers conflict after approval of name

PROCEDURE FOR VOLUNTARY CHANGE OF NAME S. 30

(3) CAMA; (Exam Favorite Take Note) 🔄

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 1. Pass Board Resolution proposing the change of name with suggestion of
new names
2. availability check and reservation of name
3. issuance of notice of meeting of GM usually (EGM) to members
4. At the meeting, Pass a special resolution for the approval of the change of
the company name
5. Make consequential alterations on the Memorandum and Articles of
Association in line with its new status
6. Make an application to the CAC for its consent on the change of name
attached with necessary documents to wit: Commented [MOU40]:
REQUIREMENTS/DOCUMENTS FOR THE CHANGE OF COMPANY
NAME
a. Notice of special Resolution 1.Availability search and reservation of new name

b. Application for consent to change the name of the company, using Form 2.Notice of change of the name of a company (Form CAC 3) - to
be authorised by a director, secretary or any other appropriate
officer of the company
CAC 3 (Notice of Change of Name of a Company)
3.Special resolution stating the change desired, duly signed by
c. copy of the Memorandum and Articles as proposed to be amended director (s) of the company

4.Surrender of the original certificate of incorporation for

d. original Certificate of Incorporation cancellation

e. Evidence of filing annual Returns 5.Payment of filing fees

6.Up-to-date annual returns

7. CAC will then advertise the change of name in its official Gazette
8. CAC will issue a new Certificate of Incorporation.

POST-REGISTRATION PROCEDURE
1. Alteration of company seal (where the company’s articles provide for the
use of seal), certificates, letterheads, etc.
2. Effect the alteration in the memorandum and articles of association, issued
after the approval of the new name
3. Advertisement of the change of name in a daily newspaper circulating
nation-wide
4. Advertisement of change of name in the official gazette of the federation
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NOTE: it is now the duty of the CAC to advertise in a national daily newspaper
and on its website. - see s. 30 (7) CAMA

NOTE – focus, Section. 30 (6) CAMA

The change of name does not affect any right or obligation of the company, or
render defective any legal proceeding by or against the company, and any legal
proceeding may be continued or commenced against or by it in its new name.

CHANGE OF REGISTERED ADDRESS OF A COMPANY

PROCEDURE:
1. Pass Board Resolution proposing it
2. Secretary sends 21 days’ notice of meeting
3. Pass ordinary resolution of the company approving it
4. Fill Form CAC 3A- Notice of registered address to reflect the new office
address
5. Write an application to CAC to note the change attached with the following:
a. Board and company Resolution approving the change
b. Filled Form CAC 3A- Notice of change of registered office
c. Receipt of filing fees

ALTERATION OF OBJECT CLAUSE OF A COMPANY S. 50 of CAMA

PROCEDURE: (April 2019 bar final Q 5a, b&c)
1. Board resolution proposing the alteration, which may be in whole or in part
2. Company secretary sends 21 days’ notice of a GM in writing to members
and debenture holders secured by floating charges. S.51

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 3. At the meeting Pass special Resolution approving the alteration of the
objects of the company as contained in the memorandum
4. Company allows 28 days of passing the resolution for any objection and
application to court for the cancellation of the resolution by aggrieved
minority members and debenture holders secured by floating charges.
S.51(3)
5. if no objection is made within 28 days, within 15 days expiration of the 28
days, deliver to CAC :
a) a copy of the special resolution for the alteration
b) altered MEMO and ART
c) updated annual returns
d) Evidence of payment of prescribed fees
(stop here if no objection is made and CAC is satisfied)
6. If CAC is not satisfied. by the resolution, it notifies the company and the
company/aggrieved members can appeal to the FHC within 21 days of
receipt of CAC notice of refusal
7. If the appeal succeeds, within 15 days deliver to the CAC:
a) CTC of the court order confirming the resolution altering the object
clause
b) A printed copy altered MEMO and ART
8. Where an application is made to cancel the resolution is made to court by
the aggrieved minority members or debenture holders within 28 days of
passing, the company notifies CAC

CHANGE/ALTERATION OF SHARE CAPITAL

A company’s share capital can alter in any of following modes: Ordinary
resolution
101
 1. Increase in share capital - Section 128
2. Reduction in share capital - Section 130
3. Consolidation of all the shares and division into shares of larger
amounts – S.126 (1) (a)
4. Subdivision of shares into shares of smaller amounts – S.126 (1) (b)
5. Conversion of paid-up shares into stock and reconversion – S.126 (1)
CAC should be notified within 1 month – S.128 (1)

Procedure For the Increase Of Share Capital of A Company: S. 127 CAMA

(August 2017 Q 3ei) 🔄
1. Pass Board Resolution proposing the increase and authorizing the secretary
to take necessary steps to effect the increase.
2. Issuance of notice of meeting
3. At the meeting an ordinary resolution is passed approving the increase
4. Prepare and deliver to CAC within 15 days of the passing of the Resolution
attached with the following documents: August 2011
a. Copy of the notice of increase
b. Statement of increase duly stamped
c. Copy of Resolution of the Board and the company approving the
increase
d. Statutory declaration by Directors verifying the fact that 25% of
total share capital has been issued
e. Evidence of payment of annual returns up to date
f. Altered MEMOART reflecting the new issued capital
5. Obtain Certificate of increase from CAC.
6. Annex a copy each of the Resolution and the Certificate of Increase to the
MEMO.
102
Note the procedure where there is need to obtain approval for increase of share
capital from a regulatory agency S 127 (2)-(5):

A. Notice to CAC within 15 days supported by a verifying affidavit on the

need to get special approval.
B. Period is deemed extended with a period not later than 10 days from the
date of approval
C. Successive notices after 48 days of approval not granted.
D. If approval is not obtained within 9 months, the resolution lapses and
becomes null and void.

REDUCTION OF SHARE CAPITAL section 131 CAMA

FORMS OF REDUCTION OF ISSUED CAPITAL - S 131 (2) CAMA

1. By extinguishing or reducing the liability on un-paid shares.
2. Cancel paid up shares lost or un-represented by available assets.
3. Cancelling paid up shares in excess of the company's wants

Procedure For Reduction of Share Capital (Dec 2020 Q 1a) Section 130
1. Board Resolution proposing the reduction of the share capital
2. Preparation of the Scheme of Reduction.
3. Secretary issues notice of meeting (usually EGM), accompanied with
explanatory circular and the scheme of reduction
4. At the meeting Special Resolution will be passed reducing the share capital
and approving the scheme of reduction – S. 131
5. Apply to the Federal High Court to confirm the reduction and approve the
scheme of reduction.

103
6. Deliver to CAC the following documents:
a) Copy of the Special Resolution
b) CTC of the order of court approving the Scheme of Reduction
c) Extract of minutes of meeting approving the Scheme of Reduction.
d) Updated Annual Returns
e) Receipts of payment of the filing fees.
7. Obtain from CAC Certificate of Registration of Court Order confirming the
reduction and the Extract of Minutes of Meeting adopting the Scheme and annex
same to the Memorandum and Articles Association of the company.

ALTERATION OF THE ARTICLES OF ASSOCIATION OF A COMPANY

- S. 52 & 53 of CAMA;
PROCEDURE:
1. Board Resolution proposing the alterations.
2. Convene General Meeting of members and enclose the Resolution Notice.
3. At the General meeting, a special Resolution is passed altering the relevant
provisions of the articles.
4. Stamp the altered Articles.
5. Deliver to CAC within 15 days of passing the Resolution:
a. Printed copy of the Resolution.
b. Copy of duly stamped Articles as altered.
6. Evidence of payment of Annual Returns up to date.

NOTE:
In all the procedures the first 4-5 steps are almost the same at least always
remember those ones in case they decide to mark according to the number of
procedures you get. .
104
 CHAPTER SIX
CORPORATE GOVERNANCE I & II, COMPANY DIRECTORS
AND SECRETARY

CODES OF GOOD CORPORATE GOVERNANCE IN NIGERIA

The following indigenous Codes have been released by different regulatory
agencies to ensure good corporate governance in Nigerian Companies: (Bar final
January 2020 Q 5a)
1. Code of Corporate Governance for Public Companies 2011 by SEC
2. Code of Corporate Governance for Pension Operators 2008 by PENCOM
3. Code of Corporate Governance for Telecommunication Companies.
4. Code of Corporate Governance for Banks, Discount Houses and other
Financial Institutions 2014 by CBN
5. Code of Corporate Governance for Insurance Industries
6. OECD Code of Corporate Governance

The two main Codes with relevant provisions are:

a. Nigerian Code of Corporate governance
b. Code of Corporate Governance for Discount Houses, Banks and Other
Financial Institutions.

The first Code is applicable to all public companies and it made the following
provisions (Bar final August 2017 Q 4e, 2018 Q 5c, August 2019 Q 2d&e,
January 2020 Q5b)
1. The composition of the Board of Directors of a public company shall be at
least 5 members and the majority shall be non-executive directors.

105
 2. The chairman of the company is to be appointed from the non-executive
directors

3. Prohibition of the combination of the offices of the chairman and CEO

4. 2 members of the same family shall not be in the Board of directors of a

public company at the same time.

5. The company must have a strong independent Auditor who must not be
a staff of the company.

6. The proceedings of the Board shall be 3 meetings in a year with each

director attending at least 2.

7. Whistle blowing: reporting unethical or illegal practices S. 32

The second Code applies to Banks alone and it made the following provisions:
1. Quantum of Shares: no single individual shall hold more than 5% of the
shares of a Bank
2. Tenure of office of a Managing Director of a Bank shall be 2 tenures of 5
years each (appointed for 5 years and can be re-appointed for another 5 years
only)

106
 DIRECTORS – focus
A director is a person duly appointed by a company to manage the affairs of that
company; S. 269(1). Director is the alter ego of a company-Yalaju Amaye v.Arec

Presumption of Due Appointment

There is presumption of due appointment of any person held out by the company
as a director – S.269 (2)
PENALTY
a) The person not duly appointed, who holds himself out as a director: He is liable
to a term of 2 years imprisonment or a fine as the court deems fit. Such fine shall
be payable for each day the defaulter acts without due appointment. 269 (3),
Olufosoye v Fakorede
b) Where it is the company that holds out such a person as a director: It is liable to
a fine in such amount as the Commission shall specify in its regulations for each
day during which the default took place. S.269 (4) CAMA.
TYPES OF DIRECTORS – August 2022 Commented [MOU41]:
various types of directors that can manage the affairs of a
company limited by shares.

SHADOW DIRECTOR 1.Executive or special directors

a person on whose direction and instructions the directors are accustomed – S. 270. 2.Non-executive directors

3.Shadow directors

4.Alternate directors

EXCUTIVE DIRECTORS: - 5.Assignee directors

They hold service contract and are employees of the company involved in the daily 6.Life directors

7.Independent directors
running of the company and are normally paid salaries – Longe v. FBN.

NON-EXECUTIVE DIRECTOR:
They are board members who attend board meetings and general meetings of the
company. They are not servants of the company but its alter ego and are not paid

107
salary but out of pocket expenses. Salary is paid only when the articles permit
that.

INDEPENDENT DIRECTORS S.275 (3): Independent director means a director

who, in the two years preceding is nomination the relevant director or his relative
was not:
(a) Was not an employee of the company;
(b) did not Make or receive payments from company exceeding N20,000,000(20m) Commented [MOU42]:
nor own (directly or indirectly) more than 30% of the shares of an
entity that received such a payment from the public company;
c) was not engaged directly or indirectly as an auditor of the company
By the provisions of S. 275 of CAMA, a public company shall have at least 3
independent directors.

LIFE DIRECTOR – S. 281

This is a person appointed a director of company for life which means that he is
not subject to the rotation of directors but he is removable under S. 288 of CAMA;
BY AN ORDINARY RESOLUTION and SPECIAL NOTICE IS GIVEN..

MANAGING DIRECTOR
Per S. 88(b) unless otherwise provided in the articles, the board of directors may
from time to time, appoint one or more of their body to the office of managing
director and may delegate all of their powers to such MD. Also S.289(5) CAMA
permits the board to delegate their powers to the Managing director
This is a director appointed by the Board of directors to run the day-to-day affairs
of the day company. Their appointment may be terminated like that of any other
employee. If so terminated, he reverts to the position of an ordinary director.
Where the members remove him as a director, he ceases to be both a director
and the managing director – Yalaju Amaye v AREC

108
CHAIRMAN - focus
The directors may elect a Chairman of their meetings and determine the period of
which he shall be in office. if no chairman is elected or if at any meeting the
chairman is not present within 5 minutes after the time appointed for the holding
of the meeting, the directors present may choose one of their members to be the
chairman of the meeting – Section 289(6). The Act restricts the chairman board of
directors of a public company from acting in dual capacity as the CEO of the same
company – S. 265(6)

NUMBER OF DIRECTORS
The minimum number of directors of a company is 2 directors, except a small
company section 271 CAMA, the articles may fix a maximum number
NOTE:
If the number falls below 2 the company must within 1 month appoint another or
shall not carryon business after the expiration of the 1-month period. S. 271 (2)
Any director acting without filing the vacancy after 60 days shall be personally
liable for all the debts incurred by the company within that period – S. 271 (3).
The directors may increase the number of directors as long as it is not above the
maximum numbers but the general meeting has power to increase or decrease the
number of directors generally Section 274(3)

APPOINTMENT OF DIRECTORS (exam area: August 2014 Q 4a, 2016 Q 6)

1. FIRST DIRECTORS:
These are directors appointed by the Subscribers to Memorandum of
Association. They may also be named in the article of association - S. 272

109
 2. SUBSEQUENT DIRECTORS:
a. By members at Annual General Meetings; Section 273(1) Commented [MOU43]:
may re-elect or reject directors and appoint new ones.

b. By personal representatives or creditors where all the directors and

shareholders die; Section 273(2)
c. By board of directors to fill casual vacancy arising out of death,
retirement and resignation SUBJECT to ratification by members at
the next annual general meeting. S.274

NOTE: Appointment of Directors after Death of all Directors and

Shareholders (exam area).
The Personal Representatives of the dead directors and Shareholders shall apply
to the Federal High Court for an order to convene a General Meeting of all
Personal Representatives of the shareholders to appoint new directors. Where they
fail to convene the meeting; the CREDITORS if any, shall do so S. 273(2)
CAMA (see January 2020 Q 2e)

QUALIFICATION OF DIRECTORS (Exam Focus)

Anybody can be appointed as a director of a Company EXCEPT the following
persons: Section. 283
1. Infants under 18 years of age (totally prohibited)
2. A person disqualified under section 279 (insolvent persons), section
280 (fraudulent persons), and section 284 (vacation of office). Commented [MOU44]:
i.e share qualification, resignation in writing etc;

3. A person suspended or removed under S. 288 of the Act

4. Unethical conduct Commented [UCHIHA45]: Business facilitation act made this
amendment and removed the provision of unsound mind

5. A corporation other than its representative appointed to the board for a

given period (section 283).

110
NOTE S. 280 restrains persons who have been adjudged fraudulent in relation to
company matters by the court, from taking part in the management of a company
for a specified period not more than 10 years.

POSER
What is the legal implication of a person’s conviction for fraudulent
misrepresentation in his capacity as a Director of a Company. August 2011 No
5(b)
Section 283 provides for the category of persons who are disqualified from
holding office as Directors. One of such persons is the person disqualified
under Section 280 CAMA.

By Section 280, a person who has been found guilty, while as an officer of a
Company, of any fraud in relation to the Company shall be disqualified from
holding office as a Director of the Company or take part in the management
of the Company for a specified period not exceeding 10 years.

AGE OF DIRECTOR (Exam Focus)

A director must be above 18 years of age. Therefore, A MINOR CANNOT BE
A DIRECTOR. – Section 283
Section 278 requires that where a person who is 70 years is to be appointed a
director of public company he/she shall disclose this fact to members in general
meeting
THE EXCEPTION, a person may be appointed a director who is 70 years
notwithstanding his age PROVIDED special notice is given of the resolution
appointing or approving the appointment of such a director, and the notice given
to the company and by the company to its members shall state the age of the
person to whom it relates. Section 282

111
Failure to disclose his age and multiple directorships, will attract a fine/penalty; S.
278(3)
POSER
Examine the possibility of appointing a 72 year old man and a 16 year old as
Directors of Axe (Nig) Plc. August 2011 No 5(c)
An adult is qualified for appointment as a Director of a Company. But in the case
of a Public Company, a person above the age of 70 years owes the Company the
duty to disclose his age to the members at the general meeting. Section 278.
Failure to so declare his age renders the person guilty of an offence and liable to a
fine. The notice seeking to appoint a 72 year old man must state the age of the
person.
An infant, being a person less than 18 years old is disqualified from appointment as
a Director of a Company. Section 283(a) CAMA

ROTATION OF DIRECTORS (see August 2014 Q 4b, 2016 Q 6, January

2020 Q 5c) 🔄
If no provision on the retirement or rotation of directors is made in the Articles of
Association of a company, then the provisions of the CAMA can apply which are
as follows: Section 285
1. At the first Annual General Meeting (AGM), all the directors (excluding
life directors) are to retire.
2. In any subsequent AGM, one-third (1/3) of the directors must retire to the
nearest whole number in their order of appointment (i.e. first to be
appointed retires first).
3. Where two or more directors are appointed the same day, retirement shall be
by casting a lot unless they agree among themselves who should retire
first. (stop here when asked for the principle)
112
 4. Where a director at retirement presents himself for re-election then
whether the company is silent or not, he is deemed to have been re-elected
as a director, unless:
a. There is a resolution not to fill the vacancy or
b. The resolution for his re-appointment was put to the meeting and he lost
or
c. Another director has been elected in his place.

REMOVAL OF DIRECTORS (exam focus) 🔄

First look at the Articles of Association of the company if it has clauses on the
removal of a director, if yes then that should be followed. If not, CAMA applies

The Procedure is as follows: Section 288, Yalaju Amaye v A.R.E.C Ltd Commented [MOU46]:
PROCEDURE FOR REMOVAL UNDER S. 288 – SHORTER

1. Check to find out if direct and simpler power of removal other than S. 1.Check to find out if direct and simpler power of removal other
than S. 288 is provided by the articles or contract and apply it if
288 is provided by the articles or contract of service and apply it if available.

2.The person wishing to remove the director issues special

available. notice to the company.

2. The person proposing the removal will send a SPECIAL NOTICE to 3.The secretary upon receipt of the notice will;
a.Send a copy to the director concerned

the company at least 28 days before the date of the meeting b.Issue notice of meeting together with the special notice to
members
3. Upon receipt of the notice, the secretary to the company will:
c.The notice will be accompanied by any representations
made by the director and state the fact of the
a. Send a copy of the Notice for his removal to the director representations having been made.

concerned. 4.At the meeting, audience will be given to the director to make
his representations and an ORDINARY RESOLUTION will be
passed removing the director
b. Issue a notice of meeting to members AT LEAST 21 DAYS
5.The company secretary will notify CAC by filing Form CAC 7A
before the date of meeting which is ACCOMPANIED by any within 14 days of removal

representation made by the director and state the fact of the CONSEQUENTIAL ALTERATIONS
1.The Secretary will alter the Register of Directors S. 318
2.Register of Directors’ Residential Addresses – S. 320
representations having been made 3.Register of Directors Share-holding – S. 301 of CAMA.

4. At the meeting:

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 a. Give audience to the director and read to the members his
representations if they were received too late or were not sent to
the members owing to the company's default; and
b. Pass an ORDINARY RESOLUTION the removal of the
director.
5. Company notifies the CAC using Form CAC 7A- notice of removal
of directors to reflect the removal, attached with the said Resolution
within 14 days.
6. The company is to make the changes in its Register of Directors and
where necessary and also amend the register of directors’
shareholding.
POSER
What are the options available to a Board of Directors of a company for the
removal of the Managing Director? 2009 No 5(d)
There's no provision in the Act for the appointment, discipline or suspension of an
executive director (the managing director is also an executive director). Provisions
for suspension or general discipline may be made in the contract of service or the
Articles of Association of a company. Longe vs FBN
In U.O.O (Nig) Plc v Okafor (2020) NWLR Pt 1736 the court held that There's
no provision in the CAMA for the appointment, discipline or suspension or
removal of a managing director from office. Be that as it may the Chairman of
the BOD or MD can be removed summarily for serious misconduct or when
there is a crisis of confidence between him and shareholders.

The Effect of Non-Compliance with the Above Procedure:

A director whose removal is not in accordance with the procedure under the
CAMA, the removal will be invalid and void and such will be set aside; see
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Longe v. First Bank PLC, Yalaju-Amaye v. AREC e.g failure to issue notice to
the director sought to be removed

NOTE: That the Board of directors cannot remove a director (including a

managing director). A director can only be removed at the General Meeting in
accordance with section 288 of CAMA above; (see April Bar Final 2019 Q 1a &
b, Dec 2020 Q 6d).

Remedies For Wrongful Removal of A Director: (Dec 2020 Q 6dii)

1. A declaration that the removal was wrongful hence Null and void-
Awoyemi v. Solomon
2. Seek for an Order of Court re-instating him as a director
3. Compensation for loss of office
4. Seek for damages for the unlawful removal

REMUNERATION OF DIRECTORS – S. 293

Directors of a company are not entitled to remuneration unless expressly stated
in the Articles of Association. S.293(4).
The remuneration of directors shall be determined from time to time by the
members in general meeting and shall be deemed to accrue from day to day.
Section 293(1) CAMA. The articles of association may also fix directors
remuneration where the articles fixes it, it is only alterable by a special
resolution – Section 293(3)
However, Executive/Managing directors are entitled to remuneration since they
are considered as employees of the company with Service Contracts
NOTE: that directors will always be entitled to refund of out-of-pocket expenses
expended in discharging their official duties on behalf of the company.
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MULTIPLE DIRECTORSHIPS
A person shall not be a director in more than 5 public companies.

DUTIES OF DIRECTORS: -

Directors are in fiduciary relationship with the company, all their duties therefore
flow from the fiduciary duty that they owe the company. S. 305

1. Duty to act in the best interest of the company – A director must separate
his personal interest from the interest of the company. The test is subjective
which depends on each circumstance, but the director must have displayed
faithfulness, diligence, carefulness and ordinary skill.

2. Duty not to fetter discretion- Discretion will be fettered when for example
the director uses the right to vote for a collateral reason.

3. Duty to avoid conflict of interest - Personal interest must not conflict with
duties as a director (especially in making secret profit) See Section 306 (1)
and (2) CAMA.

4. Duty of Care and Skill- must not be negligent in the discharge of his duties.
S.308 (2) CAMA.
5. Duty to give notice – Notice of interest in contracts, loans and/or
shareholding.
6. Duty to disclose age and Multiple directorships in case of public
company:
(a) Age: Any person who is appointed or to his knowledge proposed to be
appointed director of a public company and who is 70 or more years old

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 shall disclose this fact to the members at the general meeting – Section
278 (1) CAMA

(b) Multiple Directorship: shall not derogate from his fiduciary duties to each
company including, duty not to use the property, opportunity or
information obtained in the course of the management of one company
for the benefit of the other company or to his own or other person’s
advantage. S.307
Remedies for Breach of Directors Duties

The following remedies are available to the company against a director for breach
of duties:

1. Accounts of Profits
2. Rescission of Contracts
3. Summary termination of appointment with the company/dismissal of the
director.
4. Restoration of the company’s property
5. Damages/Compensation
6. Injunction and/or Declaration.

LIABILITY OF DIRECTORS: - 316

A director may be personally liable who fraudulently fails to apply money received
by the company as a loan for a specific purpose or money or other properties
received by the company as advance payment for execution of a contract or
project, for the purpose for which it was received, shall be personally liable to the
party from whom the money or property was received.

117
There are circumstances when the liability of directors of a limited liability
company shall be unlimited and they are as follows;

1. Where the memorandum of association of a limited liability company provides

that the liability of directors, managers or
2. managing director be unlimited. See S. 314(1).
3. Also, a limited liability company, if so authorized by its articles may, by
special resolution, alter its memorandum so as to render unlimited, the liability
of its directors or managers or of any managing director

PROCEEDINGS/MEETINGS OF DIRECTORS Commented [MOU47]:

The decision of the board shall be by simple majority and where
there is a tie, the chairman shall have a second or casting vote. Each
The directors may meet as a Board, the first meeting of the Board of directors is to director is entitled to a vote.

be held within 6 months of incorporation company. - Section. 289 (1). (MCQ) A resolution in writing signed by all the directors entitled to receive
notice of meeting is valid and effectual as if it has been passed at a
meeting of the directors. A-G Enugu State.V. Avop Plc

REG 16 COMPANIES REGULATION

Agenda/Business of the First Board Meeting (Exam focus) Directors may, in the exercise of their power to regulate their meeting
as they think fit, hold their meetings electronically and by any means
that would allow all directors to participate, speak and vote at the
The agenda of the first Board meeting should usually contain the following: meeting.

1. Election of the Chairman from amongst the directors

2. Appointment of secretary
3. Appointment of the managing director
4. Appointment of the solicitor of the company
5. Appointment of Bankers.

Length of Notice of Board Meeting (MCQ)

The length of Notice of Board meetings is 14 days’ notice. Sec. 292 (2).
The notice must be sent to every director entitled to attend the meeting and the
company secretary.

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Failure to give notice of the meeting to persons so entitled shall invalidate the
meetings, Section 292(3)

QUORUM OF BOARD MEETINGS

The quorum of Board meetings is 2 if the directors are not more than 6 or
1/3 if they are more than 6 directors of the company. -S. 290 of CAMA
NOTE that where the Board of Directors is unable to act because quorum cannot
be formed, the general meeting may act in place of the Board; S. 291 CAMA;
(MCQ August 2019)

POSER
With the aid of relevant authorities, write a reply on points of law to the contention
that once made a director, only death can terminate the appointment. 2009 No
4(a)(v); August 2011 No 5(d)
This assertion is not correct. The general meeting has power under section 288 to
remove all directors, including a Life Director, from office. A Life Director is only
exempted from retirement from office by rotation under section 285 CAMA. He is
subject to removal under S. 288 CAMA

COMPANY SECRETARY - Focus

Every company except a small company, must have a company secretary; S. 330
A company can appoint assistant or deputy company secretary – S 330(3)
He’s a high-ranking officer and can be part of management. Wimpey Ltd v
Balogun
On no condition shall a secretary Exercise any powers vested on the directors
without the board’s authority. S. 335 CAMA.

119
NOTE: exam focus
a director of a company may be appointed as a secretary of that same company but
cannot validly act in the same capacity in a single (one) transaction; section Commented [MOU48]:
it is possible for a person to validly occupy the dual position of
Director and Secretary at the same time but where an act or thing is
331; (August 2018 Q 4c), A document attested to by a person in the dual required to be done by a Director and Secretary, such things cannot
be validly done by the same person
capacity of a Director and Secretary is invalid.

QUALIFICATIONS OF A COMPANY SECRETARY: Section 332

PRIVATE COMPANY (LTD)
There is no special qualification for the secretary of a private company.
PROVIDED that the Board is satisfied that the person to be appointed a company
secretary have the requisite knowledge and experience to discharge the
functions of a secretary.

PUBLIC COMPANY (PLC)

For a person to be appointed as a secretary of a public company, he/she must be
qualified as either: August 2022
1. A member of the Institute of Chartered Secretaries of Nigeria
2. A Legal practitioner
3. A member of of any professional body of accountants established from time
to time by an Act of the National Assembly
4. A person who had held the office of the company secretary for 3 years in a
Public company of the 5 years preceding his appointment
5. A firm of chartered secretary, legal practitioner or chartered accountant

APPOINTMENT OF SECRETARY
A company secretary is appointed and removable by the Board of Directors of the
company. Section 333(1) of CAMA. Use Form CAC 8 for appointment
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STATUS OF A COMPANY (See August 2019 Q 6e)
A company secretary is an important officer of the company and can make
representations that will bind the company, Wimpey Nig. Ltd v Balogun, Okeowo
v Migliore
The Companies and Allied Matters Act has also elevated the status of a company
secretary by making the following provisions: FOCUS
1. Statutory provision for the position of a secretary; Section 330
2. Statutory provision for the qualification of a company secretary (PLC);
section 332 CAMA
3. Statutory provision for the appointment and removal of a secretary; S. 333
4. Statutory provision for the duties of a company secretary; Section 335

DUTIES OF A COMPANY SECRETARY (August 2016 Q 6, April 2018)

The Statutory Duties of Company Secretary are: S.335
1. To attend and take minutes of the meetings of all types of company meetings
2. Advising the meetings on the compliance with the applicable rules and the
provisions of CAMA
3. To maintain the registers and other statutory records
4. To render the proper returns and give notifications to the Corporate
Affairs Commission as required by Law
5. To carry out other administrative and secretarial duties as directed by
the company - section 335(1)
N.B
The secretary must not without authority exercise any power vested in the
director’s section 335(2)

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Duties Before a Meeting (General Duties): focus august 2011
a. Serve out Notice of meetings and the agendas on all members and
officers of the company
b. Receive the Notice of proxies attendance within 48 hours to the
meeting
c. Keep the statutory records
d. To ensure the venue of the meeting is secured
e. To publish additional Notice of meeting in at least two National
Newspapers (PLC only)

Duties During the Meetings:

a. To take down the minutes of the meeting
b. To ensure compliance with the Law
c. To assist the Chairman in the conduct of the meeting.

Duties After the Meeting:

a. To draft Resolutions of the meeting ready for filing at the Corporate
Affairs Commission
b. To prepare the minutes of the meetings to the Chairman/secretary to
sign
c. To file statutory returns at the CAC required by Law
d. To update Statutory Records/ Registers kept by the company to reflect
current Resolutions.

Statutory Filings/Returns to be made to CAC by a Company Secretary & time

(Exam focus August 2016 Q 1 & 3) & MCQ!!!!
1. Court orders must be filed within 14 days – S. 51(7), 65(3) and 115 (4)
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 2. Notice of change in the particulars of directors within 14 DAYS – S. 321
3. Notice of change in the particulars of a secretary within 14 DAYS – S.
339
4. Notice of Appointment/ removal of auditor within 14 DAYS – 401 &
409(2)
5. Returns during receivership and winding up within 14 days – S. 533
6. Special resolutions within 15 DAYS – S. 262
7. Annual returns to be made within 42 days after the Annual General
meeting. – S. 421
8. Return of Allotment of shares within 15 days after the allotment – S. 154
CAMA (The business facilitation Act amended it to 15)
9. Notice of alteration in Share Capital within 1 MONTH - S. 126, 127, 131
10. Statutory report – 21 days S. 235(6)
11. Registration of charges within 90 DAYS. – S. 222
12. Statement by banks, insurance companies – Before commencement of
business and on 1st Monday in February and 1st Tuesday of August of
every year - S. 733

REMOVAL OF A COMPANY SECRETARY- Section 333

PRIVATE COMPANY:
There is no special procedure for removal of the secretary of a private company,
PROVIDED it was done by a resolution of the Board of Directors. Upon such
removal, the company will notify CAC within 14 days by filing CAC Form 8A
NOTE: only the Managing Director cannot remove the secretary.

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Procedure for the removal of a secretary of a private company
1. Board of directors Convene a meeting proposing the removal of the
secretary
2. At the meeting a resolution is passed removing the secretary
3. Notify CAC within 14 days using FORM CAC 8A – Notice of removal of
secretary
4. Make consequential alteration to the register of secretaries

PUBLIC COMPANY (January 2020 Q 5e, Dec 2020 Q 6e) – S. 333

The secretary of a public company can only be removed through the procedure
stated below:
1. Give the affected secretary a Notice which must state:
a. Intention to remove him as the secretary
b. The grounds for his proposed removal
c. That he has 7 working days to either resign his office or to make a
defense

2. The Board may pass a Resolution removing the secretary where he does not
resign or does not make a defense the Board will remove him and report it to
the next Annual General Meeting.

3. Where without resigning his office, he makes a defense which the board
does not consider sufficient to exonerate him, the following options are
open to the board
a) If the ground is that of fraud or gross misconduct, the board may
remove him from office and shall report to the next general meeting
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 b) If the ground is other than fraud or serious misconduct, the board can
only suspend him and report same to the next general meeting

4. The company will notify CAC of the removal within 14 days using CAC
8A – Notice of removal of secretary

5. Make consequential alterations to the register of secretaries (if a plc) – S.

336

Note: where a secretary who is suspended from office eventually removed with the
approval of the general meeting, the removal takes effect from the date of the
suspension – Section 333 (4)

REMEDIES FOR WRONGFUL REMOVAL

1. action in court for damages for wrongful removal
2. claim a declaration that the purported removal is void

REGISTER OF SECRETARIES - Section 336.

Every public company shall maintain a register of secretaries which shall contain
if it’s an individual:
(a) full name and any former name or names ;
(b) address; and
(c) email address.

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 CHAPTER SEVEN
CORPORATE GOVERNANCE III
MEMBERSHIP, MEETINGS AND RESOLUTIONS

HOW TO BE A MEMBER OF A COMPANY – focus 2010

It can be by any of the following for companies with a share capital: SATT
1. Subscribing to the memo – Section 105
2. Allotment and being placed on the register of members. - Section. 150
3. Transfer of shares (SALE) from existing shareholders and being placed on the
register of members. – Section 175
4. Transmission (Inheritance) i.e. by succeeding to the estate of a decreased,
bankrupt member, and being placed on the register of members. - Section 179

For companies without a share capital (GTE and IT) membership is acquired by:
1. Subscription
2. Undertaking to contribute to the assets of the company in the event of it
being wound up
NOTE: An alien may join in forming a company or acquire shares in a company
but must comply with the laws relating to alien participation. -S. 17 NIPC ACT;

INCIDENTS/RIGHTS OF MEMBERSHIP (Bar Final August 2018 Q 6b).

SECTION 138
1. Right to dividends when declared
3. Right to attend meetings
4. Right to receive notice of meetings
5. Right to vote at meetings and be voted for
6. Right to demand poll.
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7. Right to appoint proxy
8. Right to requisition extra – ordinary general meeting.
9. Right to own shares
10. Right to transfer shares.

CESSATION OF MEMBERSHIP
1. Transfer of all of one’s share to another
2. Forfeiture of shares
3. Transmission of shares
4. Surrender of shares
5. Liquidation of a company
6. Repudiation by an infant

MEETINGS OF THE COMPANY

There are 3 types of General meetings of a company:
1. Statutory meeting. – Section. 235
2. Annual General Meeting (AGM) – Section 237
3. Extra–ordinary General Meeting (EGM) Section 239

A. STATUTORY MEETING - Section 235 (April 2018 Q 4, August 2018

Q 5d)
Features of the Meeting:
1. This is solely for public companies (PLC) and it is compulsory.
2. To be held within 6 months of the date of incorporation of the company.
3. It must be held in Nigeria Section 240

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Business Transacted at Statutory Meeting (MCQ and Theory)
The members of the company present at the statutory meeting may
1. Consider the statutory report.
2. Considers matters arising from the statutory report.
3. Discuss any matter relating to the formation of the company and
commencement of business.

Statutory Report: MCQ

• The directors shall at least 21 days before the day on which the statutory
meeting is held, forward to every member of the company statutory report;
S. 235 (2) CAMA
• The statutory report shall be certified by not less than two directors or by
a director and the Secretary of the company Section 235(3) CAMA
• The directors shall also deliver a copy of the statutory report certified, to the
CAC, Done within 14 days for registration. Section 235 (6)

Contents of Statutory Report (know at least 5) – Section 235(3)

1. The total number of shares allotted, either as fully paid up, partly paid up

or partly paid up by consideration and its particulars.

2. The total amount of cash received by the company in respect of all the

shares allotted,
3. The total amount of cash received by the company in respect of all the

shares allotted, distinguished as aforesaid.

4. The names, addresses and descriptions of the directors, auditors,
managers, if any, and secretary of the company.
5. The particulars of any pre-incorporation contract together with the

particulars of any modification or proposed modification.

128
 6. Any underwriting contract that has not been carried out and the

reasons therefore.
7. The arrears share, if any due on calls from every director.

8. The particulars of any commission or brokerage paid or to be paid on the

issue or sale of shares or debentures to a director or manager

9. An abstract of the receipts of the company and of the payments made from

them up to a date;

Effect of Failure to Hold the Statutory Meeting OR deliver statutory report

(April 2018 Q4, August 2018 Q5e): Failure to hold statutory meeting or deliver
statutory Report would result to:
1. The company and any officer in default shall be guilty of an offence
and liable to a daily penalty for everyday during which default
continues to the tune of any amount the commission specifies in its
regulation; Section 236 CAMA
2. It will form a ground for winding up of the company by the court-S. 571
(for failure in delivery of report)

POSER
When is a Company incorporated on September 30, 2022 supposed to hold its
statutory meeting and what businesses are transacted therein?
The statutory meeting of a Public Company must be held within a period of 6
months from the date of incorporation – Section 235 CAMA. A company
incorporated on September 30, 2021 must hold its statutory meeting before March
30, 2022.

129
The business to be transacted at the Statutory Meeting of the Company is to
consider the statutory report. The statutory report must be forwarded to every
member of the Company at least 21 days before the meeting.

B. ANNUAL GENERAL MEETING (AGM)- Section 237 CAMA

Essential Features of AGM
1. It is compulsory for all Companies EXCEPT small company.
2. A company should hold its first AGM within 18 months of incorporation.
3. Not more than 15 months must elapse between one AGM and the next
However a company that holds its first AGM within 18 months of its
incorporation, it need not hold another AGM in that year or in the
following year S. 237(1)(a) CAMA1
4. Apart from the first AGM, CAC can extend the time of holding any
subsequent AGM by not more than 3 months; S. 237(1)(b) CAMA
5. The AGM must be held in Nigeria S. 240 CAMA
N.B Commented [MOU49]:
MCQ
THE FOLLOWING CAN CONVENE AGM
The notice calling it must describe it as an annual general meeting 1.DIRECTORS OF THE COMPANY
2.THE COURT
3.MINORITY SHAREHOLDERS HOLDING 20% OF THE COMPANIES
SHARES

PROCEDURE TO COMPEL HOLDING OF AGM:

1. A member can apply to the CAC urging the CAC to call or direct the calling
of a meeting.
2. If a member’s application is timely and the CAC grants the order to hold the
meeting in that year, the meeting is an AGM of that same year.

1
i.e. the company need not hold its first annual general meeting in the 1st or the following year of its
incorporation. For example if a company was incorporated on 1st November 1995, it need not hold annual
general meeting in 1995 or 1996 but must hold it at least in April 1997

130
 3. The CAC can also give a direction that one members of the company
present in person or by proxy may apply to the Fed. High Court for an order
to take a decision which shall bind all the members S. 237(2) CAMA

Business Transacted at Annual General Meeting (Exams Focus August 2016,

April 2017 & April 2018);
Two types of business are transacted at the AGM of a company ORDINARY
BUSINESS OF AGM: this includes; S. 238
1. Declaration of dividend. Commented [MOU50]:
1.IT MUST BE DECLARED AT THE GENERAL MEETING
2.MAY BE PAID OUT OF DISTRIBUTABLE PROFITS
2. Presentation of the Financial Statements. 3.ARE SPECIAL DEBTS RECOVERABLE WITHIN 12 YEARS

3. The Reports of Directors and Auditors

4. Election of directors in place of retiring ones.
5. Appointment of Auditors and fixing of their remuneration.
6. Appointment of members of the Audit committee

2. SPECIAL BUSINESS OF AGM

Any other business not listed as ordinary business of AGM is deemed Special
Business of AGM;. It may include: section 238
1. Increase of share capital
2. Reduction of share capital
3. Conversion of company
4. Removal of a director
5. Change of name
6. Alteration of object clause etc.
7. Winding up of company

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 POSER – May 2011
When is a Company incorporated on September 30, 2022 supposed to hold its first
AGM and what businesses are transacted therein.

The first annual general meeting a Company must be held within 18 months
from the date of incorporation – Section 237 CAMA. Thus for a company
incorporated on September 30, 2022, its first annual general meeting must be
held not later than March 30, 2024.

The business to be transacted at the Annual General Meeting of the Company

are the ordinary business and the special business. The ordinary businesses
are

• Declaration of dividends

• Presentation of financial statements

• Directors/Auditors’ Report

• Election of Directors to replace retiring Directors

• Appointment and fixing of remuneration of Auditors

• Appointment of Audit Committee members

Section 238 CAMA

All other businesses other than the above are deemed special business of the
Company. Section 238 CAMA.

C. EXTRA-ORDINARY GENERAL MEETING - Section 239 CAMA

1. Extra–ordinary General Meeting (EGM) is the General Meeting held at any
time to transact businesses that cannot conveniently wait for the next
Annual General Meeting (AGM).
2. An EGM can hold at any time and need not hold in Nigeria S. 240 CAMA

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WHO CAN CONVENE AN EGM?
1. Board of Directors
2. Any Director if other Directors are not within Nigeria & quorum may not be
formed for BOD
3. Requisition by members holding not less than one tenth of the paid-up
share capital of the company, carrying the right of voting see Pedley V
Inland Waterways Asso. Ltd , S. 239(2)
4. Auditors can requisition an EGM for the purposes of discussing the
reasons contained in his notice of resignation Section 413
5. in the case of a company without a share capital (GTE/IT), members holding
one-tenth of the total Voting rights of all the member.
6. CONVENED BY THE COURT: - Section 247
Where it is impracticable to call company’s meeting, the court may on its
own motion or on the application of a director or a member, order that a
meeting be conducted as it may direct including one member constituting
quorum, Okeowo .V. Migliore.
7. CAC can order for holding of EGM of a company.
N.B - 2009
The contention that there is nothing the shareholders can do where the Directors
fail to convene a meeting is misconceived in law. Apart from the Board of
Directors calling a meeting, a meeting of the Company may also be called by those
listed above.
N.B
The Board of Directors have the duty of calling the general meeting of the
Company, but where they fail to do so, the members of the Company can
requisition a General Meeting of the Company

133
Procedure Calling/Requisitioning An EGM By The Members (April 2018 Q 3)
S. 239 (2) CAMA
1. The Requisitionists shall deposit a signed requisition at the registered office
of company, stating “the object of the meeting” and the Resolution which
they intend to propose. S. 239(3)
2. If after 21 days of the deposit of the notice of requisition stating the objects
of the meeting, the directors fail to call a meeting,
3. Such meeting must be convened within 3 months of the deposit of the
requisition. See S. 239(4).
4. Any reasonable expenses of the requisitionists in convening the meeting
shall be repaid to the requisitionists by the company S. 239 (6)
5. If no quorum is present at the requisitioned meeting, within 1 hour from
the time appointed for the meeting, it is dissolved i.e. that would be the end
of the matter, there is no adjournment S. 264 (3).

Business Transacted At Extra–Ordinary General Meeting.

ALL businesses transacted at an extra – ordinary general meeting shall be deemed
to be “SPECIAL BUSINESS” (MCQ) Section 239(8) CAMA,

VENUE OF MEETING
All STATUTORY and AGM shall be held in Nigeria EXCEPT, a small
company and a company with a single shareholder S.240.
All types of company can hold general meetings electronically PROVIDED that
Commented [MOU51]: REGULATION 15
the meetings are conducted in accordance with the articles of the company. S.
Where the general meeting of a private company is held
electronically, the minutes of the meeting shall indicate that fact.
240 (2). (Amendment by the business facilitation Act)
It shall be sufficient to reflect the registered office address of the
company as the physical venue of the meeting provided that a
director and the company secretary (if any) shall be present at the
physical venue of the meeting.

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 POSER
Comment on the challenge of a meeting of the Board of Directors by the Chairman
on the ground that the Board meeting was held in Dubai, UAE. May 2011 No
4(b)(ii)
The Directors of a Company may meet together from time to time for the dispatch
of business, adjourn and otherwise regulate their meetings as they deemed fit.
Section CAMA. Also By S. 240, all statutory and annual general meetings of the
company shall be held in Nigeria. It therefore follows that all other types of
meetings, including meeting of the Board of Directors can validly hold outside
Nigeria.
The objection by the Chairman that the Board meeting is invalid having been held
in Dubai is misconceived in law.

NOTICE OF MEETING S. 241 CAMA (MCQ)

The notice required for all types of general meetings is 21 days from the date on
which the notice was sent out.
A shorter notice may be given where:
a. For AGM, if it is agreed by all the members entitled to attend and vote
at the meeting
b. For any other meeting, by majority holding not less than 95% in nominal
value of the shares with right to attend and vote. S. 241(2).

Contents of Notice of Meeting: Section 242 CAMA (January 2020 Q 5d)

A valid notice of a meeting must specify:
1. The place, date and time of the meeting; (Venue)
2. The type of meeting
3. Agenda i.e. general nature of the business to be transacted
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 4. For Annual General Meeting, it is to be stated in the Notice; that the
meeting is to transact “Ordinary Business” and state them.
5. For Special Business, terms of the resolution should be set out.
6. Provision should be made for proxy attendance.
7. It should be expressed to be By Order of the Board.
8. Signed by Company Secretary.
9. Date

PERSONS ENTITLED TO RECEIVE NOTICE OF MEETING – S. 243(1)

The following persons are entitled to receive Notice of a general meeting, and thus
are eligible to attend: (Bar final August 2018 Q 3b, January 2020 Q 5c)
a. Every member
b. Legal representative, receiver or a trustee in bankruptcy of a member.
c. Every director of the company.
d. Every auditor of the company
e. Company Secretary
f. CAC in case of public of companies

SERVICE OF NOTICE: Section 244 CAMA

Notice of meeting can be served by: (BFA amendment)
a. Personal service
b. electronically
c. By post to the person entitled or to his registered address
d. where he has no registered address within Nigeria, to the address,
supplied by him to the company for the giving of notice to him

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NOTE-Where a notice is sent by post and the letter is properly addressed and
stamped, then the addressee is deemed to receive it 7 days after the letter is
posted– S. 244 (2) CAMA

EFFECT OF FAILURE TO GIVE NOTICE OF MEETING S. 245 CAMA

(exam focus)
Failure to give notice of meeting to a person entitled to receive it shall invalidate
the meeting. Therefore, such a member can apply to the Federal High Court by
Originating Summons for the meeting to be declared invalid.
The EXCEPTION is where such failure is an accidental omission on the part of
the persons giving the notice; (January 2020 Q 5a)
NOTE THAT: In addition to the normal individual notices sent out, every Public
Company (PLC) shall at least 21 days before any General meeting advertise a
notice of such meeting in at least two daily newspapers. Section 246 CAMA
POSER
Advice a person who was not given a notice of meeting about the remedies
available to him under the law. 2009 No 3(iv)

Failure to give notice of any meeting to any a person entitled to receive notice
of such meeting shall invalidate the meeting except where such failure is an
accidental omission. Section 245 CAMA

In addition to the above, a minority who complains of failure to serve notice

of meeting on him shall be entitled to bring minority actions under S. 343 for
either an injunction restraining the company from holding the meeting or
giving effect to the resolutions passed at the meeting or a declaration to
invalidate such meeting or resolution. Pender v Lushington, Parke v Daily
News; Longe v First Bank.

CHAIRMAN OF THE MEETING - May 2011 No 4(b)(i)

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 Ø The chairman of the AGM is also the Chairman of the Board of Directors.
Ø If it is a general meeting of the company for which he is not present within
one (1) hour of the scheduled time or is unwilling to act, the directors present
will be appointed to chair the meeting- S. 265(1) of CAMA. (FOCUS)
Ø If he is not present after 5 minutes of the time for the Board meeting,
another will be appointed to act as chairman-S. 289(6) (Focus)
POSER
Comment on the challenge of a meeting of the Board of Directors by the Chairman
on the ground that the Board appointed another person as Chairman after 10 mins.
May 2011 No 4(b)(i)
The Board of Directors of a Company may elect a chairman of their meetings and
determine the period for which he is to hold office, but if no such Chairman is
elected or if at any meeting, the Chairman is not present within five minutes after
the time appointed for the holding same, the Directors present may choose one of
their number to be the Chairman of the meeting. Section 289(6) CAMA.
The objection by the Chairman that another person was appointed as Chairman
after ten minutes is misconceived.
POSER II
Comment on the validity or otherwise of the appointment of another person as
Chairman of an AGM in the absence of the Chairman after 30 mins of the time
scheduled for the commencement of the meeting. August 2011 No 6(a)(i)
The Chairman of the Board of Directors has the right to preside as Chairman at
every general meeting. But where at a general meeting, there is no such Chairman
if he is not present within one hour after the time appointed for the holding same
or is unwilling to act, the Directors present may choose one of their number to be
the Chairman of the meeting. Section 265 CAMA.

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The objection by the Chairman that another person was appointed as Chairman
after 30 minutes is valid because the Directors ought to have waited for one hour
before appointing another person as the Chairman of the meeting.

THE FUNCTIONS/DUTY OF A CHAIRMAN OF A MEETING; Section

265(3) (AUGUST 2011)
1. To ensure the meeting is properly conducted
2. Preservation of order in the meeting
3. He ensures that all questions that arises in the course of a meeting are
properly decided
4. To preside over both the Board and company meetings
5. To act bona fide in the interest of the company
6. He has the power to adjourn meetings
7. He has a casting vote on issues if there is a vote tie by the members

PROXY - 2009 No 3(iv).

Ø Proxy means a person nominated by any member to attend a company
meeting on his behalf, takes part in the voting and can exercise the same right
as the member appointing him. S. 253 (focus)
Ø A member who appoints a proxy must be entitled to attend and vote at the
meeting.
Ø A proxy may not be a member of the company
Ø Proxy is not allowed in company without share capital UNLESS its
Articles permit e.g. Incorporated Trustees and guarantee. S.254 (1)

How A Proxy Is Appointed

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 1. The instrument appointing a proxy shall be in writing under the hand of the
appointer or of his Attorney duly authorized in writing.
2. If the appointer is a corporation, the Proxy Instrument shall either be deed
or under the hand of an officer or Attorney duly authorized S. 254(6)
3. Proxy Form/Instrument is to be lodged not later than 48 hours before a
meeting or adjourned meeting at the registered address or head office-S. 254
(3)
4. If voting in the meeting will be by Poll, it has to be deposited not less than
24 hours before the time appointed for the taking of poll.-S. 254 (7)

REVOCATION OF PROXY’S APPOINTMENT

A proxy instrument may be revoked in writing before the commencement of the
meeting or adjourned meeting at which the proxy instrument is to be used:
1. By death of the appointer;
2. By insanity of the appointer;
3. By express revocation;
4. By attendance of the meeting by the appointer
5. By the transfer of the shares in respect of which the proxy is given. S. 254(5)

CORPORATE REPRESENTATION - Section 255 (exam focus)

A company which is a member of another company shall be represented at the
general meeting of that company of which it is a member by a person authorized
on a resolution of the board of directors or other governing council.

POSER

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Comment on the representation of a Company which is the Shareholder in another
Company, at the meeting of such other by Company by an NYSC Lawyer. August
2011 No 6(c)

A Company which is a Shareholder in another Company shall have the right

to be represented at the Board of such other Company as a Nominee or
Representative by resolution of its Board of Directors or other Governing
Body. Section 255 CAMA.

There is no special requirement to be fulfilled by any person before being

appointed such Nominee or Representative so long as the appointment was
done by the resolution.

QUORUM OF MEETING; Section 256 (1) CAMA

Refers to the minimum number of persons whose presence is required to constitute
a valid meeting Except for a company with one member or provided in the articles.
It is a matter for the articles to fix the quorum, but where it is silent, Section 256
(2) applies
Quorum is determined as Follows:
1. the quorum for a meeting shall be 1/3 (one-third) of the total number of
members of the company or 25 members (whichever is less) present in
person or by proxy.
2. Where the number of members is not a multiple of 3, then the number
nearest to 1/3.
3. Where the number of members is 6 or less, the quorum shall be 2
members.
N.B
In determining whether there is quorum, members and proxies will be counted
section 256 (2).

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Quorum During the Progress of The Meeting (August 2016 Q 6)
Unless the Articles provides, quorum is to be maintained from the starting of the
business of the meeting and throughout the meeting. S. 256 (1)
MEMBERS WITHDRAWAL - focus

The Chairman’s direction depends on whether the reason for withdrawal from the
meeting was for “sufficient or insufficient Reason”

GOOD REASON

If it is for sufficient reasons, the meetings shall be adjourned to the same place,
and time in a week’s time. If there is no quorum still at the adjourned
meeting. The member present shall be the quorum and their decision shall
bind all shareholders. If only 1 member is present at the adjourned meeting,
he may seek direction of the FHC to take decision S 256 (3)

MALICIOUS WALKING OUT/INSUFFICIENT

If it is for insufficient reason OR for the purpose of reducing the quorum the
meeting can continue with the number present, and their decision shall bind all the
shareholders and where it remains only one member, he may seek direction of the
court (FHC) to take a decision S 256 (4)

VOTING IN THE MEETING

Voting is done to ascertain the support of a particular Resolution by members.
There are basically two types of voting at any General meeting;
a. Show of hand
b. Electronic voting
c. By demanding a poll- section 248(1) CAMA, with BFA Amendment

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VOTING BY POLL
Ø Voting on a poll entails the shareholders voting according to the number of
shares he owns.
Ø Proxies also vote according to the number of shares which the member they
are representing hold.

RESTRICTIONS ON DEMAND OF POLL

S. 249, right to demand a poll shall not limited by the articles of a company. Where
the Articles limits the right to demand for poll, the Articles shall be void.
There shall be no right for demand poll in the following matters: S.249 (1) & (3)
1. Election of the chairman
2. Adjournment
3. Appointment of members of the audit committee

Persons that Can Demand a Poll S.248

1. The Chairman, where he is a shareholder or a proxy
2. At least three members present in person or by proxy
3. Any member or members present in person or by proxy and who represent
not less than 1/10 of the total voting rights
4. Any member or members holding shares not less that 1/10 of the total fully
paid-up shares in the capital of the company

ADJOURNMENT OF MEETINGS-Section 264 CAMA

A meeting may be adjourned either because:
a. No Quorum is formed at the original meeting, or
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 b. The business was unfinished at the original meeting.
c. The Chairman may with the consent or directive from the members at
the meeting, adjourn the meeting from time to time and from place to
place.
d. No new business is allowed at the adjourned meeting only the unfinished
business from the original meeting shall be transacted
e. It is not necessary to give notice of adjourned meeting unless it is
adjourned for 30 days or more, then notice must be given
MINUTES OF THE MEETING – S. 266
Ø Every company EXCEPT small companies shall keep minutes of all
proceedings of general meetings, board meetings and management
meeting at its registered office
Ø Where there is default, the company and every officer in default shall be
guilty of an offence and liable to a penalty
Ø The minutes when signed by the Chairman of the meeting or the chairman of
the next succeeding meeting, shall be prima facie evidence of the
proceedings.
Ø And that the meeting was duly held and convened, and matters agreed to the
meeting are deemed to be valid

FORM OF MINUTES:
1. Bound books
2. Loose leaves - International Agricultural Industries (Nig)ltd v Chika
Brothers Ltd
3. Photographic film form
4. Stored on any information storage device capable of being reproduced into
intelligible written form e.g. Compact Disks (CD), Flash drives etc.
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 RESOLUTIONS IN THE MEETING - focus
There are two basic types of Resolutions:
1. ORDINARY RESOLUTION
This is a resolution passed by a simple majority of votes cast by members being
entitled to vote either in person or by Proxy - Section 258(1) CAMA
Examples of Matters Requiring Ordinary Resolution:
1. Appointment and removal of directors
2. Removal of Secretary.
3. Appointment and removal of Auditors
4. Appointment of members of the audit committee
5. Increase in share capital

SPECIAL RESOLUTION
This is a resolution passed by at least ¾ (three – fourth)/75% of the votes cast by
such members being entitled to vote either run person or by proxy, of which 21
days’ notice specifying the intention to propose the resolution as a special
Resolution has been duly given- S.258(2)
Shorter notice may however be given if agreed to by majority holding not less than
95% of the nominal value of the shares or by members representing not less than
95% of the total voting rights in case of company not having share capital.

Examples of Matters Requiring Special Resolution:

1. Change of Name – S. 30
2. Alteration of Objects – S. 51
3. Alteration of the Articles – S. 53
4. Re-registration of LTD as PLC – S. 56

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 5. Re-registration of PLC as Ltd - S. S.63
6. Re-registration of ULTD as LTD – S. 71
7. Reduction of Capital – S. 131
8. Voluntary Winding up - S. 621
9. Compulsory winding up – S. 571
10. Increase in Share Capital of the company – S 127

NOTE: Printed copies of the special resolutions must be forwarded to CAC for
registration within 15 days after its passage. - S. 262(1) & (4) CAMA

WRITTEN RESOLUTIONS
This is peculiar to private companies. Written Resolution is resolution passed
without formal physical meeting of members who are entitled to attend the meeting
and vote AG Enugu State v. Avop Plc.

All resolutions shall be passed at general meeting otherwise, it shall not be

effective. But for a private company, a written resolution signed by all members
is as valid and effective as if passed in general meeting. See S. 259. (exam focus)

RESOLUTION REQUIRING SPECIAL NOTICE

When a resolution requires special notice, notice of intention to move it must be

given to the company at least 28 days before the meeting - (section 261). The
company in turn is to give notice to members of the proposed resolution at least 21
days before the meeting or advertise it in a newspaper.

Note Proviso:

Once a company receives notice, its failure to call a meeting for a date 28 days or
less after the notice will not invalidate the meetings.
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POSER

Comment on the validity of a resolution passed by the Board of Directors of a

Company, where only one of the Directors was available in Nigeria while the
others forwarded their consent by e-mail. 2009 No 6(b)
The Board of Directors ordinarily take decisions by resolutions passed at
meetings. However, by Section 259 CAMA, a resolution in writing signed by
all the Directors for the time being in force, entitled to receive notice of a
meeting of the Directors shall be as valid and effectual as if it had been passed at
a meeting of the Directors duly convened and held. Thus the Directors can
validly pass a resolution in writing without necessarily being present physically.

The resolution signed by one Director while others sent their consent via
email is invalid because Section CAMA contemplates a resolution signed by
the Directors entitled to receive notice of the meeting and not a consent sent
via email.

Also where the other Directors are outside Nigeria and did not leave an address in
Nigeria, then they are not entitled to receive the notice of the meeting (Section
CAMA) and hence not entitled to sign the written resolution in the first place.
Section 263(8) CAMA. Thus, the only Director available in Nigeria would not
form the quorum necessary for any transaction.

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 CHAPTER EIGHT

MINORITY PROTECTION
CORPORATE SOVEREIGNTY AND MAJORITY RULE
The general rule in the case of Foss v. Harbottle and Section 341 of CAMA is
that only a company can sue to redress a wrong done to it or defend an action
against the company; Yalaju-Amaye v. AREC Co. Ltd
Justification of the rule
1. the company will ultimately be the claimant to sue in respect of wrong done
to the company
2. to prevent multiplicity of suits
3. the court will not intervene in the management of company, where the
irregularity being complained about is within the scope of powers of the
majority shareholders to remedy or ratify by means of an ordinary resolution
EXCEPTIONS TO MAJORITY RULE; Section 343 (a) – (f) CAMA
The minority members of the company may act in any of the following instances:
a. Illegal or ultra vires acts of the company-This is where the company acts in
excess of its powers or outside its objects.; Parke v. Daily News

b. Purporting to do an act by ordinary Resolution, which CAMA or the

Articles of the company require a special Resolution (irregularity); Edwards
v. Halliwel
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 c. Any act or omission affecting the applicants individual rights as a
member of the company. Pender v Lushington
This includes breach of the member’s personal right in the company (such as
the right to attends meetings, to be paid dividend when declared, to vote in
meetings, to receive Notice of meetings

d. Commission of fraud on the company or the minority shareholders and

the directors fail to take steps to redress it.
An example of this ground is the misappropriation of the company’s
property/money by the directors or majority shareholders. Cooks v. Deeks

e. Where a company meeting cannot be practically called in time to redress a

wrong done to the company
A good example is where the Directors have exceeded the borrowing limits
and have mortgaged the prime asset of the company

f. Directors are deriving profits or benefits from their negligence or breach of

duty. A good example is sale of company property at an under value.

g. any act or omission, where the interest of justice so demands

MINORITY PROTECTION REMEDIES (August 2016 Q 4c, 2017 Q 1B, &

2018 Q 3c) 🔄
the remedies available to the minority shareholders where any of the wrongs stated
above are committed or being committed by the company. They are:

149
 1. Members Direct Action
2. Derivative Action
3. Petition on the ground of unfairly prejudicial, discriminatory or oppressive
conduct of the company’s affairs
4. Application to CAC for investigation of the Company
5. Petition for compulsory winding up on just and equitable ground

MEMBERS DIRECT ACTION

This is the most suitable remedy where the wrong in question is affecting the
individual rights of the members of the company.
The Members Direct Action can be brought in two forms as follows;

a. Personal Action
A member can institute a personal action to enforce a right due to him personally;
section 344 CAMA. Personal action is restricted to such infringements directed
at the individual membership rights in the company e.g. entitlement to notice of
meeting, voting, attendance to meetings payment of dividend when declared

b. Representative Action
Members can bring action in a representative capacity for the enforcement of
personal rights due to them. Such members must nominate those who are
members to bring action in a representative capacity for the enforcement of rights
due to them.
Proper Parties to a Member Direct Action:
The member of the company sues in his name or in representative capacity as the
plaintiff(s) while the company and the directors are made defendants to the
action.
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Who Can Bring Members Direct Action-S. 345 CAMA
1. Member/shareholder of a company
2. Debenture holder secured by floating charge
3. Personal representative of a deceased member

Reliefs Available To a Person Instituting A Members Direct Action S. 344(1)

a. Declaration or
b. Injunction restraining the company and/or directors from doing a particular
act.
c. damages for any loss incurred on account of the breach of that right

NOTE:
The court may order any director to be personally liable to pay damages to the
member of the company if found liable for any wrong doing S. 344 (3)-(4)

DERIVATIVE ACTION - Section 346 CAMA, Agip (Nig) Ltd v Agip Petrol.
Int
This action is suitable in circumstances where the directors have refused to act on
behalf of the company either to sue or to defend an action against the company.
They are actions which ought to have been brought by the company through the
directors.

Modes of Derivative Action:

a. A member can commence a derivative action in the name of the
company OR
b. In a Representative Capacity on behalf of the company.

151
Who Can Apply For Derivative Action?
Section 352 CAMA; the following persons can apply for Derivative action for a
company:
1. A registered holder (member) or beneficial owner (by Transfer or
Transmission)
2. A former registered holder or beneficial owner of a company’s security
(debenture holder).
3. A director or officer or a former Director or Officer of a company.
4. Corporate Affairs Commission
5. Any other person the Court may permit to make the application.

The Procedure for Derivative Action

Obtain leave of court by way of Originating Summons at the Federal High
Court with an Affidavit in support and a written address
The Affidavit in support of the Originating summons must show the following:-
a. a cause of action has arisen from an actual or proposed act or omission
involving negligence, default, breach of duty or trust by a director or a
former director of the company;

b. That a reasonable Notice to the directors of the company of his intention

to apply to the Court

c. the directors of the company do not bring, diligently prosecute, defend

or discontinue the action

152
 d. the notice contains a factual basis for the claim and the actual or
potential damage caused to the company
e. The Applicant is acting in good faith; and
f. It is in the best interest of the company that the action be brought or
defended; section 344(2) CAMA

ORDERS THE COURT CAN MAKE UPON A SUCCESSFUL

DERIVATIVE ACTION – S. 347(2) CAMA
a) An order authorizing the applicant or any other person to control the conduct
of the action;
b) An order giving directions for the conduct of the action;
c) An order directing that any amount adjudged payable by a defendant in the
action shall be paid, in whole or in part, directly to former and present
security holders of the company, instead of the company.
d) An order requiring the company to pay reasonable legal fees incurred by the
applicant in connection with the proceedings.

NB:
the court may order the company to pay to the applicant interim costs to the
applicant pending the determination of the application or action. S. 351
That a derivative action shall not be dismissed, stayed or discontinued on the
ground that the shareholder approved the breach – S. 348

Proper Parties To A Derivative Action

The appropriate parties in a derivative action should be the Company and the
Applicant as Claimants/Applicants and the Directors and the Company or
wrong doer as the Defendant/Respondent.
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RELIEF ON THE GROUNDS OF UNFAIRLY PREJUDICIAL AND
OPPRESSIVE CONDUCT: S. 354 CAMA Commented [MOU52]:
The following conducts have been held to be unfairly prejudicial: -

Here, the affairs of the company are being conducted in an illegal or oppressive a.Exclusion and removal of a member from the board,

manner or unfairly prejudicial or discriminatory manner against a member or b.Improper allotment of shares,

c.Failure to call meeting of the company,

member’s interest or in disregard of public interest.
d.Making an inaccurate statement to shareholders,
May apply to court for relief by way of PETITION. Ijale Properties Ltd v
e.A managing director using assets of the company for his own
personal benefit and the personal benefit of his family and
Omololu-Mulele friends,

f.Diversion of company’s business to a director-controlled

For the petition to succeed, there must be a continuing cause of oppressive company,

g.Making right issue which minority shareholders could not take

conduct and not an isolated case of oppression up; and

h.Payment of excessive directors‟ bonuses and pension

The following persons may bring such an application to the court: Section contributions.

353(1) CAMA.
a) A member of the company;
b) A director or officer of the company, or former director or officer of the
company.
c) A creditor
d) CAC
e) Any other person who in the discretion of the court is the proper person to
make the application under S. 354 CAMA.

Possible Reliefs/ Orders The Court Can Grant Upon Successful Petition: S.
355 CAMA lists the several reliefs which may be ordered by the court as follows:
a. That the company be wound up.
b. order directing an investigation to be made by the CAC
c. order appointing a receiver or a receiver and manager of company
property

154
 d. Order varying or setting aside a transaction.
e. Order for the purchase of the shares of any member by other members or
by the company.
f. Order directing the company or a member to institute, prosecute defend or
discontinue specific proceedings etc.

INVESTIGATION OF THE COMPANY

CAC may appoint competent inspectors to make formal inquiry into alleged
malpractices by those persons who managed or who control the company and
make report on their investigation. S. 357 Commented [MOU53]:
USES OF THE INSPECTION REPORT

CIVIL PROCEEDINGS - S.364 CAMA:

Pursuant to the inspection report, if it appears to the commission, that
Section 357(2) provides that, the appointment may be made by any civil proceedings ought in the public interest to be brought by the
company, or anybody corporate, the commission may itself bring
such proceedings in the name and on behalf of the company, or the
1) In the case of a company having a share capital, on the application of body corporate - S. 364(1) CAMA.
CAC shall indemnify the body corporate against any costs or
expenses incurred by it in connection with the proceedings, and any
members holding not less than 1/10 of the class of shares issued costs or expenses so incurred shall, if not otherwise recoverable, be
defrayed out of the Consolidated Revenue Fund.
2) In the case of a company not having a share capital, on the application of not CRIMINAL PROCEEDINGS - S. 365CAMA
If company, is guilty of an offence for which it is criminally liable,
less than 1/10 in number of the persons on the company's register of the report shall be referred to the AGF for criminal prosecution
or other proceedings-
members; and WINDING UP PETITION – S. 366 CAMA
Pursuant to the Investigation Report, if it appears to the
3) in any other case, on the application of the company Commission to be expedient in public interest that the body
corporate be wound up, it may (unless the body is already wound
up by the court), present a petition for it to be wound up, if the
court thinks it is just and equitable to do so.

NOTE: EVIDENCE IN LEGAL PROCEEDINGS – S. 368 CAMA

A copy of the Inspectors’ Report, certified by the Commission, as
true copy of the original shall be admissible in any legal proceedings
The application is by a letter and shall be supported by evidence showing good as evidence of the opinion of the inspectors in relation to any matter
contained in the report.

reason for requiring the investigation. S.357(3) – August 2017 Q1.b OWNERSHIP OF A COMPANY – S. 369 CAMA
The Report may be used to ascertain the actual membership of a
company, and the true persons who are or have been financially
Where a company’s employee, in compliance with an inspector’s request, provides interested in the success or failure of the company, or liable to control
or materially influence the policy of the company.

the inspector with any information concerning the company’s affairs, the company
shall protect the employee from any form of discrimination or other unfair
treatment. Section 357(4)

155
Any employee relieved of his employment without any just cause, other than for
reason of disclosure made pursuant to the provision of this section, is entitled to a
compensation which is calculated as if he had attained the maximum age of
retirement or had served the maximum period of service, in accordance with his
terms of employment or conditions of service to the company- Section 357(5)

CIRCUMSTANCES THAT MAY WARRANT APPLICATION FOR

INVESTIGATION OF A COMPANY
CAC may order investigation if:
a. the company’s affairs are being or have been conducted with intent to
defraud its creditors or the creditors of any other person, or in a manner
which is unfairly prejudicial to some part of its members;

b. any actual or proposed act or omission of the company (including an act or

omission on its behalf) is or would be so prejudicial, or that the company
was formed for any fraudulent or unlawful purpose;

c. persons concerned with the company’s formation or the management of its

affairs been guilty of fraud, or misconduct towards it or towards its
members;

d. the company’s members have not been given all the information with respect
to its affairs which they might reasonably expect. See S. 358(2)

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 CHAPTER NINE
FINANCIAL STATEMENTS AND ACCOUNTING RECORDS
Accounting records are day to day records kept at the companies registered office
of the profit and losses of a company.

Importance of Accounting Records:

a. To disclose with reasonable accuracy the financial position of a company
b. It forms the basis of relevant information and data to be used in preparing
financial statements and audited account of the company.
c. To ensure that financial records comply with the Act–section 374 CAMA

Time Frame For Keeping Accounting Records

The records are to be preserved for a period of 6 years; S. 375(2)

Contents of Accounting Records – 374(3) CAMA

The accounting records shall, in particular, contain:
1. Entries from day to day of all sums of money received and expended by
the company, and the matters in respect of the receipt and expenditure took
place; and
2. A record of the assets and liabilities of the company. S. 374(3) CAMA
3. The Accounting records of a company dealing in goods will contain
a. statements of stocks held at the end of the year of the company;
b. Statements of all goods sold and purchased other than by retail
trade. S. 374 (4) CAMA

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FAILURE TO KEEP ACCOUNT – S 376
every officer of the company who is in default commits an offence unless he shows
that he acted honestly and that in the circumstances in which the business of the
company was carried on, the default was excusable

FINANCIAL STATEMENT - Section 377 CAMA (focus)

series of financial documents made from year to year and presented to or laid
before the members at an AGM. It gives the financial position of a company on a
given date.

Every company, the directors shall in respect of each year of the company, prepare
financial statements for the year.
At the first meeting of the board after incorporation the Directors must determine
to what date in each year the financial statements shall be made up., and they shall
give notice of the date to the CAC within 14 days of determination. S. 377(4)

The Contents of a Financial Statement of A Company (August 2017 Q 3d)

The contents of a financial statement of a Nigerian company are: S. 377(2)
a. Balance sheet as at the last day of year,
b. Profit and loss account. (Note Ltd Gte).
c. Notes on the accounts,
d. Auditor’s report.
e. Director’s report.
f. Five-year financial summary.
g. Statement of the source and application of fund or statement of cashflow
(Nil for LTD)
h. Changes in equity (Nil for LTD)
i. Value added statement for the year. (Nil for LTD)

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 j. Statement of accounting policies. (Nil for LTD)
k. Group financial Statement. Required for holding company.
Any other matter required by accounting standards
NB – You may be asked to list the one applicable only to a private company or
public company.
Persons Entitled To Receive Financial Statements (MCQ) – S.387(1)
a. Every member of the company.
b. Debenture holders.
c. Other person apart from members/debenture holders that may be entitled.

NOTE:
Copies of the financial statements for each year shall be sent to the above persons
not less than 21 days before the date of the meeting at which they are to be laid
and approved. S 387

NB-Failure to deliver financial statement only attracts penal sanction but does
not affect the validity of the meeting or resolution reached. – S. 389

Director’s Duty to Lay and Deliver Financial Statements at the General

Meeting:
In respect of each financial year, the directors shall at a date not later than 18
Months after incorporation and subsequently, once at least in every year, lay
before the company in general meeting copies of the financial statements of the
company made up to a date not exceeding 9 months previous to the date of the
meeting for its adoption - Section 388 CAMA

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 MODIFIED FINANCIAL STATEMENT - 393

A small company may file a modified financial statement. S 393(1) CAMA

TO QUALIFY AS A SMALL COMPANY the requirements are set out in Sect.

394 (3) CAMA, Reg 19 CR and the requirements are conjunctive. They are: Commented [MOU54]:
T IN THE TURNOVER – TWENTY – 120m
S in THE ASSTES – SIXTY – 60m

1. Must be a private company

2. Turnover for the year is not more than N120m
3. Net assets not more than N60m
4. No alien participation
5. No govt. or govt. agency nominee
6. 51% equity share capital held by directors ( for companies with a share
capital)
7. Must have qualified as a small company if the requirements are not only met
in that year, but also in the preceding year.
A modified financial statement is an abbreviated version of the full balance sheet.
It may exclude Profit and Loss account and Director’s report (See 6th
Schedule and Part l. 1st Schedule)
NOTE: A modified financial statement is different from abridged financial
statements in S 399 CAMA

ABRIDGED FINANCIAL STATEMENT – S. 399

• it is not a complete statement, but same is not submitted as a part or partial

financial statement S 399(1).
• A company publishing abridged financial statements must publish the fact
that they are not full statements S 399(3).
• Where a company publishes abridged financial statements, it shall not
contain an auditor’s report S 399(4)
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 GROUP FINANCIAL STATEMENTS – S.379

• There is need not just to prepare accounts for the subsidiaries, but also to
prepare group financial statements.
• The Group financial statement includes a consolidated balance sheet and a
consolidated Profit and Loss account.
• The directors may also choose to present several consolidated financial
Statements or separate Financial Statement, for each subsidiary.
• Group Financial Statement May be incorporated into the Financial Statement
Of the holding company,

Note S.379(3) circumstances under which Financial Statement of a subsidiary in Commented [MOU55]:
an Unlimited Company is exempted from delivering to CAC, its
financial statements and the annexures unless, it is a subsidiary or
the group can be dispensed with if the directors are of the view that: a holding company of a limited liability company.

1. Impracticability or of no value.
2. Expense or delay outweighs value.
3. Misleading/harmful as to the company's business or its subsidiaries.
4. Business are so unconnected and cannot be taken as a single undertaking.
• Note S 379(2) circumstances exempted under FRCN (Financial Reporting
Council of Nigeria)

AUDIT, AUDIT COMMITTEE AND ANNUAL RETURN

AUDIT
Audit deals with the examination of the books of accounts of the company by
external experts with a view to ascertaining its compliance with the accounting
policy of a company and accounting standard rules.

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AUDITOR - this is an independent external person who verifies and checks the
compliance of accounting records of the company with basic accounting stands and
legal requirements.

WHO APPOINTS FIRST AUDITORS? (August 2017 Q 3a, August 2018 Q

5b, Dec 2020 Q 6a) 🔄
The first auditors of a company may be appointed by the Directors at any time
before commencement of business and such auditors will hold office until the
conclusion of the next (first) AGM S 401(5).
Where the directors fail to exercise the power, the appointment is made the
company at a general meeting; S 401 (5) (b) CAMA

Appointment of Subsequent Auditors

S. 401 an auditor should be appointed at every AGM to audit the financial
statement of the company and should hold office until the next AGM. Both
Public and Private Companies must have auditors.
POSER
The challenge of the appointment of an auditor of a company on the ground
that he was appointed by the General Meeting instead of the Board of
Directors is invalid because, the appointment of an Auditor of a Company is
to be done at every General Meeting of the Company. It is only the
appointment of the first Auditor that is done by the Board of Directors.
Section 401 CAMA.

RE-APPOINTMENT OF AUDITORS; S. 401(2) (a)-(c)

At any AGM a retiring auditor however appointed shall be re-appointed
without any resolution being passed UNLESS –
a. He is not qualified for reappointment; or
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 b. A resolution has been passed at that meeting that some other person instead
of him has been nominated or
c. He has given the company notice in writing of his unwillingness to be
reappointed.

RESIGNATION OF AUDITORS – S. 412 CAMA

An Auditor of the company may resign by depositing a notice in writing of his
resignation at the registered office of the company. Such notice shall operate to
bring an end to his tenure as the auditor of the company.
For the notice to be effective, it must contain the following:
c. A statement that there is no fact relating to his resignation which he
ought to disclose to the company or to the creditors

d. If there is such fact, he must disclose same in his notice of resignation

which must be sent to the creditors of the company.

e. However, where it is calculated to gain cheap publicity by the

Auditor, the company can apply to the court for an order that the
Notice should not be sent out.

f. A notice of the resignation will be filed to CAC within 14 days of the

resignation.

DISQUALIFIED AUDITORS ((August 2017 Q 3a, August 2018 Q 5b))

The following persons are prohibited from being appointed Auditors; Section 403
(1)(a)-(c) CAMA
a) An officer of the Company.
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 b) A partner or employee of the Company.
c) A person or a firm that gives the company financial consultation
services.
d) A person disqualified as auditor of a subsidiary cannot be appointed
as auditor of the holding.
e) A debtor to the company or any person or company with interest
(shares) in the company cannot be appointed
f) Shareholder or spouse of a company whose employee is an officer
of the coy is disqualified.
g) Anyone responsible for keeping the register of debenture holders.
h) Employee or consultant involved in preparing financial statement for
more than a year.
i) A person that knows he is disqualified must step down or he will be
guilty of an offence liable to penalty S 403(7).

NOTE: the point is that anyone who is directly or indirectly connected to the
administration of the company or who has an interest in the company is
disqualified from appointment as auditor. The purpose is to ensure the
independence of such auditors.

REMOVAL OF AUDITOR PROCEDURE: (Dec 2020 Q 6bi) – combined

reading of 409(1) and 411(1)(d)
i. Issue a Special Notice to the auditor proposing the removal and stating the
grounds
ii. Issue 21 days’ notice of EGM to the members
iii. At the EGM, pass an ordinary Resolution removing the auditor from office
as auditor
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iv. The Notice of his removal is to be filed with the CAC within 14 days of the
Resolution
Failure to follow the above procedure will render the company and every
officer in default liable to a penalty as the commission shall specify in the CR

NOTE (EXAMS) :
where an auditor is removed before the expiration of the tenure of office or
contrary to the terms of appointment, the auditor shall be entitled to
compensation or damages in respect of the termination of his appointment as
auditor – S. 409 (3)

POSER- can the BOD remove an auditor?

The procedure for the removal of an Auditor of the Company by the Board of
Directors is wrong. An Auditor is appointed at the AGM of a Company and holds
office from the AGM to the conclusion of the next AGM S. 401 EXCEPT if he is
removed from office by the company at any time before the expiration of his term
by an ordinary resolution of the company. The removal of the Auditor by the
Board of Directors is invalid S. 409

Remedies for Wrongful Removal: (Dec 2020 Q 6bii)

1. Sue the company for damages for wrongful removal
2. Apply to court for an order to declare the removal null and avoid.
3. Sue the company for breach of the service contract.

AUDITOR'S REPORT
S 404(1) provides that an auditor shall make a report the members of the accounts
examined including balance sheet and profit and loss accounts
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For a public company, an audit report must be subjected to the scrutiny of an audit
committee
THE AUDIT COMMITTEE Commented [MOU56]: MCQ
For Public companies, private companies do not need an audit
committee
Membership of Audit Committee- section 404 (3) CAMA; (Bar Exam January
2020 Q 5d)
The maximum number of an audit committee is 5 persons 3 members of the
company and 2 Non-Executive Director’s S 404 (3).
All the members of the Audit Committee must be financially literate and at least
one being a member of a professional accounting body S 404 (5).
Members of an audit committee are not entitled to remuneration {S.404(3)} and
they can be re-elected.
Any member of the company may by 21 days written notice served on company
secretary nominate another member of the company to audit committee S 404 (6).
N.B
Any nomination not received prior to the meeting as stipulated is invalid
The audited financial statements to be laid before the AGM must be made up
to a date not later than 9 Months previous to the meeting – S. 388 MCQ

Objectives and Functions of The Audit Committee; (Bar Final January 2020
Q 5d) S.404(7)(a)-(f)
1. Ascertain whether accounting and reporting policies are in accordance
with legal requirements and ethical practice.
2. Review scope of planning and audit requirement.
3. Review matters on management together with external auditor and
departmental responses thereon.
4. Reviews effectiveness of the company's accounting system and internal
control.
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 5. Makes recommendation of appointment, removal and remuneration of
auditors,
6. Authorizes investigation by internal auditors.

ANNUAL RETURNS

Every company is to make annual returns to the Commission at least once in each
year. S 417 The annual returns are in different forms depending on the type of
company S 418-420.

FORM CAC 19 is used for all AR filing for all companies, The AGM of the
company determines filing of annual returns S 421. A company need not file
annual returns in the year of incorporation or the following year provided the
period does not exceed 18 months and the period for filing can be extended for not
more than 3 months. Therefore, in subsequent years, penalties for late filing will
only start counting from 15 months of the last AGM.

TIME FOR COMPLETION & DELIVERY OF ANNUAL RETURN – S. 421

The annual return shall be completed, signed by a director and the secretary,
delivered to the Commission not later than 42 days after the AGM for the year,
whether or not that meeting is the first or only general meeting of the company in
that year, The company may apply to the Commission for extension of time within
which to file its annual return for any given calendar year.

Documents To Be Annexed To Annual Return – S 422

Subject to the provision of S. 424 CAMA exempting unlimited companies and
small companies, the Annual Return must have annexed to it:
The following documents are to be attached to the Annual Return:
1. Balance Sheet (Including documents to be attached to the Balance Sheet),
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 2. Profit and Loss account.
3. Auditors Report.
4. A written certificate for the above documents signed by a director and
secretary.
NB could be delivered in hard copy or electronically

Consequences of Failure To File Annual Returns (Exam focus)

1. It is an offence and directors or officers are liable to a penalty as the
CAC may prescribe – S. 425.
2. Striking off a defunct company: S. 692, Also under S. 425(3) If the
company fails to file for a consecutive period of 10 years, it can lead to
striking off the company from the register.
3. Enforcement of Return: By S. 744 CAMA through an action filed at the
FHC within 14 days after service of notice by CAC on the company to file
its annual returns

STRIKING OUT OF NAME OF A COMPANY

The name of company may be struck off from the register of companies either at
the request of the company or by CAC Suo motu.
Procedure for striking off at the request of the company: S. 692(1) CAMA
1. a special resolution has been passed by the company that the name of the
company be struck off the register;
2. The company will send an application to the CAC that the name of the
company be struck off the register;
3. The company will make an advertisement has been made in three national daily
newspapers within 28 days of passing the resolution, calling for objections, if
any, to the application
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4. the Commission is satisfied that—
a) the reasons given for the application are sufficient to justify the striking off,
b) the company has not commenced business and has no undischarged
obligations, and
c) no reasonable objection has been received within 28 days of the publication
of the advertisement mentioned in paragraph (c)

GROUNDS FOR COMPULSORY STRIKING OFF BY CAC: S. 692(3)

1. Where the company is not carrying on business or has not been in operation
for 10 years or
2. Where the company has not complied with provisions of CAMA for a
consecutive period of 10 years,

PROCEDURE (focus)
1. the CAC will publish, in at least three national daily newspapers, a notice
of its intention to strike off the company from the register.
2. within 90 days of the last publication, the CAC did not receive any
response from the company that it is carrying on business or in operation, it
may strike off the name of the company.
3. CAC will then publish in at least three national daily newspapers, the
name and date of the striking off of the company
N.B
the liability, if any, of every director, managing officer and member of the
company shall continue and may be enforced as if the company has not been struck
off – S. 692(5)

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RESTORATION OF NAME AFTER STRIKING OFF
1. If the name of the company was struck off on the request of the company, it
may be restored if within 2 years from the date of the striking off, an
application was made to the court by an aggrieved member. If the Court is
satisfied that it is just to restore it to the register, the Court may order the
name of the company to be so restored. – S. 692(2)

2. If the name of the company was struck off by CAC, it may be restored if
within 10 years from the date of the striking off, an application was made to
the court by an aggrieved member if the Court is satisfied that, at the time of
the striking off, the company was carrying on business or in operation, or
that it is just to restore it to the register, the Court may order the name of the
company to be restored to the register. – S.692(6)

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 CHAPTER TEN
COMPANY SECURITIES I- SHARES AND DEBENTURES
A share is the unit of interest a person has in a company. By acquisition of the
share of a company, a person becomes a member of such company.
The shares of a company may be classified into:
1. Preference shares.
2. Ordinary Shares
3. Founders or Deferred shares. – S. 144 CAMA

PREFERENCE SHARES
1. This type of shares entitles the holder to a fixed preferential dividend,
this means that the dividend payable by the company to the holder of
such shares is fixed at a specific figure e.g. 5%, 10% etc.
2. It only becomes payable when dividends are declared.
3. The dividend must be paid before the ordinary shareholders receive
their own dividends i.e. it has priority over ordinary shares.
4. However, they CANNOT participate in the profit of the company in
excess of the fixed dividend.

EQUITY/ORDINARY SHARES
1. Ordinary shares are referred to as the Equity share capital of the company.
2. They carry the remaining of distributed profits after the preference shares
have been paid their fixed dividend.
3. They are the risk bearing shares.
4. They enjoy unrestricted right to participate in the surplus assets of the
company.

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PRE-EMPTIVE RIGHTS OF EXISTING SHAREHOLDERS
The existing members of a private company have pre-emptive rights (right of first
refusal) in the new issue of shares. This is aimed at maintaining the shareholding
equilibrium. See S. 142 CAMA. It must be authorized by the Articles.

NON-VOTING - Section 140 CAMA.

Non–voting share carries no right to vote, CAMA abolished non–voting shares

WEIGHTED SHARES
A weighted share carries more than one voting right, the Act prohibits the
issuance of weighted shares. Section 140 CAMA.
The apparent permission granted by the Act is in section 140(3) which allows
preference shareholders to more than one vote. The circumstances in which such
shares can be issued are provided in section 168.

Circumstances When Preference Shares Can Carry More Than One Vote
Preference shares shall carry a right of more than one vote per share in the
following circumstances, but not otherwise: S. 168(2) CAMA
a. upon any resolution during such period as the preferential dividend or any
part of it remains in arrear and unpaid, such period starting from a date not
more 12 months or such lesser period as the articles may provide, after the
due date of the dividend or
b. upon any resolution which varies the rights attached to such shares, or
c. upon any resolution to remove an auditor of the company or to appoint
another person in place of such auditor; or
d. Upon any resolution for the winding up of the company or during the
winding up of the company.

172
 e. any special resolution of a company increasing the number of shares of
any class

Issuance of Shares at Premium: S. 145

means issuance of shares at price that is higher than the nominal value of the
shares,
It is prohibited to issue shares at a discount – Section 146 of CAMA.

SHARE PREMIUM ACCOUNT

When shares are issued at a premium, the company is to open an account called
“Share Premium Account” where the premium will be kept.
Uses Of the Share Premium Account (April 2018 No 1) – Section 145(4)
1. For paying up unissued shares and paying them to members as bonus
shares.
2. Writing off preliminary expenses relating to Incorporation.
3. Writing off commission or expenses on any issue of shares.
4. Providing for premium payable on redemption of redeemable shares.

METHODS OF ACQUISITION OF SHARES: SATT

1. Subscribing to the MEMOART of the company –S. 105
2. Allotment of shares S. 150
3. Transfer of shares S. 175
4. Transmission of shares -S. 179

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1. SUBSCRIPTION
Subscription is the signing of the memo and articles of association by two or more
persons. Therefore, subscribers are those that append their signatures to the Memo
and Articles of Association of a company.
All the shares of a company must be issued at the point of incorporation- Sect
124(1). 25% of the issued share capital must be paid up – Section 128(1) CAMA.
Their names are entered on the register of members.

3. ALLOTMENT OF SHARES (April 2018, August 2018 Q 4d)

Simply put is a written application for shares to be issued. Shares may be acquired
by allotment, i.e. written application to the company for shares to be issued to the
applicant.
MODE OF ALLOTMENT
1. For a private company is by application which is delegated to the board
of directors Section 149(1) CAMA
2. For a public company its through the ISA Section 149(2) CAMA,

A person may withdraw the application for shares before it is issued by notice in
writing. Section 150(1)(c). This is called Renunciation.

A company may allot all the shares requested for or part and notify the applicant
within 42 days of the application- Section 150(1)(c) of CAMA. (focus)

Notification of allotment of shares forms contract between the company and the
individual with effect from the date of the allotment- Section 151 of CAMA
Sending of a letter of regret where the whole shares applied for cannot be granted.

174
In the event where a letter of regret is sent part of the money representing the
shares not issued to the applicant should be refunded to the applicant. Dangote
Industries Ltd v Bank PHB.
A company must have unissued shares for it to be issued to the applicant, else
a resolution for increase of share capital must be passed first. Okoya v Santili
When a company allots shares it must make Return of allotment by filling form
CAC 5 within 1 month - Section 154

Pre-Emptive Rights with Respect to Allotment Of Shares:

A private company shall not in any event allot newly issued shares UNLESS they
are offered in the first instance to all existing shareholders of the class being issued
in proportion as nearly as may be to their existing holdings. - Sect 142 of
CAMA

The procedure for allotment of shares is provided in S. 150 – 154 CAMA

(EXAM FOCUS)
1. Issuance of prospectus,
2. Subscription list is opened (if public)
3. Receive applications and record in application and allotment sheets
4. Board of Directors (allotment committee) meeting is called to pass resolution
on allotment.
5. Issuance of letters of allotment or regret
6. Deal with Letters of Renunciation if any;
7. Deliver Share Certificate within 2 months – S 171. CAMA
8. Enter allotees name in the Register of Members
9. File Return of Allotment in Form CAC 5 within 1 month of the allotment to
the CAC and attach the following documents
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Shares may be paid for in cash or non-cash consideration – Section 160 of CAMA.
If the shares are issued for a consideration other than cash with regards to a
public company – (TAKE NOTE EXAM)
a. Have the consideration valued and obtain particulars of valuation. S. 162(1)
b. If consideration involves capital investment of 20,000 Naira or more apply
under the Industrial Inspectorate Act.

In the event where there is non-cash consideration, the following must be

submitted along with Form CAC 5:
1. Agreement constituting the title of the allottee to the allotment.
2. Agreement for sale of property, services or other consideration
3. Particulars of valuation (valuation report)
4. BOD resolution approving allotment by non-cash consideration

3. TRANSFER OF SHARES
Transfer of shares is usually subject to restrictions provided under CAMA or the
articles of the company particularly private companies. S. 22 Restriction does not
mean prohibition.
Section 175 is the general rule on transfer as restriction is an exception
Transfer is done by a instrument of transfer (it could be electronic). Transfer could
be part or the whole of the shareholding of the transferor.

Procedure For the Transfer of All the Shares Held by A Member (April 2018
Q 4) –
1. Execute an agreement under seal.
2. Submit instrument and share certificate to transferee.
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 3. Transferee delivers the instrument to the Company who cancels the
certificate and issues a fresh certificate.
4. Name of the transferee entered on the Register while that of transferor is
deleted.

If what is transferred is part of the shares or all the shares but to more than
one purchaser, the procedure is as follow: May 2012
1. Instrument of transfer duly executed is sent to the company and instrument
to be recognized and registered as certificate of transfer which shall include
an electronic form of certificate – Section 181(1) of CAMA.
2. Upon receipt company endorses on the certificate “certificate lodged”. Commented [MOU57]:
Certificate lodged endorsed is prima facie acknowledgement of
title of transferor, but not conclusive proof that the transferor
3. Old certificate is submitted and a new certificate is issued to each person. has interest in the company- Section 181(2) of CAMA.

4. Alteration on the Register.

5. Notice to CAC Form 5 (Return of allotment)

EFFECT OF NON-REGISTRATION OF TRANSFERRED SHARES Commented [MOU58]:

REMEDIES FOR NON-REGISTRATION
Until the transfer is registered the interest remains in the holder
Ø Until the name of the transferee is entered in the Register of members in The remedies are:
I.Notice of interest to company coupled with affidavit of interest
respect of transferred shares, as far as the company is concerned, the 180(1). nb maintaining status quo for 42 days 180(2)
II.Application to CAC for alteration of reg of member
III.Action against transferor to account for dividends
transferor is deemed to remain a holder of the shares. S. 176(2) (focus)
Ø The company may refuse to register the transfer of a share (not being a fully
paid share) to a person of whom they do not approve, and may also refuse to
register the transfer of a share on which the company has a lien. S. 176(3)

If the company refuses to transfer shares, notice of refusal must be sent to the
transferee - Section 177 of CAMA

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Refusal by the Company to Recognize and Register Instrument of Transfer
A company may refuse to register a transfer of shares on the following grounds:
a. If the shares are not fully paid up and the company will not approve
the transfer. – 176(3)
b. The company has a lien on the shares.
c. Non-payment of requisite fees on instrument of transfer.
d. The instrument of transfer is not accompanied by share certificate or
other evidence to show transferors to make the transfer.
e. the instrument is in respect of more than one class of shares. – S. 176

NOTE: If a company refuses to register a transfer of any share, it shall within 2

months after the date on which the transfer was lodged with it, send notice of the
refusal to the transferee. Section 177(1)

Remedies For a Person Entitled to Shares but Not Registered

1. Serve on the company a notice and affidavit of interest in the company’s shares
pursuant to CAMA.
2. Apply to Federal High Court to rectify the company’s register of members in
his favour;

TRANSMISSION OF SHARES
This is the acquisition of shares by the personal representative or surviving holder
in case of joint holding of the shareholder upon the death of the shareholder.

A person may die testate or intestate. Beneficiaries to produce Letter of Commented [MOU59]: PROTECTION OF BENEFICIARIES
A beneficiary of shares by transmission may have his interest
protected by filling an affidavit of interest on the company
Administration or will admitted to probate. Tika Tore Press Ltd v Abina pursuant to S.180 (Applicable where there is a rival interest)

178
Transmission is applicable in Bankruptcy (a bankrupt is a financially dead person, Commented [MOU60]:
This is done through a letter of request. It is an instruction to the
company for the purpose of transferring the shares to himself or
but he may be resurrected from his financial death) – Section 179 (2) CAMA. somebody

A personal representative may himself validly transfer the share or other interests
of a deceased member even though he is not registered as a member. Section 178.

OPTIONS OPEN TO A PERSONAL REPRESENTATIVES IN RESPECT

OF SHARES

1. A personal rep can transfer shares to another person or get it registered in his
name S. 179(2)
a. If the personal reps elect to transfer to himself, he sends notice in
writing indicating same, - S. 179(3)
b. if he elects to transfer to another, he shall execute an instrument
in the prescribed form S.179(3)

2. If the personal rep does not make the election above, then the company
may give notice to make an election.
3. In the event where the personal rep still fails to make an election, after 90
days the company can stop paying dividends on those shares S.179(5)

N.B BAR FINAL 2009 No 4(a)(iv)

the ownership of the shares of joint shareholders in the event of the death of
one the shareholders will automatically vest (by operation of law) on the
survivor – S.179

The Procedure for Transmission of Shares: S. 179(2) & (3)

1. The personal representative are to obtain probate /Letters of Administration

179
 2. Write a letter notifying the company of the intention to either be a
member of the company or to transfer same attached with the following
docs: Bar final 2010
a. A copy of the Death Certificate of the deceased
shareholder
b. Copy of the Probate/Letters of Administration
c. Original Shares Certificate owned by the deceased
d. An instrument of transfer if he elects to transfer the shares
to another
3. A new certificate will be issued to the legal representative of the
deceased or to any other such person to whom the shares were
transferred within 3 months
4. The company will enter the name of the person in the register of
members
POSER
With the aid of relevant authorities, write a reply on points of law to the contention
that shares of a deceased joint shareholder are registered in favor of the legal
representatives of the deceased shareholder by transmission. 2009 No 4(a)(iv)
The objection is misconceived in view of the fact that the ownership of the shares
of joint shareholders in the event of the death of one the shareholders will
automatically vest (by operation of law) on the survivor. Section 179 of CAMA.

SHARE CERTIFICATE - MCQ

Share certificate is prima facie evidence of shareholding and membership. It could
be in a physical form or electronic. S 171 (6) CAMA (BFA Amendments)

Every company must within 2 months after the allotment of any share and

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In case of transfer within 3 months after the lodging of share transfer,
complete and have ready for delivery the certificate of all the shares allotted or
transferred. S. 171

DEBENTURES

This is a mortgage on the company’s properties and undertaking including

uncalled capital. –S. 191
Unlike shares, debenture is an external source of capital of a company for a
company’s business or objects. Union Bank of Nig. Ltd V Tropic Foods Ltd.
Debentures are normally made by deed, but it may not always be a requirement of
law Union Bank v. Tropics Foods Ltd

DEBENTURE STOCK CERTIFICATE

The debenture or debenture stock certificate under the company’s common seal
must within 60 days after allotment or after registration of transfer of any
debenture be delivered by the company to the registered holder – section 192 .

TYPES OF DEBENTURES (Dec 2020 Q 1e) & MCQ

1. PERPETUAL DEBENTURE
A perpetual debenture is made irredeemable or redeemable only on the
happening of a contingency however remote or on the expiration of a
period however long. S.196

2. CONVERTIBLE DEBENTURE
These are debentures which are issued upon the terms that in lieu of
redemption or repayment, it may be converted into shares in the
company upon terms as stated in the debenture instrument; section 197

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 3. SECURED DEBENTURE
Debentures may either be secured by a charge over the company’s
property. This is the best option for Banks giving loan to companies. S. 198

4. NAKED DEBENTURE
Dentures may also be unsecured by any charge thus naked. Section 198

5. REDEEMABLE DEBENTURE
A company limited by shares may issue debentures which are or at the
option of the company are to be liable, to be redeemed; Section 199 CAMA
redeemable on a fixed date (due date) can also be re-issued subject to S. 200

6. BEARER DEBENTURE
This is debenture which is repayable to holder of the instrument.

7. REGISTERED DEBENTURE
This debenture is repayable to only the Registered Holder of Instrument (i.e.
the person whose name appears in Certificate and Register.

8. Syndicate or loan debenture- successive or series of debenture on the same

property with no right of priority of one after the other they rank side by side
but asset must cover borrowing – Sect 208(2) CAMA.
Effect of Ultra Vires Borrowing
Issuing debentures beyond borrowing limit may not invalidate it. Sect 44(3) as
company may convey its property even if not pursuant to its authorized business,

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FORM OF DEBENTURES
For a loan from 1 person or a few persons, a simple debenture deed is used,
for a loan from a large number of persons, it is done by issue of debenture
stock under a trust deed entered into between the company and trustee of the
debenture holders.
A simple debenture is usually in the common form with conditions endorsed at the
back. Offer of debentures by a public company to the public for subscription or
purchase must be by debenture trust deed (section 208(1)).

TYPES OF SECURED DEBENTURES - focus

Debenture may be secured by Fixed or Floating charges - section 203 CAMA

FIXED CHARGE
A fixed charge attaches to a particular piece of property when the charge is created.
It is the preferred option for most Banks intending to grant loans to companies.
The ADVANTAGE is that:
1. The particular asset charged is ear marked and kept available to satisfy
the loan.
2. The company cannot dispose of the asset or create other charge ranking
in priority to the present charge.
3. It ranks in priority to floating charge

The DISADVANTAGE
1. the Debenture holder is confined to the asset charged in the fixed charge
and cannot proceed against other assets of the company.

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 2. the company will be restricted in its use of the charged property, so it is
not preferable for most companies.
3. Its more rigorous and expensive to create
4. If it involves land, governors consent must also be obtained

FLOATING CHARGE
A floating charge means an equitable charge over the whole or a specified part of
the company’s undertakings and assets including cash and uncalled capital of the
company both present and future; section 203 CAMA.
It is preferred by Companies for the Following Reasons: (August 2019 Q 4e)
1. It can be created even when the company has no fixed assets
2. It is more flexible and does not restrict the rights of the company over its
assets
3. It is only registrable with CAC and not at the land registry which makes it
cheaper
4. No governor’s consent is required since no interest is conveyed.

Crystallization of Floating Charge

A floating charge shall not preclude the company from dealing with such assets
until
a. The security becomes enforceable and the holder appoints a receive or
manager or enter into possession of such assets; or
b. The court appoints a receiver or manager of such assets on application of
the holder.
c. The company goes into liquidation; section 203(1) CAMA

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On the happening of any of the events stipulated above, the charge shall be deemed
to crystallize and to become a fixed equitable charge on such of the company’s
assets as are subject to the charge.-S. 203(2) CAMA

REGISTRATION OF CHARGES (August 2018 Q 4c, Dec 2020 Q 4f)

the company must within 90 days of the creation of the charge deliver to CAC
certain particulars for registration. - Section 222 CAMA
The registration is effected by filling - Form CAC 9 which is used for the
registration of charge(s).

Upon registration of the charge securing a debenture, the CAC must issue a
Certificate of Registration which serves as prima facie evidence of compliance
with the requirements of registration, Section 222 (2) CAMA

Effect of Failure to Register Charges with The CAC (August 2017 Q 2e, Dec
2020 Q 4f) - Section 221(2) CAMA, Capital Finance Co. Ltd v. Stokes
The Debenture becomes void against the creditors and liquidators of the
company, The obligation to pay the debt is, however, not discharged.

PROCEDURE ON THE CREATION OF CHARGES/DEBENTURES (Dec

2020 Q 1f)
1. Convene a Board meeting and pass a Resolution authorizing the loan.
2. Preparation, execution and stamping of the loan documents; Commented [MOU61]:
1.Deed of mortgage (charged by way of legal mortgage or
debenture);
3. Obtain Governor’s consent, (if necessary)
2.Power of Attorney
4. File documents at Lands Registry 3.Debenture Trust Deed

5. File documents for registration with the CAC viz Form CAC 9 -
Particulars of Charges

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 6. Leave Copies of documents for inspection at the company’s registered
office i.e records of instruments
7. Particulars entered in register of charges
8. Obtain Certificate of registration of charges from CAC.
9. On satisfaction of the charge/debenture, file statement of satisfaction in
whole or part of the charge in Form CAC 10
10. Notify CAC of appointment of receiver when there is default.

REMEDIES OF DEBENTURE HOLDERS (Mostly Banks)

The following remedies are available for the default in repayment of the loan:
Section 233
1. Action in Court to recover the principal and interest
2. Petition for winding-up of the company on the ground of its inability to
pay its debt
3. Debenture holder’s action to enforce security (sell property).
4. Power of sale if it is a debenture secured on a fixed asset (must be in the
instrument)
5. Foreclosure
6. Valuation of security and providing for balance upon winding up.
7. Appointment of receiver or manager over the company; Nashtex Intl v.
Habib Nig. Bank

SATISFACTION OF CHARGE
If the company repays the amount of the debenture, it has to file a memorandum of
satisfaction of the charge. This is done using Form CAC 10 S. 229.

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RECORDS KEPT BY THE COMPANY UPON ISSUE OF DEBENTURE
1. Register of Charges – Section 216 of CAMA.
2. Record of instrument creating charges – Section 217 of CAMA
3. Register of debenture holders – Section 218 of CAMA
4. Copies of instruments creating charges – Section 215 of CAMA.

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 CHAPTER ELEVEN
COMPANY SECURITIES II
CAPITAL MARKET PRACTICE AND FLOATATION OF SECURITIES
(This Topic formed majority of the COMPULSORY Question 1 & 4)
PREAMBLE-Capital floatation is simply the method by which a company can
offer its securities to the public to raise money.

REGULATORY AUTHORITIES
1. Securities and Exchange Commission is the main regulatory authority on
public offer of companies’ securities.
2. Nigerian Exchange Limited
3. Corporate Affairs Commission
4. Federal Competition and Consumer Protection Commission
5. Federal High Court of Nigeria

Applicable Laws
1. Investment and Securities Act (ISA) 2007
2. Securities and Exchange Commission (Consolidated Rules) 2013
3. Companies and Allied Matters Act
4. Federal Competition and Consumer Protection Act
5. Federal High Court ACT
6. Ngx listing Rules

FINANCIAL MARKET
This refers to the avenue by which companies and the government raise funds.
The sources of funds are two:
a. The Money market
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 b. The Capital market.

MONEY MARKET
Money market is the forum where you can access funds from Banks and other
financial institutions through negotiable instruments and bills. It is used to access
short term funds. Collaterals are usually required.

CAPITAL MARKET
Capital market encompasses all the arrangements that facilitate the buying and
selling of shares/securities. It is a forum where companies and governments may
raise funds from the general public by trading securities on the Stock Exchange.
Platform upon which medium to long term financing is obtained in the form of
securities.

Advantages of Raising Money from the Capital Market other than Borrowing
from Banks (Dec 2020 Q 4e)
1. There is no need for collateral/security
2. No interest is paid on the funds raised
3. There is no limit to the amount of money that can be accessed
4. No duration for repayment of the funds
5. It is cheaper than obtaining loans.

LEVELS OF THE NIGERIAN CAPITAL MARKET

The Nigerian capital market exists at two levels;
1. Primary Market and
2. Secondary Market.

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THE PRIMARY MARKET-Rule 405 SEC Rules 2013
• This is where companies can access funds for their shares which have been
newly listed or issued to the public.
• It is otherwise known as the new issues market; since it provides avenue
for those wishing to raise funds from the market by selling their securities to
the public.
• Sale of securities as a fresh issue (not first issue)

Forms of Primary Market

1. Initial Public Offer (IPO)
2. Public offer

THE SECONDARY MARKET

The secondary market provides investors the opportunity to buy or sell securities
that were earlier issued in the primary market. Thus, this is a sale of shares by
the shareholder.
Transfer of interest in securities between individuals other than the company which
issued them.
An unorganized secondary market has no physical trading location but transactions
are conducted mainly through telephone calls and the computer. It is otherwise
referred to as an Over-the-Counter Market (OTC). It trades in unquoted
securities.
NB-Funds raised in the secondary market do not go to the company but the
proceeds go to the shareholder/investor himself.

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WHO CAN OFFER SECURITIES TO THE PUBLIC?
Only public companies (PLC) can offer its securities to the public, but only
quoted public companies and government issuing Bonds can be listed at the Stock
Exchange.
Private companies (LTD) and unquoted PLC can offer their securities through
private placement but which must be registered with SEC.

CAPITAL MARKET OPERATORS AND CONSULTANTS

Section 315 capital market operator" means any persons (individual or corporate),
duly registered by the Commission (SEC) to perform specific functions in the
capital market
These are key institutions and individuals whose intermediary activities operate the
capital market. They are professional corporate bodies and individuals registered
with SEC.
Capital Market Operators include: Rule 45-177 SEC Rules 2013
1. ISSUING HOUSES – A financial institution that engages in finding
capital for established companies or for private firms wishing to convert
to public companies, by issuing shares on their behalf.

2. CUSTODIANS – A person who has custody as a bailee of securities or

certificate issued in the investor’s name which appears as the beneficial
owner of the securities in the issuers register.

3. SECURITIES DEALERS – A firm who is a member of a securities

exchange engaged in the business of effecting transactions in securities
for his own account or on the account of others

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 4. STOCK BROKERS – A member of the Chartered Institute of
Stockbrokers registered as a market operator who deals in the exchange of
securities.

5. TRUSTEES – A person registered by the SEC to act and be vested with a

financial property of which trust has been created for.

6. UNDERWRITERS – A person registered by the SEC who has temporarily

purchased securities from an issuer with a view to offering and selling the
securities for the issuer.

7. PORTFOLIO MANAGERS – A professional responsible for making

investment decisions and carrying out investment

CAPITAL MARKET CONSULTANTS

Are professionals who render certain experts service in the capital markets and
their opinions impact on capital market.
They include: Rule 178-181 SEC Rules2013.
1. Solicitors,
2. Accountants,
3. Investment Advisers,
4. Valuers
5. Rating Agencies, and
6. Engineers

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CAPITAL MARKET SOLICITORS
One of the conditions for a legal practitioner to be appointed as a Capital market
solicitor is ACCREDITATION with SEC (Dec 2020 Q 4a)

Roles/Duties of Solicitors In Capital Market (August 2017 Q 5f, Dec 2020

Q4b), March 2021
RULE 180 SEC RULES 2013
1. Advise on the legal structure of the investments, and the legal risks involved.
2. Advise on compliance with the requirements of CAMA, the listing rules of
the stock exchange.
3. Ensuring that shares are registered with SEC.
4. Drafting and registration of prospectus and ensuring that untrue
statements are not contained therein.
5. File necessary applications in court in support of transactions.
6. Make all statutory filings and provide confirmations (legal opinion) as to
the enforceability and effectiveness of transaction documents;

REGISTRATION OF SECURITIES
All securities, bonds and collective investment Schemes must be approved first and
registered by SEC; S. 54 and 67 of ISA, R. 279&280 SEC RULES 2013-
AIM-The aim of the registration/approval is to approve the price for the securities.

METHODS OF OFFER OF SECURITIES TO THE PUBLIC - Rule 279(1)

(August 2018 Q 6c, Dec 2020 Q 1c), March 2021
(Mostly asked to list it and not explain)
1. Initial public offer (offer for subscription)
2. Direct offer to the public
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 3. Offer by introduction
4. Offer for sale
5. Private placement by public companies and other entities(private placement)
6. Rights issue
7. Bonus issue
8. Debt equity conversion
9. Sukuk
10. Debenture/loan stock
11. Bonds
12. Offer by tender
13. Offer by subscription

1. DIRECT OFFER TO THE PUBLIC

This is where the company offers its shares directly to the public through an
Issuing House by means of a prospectus.
NOTE-The risk of failure of the issue is borne by the company and not the
issuing house. Thus, to protect itself, the company usually arranges for the
issue to be underwritten at an agreed commission.

2. OFFER FOR SALE

This is where the company sells the whole shares or debentures to an Issuing
House and the Issuing House then offers the shares to the public at a higher
price.
The issuing house bears the risk of failure of the issue, thus undertakes the
responsibility of under writing the issue.

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Difference Between Direct Offer and Offer For Sale
i. In a direct offer for sale, the Issuing house gets commission while in offer for
sale, the issuing house gets profits.
ii. In a direct offer for sale, the company undertakes the responsibility for
underwriting the shares; whereas in an offer for sale, the issuing house
undertakes the responsibility of underwriting the shares.

3. PLACING
The shares of a company are allotted to an issuing house who later sells the shares
to a specialized client or institutional investors or pension funds. The company
pays brokerage (commission) to the issuing house
NOTE:
The risk of failure is borne by the issuing house. Thus it sees to the underwriting
of the shares.

4. PLACEMENT (Private Placements)-Rule 340 SEC Rules 2013

This is usually called private placement. This is a method of offering shares
available to a public company (listed or unlisted) or by a private company upon
application by members subject to its Articles and SEC approval.
NB- A private company cannot allow private placements to more than 50 persons.

5. RIGHTS ISSUE-R.324-338 SEC Rules 2013.

An invitation to existing shareholders to subscribe to new securities being issued
by the company, at a special price and in proportion to their existing holdings.
Rights issue is meant to preserve the leverage or shareholding equilibrium.

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 Disadvantages of Rights Issue
1. Shares are sold at a lower price than it would have been sold in the market.
2. There could be the problem of the shareholders not having enough
money to purchase the rights issue.
3. The precarious nature of the capital market or the problems associated with
the management of the companies may make a shareholder reluctant to
purchase new shares in the company.

6. Bonus issue: The proportionate issuance of new shares to the existing

shareholders of the company at no cost to the shareholders by the
capitalization of accumulated reserves from the profits earned in the previous
year then no need to issue prospectus.

7. Offer by Tender
Applications are invited from the public to tender for shares. Allotments are
made to the highest bidder.

8. Debt-equity conversion: This is a process that enables the conversion of debt

instruments into equity, based on pre-determined agreement or conditions by the
parties involved.

9. Sukuk: Investment certificates issued as evidence of undivided ownership of

tangible assets, usufructs and services, or some investment activity, based on
sharia principles, approved by SEC- See Rule 569 SEC Rules, 2013.

10. Debenture loan stock: A debenture is a medium or long-term debt instruments

used by companies to borrow money.
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11. State and local government stock: FG, State & LG Bonds are tradable security
issued by the FG, state or LG to raise funds for any specific project authorized
by the issuing authority. See Section 222-223 ISA. They can issue registered
bonds or promissory notes cumulative loan outstanding shall not be more than
50% of its revenue for the preceding year.

Electronic Offer and Transfer of Securities S. 55(1) ISA & Rule 345 SEC
A company can opt for the electronic mode of offer and transfer of securities
subject to other rules and regulations.
N.B: Even where this method is adopted, the company shall issue a share
certificate to any shareholder who elects to have same.

PROPECTUS
Prospectus" means any written or electronic information, notice,
advertisement or other forms of invitation offering to the public for
subscription or purchase, any shares, debentures or other approved securities
of a company and other issues or scheme; - 315 ISA
FORMS OF PROSPECTUCS
1. Full prospectus: this document contains a detailed description of the
prospectus
2. Abridged prospectus: summarized version of the prospectus
3. Deemed Prospectus: not tagged a prospectus but contain the essential
requirements of a prospectus. S 82 ISA
4. Statement in lieu of prospectus :
This is a statement delivered to the commission in place of a prospectus in
certain circumstances:

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 a) Where a public company that intends to allot shares to the public has not
issued a prospectus; or
b) It has issued a prospectus but has not allotted the shares.

Procedure for Issuing Prospectus for Public offer of Shares: (Dec 2020 Q 1b)
1. Prepare a draft Prospectus and the deliver same to the Issuing House.

2. The issuing house will submit the Prospectus to the Nigerian Exchange
Limited and SEC for approval and registration of the shares.

3. Print the final copy of the prospectus as approved by SEC.

4. Obtain the opinion or consent of the experts who made the Reports
contained in the Prospectus.

5. Submit to SEC the printed Prospectus duly signed by all the directors
named in it for registration.

6. Publish the Prospectus inviting the public to invest in the securities.

Liability For Non Registration of Securities

It is provided for in S. 54 (6) ISA. It attracts a fine of N1m or 3years imprisonment
or both
Liability For Non Issuance of Prospectus:
For body corporate-N500, 000 and 100, 000.00 (individual), S. 67(2) ISA
Non Registration of Prospectus- Section 80(6) ISA
N25, 000.00 for company & N5000 for individuals for each day of default

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WHO IS LIABLE? Section 85 (2) ISA - It is the directors, person consenting to
be named, employee, issuing house and principal officers.

FLOATATION OF BONDS
Bonds are fixed income security issued as debt instrument with low interest yield.
It is a loan instrument used to raise long term capital for infrastructural
development.

TYPES OF BONDS
a) Federal Government bonds:
Issued by the FGN via the debt management office and listed on NSE, the
income is tax free

b) State/Local Bonds:
Issued by SG/LG, no VAT is charged on the proceeds

c) Corporate bonds
Issued by private or public companies. They have a high interest rates
than government bonds. They can be converted to equity if certain
provisions are met and, in such circumstance, such bonds are called
convertible bonds

d) Supranational Bonds:
Issued by institutions such as AfDB and the World Bank, they have high
credit rating and are regarded as the safest bonds

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PARTIES TO A BOND
• ISSUER(BORROWER)
• BONDHOLDER(LENDER)

A. CORPORATE BONDS -
This can be issued by any public company, foreign public companies and
supranational bodies-Rule 567 SEC Rules

CONDITION FOR APPROVAL OF CORPORATE BONDS

The issuance of bonds by public companies and supranational bodies shall be
subject to the following conditions:-Rule 568

WHO CAN ISSUE GOVERNMENT BOND (MCQ) - Section 222 ISA 2007
1. The Federal Government
2. Federal Government Agencies
3. State Government and its agencies
4. Local Governments and
5. Any company which is wholly owned by the Federal, State, FCT and
Local Government

LAW REGULATING GOVERNMENT BONDS

1. Trustee Investment Act
2. Debt Management Office (Establishment) Act
3. ISA and SEC Rules 2013

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Conditions/ Requirements for a Valid Issue of Government Bonds (August
2016 NO 4 a)
1. There must be a law passed by the National Assembly, State House of
Assembly or Local Government authorizing the issuance of bonds.
2. The bond instrument must bear crest of the government body and be
signed by the minister, commissioner or chairman or other appropriate
officer of the body raising the loan. S.241(1) ISA
3. The total amount of out-standing loan and the bond of the issuer should not
exceed more than half of its actual revenue for the preceding financial year-
S. 223(1)(a) ISA;R.565(2) SEC Rules 2013.
4. The bond issue must be registered with SEC -Rule 564;s.224(1) ISA
5. Redemption date shall not exceed 25 years from date of issuance of the
bond. S.226 (2) ISA.
6. A separate sinking fund shall be established for each loan raised. S. 251
7. The bond holders must pay full purchase price before registration S.
231
8. Bond Certificates must be issued to bondholders by the registrar within 2
months of the issue-S. 232 of ISA
9. A trustee (usually a company) is to be appointed to act on behalf of the
bondholders –S. 224(5); ISA.

FLOATATION OF SECURITIES
Floatation is simply the process through which public companies make their
securities available to members of the public.
For a company to offer shares or debentures to the public, it must be a public
company.

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NB: For a private company to be able to offer its share and debentures to the
public, it must first seek re-registration from a private company to a public
company, in line with Section 56 of the CAMA.

Registration of Securities
By the provision of Rule 279 SEC Rules the following shall register their securities
or schemes with SEC:
1. Public quoted companies
2. Public unquoted companies
3. Government and its agencies
4. Investment Schemes
Failure to register such securities is a crime punishable by N1m fine, 3 years
imprisonment or both. Section 54(6) ISA.
Procedure for Floatation Commented [MOU62]:
PROCEDURE FOR FLOATATION OF BONDS
Application for approval and registration of the Bond by the
1. STEP 1: Internal compliance, board resolutions, Special resolution for Securities & Exchange Commission.

conversion, consequential amendments etc. 1.The application to SEC will be accompanied by the following
documents;

2.Copy of the law or resolution authorizing the bond;

2. STEP 2: Appointment of Professionals including; Solicitors, Underwriters, 3.Copy of the rating report by an accredited rating agency
registered by SEC; and

Valuers, reporting Accountants, Issuing House etc. 4.Irrevocable letter of authority issued by the State Accountant-
General to the federal Accountant- General to deduct from source
the state statutory allocation to redeem the bond.

5.Appointment of Corporate Trustee registered by SEC.

3. STEP 3: Team meeting, assigning responsibilities and time line.
6.Appointment of Issuing House.

7.Appointment of Registrar that is registered with SEC.

4. STEP 4: Documentation and payment of fees- resolutions, audited 8.Publication of!the bond in the gazette or other official
documents.
accounts, underwriting contracts, vending contracts, accounts histories and
9.Registration of bond holders in the bond register.
projections, prospectus, etc. 10.Issuance of bond certificate to bond holders.

5. STEP 5: Registration with SEC (by issuing house on behalf of company).

202
 6. STEP 6: Obtain approvals and converge a meeting

7. STEP 7: Marketing and Distribution

8. STEP 8: Allotment, deal with oversubscription, allotment proposal filed

with SEC, prepare range of analysis, e-allotment and issuance of certificate
etc.

DOCUMENTS FOR FLOATATION BONDS (focus)

1. Resolutions,
2. Audited accounts,
3. Underwriting contracts,
4. Vending contracts,
5. Accounts histories
6. Projections
7. prospectus

COLLECTIVE INVESTMENTS SCHEMES (CIS)

A scheme in whatever form, including open-ended investment company, in
pursuance of which members of the public are invited or permitted to invest
money or other assets in a portfolio… defined under Section 153 ISA and
Nospecto Oil and Gas Ltd v. Olorunmide.

REGULATION OF CIS
CIS is regulated by the SEC - S. 160(1) ISA, provides thus, “no person shall
establish or operate a CIS or carry on the business of a CIS UNLESS such scheme
is authorized by and registered with the commission”.
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Nobody shall administer a scheme unless the person is an incorporated
company and registered with SEC as a fund or portfolio manager. S. 158 ISA

TYPES OF COLLECTIVE INVESTMENT SCHEMES – S. 154 of ISA; Rule

41 SEC Rules (Exam focus, most times list)
1. Unit Trust Scheme
2. Real estate Investment Scheme (REIS)
3. Investment Trust Scheme
4. Community Savings Scheme (ESUSU, ADAJO)
5. Open-Ended Investment Scheme S. 154 of ISA; Rule 41 SEC Rules.

CONTENTS OF THE TRUST DEED

1. Definition of terms
2. Provisions as to certificates
3. Remuneration of Trustee and Manager
4. The Trustee and the Manager
5. Accounts
6. Constitution of the Trust
7. Issue of Units
8. Realisation of Units
9. Distributions
10. Provisions as to Holders (of Units) Register of Holders Transfer and
Transmission
11. Investment of Property held on the trust
12. Voting right on assets held on the trust
13. Interest upon deposited cash
14. Retirement of Trustee
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 15. Removal or retirement of Manager
16. Termination of the Trust
17. Notices
18. Reconstruction and Amalgamation
19. Meeting of Holders

ESSENTIAL ELEMENTS OF A COLLECTIVE INVESTMENT SCHEME-

S.152 ISA
1. The Fund: The fund is pooled by all the investors
2. Units: The pooled funds are divided into units of the participatory interest.
3. Unit Holder: The unit holders are the participants in the scheme who are
entitled to a pro rata share of interests or other income of the securities
comprised in the units.

4. Fund Manager: The scheme is managed by Fund Manager who uses the
proceeds of the sale of trust units to invest in other securities in accordance
with the policies and objectives of the trust scheme.

5. Trustee: A Trustee registers and hold investments in trust for the unit
holders and to ensure that the terms of the trust are strictly observed by the
Fund managers. It also makes fund available to the fund manager.

6. Trust Deed: A trust deed is executed between the trustees and the Fund
manager for regulating the operation of the scheme.

7. A unit trust scheme is usually administered as a limited liability company

(private or public) which is approved and registered by SEC.
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INVESTMENT TRUST SCHEME
It is regulated like the Unit Trust Scheme as both are similar but different in
operation – See Rule 41 SEC Rules.
It is usually packaged as specialized investment Trust Scheme, whereby unit
holders define in advance, what type of securities their money would be
invested (unlike UTS) E.g. IBTC Ethical Fund.

Real Estate Investment Scheme

Real Estate Investment Scheme’s may be constituted as a company or a trust,
established for the purpose of acquiring immediate and long-term interest in real
estate or property development to raise funds from the capital market through the
issuance of securities with the following features:
1. An income certificate, giving the investor a right to a share of the income of
any property or property development.
2. An ordinary share (if constituted as a company) in the body corporate,
giving the investor voting right in the management of the body corporate.

COMMUNITY SAVINGS SCHEME

It is the oldest form of CIS in various communities.
Popular among low level workers and voluntary organizations in Nigeria.
Required to be registered at the local government, where they operate- Rule
41 SEC Rules
They are required to maintain a register of all their members.
Known variously as esusu, adashe, ajo among others.
POSER
Advice your State Govt. on how to set up a Community Savings Scheme for its
rural dwellers under the ISA. May 2011 No 2b(iii)
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 • Register the Community saving schemes with the SEC – Rule 41 SEC Rules
• Establish the Community saving schemes within the LGA or Community
where the Participants reside
• Obtain and complete a registration form to be submitted to the LGA

PROCEDURE FOR CREATION OF CIS

1) The Manager must:
(a) Obtain Incorporation under CAMA
(b) Register with SEC
(c) Have the capital and reserve fund as may be prescribed by SEC – Section
160(3)(b) ISA.
2) Preparation of Trust deed and/or Custodial Agreement – S. 160(3)(d) ISA.
3) Registration of units or securities with SEC – mandatory for any dealing in
units or securities – Section 161 ISA
4) Approval of prospectus and other offer documents of the scheme. NB:
Liability in case of untrue statements in the publication.
5) Determination of the Market price of unit or security – Section 170 ISA.
6) Investment of a collective scheme by the Manager in accordance with the
provisions of the trust deed. Section 171 ISA.
7) The Manager may invest the fund and assets of a scheme in units of any
investment fund provided it is within the approved category of investments
set out in Section 171(2) ISA.
8) Where the interest of the scheme or that of its beneficiary demands, SEC
may impose additional restrictions on investments by the manager.
9) The manager shall have due regard to the risk rating of instruments that has
been undertaken by a rating company registered under the Act – Section 171
ISA.
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DIFFERENCES BETWEEN A COMPANY SHARES AND CIS (May 2012) Commented [MOU63]: Youre looing at:
1.Management
2.BINDING DOC
1. Members of a company are called shareholders while the participants in 3.MEMBERS
4.Payments
CIS are called unit holders.
2. MEMOART binds shareholders while trust deed or custodial agreement
binds CIS
3. The Board of Directors manages a company while the CIS is managed by
the Fund managers,
4. Shareholders are entitled to dividends whereas unit holders are entitled to
profit pro rata.
5. A shareholder has individual rights in the Company but Unit holders
have collective interest as their money loses its individuality
6. A shareholder can share in the residual assets of a company while a CIS
holder cannot

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 CHAPTER TWELVE
CORPORATE RESTRUCTURING, I
INTERNAL RESTRUCTURING
Corporate restructuring is the various ways in which a company can resolve some
of its corporate financial problems or change the nature of face of its business or
corporate existence.
Internal restructuring option is simply the company looking inward for a solution
to the challenge of the corporation; however, under the CAMA it permits for
solutions that may involve two or more companies in an arrangement in a
transaction that may involve transfer of assets and interests from one company to
another. Section 711 of Companies and Allied Matters Act.

Checklist of Regulatory Bodies Involved in Corporate Restructuring

1. Corporate Affairs Commission

2. Securities and Exchange Commission
3. Federal High Court
4. Central Bank of Nigeria
5. Nigeria Deposit Insurance Corporation
6. Nigerian Investment Promotion Commission
7. Nigerian Exchange Limited (formerly known as NSE)
8. Federal Competition and Consumer Protection Commission

RATIONALE FOR INTERNAL RESTRUCTURING

a) To survive economic hardship/financial trauma without losing corporate
identity

209
 b) To eliminate superfluous shares/securities no longer represented by a
company’s assets through negotiation with company’s creditors to accept
money’s worth.
c) To reduce likelihood of fraud.

METHODS OF INTERNAL RESTRUCTURING – May 2011

The options available to a company to salvage their situation and keep the
company afloat as a going concern are:
1. Management Buy-out Rule 449 SEC Rules 2013
2. Arrangement and compromise. - S. 715 CAMA
3. Arrangement on sale-S. 714 CAMA
4. Increase and reduction [in share capital) by the company- S. 127 and 131
5. Conversion and re-registration of the company in order to take advantage
of the capital market. - S. 56 & 63 CAMA
6. Share consolidation and reconstruction- S. 125 CAMA

corporate survival strategies available to a company within Sections 710 to 716

CAMA are: FOCUS

1. Transfer of Company through compromise, arrangement or

reconstruction between two or more companies or the merger of any
two or more companies – S.711
2. Scheme or contract, not being a take-over bid under the Investment and
Securities Act, involving the transfer of shares or any class of shares in a
company (in this section referred to as “the transfer of company”) to another
company – s. 712

210
 3. Transfer of 9/10th shares of a Company’s shares in pursuance of a scheme or
contract to another Company and the acquisition of the outstanding 1/10th
dissentients shares by the transferee Company – S. 713.
4. Arrangement on Sale under Section 714
5. Arrangement and Compromise under Section 715 - 716 CAMA.

Determinants of Best Internal Restructuring Options to Adopt:

1. Determining indebtedness of creditors and preference shareholders and
the company does not want to be wound up - Arrangement
/Compromise.
2. Solvent company selling whole or part of assets (voluntary winding
up) - Arrangement on Sale
3. Floated shares - reduction of share capital (issued shares)
4. Directors/employees intervention - Buyout of controlling shares
5. Increase of share capital (raising money at capital market to settle
debts)
6. Share reconstruction-S.125 -this will enable them raise value of shares
and raise more capital if it wants to target plenty participants
7. If shares are unissued-cancellation of S. 125 CAMA

ARRANGEMENT AND COMPROMISE-Section 715 CAMA

Section 170 CAMA defines Arrangement

Means any change in the rights and liabilities of members, debenture holders or
creditors of a company in regulation of a company, other than a charge effected
under any other provision of this act or by the unanimous agreement of all parties
affected.

211
Compromise an arrangement by a company with the creditors and/or the
shareholders to accept less than what they are ordinarily entitled to as full
satisfaction of their obligation.

It may require the company to negotiate with the creditors and request that they
relinquish their security or to permit the creation of a prior or pari pasu
charge in favor of other creditors.

It is also possible under a compromise for a company to persuade its creditors to

accept shares or part shares and part cash in satisfaction of their debt.
Another alternative could be convincing share-holders or a class of them to vary
their right

FORMS OF ARRANGEMENT OR COMPROMISE

A company can enter into an agreement with its members and creditors under the
following schemes:

1. Arrangement of preferential shareholders for the cancellation of the

dividend arrears, reduction or the rate of dividends or conversion of
preference shares to ordinary shares.

2. Ordinary Shareholders to surrender part of their holdings or shares to

the preferential shareholders who agree to accept the ordinary shares in
lieu of dividend in arrears.

3. Debenture holders taking up shares in place of debentures (NB: not

convertible debentures)
4. Creditors/Debenture holders agreeing to a lower rate of interest.

212
 5. Creditors accepting longer periods of repayment (by implication
extending legal due date).
6. Reconstruction of shares under a share reconstruction scheme. E.g. from
Share Capital of N10,000,000 of 10,000,000 units at N1 each to N5,000,000
of 10,000,000 units at 50 kobo each.

PROCEDURE FOR ARRANGEMENT AND COMPROMISE: (2009) S. 715

1. Preparation of Scheme of Arrangement or Compromise. (Liquidator
prepares it if the company is in liquidation.)

2. Apply to court in summary way, for a court ordered meeting of the

company or creditors be summoned and held as the court may direct.

3. Pursuant to court order a notice of meeting is sent accompanied with a

statement explaining the effect of the arrangement, and in particular state
any material interest of the directors of the company and whether it would
affect the directors differently from other person

4. At the meeting, the number of votes required to approved the scheme

are majority representing not less than ¾ in value of the shares

5. The scheme is referred to SEC by the court. The SEC shall appoint one or
more inspectors to investigate the fairness of the scheme and report to
the court.

213
 6. Upon sanctioning of the schemes as fair by the court, it becomes binding
on all concerned parties, creditors, members or class thereof and
liquidators and contributories in case of a company being wound up.

7. The CTC of the scheme sanctioned by the court shall be delivered to the
CAC and the order is not to be effective until the CTC is delivered to
CAC for registration.

8. A copy of the order sanctioning the scheme shall be annexed in every copy
of the memorandum of the company issued after order is made.

Documents That Would Be Prepared Under a Scheme Of Arrangement ( Commented [MOU64]:

1.Scheme of Arrangement;
2.Application to the court;
2009) 3.Court order convening the meeting of creditors;
4.Notice of meeting;
5.Special resolution of the creditors sanctioning the scheme of
1. The scheme of arrangement or compromise arrangement;
6.SEC Report on the fairness or otherwise of the scheme; and
2. Resolution of ¾ of the creditors or members as the case may be sanctioning 7.Court order sanctioning the scheme of arrangement.

the scheme of arrangement or compromise

Three laws that may regulate the proposed scheme are:
1.Investment and Securities Act;
3. An Order of Court convening the meeting 2.Companies and Allied Matters Act; and
3.Federal High Court Act.
4. The notice of meeting
5. The report of SEC investigation on the fairness or otherwise of the scheme
6. Order of Court sanctioning the scheme

HEADING OF THE APPLICATION APPROVING A SCHEME OF

ARRANGEMENT and COMPRISE

IN THE FEDERAL HIGH COURT OF NIGERIA.

IN THE..... JUDICIAL DIVISION.

214
 HOLDEN AT.............

Suit no FHC/...…/....2022.

IN THE MATTER OF THE COMPANIES & ALLIED MATTERS ACT 2020

AND

IN THE MATTER OF APPLICATION UNDER S 715 THEREOF.

IN (name of company) (RC....) AND ITS CREDITORS.

NOTICE IS HEREBY GIVEN....

ARRANGEMENT OR COMPROMISE BETWEEN TWO OR MORE

COMPANIES

Section 711 (1) CAMA provides that: Two or more companies may agree to a Commented [MOU65]:
“where under a scheme proposed for a compromise, arrangement or
reconstruction between two or more companies, or the merger of any
scheme of arrangement, compromise or reconstruction among themselves. two or more companies- the whole or any part of the undertaking or
property of any company concerned in the scheme (in this section
referred to as transfer of company) is to be transferred to another
company…” (In simpler words, This arrangement involves the
Note: That this section used the word “merger”, therefore such transfer of all or some of the part of a company).

ARRANGEMENT may be part of the process in a merger scheme; it may also

be a buying off by the transferee company of the other company (transfer of
company).

Summarized Procedure for Arrangement between Two or More Companies

1. Any of the companies involved in the scheme may apply to the court for
a court ordered meeting of each of the companies involved in the
scheme.
2. Special resolution of ¾ (75%) majority to be passed by each company
approving the scheme.
3. Application by one or more of the companies to Court to sanction the Commented [MOU66]:
the merger becomes binding on the companies even before the
scheme and the scheme becomes binding. court sanction is filed at the CAC. The court sanction must, however,
be filed at the CAC within 7 days.

Section 711(1) and (2) CAMA.

215
Order a Court May Make Upon Sanctioning an Arrangement Scheme: S.711
(3) of CAMA:

a. Transfer of the whole or the part of the properties or liabilities of the

transferor company to the transferee.
b. Continuation of Legal proceeding by the transferor company
c. Dissolution without winding up of the transferor company
d. An order as to provisions for dissentient members.
e. Incidental or consequential orders relating to the scheme.

Buying off A company not Under a Take Over Bid - Section 712

Where a scheme or contract, not being a take-over bid under the Investment and
Securities Act involving the transfer of shares or any class of shares in the
company (in this section referred to as “transfer of company”)

Summary of the Provision of Section 712 CAMA

The provisions of Section 712 have to do with an offer by one company to buy
off another company and the summary of the procedure as follows:

1. There is an offer made to the transferor by the transferee.

2. Approval of the Scheme or contract by 9/10 of the members of the
transferor company within 4 months of offer.
3. At the end of the 4 months period, 2 months’ notice to dissentient
members (if any) of intention to acquire their shares.
4. One month period for the dissentient members to apply to Court to vary
the terms of the scheme or contract.
5. At the expiration of the 2 month notice …

216
 6. Transferor pays the transferee for the shares and the money is paid into a
separate account to be kept in trust for the shareholder.
NB: A dissentient shareholder is one who has failed or refused to transfer his
shares to a transferee under a scheme or contract.

Notes on Section 712 CAMA

1. There is an offer by the transferee.

2. There is a period of 4 months for approval by a minimum of 9/10 of
shareholders.
3. There is a provision for dissentient holders.
4. There is notice to dissentient holders.
5. Dissentient holders may make application to court to vary.

ARRANGEMENT ON SALE S.714 CAMA

This is a process of voluntary winding up of a company and liquidators
appointed are authorized to sell the whole or part of its undertaking or assets
to another corporate body and the proceeds are distributed in species amongst
the members of the companies in accordance with their rights in liquidation.

Within one year from the date special resolution for members voluntary winding
up; if there is an order under Section 355 of CAMA (minority action for unfairly
prejudicial and oppressive conduct) or Creditors voluntary winding up any
distribution not sanctioned by the court will not be valid

WHEN RECOMMENDED:
Arrangement on Sale is one of the options that could be adopted for the internal
restructuring for A Company Whose Assets Outweighs Its Liabilities

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PROCEDURE FOR ARRANGEMENT ON SALE:
1. Board resolution adopting draft scheme of arrangement on sale
2. Notice of EGM will be issued to members of the company
3. Members of the company will pass a Special Resolution authorizing a
members voluntary winding up and to appoint a liquidator to sell the
assets to another company in consideration for cash or shares in the
company
4. A dissenting member can write the liquidator within 30 days of the
passing of the Resolution asking him to either:
a) Abstain from carrying out the Resolution or
b) Purchase his own shares at a price to be determined by-
i. An agreement if it is a private company with
no alien or
ii. SEC if a PLC or a private company with
alien participation
5. If ALL assets are sold, the proceeds of the sale will be distributed
amongst members in order of priority of a company in liquidation

6. The liquidator will convene a final dissolution meeting where the

accounts of the winding up exercise and his report would be
considered by the members

7. The arrangement will be valid if after 1 year there is no objection

under
a. Unfairly prejudicial and oppressive conduct or - 353
b. An order of the court for a creditor winding up

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MANAGEMENT BUY OUT - S. 118 of ISA, R. 449 SEC RULES 2013
Management Buy Out is the acquisition of all or controlling shares of a company
or its subsidiaries by the management of that company. This may or may not
involve third party financing in the process; in other word another entity may be
involved in the Buy Out.

PROCEDURE FOR MANAGEMENT BUY-OUT: R. 449 SEC RULES 2013

An application is made to the SEC for the approval of a management buy-out
completed by the management team, attached with:
a. A Resolution of the shareholders approving the management buy-out
b. Resolution of the management team authorizing the management buyout
c. A copy of the Certificate of Incorporation of the company
d. A copy of the MEMOART of the company
e. Two copies of the prospectus containing a company profile
f. Sale agreement between the company and the management team
containing the items in R. 449(b) (vi)(a-h) SEC Rules.

The Sale agreement or contract between the management and the company should
contain the following terms amongst others:

a. Terms and conditions of the sale

b. Indemnity against contingent liabilities by the seller to third parties and pay
tax not provided for in the account.
c. If the employees of the target company operate a pension scheme, the
agreement should have a clause on the continuation of the scheme
d. Sale and Purchase of Assets
e. Contracts and Creditors

219
 f. Employees liabilities and obligations under subsisting contracts
g. Debtors, it should contain a clause on assignment of debts or that the seller
bears responsibility.
h. Name under which business will be continued.

Checklist of Documents involved in Corporate Restructuring - focus

1. Notice of Extraordinary General Meeting or Annual General Meeting and

Court Ordered meeting.
2. Resolution for winding up of the company.
3. Resolution for appointment of liquidator
4. Court processes for Court ordered meeting
5. Prospectus for share reconstruction where applicable
6. Resolution for share reconstruction
7. Letter notifying SEC of the reconstruction/application to SEC for
approval of management Buy Out.
8. Scheme of Arrangement.

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 CHAPTER THIRTEEN
EXTERNAL OPTIONS IN CORPORATE RESTRUCTURING
External restructuring option involves the company and other third parties.
Legal Framework/Applicable Laws For Corporate Restructuring
The main laws and Rules guiding Corporate Restructuring are: (August 2019 Q
5a, January 2020 Q 4a)
1. Federal Competition and Consumer Protection Commission Act
2. Companies and Allied Matters Act
3. Investment and Securities Act 2007
4. Federal High Court Act.
5. Securities and Exchange Commission Rules 2013
6. Federal High Court Rules
7. Companies’ income tax Act (Amendment)

SECTOR SPECIFIC ACT – Depending on the scenario

1. Central Bank Act
2. Nigerian Communications Commission Act
3. National Insurance Commission Act

Regulations
1. FCCP notice of threshold for merger notification 2019
2. Merger Review Guidelines
3. Merger review regulation (as amended) 2021

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 The Regulatory Bodies/Institutions in Corporate Restructuring and Their
Functions(August 2019 Q 5b, January 2020 Q 4a March 2021)
1. Federal Competition and Consumer Protection Commission (FCCPC)
Key Role of FCCPC includes:
a. It is the apex regulatory body in merger.
b. Grants pre-merger consent, clears scheme document and approves the merger.

2. Securities And Exchange Commission (SEC)

Key Role of SEC includes:
a. It is the apex regulatory body of capital market operations.
b. Grants authority to proceed in a takeover bid.

3. Central Bank of Nigeria (CBN)

CBN gets involved in merger and acquisition, where banking institutions are
involved in the merger scheme. The prior consent of the CBN Governor must
be sought and obtained before any such agreement. -S. 7 BOFIA
Where there is foreign merger involved i.e importation of capital

4. Federal High Court

a. Orders separate shareholders’ meetings of merging companies.
b. Deals with objections to shareholders’ meeting or to merger.
c. Sanctions merger – the merger becomes effective from the date the order is
given.

5. Nigerian Exchange Limited (Formerly known as NSE)

a. It is a self-regulatory organization.
b. It regulates listed public companies.
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 c. It regulates secondary market transactions.
d. Must be notified by listed companies of intention to merge.
e. Admits “new shares” to Daily Official List, de-lists “Scheme Shares” of
dissolved companies.

6. Corporate Affairs Commission

a. Filing and certification of corporate resolutions and documents to be filed
with SEC.
b. Filing of sanction.
c. De-registration of dissolved companies.
7. Court of Appeal

SECTOR SPECIFIC REGULATORY BODIES

1. Nigerian Insurance Commission
2. Nigerian Communication Commission
3. NERC
4. Nigerian Deposit Insurance Corporation
5. Asset Management Corporation of Nigeria

REGISTERED MARKET OPERATORS INVOLVED IN MERGER

TRANSACTIONS
1. Financial Advisers/Issuing Houses.
2. Solicitors.
3. Auditors.
4. Reporting Accountants.
5. Registrars.
6. Stockbrokers.
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EXTERNAL OPTIONS IN CORPORATE RESTRUCTURING
1. Purchase and Assumption
2. Cherry Picking Commented [MOU67]:
Cherry Picking, the investor will not take up all the liabilities of the
failing company, but it will inspect the books of account, business
3. Acquisition operation and activities of the failing company in other to pick
and choose those aspects of the failing business that it can save by
4. Mergers and Amalgamation integrating it into its own business. It is also aimed at reducing the
loss of investment of a company.

5. Take Over
6. Management Buy in Commented [MOU68]:
Is an external restructuring option in which an outside manager or
management team purchases controlling shares of a company and
gives the outside management team ownership stake in the
acquired company.
PURCHASE AND ASSUMPTION: After the purchase, the outside management team replaces the
existing management team of the acquired company.

It allows other company/investors to purchase the liabilities of the failing Management-Buy-In occurs when a company appears to be
undervalued or has poor management team.
company and assume ownership of its assets, usually at auction price.
IT IS SUITABLE where the company has become MORIBOUND (August Commented [MOU69]:
In respect of banks, it is an option in which a healthy bank or thrift
2017 Q 6 purchases assets and assumes liabilities of the unhealthy bank or
thrift

PROCEDURE FOR PURCHASE AND ASSUMPTION It involves:

1.Legal due diligence;
1. Board and GM resolution approving the proposed arrangement and 2.purchase of the assets of the moribund company;
3.assumption of liabilities of the moribund companies;
4.winding up and dissolution of the moribund company; and
preparation of deed of purchase and assumption. 5.settlement of the investors, depositors and creditors of the
moribund company.
2. Upon successful purchase, the assumed company takes up the status REGULATORY BODIES
1.The Central Bank of Nigeria,
of the purchasing company through a judicial assent. 2.Nigeria Deposit Insurance Corporation,
3.Asset Management Corporation of Nigeria and
3. The transaction is perfected. (signing of deed 4.Securities and Exchange Commission.

4. The perfection documents are filed along with the court process for
judicial sanction at the FHC.
5. The assumed company is dissolved through a judicial sale of its assets
and liabilities to the purchasing company

ACQUISITION Commented [MOU70]:

SEC requires the acquirer to file an expression of interest/letter of
intent. The filing shall be done by a registered capital market
Acquisition arises where a company acquires less than 30% of the total shares operator

of another company. Rule 421 SEC Rules.

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POST ACQUISITION REQUIREMENTS BY SEC
1. Executed share/asset purchase agreement
2. Evidence of settlement of purchase agreement
3. Evidence of settlement of severance benefits of employees who may be
affected by the restructuring exercise. Rule 436
4. Post-acquisition inspection by SEC, 3 months after the approval and
consummation of the exercise

TAKE OVER-S.131-147 ISA under ISA

It’s a situation where a person or group of persons acquire(s) or wish to acquire a
minimum of 30% shares in a public company with the intention of taking over
the control of that company. S. 117 of ISA & Rule 445 of SEC Rules.

WHEN WOULD AN ACQUISITION AMOUNT TO A TAKEOVERR

For acquisition to amount to take over the share acquired must be within 30% -
50% of the voting rights of the target company. S. 131(b) ISA
If the bid is targeted at acquiring more than 51% of the issued shares of
another company it then becomes a merger.

COMPANIES THAT CAN NOT BE TAKEN OVER (September 2015 Q 4a)

1. A company with less than 20 shareholders representing 60% of the
members of the target company-R. 445(3) SEC Rules
2. Shares of a private company - S. 445(3) SEC Rules and S. 133(4)

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CONTENTS OF A TAKE OVER BID-Rule 446 SEC Rules 2013 Commented [MOU71]:
DOCUMENTMENTS TO ACCOMPANY A TAKE-OVER BID FOR
REGISTRATION WITH SEC:
a. The full names and addresses of the offeror. If a corporate body, the name and
1.Application letter;
current head office address of the company and the date on which the directors
2.2 copies of information memorandum (where applicable);

of the company gave their approval. 3.Letter of “NO OBJECTION” from relevant regulatory body;

b. The bid must specify the maximum number and shares proposed to be acquired 4.A copy each of the shareholders and board resolutions of the
offeree (acquiring company) certified by the company secretary
approving the take-over (where applicable);
during the period specified in the bid.
5. Copy of the certificate of incorporation of the offeror certified
c. The terms on which the shares are to be acquired valuation method adopted in by the company secretary;

6.Copies of the memorandum and articles of association of the

arriving at the price offered for the shares offeror certified by Corporate Affairs Commission;

7.Letter from the offeror appointing its financial adviser;

8.Decision of the appeal against Securities and Exchange

MERGER Commission’s refusal to register the bid filed within 30 days of
such refusal to Investments and Securities Tribunal.
Merger occurs when one or more undertakings directly or indirectly acquire
Commented [MOU72]:
or establish direct or indirect control over the whole or part of the business of An undertaking has control over another undertaking if:

another undertaking. Section 92 FCCPA a.It owns more than 1⁄2 of the issued capital or assets of the
other undertaking;

b.It has majority votes that will be cast in the general meeting of
the other undertaking;
REASONS FOR MERGER AND ACQUISITION c.It appoints or veto the appointment of the majority of the
directors of the other undertaking;
1. Risk Diversification.
d.It is the holding company and the other undertaking is its
2. Economies of Scale subsidiary;

e.It can influence the policies of the other undertaking;

3. Stock Exchange Quotation
4. Technological Drive
6. Management Expertise
7. Desire for growth and increased market share.
8. Survival of regulatory requirement for consolidation

Classification of Mergers/Economic Form - Rule 227 SEC Rules 2013

(January 2020 Q 4c)
Mergers and acquisitions are broadly classified into three types: FCCPC Merger
Review Regulations
226
 a. Horizontal Merger:
involves the combination or fusion of enterprises in the same line of
business i.e. Merger of competitors.

b. Vertical:
involves the combination or fusion of companies in the same market but
operates at different levels, they are complimentary known as symbiotic
relationship

c. Conglomerate:
involves the fusion of two business concerns in completely unrelated line
of operations. This merger is just with the objective to diversify and
expand the control of the market

MERGER THRESHOLDS/CATEGORIES OF MERGER (Exam Focus April

2017, Jan, 2020 Q 4c March 2021
There are two to wit : Section 92 (4) FCCPA
a. Large Merger: a merger or proposed merger with a value at or above N1 Commented [MOU73]: When asked for the legal category of a
large merger
The Legal Category of the merger between COMP A and COMP B is
billion a Large Merger because the combined assets and turnover of the two
companies are N2.5 Billion (Two Billion, Five Hundred Million
b. Small Merger: below N1 billion (combined turnover) or N500 million Naira) only which is above the 1 billion threshold for a large merger

and above of the turnover of the target undertaking.

NOTE the following:

1. There is no more Intermediate Merger
2. The FCCPCA did not stipulate the Merger thresholds but provides that
FCCPC is to fix the thresholds for the purpose of determining the categories
of merger, S. 93 FCCPC Act

227
The Legal position as regards notifications of mergers - focus
A merger becomes notifiable before implementation if in the financial year
preceding the merger:

A. LARGE MERGERS:
1. The combined annual turnover of the acquiring Company equals or
Commented [MOU74]:
exceeds 1Billion naira. ENUGU CAMPUS

2. The annual turnover of the target company equals or exceeds#500m. 1.A party to a small merger may voluntarily notify the FCCPC of
the merger at any time.

2.Within 6 months of implementation of the merger, the

Commission may require that the merging parties should notify
B. Small mergers are not notifiable UNLESS it of the merger where the Commission is of the opinion that the
merger will lessen or prevent competition.

a. the parties voluntarily choose to notify FCCPC 3.The notification of the merger shall be published within five
business days after the receipt by the Commission.
b. where the regulator feels that the merger may substantially prevent or 4.The parties to a small merger shall not implement the merger
unless approved with or without condition by the Commission.
lessen competition in accordance with section 95(1) of FCCPA.
5.Any action undertaken by any party unless the merger is
approved is in violation of the provisions of the FCCPC Act and
therefore void.
SMALL MERGER (Threshold below 1 billion Naira)
6.Within 20 business days after the parties to a small merger
Parties to a small merger are not required to notify the FCCPC and may have fulfilled all notification requirements, the commission may
extend the period in which it has to consider the proposed
merger to 40 business days and issue an extension notice to all
implement the merger without approval UNLESS the FCCPC expressly requires parties to the merger.

notification. S. 93 FCCPCA 7.After consideration of the merger proposal the commission

will,
a.issue a report in the prescribed form approving the merger
or
b.approving the merger subject to conditions
THE PROCEDURE FOR SMALL MERGER; Section 95(1-8) FCCPC Act c.prohibit the implementation of the merger if it has not been
implemented or declaring the merger to be prohibited

1. Parties notify FCCPC (if required by the commission) or voluntarily 8.If at the expiration of the 20 business days the Commission did
not issue an extension notice or at the end of the extension
otherwise pre-merger notice is not compulsory. period of 40 business days the Commission did not issue the
report in the prescribed form, the merger shall be deemed to
have been approved.

9.FCCPC shall:
2. Within 20 business days of such notification, FCCPC may; a.publish a notice of its decision in the Federal Government
Gazette;
a. Extend the period in which to consider the merger by a single period not b.Issue written reasons for the decision if it prohibits or
conditionally approves the merger, or requested to do so by a
exceeding 40 business days and in that case it must issue an extension party to the merger.

Certificate to the parties or

228
 b. After considering the merger in terms shall notify the parties in a
prescribed form of its approval, conditional approval or prohibition of
the merger.

3. Upon the expiration of the 20 working days or the expiration of the

extension, if FCCPC has not notified the parties of its decision, the merger
shall be deemed to have been approved.

4. FCCPC shall:
a. publish a notice of its decision in the Federal Government Gazette; and
b. Issue written reasons for the decision if it prohibits or conditionally
approves the merger, or requested to do so by a party to the merger.

5. If the merger is approved the parties shall apply to the court for the merger
to be sanctioned and when so sanctioned, it becomes binding on the
companies.

PROCEDURE FOR LARGE (threshold above 1 billion Naira); Section 96

FCCPC Act
The procedure for Large Merger is summarized in the 3 stages below:
1. Pre-merger notification to FCCPC
2. FCCPC Formal approval of the Merger
3. Post-merger notification of compliance to the FCCPC; (January 2020 Q
4d)

229
PROCEDURE FOR LARGE MERGER section 96-97 FCCPC Act Commented [MOU75]:
The procedure for the consummation of a larger merger is as
follows; Kano X Enugu campus
1. A party to a large merger shall notify the FCCPC of the merger in the
1.A party to a large merger shall notify the Commission of the
prescribed manner and form. merger in a prescribed form and manner.

2.The notification shall be published within 5 days after

receipt by the FCCPC.

3.The parties to a large merger shall not implement the merger

2. The notification of the merger shall be published within five (5) business unless approved with or without conditions by the
Commission.
days after receipt by the FCCPC. 4.Within 60 business days after the parties to a large merger
have fulfilled all notification requirements, the Commission
may extend the period of consideration of the merger by
another 120 business days and issue an extension notice.
3. The merging companies shall each provide a copy of the notice of merger to:
5.After a thorough consideration of the merger, the FCCPC is
a) any registered trade union that represents the employees in the acquiring duty bound to issue a report
a. Approving the merger
b. Approving the merger subject to conditions or
and target undertakings respectively; or c.prohibit the implementation of the merger.

b) The employees or representatives of the employees of the acquiring 6.FCCPC shall:

a.Give to the parties applying for approval of a large merger

and target undertakings, if there are no such registered trade unions. its decision and cause a notice of the decision to be published
in at least 2 national newspapers; and

b.Issue written reasons for its decision where-

i.It prohibits or conditionally approves the merger, or
4. Within 60 business days after the parties to a large merger have fulfilled all ii.It is requested to do so by a party to the merger.

notification requirements, the FCCPC may:

a) Extend the period in which it has to consider the proposed merger to 120
business days and Issue an extension notice to all parties to the merger;
or
b) after having considered the merger in accordance with the provisions of
the Act, issue a report in the prescribed form -
i. Approving the merger,
ii. Approving the merger subject to conditions, or
iii. Prohibiting implementation of the merger.

5. Where upon the expiry of the 60-business day period, the FCCPC has not
issued an extension notice or, upon the expiry of an extension period, the

230
 Commission has not issued a report, the merger shall be regarded as having
been approved.

6. FCCPC shall-
a) Give to the parties applying for approval of a large merger its decision
and cause a notice of the decision to be published in at least two national
newspapers; and
b) Issue written reasons for its decision where-
i. It prohibits or conditionally approves the merger, or
ii. It is requested to do so by a party to the merger.

NOTE THAT: The parties to a large merger shall not implement the merger
unless it is approved, with or without conditions, by the Commission in accordance
with the provisions of this Act.
Such a party that violates the above provision is liable on conviction to a fine not
exceeding 10% of turnover of the undertaking in the business year preceding
the date of the commission of the offence or to such other percentage as the
court may determine having regard to the circumstances of the case.

REVOCATION OF MERGER – S. 99 FCCPA (focus)

The FCCPC may revoke its own decision to approve or conditionally approve a
small or large merger if-
1. The approval was based on incorrect information for which a party to the
merger is responsible;
2. The approval was obtained by deceit;

231
 3. The parties fail to implement the merger within 12 months after the
approval was granted; or
4. Breach of an obligation attached to the decision of the Commission
approving the merger by the merging parties

DUE DILIGENCE IN EXTERNAL RESTRUCTURING Commented [MOU76]:

areas to conduct due diligence when they don’t specify which
(just fuse both legal and financial):
Types of Due Diligence Exercises to be carried before merger are: (usually asked
1.Ownership of the business;
in exam) 2.Business profile;

1. LEGAL DUE DILIGENCE 3.Employees;

4.Intellectual property and technology issues;

This covers analysis of several issues such as: 5.Litigation analysis;
6.Conduct searches at CAC, Land Registry, SEC, FIRS,
i. Ownership of the Business Standards Organization of Nigeria and Nigerian Stock
Exchange;
7.Due incorporation of the company;
ii. Business Profile 8.Contents of memorandum and articles of association;
9.The company’s minimum issued share capital;
10.Company resolutions and the minutes of its meetings;
iii. Employees 11.Keeping of statutory books and records;
12.Filing of returns;
iv. Intellectual Property and Technology Issues 13.Corporate properties of the company and encumbrances
thereat;
14.Any pending litigation involving the company;
v. Litigation Analysis: 15.Any labor issues with employees;
16.Any contingent liabilities of the company;
vi. Corporate Searches 17. Its business profile;
18.Accounting records;
19.Tax liabilities of the company;
vii. All statutory books of the company 20.Product development and competitors; and
21.Capital investments, profitability, margin/price earnings
ratio and review of forecast of trading results.

2. FINANCIAL DUE DILIGENCE

This will cover the following:
i. Accounting records of the company.
ii. Ability to raise short term and long-term capital.
iii. Tax liabilities of the company and tax implications of the proposed deal.
iv. Value of assets and liabilities to be acquired.
v. Product development and competitors.
vi. Capital investments, profitability, margin/price, earning ratio, review of
forecast of trading results.
232
 vii. Comparison of the company’s historic trading result and current trading
position, contrasted with its budgets.

DOCUMENTS IN PACKAGING MERGER TRANSACTION (focus)

1. Exclusivity Agreement:
this is executed where the target company agrees not to sell its assets or
shares to anyone else during a period of time set by the parties. This
document is relevant in the purchase of public companies.

2. Memorandum of Understanding:
this document is necessary when parties reach an agreement about the
terms of transaction but before drafting the binding agreement.

3. Confidentiality Agreement:
this is a document that is primarily binding and it constitutes the parties
agreement in respect of the way information and document will be
handled. It also constitutes issues about disclosure and disposition after
the deal proceeds.

4. The Scheme of Merger:

this document provides a mechanism for adjusting the exchange ratio in
the event that at post-merger, any of the representations made by a party
is untrue and materially affects the agreed valuation and exchange ratio.

Principal provisions you will include in a merger agreement. August 2011

1. Parties to the merger
2. Basic terms of the agreement
233
 3. Representation and warranties
4. Employee’s matters
5. Financial statements
6. Covenants and undertakings

THE ROLE OF PROFESSIONALS IN CORPORATE RESTRUCTURING

1. SOLICITORS TO THE MERGER – August 2011
a) Review legal documentation and provide a legal opinion on actual
and/ or threatened litigation.
b) Conducting due diligence
c) Drafting the merger agreement
d) Ensure the passing of all necessary resolutions required to effect the
merger;
e) Obtain court hearing date for the proposed merger.
f) Obtain court order sanctioning the scheme.
g) Conduct the order of proceedings at the court ordered meetings.
h) Assist with obtaining shareholders support for the passing of necessary
resolutions at the court ordered meetings.

2. THE AUDITOR:
a) Provide historical financial information on the entities involved.
b) Assist merging entities with the preparation of financial forecasts.

3. COMPANY SECRETARY/LEGAL ADVISER:

a. Ensures that all relevant resolutions are passed and drafted and signed.
b. Organize board meetings for requisite proposals.

234
c. They coordinate meetings with various classes of shareholders and third
parties.
d. Ensure that quorums are formed at the various meetings; court ordered
meetings or convened by the company.

235
 CHAPTER FOURTEEN
COMPANY PROCEEDINGS AND INVESTMENT DISPUTE
RESOLUTION
JURIDICTION IN COMPANY PROCEEDINGS (January 2020 Q 6a)
a. The Federal High Court: It has exclusive jurisdiction on company
proceedings and administration of the CAMA Section 251(1)(e) CFRN. The
most appropriate or default mode of commencing the action is by Originating
Motion

b. The Investment and Securities Tribunal (IST) has exclusive jurisdiction

over all investment disputes arising from capital market operations,
shares and stock or operating licenses. This is mostly commenced by
Originating Applications.

c. State High Court: Has jurisdiction over all commercial disputes arising from
contracts between a company and another company or individuals. The best
mode for commencing such action is by Writ of Summons.

d. National Industrial Court: it has jurisdiction over all disputes between the
company and its employees. The best mode to adopt depends on the cause of
action, if it is contentious then use Writ of Summons.

POSER
checklist of a least three items each on the jurisdiction of the FHC and the
IST. 2009 No 4(b)

236
Federal High Court:
1. Operation of the provisions of CAMA
2. Interpretation of CAMA
3. Winding up of companies
4. Internal affairs relating to running and management of the company
5. Matters relating to appointment and removal of the Directors

Investments and Securities Tribunal:

1. Investment disputes between capital market operators;
2. Investment disputes between capital market operators and their clients;
3. Investment disputes between an investor and a securities exchange or
capital trade point or clearing and settlement agency;
4. Investment disputes between capital market operators and self regulatory
organizations

LAWS/RULES GOVERNING COMPANY PROCEEDINGS IN NIGERIA

1. Companies Proceedings Rules 1992;
2. The Companies Winding Up Rules;
3. Federal High Court (Civil Procedure) Rules, 2018;
4. Federal High Court Act;
5. Investments and Securities Act (ISA), 2007
6. Companies and Allied Matters Act (CAMA)
7. Securities and Exchange Commission Rules, 2013; and
8. Investments and Securities Tribunal Procedure Rules, 2003
9. Arbitration and Mediation Act

237
Modes of Commencement of Corporate Litigation: See Rule 2(1) and rule 19
Companies Proceedings Rules
1. Originating Summons
2. Originating motion
3. Petition
4. Originating Application (Investment and Securities Tribunal only)

ORIGINATING SUMMONS
The default mode of commencement of action in corporate litigation is by
originating summons; UNIPETROL (NIG) PLC v. AGIP (NIG) PLC. Summons
is “commanding” in nature.
It involves interpretation clarification or declaration of legal/documentary
prescriptions. An application is to be made by originating summons.
Examples of proceedings requiring Originating summons are:
1) Application for an extension of time within which to register a charge
under section 230 CAMA
2) Production of documents and evidence of inspection under section 360(6).
3) Application to Court for Administration Order under Section 450 CAMA
4) Commencing a derivative action under 346(1) CAMA

ORIGINATING MOTION – FORM 2

This is “praying” in nature. It contains mixture of both law and disputed facts.
In corporate litigation, originating motion is mostly used where there is need to
remedy an error or omission or benefit from set rules.

238
Applications To Be Made By Originating Motions (FOCUS)
Under Rule 3(a-g) of the Rules, the following applications under the Act
(Companies and Allied Matters Act) shall be made by originating motion.
a. Application for an order declaring that the affairs of a company ought to
be investigated by an inspector appointed by the CAC under section 358

b. Rectification of Company’s Register of Members under S. 115(1) (focus)

c. Application for an order directing that any shares or debentures of a

company shall cease to be subject to restrictions imposed under section
372(3)

d. Application for an order declaring dissolution of a company which has

not been wound up to have been void under section 691(1)

e. Application for relief from consequences of breaching the requirements

of a private company under Sec 23(2)

f. Extension of time to file documents at CAC section 51(9), 154 (3) or 355(5)

g. Inquiry into refusal to produce document or respond to summons section 362(3)

and (4)

PETITION – FORM 3
The nature of petition is “complaining/requesting” this is brought in the cases
which are specifically provided in the Rules.

239
Applications To Be Made By Petition (FOCUS)
Under Rule 4 Companies Proceedings Rules, the following applications under the Act
(Companies and Allied Matters Act) shall be made by originating petition –
1) An order for cancellation of a company’s amended objects. S. 51(1)
and (2)

2) Cancellation of alteration of condition in MEMO - section 52(1)

3) Cancellation of a special resolution to re-register PLC as LTD S.

64(1)

4) Confirmation of reduction of share capital - Section 132(1)

5) Cancellation of variation of rights attached to class of share S. 167(1)

6) Application for Relief on ground of unfairly prejudicial and

oppressive conduct S. 354(1) CAMA

7) Application to confirm a reduction of the share premium account of

a company under section 145(3) CAMA

8) Application to confirm a reduction of the capital redemption reserve

fund of a company under section 182 (4) CAMA

9) Application for an order restoring the name of a company to the

register where the application is made with an application for the
winding up of the company under section 692(6) CAMA
240
 10) Application for relief from liability of an officer of a company or a
person employed by a company as auditor Under section 738 CAMA

Matters relating to Company documents (Evidential issues)/requirements

a. Common seal- S. 98 CAMA
b. Official seal- S. 99 CAMA
c. Authentication of documents- Section 101 CAMA, See SPDC (Nig) Ltd
v Allaputa
N.B
Effect of Defect in Commencing with improper Originating Process
It’ll be treated as a mere irregularity Agip (Nig.) Ltd v Agip Petrol Int’l , S. 18
Companies proceedings rules

TITLING/HEADING OF CORPORATE SUIT

IN THE FEDERAL HIGH COURT OF NIGERIA

IN THE ……….. JUDICIAL DIVISION
HOLDEN AT …..
SUIT NO………. Commented [MOU77]: FORM 1

IN THE MATTER OF (NAME OF COMPANY Ltd/Plc)

IN THE MATTER OF THE COMPANIES AND ALLIED MATTERS ACT 2020
BETWEEN:
XYZ LIMITED…………………………………………APPLICANT
AND
CORPORATE AFFAIRS COMMISSION…………………RESPONDENT

241
Including all affidavits, notice and all processes in the proceedings

SERVICE OF ORIGINATNG PROCESSES ON COMPANIES - MCQ

Proper Service - Section 104 CAMA Commented [MOU78]: A court process shall be served on a
company in the manner provided by the rules of court and any other
document may be served on a company by leaving it at, or sending it
a) By serving a Director, Secretary or other principal officer of the company by post to, the registered office or head office of the company

b) By leaving it at the registered office of the company

MTN (Nig.) Communications Ltd v Bolingo Hotel & Towers Ltd .
N.B
Ors 7 Rule 8 Abuja Civil Procedure rules provides that service should be at the
head office or any other place of business of the organisation within the
jurisdiction of the Court.

ADVANTAGES OF ADR IN COMPANY DISPUTES

a. Alternative Dispute Resolution (ADR) is generally faster and less expensive.
b. It is based on more direct participation by the disputants, rather than being run
by lawyers, judges, and the state.
c. This type of involvement is believed to increase people's satisfaction with the
outcomes, as well as their compliance with the agreements reached.
d. Most ADR processes are based on an integrative approach.
e. They are more cooperative and less competitive than adversarial court-based
methods like litigation. For this reason, Alternative Dispute Resolution (ADR)
tends to generate less escalation and ill-will between parties.

ETHICAL ISSUES INVOLVED IN COMPANY PROCEEDINGS

1. Duty not to forge documents in relation to the proceedings involving
companies in consonance with Rule 1 RPC 2007

242
 2. Duty to ensure that the right originating process is applied to client’s action
R16 RPC
3. Duty of confidentiality
4. Duty to appear in litigation on behalf of client corporate or individual.
5. Duty not to aid unauthorized practice of law.

INVESTMENT DISPUTES
Investment dispute includes disputes arising out of the operation and application of
ISA and regulations made therefrom such as: FOCUS

a. Capital market operators

b. capital market operators and their clients
c. capital market operators and self-regulatory organisations
d. an investor and a securities exchange or capital trade point or clearing and
settlement house.
e. the SEC and self-regulatory organisations
f. capital market operator and the SEC.
g. an issuer of securities and the SEC
h. arising from the administration, operation and management of collection
investment schemes.

The Investments and Securities Tribunal (IST) was established under S. 274 ISA.
The IST is a tribunal established to give expeditious hearing of capital market
issues.
NOTE the following about IST focus
1. The IST is deemed to be a civil court (it has no criminal jurisdiction).
2. The members of the IST are appointed by the Minister of Finance
3. The IST Rules is made by the Chief Judge of the Federal High Court.
243
 4. The IST is composed of 10 members appointed by the minister of finance
headed by a Chairman whose a legal practitioner of not less than 15 years Commented [MOU79]: COMPOSITION OF THE
TRIBUNAL:

PQE. – S. 275 The tribunal shall consist of 10 persons to be appointed by the

minister as follows;
5. When hearing cases, it sits with 3 members presided over by a legal a.A full time Chairman a legal practitioner of not less than 15
years PQE. – S. 275;
practitioner. S. 275 & 276 (Quorum)
b.4 other members of which 3 must be legal practitioners; and

6. It has appellate jurisdictions over the decisions of the Administrative c.5 other part time members.

Proceedings Committee of SEC

7. Proceedings of the tribunal may be held in camera as and when deemed

appropriate in the interest of the public. S. 290 (3) & (4) of IST

8. The onus of proof shall be on the applicant or appellant as the case may be
9. The judgement may be:
a) Fines
b) Suspensions, withdrawal of registration or licenses
c) Specific performance
d) Restitution

ENFORCEMENT OF AWARD OR JUDGMENT OF THE TRIBUNAL -Bar

final August 2022
Shall be enforced as if it were a judgment of the of the Federal High Court,
upon registration of a copy of such award or judgment with the Chief Registrar of
the Federal High Court by the Tribunal S. 293 (3) ISA

AIMS AND OBJECTIVES OF THE IST

1. Expedient and affordable dispute resolution mechanism
2. Protect the integrity of the capital market and stable economy
244
 3. Avoids delays and technicalities.
4. Efficient resolution of investments and capital market disputes with fairness,
flexibility and transparency”

JURISDICTION OF THE IST (MCQ Dec 2020 No. 3)

1. The jurisdiction of the Investment and Securities Tribunal is enumerated in
Section 284/294 of the Investments and Securities Act.
2. It has exclusive original jurisdiction over disputes arising from the
administration, management and operation of collective investment
schemes.
3. The IST is also empowered to adjudicate on pensions disputes in Nigeria-
S. 93 Pension Reform Acts.
4. It has appellate jurisdiction over APC of SEC disputes
5. A person aggrieved by any action or decision of SEC, may institute an action
in the tribunal or appeal against its decision within 30 days, provided the
person shall give SEC 14 days’ notice in writing of his intentions to institute
an action or appeal against its decision – S 289 of ISA.
6. IST has no criminal jurisdiction. S. 304 provides that, where in the course
of its investigation, the Commission discovers evidence of possible
criminality, the Commission shall be obliged to pass such information to
the appropriate criminal prosecuting authorities, such as, the office of the
AGF/AGS and the EFCC.

MODE OF COMMENCEMENT OF ACTION (MCQ)

The mode of commencing action in IST is by an ORIGINATING APPLICATION.

245
TIME FRAME FOR CONCLUDING ACTIONS
Thus, it is required to conclude any proceedings before it within 90 days of
commencement of the action. (MCQ)

TIME LIMIT FOR FILING APPEALS (MCQ)

Appeal against the decision of the IST lies to the Court of Appeal within 30 days
from the date of making of the order - S. 289(2); S. 304 ISA

APPEAL OF IST DECISIONS

Any appeal against its judgment lies directly to the Court of Appeal on points of
law only (Dec 2020 MCQ Q 10).
It can equally go further to the Supreme Court; S.295 and 297 ISA respectively.

NOTE that the decision of IST is called an ‘Award’ and it is treated as if decision
of the FHC and the Federal High Court has Jurisdiction to enforce an award made
by the IST.

ADMINISTRATIVE PROCEEDINGS COMMITTEE OF CAMA

Establishment –Section 851 CAMA
Commented [MOU80]:
Objectives/Functions PROCEEDINGS OF THE MEETING OF THE
ADMINISTRATIVE PROCEEDINGS COMMITTEE

a. Provide the opportunity of being heard for persons alleged to have 1.The chairman presides over the meetings of the Committee
and at any meeting the chairman is absent, the members
contravened the provisions of the Act and its Regulation. present will appoint one of their members to preside over the
meeting.

b. Resolve disputes or grievances arising from the operations of CAMA 2.The quorum at the sitting of the Committee is 4 members
present.
c. Impose administrative penalties for contravention
3.Issues are determined by the Committee by simple majority
of the members present and where there is a tie, the chairman
or the member presiding is entitled to a casting vote (second
vote).
COMPOSITION OF APC – S. 851 (1) – (3)
4.The Committee regulates its proceedings subject to the
a. the Registrar-General who shall be the Chairman provisions of S.851 of CAMA.

246
 b. 5 representatives from the operational departments of the Commission,
not below the grade level of a director, 1 of whom shall be from the
Compliance Department of the CAC
c. a representative of the Federal Ministry of Industry, Trade and Investment
not below the grade level of a director.
d. A secretary who shall be an officer of CAC and a legal practitioner of at
least 10 years PQE
e. Such number of persons as the APC may appoint at any of its meetings, as
observers, representatives of relevant associations or associations of
shareholders registrars or trustees

PERSONS THAT THE COMMITTEE MAY CO- OPT AT ITS MEETINGS

a. Representatives of association of shareholders;
b. Representatives of association of registrars; and
c. Representatives of association of trustees – 851(2) of CAMA
NB:
Members so co-opted do not count in determining the quorum and do not vote at
such meetings.

QUORUM - 857(6)
4 members present while the determination of issue shall be by simple majority
of members present and where there is equality of votes, the chairman or the
member presiding shall be entitled to a casting vote.

PROCEEDINGS – Reg 45
The proceedings of the committee shall be guided by the Evidence Act

247
VENUE – Reg 44 CR 2021
The venue of the sittings of the Committee UNLESS otherwise indicated is the
head office of Corporate Affairs Commission.

JURISDICTION – Reg 38 Companies regulation 2021

The APC may adjudicate on non-criminal disputes arising from the operations
of the Act, and in particular relating to –
1. names of companies, limited liability partnership, limited partnerships,
business names and incorporated trustees.
2. shares in private companies, and
3. appointment or removal of directors, partners or trustees.

SANCTIONS THAT THE ADMINISTRATIVE PROCEEDINGS

COMMITTEE MAY IMPOSE - 851(10)
a. Imposition of administrative penalties;
b. Suspension or revocation of registration; or
c. Recommendation for criminal prosecution if matters brought before it
reveals any criminal act or conduct -

248
 CORPORATE INSOLVENCY
Corporate insolvency is inability of a company to pay its debts.
The principal law on corporate insolvency in Nigeria: The Companies and
Allied Matters Act (CAMA)
Applicable Regulations
1) Insolvency Regulations, 2022
2) Companies Regulations, 2021

Qualifications of Insolvency Practitioner - S. 705 (1)

1) Possession of Degree in law or accountancy or such other relevant
discipline from any recognised university or polytechnic
2) Minimum of 5 years post qualification in matters relating to insolvency
3) Must be persons authorised to act as insolvency practitioners by virtue of
membership certificate issued by BRIPAN; or as members of other
professional bodies permitted to undertake the practice of insolvency
4) Must hold an authorization granted by CAC

ACCREDITATION OF INSOLVENCY PRACTITIONERS - Section 705,

Reg 24
Members of the following professional bodies may apply to the CAC for
accreditation as insolvency practitioners –
1. Business Rescue and Insolvency Practitioners Association of Nigeria
(BRIPAN)
2. Nigerian Bar Association;
3. Institute of Chartered Accountants of Nigeria;
4. Association of National Accountants of Nigeria; and
5. Institute of Chartered Secretaries and Administrators of Nigeria.
249
Requirements for accreditation shall include the following – Reg 24 (2)
a. Duly completed Form CAC - MISC 02
b. Payment of prescribed application fee;
c. Evidence of membership of relevant professional body;
d. Evidence of practice as insolvency practitioner for not less than 5 years
immediately preceding the date of application
e. Evidence of eligibility to practice for the current year; and
f. Evidence of completion of accredited course of continuous learning
administered by the relevant professional body in the preceding year (in the
case of renewal accreditation).

Company Voluntary Arrangements - FOCUS

Company Voluntary Arrangements (CVA) are usually employed when a
company is unable to pay its debts
The company directors may make a proposal to its creditors for a composition
in satisfaction of its debts or a scheme of arrangement of its affairs (known as
“Voluntary arrangement”) – S. 434 (1) CAMA By this procedure, an insolvent
company can have a legally binding voluntary agreement with its creditors

Procedure for CVA

1) Proposal of CVA (appropriate where the company is not in administration or
liquidation)
- This is followed by the appointment of a Supervisor of the CVA where the
nominee is not the liquidator or the administrator of the company
2) Presentation of report by the person nominated as CVA
3) Summoning of meetings (meetings of the company and of the creditors)

250
 4) Decisions at meetings – This involves consideration of whether to approve
the CVA, with or without modification Commented [MOU81]:
NON-PERMITTED MODIFICATIONS – SEE S 347 (2) – (4) CAMA

5) Approval of the CVA: As may be reached by both meetings (that is, the a)Modification by which the proposal ceases to be a CVA as
defined in s. 434 CAMA
creditors’ meetings and the company meeting) and decision of the court in
b)Proposal or modification which affects the rights of a secured
creditor of the company to enforce his security, except with the
that regard concurrence of the creditor concerned

6) Effect of approval c)Proposal or modification under which any preferential debt of

the company is to be paid otherwise than in priority

7) Challenge of decisions d)Denying a preferential creditor his entitlement to the same

proportional payment as other preferential creditor without
8) Implementation of proposal obtaining his approval

Commented [MOU82]:
The Shortcomings of Company Voluntary Arrangements If the decision taken by the creditors’ meeting differs from that
taken by the company meeting, a member of the company may
apply to court – S. 438 (3) & (4) CAMA
• When creditors are summoned to a meeting, those not in favour of CVA
The court may make an order:
may take steps to defeat the procedure, like: a)For the decision of the company meeting to have effect
instead of the decision of the creditors’ meeting; or

1) re-possession of goods in the custody of the company, under a hire b)make such other order as it deems fit. – s. 438 (5) CAMA

purchase agreement,
2) appointment of receiver under ss. 552 and 553 or
3) Presenting a winding up petition against the company for inability to
pay its debt (s. 571 (d) CAMA if the conditions under s 572 CAMA are
met )

Administration of Companies
Administration is a statutory insolvency procedure with the primary purpose of
rescuing an insolvent company instead of the company going into liquidation
Effect of Administration order
1) Dismissal of winding up order – s. 477 (1) CAMA
2) Vacation of office by receiver appointed by the holder of a floating charge or
by the court - s. 478 (1) CAMA

251
3) No resolution may be passed or order made for winding up of the company
except an order made on a petition presented on the grounds of public
interest as may as may be prescribed by the CJ or under certain enactments –
s. 479 (2) & (3) CAMA
4) No steps may be taken to enforce security over the company’s property
except with the consent of the administrator or the court – s. 480 (2) (a)
CAMA
5) No repossessing of goods under hire purchase agreement except with the
consent of the administrator or the court - S. 480 (2) (b) CAMA
6) No right of forfeiture by re-entry of landlord except with the consent of the
administrator or the court - S. 480 (3) CAMA
7) No legal process except with the consent of the administrator or the court –
S.480 (4 CAMA)
8) Disclosure of administration and administrator – All businesses issued on
behalf of the company must state the name of the administrator the name of
the administrator; and that the affairs, business and property of the company
are being managed by the administrator - s. 482 (1) CAMA

252
 CHAPTER FIFTEEN
WINDING UP AND DISSOLUTION OF COMPANIES
Winding up is the process of liquidation of the assets of a company for the benefits
of its creditors, members and employees in accordance with certain rules of
priority.
RELEVANT LAWS
1. Companies and Allied Matters Act, 2020
2. Winding Up Rules, 2001
3. Federal High Court Act and Civil Procedure Rules
4. Investments and Securities Act – empowers SEC, as may be appropriate
to revoke the license of a market operator
5. Securities and Exchange Commission Consolidated Rule, 2013
6. Banks and Other Financial Institutions Act – S. 2, where the bank can
revoke a banking license
7. Failed banks (recovery of debts) and financial malpractices in Banks
Act – S. 18, where a body corporate is convicted of an offence under the Act
it may be wound up
8. Nigerian Communication Commission Act – S 14, empowers NCC to
revoke operating license of a communications company
9. National Insurance Commission Act
10. Companies Proceedings Rules, 1992

REGULATORY BODIES/AGENCIES in Winding up-

1. CAC – It can present petition for winding up it is a custodian of company
records-A company must file returns during winding up
2. FHC: Court with jurisdiction to entertain winding up petition.
3. SEC – Capital market operators
253
 4. Nigerian Exchange Limited – regulates all listed authorities
5. Nigerian Insurance Commission
6. Nigerian Communication Commission
7. Central Bank of Nigeria
8. Administrative proceedings committee of SEC – regulates capital markets
operators
9. Investment and securities tribunal
10. Nigerian deposit insurance corporation – regulates banks

TYPES/FORMS/MODES OF WINDING UP – MARCH 2021, Section 564

1. Compulsorily Winding up by the court.
2. Voluntary winding up:
a. members or
b. creditors
3. Winding up subject to the supervision of the court

Note: winding up begins when a petition is filed at the FHC or when the
company passes resolution for winding up

COMMENCEMENT OF WINDING UP PROCEEDINGS

It depends on the type of winding up as follows:
a. If a members voluntary winding up, it is deemed to commence at the
date of passing the special resolution. S. 622
b. If it is compulsory winding up by the court it is deemed commenced, on
the date of the presentation of the Petition. Mercantile Bank of Nigeria
PLC v. Nwabude, S. 578(2).

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EFFECT OF COMMENCEMENT OF WINDING UP PROCEEDINGS
a. No attachment of a company’s property is allowed
b. No judgment debt can be claimed
c. No more carrying on of the business of the company
d. Its properties cannot be disposed off nor can its shares be transferred
unless such is sanctioned by the Court
e. The directors’ power to run the company ceases
f. No transfer of shares
g. Stay of action or proceeding against the company unless with leave of
court

EFFECT OF DISSOLUTION ORDER

a. Once a company is fully wound-up and dissolved, it loses its legal entity
and ceases to exist(dies) in law
b. The incorporated name cannot be used any longer.

COMPULSORY WINDING UP BY THE COURT

The court with jurisdiction to wind up a company is the Federal High Court,
within whose area the registered or the Head office of the company is situate – S.
570.

THE GROUNDS FOR WINDING UP BY THE COURT Section. 571

(August 2017 Q 1B, April 2018 Q. 6, August 2019 Q 5c)
1. Where the company has by special resolution resolved that company be
wound up by court
2. Default is made in delivering the statutory report to the CAC or in holding
the statutory meetings (Applicable only to public companies)
255
 3. The number of members has reduced below two for companies that have
more than one shareholder
4. The company is unable to pay its debt (minimum debt threshold is
200,000,) n.b service of statutory notice
5. The court is of the opinion that it is just and equitable that the company be
wound up
6. The condition precedent to the operation of the company has ceased to exist
BCC Ltd v. Ado Ibrahim & Co. Ltd and Unifam Industrial Ltd v. Oceanic
Bank (Nig) Ltd

Persons that can Petition for Compulsory Winding Up (April 2018 Q 6,

August 2019 Q 5d, Dec 2020 Q 2c MARCH 2021) - Section. 573
1. The company itself
2. A creditor, including a contingent or prospective creditor of the
company;
3. The official receiver;
4. A contributory;
5. A trustee in bankruptcy, personal representatives of creditor,
contributory.
6. The CAC under Section 366
7. A receiver if authorized by the instrument under which he was
appointed; or
8. By all or any of those parties, together or separately

PETITION FOR WINDING UP ON THE GROUND OF FAILURE TO

DELIVER STATUTORY REPORT – FOCUS - S. 573 (2) (b).
For a petition brought on this ground to be valid, two conditions must be fulfilled:
256
 1. The petition must be brought by a shareholder or a group of shareholders.
2. It must be brought, before the expiration of 14 days, after the last day
on which the meeting ought to have been held –
NOTE: This ground of winding up only applies to public Companies.

WHAT AMOUNTS TO INABILITY TO PAY DEBTS; (2009) S. 572, Unifam Commented [MOU83]:
SHORTER FORMANT
1.There is an unpaid uncontested debt that is due.
Ind Ltd v Oceanic Bank
2.The company must be owing a debt N200k and above.
A company would be deemed to be unable to pay its debts if:
3.A STATUTORY NOTICE of the debt, signed by the creditor,
must have been served on the company.
1) The creditor to whom the company is indebted in a sum exceeding N200,
4.The company has, for a period of 3 weeks, neglected to pay
000 (200K) has by a notice in writing demanded for the debt to be paid. The the sum, which is now due.

5.Court is satisfied of the inability of the company to pay debt.

company has for a period of 3 weeks thereafter neglected to pay, then the Unifam Ind. Ltd. V. Oceanic Bank.

company is unable to pay its debts. - Ado Ibrahim & Co. Ltd v. B.C.C. Ltd. Commented [UCHIHA84]: The sum is to be determined by a
regulation issued by the CAC” pursuant to the Business facilitation
essential ingredients must co-exist. They are as follows: Act

(a) There must be a debt in existence; Commented [MOU85]:

Be very careful of the ingredients in the scenario make sure these
(b) The debt must be due; conditions can be deduced from the facts before you choose this
option AND THE SUM MUST ALWAYS BE 200K IF LESS THAN 200K
THE COMPANY CANNOT BE ADJUDGED TO BE UNABLE TO PAY ITS
(c) There must have been a formal demand for the debt; and DEBT

(d) There must be inability on the part of the company to pay the debt.

2) Execution or other processes issued on a judgment or order of any court in

favor of a creditor of the company is returned unsatisfied in whole or in part;

3) The court is satisfied that the company is unable to pay its debts.

NOTE:
The BFA substituted the expression “a sum exceeding N200,000”, to the words “a
sum to be determined by a regulation issued by the Commission”

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EXCEPTIONS- Section. 572 CAMA
A company will not be deemed to be unable to pay its debt if:
1. The debt to a creditor is not due
2. No evidence of due demand for payment was made
3. If there is a bonafide dispute of the actual amount due on the debt
4. There is no evidence that the company is insolvent.
NB
The demand is a statutory correspondence made under the hand of the creditor
and it must last for a period of three weeks before a winding up action can be
brought. S. 572(a) CAMA.
When the amount owed becomes contentious, a petition for winding up will
be refused Tate Industries Plc. v Devcom M.B. Ltd,
in such cases, the matter will be referred to the SHC for the determination of
the amount owed. (EXAM focus)
You can be asked to Draft the petition for winding up on behalf of a person
claiming to be owed by a company.

WINDING UP ON JUST AND EQUITABLE GROUNDS S. 571(f) of CAMA,

the following must exist:
1. The company is formed for fraudulent purposes;
2. The company is a “bubble” i.e. where a going concern does not have any
business or assets;
3. Unfairly prejudicial or discriminating acts against the minority or other
members;
4. If it is a small going concern (small company), ground employable in the
dissolution of partnership is enough to dissolve the company.

258
A petitioner must show:
1. That as a contributory, he has no other remedy apart from the winding
up of the company.
2. That he is not acting unreasonably.
3. That there will be assets for distribution upon winding up. Commented [MOU86]:
PROCEDURAL STEPS IN COMPULSORY WINDING UP BY
4. That the petition is not opposed by the majority of the shareholders of THE COURT (Exam Focus)

STEP 1: File a Petition at the Federal High Court

the company – BCC Ltd v. Ado Ibrahim. -The Petition shall be Presented (not Filed) at the Court registry.
-Thereafter, time and place are appointed for hearing. – Rule 16
Companies Winding-Up Rules (CWR)

STEP 2: File Affidavit Verifying the Petition

PROCEDURE FOR COMPULSORY WINDING UP – -Petition must be verified by affidavit (by the petitioners or in the
case of a company, by a director, secretary or other principal officer).
-To be sworn and filed within 4 days after the petition is presented -
The procedure is summarized as follows: Rule 18 Companies Winding-Up Rules (CWR)

1. Filing of the Petition at the FHC for winding up with a verifying STEP 3: Service of the Petition
-Petition must be served on the company - Rule 17 Companies
Winding-Up Rules (CWR)
affidavit
STEP 4: Advertisement of the Petition
-Court makes order to this effect; and
2. Service of the Petition and verifying Affidavit on the Respondent -Such petition must be advertised 15 days before hearing or else, it
will be struck out - Rule 19 Companies Winding-Up Rules (CWR)
with proof of Service STEP 5: Filing of the Memorandum of Compliance
-Petitioner, on the next announced date, must satisfy the court that the
3. Obtain leave of court to advertise petition and advertise same petition had been duly advertised - Rule 22 Companies Winding-Up
Rules (CWR)
4. File Memorandum of Compliance. STEP 6: Filing of Notice of Intention to Appear:
-Everybody wishing to appear on the hearing must notify the
5. The Respondent will then file a Notice of intention to appear, petitioner in this regard - Rule 23(1) and (2) Companies Winding-
Up Rules (CWR)

Memorandum of Appearance and an affidavit in opposition to the STEP 7: Appointment of Provisional Liquidator:
-The Court appoints a Provisional Liquidator on such terms as it
petition. thinks fit - Rule 21 Companies Winding-Up Rules (CWR)
- Has the same power as the liquidator to preserve the assets of the
company pending the determination of the winding up proceedings –
6. The petitioner files a Reply to the Respondent’s processes. Gen & Aviation Service Ltd v. Thalhal.

STEP 8: Filing of Affidavit In Opposition and Affidavit in Reply:

7. The court will appoint a Provisional Liquidator or if none was appointed, -To be filed by the respondent within 10 days of the service of the
petition on him;
the official receiver shall become the provincial liquidator. -Or by any other party within 15 days of the advertisement of the
petition - Rule 25 Companies Winding-Up Rules (CWR)
-Reply to an affidavit in opposition, within 5 days of receipt from the
8. Filing and hearing of Summons for Security for Costs and list of Persons petitioner.

Appearing. STEP 9: Filing of Summon for Security for Costs

9. Hearing of Petition and making of winding-up order STEP 10: Filing of List of Persons Appearing

STEP 11: Hearing of Petition:

10. Service of winding-up order on the Respondent. -Dismiss
-Adjourn the hearing conditionally or unconditionally
-Or make the interim order as it thinks fit

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 11. Application for dissolution by the liquidator and the order of dissolution
made by the court – S. 617
12. Delivery of the copy of the order to CAC within 14 days and CAC shall
make a note of the minute of the dissolution of the company in its books.
S 617(2)

NB: An aggrieved party may appeal to the court of appeal against any order made
by the court in the course of winding up and dissolution of the company – s. 619

STEPS AFTER WINDING UP ORDER IS MADE

a) Service of Winding up order
b) Delivery of Statement of Affairs to the Official Receiver by the Director or
Secretary of the Company – Section 583 CAMA.
c) Official Receivers Preliminary Report – Section 584 (1) CAMA

Dissolution of the Company

If the affairs of the company that has been fully wound up, the liquidator makes an
application in that behalf, The court shall then order the dissolution of the
company, and it shall be dissolved from the date of the order. Notice of dissolution
to Corporate Affairs Commission within 14 days of the dissolution order and
the company is struck off the register. See Section 617 CAMA
Power of the Court to Void a Dissolution
This may be done within two years of the dissolution of a company.
-On the application of:
1. The Liquidator or,
2. Any other interested person
Notice to CAC within 7 days of order voiding dissolution. See Section 691.
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Documents to be Delivered to CAC During Winding Up by the Court
1. Special resolution for winding up by the court, pursuant to Section 571 (a)
CAMA (where applicable) to be filed at CAC within 14 days of passing.
2. Certified True Copy (CTC) of court order for winding up.
3. Publication of notice of appointment of the liquidator in the gazette or two daily
newspapers.
4. Liquidators notice of his appointment, to be filed within 14 days of his
appointment.
5. Liquidators account of receipts and payments at least, twice a year, which shall
be in duplicate and verified by statutory declaration.
6. Certified True Copy (CTC) of court orders for dissolution of company.
7. Updated Annual Return.
8. Original Certificate of Incorporation (Or CTC) for cancellation
9. Payment of Fees.

VOLUNTARY WINDING UP - S. 620 CAMA

Grounds for voluntary winding up
A company may be wound up voluntarily:
1. When the period, if any fixed for the duration of the company by the
articles expires,
2. When the articles provided that the company to be dissolved upon the
happening of an event and the event occurs
3. When the company in a general meeting has passed a resolution
requiring the company to wound up voluntarily.
4. If the company resolves by special resolution that company be wound up
voluntarily.
261
if a company passes a resolution for voluntary winding-up it must, within 14 days
after the passing of the resolution:
1. give notice of the resolution by advertisement in the Federal Government
Gazette or
2. two daily newspapers and
3. to the Commission.

POSER:
What type of resolution will be passed for Members’ voluntary winding up and list
the circumstances when Ordinary Resolution can be passed for voluntary winding
up of a Company? 2010 No 4(f)
The type of resolution to be passed is a special resolution, but in some
circumstances, it may also be by an ordinary resolution.
Ordinary resolution may be passed for voluntary winding up in the following
circumstances:
Ø When the period, if any fixed for duration of the company by the Articles of
Association
Ø The event, if any occurs on occurrence of which the articles provided that
the company is to be dissolved
Ø When the company has accomplished its purpose.
Draft a resolution for members’ voluntary winding up. 2010 No 4(i)

TYPES OF VOLUNTARY WINDING-UP

Voluntary winding-up is of two types, namely –
1. Members voluntary winding-up; and
2. Creditors’ voluntary winding-up. – Section 625(4)

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 MEMBERS VOLUNTARY WINDING-UP
This is where a statutory declaration of solvency shall be made by the directors to
the effect section 625(4).
Procedure For Members’ Voluntary Winding-Up (August 2019 Q 5e, Dec
2020 Q 2a) – Section . 620-630
1. A company passes a special resolution to wind up voluntarily
2. Statutory declaration of solvency duly signed by majority of the directors
embodying statement of the company’s asset and liabilities, to be filed at
CAC within 5 weeks of its making
3. Special resolution for voluntary winding up signed by a director and
secretary or two directors, to be passed within 5 weeks of making of the
statutory declaration of solvency, and filed with CAC within 14 days of its
passage
4. Publication of Notice of Appointment of liquidator in Gazette or two daily
newspapers
5. Resolution for appointment of liquidator
6. Notice of appointment of liquidator to be filed with CAC within 14 days
of the appointment
7. Return of final meeting and account of liquidation as laid before and
approved by the meeting, to be filed with CAC within 7 days after date of
the final meeting.
8. Original certificate of registration for cancellation -Section .630 and 633(2)

What is Declaration of Solvency and what are the conditions to be fulfilled in

making a declaration of solvency. 2010 No 4(h)
is a statutory declaration made by the Directors or Majority of the Directors of
a Company to the effect that, they have made full inquiry into the affairs of
263
the company and are of the opinion that the company will be able to pay its
debts in full within a period not exceeding 12 months from the commencement
of the winding up of the company. Section 625

The conditions to be fulfilled in making a declaration are as follows:

1. The declaration must be made within five (5) weeks immediately
preceding the date of the passing of the resolution for voluntary winding-
up
2. It must be delivered to the CAC within 15 days for registration.
3. Be accompanied with a statement of the company’s assets and liabilities
as at the latest date before the making of the declaration – Sect. 625 (2).

CREDITORS’ VOLUNTARY WINDING-UP

This occurs where the directors are not able to make a declaration of solvency at
the CAC – section 635, 636 and 637. (MCQ) this type of voluntary winding up is
not accompanied by a declaration of solvency by the Directors -Section 625(4).

Procedure For Creditors’ Voluntary Winding-Up –

1. Resolution for the voluntary winding-up, to be filed with CAC within 14 days
of passing
2. The publication of notice of creditors meeting in the gazette and two daily
newspapers
3. Appointment of a liquidator
4. Publication of notice of appointment of liquidators in the gazette or two
newspapers

264
5. Notice of appointment of liquidator to be filled with CAC within 14 days of the
appointment
6. Publication of notice of final meeting in the gazette and at least two
newspaper circulating in the locality where the meeting is being called
7. Return of final meeting and account of liquidation as laid before and
approved by the meeting
8. Original certificate of registration for cancellation
9. Updated annual returns
10. Updated S.733 filling where applicable
11. Payment of fees

POSER
write a reply on points of law to the contention that once a resolution for member’s
voluntary winding up is passed, that creditors can no longer be involved in the
wining up process. 2009 No 4(a)(vi)
The objection is misconceived in view of the fact that if a resolution for members’
voluntary winding up is passed and the company fails or refuses to file a
declaration of solvency, it may be converted to a creditor’s voluntary winding up
wherein the creditors will be involved.

NOTE-
If separate persons are nominated as liquidators at the separate meetings, the
person nominated by the creditors would be the liquidator–S. 473 (1) CAMA

MAJOR OFFICERS IN THE WINDING UP OF COMPANIES (Dec 2020 Q

2e)
1. Provisional Liquidator
265
2. Liquidator
3. Official Receiver
4. Receiver Manager
5. Special Manager

The Provisional Liquidator

He plays the role of the liquidator until the main liquidator is appointed. His role
ceases when the liquidator is appointed. The provisional liquidator, in winding
up, is usually the official receiver. In the case of Winding Up by the Court, the
Provisional Liquidator may be appointed anytime after the presentation of the
petition until the making of the winding up order -Section 585 (2) CAMA.

LIQUIDATOR
is a person appointed by the company or court to wind up the affairs of the
company and to distribute its assets among the creditors and contributories in
accordance with the articles.
One or more persons may be appointed as liquidator, in the event where more than
one person is appointed as liquidator by Court, the Court shall declare whether
they must act jointly or any of them can perform the acts required under Section
585 (4)
Upon the appointment of a liquidator, all the powers of the directors cease- Commented [MOU87]:
A liquidator represents the interest of the creditors, especially the
unsecured creditors. Thus, upon appointment all powers of directors
Section. 585(9) cease.

Company appoints (in voluntary winding up) or the Court may appoint liquidator.
A liquidator appointed other than the official Receiver is entitled to renumeration –
Section 585 (6) of CAMA.

266
The liquidator must, within fourteen (14) days after his appointment publish in the
gazette and in two (2) daily newspapers and deliver to the commission for
registration a notice of his appointment –section 654

POWERS OF A LIQUIDATOR IN WINDING UP BY THE COURT

The liquidator, in a winding-up by court, exercises some powers, but the powers
must be sanctioned by the court or the committee of inspection – section 588(1) &
(2). These powers include –
1. The power to bring or defend any action in the name and on behalf of
the company; Agbaoye v. Chief Federal Land Officer
2. The power to carry on the business of the company as may be
necessary for the purpose of the beneficial winding-up;
3. The power to appoint a legal practitioner or relevant professionals to
assist him in the performance of his duties;
4. The power to pay all classes of creditors in full;
5. The power to make any compromise or arrangement with creditors
or persons claiming to be creditors; and
6. The power to compromise all calls, debts and liabilities capable of
resulting in debts.
7. Make, draw or accept and endorse Bill of Exchange on behalf of the
company
8. Sell the company property by public auction or private contract
9. Execute any deed on behalf of the company.

267
Disqualification For Appointment As Liquidator
The following are persons who are incompetent to be appointed or to act as
liquidator in a winding-up by the court – Section 676 (1)
1. An infant.
2. An unsound mind.
3. A body corporate. Commented [MOU88]:
NDIC can be appointed as a liquidator

4. An un-discharged bankrupt.
5. A director of the company under liquidation.
6. Any person convicted of any offence involving:
a) fraud,
b) dishonesty,
c) official corruption
d) moral turpitude and
e) of whom there is a subsisting order to restraint fraudulent persons

OFFICIAL RECEIVER Section. 582 CAMA

An official receiver is the
a. Deputy Chief Registrar to the Federal High Court or
b. any other officer designated for that purpose by the Chief Judge of the Federal
High Court.
Duties of The Official Receiver
1. To receive the statement of the affairs of the company and to collate
information about the company- E.g., Capital Assets – Section 583 (1).
2. To conduct inquiry into the promotion, formation or failure of the company, if
need be - Section 583 (2)

268
 3. Submit a preliminary report of the company to the court (estimated assets and
liabilities of the company, reasons for failure of the company and
recommendation for further investigation) Section 584 (1).
4. He acts as a liquidator whenever there is no liquidator - Section 585 (1)
5. He may become the provisional liquidator in a compulsory winding up
process, prior to the appointment of the liquidator – Section 585(3)(b).

The Special Manager

The Special Manager is appointed in cases of winding up of a company where the
official Receiver who becomes a Liquidator is of the opinion that because of
the nature of business of the Company a Special Manager is needed. The
application may be made to the Court and the Special manager may have the
power of a receiver or manager as may be entrusted to him by the Court. Section
599 (1) of CAMA.

2. RECEIVER
A receiver is appointed by the secured creditors under the power contained in the
debenture instrument, executed by the company and the creditors. A receiver
may also be appointed by the court on the application of any creditor or debenture
holder of the company. S. 551 CAMA

A receiver need not get involved in the management of the company. He only
has an eye in the income and expenditure of the company in order to realize
assets and pay off the debt due to the creditors.

269
He has the power take possession of and protect the property, receive rents and
profits and discharge all out-goings in respect thereof and realise the security for
the benefit of those on whose behalf he is appointed – S. 556

QUALIFICATION OF RECEIVERS/MANAGERS
(a) an infant;
(b) any person found by a competent Court to be of unsound mind;
(c) a body corporate;
(d) an undischarged bankrupt, unless he is given leave to act as a receiver or
manager of the property or undertaking of the company by the Court by
which he was adjudged bankrupt;
(e) a director or auditor of the company; and
(f) any person convicted of any offence involving fraud, dishonesty,

N.B:
Where a receiver or manager of the property of a company has been appointed, the
receiver or manager shall within 14 days give notice (CAC FORM 11) of his
appointment to the Commission indicating the terms of and remuneration for the
appointment. S. 555

RECEIVER MANAGER – S. 556(1)

A Receiver Manager is not only concerned to realize the assets of the company but
takes over the management of the affairs of the company, to stabilize it to make
profit and pay off the creditors and then handover the company to the members.
Powers of The Receiver/Manager – see PIP Ltd v Trade Bank(Nig), S. 556(2)
a. Power to carry on the business of the company.
b. Power to appoint other professionals to assist him.
270
 c. Power to sell and dispose of the property.
d. Power to raise or borrow money and grant security due over the
property of a company.

CHAPTER SIXTEEN
SALIENT SAMPLE DRAFTS IN CORPORATE LAW
As earlier noted, in Corporate Law, drafts make up at least 30-40% of your
marks in the exam. Therefore, it is important to master some salient drafts for the
purpose of your exams. These drafts include:

1. Memorandum and Articles of Association.

2. Letters of Exemption
3. Notice meetings
4. Resolutions of the company
5. Search Report
6. Letters (like letter of allotment, letters to CAC etc.)

NOTE: there other drafts contained here which may also come out but those
highlighted above are the favourites.
SOME OF THE ABOVE DRAFTS WILL BE REPRODUCED BELOW
TOPIC BY TOPIC

DRAFTS FROM INCORPORATION OF COMPANIES

1. Memorandum of Association

271
Memorandum of Association for Company Limited By Guaranty - See CR 18TH
SCHEDULE

THE FEDERAL REPUBLIC OF NIGERIA

THE COMPANIES AND ALLIED MATTERS ACT 2020
COMPANY LIMITED BY GUARANTEE
MEMORANDUM OF ASSOCIATION
OF
NOVACANE LIMITED BY GUARANTEE
1. The name of the company is ‘Novacane Association (Limited by
Guarantee).
2. The registered office of the company will be situated in Lagos State
Nigeria.
3. The objects for which the company is established are:
a. The promotion of education and research in Lagos state
b. To do all such things incidental to the attainment of the above object.

AND IT IS HEREBY DECLARED THAT:

The objects specified in each of the paragraphs of this clause shall be regarded as
independent objects and accordingly shall in no way be limited or restricted
(except the contrary is expressly stated) by reference to or inference from the terms
of any other paragraph or the name of the Company, but may be carried out in as
full and as ample a manner and construed in as wide a sense as if each of the said
paragraphs defined the objects clause of a separate and distinct company.

4. The company is a private company.

272
 5. The liability of the members is limited by guarantee

6. The income and property of the company shall be applied solely towards
the promotion of its objects, and no portion of the income or property
shall be paid or transferred directly or indirectly to the members of the
company except as permitted by or under the Companies and Allied
Matters Act.

7. Every member of the company undertakes to contribute to the assets of

the company in the event of the company being wound-up where he is a
member or within one year after he ceases to be a member, and the costs,
charges and expenses of winding-up which shall not be less than
N100,000.00

8. If upon the winding-up or dissolution of the company there shall remain

after the satisfaction of all its debts and liabilities any property of the
company, the same shall not be paid or distributed among the members of
the company but shall be given or transferred among some other
companies having similar objects of this company which shall be
determined by the members prior to the dissolution of the company.

DATED THIS …………..DAY OF ……………………. 2022

WITNESS:
Name……………………..
Address………………
Occupation…………………..
signature……….
273
date

Memorandum of Association For Limited Company (2017 Q 4b, April

2019 Q 4d, August 2018 Q 4b) (very important for your exam) – 16th
Schedule

THE FEDERAL REPUBLIC OF NIGERIA

THE COMPANIES AND ALLIED MATTERS ACT 2020
PRIVATE COMPANY LIMITED BY SHARES
MEMORANDUM OF ASSOCIATION
OF
NOVACANE LIMITED
1. The name of the Company is ‘NOVACANE LIMITED’’.
2. The registered office of the company will be situate in Nigeria.
3. The businesses for which the company is established are as follows:
a. To carry ……
b. To carry out any incidental business to the above objects.

AND IT IS HEREBY DECLARED THAT:

The objects specified in each of the paragraphs of this clause shall be regarded as
independent objects and accordingly shall in no way be limited or restricted
(except the contrary is expressly stated) by reference to or inference from the terms
of any other paragraph or the name of the Company, but may be carried out in as
full and as ample a manner and construed in as wide a sense as if each of the said
paragraphs defined the objects clause of a separate and distinct company.

4. The company is a private company

274
 5. The liability of the members is limited by shares.
6. The issued share capital of the company is N1, 000, 000.00 divided into
100, 000, 000 ordinary shares of N1.00 each

I/we whose name(s) and address(es) is/are subscribed herein is/are desirous of
being formed into a company in pursuance of the Memorandum of Association and
I/we respectively agree to take the number of shares indicated opposite my/our
name(s).

DATED THIS ……………………..DAY OF ………….. 2022

WITNESS:
Name:
Occupation:
Address:
Signature:
Date:

2. Articles of Association: due to the new CAC policy, this is

now how to draft the Article of Association. SEE 20TH
SCHEDULE CR 2021 (August 2017 Q 4c)
Contents of Articles (abridged)

The Federal Republic of Nigeria

Companies and Allied Matters Act, 2020

Company Limited By shares

275
Articles Of Association of …………………………………

1) Interpretation

2) Shares

3) Borrowing

4) Meeting of the company

5) Transfer of shares

6) Written resolutions (for pvt. companies)

7) Number of directors

8) Secretary

9) Common seal/ official seal

10) Accounts

11) Audits

12) Stock Exchange (if the company is listed in the Nigerian Stock Exchange)

13) Notices

14) Winding up

15) Indemnity

S/N* Names addresses and Description of subscribers* Nos of shares Taken

by each subscribers* Signature

276
1.

2.

3.

Dated this 20th day of February 2021

Witness to the above signatures

Name: Wadata

Address: 2 Sokoto Street Yola

Occupation: Businessman

DRAFTS IN PARTNERSHIP
Partnership Agreement (Dec 2020 Q 3c, May 2022 resit ) (highlights)
THIS PARTNERSHIP AGREEMENT made this………day of……..2020
BETWEEN Mr. Adeola Adebayo of No. 22 Kunleda Street, Ikeja, Lagos
State (1st Partner) AND Mr. John Ogah of No 1. Cole Street, Surulere, Lagos
State (2nd Partner)

IT IS AGREED AS FOLLOWS:
1. PLACE OF BUSINESS: The place of business of the partnership shall be
No. 10 Ikota Street, Ilupeju, Lagos State
2. NATURE OF BUSINESS: Fish farming and Animal Husbandry.
3. CAPITAL CONTRIBUTION: The Partners shall raise the sum of N5,
000.000.00 (Five million Naira), in the ratio of 3:2.

277
 4. PROFIT AND LOSS SHARING: The profit and loss sharing shall be in
imparri passu with the capital contribution formula/ratio
5. BANKERS AND SIGNATORIES: The partners shall open and operate a
joint Account with Zenith Bank PLC with both partners as joint
signatories.
6. SALARIES: Each of the partners shall be entitled to a monthly salary of
N20, 000.00 (Twenty Thousand Naira).
7. DISPUTE RESOLUTION: Any dispute arising from the affairs of the
partnership shall be resolved by arbitration. The arbitrator shall be
appointed jointly by the parties.
8. DURATION OF BUSINESS: The partnership shall carry on business for
a period of 50 years form the date of commencement of the business.

IN WITNESS of which the parties executed this agreement in the manner below
the day and year first above written

SIGNED by the within named: SIGNED by the within named:

……………………………… ………………………………
Mr. Adeola Adebayo Mr. John Ogah
(1st Partner) (2nd Partner)

IN THE PRESENCE OF:

NAME…………………………….
ADDRESS……………………….
OCCUPATION…………………..
SIGNATURE…………………….

278
INTRODUCTORY PART OF A GENERAL PARTNERSHIP
THIS Partnership agreement dated———-between Isah Adam of————-
(herein referred to as first partner, Ukeme Edo of —————————(herein
referred to as second partner) and Ayo Oyo of ———————-(herein referred to
as third). Jointly referred to as partners in this agreement.

DRAFTS IN FOREIGN PARTICIPATION

Letter of Exemption
1. (you can use foreign Company’s letter head or use a solicitors letterhead)
(August 2017 Q 1A, April 2019 Q 2A)

RT BRAZIL LIMITED
NO 5 DECAPRIO ROAD, RIO DE JAINEIRO, BRAZIL
[email protected].+234-666-556-9990
OUR REF…………. YOUR REF
January 10, 2022
The Minister of trade:
Federal Republic of Nigeria
Area 1, Garki Abuja

Dear Sir,
APPLICATION FOR EXEMPTION FROM REGISTRATION AS A
NIGERIAN COMPANY PURSUANT TO SECTION 80(1) COMPANIES
AND ALLIED MATTERS ACT, 2020

279
We the above-named foreign company having been invited to Nigeria by the
Federal Government of Nigeria to execute a solar energy project hereby apply for
exemption from incorporation as a Nigerian company.

Please find attached the necessary documents as stipulated by section 80(2) of the
Companies and Allied Matters Act for your kind consideration.
Thank you
Yours faithfully,
………………….
Ronaldinho Lebron
Company Secretary.

FOR: RT BRAZIL ENERGY INC

ENCL:
(you do not need to list these documents in exam unless you were asked to do
so)

DRAFT OF RESOLUTIONS
Every decision of the company is by resolution which may be ordinary or special
resolutions. The format for all resolutions are the same, the difference is only
on the reason for the resolution. Below are some samples:
1. Resolution For Appointment of Directors

NOVACANE LIMITED
NO. 45 LAWSCHOOL DRIVE
ABAYOMI STREET VICTORIA ISLAND LAGOS
RC NO……..
280
 Email: [email protected]

RESOLUTION FOR APPOINTMENT OF DIRECTORS

PURSUANT TO SECTION 273 OF THE COMPANIES AND ALLIED
MATTERS ACT 2020
nd
At the 2 Annual General Meeting of the above-named company held on the 15
day of March 2020 at the Company’s Board room, it was proposed and duly
resolved as follows:

1. That Mr. Kareem Lawrence be and is hereby appointed a director of the

company as an additional director.

2. That Mr. Nwankwo Chizoba be and is hereby appointed a director of the

company filling up the vacancy created by the resignation of Adewale Lanre
as a director.

Dated the 15th day of March 2022

…………………… ………………………

Chairman/Director Secretary

2. Resolution of A Company for Removal Directors

GOLD PALMS LIMITED

NO. 45 LAWSCHOOL DRIVE
ABAYOMI STREET VICTORIA ISLAND LAGOS
RC NO……..

281
 RESOLUTION FOR THE REMOVAL OF PURSUANT TO SECTION 288
OF THE COMPANIES AND ALLIED MATTERS ACT 2020

At the Annual General Meeting of the company held on the 10 day of June, 2022
at the company Conference Room, it was duly proposed and resolved as follows:

That Mr. Kareem Owolabi be removed from office as a director of the company

Dated the 11th day of June 2022

…………………… ………………………….

Director Secretary

3. Board Resolution Appointment of Secretary

GOLD PALMS LIMITED

NO. 45 LAWSCHOOL DRIVE
ABAYOMI STREET VICTORIA ISLAND LAGOS
RC NO……..

RESOLUTION OF THE BOARD OF DIRECTORS FOR

APPOINTMENT OF SECRETARY PURSUANT TO SECTION 333
OF THE COMPANIES AND ALLIED-MATTERS ACT 2020

At the Board of Directors meeting of the above-named company held on the 10

day of May 2022 at the Board Conference Room of the company, it was duly
proposed and resolved as follows:

282
That Mr. Owonikoko Abiodun, a chartered Secretary, be appointed a secretary of
the company.

Dated the 10th Day of May 2022

…………………… ………………………….

Director Director

4. Special Resolution For Conversion of Company From LTD To PLC

KENDEL PALM PRODUCE LIMITED
NO. 10 YELLOW DUKE STREET
CALABAR,
CROSS RIVER STATE
RC NO 1350

SPECIAL RESOLUTION FOR RE-REGISTRATION OF KENDEL

PALM PRODUCE LTD TO BEST PALM PRODUCE PLC
PURSUANT TO SECTION 56 OF THE COMPANIES AND ALLIED-
MATTERS ACT 2020

At the 3rd Annual General Meeting of the above-named company, held on the 2
day of April, 2020, at the Board conference room of the company, No 10 Yellow
Duke Street Calabar, Cross River State, it was dully proposed and resolved as
follows:

1. THAT the company be re-registered as a Public company limited by shares

with the name Best Palm Produce PLC subject to the consent of the
Corporate Affairs Commission.

283
 2. That the MEMOART and registration documents be and are hereby altered
3. That all actions necessary to give effect to the above resolution be taken

DATED THE 6TH Day of April, 2020

……………………. ………………………….
DIRECTOR SECRETARY

5. Special Resolution proposing the Change Name

NOVACANE LIMITED
NO. 15 ALFRED REWANE STREETIKOYI LAGOS
Email: [email protected]
Tel: 09034873927
RC Number:123456

SPECIAL RESOLUTION TO CHANGE THE NAME OF NOVACANE LTD TO

INDIGO LTD PURSUANT TO SECTION 30 (3) OF THE COMPANIES AND
ALLIED MATTERS ACT 2020

At the Extra- Ordinary General Meeting of NOVACANE Limited held electronically on

Zoom on May 5th, 2022, it was duly proposed and resolved as follows:

1. THAT the company name be changed from Novacane Limited to INDIGO

LIMITED subject to the consent of the Corporate Affairs Commission.
2. That all actions necessary to give effect to the above resolution be taken

DATED THE 5TH DAY OF MAY 2022

……………………. ………………………….
284
 DIRECTOR SECRETARY

6. Special Resolution for Change Name (August 2016 Q 1b)

GOLD PALMS LIMITED

NO. 15 BROAD STREET
IKEJA LAGOS
RC NO 1350
SPECIAL RESOLUTION TO CHANGE THE NAME OF GOLD PALMS PLC
TO SUGAR PALMS LTD PURSUANT TO SECTION 30(3) OF THE
COMPANIES AND ALLIED-MATTERS ACT 2020

At the Extra- Ordinary General Meeting of GOLD PALMS LIMITED held at the
Board Conference Room of the company No 15 Broad Street, Ikeja, Lagos on
January 6, 2021, it was dully proposed and resolved as follows:

1. THAT the company name be changed to SUGAR PALMS LIMITED subject

to the consent of the Corporate Affairs Commission.
2. That the MEMOART and registration documents be and are hereby altered
3. That all actions necessary to give effect to the above resolution be taken

DATED THE 6TH DAY OF JANUARY 2022

……………………. ………………………….
DIRECTOR SECRETARY

285
7. Resolution For Increase of Authorized Share Capital

GOLD PALMS LIMITED

NO. 15 BROAD STREET
IKEJA LAGOS
RC NO 1350

RESOLUTION FOR THE INCREASE OF THE AUTHORISED SHARE

CAPITAL PURSUANT TO SECTION 127 OF THE COMPANIES AND
ALLIED-MATTERS ACT 2020

At an Extra- Ordinary General Meeting of GOLD PALMS LIMITED held on the

20 day of January 2022 at the Board conference room of the company, it was dully
proposed and resolved as follows:
1. ‘That the company’s share capital be increased from N5, 000, 000.00
divided into 5,000,000 ordinary shares of N1.00 each to N15, 000, 000.00
divided into 15,000,000 ordinary shares of N1.00 each share by the creation
of additional N10, 000, 000.00
2. The shares so created are to rank in pari pasu with the existing shares of the
company’’.

DATED THE ….DAY OF … 2022

………………… …………………..
DIRECTOR SECRETARY

286
8. Special Resolution for The Reduction of Share Capital

GOLD PALMS PLC

KM 5 IDIKOKO ROAD OTA
OGUN STATE-NIGERIA
RC NO 1245

SPECIAL RESOLUTION FOR THE REDUCTION OF SHARE CAPITAL

PURSUANT TO SECTION 130 OF THE COMPANIES AND ALLIED-
MATTERS ACT 2020

At an Extra- Ordinary General Meeting of Kato PLC held on the 20 day of May
2020 at the Board conference room of the company, it was dully proposed and
resolved as follows:
4. THAT subject to the confirmation of the Federal High Court, the share
capital of the company be reduced from N100, 000, 000.00 made up of 100,
000, 000 ordinary shares of N1.00 each to N50, 000, 000.00 made up of 50,
000,000 ordinary shares of N1.00 each by refunding pro rata the amount
already paid on those share.’’
5. That the MEMOART and registration documents be and are hereby altered
6. That the company secretary be directed to file an application at the FHC for
the court to confirm the reduction.

DATED THE ……….. DAY OF …..2020

…………………. …………………………
DIRECTOR SECRETARY
287
Draft the Resolution for the change of object of the company – March 2021
OBONG PLC
NO. 15 BROAD STREET
UYO
AKWAIBOM STATE
RC NO 1350

SPECIAL RESOLUTION FOR CHANGE OF THE OBJECT OF OBONG PLC

PURSUANT TO SECTION 51 OF THE COMPANIES AND ALLIED-MATTERS
ACT 2020

At the Extra- Ordinary General Meeting of the above-named company held at the
Board Conference Room of the company No 15 Broad Street, Uyo, Akwaibom
State on March 6, 2021, it was dully proposed and resolved as follows:

1. ‘THAT the object of the company be altered to include the manufacturing

and sales of soaps, disinfectants and sanitizers, subject to the approval of
the Corporate Affairs Commission’.
2. That the MEMOART and registration documents be and are hereby altered
3. That all actions necessary to give effect to the above resolution be taken

DATED THE 6th DAY OF MARCH 2021

……………………. ………………………….
DIRECTOR SECRETARY

NOTICES

9. NOTICE OF PROPOSAL FOR REOVAL OF DIRECTOR

(Personal address of writer)

DATE

288
The Secretary,

Ace Nigeria Limited,

No. 45 Law School Drive

Abayomi Street,
Victoria-Island Lagos

Sir,

NOTICE OF REQUISITION TO REMOVE MR. KAREEM LAWRENECE

AS A DIRECTOR OFTHE COMPANY.

TAKE NOTICE that I, Mr. Alabi Otondo of the above address and a shareholder
holding not less than one-tenth (1/10) of the paid-up capital of the company, intend
at the next general meeting of the company to move a Resolution that “Mr.
Kareem Law, a director of the company, be removed from his office as a director
and that …………………………… be appointed a director in his place”.

Yours faithfully,

…………………..
Mr. Alabi Otondo

10. Notice of Board of Directors’ Intention To Remove A Secretary (April 2019 Q

1c)

GOLD PALMS LIMITED

NO. 45 LAWSCHOOL DRIVE
ABAYOMI STREET
289
 VICTORIA ISLAND LAGOS
RC NO……..
OUR REF………………… YOUR REF …….

To:

Mr. Owonikoko Abiodun

No.15 Broad Street,
Bariga,
Lagos State
Sir,

NOTICE OF BORAD OF DIRECTORS’ INTENTION TO REMOVE YOU AS

THE COMPANY SECRETARY PURSUANT TO SECTION 333(2) OF THE
COMPANIES AND ALLIED MATTERS ACT 2020

You are hereby given Notice of the Board’s intention to remove you as the
secretary of the company for failing to file statutory returns to the Corporate
Affairs Commission for a period of six months now.

You are given a period of seven (7) working days to make your defence or
alternatively to put in a Notice of your resignation to the Board.

Yours faithfully,

Chairman

BY ORDER OF THE BOARD

SAMPLE DRAFT OF APPLICATIONS/LETTERS TO CAC

290
 1. Application For Consent For Conversion of Company

GOLD PALMS LIMITED

NO. 15 KENT STREET IKOYI
LAGOS STATE
RC NO 1015 Email: [email protected]
OUR REF.: YOUR REF

DATE: APRIL 10, 2021

To:
The Registrar-General
Corporate Affairs Commission
Aguiyi Ironsi Crescent
Maitama, Abuja.

Dear Sir,

APPLICATION TO RE-REGISTER APEX INVESTMENT LIMITED RC

NO. 1015 TO A PUBLIC COMPANY PURSUANT TO SECTION 56 OF
THE COMPANIES AND ALLIEDMATTERS ACT 2020.

We, the members of the above-named company, have passed a special Resolution
to change the above-named company to GOLD PALMS PLC dated the 4th day of
April, 2020.
We therefore apply for your approval to carry out the proposed change.
Please find attached the necessary documents for your kind consideration.
Thanks for your consideration.
291
Yours faithfully,
……………….
AHMADU YUSUF
COMPANY SECRETARY
2. Application To Conduct a Search at the CAC

GODS FAVOUR CHAMBERS

BARRISTERS AND SOLICITORS
NO. 15 BWARI STREET
WUSE ZONE 4 ABUJA
RC NO 1015
OUR REF.:

20 JANUARY, 2021

The Registrar-General
Corporate Affairs Commission
Opposite Gowon House
Aguiyi Ironsi Crescent
Maitama, Abuja.
Sir,
APPLICATION TO CONDUCT SEARCH ON TROPICAL
INVESTMENT LIMITED WITH REGISTERED CERTIFICATE NO. 1350
We are the external Solicitors of Premier Bank PLC Alagomeji Branch Lagos,
which we will refer to as ‘our client’.

292
It is our client’s instructions that we carry out a search on Tropical Investment
Limited with RC No. 1350.

We specifically request that the following documents be made available to us

namely:
a. The Memorandum and Articles of Association
b. Particulars of Directors
c. Statement of the authorized Share Capital and Return of Allotment-
Please find attached the necessary receipts to aid your kind consideration of our
application.
Thank you for your prompt consideration.

Yours faithfully,

Basil Jegede
Gods Favour Law Firm
External Solicitors to Premier Bank PLC

3. Application To CAC To Conduct Investigation On A Company (August

2017 Q 1B)

GODS FAVOUR CHAMBERS

BARRISTERS AND SOLICITORS
NO. 15 BWARI STREET
WUSE ZONE 4 ABUJA
RC NO 1015
OUR REF.: YOUR REF….
293
20TH January 2020

The Registrar-General
Corporate Affairs Commission
Aguiyi Ironsi Crescent
Maitama, Abuja.
Sir,
APPLICATION TO CONDUCT INVESTIGATION ON TROPICAL
INVESTMENT LIMITED PURSUANT TO SECTION 357

We are the Solicitors Mr. James Tunde a shareholder in the above-named

company, (Our client).
It is our client’s instructions that we write to you to carry out an investigation into
the activities and affairs of Tropical Investment Limited with RC No. 1350.
The grounds and events giving rise to this application are as follows:
1. The company has failed to declare dividend for two years;
2. The company has failed to hold the Annual General Meeting for about 3 years
now.
Thank you for your prompt consideration.

Yours faithfully,

BASIL JEGEDE
FOR: GOD’S FAVOUR LAW FIRM.
OR – Abuja campus Pre Bar test draft

294
 Justin Okafor, (On behalf five other members holding
cumulatively, one eighth of the preference shares of the
company).
(Address).

The Registrar General,

Corporate Affairs Commission,
Tigris street Maitama, Abuja.

Dear sir,
An application to investigate the affairs of Citrus pharmaceutical Ltd.
Pursuant to Section 357 CAMA 2020.
The above subject matter refers.
I write on behalf of my five other colleagues. We are members of citrus
Pharmaceutical Ltd. We cumulatively own preference shares amounting to one
eighth of the total capitalisation of the company.
May we seize this medium to bring to your attention the distasteful attitude of the
Board of our company.
The members of the board are bent on running our Company aground by recklessly
deploying the scarce funds of the company into unprofitable ventures.
All attempts made in time past to ensure that they course correct have proved
abortive.
Kindly therefore appoint one or more competent inspectors to investigate the
affairs of our company.

Yours sincerely,
Justin Okafor.
295
( On behalf of five other shareholders holding cumulatively, one eighth of the
preference shares of the company).

Letter requesting the consent of the corporate affairs commission to

effect the change of name.

PINO PINO BOUTIQUE LIMITED

ANY ADDRESS - ½ mark

ANY RC. NO.,

Email Address and Phone No.

10th August, 2022

The Registrar-General
Corporate Affairs Commission
Abuja.

Dear Sir,

REQUEST FOR APPROVAL TO CHANGE THE NAME OF PINO PINO BOUTIQUE

LIMITED - 1 mark

I am directed by the board of directors of the above named company to apply for approval of the
Commission for the name of the above named company to be changed to “CHUKWUEMERIE
BOUTIQUE LIMITED”. - ½ mark

I enclosed a printed copy of the special resolution of the company duly passed on the - day - ,
2024, sanctioning the proposed change of name. ½ mark

Thank You.

Yours faithfully,

Any signature
Company Secretary ½ mark

4. SEARCH REPORT (Bar final August 2019 Q 6d, Dec 2020 Q 4c)

296
 JOHN DOE LP
NO. 15 BWARI STREET
ILLORIN, KWARA STATE
OUR REF………..PHONE NO………………………..
10 DECEMBER, 2020

The Secretary/Legal Adviser

Wadata Nig. Limited,
Okikie Close, Ilorin,
Kwara State

Dear Sir,

RE: SEARCH REPORT ON BABARIKA PLC

Sequel to your instruction dated the 8 day of December 2020 on the above subject
matter, we are pleased to inform you that we have carried out the search as
instructed. Below is the Search Report:

1. Date of Search: 9 December, 2020

2. Place of Search: Corporate Affairs Commission, Abuja.
3. Name of Company: Babarika PLC
4. Registered Certificate NO.: RC 1350
5. Registered Address: No 12 Oke Meta-Resort, Ilorin, Kwara State.
6. Date of Incorporation: 20 January, 2016
7. Business/ Objects of the Company: buying and manufacture of cement.
8. Particulars of Directors:
i. Engr. Rotimi William of No 12 Rotimi Road, Ikeja Lagos
ii. Mr. Ilesanmi William of No 12 Rotimi Road, Ikeja Lagos

297
 9. Authorized Share Capital: N100, 000, 000.00 divided into 10, 000,000
ordinary shares of N1.00 each
10. Encumbrances: Nil
11. Comment/Advice: The Company is an on-going concern, so can do business
with it.

Yours faithfully,

…………….
Basil Jegede
Gods Favour Law Firm

DRAFTS ON COMPANY SECURITIES (Allotment of shares)

1. Letter of Allotment (Dec 2020 Q 1d)

AMANCO NIGERIA PLC

RC NO: 2345
NO 20 KEBBI ROAD, IKIRE,
OGUN STATE
OUR REF:

10 DECEMBER, 2020

Mr. Clifford Ike

No. 15 kent Road Wuse
Ogun State

Sir,

298
 LETTER OF ALLOTMENT OF SHARES

I am directed by the Board of the above-named company to inform you that your
application for the allotment of 1000 ordinary shares of N1.00 each in the company
has been allotted to you.

You may renounce all or any of the shares in favour of another by filling up the
accompanying letter of renunciation, on the understanding that you are still liable
to pay all sums due on the shares should any of your nominees fail to do so.

Thank you.

Yours faithfully,

…………………….

Company Secretary

2. Letter of Regret

AMANCO NIGERIA PLC

RC NO: 2345
NO 20 KEBBI ROAD, IKIRE,
OGUN STATE

OUR REF: YOUR REF….

15 JUNE, 2020

Mr. Ben Idah

No. 15 Kent Road Wuse Zone 4
Abuja.
Sir,

299
 LETTER OF REGRET

I regret to inform you that the directors were unable to allot you any shares in the
above company, and enclose herewith is a cheque for N600, 000.00 being the
amount paid by you on application.

Kindly fill up and return the annexed form of receipt.

Yours faithfully,

Company secretary

SAMPLE DRAFT OF NOTICE OF RESIGNATION BY AN AUDITOR

Mr. Abik Hamza & Co.

Chartered Accountants
Suit A4 Goni Plaza Wuse Zone 2
FCT Abuja.
25 May 2020
To:
The Company Secretary
Acquak Bank Plc
No. 10 Bank Road
Wuse Zone 5
FCT Abuja
Sir,
NOTICE OF RESIGNATION AS AUDITOR
The above subject matter refers.

300
I, Mr. Abik Hamza, as Auditor of your company write to resign my appointment
which is to take effect from the 30 day of May 2022.
The reason for my decision is to protect my professional integrity as the Directors
pressured me to falsify the tax obligations of the company in the Financial
Statement laid before the company.
Thank you.

Yours faithfully,
Mr. Hamza Abik

SAMPLE DRAFTS ON MEETINGS

NOTICE OF MEETING (August 2017 Q 2eii, August 2018 Q 3a, August

2019 Q 2a & 6d)

AMANCO NIGERIA PLC

RC NO: 2345
NO 20 KEBBI ROAD, IKIRE,
OGUN STATE

NOTICE OF 3RD ANNUAL GENERAL MEETING PURSUANT TO

SECTION 237 OF THE COMPANIES AND ALLIED MATTERS ACT CAP
C20 LFN 2020

NOTICE IS HEREBY GIVEN; that the 3rd Annual General Meeting of the above
named company will hold on the ....day of .....2022 at the company’s registered
address No 20 Kebbi Road, Ikire, Ogun State, to transact the following business:
1. ORDINARY BUSINESS:

301
 a. Declaration of dividend.
b. Presentation of the Financial Statements.
c. The Reports of Directors and Auditors
d. Election of directors in place of retiring ones.
e. Appointment of Auditors and fixing of their remuneration.
f. Appointment of members of the Audit committee

2. SPECIAL BUSINESS:
a. Increase of the share capital of the company
b. To pass a special resolution to change the company’s name to Best Palm
Produce PLC

Dated: .... Day of.........2020

BY ORDER OF THE BOARD

SIGNED:

..........................

COMPANY SECRETARY

NOTE PROXY:

SAMPLE DRAFTS ON WINDING UP

Special Resolution For Voluntary Winding Up:
WADATA NIGERIA LIMITED
10 IKOYI ROAD IKOYI
LAGOS STATE
RC NO……….

302
 SPECIAL RESOLUTION TO WIND-UP THE COMPANY AND TO
APPOINT A LIQUIDATOR AND FIX HIS REMUNERATION PURSUANT
TO SECTION 620 OF THE COMPANIES AND ALLIED-MATTERS ACT
2020

At an Extra-ordinary General meeting of the above-named company held on the 10

day of February 2020 at the company’s conference room, it was dully proposed
and resolved as follows:
1. THAT the company be wound up voluntarily.
2. THAT Chief Anthony Ibru, an accountant of ……..(address) be and is hereby
appointed liquidator to wind-up the company at a remuneration of
N100,000.00 per annum.

DATED 10 Day of February, 2020

….………….. …………………
Director Director

1. Declaration of Solvency to Enable Members’ Voluntary Winding Up; (Dec

2020 Q 2b)
WADATA NIGERIA LIMITED
10 IKOYI ROAD IKOYI
LAGOS STATE
RC NO…………

303
 STATUTORY DECLARATION OF SOLVENCY EMBODYING A
STATEMENT OF THE ASSETS AND LAIBILITIES PURSUANT TO
SECTION 625 OF THE COMPANIES AND ALLIED-MATTERS ACT 2020

We, John Bui of………..and Bamba Audu of………………being the Directors of

the above-company, solemnly declare that we have made a full enquiry into the
affairs of this company and that having done so, we have formed the opinion that
the company will be able to pay its debt in full within a period of twelve (12)
months from the commencement of the winding up, and we append a
statement of the company’s assets and liabilities as at the … day of …. 2022
being the latest practicable date before making this declaration.
And we make this solemn declaration, conscientiously believing the same to be
true by virtue of the Oaths Act.

John Bui………………….Deponent

Bamba Audu ………………….. Deponent

Sworn To at the Federal High Court Registry, Lagos

THIS…DAY OF……. 2020

BEFORE ME

COMMISSIONER FOR OATHS

2. Petition For Winding Up

304
 IN THE FEDERAL HIGH COURT OF NIGERIA
HOLDEN AT PORT-HARCOURT
SUIT NO…………
IN THE MATTER OF DELTA OIL GROUP PLC
AND
IN THE MATTER OF COMPANIES AND ALLIED MATTERS ACT, 1990
BETWEEN:
MR. EMEKA ADE………………………………….PETITIONER
AND
DELTA OIL GROUP PLC………………………..RESPONDENT
PETITION FOR WINDING UP
The petition of Mr. Emeka Ade (Petitioner) of No. 1 Agbani Road, Garki, Abuja is
presented for filing based on the ground that the respondent refused to pay his
professional fees based on the following facts:-
1. The petitioner is a sole Legal Practitioner with his office at FCT, Abuja.
2. The respondent is a company incorporated in Nigeria in accordance with
the provisions of CAMA, 2004.
3. The respondent agreed to pay N5 million dollars as professional fees to
the petitioner.
4. The petitioner has demanded for payment of his professional fee and the
respondent has refused, failed and or neglected to settle his indebtedness.
5. The petitioner prays the winding up of the respondent company

DATED…….DAY OF……….20……..
…………………
UJU OFEM
PLOT 113, GARKI,
305
 ABUJA

3. Motion For Rectification of Register

IN THE FEDERAL HIGH COURT OF NIGERIA

IN THE LAGOS JUDICIAL DIVISION
HOLDEN AT LAGOS
SUIT NO:
IN THE MATTER OF TIMBERWOODS FURNITURE LTD
AND
IN THE MATTER OF THE COMPANIES AND ALLIED MATTERS ACT
CAP C20 LFN 2020 AND IN THE MATTER OF:

1. MOJI MODUPE
(Administrator/Personal Representative……………………..APPLICANTS
of the Estate of Bola Modupe-Deceased)
AND
1. TIMBERWOODS FURNITURE LTD
2. JAMES JOHN (DIRECTOR)…..………………………..RESPONDENTS

ORIGINATING MOTION
BROUGHT PURSUANT TO SECTION 115 OF THE COMPANIES AND
ALLIED MATTERS ACT AND UNDER THE INHERENTJURISDICTION
OF THIS HONOURABLE COURT

306
TAKE NOTICE that this Honourable Court will be moved on the ……….. Day
of …….2020 at the hour of 9 O’clock in the forenoon or so soon thereafter as
Counsel for the Defendant /Appellant will be heard praying this Honourable Court
for:
1. AN ORDER mandating the Respondent to rectify the Register of members
to include both the names of the Applicants as owners of the shares owned
by Mrs. Bola Modupe now deceased.
2. AND for such orders as the Honourable Court may deem fit to make in the
circumstances.

DATED THIS …..DAY OF …… 2020

…………………….
Ojo Yusuf, Esq.
Counsel to the Applicants
No 10 Base Street
Ikoyi Lagos State
FOR SERVICE ON:
The Respondents

4. Statutory Letter of Demand

NATWEST BANK LIMITED

RC NO 10145
NO 40 ADEOLA STREET
VICTORIA ISLAND LAGOS
OUR REF.................... YOUR REF..................

307
 March 10, 2020.

To:
The Board of Directors
BNXN Limited
Ikoyi-Lagos State
Dear Sir,

STATUTORY NOTICE OF DEMAND TO REPAY N15, 000, 000.00 LOAN

PERSUANT TO SECTION 572 OF THE COMPANIES AND ALLIED-
MATTERS ACT 2020

I, the secretary of the above named bank write to notify your company of the
repayment of a facility advanced to it to the sum of fifteen million naira only (N15,
000, 000.00) at an interest of 13 percent per annum dated the 18 day of July 2019
with its due date of repayment to be on/ before the 2nd of March 2020.

Please be informed that no amount of the loan has been paid in partial discharge of
the loan sum and interest.

You are hereby demanded to repay the principal loan and interest within twenty-
one (21) clear days of your receipt of this Notice otherwise Legal action will be
taken against your company.

You can kindly make payment into account No 1276589308 at First Bank
belonging to us.

Yours faithfully,

……………………
Company Secretary

308
For: Natwest Bank Ltd.

OR – ABUJA Pre bar test answer 2022

SURE BANK PLC

No. 12 Law School Road, Abuja, Nigeria
www.surebankplc.com
[email protected]
08123456789
RC NO. 1234
OUR REF:

12th August, 2022

The Managing Director,

Golden Industries Plc,
Road 15,
Asokoro,
Abuja

Dear Sir,

STATUTORY LETTER OF DEMAND FOR THE SUM OF N500,000,000

(FIVE HUNDRED MILLION NAIRA ONLY) PURSUANT TO...

The above subject matter refers.

We write to demand the repayment of the sum of N500,000,000 (Five Hundred

Million Naira), being the sum of monies due to the company by virtue of the
Loan Offer dated 1st January, 2020.

Kindly pay the said debt sum within three weeks (3 weeks) of receipt of this
Letter or we would set the legal machinery at the expiration of one month
without further recourse to you.

309
 Thank you.

Yours faithfully,

Bingo Bongo,
Secretary OR Director of the Company.

Kano Campus Pre Bar – Letter of demand 2022

Orange chemicals nig ltd.

RC .....

Date .....

The Managing Director.

Citrus Pharmaceutical Nig. PLC

(Address)

Dear sir,

Statutory letter of demand pursuant to S. 572 CAMA 2020 for the payment of
the sum of #10m being a debt due and payable to Orange chemicals Ltd.

The above subject matter refers.

You will recall sir that the sum of#10m fell due as a result of our transaction with
your company.

Owing to the dwindling fortunes of our company occasioned by the misguided

economic policy of the present administration, we need you to defray this debt to
enable us to plough it into its waning working capital.

310
Take notice that unless payment of the outstanding debt is received by us within
three weeks after the receipt of this letter by your office, we shall be constrained to
commence winding up proceedings against your company.

Please do have as always, the assurances of our best regards.

Yours faithfully.

( Signature).

Managing Director.

311
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INCENTIVES: SHORTER:

1. Where the company exports not less than 60% of what it manufactures, the
company will not pay tax for three (3) years.

2. Where the company continues to export not less than 60% of what it
manufactures in the subsequent years, the company will have 10% tax relief.

3. If the company obtains foreign loan, interest from such loan will not be taxed.

4. If the company obtains loan from a Nigerian Bank, interest from such loan will
not be taxed.

5. If the company uses all the profit it makes to purchase raw materials or
machineries, the company will not be taxed for that year.

6. If the company is located within an area designated as Export Processing Zone

(EPZ), the company will not pay tax for three (3) years and will import free of
import duties.

7. Relief from double taxation

8. Utilisation of local raw materials attracts tax waivers.

9. Pioneer status

10. Relief from double taxation

11. Relief from commonwealth taxation

12. Importation of raw materials to manufacture goods for export will attract duty
drawback/suspension scheme

13. If the company is located within an area designated as Economically

Disadvantaged Area, the company will not pay tax for seven (7) years.

14. The foreign currency earned from such export will be deposited in a domiciliary
account without converting it to Naira and interest from such domiciliary
account will not be taxed.
15. Expenses incurred in research and development will be deducted before taxing
the company. In other words, the company enjoys 20% tax credit for engaging in
research development

16. Rural investment allowance of 15% - 100% of the cost incurred in providing
infrastructure in rural areas.