Corporate Law Practice - Equity Capital and Collective Investment Schemes

Vocabulary flashcards covering corporate finance, share classifications, acquisition and transfer procedures, public offers, and collective investment schemes based on the Nigerian Law School lecture notes.

Corporate Finance

The strategic management of a company's financial activities, including general statutory powers to raise funds under Sec 191 CAMA.

Securities (Sec 315 ISA)

Shares, debentures, bonds, commodities, or negotiable financial instruments with monetary value that can be traded.

Share (Sec 139 & Sec 868 CAMA)

The interest in a company's share capital of a member entitled to share in capital or income; legally classified as a chose in action and transferable property.

Weighted Share

A share carrying more than one voting right, retained in favor of preferential shareholders under specific circumstances listed in Sec 168 CAMA and Sec 10 BOFIA.

Non-voting Share

A share carrying no right to vote, which has been absolutely abolished under S. 140 CAMA following Bayo Kehinde v Registrar of Companies.

Share Issued at a Premium (Sec 145 CAMA)

Shares issued at a price higher than their nominal value at incorporation or allotment, with gains transferred to a share premium account.

Share Issued at a Discount

The act of issuing shares below par value, which is unlawful under Sec 146 CAMA.

Preference Shares

Shares entitling the holder to a fixed preferential dividend before ordinary shareholders, presumed to be cumulative unless explicitly stated as non-cumulative.

Ordinary Shares

Risk-bearing equity share capital that carries the remainder of distributed profits after preference share dividends and holds unrestricted rights to surplus assets at winding up.

Deferred / Founder Shares

Shares issued to promoters or directors carrying rights to the remainder of distributed profits after fixed dividends are paid to ordinary shares.

Call on Shares (Sec 158 CAMA)

A formal demand by a company on shareholders to pay outstanding unpaid balances on allotted shares within a specified timeframe.

Lien on Shares (Sec 164 CAMA)

The company's right over all partly paid issued shares for all monies due in respect of those shares.

Transfer of Shares (Sec 175 CAMA)

A voluntary conveyance of rights by a member to another person via delivery of a proper transfer instrument and registration in the register of members.

Certificate Lodged Endorsement (Sec 181 CAMA)

An endorsement on a transfer instrument recognizing that a document showing title was produced to the company, creating liability if made negligently.

Dematerialization of Share Certificates

The replacement of paper share certificates with electronic share certificates managed by the Central Securities Clearing System (CSCS).

Transmission of Shares (Sec 179 CAMA)

The automatic transfer of share rights by operation of law, such as to personal representatives upon a member's death.

Substantial Interest in Shares (Sec 120 & 121 CAMA)

Ownership of 5% or more of the issued shares of a public company, requiring notification to the company and the CAC.

Person with Significant Control (PSC) (Sec 119 & 868 CAMA)

Any individual or legal entity that exercises substantial direct or indirect ownership, influence, or control over a company.

Primary Market

The new issues market segment where companies access funds by selling newly listed or newly issued securities directly to the public.

Secondary Market

The market where investors buy or sell existing securities previously issued in the primary market, with sales proceeds going to the investor rather than the company.

Initial Public Offer (IPO)

The first invitation by a company to members of the public to subscribe for its shares or debentures to raise capital.

Rights Issue

An issue of shares directed at existing shareholders pro rata to preserve leverage and shareholding equilibrium.

Direct Offer for Subscription

A public offer method where the company offers shares through an issuing house acting as an official agent, with the company bearing the risk of issue failure.

Offer for Sale

A public offer method where the company sells the entire issue to an issuing house, which re-sells to the public at a higher price and bears the risk of failure.

Private Placement

A method of offering securities by an unquoted public company or private company to selected individuals or entities without public advertisement.

Collective Investment Scheme (CIS) (Sec 150 & 153 ISA)

A wealth creation structure where investors pool resources to participate in profits or income arising from property managed by a third party.

Unit Trust Scheme (Sec 357 / S 184 ISA)

A collective investment scheme administered as a corporate entity involving a trustee, fund manager, trust deed, and unit holders.

Real Estate Investment Trust (REIT) (Sec 191 & 193 ISA)

A scheme established solely to acquire intermediate or long-term interest in real estate or property development using pooled investor capital.

Global Depository Receipt (GDR)

An investment mechanism where a foreign investor buys shares of a foreign company in their home country using local currency.

Prohibited Investment Scheme Penalties (Sec 196 ISA)

Statutory penalties for illegal financial operations like Ponzi or pyramid schemes, comprising fines up to N20 million, up to 10 years imprisonment, or both.