Corporate Law Practice in Nigeria

Flashcards covering key concepts, legal frameworks, regulatory bodies, and procedures related to Corporate Law Practice in Nigeria, including company formation, governance, external restructuring, insolvency, and non-business organizations.

CAMA

Companies and Allied Matters Act, a principal enactment regulating corporate law practice in Nigeria.

ISA

Investments and Securities Act, a principal enactment regulating investments and securities in Nigeria.

NIPC ACT

Nigerian Investment Promotion Commission Act, a principal enactment encouraging investment in Nigeria.

FCCPA ACT

Federal Competition and Consumer Protection Act, a principal enactment promoting competitive markets and consumer protection in Nigeria.

BOFIA

Banks and Other Financial Institutions Act, a principal enactment regulating banks and other financial institutions in Nigeria.

CAC

Corporate Affairs Commission, a regulatory authority responsible for the registration, regulation, and supervision of companies, business names, and incorporated trustees in Nigeria.

SEC

Securities and Exchange Commission, a regulatory authority for the Nigerian capital market and issuance of securities.

CBN

Central Bank of Nigeria, a regulatory authority responsible for monetary and price stability, issuing legal tender currency, and promoting a sound financial system.

FCCPC

Federal Competition and Consumer Protection Commission, a regulatory authority promoting competitive markets and protecting consumer interests.

NIPC

Nigerian Investment Promotion Commission, a regulatory authority charged with encouraging, promoting, and coordinating investment in the Nigerian economy.

NOTAP ACT

National Office for Technology Acquisition and Promotion Act, which established NOTAP to regulate the transfer of foreign technology into Nigeria.

FIRS ACT

Federal Inland Revenue Service (Amendment) Act, which established FIRS with the principal responsibility of collecting revenues for the Federal Government.

AMCON ACT

Asset Management Corporation of Nigeria Act, which established AMCON to manage liquidity of banks by disposing of non-performing loans and toxic assets.

One Stop Investment Center (OSIC)

A center created by NIPC to ease doing business in Nigeria by co-locating desks of major agencies for customer service.

Pre-action notice (CAMA)

A new provision in CAMA 2020 (Section 17) requiring a 30-day written notice before commencing a suit against the Corporate Affairs Commission.

Single-member/Shareholder Private Company

A provision in CAMA 2020 (Section 18(2)) allowing one person to form and incorporate a private company.

Statement of Compliance

A statement by the applicant or agent (Section 40(1) CAMA 2020) affirming compliance with registration requirements, replacing the previous declaration of compliance by a legal practitioner.

Administrative Proceedings Committee (CAC)

An innovation of CAMA 2020 (Section 851) for the Corporate Affairs Commission to resolve disputes related to company names, shares in private companies, and appointment/removal of directors/partners/trustees.

Accreditation (CAC)

The process by which professionals (Legal Practitioners, Chartered Accountants, Chartered Secretaries, Business Rescue & Insolvency Practitioners) are deemed eligible to register companies under Part B of CAMA.

Registration with SEC

Required for any person operating in the Nigerian capital market as an expert, professional, or in investment and securities business (Section 38(1) ISA).

Promoter

A person who undertakes to take part in forming a company with reference to a given project and to set it going, including raising capital (Section 85 CAMA). Professionals acting in a professional capacity are generally not considered promoters.

Fiduciary Relationship (Promoters)

The legal relationship between a promoter and the company, implying duties of utmost good faith, accountability, non-disclosure of secret profits, disclosure of conflict of interest, diligence, and honesty (Section 86(1) CAMA).

Remedies for Promoter's Breach of Duty

Includes action to render account, account for secret profit, action for damages, refusal to ratify pre-incorporation contract, and rescission.

Pre-incorporation Contracts

Contracts entered into on behalf of a proposed company by a promoter before the company's incorporation, which can be ratified by the company after its formation (Section 96(1) CAMA).

Ratification (Pre-incorporation Contracts)

The act by which a company, after its formation, makes itself bound by and entitled to the benefit of a contract entered into on its behalf prior to its formation (Section 96(1) CAMA).

Publication of Name (Post-incorporation)

Every company must paint or affix its name and registration number on its offices, engrave its name on its common and official seals, and include its name and registration number in all official documents and bills (Section 729(1) CAMA).

Statutory Books/Records

Specific registers and books that must be kept by a company after incorporation, such as Register of Members, Register of Directors, and Accounting Records.

Alteration of Articles of Association

A company may alter or add to its articles by special resolution, subject to CAMA provisions and conditions in its memorandum (Section 53 CAMA).

Alteration of Name Clause

A company's name cannot be altered without the consent of the Corporate Affairs Commission (CAC) and in accordance with Section 30 CAMA.

Change of Business or Objects Clause

The alteration of a company's business or objects, requiring a special resolution and a 28-day period for potential minority objections (Section 51 CAMA).

Increase in Share Capital

A company can increase its share capital by resolution of the Board of Directors or members, with specific filing requirements to the CAC (Section 127 CAMA, as amended by BFA).

Reduction in Share Capital

A company shall not reduce its issued share capital except as authorized by CAMA, requiring articles authorization, a special resolution, and court confirmation (Sections 130 and 131 CAMA).

Conversion of Companies

The re-registration of a company from one form to another (e.g., Private to Public, or Limited to Unlimited) under specific procedures outlined in CAMA (Sections 56-77 CAMA).

Corporate Searches

Investigations conducted at the CAC (electronically or manually) to confirm the due incorporation, compliance, and corporate profile of a company, leading to a Corporate Search Report.

Small Company (CAMA)

A private company with a turnover not exceeding N120 million, net assets not exceeding N60 million, no alien or government members, and directors holding at least 51% of equity share capital (Section 394(3) CAMA).

Foreign Participation in Nigerian Business

Foreigners can participate in business in Nigeria, either alone or in partnership, subject to compliance with specific laws and regulations like CAMA, NIPC Act, and Immigration Act (Section 20(4) CAMA, Section 17 NIPC Act).

Exempted Foreign Companies

Categories of foreign companies that may be exempted from the requirement of incorporation in Nigeria, such as invited companies, those on loan projects, foreign government-owned export promotion companies, and engineering consultants (Section 80(1) CAMA).

Foreign Direct Investment (FDI)

A measure of foreign ownership of productive assets, such as factories, mines, and land, typically involving takeover or formation of new companies in Nigeria.

Foreign Portfolio Investment (FPI)

Passive holdings of securities such as shares, bonds, debentures, or other financial assets by foreigners, without participating in the running of the entity they invest in.

Certificate of Capital Importation (CCI)

A certificate issued by an authorized dealer (bank) to a foreign investor who imports capital into Nigeria, providing advantages like fund repatriation and foreign currency domiciliary accounts.

Expatriate Quota

A permit required by a company employing a foreigner in Nigeria, obtained from the Chief Federal Immigration Officer, with types like Permanent Until Reviewed (PUR) and Temporary.

CERPAC

Combined Expatriate Residence Permit and Alien Card, a scheme introduced to simplify the process of acquiring residence permits and alien registration certificates for foreigners living or working in Nigeria.

NOTAP Registration

Required for any contract or agreement involving the transfer of foreign technology into Nigeria (Section 5(2) NOTAP Act).

Industrial Inspectorate Act

Requires notice to the Director of the Industrial Inspectorate Division for capital expenditures over N5 million, potentially leading to a Certificate of Acceptance for tax waivers.

Corporate Governance

The system of rules, practices, and processes by which a company is directed and controlled, ensuring accountability, effectiveness, integrity, fairness, and transparency.

Nigerian Code of Corporate Governance, 2018 (NCCG)

A standardized code released by the Financial Reporting Council of Nigeria (FRCN) to institutionalize corporate governance best practices in Nigerian companies.

Shadow Director

A person not expressly appointed as a director but whose directions the real directors of the company are accustomed to act upon (Section 270 CAMA).

Executive Director

An officer holding a service contract with the company, appointed to the board, responsible for day-to-day running, and considered an employee.

Non-Executive Director

A director who attends board meetings but is not entitled to remuneration apart from reimbursement of out-of-pocket expenses, unless the articles provide otherwise.

Independent Director

A director of a public company (at least one-third of total directors) who has no relationships with the company that could compromise their independence (Section 275 CAMA, as amended by BFA).

Life Director

A person appointed as a director for life, but subject to removal by ordinary resolution with special notice (Section 281 CAMA).

Managing Director (MD)

Appointed by the board, the Chief Executive Officer of the company, and considered a servant/employee (Section 294 CAMA).

Disqualification from Acting as Director

Persons under 18, of unsound mind, undischarged bankrupts, those disqualified for fraud/dishonesty, or corporations (Section 283 CAMA).

Removal of Directors

A company may, by ordinary resolution and special notice, remove a director before the expiration of their term of office, even if articles state otherwise (Section 288 CAMA).

Company Secretary

Every company (except small) must have a secretary, who is a high-ranking official involved in management and administration (Section 330(1) CAMA).

Qualification of Secretary (Public Company)

Must be a member of ICAN/ANAN, a legal practitioner, a member of ICAS, or have held office as secretary of a public company for at least 3 of the last 5 years (Section 332 CAMA).

Appointment of Secretary

Appointed by the Board of Directors in both private and public companies (Section 333(1) CAMA).

Removal of Secretary (Public Company)

Involves notice, stating grounds, opportunity to defend or resign; board may remove for fraud/misconduct. (Section 333(2) CAMA).

Duties of Company Secretary

Attending meetings, maintaining registers and statutory records, rendering statutory returns, and carrying out administrative duties (Section 335(1) CAMA).

Membership of Company

Includes subscribers to the memorandum and other persons who agree in writing to become members and whose names are entered in the register of members (Section 105(1) and (2) CAMA).

Disqualified Members

Persons of unsound mind, undischarged bankrupts, corporations in liquidation, and infants (Section 106 CAMA, Section 20(3) CAMA).

Acquisition of Membership

Through subscription to memorandum, allotment and registration, transfer (and registration), or transmission (and registration) (SATT acronym).

Rectification of Register of Members

If a transferee's name is not entered in the Register of Members, they can apply to the Federal High Court for an order for rectification (Section 115 CAMA).

Annual General Meeting (AGM)

A mandatory yearly meeting for most companies (except small companies or those with a single shareholder) to transact ordinary business (Section 237(1) CAMA).

Statutory Meeting

A mandatory meeting for public companies only, held within 6 months of incorporation to consider the statutory report (Section 235 CAMA).

Extra-Ordinary General Meeting (EGM)

Any general meeting that is not an AGM and can be held at any time to deal with urgent matters (Section 239 CAMA).

Quorum (General Meeting)

The minimum number of members that must be present for a valid meeting, typically fixed by articles or, if silent, one-third of members or 25, whichever is less (Section 256(2) CAMA).

Proxy (General Meeting)

The right of members (in companies with share capital) to appoint another person to attend and vote instead of them (Section 253 CAMA).

Voting Methods

Can be by show of hands, electronic voting, or a poll. A poll can be demanded by the chairman, at least three members, or members representing 1/10th of voting rights (Section 248 CAMA).

Ordinary Resolution

A resolution passed by a simple majority of votes cast by members in person or by proxy, presumed when CAMA simply requires a resolution (Section 258(1) CAMA).

Special Resolution

A resolution passed by at least 3/4 (75%) majority of members voting in person or by proxy at a general meeting with at least 21 days' notice (Section 258(2) CAMA).

Written Resolution

For private companies, a resolution signed by all members is as valid as if passed in a general meeting (Section 259 CAMA).

Financial Statements

Summaries of a company's accounting records, showing its annual state of affairs, including balance sheet, profit and loss account, and notes on accounts (Section 377(2) CAMA).

Accounting Records

Records every company must keep, sufficient to show and explain transactions, including daily sums received/expended and assets/liabilities (Section 374 CAMA).

Accounting Reference Date (ARD)

The date directors decide, within 6 months of incorporation, to make their financial statements every year, notified to the CAC within 14 days (Section 377(4) CAMA).

Auditors

Persons appointed to examine a company's books and accounts, making a report to members on the financial statements (Section 401(1) CAMA).

Audit Committee

A committee required only in public companies, consisting of three non-executive directors and two members, to act as a watchdog on company accounts and assist auditors (Section 404(3) CAMA).

Annual Returns

A general overview of the state of a company each year, filed with the CAC at least once annually, typically within 42 days after the AGM (Section 417 CAMA).

Foss v. Harbottle

A general rule stating that where an actionable wrong has been done to a company, only the company can ratify the conduct or sue to remedy the wrong (Section 341 CAMA).

Members Direct Action

An action where a member can, by injunction or declaration, restrain the company from illegal/ultra vires transactions, acts requiring special resolution, or acts affecting individual rights (Section 343 CAMA).

Personal Action (Minority Protection)

An action instituted by an individual in their personal name seeking to redress a personal wrong (e.g., infringement of voting rights), allowing for damages, declaration, or injunction (Section 344 CAMA).

Representative Action

An action where an individual or group sues on behalf of themselves and a larger group of persons for a breach of a common right, allowing for damages, declaration, or injunction (Section 344 CAMA).

Derivative Action

An action brought in the name or on behalf of the company (with court leave) by a shareholder, director, or other qualified person to remedy a wrong done to the company itself (Section 346 CAMA).

Oppressive or Unfairly Prejudicial Conduct

A ground for relief where a member can petition the court if the company's affairs are conducted in an oppressive or unfairly prejudicial manner, allowing for various court orders (Section 353 CAMA).

Investigation of the Company (Minority Protection)

The Corporate Affairs Commission may appoint inspectors to investigate a company's affairs upon application by qualified members or on its own motion (Section 357(1) CAMA).

Shares

A unit of the bundle of rights and liabilities in a company's capital, representing a member's stake and acting as transferable property (Section 138(a) and (b) CAMA).

Minimum Issued Share Capital

The minimum share capital a company must have to register with CAC (N100,000 for private, N2,000,000 for public companies).

Preference Shares

Shares that take priority over ordinary shareholders, potentially carrying more than one vote in specific circumstances (Section 168 CAMA), and can be cumulative, non-cumulative, convertible, participatory, or redeemable.

Weighted Shares

Shares that carry more than one vote, generally prohibited unless for preference shares under specific circumstances (Section 140 CAMA).

Share Premium Account

An account where sums equal to premiums on issued shares are transferred, used for purposes like issuing bonus shares or writing off preliminary expenses (Section 145(2) CAMA).

Allotment of Shares

The allocation of a specified number of shares to an applicant, vested in the company (or delegated to directors) (Section 149 CAMA).

Transfer of Shares

The process by which shares are transferred from one holder to another, effected by an instrument of transfer and subsequent registration (Section 175(1) & (2) CAMA).

Transmission of Shares

The vesting of shares in personal representatives upon the death of a shareholder, distinct from a transfer (Section 179(1) CAMA).

Debentures

Instruments issued by a company to lenders to acknowledge its indebtedness, representing external finances (Section 191 CAMA).

Charges Securing Debentures

Fixed or floating charges over a company's assets that secure debentures, giving creditors a prior claim (Section 203 CAMA).

Registration of Charges

Required for specific charges created by a company on its property, to be delivered to CAC within 90 days of creation, else void against liquidator/creditors (Section 222(1) CAMA).

Remedies for Debenture Holders

Include recovery of principal and interest, petition for winding up, debenture holders' action, sale of charged property, foreclosure, and appointment of a receiver (Section 233 CAMA).

Capital Floatation

Methods by which a company offers its securities to the public to raise money, subject to regulation by the Securities and Exchange Commission (SEC).

Prospectus

Any written or electronic information, notice, advertisement, or other invitation made to the public for the purchase of securities, subject to SEC approval and registration (Section 315 ISA).

Irregular Allotment (Shares)

Occurs when shares are allotted without meeting minimum subscription, before payment, or without a statement in lieu of prospectus, making the allotment voidable (Section 90 ISA).