FOR THOSE OF US TAKING COMPANY LAW
COMPANY LAW
: History of company law in NigeriaIn 1876, the supreme court ordinance was promulgated
in Lagos which was ceded to the British colony in 1861.
Under the ordinance, Tue common law of England, the
doctrines of equity and the statutes of general
application which were in force in England on the 24th
day of July 1874, were to be in force within tue court's
jurisdiction.
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After the proclamation of the protectorate of northern
and Southern Nigeria in 1900, the supreme court
proclamation of 1900 of Southern Nigeria and tue
supreme court proclamation, 1902 of Northern Nigeria,
were introduced. With each proclamation, making the
common law of England, the doctrines of equity and the
statutes of general application in force in England on the
1st day of January 1900 applicable in Nigeria.
In 1914, the two protectorates were amalgamated and
the supreme court ordinance of 1914 was promulgated to
cover the whole country. The ordinance also provided
for the applicability of tue common law of England, the
doctrine of equity and S.O.G.A.
The first local company law in Nigeria was promulgated
in 1912, that was the companies ordinance of 1912,
which was based on the English companies act of 1908.
It was originally applied to the colony of Lagos but
later, in 1917, applied to the rest of the country. In 1922,
the previous ordinances was consolidated and later
repealed and replaced with the companies ordinance of
1922. The 1922 ordinance was subsequentlyamended in
1929,1941, and 1954. And became part of LFN 1948
edition. And later 1958.
In 1958, the companies act under..... The 1968 act was a
marked improvement on the previous laws. It made
mandatory provisions for accounts and encouraged
greater accountability of directors. Similarly it required
foreign companies intending to carry on business in
Nigeria to be locally incorporated. However, despite
these improvements, there were still several criticisms
that the improvements did not adequately deal with the
rapid economic and commercial growth if the country
especially the sudden boom of petroleum oil wealth
between 1970 and 1979.
It is in this regard that in 1987, the Nigerian law reform
commission was directed by the then attorney general of
the federation to undertake a review and reform of
Nigerian company law. This led to the draft decree
which was promulgated into the companies and allied
matters decree 1 of 1990.
The decree was amended as the companies and allied
matters amendment decree no 32 of 1990, decree no 46
of 1991 and no 40of 1992. In 1999, part 17, that is,
dealings in companies securities was transferred to the
investment and securities act no 45, 1999. The current
companies statute can now be found in chapter C20
L.F.N. 2004. Part A of the act deals with incorporated
companies, B with registration of business names. C
with incorporated trustees, pt D deals with citations.
HIGHLIGHTS OF THE ACT
1. Inclusion and modification of some relevant common
law principles, e.g the doctrine of ultra vires, issues of
promoters.....,The principle of legal personality
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2. Introduction of Corporate affairs commission
3. Introduction of minimum share capital.
4. Stronger control over directors and accounts.
5. Provisions for the appointments, qualifications, duties
and tenure for the office of the company secretary.
6. Provisions relating to majority rules and minority
protection.
CORPORATE AFFAIRS COMMISSION.
The C.A.C is a body corporate with perpetual succession
and a common seal. It is capable of suing and being
sued in its corporate name. It is also capable of
acquiring, holding or disposing of any property movable
or immovable for the purpose of carrying out it's
functions. S 1 CAMA. Tue headquarters of rye
commission is located in Abuja with branches to be
established in each state. So far, branches have been
establishes in virtually all states
FUNCTIONS
1. Administration of the act including the regulation and
supervision, registration and winding up of companies.
2. Establishment and maintenance of companies registry
and offices in all the states in a federation.
3. Conduct of investigation into the affairs of any
company where the interest if tue shareholders and
public so demands.
4. Administration of business names and incorporation
of trustees pact of the act.
5. Such other activities as are necessary for giving effect
to the act's provision. S 7 C.A.M.A.
The chief executive of the commission is a registrar
general who must be a legal practitioner and has been
so qualified for not less than ten years. Who must have
an experience in the practice and administration in
company law for not less than 8 years.
ACCREDITATION
Legal practitioners, chattered accountants and chattered
secretaries are the only professionals authorized to
transact business with C.A.C in respect of corporate
matters in Part A of the act. However, these
professionals must be formally accredited with the
commission.
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PROCEDURE FOR ACCREDITATION
1. Obtain and complete accreditation form at C.A.C
2. Return of the completed application form to be
accompanied by:
• Two passport photographs
• Copy of qualifying certificate
• Practising fee receipt for the year of application.
• N.Y.S.C discharge or exception certificate.
• Accreditation fee of 2,500 for individuals and 5,000 for
firms.
Week 2: Types and classification of company.
A company, according to the Black's law dictionary, is a
union or association of persons for carrying on a
commercial or industrial enterprise ; a partnership,
corporation, association, joint stock company.
TYPES OF COMPANY
There are two types of company under the CAMA. They
are:
1. Private company
2. Public company
1. Private company: According to section 22(1) CAMA, a
private company is one which states so in its
memorandum of association. It has the following
features :
• It restricts the transfer of its shares. S 22(2) CAMA
• It has not more than fifty members. S 22(3).
• If two people jointly purchase shares they shall be
regarded as one pursuant to S 22(3) CAMA - S 22(4)
According to S 5 CAMA, a private company shall not
unless authorized by law, invite the public to:
• Subscribe to shares or debentures in the company
• Make deposit for a fixed period even if for interest.
2. Public company: A public company according to S 24
CAMA is any company that is not private and it shall be
stated in its memorandum.
FEATURES OF A COMPANY.
A company may either be limited liability or unlimited
liability.
1. Limited liability: This is divided into:
• Company limited by shares: According to S 21(1)a, a
company limited by shares is one in which liability of
members is restricted to the amount of shares purchased
in the company.
• Company limited by guarantee: According to S 21(1)b
CAMA, a company limited by guarantee is one in which
liability of members is restricted to the amount they
contributed towards the shares of the company.
Companies limited by guarantee are not for making
profit. S 26(1) CAMA
2. Unlimited company: This is a company in which the
liability of members in case of liquidation is unlimited.
If the company liquidated, members have to pay for the
debt of the company.
CAPACITY OF INDIVIDUAL TO FORM COMPANY.
According to S 20(1) CAMA, The following people cannot
form a company:
1. Someone under 18 years.
2. Someone dat has been proven by a court or elsewhere
to be of unsound mind.
3. Someone dat is an undischarged bankrupt.
4. A person disqualified from being a director under S
254 CAMA.
Section 20(2) CAMA provides that if any two people who
are not disqualified in S 1(a) sign the memorandum, it is
valid and a company could be formed. That Is if the
other two are more than 18 and above. It stands.
A corporate body in liquidation can't form a company S
20(3) CAMA.
S 20(4) CAMA says that subject to any laws restricting
it, an alien or foreign corporation may join in the
formation of Company.
INCORPORATION OF A COMPANY
S 18 CAMA states that any two or more persons that are
qualified can form a company. S 19(1) CAMA says that
no company, association or partnership consisting of
more than 20 persons can be formed without
subscribing to the act. According to S 19(2) CAMA, those
excluded from this are co-operative societies and
partnerships of lawyers or accountants.
According to S 35(2) CAMA, in order to incorporate a
company, the following must be provided to the
commission:
• Memorandums of Association and Article of association
• The address of the company and the head-office if
required. A P.O. Box shall not be accepted as an
address.
• A document containing the list, particulars and consent
of the first directors of the company.
• A statement of authorized share capital signed by at
least one director
• Any other document required by the commission to
satisfy the requirement of any law relating to the
formation of a company.
• S 35(3) CAMA, A statement of declaration by a legal
practitioner that the requirement of the act have been
complied with shall be produced to the commission. If
the commission rejects the declaration, it shall notify the
declarant within 30 days.