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29 Dec

COMPANY LAW 1.8 ALTERATION OF CONTENTS OF THE MEMORANDUM OF ASSOCIATION

ALTERATION OF THE MEMO.

See Section 44.

Initially, alteration was prohibited as the memo was seen as the constitutional and fundamental document. Today, the memo can generally[1] be altered except the company provides a restriction clause in the memo that prohibits alteration of the Memo. We shall focus on alteration of name and object clause which features most in practice.

Alteration of Name: the process (See Section 31) can be summarised thus:

  • The members would pass a special resolution to change the co’s name: A special resolution requires at least ¾ majority-Section 233(2). This is unlike a simple resolution which merely requires a simple majority-Section 233(1).
  • The CAC (in writing) would have to approve/consent to the special resolution.
  • The CAC shall enter the new name (in place of the former one) in the register-31(5)
  • A certificate of incorporation (bearing the altered/new name) is issued by the CAC to the Company[2].
  • The CAC then publishes the change of name in the official gazette.

:: The new certificate or notice in the official gazette would suffice as evidence of alteration-Section 31(8).

:: The alteration/registration can be revoked where the CAC discovers that due procedure was not followed. E.g. no special resolution was passed.

:: The change of name would not affect any right or obligation attaching or accruing to the company-31(6)

:: The procedure above would not be necessary where the company seeks to substitute the word “Limited” with “Public Limited Company” and vice versa-Section 31(3). This provision has been criticised because such alteration is too fundamental to be ignored.

:: The CAC can ask a company to change its name where it conflicts with the name of a registered company already in existence before the company

Alteration of Object Clause: This was initially discouraged however, since 1968, it became relatively straightforward to amend the object clause. The companies no longer need to draft verbose objects to cover every conceivable endeavours they might undertake in the future. Just amend the object clause to suit the new cause you wish to undertake as a company.

The procedure (see Section 46 CAMA) was stated in Orji V Dorji Textile Mills Nig Ltd[3]

  • A written notice of intention to amend the object clause must be given to all the membersSection 46(1). This would enable them to know whether they still want to support/be part of the proposed new cause.
  • A special resolution to alter the objects should be passed-Section 46(1).
  • Notice of the special resolution (that was passed) should be given to the CAC within 43 days (i.e. 28 days for dissenting member to apply to the court… Plus 15 days grace added)-Section 46(7).
  • The amendment has occurred.

In Yalaju Amaye V AREC it was noted that the court should not interfere where the legal procedures above have been complied with.

In Step 3 above, the dissenting member(s)[4] may apply to the court within 28 days (of passing the resolution) to challenge the resolution[5]. When a dissenting party has applied to the court, the resolution shall not have effect until it is confirmed by the court. Such confirmation can be wholly or in part or with terms which the court deems appropriate… furthermore, the court can adjourn the proceeding for the dissenting member(s) to be convinced or their interest bought over-Section 46 (4).

See Section 100-111 for amendment of Capital Clause.

 

 

ARTICLES OF ASSOCIATION

Regulates the internal affairs of the company. Before the 1990 CAMA, it was optional for a company limited by shares to register the articles. If it did not file its articles, it is deemed to have adopted the model contained in Table A-Section 8 and 10 CAMA 1968. However, Section 33 of CAMA 1990 now makes it mandatory to file the Articles of Association together with the Memorandum.

The articles largely regulate the internal affairs of the company. The articles must be signed by each subscriber[6] in the presence of at least 1 witness who shall attest to the signature… and shall bear a stamp as if contained in a deed-Section 34(4) CAMA 1990.

Table A in Schedule 1 has four parts which have specimen forms for

  • Public company having share capital-Part 1.
  • Private co having share capital-part 2.
  • Company limited by guarantee-Part 3.
  • Unlimited Company-Part 4.

These specimen forms are mere guides and Section 34 provides that they could be used/adopted with such omissions or alterations as may be required in the circumstances to suit the particular preference of the shareholders.

 

[1] The Registered Office Clause cannot be altered.

[2] This procedure was reiterated in Shackleford Ford and Co v Dangerfield [1868] L.R C.P 407.

[3] [2010] 5 WRN 32.

[4] 46 (2) An application under this Section may be made to the court

(a) by the holders of not less in the aggregate than 15 per cent in nominal value of the company’s issued share

capital or any class thereof or, if the company is not limited by shares, not less than 15 per cent of the company’s members; or

(b) by the holders of not less than 15 per cent of the company’s debentures entitling the holders to object to

alterations of its objects:

Provided that any such application shall not be made by any person who has consented to or voted in favour of the alteration.

[5] Section 46(2)(3) and (5) Companies and Allied Matters Act.

[6]  Same persons who signed the memorandum.

Isochukwu

Quite eccentric really

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