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26 Jan

COMPANIES AND ALLIED MATTERS ACT 1990

Companies and Allied Matters Act
Chapter 59
Laws of the Federal Republic of Nigeria 1990

2nd January 1990

An Act to establish the Corporate Affairs Commission, provide for the incorporation of companies and incidental matters, registration of business names and the incorporation of trustees of certain communities, bodies and associations.

Part A
Companies

Part I
Corporate Affairs commission

1. (1) There is hereby established under this Decree, a body to be known as the Corporate Affairs Commission (in this Decree referred to as “the Commission”).

(2) The Commission shall be-

(a) a body corporate with perpetual succession and a common seal;

(b) capable of suing and being sued in its corporate name; and

(c) capable of acquiring, holding or disposing of any property, movable or immovable, for the purpose of carrying out its functions.

(3) The headquarters of the Commission shall be situated in the Federal Capital Territory, Abuja, and there shall be established an office of the Commission in each State of the Federation.

2. The Commission shall consist of the following members, that is-

(a) a chairman who shall be appointed by the President, Commander-in Chief of the Armed Forces on the recommendation of the Minister, being a person who by reason of his ability, experience or specialised knowledge of corporate, industrial, commercial, financial or economic matters or of business or professional attainments would in his opinion be capable of making outstanding contributions to the work of the Commission;

(b) one representative of the business community, appointed by the Minister on the recommendation of the Nigerian Association of Chambers of Commerce, Industries, Mines and Agriculture;

(c) one representative of the legal profession, appointed by the Minister on the recommendation of the Nigerian Bar Association;

(d) one representative of the accountancy profession, appointed by the Minister on the recommendation of the Institute of Chartered Accountants of Nigeria

(e) one representative of the Manufacturers Association of Nigeria, appointed by the Minister on the recommendation of the Association;

(f) one representative of the Securities and Exchange Commission not below the grade of a Director or its equivalent;

(g) one representative of each of the following Federal Ministries, that is-

(i) Trade and Tourisms,

(ii) Finance and Economic Development,

(iii) Justice,

(iv) Industry and Technology; and

(h) the Registrar-General of the Commission.

3. (1) Subject to the provisions of subsection (2) of this section, a person appointed as a member of the Commission (not being an ex-officio member) shall hold office for three years and shall be eligible for re-appointment for one further term of two years.

(2) The minister may, with the approval of the President, Commander-in Chief of the Armed Forces at any time remove any member of the Commission from office if the Minister is of the opinion that it is not in the interest of the Commission for the member to continue in office and shall notify the member in writing to that effect.

(3) The members of the Commission except the Registrar-General shall be part-time members of the Commission.

(4) Any member of the Commission shall cease to hold office if-

(a) he becomes of unsound mind or is incapable of carrying out his duties;

(b) he becomes bankrupt or has made arrangement with his creditors;

(c) he is convicted of felony or any offence involving dishonesty;

(d) he is guilty of serious misconduct relating to his duties; or

(e) in the case of a person possessed of professional qualifications, he is disqualified or suspended (other than at his own request) from practising his profession in any part of Nigeria by the order of any competent authority made in respect of him personally.

4. Members of the Commission appointed under section 2 (a), (b), (c), (d), (e), (f), (g), and (h) shall be paid such remuneration and allowances as the President, Commander-in-Chief of the Armed Forces may, from time to time, direct.

5. (1) Subject to this section and section 26 of the Interpretation Act 1964, the Commission may make standing orders regulating its proceedings.

(2) The Chairman shall preside at every meeting of the Commission but, in his absence, the members present shall elect one of their number present to preside at the meeting.

(3) The quorum for meetings of the Commission shall be five7

(4) The Commission may appoint any of its officers to act as Secretary at any of its meetings.

6. (1) A member of the Commission who is directly interested in any company or enterprise, the affairs of which are being deliberated upon by the Commission, or is interested in any contract made or proposed to be made by the Commission shall, as soon as possible after the relevant facts have come to his knowledge, disclose the nature of his interest at a meeting of the Commission.

(2) A disclosure, under subsection (1) of this section, shall be recorded in the minutes of the Commission, and the member shall-

(a) not take part after such disclosure in any deliberation or decision of the Commission with regard to the subject matter in respect of which his interest is thus disclosed;

(b) be excluded for the purpose of constituting a quorum of the Commission for any such deliberation or decision.

7. (1) The functions of the Commission shall be to-

(a) subject to section 541 of this Act, administer this Act including the regulation and supervision of the formation, incorporation, registration, management, and winding-up of companies under or pursuant of this Act;

(b) establish and maintain a companies registry and offices in all the States of the Federation suitably and adequately equipped to discharge its functions under this Act or any other law in respect of which it is charged with responsibility;

(c) arrange or conduct an investigation into the affairs of any company where the interest of the shareholders and the public so demand;

(d) perform such other functions as may be specified by any law or enactment; and

(e) undertake such other activities as are necessary or expedient for giving full effect to the provisions of this Act.

(2) Nothing in this section shall effect the powers, duties or jurisdiction of the Securities and Exchange Commission under the Securities and Exchange Commission Act.

8. (1) There shall be appointed by the Commission, a Registrar-General who shall be qualified to practice as a legal practitioner in Nigeria and has been so qualified for not less than 10 years and in addition, has had experience in company law practice or administration for not less than eight years.

(2) The Registrar-General shall be the chief executive of the Commission and shall be subject to the directives of the Commission and shall hold office on such terms and conditions as may be specified in his letter of appointment and on such other terms and conditions as may be determined from time to time, by the Commission with the approval of the National Council of Ministers.

(3) The Registrar-General shall be the accounting officer for the purpose of controlling and disbursing amounts from the fund established pursuant to section 12 of this Act.

9. The Commission may appoint such other staff as it may deem necessary for the efficient performance of the functions of the Commissions under or pursuant to this Act.

10. Notwithstanding the provisions of any enactment to the contrary, a person appointed to the office or Registrar-General under section 8 of this Act or a person appointed under section 9 of this Act who is a legal practitioner shall, while so appointed, be entitled to represent the Commission as a legal practitioner for the purpose and in the course of his employment.

11. Service in the Commission shall be approved service for the purpose of the Pensions Act and accordingly, officers and other persons employed in the Commission shall in respect of their service in the Commission be entitled to pensions, gratuities and other retirement benefits enjoyed by persons holding equivalent grades int he public service of the Federation, so however that nothing in this Act shall prevent the appointment of a person to any office on terms which preclude the grant of a pension and gratuity in respect of that office.

12. The Commission shall establish a fund which shall consist of such sums as may be allocated to it by the Federal Government and such other funds as may accrue to it in the discharge of its functions.

13. The Commission may, from time to time, apply the proceeds of the fund established in pursuance of section 12 of this Act-

(a) to the cost of administration of the Commission;

(b) for re-imbursing members of the Commission or any committee set up by the Commission for such expenses as may be authorised or approved by the Commission, in accordance with the rate approved in that behalf by the National Council of Ministers;

(c) to the payment of salaries, fees or other remuneration or allowances, pensions and gratuities payable to the employees of the Commission;

(d) for the maintenance of any property acquired or vested in the Commission; and

(e) for, and in connection with, all or any of the functions of the Commission under this Act.

14. (1) The Commission shall keep proper accounts and proper records in relation thereto and shall prepare in respect or each year a statement of accounts in such form as the National Council of Ministers may direct.

(2) The accounts of the Commission shall be audited not later than six months after the end of the year by auditors appointed by the Commission from the list and in accordance with guidelines supplied by the Auditor-General of the Federation, and the fees of the auditors and the expenses of the audit generally shall be paid from the funds of the Commission.

(3) The Commission shall cause to be prepared, not later than 30th September in each year, an estimate or the expenditure and income or the Commission during the next succeeding year and when prepared they shall be submitted through the Minister for approval by the National Council of Ministers.

15. The Commission shall, not later than 30th June in each year, submit to the National Council of Ministers, a report on the activities of the Commission during the immediately preceding year and shall include in such report, the audited accounts of the Commission.

16. The Minister may, with the approval or the National Council of Ministers, make regulations generally for the purpose of this Act and in particular, without prejudice to the generality of the foregoing provisions, make regulations-

(a) prescribing the forms and returns and other information required under this Part, that is, Part A of this Act;

(b) requiring returns to be made within the period specified therein by any company or enterprise to which this Part, that is, Part A of this Act applies; and

(d) prescribing any fees payable under this Part, that is, Part A of this Act.

17. In this Part of this Act-

“Chairman” means the Chairman of the Commission; and “member” means any member of the Commission, including the Chairman.

Part II
Incorporation of companies and incidental matters

Chapter I
Formation of Company

18. As from the commencement of this Act, any two or more persons may form and incorporate a company by complying with the requirements of this Act in respect of registration of such company.

19. (1) No company, association, or partnership consisting of more than twenty persons shall be formed for the purpose of carrying on any business for profit or gain by the company, association, or partnership, or by the individual members thereof, unless it is registered as a company under this Act, or is formed in pursuance of some other enactment in force in Nigeria.

(2) Nothing in this section shall apply to-

(a) any co-operative society registered under the provisions of any enactment in force in Nigeria; or

(b) any partnership for the purpose of carrying on practice-

(i) as legal practitioners, by persons each of whom is a legal practitioner; or

(ii) as accountants, by persons each of whom is entitled by law to practice as an accountant.

(3) If at any time the number of members of a company, association or partnership exceeds twenty in contravention of this section and it carries on business for more than fourteen days while the contravention continues, every person who is a member of the company, association or partnership during the time that is so carries on business after those fourteen days shall be guilty of an offence and liable on conviction to a fine of 25 for every day during which the default continues.

20. (1) Subject to subsection (2) of this section, an individual shall not join in the formation of a company under this Act if-

(a) he is less than eighteen years of age; or

(b) he is of unsound mind and has been so found by a court in Nigeria or elsewhere; or

(c) he is an undischarged bankrupt; or

(d) he is disqualified under section 254 of this Act from being a director of a company.

(2) A person shall not be disqualified under paragraph (a) of subsection (1) of this section, if two other persons not disqualified under that subsection have subscribed to the memorandum.

(3) A body corporate in liquidation shall not join in the formation of a company under this Act.

(4) Subject to the provisions of any enactment regulating the rights and capacity of aliens to undertake or participate in trade or business, an alien or a foreign company may join in forming a company.

21. (1) An incorporated company may be either a company-

(a) having the liability of its members limited by the memorandum to the amount, if any, unpaid on the shares respectively held by them (in this Act referred to as “a company limited by shares”); or

(b) having the liability of its members limited by the memorandum to such amount as the members may respectively thereby undertake to contribute to the assets of the company in the event of its being wound up (in this Act referred to as “a company limited by guarantee”) or

(c) not having any limit on the liability of its members (in this Act referred to as “an unlimited company”).

(2) A company of any of the foregoing types may either be a private company or a public company.

22. (1) A private company is one which is stated in its memorandum to be a private company.

(2) Every private company shall by its articles restrict the transfer of its shares.

(3) The total number of members of a private company shall not exceed fifty, not including persons who are bona fide in the employment of the company, or were while in that employment and have continued after the determination of that employment to be, members of the company.

(4) Where two or more persons hold one or more shares in a company jointly, they shall for the purpose of subsection (3) of this section, be treated as a single member.

(5) A private company shall not, unless authorised by law invite the public to-

(a) subscribe for any shares or debentures of the company;

(b) deposit money for fixed periods or payable at call, whether or not bearing interest.

23. (1) Subject to subsection (2) of this section, where default is made in complying with any of the provisions of section 22 of this Act in respect of a private company, the company shall cease to be entitled to the privileges and exemptions conferred on private companies by or under this Act and this Act shall apply to the company as if it were not a private company.

(2) If a court, on the application of the company or any other person interested, is satisfied that the failure to comply with the provisions of section 22 of this Act was accidental or due to inadvertence or to some other sufficient cause, or that on other grounds it is just and equitable to grant relief, the court may, on such terms and conditions as may seem to it to be just and expedient, order that the company be relieved from the consequences mentioned in subsection (1) of this section.

24. Any company other than a private company shall be a public company and its memorandum shall state that it is a public company.

25. As from the commencement of this Act, an unlimited company shall be registered with a share capital; and where an existing unlimited company is not registered with a share capital, it shall, not later than the appointed day, alter its memorandum so that it becomes an unlimited company having a share capital not below the minimum share capital permitted under section 99 of this Act.

26. (1) Where a company is to be formed for promoting commerce, art, science, religion, sports, culture, education, research, charity or other similar objects, and the income and property of the company are to be applied solely towards the promotion of its objects and on portion thereof is to be paid or transferred directly or indirectly to the members of the company except as permitted by this Act, the company shall not be registered as a company limited by shares, but may be registered as a company limited guarantee.

(2) As from the commencement of this Act, a company limited by guarantee shall not be registered with a share capital; and every existing company limited by guarantee and having share capital shall, not later than the appointed day, alter its memorandum so that it becomes a company limited by guarantee and not having a share capital.

(3) In the case of a company limited by guarantee, every provision in the memorandum or articles or in any resolution of the company purporting to give any person a right to participate in the divisible profits of the company otherwise than as a member or purporting to divide the company’s undertaking into shares or interests shall be void.

(4) A company limited by guarantee shall not be incorporated with the object of carrying on business for the purpose of making profits for distribution to members.

(5) The memorandum of a company limited by guarantee shall not be registered without the authority of the Attorney General of the Federation.

(6) If any company limited by guarantee carries on business for the purpose of distributing profits, all officers and members thereof who are cognisant of the fact that it is so carrying on business shall be jointly and severally liable for the payment and discharge of all the debts and liabilities or the company incurred in carrying on such business, and the company and every such officer and member shall be guilty of an offence and liable on conviction to a fine not exceeding 100 for every day during which it carries on such business.

(7) The total liability of the members of a company limited by guarantee to contribute to the assets of the company in the event of its being wound up shall not at any time be less than 10,000.

(8) Subject to compliance with subsection (5) of this section, the articles of association of a company limited by guarantee may provide that members can retire or be excluded from membership of the company.

(9) If, in breach of subsection (5) of this section, the total liability of the members of any company limited by guarantee shall at any time be less than 10,000, every director and member of the company who is cognisant of the breach shall be guilty of an offence and liable on conviction to a fine or 50 for every day during which the default continues.

(10) If, upon the winding-up of a company limited by guarantee, there remains after the discharge of all its debts and liabilities any property of the company, the same shall not be distributed among the members but shall be transferred to some other company limited by guarantee having objects similar to the objects of the company or applied to some charitable object and such other company or charity shall be determined by the members prior to the dissolution of the company.

Memorandum of Association

27. (1) The memorandum of every company shall state-

(a) the name of the company;

(b) that the registered office of the company shall be situated in Nigeria;

(c) the nature of the business or businesses which the company is authorised to carry on, or, if the company is not formed for the purpose of carrying on business, the nature of the object or objects for which it is established;

(d) the restriction, if any, on the powers of the company;

(e) that the company is a private or public company, as the case may be;

(f) that the liability of its members is limited by shares or by guarantee or is unlimited, as the case may be.

(2) If the company has a share capital-

(a) the memorandum shall also state the amount of authorised share capital, not being less than 10,000 in the case of a private company and 500,000 in the case of a public company, with which the company proposes to be registered, and the division thereof into shares of a fixed amount;

(b) the subscribers of the memorandum shall take among them a total number of shares of a value of not less than twenty-five per cent of the authorised share capital; and

(c) each subscriber shall write opposite to his name the number of shares he takes.

(3) A subscriber of the memorandum who holds the whole or any part of the shares subscribed by him in trust for any other person shall disclose in the memorandum that fact and the name of the beneficiary.

(4) The memorandum of a company limited by guarantee shall also state that-

(a) the income and property of the company shall be applied solely towards the promotion of its objects, and that no portion thereof shall be paid or transferred directly or indirectly to the members of the company except as permitted by or under this Act; and

(b) each member undertakes to contribute to the assets of the company in the event of its being wound up while he is a member or within one year after he ceases to be a member, for payment of the debts and liabilities of the company, and of the cost of winding up, such amount as may be required not exceeding a specified amount and the total of which shall not be less than 10,000.

(5) The memorandum shall be signed by each subscriber in the presence of at least one witness who shall attest the signature.

(6) The memorandum shall be stamped as a deed.

28. Subject to the provisions of section 27 of this Act, the form of a memorandum of association of-

(a) a company limited by shares;

(b) a company limited by guarantee; and

(c) an unlimited company,

shall be specified in Tables B, C and D respectively, in the First Schedule to this Act, or as near that form as circumstances admit.

29. The name of a private company limited by shares shall end with the word “Limited”.

(2) The name of a public company limited by shares shall end with the words “Public Limited Company”.

(3) The name of a company limited by guarantee shall end with the words “(Limited by Guarantee)” in brackets.

(4) The name of an unlimited company shall end with the word “Unlimited”.

(5) A company may use the abbreviations “Ltd”, “PLC” “(Ltd/Gte)” and “Ultd” for the words “Limited”, “Public Limited Company”, “(Limited by Guarantee)” and “Unlimited” respectively, in the name of the company.

30. (1) No company shall be registered under this Act by a name which-

(a) is identical with that by which a company in existence is already registered, or so nearly resembles that name as to be calculated to deceive, except where the company in existence is in the course of being dissolved and signifies its consent in such manner as the Commission requires; or

(b) contains the words “Chamber of Commerce” unless it is a company limited by guarantee; or

(c) in the opinion of the Commission is capable of misleading as to the nature or extent or its activities or is undesirable, offensive or otherwise contrary to public policy; or

(d) in the opinion of the Commission would violate any existing trade mark or business name registered in Nigeria unless the consent of the owner of the trade mark or business name has been obtained.]

(2) Except with the consent of the Commission, no company shall be registered by a name which-

(a) includes the word “Federal”, “National’, “Regional”, “State”, “Government”, or any other word which in the opinion of the Commission suggests or is calculated to suggest that it enjoys the patronage or the Government of the Federation or the Government of a State in Nigeria, as the case may be, or any Ministry or Department of Government; or

(b) contains the word “Municipal” or “Chartered” or in the opinion of the Commission suggests, or is calculated to suggest, connection with any municipality or other local authority; or

(c) contains the word “Co-operative” or the words “Building Society”; or

(d) contains the word “Group” or “Holding”.

31. (1) If a company, through inadvertence or otherwise, on its first registration or on its registration by a new name, is registered under a name identical with that by which a company in existence is previously registered, or so nearly resembling it as to be likely to deceive, the first-mentioned company may, with the approval of the Commission, change its name, and if the Commission so directs within six months of its being registered under that name, the company concerned shall change its name within a period of six weeks from the date of the direction or such longer period as the Commission may allow.

(2) If a company makes default in complying with a direction under subsection (1) of this section, it shall be guilty of an offence and liable on conviction to a fine of N 25 for every day during the default continues.

(3) Any company may, by special resolution and with the approval of the Commission signified in writing, change its name:

Provide that no such approval shall be required where the only change in the name of a company is the substitution of the words “Public Limited Company” for the word “Limited’ or vice versa on the conversion of a private company into a public company or a public company into a private company in accordance with the provisions of this Act.

(4) Nothing in this Act shall preclude the Commission from requiring a company to change its name if it is discovered that such a name conflicts with an existing trade mark or business name registered in Nigeria prior to the registration of the company and the consent of the owner of the trade mark or business name was not obtained.

(5) Where a company changes its name, the Commission shall enter the new name on the register in place of the former name, and issue a certificate of incorporation altered to meet the circumstances of the case.

(6) The change of name shall not affect any rights or obligations of the company, or render defective any legal proceedings by or against the company, and any legal proceedings that could have been continued or commenced against it or by it in its former name may be continued or commenced against or by it in its new name.

(7) Any alteration made in the name under this section shall be published by the Commission in the Gazette.

(8) A certificate or publication in the Gazette under this section shall be evidence of the alteration to which it relates.

32. (1) The Commission may, on written application and on payment of the prescribed fee, reserve a name pending registration of a company or a change of name by a company.

(2) Such reservation as is mentioned in subsection (1) of this section shall be for such period as the Commission shall think fit not exceeding sixty days and during the period of reservation no other company shall be registered under the reserved name or under any other name which in the opinion of the Commission bears too close a resemblance to the reserved name.

Article of Association

33. There shall be registered with the memorandum of association articles of association signed by the subscribers to the memorandum of association, and prescribing regulations for the company.

34. (1) The form and contents of the articles of association of a public company having a share capital, a private company having a share capital, a company limited by guarantee and an unlimited company shall be as in Parts I, II, III, and IV respectively, of Table A in the First Schedule to this Act with such additions, omissions or alterations as may be required in the circumstances. (2) In the case of a company limited by guarantee, the articles of association shall state the number of members with which the company proposes to be registered for the purpose of enabling the Commission to determine the fees payable on registration.

(3) The articles of association shall-

(a) be printed;

(b) be divided into paragraph numbered consecutively; and

(c) be signed by each subscriber of the memorandum of association in the presence of at least one witness who shall attest the signature.

(4) The articles shall bear the same stamp duty as if they were contained in a deed.

Registration of Companies

35. (1) As from the commencement of this Act, a company shall be formed in the manner set out in this section.

(2) There shall be delivered to the Commission-

(a) the memorandum of association and articles of association complying with the provisions of this Part of this Act;

(b) the notice of the address of the registered office of the company and the head office if different from the registered office;

(c) a statement in the prescribed form containing the list and particulars together with the consent of the persons who are to be the first directors of the company;

(d) a statement of the authorised share capital signed by at least one director; and

(e) any other document required by the Commission to satisfy the requirements of any law relating to the formation of a company.

(3) A statutory declaration in the prescribed form by a legal practitioner that those requirements of this Act for the registration of a company have been compiled with shall be produced to the Commission, and it may accept such a declaration as sufficient evidence of compliance:

Provided that there where the Commission refuses a declaration, it shall within thirty days of the date of receipt of the declaration send to the declarant a notice of its refusal giving the grounds of such refusal.

36. (1) The Commission shall register the memorandum and articles unless in its opinion-

(a) they do not comply with the provisions of this Act; or

(b) the business which the company is to carry on, or the objects for which it is formed, or any of them, are illegal; or

(c) any of the subscribers to the memorandum is incompetent or disqualified in accordance with section 20 of this Act; or

(d) there is non-compliance with the requirement of any other law as to registration and incorporation of a company; or

(e) the proposed name conflicts with or is likely to conflict with an existing trade mark or business name registered in Nigeria.

(2) Any person aggrieved by the decision of the Commission under subsection (1) of this section, may give notice to the Commission requiring it to apply to the court for directions and the Commission shall within twenty-one days of the receipt of such notice apply to the court for the directions.

(3) The Commission may, in order to satisfy itself as provided in subsection (1) (c) of this section, by instrument in writing require a person subscribing to the memorandum to make and lodge with the Commission, a statutory declaration to the effect that he is not disqualified under section 20 of this Act from joining in forming a company.

(4) Steps to be taken under this Act to incorporate a company shall not include any invitation to subscribe for shares or otherwise howsoever on the basis of a prospectus.

(5) Upon registration of the memorandum and articles, the Commission shall certify under its seal-

(a) that the company is incorporated;

(b) in the case of a limited company, that the liability of the members is limited by shares or by guarantee; or

(c) in the case of an unlimited company, that the liability of the members is unlimited; and

(d) that the company is a private or public company, as the case may be.

(6) The certificate of incorporation shall be prima facie evidence that all the requirements of this Act in respect of registration and of matters precedent and incidental to it have been compiled with and that the association is a company authorised to be registered and duly registered under this Act.

37. As from the date of incorporation, the subscriber of the memorandum together with such other persons as may, from time to time, become members of the company, shall be a body corporate by the name contained in the memorandum, capable forthwith of exercising all the powers and functions of an incorporated company including the power to hold land, and having perpetual succession and a common seal, 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 this Act.

Capacity and powers of companies

38. (1) Except to the extent that the company’s memorandum or any enactment otherwise provides, every company shall, for the furtherance of its authorised business or objects, have all the powers of a natural person of full capacity.

(2) A company shall not have or exercise power either directly or indirectly to make a donation or gift of any of its property or funds to a political party or political association, or for any political purpose; and if any company, in breach of this subsection makes any donations or gift of its property to a political party or association, or for any political purpose, the officers in default and any member who voted for the breach shall be jointly and severally liable to refund to the company the sum or value of the donation or gift and in addition, the company and every such officer or member shall be guilty of an offence and liable to a fine equal to the amount or value of the donation or gift.

39. (1) A company shall not carry on any business not authorised by its memorandum and shall not exceed the powers conferred upon it by its memorandum or this Decree.

(2) A breach of subsection (1) of this section, may be asserted in any proceedings under sections 300 to 313 of this Decree or under subsection (4) of this section. (3) Notwithstanding the provisions of subsection (1) of this section, no act of a company and no conveyance or transfer of property to or by a company shall be invalid by reason of the fact that such act, conveyance or transfer was not done or made for the furtherance of any of the authorised business of the company or that the company was otherwise exceeding its objects or powers.

(4) On the application of-

(a) any member of the company; or

(b) the holder of any debenture secured by a floating charge over all or any of the company’s property or by the trustee of the holders of any such debentures,

the court may prohibit by injunction, the doing of any act or the conveyance or transfer of any property in breach of subsection (1) of this section.

(5) If the transactions sought to be prohibited in any proceeding under subsection (4) of this section are being, or are to be performed or made pursuant to any contract to which the company is a party, the court may, if it deems the same t be equitable and if all the parties to the contract are parties to the proceedings, set aside and prohibit the performance of such contract, and may allow to the company or to the other parties to the contract compensation for any loss or damage sustained by them by reason of the setting aside or prohibition of the performance of such contract but no compensation shall be allowed for loss of anticipated profits to be derived from the performance of such contract.

40. (1) Where there is provision in the memorandum of association of a company restricting the powers and capacity of the company to carry on its authorised business or object, the restriction may be relied on and have effect only for the purpose of-

(a) proceedings against the company by a director or member of the company, or where the company has issued debentures secured by a floating charge over all or any of the company’s property, by the holder of any of the debentures or the trustee for the holders of the debentures; or

(b) proceedings by the company or a member of the company against the present of former officers or the company for failure to observe any such restriction; or

(c) proceedings by the Commission or a member of the company to wind up the company; or

(d) proceedings for the purpose of restraining the company or other person from acting in breach of the memorandum or directing the company or such person to comply with the same.

(2) A person may not in proceedings referred to in subsection (1) (a) (b) or (c), of this section, rely on a restriction of the power or capacity of the company contained in the memorandum in any case where he voted in favour of, or otherwise expressly or by conduct agreed to the doing of an act by the company or the conveyance by or to the company of property which, it is alleged in the proceedings, was or would be contrary to such a restriction.

Effect of memorandum and articles

41. (1) Subject to the provisions of this Decree, the memorandum and articles, when registered, shall have the effect of a contract under seal between the company and its members and officers and between the members and officers themselves whereby they agree to observe and perform the provisions of the memorandum and articles, as altered from time to time in so far as they relate to the company, members, or officers as such.

(2) All money payable by any member to the company under the memorandum or articles shall be a debt due from him to the company and shall be of the nature of a speciality debt.

(3) Where the memorandum or articles empower any person to appoint or remove any director or other officer of the company, such power shall be enforceable by that person notwithstanding that he is not a member or officer of the company.

(4) In any action by any member or officer to enforce any obligation owed under the memorandum or articles to him and any other member or officer, such member or officer may, if any other member or officer is affected, by the alleged breach of such obligation with his consent, sue in a representative capacity on behalf of himself and all other members or officers who may be affected other than any who are defendants and the provisions of Part XI of this Decree shall apply.

Member’s right to copy of memorandum and articles

42. (1) A company shall, on being so required by any member, send to him a copy of the memorandum and of the articles, if any, and a copy of any enactment which alters the memorandum, subject to payment, in the case of a copy of the memorandum and of the articles, of N20 or such less sum as the company may prescribe and in the case of a copy of an enactment of such sum not exceeding the published price thereof as the company may require.

(2) If a company makes default in complying with this section, the company and every officer of the company who is in default shall be liable for each offence to a fine not exceeding N25.

43. (1) Where an alteration is made in the memorandum of a company every copy of the memorandum issued after the date of the alteration shall be in accordance with the alteration.

(2) If, where any such alteration has been made, the company at any time after the date of the alteration issues any copies of the memorandum which are not in accordance with the alteration, it shall be liable to a fine not exceeding N25 for each copy so issued, and every officer of the company who is in default shall be liable to the like penalty.

Alteration of memorandum and articles

44. (1) A company may not alter the conditions contained in its memorandum except in the cases and in the manner and to the extent for which express provision is made in this Decree.

(2) Only those provisions which are required by section 27 of this Decree or by any other specific provision contained in this Decree, to be stated in the memorandum of the company concerned shall be deemed to be conditions contained in its memorandum.

45. (1) The name of the company shall not be altered except with the consent of the Commission in accordance with section 31 of this Decree.

(2) The business which the company is authorised to carry on or, if the company is not formed for the purpose of carrying on business, the objects or which it is established may be altered or added to in accordance with the provisions of section 46 or of Part XV of this Decree.

(3) Any restriction on the powers of the company may be altered in the same way as the business or object of the company.

(4) The share capital of the company may be altered in accordance with the provisions of section 100 to 111 of this Decree but not otherwise.

(5) Subject to section 49 of this Decree, any other provision of the memorandum may be altered in accordance with section 46 of this Decree, or as otherwise provided in this Decree.

46. (1) A company may, at a meeting of which notice in writing has been duly given to all members (whether or not otherwise entitled thereto), by special resolution alter the provisions of its memorandum with respect to the business or objects of the company:

Provided that if an application is made to the court in accordance with this section for the alteration to be cancelled, it shall not have effect except in so far as it is confirmed by the court.

(2) An application under this section may be made to the court-

(a) by the holders of not less in the aggregate than fifteen 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 fifteen per cent of the company’s members; or

(b) by the holders of not less than fifteen 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.

(3) An application under this section shall be made not later than twenty-eight days after the date on which the resolution altering the company’s business or objects was passed, and may be made on behalf of the persons entitled to make the application by such one or more of their number as they may appoint in writing for the purpose.

(4) On an application under this section, the court may make an order confirming the alteration either wholly or in part and on such terms and conditions as it thinks fit, and may adjourn the proceedings in order that an arrangement may be made to the satisfaction of the court for the purchase of the interest of dissentient members, and the court may give such directions and make such orders as it thinks expedient for facilitating or carrying into effect any such arrangement:

Provided that no part of the capital of the company shall be expended in any purchase.

(5) The debentures entitling the holders to object to alterations of a company’s business or objects shall be any debentures secured by a floating charge.

(6) The special resolution altering a company’s business or objects shall require the same notice to the holders of any such debentures as to members of the company; and in default of any provisions regulating the giving of notice to any such debenture holders, the provisions of the company’s articles regulating the giving of notice to members shall apply.

(7) Where a company passes a resolution altering its business or objects and-

(a) application is thereafter made to the court for its confirmation under this section, the company shall forthwith give notice to the Commission of the making of the application, and thereafter there shall be delivered to the Commission within 15 days from the date of its making-

(i) a certified true copy of the order in the case of refusal to confirm the resolution; and

(ii) a certified true copy of the order in the case of confirmation of the resolution together with a printed copy of the memorandum as thereby altered;

(b) no application is made with respect thereto to a court under this section, the company shall within fifteen days from the end of the period for taking such an application deliver to the Commission a copy of the resolution as passed; and if the Commission-

(i) is satisfied, a printed copy of the memorandum as altered by the resolution shall forthwith thereafter be delivered to it;

(ii) is not satisfied, it shall give notice in writing to the company of its decision and an appeal from its decision shall thereafter lie to the court at the suit of any person aggrieved, if made within 21 days from the date of the receipt by the company of the notice of the rejection, or within such extended time as the court may allow.

(8) The court may at any time extend the time for the delivery of documents to the Commission under paragraph (a) of subsection (7) of this section for such period as the court may think proper.

(9) If a company makes default in giving notice or delivering any document to the Commission as required by subsection (6) of this section, the company and every officer of the company who is in default shall be liable to a fine of N50.

(10) The validity of an alteration of the provision of a company’s memorandum with respect to the business or objects of the company shall not be questioned on the ground that it was not authorised by subsection (1) of this section except in proceedings taken for the purpose (whether under this section or otherwise) before the expiration of twenty-one days after the date of the resolution in that behalf; and where any such proceedings are taken otherwise than under this section, subsections (6), (7) and (8) of this section shall apply in relation thereto as if they had been taken under this section, and as if an order declaring the alteration invalid were an order cancelling it and as if any order dismissing the proceedings were an order confirming the alteration.

(11) In this section “member” includes any person financially interested in the company.

47. (1) Subject to the provisions of section 44 of this Act and of this section and of any Part of this Act which preserves the rights of minorities in certain cases) any provision in a company’s memorandum which might lawfully have been in articles of association instead of in the memorandum may be altered by the company by special resolution; but if an application is made to the court for the alteration to be cancelled, the alteration shall not have effect except in so far as it is confirmed by the court.

(2) This section shall not apply where the memorandum itself provides for or prohibits the alteration of all or any of the said provisions, and shall not authorise any variation or abrogation of the special rights of any class of members.

(3) Subsections (2), (3), (4), (7), (8) and (9) of section 46 of this Act (which relate to mode of alteration of business or objects) except paragraph (b) of subsection (2) thereof shall apply in relation to any alteration and to any application made under this section as they apply in relation to alterations and to applications made under that section.

(4) This section shall apply to a company’s memorandum whether registered before or after the commencement of this Decree.

48. (1) Subject to the provisions of this Decree and to the conditions or other provisions contained in its memorandum, a company may by special resolution alter or add to its articles.

(2) Any alteration or addition so made in the articles shall, subject to the provisions of this Decree, be as valid as if originally contained therein and be subject, in like manner, to alteration by special resolution.

49. Save to the extent to which a member of a company agrees in writing at any time to be bound thereby, and anything to the contrary in the memorandum or articles notwithstanding, the member shall not be bound by any alteration made in the memoradnum or articles of the company requiring him on or after the date of the alteration to-

(a) take or subscribe for more shares than he held at the date on which he became a member; or

(b) increase his liability to contribute to the share capital of the company; or

(c) pay money by any other means to the company.

Chapter 2
Conversion and Re-registration of Companies

50. (1) Subject to this section, a private company having a share capital may be re-registered as a public company if-

(a) a special resolution that it should be so re-registered is passed; and

(b) an application for re-registration is delivered to the Commission together with the documents prescribed in subsection (3) of this section.

(2) The special resolution shall-

(a) alter the company’s memorandum so that it states that the company is to be a public company; and

(b) make such other alterations in the memorandum as are necessary to bring it into conformity with the requirements of this Decree with respect to the memorandum of a public company in accordance with section 27 of this Decree; and

(c) make such alterations in the company’s articles as are requisite in the circumstances

(3) The application shall be made to the Commission in the prescribed form and be signed by at least one director and the secretary of the company; and the documents to be delivered with it are the following-

(a) a printed copy of the memorandum and articles as altered in pursuance of the resolution; and

(b) a copy of a written statement by the directors and the secretary certified on oath by them, and showing that the paid up capital of the company as at the date of the application is not less than 25 per cent of the authorised share capital as at that date; and

(c) a copy of the balance sheet of the company as at the date of the resolution or the preceding 6 months, whichever is later; and

(d) a statutory declaration in the prescribed form by a director and the secretary of the company-

(i) that the special resolution required under this section has been passed; and

(ii) that the company’s net assets are not less than the aggregate of the paid up share capital and undistributable reserves; and

(e) a copy of any prospectus or statement in lieu of prospectus delivered within the preceding 12 months to the Securities and Exchange Commission established under the Securities and Exchange Commission Decree 1988.

(4) If the Commission is satisfied that a company has complied with the provisions of this section and may be re-registered as a public company, it shall-

(a) retain the application and other documents delivered to it under this section;

(b) register the application and other documents; and

(c) issue the company a certificate of incorporation, stating that the company is a public company.

(5) Upon the issue to a company of the certificate of incorporation under this section-

(a) the company shall by virtue of this issue of that certificate become a public company; and

(b) any alterations in the memorandum and articles set out in the resolution shall take effect accordingly.

(6) The certificate shall be prima facie evidence that-

(a) the requirements of this Decree in respect of re-registration and of matters precedent and incidental thereto have been complied with; and

(b) the company is a public company.

(7) A company shall not be re-registered under this section if it has previously been re-registered as an unlimited company.

51. (1) Subject as follows, a company which is registered as limited by shares may be re-registered as unlimited in pursuance of an application in that behalf complying with the requirements of this section.

(2) A company shall be precluded from re-registering under this section if it is limited by virtue of re-registration under section 52 of this Decree.

(3) A public company or a company which has previously been re-registered as unlimited company shall not be registered under this section.

(4) An application under this section shall be in the prescribed form and signed by a director and the secretary of the company, and be lodged with the Commission together with the documents specified in subsection (6) of this section.

(5) The application shall sect out such alterations in the company’s memorandum and articles as are requisite to bring it into conformity with the requirements of this Decree with respect to the memorandum and articles of a company to be formed as an unlimited company.

(6) The documents to be lodged with the Commission are as follows-

(a) the prescribed form of assent to the company being registered as unlimited, subscribed by or on behalf of all the members of the company;

(b) a statutory declaration made by the directors of the company-

(i) that the persons by whom or on whose behalf the form of assent is subscribed constitute the whole membership of the company; and

(ii) if any of the members have not subscribed that form themselves, that the directors have taken all reasonable steps to satisfy themselves that each person who subscribed to it on behalf of a member was lawfully empowered to do so; and

(c) a printed copy of the memorandum and the articles incorporating the alterations set out in the application.

(7) If the Commission is satisfied that the company be registered under this section as an unlimited company, it shall retain the application and other documents lodged with it under this section and-

(a) register the application and other documents; and

(b) issue to the company a certificate of incorporation appropriate to the status to be assumed by virtue of this section.

(8) On the issue of the certificate-

(a) the status of the company, by virtue of the issue, shall be changed from limited to unlimited; and

(b) the alterations in the memorandum set out in the application and any alteration in the articles so set out shall take effect as if duly made by resolution of the company; and

(c) the provisions of this Decree shall apply accordingly to the memorandum and articles as altered.

(9) The certificate shall be prima facie evidence that the requirements of this section in respect of the re-registration and of matters precedent and incidental to it have been complied with, and that the company was authorised to be re-registered under this Decree in pursuance of this section and was duly so re-registered.

52. (1) Subject as follows, a company which is registered as unlimited may be re-registered as limited by shares if a special resolution that it should be so registered is passed, and the requirements of this section are complied with in respect of the resolution and otherwise.

(2) A company shall not under this section be re-registered as a public company or company limited by guarantee; and a company shall be precluded from registering under it if it is unlimited by virtue of re-registration under section 51 of this Decree.

(3) The special resolution shall state the proposed authorised share capital and provide for the making of such alterations in the memorandum as are necessary to bring it into conformity with the requirements of this Decree with respect to the memorandum of a company so limited, and such alterations in the articles as are requisite in the circumstances.

(4) An application in the prescribed form for the company to be re-registered as limited signed by a director and the secretary of the company shall be lodged with the Commission together with the necessary documents not earlier than the day on which the resolution was filed under section 237 of this Decree.

(5) The documents to be lodged with the Commission shall be a printed copy of the-

(a) memorandum as altered in pursuance of the resolution; and

(b) articles as so altered.

(6) If the Commission is satisfied that the company be re-registered under this section as a company limited by shares, it shall retain the application and other documents lodged with it under this section and register them, and it shall issue to the company a certificate of incorporation appropriate to the status to be assumed by the company by virtue of this section.

(7) On the issue of the certificate-

(a) the status of the company shall, by virtue of the issue, change from unlimited to limited; and

(b) the alterations in the memorandum specified in the resolution and the alterations in, and additions to, the articles so specified shall take effect accordingly.

(8) The certificate shall be prima facie evidence that the requirements of this section in respect of re-registration and of matters precedent and incidental to it have been complied with, and that the company was authorised to be re-registered in pursuance of this section and was duly so re-registered.

(9) The re-registration of an unlimited company as a limited company shall not affect the rights and liabilities of the company in respect of any debt or obligation incurred, or any contract entered into, by, to, with, or on behalf of the company before the re-registration, and those rights or liabilities may be enforced in the manner provided by Part III of this Decree as in the case of a company registered pursuant to Part II of this Decree.

53. (1) A public company may be re-registered as a private company if-

(a) a special resolution complying with subsection (2) of this section that it should be so re-registered is passed and has not been cancelled by the court under this section;

(b) an application for the purpose in the prescribed form and signed by a director and the secretary of the company is delivered to the Commission together with a printed copy of the memorandum and articles of the company as altered by the resolution; and

(c) either-

(i) the period during which an application for the cancellation of the resolution under this section may be made has expired without any such application having been made; and

(ii) where such an application has been made, the application has been withdrawn or an order has been made confirming the resolution and a copy of that order has been delivered to the Commission.

(2) The special resolution shall alter the company’s memorandum so that it states that the company is a private company and shall make such other alterations in the company’s memorandum and articles as are requisite in the circumstances.

(3) Where the special resolution is passed, an application may be made to the court for the cancellation of the resolution, and such application may be made by-

(a) the holders of not less in the aggregate than 5 per cent in the nominal value of the company’s issued share capital, or any class thereof; or

(b) not less than 5 per cent of the company’s members; but not by a person who has consented to or voted in favour of the resolution.

(4) The application shall be made within 28 days after the passing of the resolution and the applicant shall forthwith give notice of the application in the prescribed form to the Commission and to the company.

(5) On the hearing of the application, the court shall make an order either cancelling or confirming the resolution and may make all such orders or give such directions as it may think expedient under the circumstances.

(6) The company shall, within 15 days from the making of the court’s order, or within such other period as the court may be by order direct, deliver to the Commission a certified true copy of the order.

(7) If a company fails to deliver to the Commission a certified true copy of the order as required in subsection (6) of this section, the company and any officer of it who is in default, shall be guilty of an offence and liable to a fine of N100 and for continued contravention, to a daily default fine of N25.

(8) If the Commission is satisfied that a company may be re-registered under this section, it shall-

(a) retain the application and other documents delivered to it under this section;

(b) register the application and other documents; and

(c) issue the company with a certificate of incorporation as a private company.

(9) On the issue of the certificate-

(a) the company shall become a private company; and

(b) the alteration in the memorandum and articles set out in the resolution shall take effect accordingly.

(10) The certificate shall be prima facie evidence that-

(a) the requirements of this section in respect of re-registration and of matters precedent and incidental to it have been complied with; and

(b) the company is a private company.

Chapter 3
Foreign Companies

54. (1) Subject to sections 56 to 59 of this Decree every foreign company which before or after the commencement of this Decree was incorporated outside Nigeria, and having the intention of carrying on business in Nigeria shall take all steps necessary to obtain incorporation as a separate entity in Nigeria for that purpose, but until so incorporated, the foreign company shall not carry on business in Nigeria or exercise any of the powers of a registered company and shall not have a place of business or an address for service of documents or processes in Nigeria for any purpose other than the receipt of notices and other documents, as matters preliminary to incorporation under this Decree.

(2) Any act of the company in contravention of subsection (1) of this section shall be void.

(3) Nothing in this section shall affect the status of-

(a) any foreign company which before the commencement of this Decree was granted exemption from compliance with Part X of the Companies Act 1968;

(b) any foreign companies exempted under any treaty to which Nigeria is a party.

55. If any foreign company fails to comply with the requirements of section 54 of this Decree in so far as they may apply to the company, the company shall be guilty of an offence and liable on conviction to a fine of not less than N2,500; and every officer or agent of the company who knowingly and wilfully authorises or permits the default or failure to comply shall, whether or not the company is also convicted of any offence, be liable on conviction to a fine of not less than N250 and where the offence is a continuing one to a further fine of N25 for every day during which the default continues.

56. (1) A foreign company may apply to the National Council of Ministers for exemption from the provisions of section 54 of this Decree if that foreign company belongs to one of the following categories, that is-

(a) foreign companies (other than those specified in paragraph (d) of this subsection) invited to Nigeria by or with the approval of the Federal Military Government to execute any specified individual project;

(b) foreign companies which are in Nigeria for the execution of specific individual loan project on behalf of a donor country or international organisation;

(c) foreign government-owned companies engaged solely in export promotion activities; and

(d) engineering consultants and technical experts 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 Military Government.

(2) An application for exemption under this section shall be in writing addressed to the Secretary to the Federal Military Government and shall set out-

(a) the name and place of business of the foreign company outside Nigeria;

(b) the name and place of business or the proposed name and place of business of the foreign company in Nigeria;

(c) the name and address of each director, partner or other principal officer of the foreign company;

(d) a certified copy of the charter, statutes, or memorandum and articles of association of the company, or other instrument constituting or defining the constitution of the company and if the instrument is not written in the English language, a certified translation thereof;

(e) the names and addresses of some one or more persons resident in Nigeria authorised to accept on behalf of the foreign company services of process and any notices required to be served on the company;

(f) the business or proposed business in Nigeria of the foreign company and the duration of such business;

(g) particulars of any project previously carried out by the company as an exempted foreign company; and

(h) such other particulars as may be required by the Secretary to the Federal Military Government.

(3) Where the National Council of Ministers upon the receipt of an application for exemption is of the opinion, that the circumstances are such as to render it expedient that such an exemption should be granted, the National Council of Ministers may, subject to such conditions as it may prescribe, exempt the foreign company from the obligations imposed by or under this Decree.

(4) Every exemption granted in pursuance of this section shall specify the period or, as the case may be, the project or series of projects, for which it is granted and shall lapse at the end of such period or upon the completion of such project or series of projects.

(5) The National Council of Ministers may at any time revoke any exemption granted to any company, if it is of the opinion that the company has contravened any provision of this Decree or has failed to fulfil any condition contained in the exemption order or for any other good or sufficient reason.

(6) The National Council of Ministers shall cause to be published in the Gazette the name of any company-

(a) to which an exemption has been granted and the period or, as the case may be, the project or series of projects for which the exemption is granted;

(b) whose exemption has been revoked and the effective date of such revocation.

57. Every exempted foreign company shall deliver to the Commission, every calendar year a report in the form prescribed by the Commission.

58. Subject to this Decree and save as may be stated in the instrument of exemption, a foreign company exempted pursuant to this Decree shall have the status of an unregistered company and accordingly, the provisions of this Decree applicable to an unregistered company shall apply in relation to such an exempted company as they apply in relation to an unregistered company under this Decree.

59. (1) Any person who for the purpose of obtaining an exemption or of complying with any of the provisions of section 56 of this Decree, makes any statement or presents any instrument which is false in a material particular shall be guilty of an offence unless he proves that he has taken all reasonable steps to ascertain the truth of the statement made or contained in the instrument so presented.

(2) Any person who is guilty of an offence under this section shall be liable on conviction to a fine of N5,000 or imprisonment for a term of three years.

60. For the avoidance of doubt, it is hereby declared that-

(a) save as provided in section 55, 56, 57 and 58 of this Decree, nothing in this Decree shall be construed as authorising the disregard by any exempted foreign company of any enactment or rule of law; and

(b) nothing in this Chapter shall be construed as affecting the rights or liability of a foreign company to sue or be sued in its name or in the name of its agent.

Chapter 4
Promoters

61. Any person who undertakes to take part in forming a company with reference to a given project and to set it going and who takes the necessary steps to accomplish that purpose, or who, with regard to a proposed or newly formed company, undertakes a part in raising capital for it, shall prima facie be deemed a promoter of the company: Provided that a person acting in a professional capacity for persons engaged in procuring the formation of the company shall not thereby be deemed to be promoter.

62. (1) A promoter stands in a fiduciary relationship to the company and shall observe the utmost good faith towards the company in any transaction with it or on its behalf and shall company for any loss suffered by reason of his failure so to do.

(2) A promoter who acquired any property or information in circumstances in which it was his duty as a fiduciary to acquire it on behalf of the company shall account to the company for such property and for any profit which he may have made from the use of such property or information.

(3) Any transaction between a promoter and the company may be rescinded by the company unless, after full disclosure of all material facts known to the promoter, such transaction shall have been entered into or ratified on behalf of the company-

(a) by the company’s board of directors independent of the promoter; or

(b) by all the members of the company; or

(c) by the company at a general meeting at which neither the promoter nor the holders of any shares of any in which he is beneficially interested shall vote on the resolution to enter into or ratify that transaction.

(4) No period of limitation shall apply to any proceedings brought by the company to enforce any of its rights under this section but in any such proceedings the court may relieve a promoter in whole or in part and on such terms as it thinks fit from liability hereunder if in all the circumstances, including lapse of time, the court thinks it equitable to do so.

Part III
Acts by or on behalf of the Company

Exercise of Company’s Powers

63. (1) A company shall act through its members in general meeting or its board of directors or through officers or agents, appointed by, or under authority derived from, the members in general meeting or the board of directors.

(2) Subject to the provisions of this Decree, the respective powers of the members in general meeting and the board of directors shall be determined by the company’s articles.

(3) Except as otherwise provided in the company’s articles, the business of the company shall be managed by the board of directors who may exercise all such powers of the company as are not by this Decree or the articles required to be exercised by the members in general meeting.

(4) Unless the articles shall otherwise provide, the board of directors, when acting within the powers conferred upon them by this Decree or the articles, shall be bound to obey the directions or instructions of the members in general meeting: Provided that the directors acted in good faith and with due diligence.

(5) Notwithstanding the provisions of subsection (3) of this section, the members in general meeting may-

(a) act in any matter if the members of the board of directors are disqualified or are unable to act because of a deadlock on the board or otherwise;

(b) institute legal proceedings in the name and on behalf of the company, if the board of directors refuse or neglect to do so;

(c) ratify or confirm any action taken by the board of directors; or

(d) make recommendations to the board of directors regarding action to be taken by the board.

(6) No alteration of the articles shall invalidate any prior act of the board of directors which would have been valid if that alteration had not been made.

64. Unless otherwise provided in this Decree or in the articles, the board of directors may-

(a) exercise their powers through committees consisting of such members of the body as they think fit; or

(b) from time to time, appoint one or more of their body to the office of managing director and may delegate all or any of their powers to such managing director.

Liability for acts of the company

65. Any act of the members in general meeting, the board of directors, or of a managing director while carrying on in the usual way the business of the company shall be treated as the act of the company itself and the company shall be criminally and civilly liable therefor to the same extent as if it were a natural person:

Provided that-

(a) the company shall not incur civil liability to any person if that person had actual knowledge at the time of the transaction in question that the general meeting, board of directors, or managing director, as the case may be had no power to act in the matter or had acted in an irregular manner or if, having regard to his position with or relationship to the company, he ought to have known of the absence of such power or of the irregularity;

(b) if in fact a business is being carried on by the company, the company shall not escape liability for acts undertaken in connection with that business merely because the business in question was not among the business authorised by the company’s memorandum.

66. (1) Except as provided in section 65 of this Decree, the acts of any officer or agent of a company shall not be deemed to be acts of the company, unless-

(a) the company, acting through its members in general meeting, board of directors, or managing director, shall have expressly or implied authorised such officer or agent to act in the matter; or

(b) the company, acting as mentioned in paragraph (a) of this subsection, shall have represented the officer or agent as having its authority to act in the matter, in which event the company shall be civilly liable to any person who has entered into the transaction in reliance on such representation unless such person had actual knowledge that the officer or agent had no authority or unless having regard to his position with or relationship to the company, he ought to have known of such absence of authority.

(2) The authority of an officer or agent of the company may be conferred prior to any action by him or by subsequent ratification, and knowledge of such action by the officer or agent and acquiescence therein by all the members of the company or by the directors for the time being or by the managing director for the time being by equivalent to ratification by the members in general meeting, board of directors, or managing director, as the case may be.

(3) Nothing in this section shall derogate from the vicarious liability of the company for the acts of its servants while acting within the scope of their employment.

67. (1) Any provision, whether contained in the articles of the company or in any contract with a company or otherwise, for exempting any officer of the company or any person (whether an officer of the company or not) employed by the company as auditor from, or indemnifying him against, any liability which by virtue of any rule of law, would otherwise attach to him in respect of any negligence, default, or breach of trust of which he may be guilty in relation to the company, shall be void.

(2) Notwithstanding the provisions of subsection (1) of this section-

(a) a person shall not be deprived of any exemption or right to be indemnified in respect of anything done or omitted to be done by him while any such provision as mentioned in that subsection was in force; and

(b) a company may, in pursuance of any such provision as mentioned in subsection (1) of this section, indemnify any such officer or auditor against any liability incurred by him in defending any proceedings, whether civil or criminal in which judgement is given in his favour or in which he is acquitted or in connection with any application under section 641 of this Decree in which relief is granted to him by the court.

Constructive notice of registered documents

68. Except as mentioned in section 197 of this Decree, regarding particulars in the register of particulars of charges, a person shall not be deemed to have knowledge of the contents of the memorandum and articles of a company or of any other particulars, documents, or the contents of documents merely because such particulars or documents are registered by the Commission or referred to in any particulars or documents so registered, or are available for inspection at an office of the company.

69. Any person having dealings with a company or with someone deriving title under the company shall be entitled to make the following assumptions and the company and those deriving title under it shall be stopped from denying their truth that-

(a) the company’s memorandum and articles have been duly complied with;

(b) every person described in the particulars filed with the Commission pursuant to sections 35 and 292 of this Decree as a director, managing director secretary of the company, or represented by the company, acting through its members in general meeting, board of directors, or managing director, as an officer or agent of the company, has been duly appointed and has authority to exercise the powers and perform the duties customarily exercised or performed by a director, managing director, or secretary of a company carrying on business of the type carried on by the company or customarily exercised or performed by an officer or agent of the type concerned;

(c) the secretary of the company, and every officer or agent of the company having authority to issue documents or certified copies of documents on behalf of the company has authority to warrant the genuiness of the documents or the accuracy of the copies so issued;

(d) a document has been duly sealed by the company if it bears what purports to be the seal of the company attested by what purports to be the signatures of two persons who, in accordance with paragraph (b) of this section, can be assumed to be a director and the secretary of the company:

Provided that-

(i) a person shall not be entitled to make such assumptions as aforesaid, if he had actual knowledge to the contrary or if, having regard to his position with or relationship to the company, he ought to have known the contrary;

(ii) a person shall not be entitled to assume that any one or more of the directors of the company have been appointed to act as a committee of the board of directors or that an officer or agent of the company has the company’s authority merely because the company’s articles provided that authority to act in the matter may be delegated to a committee or to an officer or agent.

70. Where, in accordance with section 65 to 69 of this Decree, a company would be liable to a third party for the acts of any officer or agent, the company shall, except where there is collusion between the officer or agent and the third party, be liable notwithstanding that the officer or agent has acted fraudulently or forged a document purporting to be sealed by or signed on behalf of the company.

Company’s contracts

71. (1) Contracts on behalf of a company may be made, varied or discharged as follows-

(a) any contract which if made between individuals would be by law required to be in writing under seal, or which would be varied, or discharged only by writing under seal, may be made, varied or discharged, as the case may be, in writing under the common seal of the company;

(b) any contract which if made between individuals would be by law required to be in writing, signed by the parties to be charged therewith, or which could be varied or discharged only by writing or written evidence signed by the parties to be charged, may be made, varied or discharged as the case may be, in writing signed in the name or on behalf of the company; and

(c) any contract which if made between individuals would be valid although made by parol only and not reduced into writing or which could be varied or discharged by parol, may be made, varied or discharged, as the case may be, by parol on behalf of the company.

(2) A contract made according to this section shall be effectual in law, and shall bind the company and its successors and all other parties thereto, their heirs, executors, or administrators, as the case may be; and may be varied or discharged in the same manner in which it is authorised by this section to be made.

72. (1) Any contract or other transaction purporting to be entered into by the company or by any person on behalf of the company prior to its formation may be ratified by the company after its formation and thereupon the company shall become bound by and entitled to the benefit thereof as if it has been in existence at the date of such contract or other transaction and had been a party thereto.

(2) Prior to ratification by the company, the person who purported to act in the name of or on behalf of the company shall, in the absence of express agreement to the contrary, be personally bound by the contract or other transaction and entitled to the benefit thereof.

73. (1) A bill of exchange or promissory note shall be deemed to have been made, accepted, or endorsed on behalf of a company if made, or expressed to be made, accepted, or endorsed in the name of the company, or if expressed to be made, accepted or endorsed on behalf or on account of the company by a person acting under its authority.

(2) The company and its successors shall be bound thereby if the company is in accordance with sections 65 to 67 of this Decree, liable for the acts of these who made, accepted or endorsed it in its name or on its behalf or account, and a signature by a director or the secretary on behalf of the company shall not be deemed to be a signature by procuration for the purposes of section 25 of the Bill of Exchange Act.

74. A company shall have a common seal the use of which shall be regulated by the articles.

75. (1) A company whose objects require or comprise the transaction of business in foreign countries may, if authorised by its articles, have for use in any territory, district, or place outside Nigeria, an official seal, which shall be a facsimile of the common seal of the company, with the addition on its face of the name of every territory, district, or place where it is to be used.

(2) A company having such an official seal may, by writing under its common seal, authorise any person appointed for the purpose in any territory, district, or place outside Nigeria, to affix the same to any deed or other document to which the company is party in that territory, district, or place.

(3) The authority of any such agent shall, as between the company and any person dealing with the agent, continue during the period, if any, mentioned in the instrument conferring the authority, or if no period is there mentioned, then until notice of the revocation or determination of the agent’s authority has been given to the person dealing with him.

(4) The person affixing any such official seal shall, by writing under his hand, on the deed or other document to which the seal is affixed, certify the date on which and place at which it is affixed.

(5) A deed or other document to which an official seal is duly affixed shall bind the company as if it has been sealed with the common seal of the company.

76. (1) A company may, by writing under seal, empower any person, either generally or in respect of any specified matter, as its attorney, to execute deeds on its behalf in any place within or outside Nigeria.

(2) A deed signed by a person empowered as provided in subsection (1) of this section shall bind the company and have the same effect as it would have if it were under the company’s common seal.

Authentication and service of documents

77. A document or proceeding requiring authentication by a company may be signed by a director, secretary, or other authorised officer of the company, and need not be under its common seal unless otherwise so required in this Part of this Decree.

78. 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 by post to, the registered office or head office of the company.

Part IV
Membership of the company

79. (1) The subscribers of the memorandum of a company shall be deemed to have agreed to become members of the company, and on its registration shall be entered as members in its register of members.

(2) Every other person who agrees in writing to become a member of a company, and whose name is entered in its register of members, shall be a member of the company.

(3) In the case of a company share capital, each member shall be a shareholder of the company of the company and shall hold at least one share.

80. (1) As from the commencement of this Act, an individual shall not be capable of becoming a member of a company if –

(a) he is of unsound mind and has been so found by a court in Nigeria or elsewhere; or

(b) he is an undischarged bankrupt.

(2) A person under the age of eighteen years shall not be counted for the purpose of determining the legal minimum number of members of a company.

(3) A corporate body in liquidation shall not be capable of becoming a member of a Company.

(4) Where at the commencement of this Act, any person falling within the provisions of subsection (1) of this section is a member of a Company by reason of being a shareholder of the Company, his share shall vest in his committee or trustee, as the case may be.

(5) Where after the commencement of this Act, any shareholder purports to transfer any shares to a person falling within the provisions of subsection (1) of this section, the purported transfer shall not vest the title in the shares in that person but the title shall remain in the purported transfer or his personal representative who hold the shares in trust for that person during the period of his incapacity.

81. Every member shall, notwithstanding any provision in the articles, have a right to attend any general meeting of the Company and to speak and vote on any resolution before the meeting:

Provided that the articles may provide that a member shall not be entitled to attend and vote unless all calls or other sums payable by him in respect of shares in the Company have been paid.

82. If any person falsely deceitfully personates any member of a Company and thereby obtains or endeavours to obtain any benefit due to any such member, he shall be guilty of an offence and be liable on conviction to imprisonment for a term of not more than seven years or a fine of not more than N2,500.

Register of Members

83. (1) Every Company shall keep a register of its members and enter in it the following particulars –

(a) the names and address of the members, and in the case of a Company having a share, if capital a statement of the shares and class of shares, if any, held by each member, distinguishing each share by its number so long as the share has a number, and of the amount paid or agreed to be considered as paid on the share of each member.

(b) the date on which each person was registered as a member; and

(c) the date on which any person ceased to be a member:

Provided that, where the Company has converted any of its shares into stock and given notice of the Conversion to the Commission, the register shall show the amount of stock held by each member instead of the amount of shares and the particulars relating to share specified in paragraph (a) of this subsection.

(2) The entry required under paragraph (a) or (b) of subsection (1) of this section, shall be made within twenty eight days of the conclusion of the agreement with the Company to become a member or, in the case of a subscriber of the memorandum, within twenty-eight days of the registration of the Company.

(3) The entry required under paragraph (c) of subsection (1) of this section shall be made within twenty-eight days of the date on which the person concerned ceased to be a member, or, if he ceased to be a member otherwise than as a result of action by the Company, within twenty-eight days of production to the Company of evidence satisfactory to the Company of the occurrence of the event whereby he ceased to be a member.

(4) Where a company makes in default in complying with the provisions of this section, the company and very officer of the company who is in default shall be guilty of an offence and liable on conviction to a fine of N25 and a daily default fine of N5.

(5) Liability incurred by a company from the making or deletion of an entry in its register of members, or from a failure to make or delete any such entry, shall not be enforceable after the expiration of twenty years from the date on which the entry was made or deleted or, in the case of any such failure, from the date on which the failure first occurred.

84. (1) The register of members shall be kept at the registered office of the company, except that if –

(a) the work of making it up is done at another office of the company, it may be kept at that other office; and

(b) the company arranges with some other person for the making up of the register to be undertaken on behalf of the company by that person, it may kept at the office of that other person at which the work is done;

but the register shall not be kept in the case of company registered in Nigeria, at a place outside Nigeria.

(2) Every company shall send notice of the Commission of the place where the register is kept and of any change of that place.

(3) A company shall not be bound to send notice under this subsection where the register has, at all times since it came into existence or, in the case of a register in existence at the commencement of this Act, at all times since then, been kept at the registered office of the company.

(4) If a company makes default for twenty-eight days in complying with subsection (2) of this section, the company and every one of its officers who is in default shall be guilty of an offence and liable on conviction to a fine of N10 and, for continued contravention, to a daily default fine of N5.

85. (1) Every company having more than fifty members shall, unless the register of members is in such a form as to constitute in itself an index, of the names of the members of the company and shall, within fourteen days after the date on which any alteration is made in the register of members, make any necessary alteration in the index

(2) The index shall in respect of the each member contain a sufficient indication to enable the account of that member in the register to be readily found.

(4) If default is made in complying with the provisions of this section, the company and every officer of the company who is in default be liable to a fine of N50.

86. No notice of any trust, express, implied or constructive shall be entered on the register of members or be receivable by the Commission.

87. (1) Except when the register of members is closed under the provisions of this Act, the register and the index of members’ names shall be open during business hours (subject to such reasonable restrictions as the company in general meeting may impose, so however, that no less than two hours in each day shall be allowed for inspection) to the inspection of any member of the company without charge, and with the permission of the company to any other person on payment of N1 or any less sum as the company may prescribe for each inspection.

(2) Any member or, with the permission of the company any other person may require a copy of the register, or of any part thereof, on payment of 50 kobo, or such less sum as the company may prescribe, for every 100 words or fractional part thereof required to be copied; and the company shall cause any copy so required by any person to be sent to that person within a period of ten days commencing on the day next after the day on which the requirement is received by the company.

(3) In the case of a member, if any inspection required under this section is refused or if any copy required under this section is not sent within the prescribed period, the company and every officer of the company who is in default shall be liable in respect of each offence to a fine of N10.

(4) In the case of any such refusal or default in the case of a member, the court may by order compel an immediate inspection of the register, and index or direct that the copies required shall be sent to the persons requiring them.

88. Where, by virtue of paragraph (b) of subsection (1) of section 84 of this Act, the register of members is kept at the office of some person other than the company, and by reason of any default of his, the company fails to comply with subsection (1) or (2) of section 84 of this Act, or with any requirements of this Act as to the production of the register, that other person shall be liable to the same penalties as if he were an officer of the company who was in default, and the power to the court under subsection (4) of section 87 of this Act shall extend to the making of orders against that other person and his officers and servants.

89. A company may, on giving notice be advertisement in a daily newspapers circulating in the district in which the registered office of the company is situated, close the register of members or any part of it for any time or times and exceeding on the whole thirty days in each year.

90. (1) If –

(a) the name of any person is, without sufficient cause, entered in or omitted from the register of members of a company; or

(b) default is made or unnecessary delay takes place in entering on the register the fact of any person having ceased to be a member,

the person aggrieved, or any member of the company, or the company, may apply to the court for rectification of the register.

(2) The court may refuse the application, or order rectification of the register and payment by the company of any damages sustained by the party aggrieved.

(3) On an application under this section, the court may decide any question relating to the title of any person who is a party to the application to have his name entered in or omitted from the register, whether the question arises between members or alleged members or between members and alleged members on the one hand and the company on the other hand, and generally may decide any question necessary or expedient to be decided for rectification of the register.

(4) In the case of a company required by this Act to send a list of its members to the Commission, the court, when making an order for rectification of the register shall, by its order, direct notice of the rectification to be given to the Commission.

91. The register of members shall be prima facie evidence of matters which are by this Act directed or authorised to be inserted in it.

Liability of members

92. (1) Prior to the winding-up of a company, a member of the company with shares shall be liable to contribute the balance, if any, of the amount payable in respect of the shares held by him in accordance with the terms of the agreement under which the shares were issued or in accordance with a call validly made by the company pursuant to its articles.

(2) Where any contribution has become due and payable by reason of a call validly made by the company pursuant to the articles or where, under the terms of any agreement with the company, a member has undertaken personal liability to make future payments in respect of shares issued to him, the liability of the members shall continue notwithstanding that the shares held by him are subsequent transferred or forfeited under a provision to that effect in the articles, but his liability shall cease if and when the company shall have received payment in full of all such moneys in respect of the shares.

(3) Subject to subsections (1) and (2) of this section, no member or past member shall be liable to contribute to the assets of the company, except in the event of its being wound up.

(4) In the event of a company being wound up, every present or past member shall be liable to contribute to the assets of the company to an amount sufficient for payment of its debts and liabilities and for the costs, charges and expenses of the winding-up and for the adjustment of the rights of the members and past members among themselves but subject to the following qualifications –

(a) a past member shall not be liable to contribute if he has ceased to be a member for period of one year or upwards before the commencement of the winding-up;

(b) as past member shall not be liable to contribute unless it appears to the court that the existing members are unable to satisfy the contributions required to be made by them in pursuance of this section;

(c) in the case of a company limited by shares, no contribution shall be required from any member or past member exceeding the amount, if any unpaid on the shares in respect of which he is liable as a present or past member;

(d) in the case of a company limited by guarantee, no contribution shall be required from any member or past member exceeding the amount undertaken to be contributed by him to the assets of the company in the event of its being wound up; and

(e) any sum due from the company to a member or past member, in his capacity as member, by way of dividends or otherwise shall not be set-off against the amount of which he is liable to contribute in accordance with this section but any such sum shall be taken into account for the purposes of final adjustment of the rights of the members and past members amongst themselves.

(5) For the purposes of this section, the expression “past member” includes the estate of a deceased member and where any person dies after becoming liable as a member or past member such liability shall be enforceable against his estate.

(6) Except as contained in this section, a member or past member shall not be liable as a member or past member for any of the debts and liabilities of the company.

93. If a company carries on business without having at least two members and does so for more than six months, every director or officer of the company during the time that it so carries on business after those six months who knows that it is carrying on business with only one or no member shall be liable jointly and severally with the company for the debts of the company contracted during that period.

Disclosure of beneficial interest in shares

94. (1) Notwithstanding the provision of section 95 of this Act, a public company may by notice in writing require any member of the company, within such reasonable time as is specified in the notice –

(a) to indicate in writing the capacity in which he holds any shares in the company; and

(b) if he holds them otherwise than as beneficial owner, to indicate in writing the particulars of the identity of persons interested in the shares in question and whether persons interested in the same shares are parties to any agreement or arrangement relating to the exercise of any rights conferred by the holding of the shares.

(2) Where a company is informed in pursuance of a notice given to any person under subsection (1) of this section, or under this subsection that any other person has an interest in any shares in the company, the company may, by notice in writing, require that other person within such reasonable time as is specified in the notice –

(a) to indicate in writing the capacity in which he holds that interest; and

(b) if he holds it otherwise than as beneficial owner, to indicate in writing, so far as it lies within his knowledge, the persons who have any interests in them (either by name and address or by other particulars sufficient to enable them to be identified) and the nature of their interests.

(3) Whenever a company receives information from a person in pursuance of a requirement imposed on him under this section with respects to shares held by a member of the company, it shall be under an obligation to inscribe against the name of the member in the register of members –

(a) the fact that the requirement was imposed; and

(b) the information received in pursuance of the requirement.

(4) Subject to subsection (5) of this section, any person who –

(a) fails to comply with a notice under this section; or

(b) in purported compliance with such a notice, makes any statement which he knows to be false in a material particular or recklessly makes any statement which is false in material particular,

shall be guilty of an offence and liable on conviction to imprisonment for six months or to a fine of N25 for every day during which the default continues.

(5) A person shall not guilty of an offence under subsection (4)(a) of this section, if he proves that the information ion question was already in the possession of the company or that the requirement to give it was for any other reason frivolous or vexatious.

95. (1) A person who is a substantial shareholder in a public company shall give notice in writing to the company stating his name and address and giving full particulars of the shares held by him or his nominees (naming the nominee) by virtue of which he is a substantial shareholder.

(2) A person is a substantial shareholder in a public company if he holds himself or by his nominee, shares in the company which entitle him to exercise at least ten per cent of the unrestricted voting rights at any general meeting of the company.

(3) A person required to give a notice under subsection (1) of this section, shall do so within fourteen days after that person becomes aware that he is a substantial shareholder.

(4) The notice shall be so given notwithstanding that the person has ceased to be a substantial shareholder before the expiration of the period referred to in subsection (3) of this section.

(5) A person who fails to comply with the provisions of this section shall be liable to a fine of N50 for every day during which the default continues.

96. (1) A person who ceases to be a substantial shareholder in a public company shall give notice in writing to the company stating his name and the date on which he ceases to be substantial shareholder and giving full particulars of the circumstances by reason of which he ceased to be a substantial shareholder.

(2) A person required to give notice under subsection (1) of this section shall do so within fourteen days after he becomes aware that he has ceased to be a substantial shareholder.

97. (1) A public company shall keep a register in which it shall enter –

(a) in a alphabetical order, the names of persons from whom it has received a notice under section 95 of this Act; and

(b) against each name so entered, the information given in the notice and where it receives a notice under section 95 of this Act, the information given in that notice.

(2) The register shall be kept at the place where the register of members required to be kept under section 84 of this Act is kept and shall be subject to the same right to inspection the register of members.

(3) The Commission may, at any time in writing, require the company to furnish it with a copy of the register or any part of the register and the company shall furnish the copy within fourteen days after the day on which the requirement is received by the company.

(4) If the company ceases to be public company, it shall continue to keep the register until the end of the period of six years beginning with the day next following that on which it ceases to be such a company.

(5) A company shall not, by reason of anything done for the purposes of this section, be affected with notice of, or put on enquiry as to, a right of a person to or in relation to a share in the company.

(6) If default is made in complying with this section, the company and every officer of the company who is in default shall be guilty of an offence and liable on conviction to a fine of N25 and a daily fine of N5.

98. The matter relating to beneficial interests in shares required by section 94 of this Act shall entered in a different part of the register of interests which shall be so made up that the entries inscribed in it appear in chronological order.

Part V
Share Capital
Minimum share capital

99. (1) Where, after the commencement of this Act, a memorandum delivered to the Commission under this section 35 of this Act states that the association to be registered is to be registered with shares, the amount of the share capital stated in the memorandum to be registered shall not be less than the authorised minimum share capital and not less than twenty-five per cent of the capital shall be taken by the subscribers of the memorandum.

(2) No company having a share capital shall, after the commencement of this Act, be registered with an authorised share capital less than the authorised minimum share capital.

(3) Where at the commencement of this Act, the authorised share capital of an existing company is less than the authorized minimum share capital, the company shall, not later than thirty days after the appointed day, increase the share capital to an amount not less than the authorised minimum share capital of which not less than twenty-five per cent shall be issued.

(4) Subject to subsection (3) of this section and to section 103 of this Act, where a company is registered with shares, its issued capital shall not at any time be less than twenty-five per cent of the authorised share capital.

(5) Where a company to which subsection (3) or (4) of this section applies fails to comply with the applicable subsection, it shall be guilty of an offence and liable on conviction to a fine of N2,500, and every officer who is in default shall be liable to a fine of N50 for every day during which the default continues.

Alteration of share capital

100. (1) A company having a share capital may in general meeting and not otherwise alter the conditions of its memorandum to the following extent, that is to say, it may –

(a) consolidate and divide all or any part of its share capital into shares of larger amount than its existing shares;

(b) convert all or any of its paid-up shares into stock, and re-convert that stock into paid-up shares of any denomination;

(c) subdivide its shares or any of them, into shares of smaller amount than is fixed by the memorandum, so however that in the subdivision the proportion between the amount paid and the amount, if any, unpaid on each reduced share be the seem as it was in the case of the share from which the reduced share is derived.

(d) cancel shares which, at the date of the passing of the resolution in that behalf, have not been taken or agreed to be taken by any person, and diminish the amount of its share capital by the amount of the shares so cancelled.

(2) Cancellation of shares made in pursuance of this section shall not be deemed to be a reduction of share capital within the meaning of this Act.

101. (1) If a company having share capital has-

(a) consolidated and divided its share capital into shares of lager amount than its existing shares; or

(b) converted any shares into stock; or

(c) re-converted stock into shares; or

(d) subdivided its shares or any of them; or

(e) cancelled any shares, otherwise than in connection with a reduction of share capital under section 105 of this Act,

it shall within one month after so doing give notice of it to the Commission specifying as the case may be, the shares consolidated, subdivided, converted, cancelled, or the stock re-converted.

(2) If default is made in complying with this season, the company and every officer of the company who is in default shall be liable to a fine of N50 for every day during which the default continues.

102. (1) A company having a share capital whether or not the shares have been converted into stock may, in general meeting and not otherwise, increase its share capital by new shares of such amount as it thinks expedient.

(2) Where a company has increased its shares capital it shall, within fifteen days after the passing of the resolution authorising the increase, give to the Commission, notice of the increase and the Commission shall record the increase.

(3) Where in connection with the increase of shares any approval is required to be obtained under any enactment other than this Act, the Commission may on application by a company extend the time within which to give notice of the increase to the Commission.

(4) The notice to be given under this section shall include any particulars prescribed with respect to the classes of shares affected and the condition subject to which the new shares have been or are to be issued and the notice shall be accompanied by a printed copy of the resolution authorising the increase.

(5) If default is made in complying with the provisions of this section, the company in default shall be guilty of an offence and liable on conviction to a fine of N50 for every day during which the default continues.

103. Where a company passes a resolution increasing its authorised share capital, the increase shall not take effect unless –

(a) within six months of giving notice of the increase to the Commission, not less than twenty five per cent of the share capital including the increase has been issued; and

(b) the directors have delivered to the Commission a statutory declaration verifying that fact.

104. If an unlimited company resolves to be registered as a limited company under this Act, it may –

(a) increase the nominal amount of its share capital by increasing the nominal amount of each of its shares, but subject to the condition that no part of the increased capital shall be capable of being called up except in the event and for the purposes of the company being would up, or

(b) provide that a specified portion of its uncalled share capital shall not be capable of being called up except in the event and for the purposes of the company being wound up.

Reduction of share capital

105. (1) Except as authorised by this Decree, a company having a share capital shall not reduce its issued share capital.

(2) For the purposes of this and other sections relating to reduction of share capital, any issued of share capital shall include the share premium account and any capital redemption reserve account of a company, and “issued share capital” shall be construed accordingly.

106. (1) Subject to confirmation by the court, a company having share capital may, if so authorised by its articles, by special resolution reduce its share capital in any way.

(2) In particular, and without prejudice to subsection (1) of this section, the company may-

(a) extinguish or reduce the liability on any of its shares in respect of share capital not paid up; or

(b) either with or without extinguishing or reducing liability on any of its shares, cancel any paid-up share capital which is lost or unrepresented by available assets; or

(c) either with or without extinguishing or reducing liability on any of its shares, cancel any paid-up share capital which is in excess of the company’s wants,

and the company may, if and so far as is necessary, alter its memorandum by reducing the amount of its share capital and of its shares accordingly.

(3) A special resolution under this section shall in this Decree be referred to as “a resolution for reducing share capital”.

107. (1) Where a company has passed a resolution for reducing share capital, it may apply to the court for an order confirming the reduction.

(2) If the proposed reduction of share capital involves either-

(a) diminution of liability in respect of unpaid share capital; or

(b) subject to subsection (6) of this section, the payment to a shareholder of any paid up share capital, and in any other case if the court so directs, subsection (3), (4) and (5) of this section shall have effect.

(3) Every creditor of the company who at the date fixed by the court is entitled to any debt or claim which, if that date were the commencement of the winding up of the company, would be admissible in proof against the company shall be entitled to object to the reduction of capital.

(4) The court shall settle a list of creditors entitled to object, and for that purpose-

(a) shall ascertain, as far as possible without requiring an application from any creditor, the names of those creditors and the nature and amount of the debts or claims;

(b) may publish notices fixing a day or days within which creditors not entered on the list are to claim to be so entered or are to be excluded from the right of objecting to the reduction of capital.

(5) If a creditor entered on the list whose debt or claim is not discharged or has not been determined does not consent to the reduction, the court may, if it thinks fit, dispense with the consent of that creditor, on the company securing payment of his debt or claim by appropriating (as the court may direct) the following amount if-

(a) the company admits the full amount of the debt or claim or, though not admitting it, is willing to provide for it, then the full amount of the debt or claim;

(b) the company does not admit, and is not willing to provide for, the full amount of the debt or claim, or if the amount is contingent or not ascertained, then an amount fixed by the court after the like enquiry and adjudication as if the company were being wound up by the court.

(6) If a proposed reduction of share capital involves either the diminution of any liability in respect of unpaid share capital or the payment to any shareholder of any paid up share capital, the court may, if having regard to any special circumstances of the case it thinks proper to do so, direct that subsections (3) to (5) of this section shall not apply as regards any class or any classes of creditors.

108. (1) The court, if satisfied-

(a) with respect to every creditor of the company who under section 107 of this Decree is entitled to object to the reduction of capital that either-

(i) his consent to the reduction has been obtained; or

(ii) his debt or claim has been discharged or has determined, or has been secured; and

(b) that the share capital does not by this reduction on such terms and conditions as it thinks fit.

(2) Where the Court so orders, it may also-

(a) if for any special reason it thinks proper to do so, make an order directing that the company shall, during such period (commencing on or at any time after the date of the order) as is specified in the order, add to its name as its last words “and reduced”;

(b) make an order requiring the company to publish (as the court directs) the reasons for reduction of capital or such other information in regard to it as the court thinks expedient with a view to giving proper information to the public and (if the court thinks fit) the causes which led to the reduction.

109. (1) The Commission on production to it of the order of the court confirming of a company’s share capital, and the delivery to it of a copy of the order and of minutes of the meeting of the company (approved by the court) showing, with respect to the company’s share capital as altered by the order-

(a) the amount of the share capital;

(b) the number of shares into which it is to be divided, and the amount of each share; and

(c) the amount (if any) at the date of the registration deemed to be paid up on each shares,

shall register the order and minutes.

(2) On the registration of the order and minutes, and not before, the resolution for reducing share capital as confirmed by the order so registered shall take effect.

(3) A notice of the registration shall be published in such manner as the Court may direct.

(4) The Commission shall certify the registration of the order and minutes; and the certificate-

(a) may be either signed by the Registrar-General or authenticated by its official seal;

(b) shall be prima facie evidence that all the requirements of this Decree with respect to the reduction of share capital have been complied with, and that the company’s share capital is as stated in the minutes.

(5) The minutes when registered shall be deemed to be substituted for the corresponding part of the company’s memorandum, and valid and alterable as if it had been originally contained in it.

(6) The substitution of such minutes for part of the company’s memorandum shall be deemed an alteration of the memorandum.

110. (1) Where a company’s share capital is reduced, a member of the company (past or present) shall not be liable in respect of any share to any call or contribution exceeding in amount the difference (if any) between the amount of the shares as fixed by the minute and the amount paid on the share or the reduced amount (if any), which is deemed to have been paid on it, as the case may be.

(2) Subsections (3) and (4) of this section shall apply if-

(a) a creditor, entitled in respect of a debt or claim to object to the reduction of share capital, by reason of his ignorance of the proceedings for reduction of share capital, or of their nature and effect with respect to his claim, is not entered on the list of creditors; and

(b) after the reduction of capital, the company is unable (within the meaning of section 409 of this Decree) to pay the amount of his debt or claim.

(3) Every person who was a member of the company at the date of the registration of the order for reduction and minutes shall be liable to contribute for the payment of the debt or claim in question an amount not exceeding that which he would have been liable to contribute if the company had commenced to be wound up on the day before that date.

(4) If the company is wound up, the Court, on application of the creditor in question and proof of ignorance referred to in subsection (2) (a), of this section, may (if it thinks fit), settle accordingly a list of persons so liable to contribute, and make and enforce calls and orders on the contributories settled on the list, as if they were ordinary contributories in a winding up.

(5) Nothing in this section shall affect the rights of the contributories among themselves.

111. If an officer of the company-

(a) wilfully conceals the name of a creditor entitled to object to the reduction of capital; or

(b) wilfully misrepresents the nature or amount of the debt or claim of any creditor; or

(c) aids, abets or is privy to any such concealment or misrepresentation as is mentioned above,

he shall be guilty of an offence and liable on conviction to a fine of N500.

Miscellaneous matters relating to capital

112. (1) Where the net assets of a public company are half or less of its called up share capital, the directors shall, not later than 30 days from the earliest day on which that fact is known to a director of the company, duly convene an extraordinary general meeting of the company, duly later than 60 days from that day for the purpose of considering whether any, and if so, what steps should be taken to deal with the situation.

(2) If there is a failure to convene an extraordinary general meeting as required by subsection (1) of this section, each of the directors of the company who-

(a) knowingly and wilfully authorised or permits the failure; or

(b) after the expiry of the period during which that meeting should have been convened, knowingly and wilfully authorises or permits the failure to continue,

shall be liable to a fine of N500.

(3) Nothing in this section shall authorise the consideration, at a meeting convened in pursuance of subsection (1) of this section, of any matter which could have been considered at that meeting apart from this section.

113. Where any shares of a company are issued for the purposes of raising money to defray the expenses of the construction of any works or buildings or the provision of any plant which cannot be made profitable for a long period, the company may pay interest on so much of that share capital as if for the time being paid up for the period and subject to the conditions and restrictions mentioned in this section, and may charge the same to capital as part of the cost of construction of the work or building or the provision of plant:

Provided that-

(a) no such payment shall be made unless it is authorised by the articles or by special resolution;

(b) no such payment, whether authorised by the articles or by special resolution, shall be made without the previous sanction of the Commission;

(c) before sanctioning any such payment the Commission may, at the expense of the company, appoint a person to inquire and report to it as to the circumstances of the case, and may, before making the appointment, require the company to give security for the payment of the costs of the inquiry;

(d) the payment shall be made only for such period as may be determined by the Commission which shall in no case extend beyond the close of six months after the half year during which the works or buildings have been actually completed or the plant provided;

(e) the rate of interest shall not exceed the current bank rate;

(f) the payment of the interest shall not operate as a reduction of the amount paid up on the shares in respect of which it is paid.

Part VI
Shares

Nature of shares

114. Subjects to the provisions of this Decree, the rights and liabilities attaching to the shares of a company shall-

(a) be dependent on the terms of issue and of the company’s articles; and

(b) notwithstanding anything to the contrary in the terms or the articles, include the right to attend any general meeting of the company and vote at such a meeting.

115. The shares or other interests of a member in a company shall be property transferable in the manner provided in articles of association of the company.

116. (1) Unless otherwise provided by any other enactment-

(a) any shares issued by a company after the date of commencement of this Decree, shall carry the right on a poll at a general meeting of the company to one vote in respect of each share and no company may by its articles or otherwise authorise the issue of shares which carry more than one vote in respect of each share or which do not carry any right to vote; and

(b) where, at the commencement of this Decree, any share of a company carries more than one vote or does not carry any vote at a general meeting of the company, such a share shall be deemed, as from the appointed day, to carry one vote only.

(2) If a company contravenes any of the provisions of this section, the company and any officer in default shall be liable to a daily default fine of N50 and any resolution passed in contravention of this section shall be void.

(3) Nothing in this section shall affect any right attached to a preference share under section 143 of this Decree.

116. (1) Unless otherwise provided by any other enactment-

(a) any shares issued by a company after the date of commencement of this Decree, shall carry the right on a poll at a general meeting of the company to one vote in respect of each share and no company may by its articles or otherwise authorise the issue of shares which carry more than one vote in respect of each share or which do not carry any right to vote; and

(b) where, at the commencement of this Decree, any share of a company carries more than one vote or does not carry any vote at a general meeting of the company, such a share shall be deemed, as from the appointed day, to carry one vote only.

(2) If a company contravenes any of the provisions of this section, the company and any officer in default shall be liable to a daily default fine of N50 and any resolution passed in contravention of this section shall be void.

(3) Nothing in this section shall affect any right attached to a preference share under section 143 of this Decree.

Issue of shares

117. Subject to any limitation in the articles of a company with respect to the number of shares which may be issued, and any pre-emptive rights prescribed in the articles in relation to the shares, a company shall have the power, at such times and for such consideration as it shall determine, to issue shares up to the total number authorised in the memorandum.

118. (1) A company may, where so authorised by its articles issue classes of shares.

(2) Shares shall not be treated as being of the same class unless they rank equally for all purposes.

119. Without prejudice to any special rights previously conferred on the holders of any existing shares or class shares, any share in a company may be issued with such preferred, deferred or other special rights or such restrictions, whether with regard to dividend, return of capital or otherwise, as the company may, from time to time, determine by ordinary resolution.

120. (1) Shares of a company may be issued at a premium.

(2) Where a company issues at a premium, whether for cash or otherwise, a sum equal to the aggregate amount or value of the premium on those shares shall be transferred to an account, to be called “the share premium account”, and the provisions of this Decree relating to the reduction of the share capital of a company shall, except as provided in this section, apply as if the share premium account were paid up share capital of the company.

(3) Notwithstanding, anything to the contrary in subsection (2) of this section, the share premium account may be applied by the company in paying up unissued shares of the company to be issued to members of the company as fully paid bonus shares, in writing off-

(a) the preliminary expenses of the company; or

(b) the expenses of, or the commission paid or discount allowed on, any issue of shares of the company; or in providing for the premium payable on redemption of any redeemable share of the company.

(4) Where a company has before the commencement of this Decree issued any shares at a premium, this section shall apply as if the shares had been issued after the commencement of this Decree:

Provided that any part of the premium which has been so applied that it does not at the commencement of this Decree form an identifiable part of the company’s reserves within the meaning of Schedule 2 to this Decree shall be disregarded in determining the sum to be included in the share premium account.

121. (1) Subject to the provisions of this section, it shall be lawful for a company to issue at a discount shares in the company of a class of shares already issued:

Provided that-

(a) the issue of the shares at a discount is authorised by resolution passed in general meeting of the company, and thereafter is sanctioned by the court;

(b) the resolution specifies the maximum rate of discount at which the shares are to be issued; and

(c) the shares to be issued at a discount are issued within the month after the date on which the issue is sanctioned by the court or within such extended time as the court may allow.

(2) Where a company has passed a resolution authorising the issue of shares at a discount, it may apply to the court for an order sanctioning the issue, and on any such application the court, having regard to all the circumstances of the case, amy if it thinks fit so to do on such terms and conditions as it may impose, may make an order sanctioning the issue.

(3) Every prospectus relating to the issue of the shares, shall contain particulars of the discount allowed on the issue of the shares or of so much of that discount as has not been written off at the date of the issue of the prospectus.

(4) If default is made in complying with subsection (3) of this section, the company and every officer of the company who is in default shall be liable to a fine of N50 for everyday during which the default continues.

122. Subject to the provisions of section 158 of this Decree, a company limited by shares may, if so authorised by its articles, issue preference shares which shall, or at the option of the company be liable, to be redeemed.

123. (1) Where a company has purported to issue or allot shares and the creation, issue or allotment of those shares was invalid by reason of any provision of this Decree or any other enactment or of the articles of the company or otherwise, or the terms of issue or allotment were inconsistent with or unauthorised by any such provision, the court may upon application made by the company or by a holder or mortgagee of those shares or by a creditor of the company, and upon being satisfied that in all the circumstances it is just and equitable to do so, validate the issue or allotment of those shares or confirm the terms of the issue and allotment, as the case may be.

(2) In every case where the court validates an issue or allotment of shares or confirms the terms of an issue or allotment in accordance with subsection (1) of this section, it shall make, upon payment of the prescribed fees and order which shall be proof of the validation or confirmation and upon the issue of the order, those shares shall be deemed to have been issued or allotted upon the relevant terms of issue or allotment.

Allotment of Shares

124. Subject to the provisions of the Securities and Exchange Commission Decree 1988, the power to allot shares shall be vested in the company which may delegate it to the directors subject to any conditions or directions that may be imposed in the articles or from time to time by the company in general meeting.

125. Without prejudice to the provisions of section 566 to 574 of this Decree, the following provisions shall apply in respect of an application for an allotment of issued shares of a company-

(a) in the case of a private company or a public company where the issue of shares is not public, there shall be submitted to the company a written application signed by the person wishing to purchase share and indicating the number of shares required;

(b) in the case of a public company, subject to any conditions imposed by the Securities and Exchange Commission where the issue of shares is public, there shall be returned to the company a form of application as prescribed in the company’s articles, duly completed and signed by the person wishing to purchase shares;

(c) upon the receipt of an application, a company shall, where it wholly or partially accepts the application, make an allotment to the applicant and within 42 days after the allotment notify the applicant of the fact of allotment and the number of shares allotted to him;

(d) an applicant under this section shall have the right at any time before allotment, to withdraw his application by written notice to the company.

126. An allotment of shares made and notified to an applicant in accordance with section 125 of this Decree shall be an acceptance by the company of the offer by the applicant to purchase its shares and the contract take effect on the date on which the allotment is made by the company.

127. Subject to the provisions of sections 135 to 138 of this Decree, a company may in its articles, make provision with respect to payments on allotment of its shares.

128. (1) An allotment made by a company before the holding of the statutory meeting to an applicant in contravention of the provisions of this Decree, shall be voidable at the instance of the applicant within one month after the holding of the statutory meeting of the company and not later, or where the allotment is made after the holding of the statutory meeting, within one month after the date of the allotment, and not later, and the allotment shall be so voidable notwithstanding that the company is in the course of being wound up.

(2) If any director of a company knowingly contravenes or permits or authorises the contravention of any of the provisions of this Decree with respect to allotment, he shall be liable to compensate the company and the allottee respectively for any loss, damages or costs which the company or the allottee may have sustained or incurred thereby:

Provided that proceedings to recover any such loss, damages, or costs shall not be commenced after the expiration of two years from the date of the allotment.

129. (1) Whenever a company limited by shares makes any allotment of its shares, the company shall within one months thereafter deliver to the Commission for registration-

(a) a return of the allotments stating the number and nominal amount of the shares comprised in the allotment, the names, addresses and description of the allottees, and the amount, if any, paid or due and payable on each share; and

(b) in the case of shares allotted as fully or partly paid up otherwise than in cash-

(i) a contract in writing constituting the title of the allottee to the allotment together with any contract of sale, or for services or other consideration in respect of which that allotment was made, such contracts being duly stamped;

(ii) a return stating the number and nominal amount of shares so allotted, the extent to which they are to be treated as paid up, and the consideration for which they have been allotted; and

(iii) particulars of the valuation of the consideration in accordance with section 137 of this Decree, if any.

(2) If default is made in complying with this section, every officer of the company who is in default shall be liable to a fine of N50 for every day during which the default continues:

Provided that, in case of default in delivering to the Commission within one month after the allotment any document required to be delivered by this section, the company or any officer liable for the default, may apply to the court for relief, and the court, if satisfied that the omission to deliver the document was accidental or due to inadvertence or that is just and equitable to grant relief, may make an order extending the time for the delivery of the document for such period as the court may think proper.

Commission and discounts

130. (1) Except as provided in section 131 of this Decree, no company shall apply any of its shares or capital money either directly or indirectly in payment of any commission, discount or allowance to any person in consideration of his subscribing or agreeing to subscribe, whether absolutely or conditionally, for any shares in the company, or procuring or agreeing to procure subscriptions, whether absolute or conditional, for any shares in the company, whether the shares or capital money are so applied by being added to the purchase money of any property acquired by the company or to the contract price of any work to be executed for the company, or any such money is paid out of the nominal purchase money or contract price, or otherwise.

(2) Nothing in this section shall affect the payment of any brokerage as is usual for a company to pay.

(3) A vendor to, promoter of, or other person who receives payment in money or shares from, a company shall have and shall be deemed always to have had power to apply any part of the money or shares so received in payment of any commission, the payment of which, if made directly by the company, would have been legal under this section.

131. (1) It shall be lawful for a company to pay person in consideration of his subscribing or agreeing to subscribe, whether absolutely or conditionally, for any shares in the company or procuring or agreeing to procure subscription, whether absolute or conditional, for any shares in the company if-

(a) the payment of the commission is authorised by the articles; and

(b) the commission paid or agreed to be paid does not exceed ten per cent of the price at which the shares are issued or the amount or rate authorised by the articles, whichever is the lesser; and

(c) the amount or rate per cent of the commission paid or agreed to be paid is-

(i) in the case of shares offered to the public for subscription, disclosed in the prospectus; or

(ii) in the case of shares not offered to the public for subscription, disclosed in the statement in lieu of prospectus, or in a statement in the prescribed form signed in like manner as a statement in lieu of prospectus, and delivered before the payment of the commission to the Commission for registration, and where a circular or notice, not being a prospectus inviting subscription for the shares is issued, also disclosed in that circular or notice; and

(d) the number of shares which persons have agreed for a commission to subscribe absolutely is disclosed in the manner specified in this section.

(2) If default is made in delivering to the Commission any document required to be delivered to the Commission under this section, the company and every officer in default shall be liable to a fine of N250.

132. (1) Where a company has paid any sum by way of commission in respect of any shares in the company, the amount so paid or so much of it as has not been written off, shall be stated in every balance sheet of the company until the whole amount has been written off.

(2) If default is made in complying with this section, the company and every officer of the company in default is guilty of an offence and liable to a fine or N50 for every day during which the default continues.

Call on and payment for shares

133. (1) Subject to the terms of the issue of the shares and of the articles the directors may from time to time make calls upon the members in respect of any moneys unpaid on their shares (whether on account of the nominal value of the shares or by way of premium) and not by the conditions of allotment of the shares made payable at fixed times:

Provided that no call shall exceed one fourth of the nominal value of the share or be payable at less than one month from the date fixed for the payment of the last preceding call, and each member shall (subject to receiving at least 14 days notice specifying the time or times and place of payment) pay to the company at the time or times and place so specified the amount called on his shares, so however that a call may be revoked or postponed as the directors may determine.

(2) A call shall be deemed to have been made at the time when the resolution of the directors authorising the call was passed, and may be required to be paid by instalments.

(3) The joint holders of a share shall be jointly and severally liable to pay all calls in respect of the share.

(4) If a sum called in respect of a share is not paid before or on the day appointed for payment, the person from whom the sum is due shall pay interest on the sum from the day appointed for payment to the time of actual payment at such rate not exceeding the current bank rate per annum, as the directors may determine, but the directors shall be at liberty to waive payment of such interest wholly or in part.

(5) Any sum which the terms of issue of a share becomes payable on allotment or at any fixed date, whether on account of the nominal value of the shares or by way of premium shall, for the purposes of these provisions, be deemed to be a call duly made and payable on the date on which by the terms of issue the same become payable, and in case of non-payment, all the relevant provisions of this Decree as to payment of interest and expenses, forfeiture or otherwise shall apply as if such sum had become payable by virtue of a call duly made and notified.

(6) The directors may, if they think fit, receive from any member willing to advance the same, all or any part of the moneys uncalled and unpaid upon any shares held by him; and upon all or any of the moneys so advanced may (until the same would but for such advance, become payable) pay interest at such rate not exceeding (unless the company in general meeting shall otherwise direct) the current bank rate per annum as may be agreed upon between the directors and the member paying such sum in advance.

134. A company limited by shares may by special resolution determine that any portion of its share capital which has not been already called up shall not be capable of being called up except in the event and for the purposes of the company being wound up; and thereupon that portion of its share capital shall not be capable of being called up, except in the event and for the purposes specified in this section.

135. Subject to the provisions of sections 136 and 137 of this Decree, the shares of a company and any premium on them shall be paid up in cash, or where the articles so permit, by a valuable consideration other than cash or partly in cash and partly by a valuable consideration other than cash.

136. Shares shall not be deemed to have been paid for in cash except to the extent that the company shall actually have received cash for them at the time of, or subsequently to, the agreement to issue the shares, and where shares are issued to a person who has sold or agreed to sell property or rendered or agreed to render services to the company or to persons nominated by him, the amount of any payment made for the property or services shall be deducted from the amount of any cash payment made for the shares and only the balance (if any) shall be treated as having been paid in cash for such shares notwithstanding any exchange of cheques or other securities for money.

137. (1) Where a company agrees to accept payment for its shares otherwise than wholly in cash, it shall appoint an independent valuer who shall determine the true value of the consideration other than cash and prepare and submit to the company a report on the value of the consideration.

(2) The valuer shall be entitled to require from the officers of the company such information and explanation as he thinks necessary to enable him carry out the valuation or make the report under subsection (3) of this section.

(3) The company shall, not more than three days after the receipt by it of the values report, send a copy of it to the proposed purchaser of shares, and indicate to the proposed purchaser whether or not it intends to accept the consideration as payment or part-payment for its shares.

(4) A company shall not accept as payment or part-payment for its shares consideration other than cash unless the case value of the consideration as determined by the valuer is worth at least as much as may be credited as paid up in respect of the shares allowed to the proposed purchaser.

(5) A valuer who, in his report or otherwise, knowingly or recklessly makes a statement which is misleading, false or deceptive in a material particular shall be guilty of an offence and liable to imprisonment for 12 months or to a fine of N1,000 or both such imprisonment and fine.

(6) For the purposes of this section “valuer” means an auditor, a valuer, a surveyor or an account not being a person in the employment of the company nor an agent or associate of the company or any of its directors or officers.

138. To the extent to which it is so authorised by its articles, a company may-

(a) make arrangements on the issue of shares for a difference between the shareholders in the amounts and times of payment of calls on their shares;

(b) accept from any member the whole or a part of the amount remaining unpaid on any shares held by him, although no part of that amount has been called up;

(c) pay dividend in proportion to the amount paid up on each share where a larger amount is paid up on some shares than on others.

Lien and forfeiture of shares

139. (1) A company shall have a first and paramount lien on every share, (not being a fully paid share for all moneys (whether currently payable or not) called or payable at a fixed time in respect of that share, and the company shall also have a first and paramount lien on all shares (other than fully paid shares) standing registered in the name of a single person or all moneys presently payable by him or his estate to the company; but the directors may at any time declare any share to be wholly or in part exempt from the provisions of this subsection.

(2) A company’s lien, if any, on a share shall extend to all dividends payable on it.

(3) A company may sell, in such manner as the directors thinks fit any shares on which the company has a lien, but no sale shall be made unless a sum in respect of which the lien exists is currently payable, nor until the expiration of 14 days after a notice in writing, stating and demanding payment of such part of the amount in respect of which the lien exists as is currently payable, has been given to the registered holder for the time being of the shares, or the person entitled to them by reason of his death or bankruptcy.

(4) For the purpose of giving effect to any such sale the directors may authorise some person to transfer the shares sold to the purchaser of the shares and the purchaser shall be registered as the holder of the shares comprised in any such transfer, and he shall not be bound to see to the application of the purchase money, nor shall his title to the shares be affected by any irregularity or invalidity in the proceedings in reference to the sale.

140. (1) If a member fails to pay any call or instalment of a call on the day appointed for payment, the directors may, at any time thereafter during such time as any part of the call or instalment remains unpaid, serve a notice on him requiring payment of so much of the call or instalment as is unpaid, together with any interest which may have accrued. (2) The notice shall name a further day (not earlier than the expiration of 14 days from the date of service of the notice) on or before which the payment required by the notice is to be made, and it shall state that in the event of non-payment at or before the time appointed, the shares in respect of which the call was made shall be liable to be forfeited.

(3) If the requirements of any such notice as is mentioned in subsections (1) and (2) of this section are not complied with, any share in respect of which notice has been given may at any time thereafter, before the payment required by the notice has been made, by forfeited by a resolution of the directors to that effect.

(4) A forfeited share may be sold or otherwise disposed of on such terms and in such manner, as the directors think fit, and at any time before a sale or disposition, the forfeiture may be cancelled on such terms as the directors think fit.

(5) A person whose shares have been forfeited shall cease to be a member in respect of the forfeited shares, but shall, but shall, notwithstanding, remain liable to pay to the company all moneys which, at the date of forfeiture, were payable by him to the company in respect of the shares, but his liability shall cease if and when the company receives payment in full of all such moneys in respect of the shares.

(6) A statutory declaration that the declarant is a director or the secretary of the company, and that a share in the company has been duly forfeited on a date stated in the declarations, shall be prima facie evidence of the facts stated in it as against all persons claiming to be entitled to the shares.

(7) The company may receive the consideration, if any, given for the share on any sale or disposition of it and may executed a transfer of the share in favour of the person to whom the share is sold or disposed of, and he shall thereupon be registered as the holder of the share, and shall not be bound to see to the application of the purchase money, if any, nor shall his title to the share be affected by any irregularity or invalidity in the proceedings in reference to the forfeiture, sale or disposal of the share.

(8) The provisions of this section as to forfeiture shall apply in the case of non-payment of any sum which, by the terms of issue of a share, becomes payable at a fixed time, whether on account of the nominal value of the share or by way of premium, as if the same had been payable by virtue of a call duly made and notified.

Classes of shares

141. (1) If at any time the share capital of a company is divided into different classes of shares under section 118 of this Decree, the rights attached to any class (unless otherwise provided by the terms of issue of the shares that class) may, whether or not the company is being wound up, be varied with the consent, in writing, of the holders of three-quarters of the issued shares of that class, or with the sanction of a special resolution passed at a separate general meeting of the holders of the shares of the class.

(2) To every such separate general meeting as is mentioned in subsection (1) of this section, the provisions of this Decree relating to general meetings shall apply, so however that the necessary quorum shall be two persons at least holding or representing by proxy one-third of the issued shares of the class and that any holder of shares of the class present in person or by proxy may demand a poll.

(3) If on any such application the court, after hearing the applicant and any other persons applying to it to be heard and appearing to be interested in the application, is satisfied that the variation would unfairly prejudice the shareholders of the class represented by the applicant, the court, having regard to all the circumstances of the case, may disallow the variation, and shall, if not satisfied, confirm the variation.

(4) The decision of the court on any such application shall be final.

(5) The company shall, within 15 days after the making of an order by the court on an application to it under this section, forward a copy of the order to the Commission and if default is made in complying with the provisions of this subsection, the company and every officer of the company who is in default shall be liable to a fine of N50 for every during which the default continues.

(6) In this section, “variation” includes abrogation and cognate expressions shall be constructed accordingly.

143. (1) Notwithstanding the provisions of section 116 of this Decree, the articles may provide that preference shares issued after the commencement of this Decree shall carry the rights to attend general meetings and on a poll at the meetings to more than one vote per share in the following circumstances, but not otherwise, that is to say-

(a) upon any resolution during such period as the preferential dividend or any part of it remains in arrear and unpaid, such starting from a date not more than 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.

(2) Notwithstanding the provisions of section 116 of this Decree, any special resolution of a company increasing the number of shares of any class may validly resolve that any existing class of preference shares shall carry the right to such votes additional to one votes additional to one vote per share as shall be necessary in order to preserve the existing ratio which the votes exercisable by the holders of such preference shares at a general meeting of the company bear to the total votes exercisable at the meeting.

(3) For the purposes of subsection (2) of this section, a dividend shall be deemed to be due on the date appointed in the articles for the payment of the dividend for any year or other period, or if no such date is appointed, upon the day immediately following the expiration of the year or other period, and whether or not such dividend shall have been earned or declared.

144. In construing the provisions of a company’s articles in respect of the rights attached to shares, the following rules of construction shall be observed-

(a) unless the contrary intention appears, no dividend shall be payable on any shares unless the company shall resolve to declare such dividend;

(b) unless the contrary intention appears, a fixed preferential dividend payable on any class on any class of shares is cumulative, that is to say, no dividend shall be payable on any shares ranking subsequent to them until all the arrears of the fixed dividend have paid;

(c) unless the contrary intention appears, in a winding up arrears of any cumulative preferential dividend, whether earned or declared or not are payable up to the date of actual payment in the winding up;

(d) if any class of shares is expressed to have a right to a preferential dividend, then, unless the contrary intention appears, such class has no further right to participate in dividends;

(e) if any class of shares is expressed to have preferential rights to payment out of the assets of the company in the event of winding up, then unless the contrary intention appears, such class has no further right to participate in the distribution of assets in the winding up;

(f) in determining the rights of the various classes to share in the distribution of the company’s property on a winding up, no regard shall be paid, unless the contrary intention appears, to whether or not such property represents accumulated profits or surplus which would have been available for dividend while the company remained a going concern;

(g) subject to this section, all shares rank equally in all respects unless the contrary intention appears in the company’s articles.

Numbering of shares

145. Each share in a company having a share capital shall be distinguished by its appropriate number:

Provided that, if any time all the issued shares in a company, or all of its issued shares of a particular class, are fully paid up and rank pari passu for all purposes, none of those shares need thereafter have a distinguishing number so long as it remains fully paid up and ranks pari passu for all purposes with all shares of the same claim for the time being issued and fully paid up.

Shares certificates

146. (1) Every company shall, within two months after the allotment of any of its shares and within 3 moths after the date on which a transfer of any such shares is lodged with the company, complete and have ready for delivery the certificates of all shares allotted or transferred, unless the conditions of issue of the shares otherwise provide.

(2) Every person whose name is entered as a member in the register of members shall be entitled without payment to receive within 3 months of allotment or lodgement of transfer or within such other period as the conditions of issue shall provide one certificate for all his shares or several certificates each for one or more of his shares upon payment of a fee as the directors shall, from time to time, determine.

(3) Every certificate issued by a company shall be under the company’s seal and shall specify the shares to which it relates and the amount paid up on them:

Provided that in respect of shares held jointly by several persons, the company shall not be bound to issue more than one certificate, and delivery of a certificate for shares to one of several joint holders shall be sufficient delivery to all such holders.

(4) If a share certificate is defaced, lost or destroyed, it may be replaced on such terms (if any), as to evidence and indemnity and the payment of out of pocket expenses of the company of investigating evidence as the directors think fit.

(5) If any company on which a notice has been served requiring it to make good any default in complying with the provisions of subsection (1) of this section fails to make good the default within 10 days after the service of the notice, the court may, on the application of the person entitled to have the certificate delivered to him, make an order directing the company and any officer of the company to make good the default with such time as amy be specified in the order, and any such order may provide that all costs of and incidental to the application shall be borne by the company or by any officer of the company responsible for the default.

(6) If default is made in complying with this section, the company and every officer of the company who is default shall be liable to a fine of N50 for every day during which the default continues.

(7) In this section, “transfer” means a transfer duly stamped and otherwise valid, but does not include a transfer which under this Decree, a company is for any reason entitled to refuse to and does not, register.

147. (1) A certificate, under the common seal of the company, specifying any shares held by any member, shall be prima facie evidence of the title of the member to the shares.

(2) If any person changes his position to his detriment in good faith on the continued accuracy of the statements made in a certificate, the company shall be estopped from denying the continued accuracy of such statements and shall compensate the person for any loss suffered by him in reliance on them and which he would not have suffered had the statements been or continued to be accurate.

(3) Nothing contained in subsection (2) of this section shall derogate from any right the company may have to be indemnified by any other person.

148. The production to a company of any document which is by law sufficient evidence of probate of the will, or letters of administration of the estate, or confirmation as executor, of a deceased person having been granted to some person, shall be accepted by the company as sufficient evidence of the grant, notwithstanding anything in its articles to the contrary.

149. (1) As from the date of commencement of this Decree, no company shall have the power to issue warrants.

(2) Every company shall within a period of 30 days from the date of commencement of this Decree, cancel any share warrants previously issued by it which are still valid on that date and enter in its register of members the names and relevant particulars of the bearers of the share warrants.

(3) A person whose name is entered in a company’s register of members by virtue of subsection (2) of this section, shall be deemed to be a member of the company with effect from the date on which the share warrant thereby cancelled, was issued.

Conversion of shares into stock

150. (1) The provisions of this section shall apply with respect to the conversion of all or any of the shares of a company into stock and the reconversion of such stock into shares under the provisions of section 100 of this Decree.

(2) The conversion of any paid-up shares into any stock into paid-up shares shall be by ordinary of the company at a general meeting.

(3) The holders of stock may transfer the same, or any part of it in the same manner, and subject to the same conditions, as and subject to which the shares from which the stock arose might previous to the conversion have been transferred, or as near to it as circumstances admit; and the directors may, from time to time, fix the minimum amount of stock transferable, so however that such minimum shall not exceed the nominal amount of the shares from which the stock arose.

(4) The holders of stock shall, according to the amount of stock held by them, have the same rights, privileges and advantages as regards dividends, voting at meeting of the company and other matters as if they held the shares from which the stock arose, but no such privilege or advantage (except participation in the dividends and profit of the company and in the assets on winding up) shall be conferred by an amount of stock which would not, if existing in shares, have conferred that privilege or advantage.

(5) Such of the articles of the company as are applicable to paid-up shares shall apply to stock, and the words “shares” and “shareholders” in those articles shall include “stock” and “stockholder”.

Transfer and transmission

151. (1) The transfer of a company’s share shall be by instrument of transfer and except as expressly provided in the articles, transfer of shares shall be without restrictions.

(2) Notwithstanding anything in the articles of a company, it shall not be lawful for the company to register a transfer of shares in the company, unless a proper instrument of transfer has been delivered to the company:

Provided that nothing in this section shall prejudice any power of the company to register as shareholder, any person to whom the right to any shares in the company has been transmitted by operation of law.

(3) The instrument of transfer of any share shall be executed by or on behalf of the transferor and transferee, and the transferor shall be deemed to remain a holder of the share until the name of the transferee is entered in the register of members in respect of the share.

(4) Subject to such of the restrictions of a company’s articles as may be applicable, any member may transfer all or any of his shares by instrument in writing in any usual or common form or any other form which the directors may approve.

152. (1) On the application of the transferor of any share or interest in a company, the company shall enter in its register of members, the name of the transferee in the same conditions as if the application for the entry were made by the transferee.

(2) Until the name of the transferee is entered in the register of members in respect of the transferred shares, the transferor shall, so far as concerns the company, be deemed to remain the holder of the shares.

(3) 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 refused to register the transfer of a share on which the company has a lien.

(4) The company may refuse to recognise any instrument of transfer unless-

(a) a fee as the company may, from time to time, determine is paid to the company in respect of the instrument; and

(b) the instrument of transfer is accompanied by the certificate of the shares to which it relates and such other evidence as the directors may reasonably require to show the right of the transferor to make the transfer; and

(c) the instrument of transfer is in respect of only one class of shares.

153. (1) If a company refuses to register a transfer of any shares it shall, within two months after the date on which the transfer was lodged with it, send notice of the refusal to the transferee.

(2) If default is made in complying with this section, the company and every officer of the company who is in default shall be liable to a fine of N200.

154. A transfer of the share or other interest of a deceased member of a company made by his personal representative shall, although the personal representative is not himself a member of the company, be as valid as if he had been such a member at the time of the execution of the instrument of transfer.

155. (1) In case of the death of a member, the survivor or survivors where the deceased was a joint holder, or the legal personal representative of the deceased where he was a sole holder, shall be the only persons recognised by the company as having any title to his interest in the shares; but nothing in this section shall release the estate of a deceased joint holder from any liability in respect of any share which had been jointly held by him with other persons.

(2) Any person becoming entitled to a share in consequence of the death or bankruptcy of a member may, upon such evidence being produced as may, from time to time, properly be required by the directors and subject as hereafter provided in this section, elect either to be registered himself as holder of the share, or to have some person nominated by him registered as the transferee of the share; but the company shall, in either case, have the same right to decline or suspend registration as they would have had in the case of a transfer of the share by that member before his death or bankruptcy, as the case may be.

(3) If the person so becoming entitled elects to be registered himself, he shall deliver or send to the company a notice in writing signed by him stating that he so elects and if he elects to have another person registered, he shall testify his election by executing to that person a transfer of the share.

(4) All the limitations, restrictions and provisions of this Decree and the company’s articles relating to the rights to transfer and the registration of transfers of share, shall be applicable to any such notice or transfer as mentioned in subsection (3) of this section as if the death or bankruptcy of the member had not occurred and the notice or transfer were a transfer signed by that member.

(5) A person becoming entitled to a share by reason of the death or bankruptcy of the holder, shall be entitled to the same dividends and other advantages to which he would be entitled if he were the registered holder of the share, except that he shall not, unless the articles otherwise provide, before being registered as a member in respect of the share, be entitled in respect of it to exercise any right conferred by membership in relation to meetings of the company:

Provided that the directors may at any time give notice requiring any such person to elect either to be registered himself or to transfer the share, and if the notice is not complied with within 90 days the directors may thereafter withhold payment of all dividends, bonuses or other moneys payable in respect of the share until the requirements of the notice have been complied with.

156. (1) Any person claiming to be interested in any shares or the dividends or interest on them may protect his interest by serving on the company concerned a notice and affidavit of interest.

(2) Notwithstanding the provisions of section 86 of this Decree, the company shall enter on the register of members, the fact that such notice has been served and shall not register any transfer or make any payment or return in respect of the shares contrary to the terms of the notice until the expiration of 42 days notice to the claimant of the proposed transfer or payment.

(3) In the event of any default by the company in complying with this section, the company shall compensate any person, injured by the default.

157. (1) When the holder of any shares of a company wishes to any person only a part of the shares represented by one or more certificates, the instrument of transfer together with the relevant certificates shall be delivered to the company with a request that the instrument of transfer be recognised and registered.

(2) A company to which a request is made under subsection (1) of this section, may recognise the instrument of transfer by endorsing on it the words “certificate lodged” or words to the like effect.

(3) The recognition by a company of any instrument of transfer of shares in the company shall be taken as a representation by the company to an person acting on the faith of the recognition that there have been produced to the company such documents as on the face of them show a prime facie title to the shares in the transferor named in the instrument of transfer, but not as a representation that the transferor has any title to the shares.

(4) Where any person acts on the faith of a false recognition by a company made negligently, the company shall be under the same liability to that person as if the recognition has been made fraudulently.

(5) For the purposes of this section-

(a) an instrument of transfer shall be deemed to be recognised if it bears the words “certificate lodged” or words to the like effect;

(b) the recognition of an instrument of transfer shall deemed to be made by a company if-

(i) the person issuing the instrument is a person authorised to recognise transfers of shares on the company’s behalf, and

(ii) the recognition is signed by a person authorised to recognise transfers of shares on the company’s behalf or by any officer or servant either of the company or of a body corporate so authorised;

(c) a recognition shall be deemed to be signed by any person if-

(i) it purports to be authenticated by his signature or initials (whether handwritten or not); and

(ii) it is not shown that the signature or initials was or were placed there by any person other than him or a person authorised to use the signature or initials for the purpose of transfers on the company’s behalf.

Transaction by company in respect of its own shares

158. (1) The provisions of this section shall apply with respect to the redemption by a company of any redeemable preference shares issued by it under section 122 of this Act.

(2) The shares shall not be redeemed unless they are fully paid, and redemption shall be made only out of –

(a) profits of the company which would otherwise be available for dividend; or

(b) the proceeds of a fresh issue of shares made for the purposes of the redemption.

(3) Before the shares are redeemed, the premium, if any, payable on redemption, shall be provided for out of the profits of the company or out of the company’s share premium account.

(4) Where shares are redeemed otherwise than out of the proceeds of a fresh issue, there shall, out of profits which would otherwise have been available for dividend, be transferred to a reserve fund, to be called the capital redemption reserve fund a sum equal to the nominal amount of the shares redeemed, and the provisions of this Act relating to the reduction of the share capital of a company shall, except as provided in this section, apply as if the capital redemption reserve fund were paid up share capital of the company.

(5) Subject to the provisions of this section, the redemption of preference shares thereunder may be affected on such terms and in such manner as are provided by the articles of the company.

(6) The redemption of preference shares under this section by a company shall not be taken as reducing the amount of the company’s authorised share capital.

(7) Where, in pursuance of this section a company has redeemed or is about to redeem any preference shares, it shall have power to issue shares up to the nominal amount of the shares redeemed or to be redeemed as if those shares had never been issued, and accordingly, the share capital of the company shall not, for the purposes of any enactments relating to stamp duty, be deemed to be increased by the issue of shares in pursuance of this subsection:

Provided that, where new shares are issued before the redemption of the old shares, the new shares shall not, so far as relates to stamp duty, be deemed to have been issued in pursuance of this subsection, unless the old shares are redeemed within one month after the issue of the new shares.

(8) The capital redemption reserve fund may, notwithstanding anything in this section, be applied by the company in paying up unissued shares of the company to be issued to members of the company as fully paid bonus shares.

159. (1) In this section, financial assistance includes a gift, guarantee, security or indemnity, loan, any form of credit and any financial assistance given by a company, the net assets of which are thereby reduced to a material extent or which has no net assets.

(2) Subject to the provisions of this section –

(a) where a person is acquiring or is proposing to acquire shares in a company, it shall not be lawful for the company or any of its subsidiaries to give financial assistance directly or indirectly for the purpose of that acquisition before or at the same time as the acquisition takes place; and

(b) where a person has acquired shares in a company and any liability has been incurred (by that or any other person), for the purpose of this acquisition, it shall not be lawful for the company or any of its subsidiaries to give financial assistance directly or indirectly for the purpose of reducing or discharging the liability so incurred.

(3) Nothing in subsection (1) of this section shall be taken to prohibit –

(a) the lending of money by the company in the ordinary course of its business, where the lending of money is part of the ordinary business of a company;

(b) the provision by a company, in accordance with any scheme for the time being in force, of money for the purchase of, or subscription for, fully paid shares in the company or its holding company, being a purchase or subscription by trustees of or for shares to be held by or for the benefit of employees of the company, including any director holding a salaried employment of office in the company;

(c) the making by a company of loans to persons, other than directors, bona fide in the employment of the company with a view to enabling those persons to purchase or subscribe for fully paid shares in the company or its holding company, to be held by themselves by way of beneficial ownership;

(d) any act or transaction otherwise authorised by law.

(4) If a company acts in contravention of this section, the company and every officer of the company who is in default shall be guilty of an offence and liable on conviction to a fine not exceeding N500.

160. (1) Subject to the provisions of subsection (2) of this section and its articles, a company may not purchase or otherwise acquire shares issued by it.

(2) A company may acquire its own shares for the purpose of –

(a) settling or compromising a debt or claim asserted by or against the company; or

(b) eliminating fractional shares; or

(c) fulfilling the terms of a non assignable agreement under which the company has an option or is obliged to purchase shares owned by an officer or any employee of the company; or

(d) satisfying the claim of a dissenting shareholder; or

(e) complying with a court order.

(3) A company may accept, from any shareholder, a share in the company surrendered to it as a gift, but may not extinguish or reduce a liability in respect of an amount unpaid on any such share, except in accordance with section 106 of this Act.

161. Notwithstanding any provision in the articles, a company shall not purchase any of its own shares except on compliance with the following conditions, that is –
(a) shares shall only be purchased out of profits of the company which would otherwise be available for dividend or the proceeds of a fresh issue of shares made for the purpose of the purchase;

(b) redeemable shares shall not be purchased at a price greater than the lowest price at which they are redeemable or shall be redeemable at the next date thereafter at which they are due or liable to be redeemed;

(c) no purchase shall be made in breach of section 162 of this Act.

162. No transaction shall be entered into by or on behalf of a company whereby the total number of its shares, or of its shares of any one class, held by persons other than the company or its nominees becomes less than eighty five per cent of the total number of shares, or of shares of that class, which have been issued:

Provided that –
(a) redeemable shares shall be disregarded for the purposes of this section, and

(b) where, after shares of any class have been issued, the number of such shares has been reduced, this section shall apply as if the number originally issued (including shares of that class cancelled before the reduction took effect) has been the number as so reduced.

163. (1) A contract with a company providing for the acquisition by the company of shares in the company is specifically enforceable against the company, except to the extent that the company cannot perform the contract without thereby being a breach of the provisions of section of this Act.

(2) In any action brought on a contract referred to in subsection (1) of this section, the company shall have the burden of proving that performance of the contract is prevented by the provisions of section 160 of this Act.

164. Where shares in a company are redeemed, purchased, acquired or forfeited, such shares shall, unless the company by alteration of its articles of association cancels the shares, be available for re-issue by the company.

165. (1) A company which is a subsidiary may acquire shares in its holding company where the subsidiary company is concerned as personal representative or trustee, unless the holding company or any subsidiary of it is beneficially interested otherwise than by way of security for the purposes of a transaction entered into by it in the ordinary course of a business which includes the lending of money.

(2) A subsidiary which, at the commencement of this Act, is a holder of shares of its holding company, or a subsidiary which acquired shares in its holding company before it became a subsidiary of that holding company, may continue to hold such shares but, subject to subsection (1) of this section, shall have no right to vote at meetings of the holding company or any class of shareholders of the holding company and shall not acquire any future shares in it except on a capitalisation issue.

Part VII
Debentures

Creation of debenture and debenture stock.

166. A company may borrow money for the purpose of its business or objects and may mortgage or charge its undertaking, property and uncalled capital, or any part thereof, and issue debentures, debenture stock and other securities whether outright or as security for any debt, liability or obligation of the company or of any third party.

167. (1) Every company shall, within sixty days after the allotment of any of its debentures or after the registration of the transfer of any debentures, deliver to the registered holder thereof, the debenture or a certificate of the debenture stock under the common seal of the company.

(2) If a debenture or debenture stock certificate is defaced, lost or destroyed, the company, at the request of the registered holder of the debenture, shall issue a certified copy of the debenture or renew the debenture stock certificate on payment of a fee not exceeding N5 and on such terms as to evidence and indemnity and the payment of the company’s out of pocket expenses of investigating evidence as the company may reasonably require.

(3) If default is made in complying with this section, the company and any officer of the company who is in default shall be liable to a fine not exceeding N25; and on application by any person entitled to have the debentures or debenture stock certificate delivered to him, the court may order the company to deliver the debenture or debenture stock certificate and may require the company and any such officer to bear all the costs of and incidental to the application.

168. Every debenture shall include a statement on the following matters, that is –
(a) the principal amount borrowed;

(b) the maximum discount which may be allowed on the issue or re-issue of the debentures, and the maximum premium at which the debentures may be made redeemable;

(c) the rate of and the dates on which interest on the debentures issued shall be paid and the manner in which payment shall be made;

(d) the date on which the principal amount shall be repaid or the manner in which redemption shall be effected, whether by the payment of instalments of principal or otherwise;

(e) in the case of convertible debentures, the date and terms on which the debentures may be converted into shares and the amounts which may be credited as paid up on those shares, and the dates and terms on which the holders may exercise any right to subscribe for shares in respect of the debentures held by them;

(f) the charges securing the debenture and the conditions subject to which the debenture shall take effect.
169. (1) Statements made in debenture or debenture stock certificates shall be prima facie evidence of the title to the debentures of the person named therein as the registered holder and of the amounts secured thereby.

(2) If any person shall change his position to his detriment in reliance in good faith on the continued accuracy of any statements made in the debenture or debenture stock certificate, the company shall be estopped in favour of such person from denying the continued accuracy of such statements and shall compensate such person for any loss suffered by him in reliance thereon and which he would not have suffered had the statement been or continued to be accurate:

Provided that nothing in this subsection shall derogate from any right the company may have to be indemnified by any other person.
170. A contract with a company to take up and pay for any debentures of the company may be enforced by an order for specific performance.
Types of Debentures
171. A company may issue perpetual debentures, and a condition contained in any debentures, or in any deed for securing any debentures, shall not be invalid by reason only that the debentures are made irredeemable or redeemable only on the happening of a contingency, however remote, or on the expiration of a period, however long, any rule of equity to the contrary notwithstanding.
172. Debentures may be issued upon the terms that in lieu of redemption or repayments, they may, at the option of the holder or the company, be converted into shares in the company upon such terms as may be stated in the debentures.
173. (1) Debentures may either be secured by a charge over the company’s property or may be unsecured by any charge

(2) Debentures may be secured by a fixed charge on certain of the company’s property or a floating charge over the whole or a specified part of the company’s undertaking and assets, or by both a fixed charge on certain property and a floating charge.

(3) A charge securing debentures shall become enforceable on the occurrence of the events specified in the debentures or the deed securing the same.

(4) Where any legal proceedings are brought by a debenture holder to enforce the security of a series of debentures of which he holds part, the debenture holder shall sue in a representative capacity on behalf of himself and all other debenture holders of that series.

(5) Where debentures are secured by a charge, the provisions of section 197 of this Act relating to registration of particulars of charges shall apply.
174. A company limited by shares may issue debentures which are, or at the option of the company are to be liable, to be redeemed.
175. (1) Where either before or after the commencement of this Act, a company has redeemed any debentures previously issued, then unless –
(a) any provision, express or implied, to the contrary is contained in the articles or in any contract entered into by the company; or

(b) the company has, by passing a resolution to that effect or by some other act, manifested its intention that the debentures shall be cancelled, the company shall have, and shall be deemed always to have had, power to re-issued the debentures, either by re-issuing the same debentures or by issuing other debentures in their place.

(2) On a re-issue of redeemed debentures, the person entitled to the debentures, shall have, and shall be deemed always to have had, the same priorities as if the debentures had never been redeemed.

(3) Where a company has, either before or after the commencement of this Act, deposited any of its debentures to secure advances, from time to time, on current account or otherwise, the debenture shall not be deemed to have been redeemed by reason only of the account of the company having ceased to be in debit, whilst the debentures remained so deposited.

(4) The re-issue of a debenture or the issue of another debenture in its place under the power given by this section or deemed to have been possessed by a company, whether the re-issue or issue was made before or after the commencement of this Act, shall be treated as the issue of a new debenture for the purposes of a stamp duty, but it shall not be so treated for the purposes of any provision limiting the amount or number of debentures to be issued:

Provided that any person lending money on the security of a debenture re-issued under this section which appears to be duly stamped, may give the debenture in evidence in any proceedings for enforcing his security without payment of the stamp duty or any penalty in respect thereof, unless he had notice or, but for his negligence, might have discovered, that the debenture was not duly stamped, but in any such case the company shall be liable to pay the proper stamp duty and penalty.

(5) Nothing in this section shall prejudice any power to issue debentures in place of any debentures paid off or otherwise satisfied or extinguished which, by its debentures or the securities for the same, is reserved to a company.
176. (1) The trustee of a debenture trust deed shall hold all contracts, stipulations and undertakings given to him and all mortgages, charges and securities vested in him in connection with the debentures covered by the deed, or some of those debentures, exclusively for the benefit of the debenture holders concerned (except in so far as the deed otherwise provides) and the trustee shall exercise due diligence in respect of the enforcement of those contracts, stipulations, undertakings, mortgages, charges and securities and the fulfillment of his functions generally.

(2) A debenture holder may sue –

(a) the company which issued the debentures he holds for payment of any amount payable to him in respect of the debentures; or

(b) the trustee of the debenture trust deed covering the debentures he holds for compensation for any breach of the duties which the trustee owes him, and in any such action, it shall not be necessary for any other debenture holders of the same class, or if the action is brought against the company, the trustee of the covering trust deed, to be joined as a party.

(3) This section shall apply notwithstanding anything contained in a debenture trust deed or other instrument but a provision in a debenture or trust deed shall be valid and binding on all the debenture holders of the class convened in so far as it enables a meeting of the debenture holders by a resolution supported by the votes of the holders of at least three quarters in value of the debentures of that class in respect of which votes are cast on the resolution to –

(a) release any trustee from liability for any breach of his duties to the debenture holders which he has already committed, or generally from liability for all such breaches (without necessarily specifying them) upon his ceasing to be a trustee; or

(b) consent to the alteration or abrogation of any of the rights, powers or remedies of the debenture holders and the trustee of the debenture trust deed covering their debentures (except the powers and remedies under section 215 of this Act); or

(c) consent to the substitution for the debentures of a different class issued by the company or any other company or corporation, or the cancellation of the debentures in consideration of the issue to the debenture holders of shares credited as fully paid in the company or any other company.
177. (1) The terms of any debentures or trust deed may provide for the convening of general meetings of the debentures holders and for the passing, at such meetings, of a resolution binding on all the holders of the debentures of the same class.

(2) Whether or not the debentures or trust deed contain such provisions as are referred to in subsection (1) of this section, the commission may at any time direct a meeting of the debenture holders of any class to be held and conducted in such manner as the Commission thinks fit to consider ancillary or consequential direction as it shall think fit.

(3) Notwithstanding anything contained in a debenture trust deed, or in any debenture or contract or instrument the trustee of a debenture deed shall, on the requisition of persons holding, at the date of the deposit of the requisition debentures covered by the trust deed which carrying not less than one tenth of the total voting rights attached to all the issued and outstanding debentures of that class, forthwith, proceed duly to convene a meeting of that class of debenture holders.

Fixed and Floating charges

178. (1) 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, but so that the charge shall not preclude the company from dealing with such assets until –

(a) the security becomes enforceable and the holder thereof, pursuant to a power in that behalf in the debenture or the deed securing the same, appoints a receiver or manager or enters into possession of such assets; or

(b) the court appoints a receiver or manager of such assets on the application of the holder; or

(c) the company goes into liquidation;

(2) On the happening of any of the events mentioned in subsection (1) of this section, the charge shall be deemed to crystallise and to become a fixed equitable charge on such of the company’s assets as are subject to the charge, and if a receiver or manager is withdrawn with the consent of the chargee, or the chargee withdraws from possession, before the charge has been fully discharged, the charge shall thereupon be deemed to cease to be a fixed charge and again to become a floating charge.

179. A fixed charge on any property shall have priority over a floating charge affecting that property, unless the terms on which the floating charge was granted prohibited the company from granting any later charge having priority over the floating charge and the person in whose favour such later charge was granted had actual notice of that prohibition at the time when the charge was granted to him.

180. (1) Whenever a fixed or floating charge has become enforceable, the court shall have power to appoint a receiver and in the case of a floating charge, a receiver and manager of the assets subject to the charge.

(2) In the case of a floating charge, the court may, notwithstanding that the charge has not become enforceable, appoint a receiver or manager if satisfied that the security of the debenture holder is in jeopardy; and the security of the debenture holder shall be deemed to be in jeopardy if the court is satisfied that events have occurred or are about to occur which render it unreasonable in the interests of the debenture holder that the company should retain power to dispose of its assets.

(3) A receiver or manager shall not be appointed as a means of enforcing debentures not secured by any charge.

181. Where a receiver or a receiver and manager is appointed by the court, advertisement to this effect shall be made by the receiver or the receiver and manager in the Gazette and in two daily newspapers.

182. (1) Where a receiver is appointed on behalf of the holders of any debentures of a registered company secured by a floating charge, or possession is taken by, or on behalf of those debenture holders of any property comprising or subject to the charge, then if the company is not at the time in course of being wound up, the debts which in every winding-up are under the provisions relating to preferential payments in part XV of this Act to be paid in priority to all other debts, shall be paid out of any assets coming to the hands of the receiver or other person taking possession as aforesaid in priority to any claim for principal or interest in respect of the debentures.

(2) In the application of the provisions relating to preferential payments –

(a) section 494 of this Act shall be construed as if, the provision for payment of accrued holiday remuneration becoming payable on the termination of employment before or by the effect of the winding-up order or resolution, were a provision for payment of such remuneration becoming payable on the termination of employment before or by the effect of appointment of the receiver or possession being taken as aforesaid; and

(b) the periods of time mentioned therein shall be reckoned from the date of the appointment of the receiver or of possession being taken as aforesaid, as the case may be, and if such date occurred before the commencement of this Act, the provisions relating to preferential payments which would have applied but for this Act, shall be deemed to remain in full force.

(3) Any payments made under this section, shall be recouped as far as many be out of the assets of the company available for payment of general creditors.

Debenture trust deed

183. (1) Every company which offers debentures to the public for subscription or purchase shall, before issuing any of the debentures, execute debenture trust deed in respect of them and procure the execution of the deed by the trustee for the debenture holders appointed by the deed.

(2) No debenture trust deed shall cover more than one class of debentures, whether or not the trust deed is required by this section to be executed.

(3) Where a trust deed is required to be executed by this section but has not been executed, the court, on the application of a debenture holder concerned, may-

(a) order the company to execute a trust deed;

(b) direct that a person nominated by the court shall be appointed to be trustee; and

(c) give such consequential directions as it thinks fit, as to the contents of the trust deed and its execution by the trustee thereof.

(4) For the purposes of this Act, debentures shall belong to different classes if different rights attach to them in respect of –

(a) the rate of, or dates for payment of interest;

(b) the dates when, or the instalments by which, the principal of the debentures shall be repaid, unless difference is solely that the class of debentures shall be repaid during a stated period of time and particular debentures may be repaid at different dates during that period according to selections made by the company or by drawing ballot or otherwise;

(c) any right to subscribe for or convert the debentures into shares in, or other debentures of, the company or any other company; or

(d) the powers of the debentures holders to realise any security.

(5) Debentures further belong to different classes, if they do not rank equally for payment when any security invested in the debenture holders under any trust deed is realised or when the company is wound up, that is to say, if, in the circumstances mentioned in subsection (4) of this subsection the subject matter of any such security or the proceeds thereof, or any assets available to satisfy the debentures, is or are not to be applied in satisfying the debentures strictly in proportion to the amount of principal, premiums and arrears of interest to which the holders of them are respectively entitled.

(6) A debenture is covered by a trust deed if –

(a) the holder of the debenture is entitled to participate in any money payable by the company under the deed; or

(b) is entitled to the benefit of any mortgage, charge or security created by the deed, whether alone or together with other persons.

(7) If a company issues debentures in circumstances in which this section required a debenture trust deed to be executed without such a deed, having been executed in compliance with this section, or if the company issues debentures under a trust deed which covers two or more classes of debentures, the directors of the company who are in default of an offence and liable on conviction to a fine of N5,000 jointly or severally.

184. (1) Every debenture trust deed, whether required by section 183 of this Act or not, shall state-

(a) the maximum sum which the company may raise by issuing debentures of the same class;

(b) the maximum discount which may be allowed on the issue or re-issue of the debentures, and the maximum premium at which the debentures may be made redeemable;

(c) the nature of any assets over which a mortgage, charge or security is created by the trust deed in favour of the trustee for the benefit of the debenture holders equally, and except where such a charge is a floating charge or a general floating charge, the identity of the assets subject to it;

(d) the nature of any assets over which a mortgage, charge or security has been or will be created in favour of any person other than the trustee for the benefit of the debenture holders equally, and except where such a charge is floating charge or a general floating charge, the identity of the assets subject to it;

(e) whether the company has created or will create any mortgage, charge or security for the benefit of some, but not all, of the holder of debentures issued under the trust deed;

(f) any prohibition or restriction on the power of the company of issue debentures or to create mortgages, charges or any security on any of its assets ranking in priority to, or equally with the debentures issued under the trust deed;

(g) whether the company shall have power to acquire debentures issued under the truest deed before the date of their redemption and to re-issue the debentures;

(h) the rate of and the dates on which interest on the debentures issued under the trust deed shall paid and the manner in which payment may be made;

(i) the date or dates on which the principal or the debentures issued under the trust deed shall be repaid, and unless the whole principal is to be repaid to all the debenture holders at the same time, the manner in which redemption shall be effected, whether by the payment of equal instalments of principal in respect of each debenture, or by the selection of debentures for redemption by the company, or by drawing, ballot, or otherwise;

(j) in the case of convertible debentures, the dates and terms on which the debentures may be converted into shares and the amounts which may be credited as paid up on those shares in right of the debentures held by them;

(k) the circumstances in which the debenture holders shall be entitled to realise any mortgage, charge or security invested in the trustee or any other person from their benefit (other than the circumstances in which they are entitled to do so by this Act);

(l) the power of the company and the trustee to call meetings of the debentures holders and the rights of debenture holders to require the company or the trustee to call such meetings;

(m) whether the rights of debenture holders may be altered or abrogated and if so, the conditions which must be fulfilled, and the procedure which must be followed, to effect such an alteration or abrogation; and

(n) the amount or rate of the remuneration to be paid to the trustee and the period for which it shall be paid, and whether it shall be paid in priority to the principal, interest and costs in respect of debentures issued under the trust deed.

(2) If debentures are issued without a covering debenture trust deed being executed, the statements required by subsection (1) of this section shall be included in each debenture or in a note forming part of the same document or endorsed thereon, and in applying that subsection references therein to “the debenture trust deed” shall be construed as references to all or any of the debentures of the same class.

(3) Subsection (2) of this section shall not apply if the debenture is the only debenture of the class to which it belongs which has been or may be issued, and the rights of the debenture holder shall not be altered or abrogated without his consent.

(4) Any director who issues debenture in violation of the provisions of this section shall be guilty of an offence.

185. (1) Every debenture covered by a debenture trust deed shall state, either in the body thereof or in a note forming part of the same document or endorsed thereon-

(a) the matters required to be stated in a debenture trust deed by paragraphs (a), (b), (f), (h), (i), (j), (l) and (m) of subsection 184 of this Act;

(b) whether the trustee of the covering debenture trust deed holds the mortgages, charges and securities vested in him by the trust for the debenture holders equally, or in trust for some only of the debenture holders, and if so, which debenture holders; and

(c) whether the debenture is secured by a general floating charge vested in the trustee of the covering debenture trust deed or in the debenture holders.

(2) A debenture issued by a company shall state on its face in clearly legible print, that it is unsecured if no mortgage, charge or security is vested in the holder of the debenture or in any person for his benefit as security for payment of principal or interest.

(3) Any director of a company who issues a debenture in violation of the provisions of subsections (1) and (2) section shall be guilty of an offence.

186. (1) Whether or not a debenture is secured by a charge over the company’s property it may be secured by a trust deed appointing trustee for the debenture holders.

(2) It shall be the duty of such trustees to such trustees to safeguard the right to the debenture holders and, on behalf of and for the benefit of the debenture holders, to exercise the rights, powers and discretions conferred upon them by the trust deed.

(3) Charges securing the debentures may be created in favour of the debenture holders by vesting them in the trustees.

(4) Any provision contained in a trust deed or in any contract with debenture holders secured by trust deed shall be void in so far as it would have the effect of exempting a trustee thereof from, or indemnifying him against, liability for any breach of trust or failure to show the degree of care and diligence required of him as trustee having regard to the powers, authorities or discretion conferred on him by the trust deed.

Provided that nothing herein contained shall be deemed to invalidate any release otherwise validly given in respect of anything done or omitted to be done by a trustee on the agreement to such release of a majority of not less than three quarters in value of the debenture holders present in person, or where proxies are permitted, by proxy at a meeting summoned for the purpose.

(5) Notwithstanding any provisions contained in the debentures or trust deed, the court may, on the application of any debenture holder or of the commission remove any trustee and appoint another in his place if satisfied that such trustee has interests which conflict or may conflict with those of the debenture holders or that for any reason it is undesirable that such trustee should continue to act.

Provided that where any such application is made by a debenture holder, the court if it thinks fit, may order the applicant to give security for the payment of the costs of the trustee and may direct that the application shall be heard in Chambers.

187. (1) A person is not qualified for appointment as a trustee of a debenture trust deed if he is –

(a) an officer or an employee of the company which issues debentures covered by the trust deed or of a company in the same group of companies as the company so issuing debentures;

(b) less than eighteen years of age;

(c) of unsound mind and has been so found by a court in Nigeria or elsewhere;

(d) an undischarged bankrupt;

(e) disqualified under section 257 of this Act from being appointed as a director of a company;

(f) a substantial shareholder (as defined in section 95 of this Act) of the company.

(2) If a trustee becomes subject to any of the disqualification mentioned in subsection (1) of this section after he has been appointed, he shall immediately cease to be qualified to act as a trustee of the debenture trust deed.

(3) Any person who acts as trustee of a debenture trust deed shall be guilty of an offence, if his appointment is invalid under subsection (1) of this section or if he is disqualified from acting under subsection (2) of this section.

188. (1) Subject to the provisions of this section anything contained in a trust deed for securing an issue of debentures, or in any contract with the holders of debentures secured by a trust deed, shall be void in so far as it would have the effect of exempting a trustee thereof from or indemnifying him against liability for breach of trust, where he fails to show the degree of care and diligence required of him as trustee, having regard to the provisions of the trust deed conferring on him any powers, authorities of discretions.

(2) Subsection (1) of this section shall not invalidate –

(a) any release otherwise validly given in respect of anything done or omitted to be done by a trustee before the giving of the release; or

(b) any provisions enabling such a release to be given –

(i) on the agreement thereto of a majority of not less than three-quarters in value of the debenture holders present and voting in person, where proxies are permitted, by proxy at a meeting summoned for the purpose; and

(ii) either with respect to specific acts or omissions or on the trustee dying or ceasing to act.

(3) Subsection (1) of this section shall not operate to –

(a) invalidate any provision in force at the commencement of this Act in any such trust deed or contract, so long as any person entitled to the benefit of that provision, or afterwards given the benefit thereof under subsection (4) of this section, remains a trustee of the trust deed in question; or

(b) deprive any person of any exemption or right to be indemnified in respect of anything done or omitted to be done by him, while any such provision was in force.

(4) While any trustee of a trust deed remains entitled to the benefit of a provision saved by subsection (3) of this section, the benefit of that provision may be given –

(a) to all trustees of the deed, present and future; and

(b) to any named trustee or proposed trustee thereof, by a resolution, passed by a majority of not less than three-quarters in value of the debenture holders present in person or, where proxies are permitted by proxy at a meeting summoned for the purpose in accordance with the provisions of the trust deed or, if the trust deed makes no provision for summoning meetings summoned for the purpose in any manner approved by the court.

189. (1) Except as expressly provided in the terms of any debentures, debentures shall be transferable without restriction by a written transfer in common form and so that the transferee shall be entitled to the debenture and to the moneys secured thereby without regard to any equities, set-off, or cross claim between the company and the original or any intermediate holder.

(2) The terms of any debentures may impose restrictions of any nature whatsoever on the transferability of debentures, including power for the company to refuse to register and transfer and provisions for compulsory acquisition or rights of first refusal in favour of other debenture holders, or members or officers of the company:

Provided that if any restriction is imposed on the right to transfer any debenture, notice of the restriction shall be endorsed on the face of the debenture or debenture stock certificate and in the absence of such endorsement, the restriction shall be ineffective as regards any transferee for value, whether or not he has notice of the restriction.

190. Every company shall cause a copy of every instrument creating any charge requiring registration under this Part of this Act to be kept at the registered office of the company:

Provided that, in the case of a series of uniform debentures, a copy of one debenture of the series shall be sufficient.
Company’s register of charges.

191. (1) Every limited company shall keep at the registered office of the company, a register of charges and enter therein all charges specifically affecting property of the company and all floating charges on the undertaking or any property of the company giving in each case a short description of the property charged, the amount of the charge, and, except in the case of securities to bearer, the names of the persons entitled thereto.

(2) If any officer of the company knowingly and willfully authorities or permits the omission of any entry required to be made in pursuance of this section, he shall be guilty of an offence and liable on conviction to a fine not exceeding N250.

192. (1) The copies of instruments creating any charge requiring registration under this Part of this Act with the Commission and the register of charges kept in pursuance of section 191 of this Act, shall be open during business hours (but subject to such reasonable restrictions as the company in general meeting may impose, so that not less than two hours in each day shall be allowed for inspection) to inspection by any creditor or member of the company without fee and the register of charges also be open to inspection by any other person on payment of such fee, not exceeding N5 for each inspection as the company may prescribe.

(2) If inspection of copies of instruments creating charges or of the register is refused, every officer of the company who is in default shall be guilty of an offence and liable to a fine not exceeding N10 for every day during which the refusal continues.

(3) If any such refusal occurs in relation to a company registered in Nigeria or, in so far as a foreign company has an established place of business within Nigeria and an instrument creates a charge over any of its property in Nigeria and the refusal relates to that charge, the court may by order compel an immediate inspection of the copies of instruments or register.

193. (1) A company which issues or has issued debentures shall maintain a register of the holders thereof.

(2) The register shall contain the following information, that is –

(a) the names and addresses of the debenture holders;

(b) the principal of the debentures held each of them;

(c) the amount or the highest amount of any premium payable on redemption of the debentures;

(d) the issue price of the debenture and the amount paid up on the issue price;

(e) the date on which the name of each person was entered on the register as a debenture holder; and

(f) the date on which each person ceased to be a debenture holder.

(3) The entry required under this section shall be made within thirty days of the conclusion of the agreement with the company to become a debenture holder or within thirty days of the date at which he ceases to be one.

194. (1) Every register of debenture holders of a company shall, except when duly closed (but subject to such reasonable restrictions as the company may in general meeting impose, so that not less than two hours in each day shall be allowed for inspection), be open to the inspection of any registered debenture holder or any shareholder in the company without fee, and of any other person on payment of a fee of N1 or such less sum as may be prescribed by the company.

(2) Any such registered debenture holder as aforesaid or any other person may require a copy of the register of the debenture holders of the company or any part thereof on payment of 50 kobo for every 100 words required to be copied.

(3) A copy of any trust deed for securing any issue debentures shall be forwarded to every debenture holder at his request on payment in the case of a printed trust deed, of the sum of N1 or such less sum as may prescribed by the company, or, where the trust deed has not been printed, on payment of 50 kobo for every 100 words required to be copied.

(4) If inspection is refused, or a copy is refused or not forwarded, the company and every officer of the company who is default shall be guilty of an offence and liable to a fine not exceeding N50 and in case of a continuing default, to a further fine of N10 for every day during which the default continues.

(5) Where a company is in default as aforesaid, the court convicting may by order compel an immediate inspection of the register or direct that the copies required shall be sent to the person requiring them.

(6) For the purposes of this section, a register shall be deemed to be duly closed in accordance with provisions contained in the articles or in the debentures or, in the case of debenture stock, in the stock certificates, or in the trust deed or other document securing the debentures or debenture stock, during such periods, not exceeding in the whole thirty days in any year, as may be therein specified.

195. On the application of the transferor of any debenture in a company, the company shall enter in its register of debenture holders the name of the transferee in the same manner and subject to the same conditions as if the application for the entry were made by the transferee.

196. (1) If a company refuses to register a transfer of any debentures, the company shall, within two months after the date on which the transfer was lodged with the company, send to the transferee notice of the refusal.

(2) If any default is made in complying with the provisions of this section, the company and every officer of the company who is default shall guilty of an offence and liable to a fine of N500.

Registration of Charges with Commission

197. (1) Subject to the provisions of this Part of this Act, every charge created by a company, being a charge to which this section applies, shall so far as any security on the company’s property or undertaking is conferred be void against the liquidator and creditor of the company, unless the prescribed particulars of the charge together with the instrument, if any by which the charge is created or evidenced, have been or are delivered to or received by the Commission for registration in the manner by this Act or by any enactment repealed by this Act within ninety days after the date of its creation but without prejudice to any contract or obligation for repayment of the money thereby secured, and when a charge becomes void under this section, the money thereby secured shall immediately become payable.

(2) The provisions of this section shall apply to the following charges, that is –

(a) a charge for the purpose of securing any issue of debentures;

(b) a charge on uncalled share capital of the company;

(c) a charge created or evidenced by an instrument which, if executed by an individual, would require registration as a bill of sale;

(d) a charge on land, wherever situate, or any interest therein, but not including a charge for rent or other periodical sum issuing out of land;

(e) a charge on book debts of the company;

(f) a floating charge on the undertaking or property of the company;

(g) a charge on calls made but not paid;

(h) a charge on a ship or aircraft or any share in a ship; and

(i) a charge on goodwill, on a patent or a licence under a patent, on trademark or on a copyright or a licence under a copyright.

(3) Where a charge affects or relates to property situated in Nigeria and in addition to registration under subsection (1) of make the charge valid or effectual, it shall, subject to this subsection, be sufficient evidence of compliance with the requirements of subsection (1) of this section, if, instead of delivery of the original instrument creating or evidencing the charge, there is delivered to and received by the commission within the prescribed period of ninety days, or such extended time as the court may allow, a true copy of it duly certified as such by the secretary to the company.

(4) A reference in any enactment to the date of execution of an instrument for the purposes of computation of time within which registration is to be effected with or without penalty, shall be construed as a reference to the date of presentation of copy of the instrument to the commission under this Act, and time shall be computed accordingly; and if a certified copy is delivered to the Commission under this subsection, the original of it shall be produced to it for inspection and comparison, if the Commission so requires.

(5) In the case of a charge created out of Nigeria, affecting or in relation to property situate outside Nigeria, the delivery to and the receipt by the Commission of a copy verified in the prescribed manner of the instrument by which the charge is created or evidenced shall have the same effect for the purposes of this section as the delivery and receipt of the instrument itself, and ninety days after the date on which the instrument or copy could, in due course of post, and if despatched with diligence, have been received in Nigeria shall be substituted for ninety days after the date of the creation of the charges as the time within the particulars and instrument or copy are to be delivered to the Commission.

(6) Where a charge is created in Nigeria but affects or relates to property outside Nigeria, the instrument creating or purporting to create the charge may be sent for registration under this section notwithstanding that further proceedings may be necessary to make the charge valid or effectual according to the law of the country in which the property is situate.

(7) Where a negotiable instrument has been given to secure the payment of any book debts of a company, the deposit of the instrument for the purpose of securing an advance to the company shall not, for the purposes of this section, be treated as a charge on those book debts.

(8) The holding of debentures which entitles the debenture holder to a charge on land shall not, for the purposes of this section, be deemed to be an interest in land.

(9) Where a series of debentures containing, or giving by reference to any other instrument, any charge to the benefit of which the debenture holders of that series are entitled pari pasu is created by a company, it shall, for the purposes of this section, be sufficient if there are delivered to or received by the Commission within ninety days after the execution o the deed containing the charge or, if there is no such deed, after the execution of any debentures of the series, the following particulars –

(a) the total amount secured by the whole series;

(b) the dates of the resolutions authorising the issues of the series and the date of the covering deed, if any, by which the security is created or defined;

(c) a general description of the property charged; and

(d) the names of the trustees, if any, for the debenture holders; together with the deed containing the charge, or, if there is no such deed, one of the debentures of the series:

Provided that, where more than one issue is made of debentures in the series, there shall be sent to the Commission for entry in the register particulars of the date and amount of each issues, but an omission to do this shall not affect the validity of the debentures issued.

(10) Where any commission, allowance or discount has been paid or made either directly or indirectly by a company to any person in consideration of his subscribing or agreeing to subscribe, whether absolutely or conditionally, for any debentures of the company, or procuring or agreeing to procure subscriptions whether absolute or conditional, for any such debentures, the particulars required to be sent for registration under this section shall include particulars as to the amount or rate per cent of commission, discount or allowance so paid or made, but an omission to do this shall not affect the validity of the debentures issued:

Provided that the deposit of any debentures as security for subsection, be treated as the issue of the debentures at a discount.

(11) In this Part of this Act, charge includes mortgage.

198. (1) The Commission shall keep, with respect to each company, a register in the prescribed form of all the charges requiring registration under this Part of this Act, and shall on payment of such fee as may be specified by regulations made by the commission enter in the register with respect to such charges the following particulars –

(a) in the case of a charge to the benefit of which the holders of a series of debentures are entitled, such particulars as are specified in section 197(9) of this Act;

(b) in the case of any other charge –

(i) if the charge is a charge created by the company, the date of its creation, and if the charge was a charge existing on property acquired by the company, the date of its creation, and the date of the acquisition of the property;

(ii) the amount secured by the charge,

(iii) short particulars of the property, and

(iv) the persons entitled to the charge.

(2) Where a charge is registered under this Part of this Act, the Commission shall issue a registration certificate setting out the parties to the charge, the amount thereby secured, with such other particulars as the Commission may consider necessary; and the certificate shall be prima facie evidence of due compliance with the requirements as to registration under this Part of this Act.

(3) The register kept in pursuance of this section shall be open to inspection by any person on payment of such fee, not exceeding N1 for each inspection as may be specified by regulations made by the Commission.

199. (1) It shall be the duty of a company to send to the Commission for registration, the particulars of every charge created by the company and of the issues of debentures of a series requiring registration under section 197 of this Act, but registration of any such charge may be effected on the application of any person interested therein.

(2) Where registration is effected on the application of some person other than the company, that person shall be entitled to recover from the company the amount of any fees properly paid by him to the Commission on the registration.

(3) If any company makes default in sending to the Commission for registration, the particulars of any charge created by the company or of the issues of debentures of a series requiring registration as aforesaid, then, unless the registration has been effected on the application of some other person, the company and every officer of the company who is in default shall be guilty of an offence and liable to a fine of N500.

200. (1) Where a company acquires any property which is subject to a charge of any such kind as would have been required, if it has been created by the company after the acquisition of the property, to be registered under this Part of this Act, the company shall cause the prescribed particulars of the charge, together with a copy (certified in the prescribed manner to be a correct copy) of the instrument, if any, by which the charge was created or is evidenced, to be delivered to the Commission for registration in the manner required by this Act within ninety days after the date on which acquisition is completed:

Provided that, if the property is situated and the charge was created outside Nigeria, “ninety days after the date on which the copy of the instrument could in due course of post, and if despatched with due diligence, have been received in Nigeria” shall be substituted for ninety days after the date on which acquisition is completed, as the time within which the particulars and the copy of the instrument are to be delivered to the Commission.

(2) If default is made in complying with this section, the company and every officer of the company who is in default shall be guilty of an offence and liable to a fine of N250

(3) It shall be sufficient compliance with this section in any case affecting land registered under any enactment in a State, where the charge is registered thereunder before the land is acquired by the company, if a true copy of the charge duly certified by the Registrar of Land is delivered to the Commission within the time prescribed by this section.

201. (1) Where, at the date of commencement of this Act, a company has property on which thee is a charge particulars of which would require registration if it had been created by the company after the date of such commencement then, ceased to be held by the company prior to the expiration of six months from the date of such commencement, the company shall, within that time, cause particulars of the charge as prescribed by section 197 of this Act to be delivered to the Commission for registration together with the document, if any, by which the charge was created or a copy thereof, certified as required by that section.

(2) Every existing company shall, prior to the expiration of six months from the commencement of this Act, deliver to the Commission for registration a statutory declaration made by a director and the secretary of the company stating whether or not there are any charges on the company’s property of which particulars required to be registered under this section and confirming that particulars of any such charges have been duly delivered to the Commission for registration.

(3) In the event of default in complying with subsection (2) of this Section, the company and every officer of the company who is in default shall be guilty of an offence and liable to a fine not exceeding N50 for every day during which the default continues.

(4) Failure to comply with the provisions of this section shall not affect the validity of the charge.

202. Where a charge, particulars of which require registration under section 197 of this Act, is expressed to secure all sums due or to become due or some other uncertain or fluctuating amount, the particulars required under paragraph (a) of subsection (9) of section 197 of this Act shall state the maximum sum deemed to be secured by such charge (being the maximum sum covered by the stamp duty paid thereon) and such charge shall be void, so far as any security on the company’s property is thereby conferred, as respects any excess over the stated maximum:

Provided that, if –
(a) additional stamp duty is subsequently paid on such charge; and

(b) at any time thereafter prior to the commencement of the winding-up of the company, amended particulars of the said charge stating the increased maximum sum deemed to be secured thereby (together with the original instrument by which the charge was created or evidenced) are delivered to the Commission for registration, then, as from the date of such delivery the charge, if otherwise valid, shall be effective to the extent of such increased maximum sum except as regards any person who, prior to the date of such delivery, has acquired any proprietary rights in, or a fixed or floating charge on, the property subject to the charge.

203. (1) The company shall cause a copy of every certificate of registration given under section 198 of this Act to be endorsed on every debenture or certificate of debenture stock which is issued by the company and the payment of which is secured by the charge so registered:

Provided that nothing in this subsection shall be construed as requiring a company to cause a certificate of registration of any charge so
given to be enforced on any debenture or certificate of debenture stock issued by the company before the charge was created.

(2) If any person knowingly and willfully authorises or permits the delivery of any debenture or certificate of debenture stock which under the provisions of this section is required to have endorsed on it a copy of a certificate of registration without the copy being so endorsed upon it, he shall, without prejudice to any other liability, be guilty of an offence an liable to a fine not exceeding N500.

204. If the Commission is satisfied with respect to any registered charge that –
(a) the debt for which the charge was given has been paid or satisfied in whole or in part; or

(b) part of the property or undertaking charged has been released from the charge or has ceased to form part of the company’s property or undertaking,

it may enter on the register a memorandum of satisfaction to the extent necessary to give effect thereto and, where it enters a memorandum of satisfaction it shall, if required, furnish the company with a copy of the entry, and any such entry shall have effect, subject to the requirement of any other enactment as to registration.

205. The court, on being satisfied that the omission to register a charge within the time required by this Act or that the omission or mis-statement of any particular with respect to any such charge or in a memorandum of satisfaction was accidental, or due to inadvertence or to some other sufficient cause, or is not of a nature to prejudice the position of creditors or shareholders of the company, or that on other grounds it is just and equitable to grant relief, may, on the application of the company or any person interested and on such terms and conditions as seems to the court just and expedient, order that the time for registration shall be extended or, as the case may be, that the omission or mis-statement shall be rectified.
Registration of appointment order, etc.
206. (1) If any person obtains an order for the appointment of a receiver or manager of the property of a company, or appoints such a receiver or manager under any powers contained in any instrument, he shall, within seven days from the date of the order or the appointment under the said powers, give notice of the fact to the Commission and the Commission shall, on payment of such fee as may be specified by regulations made under this Act, enter the fact in the register of charges.

(2) Where any person appointed receiver or manager of the property of a company under the powers contained in any instrument, ceases to act as such receiver or manager, he shall, on so ceasing, give the Commission notice to that effect, and the Commission shall enter, the notice in the register of charges.

(3) If any person makes default in complying with the requirements of this section, he shall be guilty of an offence and liable to a fine not exceeding N50 for every day during which the default continues.

207. (1) The copies of instruments creating any charge requiring registration under this part of this Act with the Commission and the register of charges kept in pursuance of section 198 of this Act, shall be open during business hours (but subject to such reasonable restrictions as the company in general meeting may impose, so that not less than two hours in each day shall be allowed for inspection) to inspection by any creditor or member of the company without fee, and the register of charges shall also be open to inspection by any other person on payment of such fee, not exceeding N1 for each inspection, as the company may prescribe.

(2) If inspection of copies of instruments creating charges or of the register is refused, every officer of the company who is in default shall be guilty of an offence and liable to a fine not exceeding N50 for every day during which the refusal continues.

(3) If any such refusal occurs in relation to a company registered in Nigeria or, in so far as a foreign company has an creates a charge over any of its property in Nigeria and the refusal relates to that charge, the court may by order compel an immediate inspection of the copies or register.

208. (1) A debenture holder shall be entitled to realise any security vested in him or in any other person for his benefit if –

(a) the company fails to pay any instalment of interest, or the whole or part of the principal or any premium, owing under the debenture or the debenture trust deed covering the debenture within one month after it becomes due; or

(b) the company fails to fulfil any of the obligations imposed on it by the debentures or the debenture trust deed; or

(c) any circumstances occur which by the terms of the debentures or debenture trust deed entitled the holder of the debenture to realise his security; or

(d) the company is wound up.

(2) A debenture holder whose debenture is secured by a general floating charge vested in him or the trustee of the covering debenture trust deed or any other person shall additionally be entitled to realise his security if –

(a) any creditor of the company issues a process of execution against any of its assets or commences proceedings for winding-up of the company by order of any court of competent jurisdiction; or

(b) the company ceases to pay its debts as they fall due; or

(c) the company ceases to carry on business; or

(d) the company suffers, after the issue of debenture of the class concerned, losses or diminutions in the value of its assets which in the aggregate amount to more than one half of the total amount owing in respect of who seeks to enforce his security and debentures whose holder ranks before him for payment of principal or interest; or

(e) any circumstances occur which entitles a debenture holder who ranks for payment of principal or interest in priority to the debentures secured by the general floating charges to realise his security.

209. (1) At any time after a debenture holder or a class of debenture holders becomes entitled to realise his or their security, a receiver of any assets subject to a mortgage, charge or security in favour of the class of debenture holders or the trustee of the covering debenture trust deed or any other person may be appointed by –

(a) that trustee;

(b) the debentures holders of the same class containing power to appoint; or

(c) debenture holders having more than one half of the total amount owing in respect of all the debentures of the same class; or

(d) the court on the application of the trustee.

(2) Subject to any conditions imposed in the debenture or debenture trust deed, a debenture holder or a trustee, in the case of a trust, deed may –

(a) bring an action in a representative capacity against the company for payment and enforcement of the security;

(b) realise his security by –

(i) bringing a foreclosure action, or

(ii) commencing a winding-up proceeding.

(3) A receiver appointed under this section shall, subject to any order made by the court, have power to take possession of the assets subject to the mortgage, charge or security and to sell those assets and, if the mortgage, charge or security extends to such assets, to collect debts owed to the company, to enforce claims vested in the company, to compromise, settle and enter into arrangements in respect of with a view to selling it on the most favourable terms, to grant, or accept leases of land and licences in respect of patents, designs, copyright or trademarks, and to recover any instalment unpaid on the company’s issued shares.

(4) Where a representative action is being brought under paragraph (a) of subsection (2) of this section, the approval of the court shall be obtained where the company is being wound up.

(5) The remedies given by this section shall be in addition to, and not in substitution for, any other powers and remedies conferred on the trustee or the debenture trust deed or on the debenture holders by the debentures or debenture trust deed, and any power or remedy which is expressed in any instrument to be exercisable if the debenture holders become entitled to realise their security shall be exercisable on the occurrence of any of the events specified in subsection (1) of subsections (1) and (2) of section 208 of this Act; but a manager of the business or of any of the assets of a company may not be appointed for the benefit of debenture holders unless a receiver has also been appointed and has not ceased to act.

(6) The provisions of sections 387 to 400 of this Act shall apply to receivers and managers under this Part of this Act.

(7) No provision in any instrument which purports to exclude or restrict the remedies given by this section shall be valid.

210. Subject to the provisions of this Part of this Act and unless the context otherwise admits, the provisions of sections 146, 147, 151, 153, 156 and 157 of this Act relating to share certificates and transfer of shares shall apply in respect of shares as if debentures were substituted for shares and debentures holders for shareholders

Part VIII
Meetings and Proceedings of Companies

Statutory meeting.

211. (1) Every public company shall, within a period of six months from the date of its incorporation, hold a general meeting of the members of the company (in this Act referred to as the statutory meeting).

(2) The directors shall, at least twenty one days before the day on which the statutory meeting is held, forward to every member of the company a copy of the statutory report.

(3) The statutory report shall be certified by not less than two directors or by a director and the secretary of the company and shall state –

(a) the total number of shares allotted, distinguishing shares allotted as fully or partly paid up otherwise than in cash, and stating in the case of shares partly paid up the extent to which they are so paid up, and in either case, the consideration for which they have been allotted;

(b) the total amount of cash received by the company in respect of all the shares allotted and distinguished as aforesaid;

(c) the names, addresses and descriptions of the directors, auditors, managers, if any, and secretary of the company;

(d) the particulars of any pe-incorporation contract together with the particulars of any modification or proposed modification thereon;

(e) any underwriting contract that has not been carried out and the reasons therefore;

(f) the arrears, if any, due on calls from every director; and

(g) the particulars of any commission or brokerage paid or to be paid in connection with the issue or sale of shares or debentures to any director or to the manager.

(4) The report shall also contain an abstract of the receipts of the company and of the payments made from them up to a date within seven days of the date of the report, exhibiting under distinctive headings the receipts of the company from shares and debentures and other sources, the payments made from such receipts and particulars concerning the balance remaining in hand, and an account or estimate of the preliminary expenses of the company.

(5) The statutory report shall, so far as it relates to the shares allotted by the company, and to the cash received in respect of such shares, and to the receipts and payments of the company on capital account, be certified as correct by the auditors of the company.

(6) The directors shall cause a copy of the statutory report, certified as required by this section, to be delivered to the Commission for registration forthwith after the sending of copies to the members of the company.

(7) The directors shall cause a list showing the names, descriptions and addresses of the members of the company, and the number of shares held by them respectively, to be produced at the commencement of the meeting and to remain open and accessible to any member of the company during the continuance of the statutory meeting.

(8) The members of the company present at the statutory meeting shall be at liberty to discuss any matter relating to the formation of the company, and its commencement of business or arising out of the statutory report.

(9) Any member who wishes a resolution to be passed on any matter arising out of the statutory report shall give further twenty one days notice from the date on which the statutory report was received to the company of his intention to propose such a resolution.

(10) The statutory meeting may adjourn from time to time, and at any adjourned meeting any resolution of which notice has been given in accordance with the articles, either before or subsequently to the former meeting, may be passed, and the adjourned meeting shall have the same powers as an original meeting.

212. Without prejudice to the provisions of section 408 of this Act, if a company fails to comply with the requirements of section 211 of this Act, the company and any officer in default shall be guilty of an offence and liable to a fine of N50 for every day during which the default continues.

General meeting.
213. (1) Every company shall in each year hold a general meeting as its annual general meeting in addition to any other meetings in that year, and shall specify the meeting as such in the notices calling it; and not more than fifteen months shall elapse between the date of one annual general meeting of a company and that of the next:

Provided that –

(a) if a company holds its first annual general meeting within eighteen months of its incorporation it need not hold it in that year or in the following year;

(b) except for the first annual general meeting, the Commission shall have the power to extend the time within which any annual general meeting shall be held, by a period not exceeding three months.

(2) If default is made in holding a meeting of a company in accordance with subsection (1) of this section, the Commission may, on the application of any member of the company call, or direct the calling of, a general meeting of the company and give such ancillary or consequential directions as the Commission thinks expedient, including directions modifying or supplementing, in relation to the calling, holding and conducting of the meeting, the operation of the company’s articles; and it is hereby declared that the directions that may be given under this subsection shall include a direction that one member of the company present in person or by proxy may apply to the court for an order to take a decision which shall bind all the members.

(3) A general meeting held in pursuance of subsection (2) of this section shall, subject to any directions of the Commission, be deemed to be an annual general meeting of the company; but, where a meeting so held is not held in the year in which the default in holding the company’s annual general meeting occurred, the meeting so held shall not be treated as the annual general meeting for the year in which it is held unless at that meeting the company resolves that it shall be so treated.

(4) Where a company resolves that a meeting shall be treated as its annual general meeting, a copy of the resolution shall, within fifteen days after the passing thereof, be filed with the Commission.

(5) If default is made in holding a meeting of the company in accordance with subsection (1) of this section, or in complying with any directions of the Commission under subsection (2) thereof, the company and every officer of the company who is in default shall be guilty of an offence and be liable to a fine of N500 and if default is made in complying with subsection (4) of this section, the company and every officer of the company who is in default shall be liable to a fine of N25.

214. All businesses transacted at annual general meetings shall be deemed special business, except declaring a dividend, the presentation of the financial statements and the reports of the directors and auditors, the election of directors in the place of those retiring, the appointment, and the fixing of the remuneration of the auditors and the appointment of the members of the audit committee under section 59 of this Act which shall be ordinary business.

Extraordinary General Meeting.
215. (1) The Board of directors may convene an extraordinary general meeting whenever they deem fit, and if at any time there are not within Nigeria sufficient directors capable of acting to form a quorum, any director may convene an extraordinary general meeting.

(2) An extraordinary general meeting of a company may be requisitioned by any member or members of the company holding at the date of the requisition not less than one tenth of the paid up capital of the company as at the date of the deposit carrying the right of voting, or in the case of a company not having a share capital, members of the company representing not less than one tenth of the total voting rights of all the members having at the said date a right to vote at general meetings of the company, and the directors shall on receipt of the requisition forthwith proceed duly to convene an extraordinary general meeting of the company, notwithstanding anything in its articles.

(3) The requisition shall state the objects of the meeting, and be signed by the requisitionists and deposited at the registered office of the company, and the requisition may consist of several documents in like form each signed by one or more requisitionists.

(4) If the directors do not within twenty one days from the date of the deposit of the requisition proceed duly to convene a meeting, the requisitionists, or any one or more of them representing more than one half of the total voting rights of all of them, may themselves convene a meeting:

Provided that any meeting so convened shall not be held after the expiration of three months from that date.

(5) A meeting convened under this section by a requisitionist or requisitionists shall be convened in the same manner, as nearly as possible, as that in which meetings are to be convened by directors.

(6) Any reasonable expenses incurred by the requisitionist or requisitionists by reason of the failure of the directors duly to convene a meeting shall be repaid to the requisitionists by the company, and any sum so repaid shall be retained by the company out of any sums due or to become due from the company by way of fees or other remuneration in respect of their services to such of the directors as were in default.

(7) For the purpose of this section the directors shall, in the case of a meeting at which a resolution is to be proposed as a special resolution, be deemed not to have duly convened the meeting if they do not give such notice as is required by section 217 of this Act.

(8) All businesses transacted at an extraordinary general meeting shall be deemed special.

216. All statutory and annual general meetings shall be held in Nigeria.

Notice of Meetings.
217. (1) The notice required for all types of general meetings from the commencement of this Act shall be twenty one days from the date on which the notice was sent out.

(2) A general meeting of a company shall, notwithstanding that it is called by a shorter notice than that specified in subsection (1) of this section, be deemed to have been duly called if it is so agreed in the case of –

(a) a meeting called as the annual general meeting, by all the members entitled to attend and vote thereat; and

(b) any other general meeting, by a majority in number of the members having a right to attend and vote at the meeting, being a majority together holding not less than ninety five per cent in nominal value of the shares giving a right to attend and vote at the meeting or, in the case of a company not having a share capital, together representing not less than ninety five per cent of the total voting rights at that meeting of all the members.

218. (1) The notice of a meeting shall specify the place, date and time of the meeting, and the general nature of the business to be transacted thereat in sufficient detail to enable those to whom it is given to decide whether to attend or not, and where the meeting is to consider a special resolution shall set out the terms of the resolution.

(2) In the case of notice of an annual general meeting a statement that the purpose is to transact the ordinary business of an annual general meeting shall be deemed to be a sufficient specification that the business is for the declaration of dividends, presentation of the financial statements, reports of the directors and auditors, the election of directors in the place of those retiring, the fixing of the remuneration of the auditors and, if the requirements of sections 362 and 363 of this Act are duly complied with, the removal and election of auditors and directors.

(3) No business may be transacted at any general meeting unless notice of it has been duly given.

(4) In every case in which a member is entitled, pursuant to section 230 of this Act, to appoint a proxy to attend and vote instead of him, the notice shall contain with reasonable prominence, a statement that the member has the right to appoint a proxy to attend and vote instead of him and that the proxy need not be a member of the company, and if default is made in complying with this subsection as respects any meeting, every officer of the company who is in default shall be guilty of an offence and liable to a fine not exceeding N500.

(5) An error or omission in a notice with respect to the place, date, time or general nature of the business of a meeting shall not invalidate the meeting, unless the officer of the company responsible for the error or omission acted in bad faith and failed to exercise due care and diligence:

Provided that in the case of accidental error or omission, the officer responsible shall effect the necessary correction either before or during the meeting.

219. (1) The following persons shall be entitled to receive notice of a general meeting –

(a) every member;

(b) every person upon whom the ownership of a share devolves by reason of his being a legal representative, receiver or a trustee in bankruptcy of a member;

(c) every director of the company;

(d) every auditor for the time being of the company; and

(e) the secretary of the company.

(2) No person other than those mentioned in subsection (1) of this section shall be entitled to receive notices of general meetings.

220. (1) A notice may be given by the company to any member either personally or by sending it by post to him or to his registered address, or (if he has no registered address within Nigeria) to the address, if any, supplied by him to the company for the giving of notice to him.

(2) Where a notice is sent by post, service of the notice shall be deemed to be effected by properly addressing, pre-paying, and posting a letter containing the notice, and to have been effected in the case of a notice of a meeting at the expiration of seven days after the letter containing the same is posted, and in any other case at the time at which the letter would be delivered in the ordinary course of post.

(3) A Notice may be given by the company to the joint holders of shares by giving the notice to the joint holder first named in the register of members in respect of the share.

(4) A notice may be given by the company to the persons entitled to shares in consequence of the death or bankruptcy of a member by sending it through the post in a prepaid letter addressed to them by name, or by the title of representatives of the deceased, or trustee of the bankrupt, or by any like description, at the address, if any within Nigeria supplied for the purpose by the person claiming to be so entitled, or (until such an address has been so supplied) by giving the notice in any manner in which the same might have been given if the death or bankruptcy had not occurred.

(5) Registered address means, in the case of a member, any address supplied by him to the company for the giving of notice to him.

221. (1) Failure to give notice of any meeting to a person entitled to receive it shall invalidate the meeting unless such failure is an accidental omission on the part of the person or persons giving the notice.

(2) Failure to give notice to a person entitled to it due to a misrepresentation or misinterpretation of the provisions of this Act, or of the articles shall not amount to an accidental omission for the purposes of the foregoing subsection.

222. In addition to the notice required to be given to those entitled to receive it in accordance with the provisions of this Act, every public company shall, at least twenty one days before any general meeting, advertise a notice of such meeting in at least two daily newspapers.

223. (1) If for any reason it is impracticable to call a meeting of a company or of the board of directors in any manner in which meetings of that company or board may be called, or to conduct the meeting of the company or board in the manner prescribed by the articles or this Act, the court may, either of its own motion or on the application of any director of the company or of any member of the company who would be entitled to vote at the meeting, in the case of the meeting of the company, and of any director of the company, in case of the meeting of the board, order a meeting of the company or board, as the case may be, to be called, held and conduced in such manner as the court thinks fit, and where any such order is made may give such ancillary or consequential directions as it thinks expedient.

(2) It is hereby declared that the directions that may be given under subsection (1) of this section shall include a direction that one member of the company present in person or by proxy, in the case of a meeting of the company, and one director, in the case of the Board may apply to the court for an order to take a decision which shall bind all the members.

(3) Any meeting called, held and conducted in accordance with an order under subsection (1) of this section, shall for all purposes be deemed to be a meeting of the company or of the board of directors duly called, held and conducted.

Voting
224. (1) At any general meeting, a resolution put to the vote shall be decided on a show of hands, unless a poll is (before or on the declaration of the result of the show of hands) demanded by –

(a) the chairman, where he is a shareholder or a proxy;

(b) at least three members present in person or by proxy;

(c) any member or members present in person or by proxy and representing not less than one tenth of the total voting rights of all the members having the right to vote at the meeting; or

(d) a member or members holding shares in the company conferring a right to vote at the meeting being shares on which an aggregate sum has been paid up equal to not less than one tenth of the total sum paid up on all the shares conferring that right.

(2) Unless a poll is so demanded, a declaration by the chairman that a resolution has, on a show of hands, been carried or carried unanimously, or by a particular majority, or minutes of the proceedings of the company, shall be conclusive evidence of the fact, without proof of the number or proportion of the votes recorded in favour of, or against, the resolution.

225. (1) Any provision contained in a company’s articles shall be void in so far as it would have the effect either of –

(a) excluding the right to demand a poll at a general meeting on any question other than the election of the chairman of the meeting or the adjournment of the meeting; or

(b) making ineffective a demand for a poll on any such question which is made by any of the persons mentioned in section 224 of this Act.

(2) The instrument appointing a proxy to vote at a meeting of a company shall be deemed also to confer authority to demand or join in demanding a poll, and for the purposes of subsection (1) of this section, a demand by a person as proxy for a member shall be the same as a demand by the member.

(3) Notwithstanding section 224 of this Act and subsection (1) and (2) of this section, there shall be no right to demand a poll on the election of members of the Audit Committee under section 359 of this Act.

226. (1) On a poll taken at a meeting of a company, or a meeting of any class of members of a company, a member entitled to more than one vote need not, if he votes, use all his votes or cast all the votes the uses in the same way.

(2) Except as provided in subsection (4) of this section, if a poll is duly demanded, it shall be taken in such manner as the chairman directs, and the result of the poll shall be deemed to be the resolution of the meeting at which the poll was demanded.

(3) In the case of an equality of votes, whether on a show of hands or on a poll, the chairman of the meeting at which the show of hands takes place or at which the poll is demanded, shall be entitled to a second or casting vote.

(4) A poll demanded on the election of a chairman or on a question of adjournment shall be taken forthwith, and on any other question, shall be taken at such time as the chairman of the meeting directs, and any business other than that upon which a poll has been demanded may be proceeded with pending the taking of the poll.

227. (1) Subject to section 228 of this Act, every member shall have a right to attend any general meeting of the company in accordance with the provisions of section 81 of this Act.

(2) In the case of joint holders of shares, the vote of the senior joint holder who tenders a vote, whether in person or by proxy, shall be accepted to the exclusion of the votes of the other joint holders; and for this purpose seniority shall be determined by the order in which the names stand in the register of members.

(3) A member of unsound mind, or in respect of whom an order has been made by any court having jurisdiction in lunacy, may vote, whether on a show of hands or on a poll, by his committee, receiver, curator bonis, or other person in the nature of a committee, receiver or curator bonis appointed by that court, and any such committee, receiver, curator bonis or other person may vote by proxy.

228. Every person who is entitled to receive notice of a general meeting of the company as provided by section 227 of this Act shall be entitled to attend such a meeting.

229. No objections shall be raised to the qualification of any voter except at the meeting or adjourned meeting at which the vote objected to is given or tendered, and every vote not disallowed at such meeting shall be valid for all purposes and any such objection made in due time shall be referred to the chairman of the meeting, whose decision shall be final and conclusive.

230. (1) Any member of a company entitled to attend and vote at a meeting of the company shall be entitled to appoint another person (whether a member or not) as his proxy to attend and vote instead of him, and a proxy appointment to attend and vote instead of a member shall also have the same right as the member to speak at the meeting:

Provided that, unless the articles otherwise provide, this section shall not apply in the case of a company not having a share capital.

(2) In every notice calling a meeting of a company having a share capital, there shall appear with reasonable prominence a statement that a member entitled to attend and vote is entitled to appoint a proxy or, where that is allowed, two or more proxies, to attend and vote instead of him, and that a proxy need not be a member and if default is made in complying with this subsection as respects any meeting, every officer of the company who in default shall be guilty of an offence and liable to a fine of N250.

(3) Any provision contained in a company’s articles shall be void in so far as it would have the effect of requiring the instrument appointing a proxy or any other document necessary to show the validity of or otherwise relating to the appointment of a proxy, to be received by the company or any other person more than forty eight hours before a meeting or adjourned meeting in order that the appointment may be effective at the meeting.

(4) If, for the purpose of any meeting of a company, invitations to appoint as proxy a person or one of a number of persons specified in the invitations are issued at the company’s expense to some only of the members entitled to be sent notice of the meeting and to vote by proxy at the meeting, every officer of the company who knowingly and willfully authorises or permits their issue as aforesaid shall be guilty of an offence and liable to a fine of N500:

Provided that an officer shall not be liable under this subsection by reason only of the issue to a member at his request in writing of a form of appointment naming the proxy or of a list of persons willing to act as proxy if the form or list is available on request in writing to every member entitled to vote at the meeting by proxy.

(5) A vote given in accordance with the terms of an instrument of proxy shall be valid notwithstanding the previous death or insanity of the principal or revocation of the proxy or of the authority under which the proxy was executed, or the transfer of the share in respect of which the proxy is given:

Provided that no intimation in writing of such death, insanity, revocation or transfer as aforesaid has been received by the company before the commencement of the meeting or adjourned meeting at which the proxy is used.

(6) The instrument appointing a proxy shall be in writing under the hand of the appointer or of his attorney duly authorised in writing or; if the appointer is a corporation, either under seal, or under the hand of an officer or attorney duly authorised.

(7) The instrument appointing a proxy and the power of attorney or other authority, if any, under which it is signed or a certified copy of that power or authority shall be deposited at the registered office or head office of the company or at such other place within Nigeria as is specified for that purpose in the notice convening the meeting, not less than forty eight hours before the time for holding the meeting or adjourned meeting, at which the person named in the instrument proposes to vote, or, in the case of a poll, not less than twenty four hours before the time appointed for the taking of the poll; and in default, the instrument of proxy shall not be treated as valid.

(8) This section shall apply to meetings of any class of members of a company as it applies to general meetings of the company.

231. (1) A corporation, whether a company within the meaning of this Act or not, may if it is –

(a) a member of another corporation, being a company within the meaning of this Act, by resolution of its directors or other governing body authorise such person as it thinks fit to act as its representative at any meeting of the company or at any meeting of any class of members of the company;

(b) a creditor (including a debenture holder) of another corporation, being a company within the meaning of this Act, by resolution of its directors or other governing body authorise such person as it thinks fit to act as its representative at any meeting of any creditors of the company held in pursuance of the provisions contained in any debenture or trust deed, as the case may be.

(2) A person, authorised as provided in subsection (1) of this section, shall be entitled to exercise the same powers on behalf of the corporation which he represents as that corporation might exercise if it were an individual shareholder, creditor or holder of debentures of that other company.

232. (1) Unless otherwise provided in the articles, no business shall be transacted at any general meeting unless a quorum of members is present at the time when the meeting proceeds to business and throughout the meeting.

(2) Unless otherwise provided in the articles, the quorum for the meeting of a company shall be one third of the total number of members of the company or twenty five members (whichever is less) present in person or by proxy:

Provided that where the number of members is not a multiple of three, then the number nearest to one third, and where the number of members is six or less, the quorum shall be two members.

(3) For the purpose of determining a quorum, all members or their proxies shall be counted.

(4) Where a member or members withdraw from the meeting for what appears to the chairman to be insufficient reasons and for the purpose of reducing the quorum, and in fact the quorum is no longer present, the meeting may continue with the number present, and their decision shall bind all the shareholders and where there is only one member, he may seek direction of the court to take a decision.

(5) Where there is a quorum at the beginning, but no quorum later due to some shareholders leaving for what appears to the chairman to be sufficient reasons, the meeting shall be adjourned to the same place, and time, in a week’s time, and if there is no quorum still at the adjourned meeting, the members present shall then be the quorum and their decision shall bind all shareholders and where only one member is present, he may seek direction of the court to take a decision.

Resolutions.
233. (1) A resolution shall be an ordinary resolution when it has been passed by a simple majority of votes cast by such members of the company as, being entitled to do so, vote in person or by proxy at a general meeting.

(2) A resolution shall be a special resolution when it has been passed by not less than three fourths of the votes cast by such members of the company as, being entitled to do so, vote in person or by proxy at a general meeting of which twenty one days’ notice, specifying the intention to propose the resolution as a special resolution, has been duly given:

Provided that, if it is so agreed by majority in number of the members having the right to attend and vote at any such meeting, being a majority together holding not less than ninety five per cent in nominal value of the shares giving that right or, in the case of a company not having a share capital, together representing not less than ninety five per cent of the total voting rights at that meeting of all the members, a resolution may be proposed and passed as a special resolution at a meeting of which less than twenty one days’ notice has been given.

(3) At any meeting at which a special resolution is submitted to be passed, a declaration of the chairman that the resolution is carried shall, unless a poll is demanded, be conclusive evidence of the fact without proof of the number of proportion of the votes recorded in favour of or against the resolution.

(4) In computing the majority of a poll demanded on the question that a special resolution be passed, reference shall be had to the number of votes cast for and against the resolution.

(5) For the purposes of this section, notice of a meeting shall be deemed to be duly given and the meeting to be duly held when the notice is given and the meeting held in the manner provided by this Act or the articles.

(6) A company may, by its articles provide that any matter not required by the articles or by this Act to be passed by a special resolution shall be passed by an ordinary resolution.

234. All resolutions shall be passed at general meetings and shall not be effective unless so passed:

Provided that in the case of a private company a written resolution signed by all the members entitled to attend and vote shall be as valid and effective as if passed in a general meeting.

235. (1) Subject to the following provisions of this section, it shall be the duty of a company, on the requisition in writing of such number of members as is hereinafter specified and (unless the company otherwise resolves) at the expense of the company to –

(a) give to members of the company entitled to receive notice of the next annual general meeting notice of any resolution submitted by a member which may properly be moved and is intended to be moved at that meeting;

(b) circulate to members entitled to have notice of any general meeting sent to them, any statement of not general meeting sent to them, any statement of not more than 1,000 words with respect to the matter referred to in any proposed resolution or the business to be dealt with at that meeting, and where the statements has more than 1,000 words to circulate a summary of it.

(2) The number of members necessary for a requisition under subsection (1) of this section shall be –

(a) any one or more members representing not less than one twentieth of the total voting rights of all the members having at the date of the requisition a right to vote at the meeting to which the requisition relates; or

(b) not less than one hundred members holding shares in the company on which there has been paid up an average sum, per member, of not less than N500,

(3) Notice of any such resolution shall be given, and any such statement shall be circulated, to members of the company entitled to have notice of the meeting sent to them by serving a copy of the resolution or statement on each such member in any manner permitted for service of notice of the meeting, and notice of any such resolution shall be given to any other member of the company by giving notice of the meeting, and notice of any such resolution shall be given to any other member of the company by giving notice of the general effect of the resolution in any manner permitted for giving notice of meetings of the company:

Provided that the copy shall be served, or notice of the effect of the resolution shall be given, as the case may be, in the same manner and so far as practicable, at the same time as notice of the meeting and, where it is not practicable for it to be served or given at that time, it shall be served or given as soon as practicable thereafter.

(4) A company shall not be bound under this section to give notice of any resolution or to circulate any statement unless –

(a) a copy of the requisition signed by the requisitionists (or two or more copies which between them contain the signatures of all the requisitionists) is deposited at the registered office of the company –

(i) in the case of a requisition requiring notice of a resolution, not less than six weeks before the meeting, and

(ii) in the case of any other requisition, not less than one week before the meeting; and

(b) there is deposited or tendered with the requisition, a sum reasonably sufficient to meet the company’s expenses in giving effect thereto:

Provided that if, after a copy of a requisition requiring notice of a resolution has been deposited at the registered office of the company, an annual general meeting is called for a date six weeks or less after the copy has been deposited, the copy though not deposited within the time required by this subsection shall be deemed to have been properly deposited for the purposes thereof.

(5) The company shall also not be bound under this section to circulate any statement if, on the application either of the company or of any other person who claims to be aggrieved, the court is satisfied that the rights conferred by this section are being abused to secure needless publicity for defamatory matter; and the court may order the company’s costs on an application under this section to be paid in whole or in part by the requisitionist, notwithstanding that the requisitionist is not party to the application.

(6) Notwithstanding anything in the company’s articles, the business which may be dealt with at an annual general meeting shall include any resolution of which notice if given in accordance with this section and for the purposes of this subsection, notice shall be deemed to have been so given, notwithstanding the accidental omission in giving it to one or more members.

(7) In the event of any default in complying with the provisions of this section, every officer of the company who is in default shall be guilty of an offence and liable to a fine of N500.

236. Where by any provision contained in this Act, special notice is required of a resolution, the resolution shall not be effective unless notice of the intention to move it has been given to the company not less than twenty-eight days before the meeting at which it is to be moved, and the company shall give its members notice of any such resolution at the same time and in the same manner as it gives notice of the meeting or, if that is not practicable, shall give them notice thereof, either by advertisement in a newspaper having an appropriate circulation or in any other mode allowed by the articles, not less than twenty one days before the meeting:

Provided that if, after notice of the intention to move such a resolution has been given to the company, a meeting is called for a date twenty eight days or less after the notice has been given, the notice though not given within the time required by this section shall be deemed to have been properly given for purposes thereof.

237. (1) Subject to subsection (7)(b) of section 46 of this Act, a printed copy of every resolution or agreement to which this section applies shall, within fifteen days after the passing or making of the resolution or agreement, as the case may be, be forwarded to the Commission.

(2) Where, pursuant to the provisions of sections 44 to 47 of this Act, a company by special resolution alters the provisions of its memorandum and the Commission is satisfied that the alteration is not in compliance with the applicable provisions of those sections, it may refuse to file a copy of the resolution in its records and shall notify the company accordingly and any person aggrieved by the refusal may appeal to the court within twenty one days from the receipt of the notification.

(3) A copy of every resolution or agreement as is mentioned in subsection (1) of this section for the time being in force shall be embodied in or annexed to every copy of the articles issued after the passing of the resolution or the making of the agreement.

(4) This section shall apply to –

(a) special resolutions;

(b) resolutions which have been agreed to by all the members of a company, but which, if not so agreed to, would not have been effective for their purpose, unless, as the case may be, they had been passed as special resolution; or

(c) resolutions or agreements which have been agreed to by all the members of any class of shareholders but which, if not so agreed to would not have been effective for their purpose, unless they had been passed by some particular majority or otherwise in some particular manner, and all resolutions or agreements which effectively bind all the members of any class of shareholders though not agreed to by all those members; and

(d) resolutions requiring a company to be wound up voluntarily, passed under paragraph (a) of section 457 of this Act.

(5) If a company fails to comply with subsection (1) of this section, the company and every officer of the company who is in default shall be guilty of an offence and liable to a fine of N5 for each copy in respect of which default is made.

(6) If a company fails to comply with subsection (3) of this section, the company and every officer of the company who is in default shall be guilty of an offence and liable to a fine of N5 for each copy in respect of which default is made.

(7) For the purposes of subsections (5) and (6) of this section, a liquidator of the company shall be deemed to be an officer of the company.

238. Where a resolution is passed at an adjourned meeting of –

(a) a company;

(b) the holders of any class of shares in a company; or

(c) the directors of a company,

the resolution shall for all purposes be treated as having been passed on the date on which it was in fact passed, and shall not be deemed to have been passed on any earlier date.

239. (1) The chairman may, with the consent of any meeting at which a quorum is present (and shall if so directed by the meeting), adjourn the meeting from time to time and from place to place, but no business shall be transacted at any adjourned meeting other than the business left unfinished at the meeting from which the adjournment took place.

(2) When a meeting is adjourned for thirty days or more, notice of the adjourned meeting shall be given as in the case of an original meeting; but otherwise it shall not be necessary to give any notice of an adjournment or of the business to be transacted at an adjourned meeting.

(3) if within one hour from the time appointed for the meeting a quorum is not present, the meeting if convened upon the requisition of members shall be dissolved, but in any other case, it shall stand adjourned to the same day in the next week, at the same time and place or to such other day and at such other time and place as the chairman and in his absence, the directors may direct.

(4) If a meeting stands adjourned under subsection (3) of this section, any two or more members present at the place and time to which it so stands adjourned shall form a quorum and their decision shall bind all shareholders, and where only one member is present, he may seek the direction of the court to take a decision.

240. (1) The chairman, if any, of the board of directors shall preside as chairman at every general meeting of the company, or if there is no such chairman, or if he is not present within one hour after the time appointed for the holding of the meeting or is unwilling to act, the directors present shall elect one of their number to be chairman of the meeting.

(2) If at any meeting no director is willing to act as chairman or if no director is present within one hour after the time appointed for holding the meeting, the members present shall choose one of their number to be chairman of the meeting.

(3) The duties and powers of the chairman shall include the duty to –

(a) preserve order and the power to take such measures as are reasonably necessary to do so;

(b) ensure that proceedings are conducted in a regular manner;

(c) ensure that the true intention of the meeting is carried out in resolving any issue that arises before it;

(d) ensure that all questions that arise are promptly decided; and

(e) act bona fide in the interest of the company.

(4) The chairman shall cast his vote bonafide in the interest of the company as a whole, provided that if he is also a shareholder, he may cast it in his own interest.

(5) The chairman shall have power to adjourn a meeting in accordance with section 239(1) of this Act.

241. (1) Every company shall –

(a) cause minutes of all proceedings of general meetings;

(b) all proceedings at meetings of its directors; and

(c) where there are managers, all proceedings at meetings of its managers, to be entered in books kept for that purpose.

(2) Any such minute of purporting to be signed by the chairman of the meeting at which the proceedings were held, or by the chairman of the next succeeding meeting, shall be prima facie evidence of the proceedings.

(3) Where minutes have been made, in accordance with the provisions of this section, of the proceedings at any general meeting of the company or meeting of directors or managers, then until the contrary is proved, the meeting shall be deemed to have been duly held and convened, and all proceedings had at the meeting to have been duly had, and all appointment of directors, managers or liquidators shall be deemed to be valid.

(4) If a company fails to comply with the provisions of subsection (1) of this section, the company and every officer of the company who is in default shall be guilty of an offence and liable to a fine of N500.

242. (1) The books containing the minutes of proceedings of any general meeting of a company held on or after the commencement of this Act, shall be kept at the registered office of the company, and shall during business hours (subject to such reasonable restrictions as the company may by its articles or in general meeting impose, but so that no less than six hours in each day be allowed for inspection) be open to inspection by members without charge.

(2) Any member shall be entitled to be furnished within seven days after receipt of his request in that behalf to the company, with a copy of any such minutes certified by the secretary at a charge not exceeding ten kobo for every hundred words.

(3) If any inspection required under this section is refused or if any copy required under this section is not sent within the proper time, the company and every officer of the company who is in default shall be guilty of an offence and liable in respect of each offence to a fine of N25

(4) In the case of any such refusal or default, the court may by order compel an immediate inspection of the books in respect of all proceedings of general meetings, or direct that the copies required shall be sent to the persons requiring them.

243. The provisions of the foregoing sections shall apply to any class meeting except where expressly excluded by this Act.

Part IX
Directors and Secretaries of the company

Chapter 1
Directors

Meaning of Directors

244. (1) Directors of a company registered under this Decree are persons duly appointed by the company or direct and manage the business of the company.

(2) In favour of any person dealing with the company there shall be a rebuttable presumption that all persons who are described by the company as directors, whether as executive or otherwise, have been duly appointed.

(3) Where a person not duly appointed acts or holds himself out as a director, he shall be guilty of an offence, and on conviction shall be liable to imprisonment for 2 years or to a fine of N100 for each day he so acts or holds out himself as a director, or to both such imprisonment or fine and shall be restrained by the company.

(4) If it is the company that holds him out as a director, it shall be liable to a fine of N1,000 each day it holds him out, and he and the company may be restrained by any member from so acting unless or until he is duly appointed.

245. (1) Without prejudice to the provisions of sections 244 and 250, and for the purposes of sections 253, 275 and 281 of this Decree, “director” shall include any person on whose instructions and directions the directors are accustomed to act.

(2) Subject to sections 275, 280 and 281 of this Decree, nothing contained in section 250 of this Decree shall be deemed to derogate from the duties or liabilities of the duly appointed directors.

(3) For the avoidance of doubt, the fact that a person in his professional capacity gives advice and a director acts on it shall not be constructed to make such a person under this Decree person in accordance with whose directions or instructions the director of a company is accustomed to act.

Appointment of Directors

246. (1) Every company registered on or after the commencement of this Decree shall have at least two directors and every company registered before that date shall before the expiration of 6 months from the commencement of this Decree have at least tow directors. (2) Any company whose number of directors falls below two, shall within one months of its so falling appoint new directors and shall not carry on business after the expiration of one month, unless such new directors are appointed.

(3) A director or member of a company who knows that a company carries on business after the number of directors has fallen below two for more than 60 days shall be liable for all liabilities and debts incurred by the company during that period when the company so carried on business.

247. Subject to section 246 of this Decree, the number of directors and the names of the first directors shall be determined in writing by the subscribers of the memorandum of association or a majority of them or the directors may be named in the articles.

248. (1) The members at the annual general meeting shall have power to re-elect or reject directors and appoint new ones.

(2) In the event of all the directors and shareholders dying, any of the personal representatives shall be able to apply to the Court for an order to convene a meeting of all the personal representatives of the shareholders entitled to attend and vote at a general meeting to appoint new directors to manage the company, and if they fail to convene a meeting, the creditors, if any shall be able to do so.

249. (1) The board of directors shall have power to appoint new directors to fill any casual vacancy arising out of death, resignation, retirement or removal.

(2) Where a casual vacancy is filled by the directors, the person may be approved by the general meeting at the next annual general meeting, and if not so approved, he shall forthwith cease to be a director.

(3) The directors may increase the number of directors so long as it does not exceed the maximum allowed by the articles, but the general meeting shall have power to increase or reduce the number of directors generally and may determine in what rotation the directors shall retire:

Provided that such reduction shall not invalidate any prior act of the removed director.

250. Where a person not duly appointed as a director acts as such on behalf of the company, his act shall not bind the company and he shall be personally liable for such action:

Provided that where it is the company which holds him out as director, the company shall be bound by his acts.

251. (1) The shareholding qualification for directors may be fixed by the articles of association of the company and unless and until so fixed no shareholding qualification shall be required.

(2) It shall be the duty of every director who is by the articles of the company required to hold a specified share qualification, and who is not already so qualified to obtain qualification within 2 months after his appointment.

(3) The office of director of a company shall be vacated if the director does not within 2 months from the date of his appointment, obtain his qualification or after the expiration of the said period, he ceases at any time to hold his shareholding qualification.

(4) A person vacating office under this section shall be incapable of being re-appointed director of the company until he has obtained his shareholding qualification.

(5) If after the expiration of the said period, any unqualified person acts as a director of the company, he shall be liable to a fine of N50 for every day between the expiration of the said period or the day on which he ceased to be qualified, as the case may be, and the last day on which it is proved that he acted as a director.

252. (1) 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 shall disclose this fact to the members at the general meeting.

(2) Any person who fails to disclose his age as required under this section shall be guilty of an offence and liable to a fine of N500.

253. (1) If any person, being an insolvent person acts as director of or directly or indirectly takes part in or is concerned in the management of any company, he shall be guilty of an offence and liable on conviction to a fine of N500, or to imprisonment for a term not less than 6 months or more than two years, or both.

(2) In this section, “company” includes an unregistered company.

254. (1) Where-

(a) a person is convicted by a High Court of any offence in connection with the promotion, formation or management of a company; or

(b) in the course of winding up a company it appears that a person-

(i) has been guilty of any offence for which he is liable (whether he has been convicted or not) under section 513 of this Decree; or

(ii) has otherwise been guilty, while an officer of the company, of any fraud in relation to the company or of any breach of his duty to the company;
the Court shall make an order that that person shall not be a director of or in any way, whether directly or indirectly, be concerned or take part in the management of a company for a specified period not exceeding 10 years.

(2) In the foregoing subsection, the High Court had the court where used in relation to the making of an order against any person by virtue of paragraph (a) of subsection (1) of this section, include the court before which he is convicted, as well as any court having jurisdiction to wind up the company, and in relation to the granting of leave means any court having jurisdiction to wind up the company as respects which leave is sought.

(3) A person intending to apply for the making of an order under this section by the Court having jurisdiction to wind up a company shall give not less than 10 days notice of his intention to the person against whom the order is sought, and on the hearing of the application, the last mentioned person may appear and himself give evidence or all witnesses.

(4) An application for the making of an order under this section by the court having jurisdiction to wind up a company may be made by the official receiver, or by the liquidator of the company or by any person who is or has been a member or creditor of the company; and on the hearing of any application for an order under this section by the official receiver or the liquidator, or of any application for leave under this section by a person against whom an order has been made on the application of the official receiver or liquidator, the official receiver or liquidator shall appear and call the attention of the court to any matters which seemed to him to be relevant, and may himself give evidence or call witnesses.

(5) An order may be made by virtue of paragraph (b) (ii) of subsection (1) of this section, notwithstanding that the person concerned may be criminally liable in respect of the matters on the ground of which the order is to be made and for the purposes of the said paragraph (b) (ii) “officer” includes any person in accordance with whose directions or instructions the directors of the company have been accustomed to act.

(6) If any person acts in contravention of an order made under this section, he shall be guilty of an offence and in respect of each offence, be liable on conviction to a fine of N500 or to imprisonment for a term of not less than 6 months or more than two years, or both.

255. A person may be appointed a director for life provided that he shall be removable under section 262 of this Decree.

256. Subject to the provisions of this Decree, a person may be appointed a director of a public company notwithstanding that he is 70 years or more of age but special notice shall be required of any resolution appointing or approving the appointment of such a director for the purposes of this section, 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.

257. (1) The following persons shall be disqualified from being director-

(a) an infant, that is, a person under the age of 18 years;

(b) a lunatic or person of unsound mind;

(c) a person disqualified under sections 253 and 258 of this Decree;

(d) a corporation other than its representative appointed t the board for a given term.

258. (1) The office of director shall be vacated if the director-

(a) ceases to be a director by virtue of section 251 of this Decree; or

(b) becomes bankrupt or makes any arrangement or composition with his creditors generally; or

(c) becomes prohibited from being a director by reason of any order made under section 254 of this Decree; or

(d) becomes of unsound mind; or

(e) resigns his office by notice in writing to the company.

(2) Where a director presents himself for a re-election, a record of his attendance at the meetings of the board during the preceding one year shall be made available to members at the general meeting where he is to be re-elected.

259. (1) Unless the articles otherwise provided, at the first annual general meeting of the company, all the directors shall retire from office, and at the annual general meeting in every subsequent year one-third of the directors for the time being, or if their number is not three or a multiple of three, then the number nearest one-third shall retire from office.

(2) The directors to retire in every year shall be those who have been longest in office since their last election, but as between persons who became directors on the same day those to retire shall (unless they otherwise agree among themselves) be determined by lot.

(3) The company at the meeting at which a director retires in the manner mentioned in subsections (1) (2) of this section, may fill the vacated office by electing a person to that office and in default the retiring director shall, if offering for re-election, be deemed to have been re-elected, unless at such meeting it is expressly resolved not to fill such vacated office or unless a resolution for the re-election of such director shall have been put to the meeting and lost.

(4) No person other than a director retiring at the meeting shall unless recommended by the directors, be eligible for election to the office of director at any general meeting unless not less than 3 nor more than 21 days before the date appointed for the meeting there shall have been left at the registered office or head office of the company notice in writing, signed by a member duly qualified to attend and vote at the meeting for which such notice is given, of his intention to propose such person for election, and also notice in writing signed by that person of his willingness to be elected.

260. The acts of a director, manager, or secretary shall be valid notwithstanding any defect that may afterwards be discovered in his appointment or qualification.

261. (1) At a general meeting of a company other than a private company, a motion for the appointment of two or more persons as directors of the company by a single resolution shall not be made, unless resolution that it shall be so made has first been agreed to by the meeting without any vote being given against it.

(2) A resolution moved in contravention of this section shall be void, whether or not its being so moved was objected to at the time:

Provided that-

(a) this subsection shall not be taken as excluding the operation of section 260 of this Decree; and

(b) where a resolution so moved is passed, no provision for automatic re-appointment of retiring directors in default of another appointment shall apply.

(3) For the purposes of this section, a motion for approving a person’s appointment or for nominating a person for appointment shall be treated as motion for his appointment.

(4) Nothing in this section shall apply to a resolution altering the company’s articles.

Removal of Directors

262. (1) A company may be ordinary resolution remove a director before the expiration of his period of office, notwithstanding anything in its articles or in any agreement between it and him.

(2) A special notice shall be required of any resolution or remove a director under this section, or to appoint some other person instead of a director so removed, at the meeting at which he is removed, and on receipt of notice of an intended resolution to remove a director under this section, the company shall forthwith send a copy of it to the director concerned, and the director (whether or not he is a member of the company) shall be entitled to be heard on the resolution at the meeting.

(3) Where notice is given of an intended resolution or remove a director under this section and the director concerned makes with respect to it representations in writing to the company (not exceeding a reasonable length) and requests their notification to members of the company, the company shall, unless the representations are received by it too late for it to do so-

(a) in any notice of the resolution given to members of the company state the fact of the representations having been made; and

(b) send a copy of the representations to every member of the company to whom notice of the meeting is sent (whether before or after receipt of the representations by the company);

and if a copy of the representations is not sent as required in this section because it is received too late or because of the company’s default, the director may (without prejudice to his right to be heard orally) require that the representations shall be read out at the meeting:

Provided that copies of the representations need not be sent out and the representations need not be read out at the meeting if, on the application either of the company or any other person who claims to be aggrieved, the court is satisfied that the rights conferred by this section are being abused to secure needless publicity for defamatory matter and the court may order the company’s costs on an application under this section to be paid in whole or in part by the director, notwithstanding that he is not a party to the application.

(4) A vacancy created by the removal of a director under this section, if not filled at the meeting at which he is removed, may be filled as a casual vacancy.

(5) A person appointed director in place of a person removed under this section shall be treated, for the purpose of determining the time at which he or any other director is to retire, as if he had become director on the day on which the person in whose place he is appointed was last appointed a director.

(6) Nothing in this section shall be taken as depriving a person removed under it of compensation or damages payable to him in respect of the termination of his appointment as a director or of any appointment terminating with that as director, or as derogating from any power to remove a director which may exist apart from this section.

Proceedings of Directors

263. (1) The directors may meet together for the despatch of business, adjourn and otherwise regulate their meetings as they think fit:

Provided that the first meeting of the directors shall be held not later than 6 months after the incorporation of the company.

(2) Any question arising at any meeting shall be decided by a majority of votes, and in case of an equality of votes, the chairman shall have a second or casting vote.

(3) A director may, and the secretary on the requisition of a director shall, at any time summon a meeting of the directors.

(4) The directors 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 holding the same, the directors present may choose one of their number to be chairman of the meeting.

(5) The directors may delegate any of their powers to a managing directors or to committees consisting of such member or members of their body as they think fit and the managing director or any committee so formed shall, in the exercise of the powers so delegated, conform to any regulations that may be made by the directors.

(6) A committee may elect a chairman of its meeting; and if no such chairman is elected, or if at any meeting the chairman is not present within five minutes after the time appointed for holding the same, the members present may choose one of their number to be chairman of the meeting.

(7) A committee may meet and adjourn as it thinks proper, and any questions arising shall be determined by a majority of votes of the members present, and in the case of equality of votes the chairman shall have a second or casting vote.

(8) A resolution in writing, signed by all the directors for the time being 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.

(9) In all the directors’ meetings, each director shall be entitled to one vote.

264. (1) Unless the articles otherwise provide, the quorum necessary for the transaction of the business of directors shall be 2 where there are not more than 6 directors, but where there are more than 6 directors, the quorum shall be one third of the number of directors, and where the number of directors is not a multiple of three, then the quorum shall be one-third to the nearest number.

(2) Where a committee of directors is appointed by the board of directors, the board shall fix its quorum, but where no quorum is fixed, the whole committed shall meet and act by a majority.

265. Where the board is unable to act because a quorum cannot be formed, the general meeting may act in place of the board and where a committee in unable to act because a quorum cannot be formed, the board may act in place of the committee.

266. (1) Every director shall be entitled to receive notice of the directors’ meetings, unless he is disqualified by any reason under the Decree from continuing with the office of director.

(2) There shall be given 14 days notice in writing to all directors entitled to receive notice unless otherwise provided in the articles.

(3) Failure to give notice in accordance with subsection (2) of this section shall invalidate the meeting.

(4) Unless the articles otherwise provide, it shall not be necessary to give notice of a meeting of directors to any director for the time being absent from Nigeria, provided that if he has given an address in Nigeria, the notice shall be sent to such an address.

Remuneration and other payments

267. (1) The remuneration of the directors shall from time to time be determined by the company in general meeting and such remuneration shall be deemed to accrue from day to day.

(2) The directors may also be paid all travelling, hotel and other expenses properly incurred by them in attending and returning from meetings of the directors or any committee of the directors or general meetings of the company or in connection with the business of the company.

(3) Where remuneration has been fixed by the articles, it shall be alterable only by a special resolution.

(4) A company shall not be bound to pay remuneration to directors, but where the company agrees to pay, the directors shall be paid such remuneration out of the fund of the company.

(5) The amount of remuneration shall be a debt from the company so that if directors take office on the basis of the articles, they shall be able to sue the company on account of the debt or prove it in the liquidation.

(6) A director who receives more money than he is entitled to, shall be guilty of misfeasance and shall be accountable to the company for such money.

(7) The remunerations of directors shall be apportionable .

268. (1) A managing director shall receive such remuneration (whether by way of salary, commission or participation in profits, or partly in one way and partly in another) as the directors may determine.

(2) Where a managing director is removed for any reason whatsoever under section 262 of this Decree, he shall have a claim for breach of contract if there is any or where a contract could be inferred from the terms of the articles.

(3) Where he performs some services without a contract, he shall be entitled to payment on a quantum meriut

269. (1) It shall not be lawful for a company to pay a director remuneration (whether as director or otherwise) free of income tax, or otherwise calculated by reference to or varying with the amount of his income tax, or at or with the rate or standard rate of income tax, except under a contract which was in force at the commencement of this Act, and provides expressly, and not by reference to the articles, for payment or remuneration as aforesaid.

(2) Any such provision contained in a company’s articles or in any contract other than such a contract as mentioned in subsection (1) of this section or in any resolution of a company or the resolution of a company’s directors for payment to a director of remuneration as mentioned in subsection (1) of this section, shall have effect as if it provided for payment, as a gross sum subject to income tax, of the net sum for which it actually provides.

(3) This section shall not apply to remuneration due before this Act comes into force or in respect of a period before it comes into force.

270. (1) It shall not be lawful for a company to make a loan to any person who is its director or a director of its holding company, or to enter into any guarantee or provide any security in connection with a loan made to such a person as earlier mentioned by any other person:

Provided that nothing in this section shall apply –

(a) subject to subsection (2) of this section, to anything done to provide any such person as mentioned in this subsection with funds to meet expenditure incurred or to be incurred by him for the purposes of the company or for the purpose of enabling him properly to perform his duties as an officer of the company; or

(b) in the case of a company whose ordinary business includes the lending of money or the giving of guarantees in connection with loans made by other persons, to anything done by the company in the ordinary course of that business.

(2) Proviso (a) to subsection (1) of this section shall not authorise the making of any loan, or the entering into any guarantee, or the provision of any security except

(a) with the prior approval of the company given at a general meeting at which the purposes of the expenditure and the amount of the loan or the extent of the guarantee or security, as the case may be, are disclosed; or

(b) on condition that, if the approval of the company is not given as in subsection (1) of this section at or before the next following annual general meeting, the loan shall be repaid or the liability under the guarantee or security shall be discharged, as the case may be, within six months from the conclusion of that meeting.

(3) Where the approval of the company is not given as required by any such condition, the directors authorising the making of the loan, or the entering into the guarantee, or the provision of the security, shall be jointly and severally liable to indemnify the company against any loss arising therefrom.

271. It shall not be lawful for a company to make to any director of the company, any payment by way of compensation for loss of office, or as consideration for or in connection with his retirement from office, unless particulars with respect to the proposed payment and the amount have been disclosed to members of the company and the proposal is approved by the company.

272. (1) If in connection with the transfer of the whole or any part of the undertaking or property of a company, it is proposed to make any payment to a director of the company by way of compensation for loss of office, or as consideration for or in connection with his retirement from office, the payment shall be unlawful unless particulars with respect to the proposal and the amount, have been disclosed to members of the company and the proposal is approved by the company.

(2) Where a payment declared by this section to be illegal is made to a director of a company, the amount received shall be deemed to have been received by him in trust for the company.

273. (1) Where, in connection with the transfer to any persons of all or any of the shares in a company, being a transfer resulting from –

(a) an offer made to the general body of shareholders;

(b) an offer made by or on behalf of some other body corporate with a view to the company becoming its subsidiary or a subsidiary of its holding company;
(c) an offer made by or on behalf of an individual with a view to his obtaining the right to exercise or control the exercise of not less than one third of the voting power at any general meeting of the company; or
(d) any other offer which is conditional on acceptance to a given extent that payment is to be made to a director of the company by way of compensation for loss of office, or as consideration for or in connection with his retirement from office,

it shall be the duty of that director to do all things reasonably necessary to secure that particulars with respect to the proposed payment and the amount, are included in or sent with any notice of the offer made for their shares which is given to any shareholders.

(2) If –

(a) any such director fails to do all things reasonably necessary as mentioned in this section; or

(b) any person who has been properly required by any such director to include the said particulars in or send them with any such notice as aforesaid fails so to do;

he shall be guilty of an offence and liable to a fine of N 20.

(3) If

(a) the requirements of subsection (1) of this section are not complied with in relation to any such payments as are mentioned there; or

(b) the making of the proposed payment is not, before the transfer of any shares in pursuance of the offer, approved by a meeting summoned for the purpose of the holders of the shares to which the offer relates and of other holders of shares of the same class as any of the said shares;

any sum received by the director on account of the payment shall be deemed to have been received by him in trust for any person who has sold his shares as a result of the offer made, and the expenses incurred by him in distributing that sum amongst those persons shall be borne by him and not retained out of that sum.

(4) Where the shareholders referred to in subsection (3)(b) of this section are not all the members of the company and no provision is made by the articles for summoning or regulating such a meeting as is mentioned in that paragraph, the provisions of this Act and of the company’s articles relating to general meetings of the company shall, for that purpose, apply to the meeting either without modification or with such modifications as the Commission on the application of any person concerned may direct for the purpose of adapting them to the circumstances of the meeting.

(5) If at a meeting summoned for the purpose of approving any payment as required by paragraph (b) of subsection (3) of this section, a quorum is not present and, after the meeting has been adjourned to a later date, a quorum is again not present, the payment shall, for the purposes of that subsection be deemed to have been approved.

274. (1) Where in proceedings for the recovery of any payment which has been received by any person in trust by virtue of subsections (I) and (2) of subsection 272 or subsections (I) and (3) of section 273 of this Act, it is shown that –

(a) the payment was made in pursuance of any arrangement entered into as part of the agreement for the transfer in question, or within one year but before two years after that agreement or the offer leading thereto; and

(b) the company or any person to whom the transfer was made was privy to that arrangement;

the payment shall be deemed, except in so far as the contrary is shown, to be one to which the subsections apply.

(2) If in connection with any such transfer as is mentioned in sections 272 and 273 of this Act –

(a) the price to be paid to a director of the company whose office is to be abolished or who is to retire from office for any shares in the company held by him is in excess of the price obtainable at the time by other holders of the like shares; or

(b) any valuable consideration is given to any such director;

the excess or the money value of the consideration, as the case may be, shall, for the purposes of that section, be deemed to have been a payment made to him by way of compensation for loss of office, or as consideration for or in connection with his retirement from office.

(3) It is hereby declared that references in sections 271 to 273 of this Act to payments made to any director of a company by way of compensation for loss of office, or as consideration for or in connection with his retirement from office shall not include any bona

Isochukwu

Quite eccentric really

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