2018 NIGERIAN LAW SCHOOL BAR FINALS QUESTIONS AND ANSWERS IN CORPORATE LAW PRACTICE
NIGERIAN LAW SCHOOL
BWARI – ABUJA
BAR EXAMINATION-PART II FINAL
CORPORATE LAW PRACTICE
WEDNESDAY, AUGUST 15, 2018 TIME ALLOWED: 3 HOURS
INSTRUCTIONS:
THIS PAPER IS DIVIDED INTO TWO SECTIONS. TWO ANSWER BOOKLETS ARE PROVIDED. QUESTIONS FORM EACH SECTION SHOULD BE ANSWERED ON A SEPARATE ANSWER BOOKLET. QUESTIONS 1 AND 4 ARE COMPULSORY. ONE OTHER QUESTION FROM EACH SECTION SHOULD BE ATTEMPTED.
WRITE YOUR EXAMINATION NUMBER ON EACH ANSWER BOOKLET.
SECTION A
QUESTION 1 (COMPULSORY)
Your clients, Mr. Graham White, an American and Mr. Olanipekun Wiliams, a Nigerian desire to set up a large scale rice farm in Aguobu-Owa, Ezeagu Local Government Area of Enugu State. The desired name for the business is Ezeagu Farms” but where that is not approved, the duo have agreed to go by GrahamWilliams Farms”.
Owing to the capital intensive nature of the business, they have proposed an authorized share capital of N5,000,000,000.00 (Five Billion Naira) divided into 5,000,000,000 ordinary shares of N1.00 each. However, they have been able to raise.only half, (that is N2,500,000,000.00 (Two Billion Five -Hundred Million Naira) of the said amount from the shares issued to themselves and close associates at the pont of ncorporation. Notwithstanding, they want to restrict who may become nembers of the business concern, as they intend to take full responsibility for any debt of the Company which the business is unable to satisty
The names and details of the persons who will be the first share holders of the Company are as follows:
S/N NAME AGE DESCRIPTION ADDRESS SHARE
TAKEN
1 Mr. Graham
White 53 Businessman 2, Isheri Coker Street, Lekki, Lagos.
1,000,000,000 Ordinary shares
2 Mrs. Bella White( Wife to Mr. Graham White) 50 Lawyer Called to the New York Bar in America 2, Isheri Coker Street, Lekki, Lagos.
250,000,000 Ordinary shares
3 Mr. Olanipekun
Williams
55 Businessman 22, Thompson Street, Ikoyi, Lagos. 1,000,000,000 Ordinary shares
4 Bitex Agro Ltd
Registered in 2015 Duncan Street, Ikeja, 250,000,000 Ordinary shares
All the first shareholders shall double as director while Mrs. Bella White shall in addition, serve as the Company Secretary. The duo have agreed to use the Boys Quarters to Mr. Graham’s house as the registered address.
Answer the following questions:
(a) List the type of business organizations available to persons desirous of undertaking a business venture within the extant laws in Nigeria.
(b) Which of the business formations identified in (a) above would you advise your clients to undertake? State your reasons tor the advise.
(c) Assuming your clients desire a public company, mention any two concerns you will raise with them, given the information you elicited during your client interview as shown in the scenario,
(d) Your clients have decided to register a private unlimited company, list any two other relevant information you may elicit from them in order to successfully carry out their instruction.
(e) Advise your clients on the need for a pre-incorporation Contract.
(f) Draff the co mencement clause of the pre-incorporation Contract mentioned by you in (e) above.
(g) Fill fhe attached CAC Form 1.1 in readiness for filing at the Corporate Affairs Commission. (The Form is on page 2A)
(h) Advise your clients on any three (3) guarantees they have for doing business in Nigeria.
QUESTION 2
In order to support the Free Lunch initiative for pupils of Primary Schools by the Lagos State Government, the fish farmers in Epe Community have decided to register a ndation, with the sole aim of supplying free fried fish to indigent pupils of Primary School Students in the Damiloju Community.
Answer the following questions:
(a) Advise the Fish Farmers on those qualified to be trustees of the foundauon
(b) Suggest an appropriate name for the foundation and complete the attached Form CAC IT 1 (on page 3A).
(c) Outline 5 clauses to be included in the constitution of the foundation.
(d) Comment on the effect (if any) of registering the trustees of the foundation
(e) Assuming the farmers intend to change their object after registration, advise them as to the procedure to be followed.
QUESTION 3
The four (4) directors of Motorcason Ltd, an automobile importatiom and distribution company, reached a deadlock on a proposed resolution to alter the Company’s objects clause to include the assemblage of motor vehicles in Nigeria. The chairman has directed Mr. Edward Okoye, the company secretary, to send notice of meeting to the persons entitled for the purpose of considering the resolution to alter the company’s objects.
Two of the shareholders of the Company Shehu Abiola and Rashida Salami, holding 15% of the company’s paid up shares have discovered that the alteration is being engineered by Mr. Idiris Adigun, a shareholder and the managing director of the
Company both of who had vested interests in the proposed business to covered by the alteration. Two of the company’s shareholders plan to vehemently oppose the resolution amending the object clause at the meeting.
Answer the following questions:
(a) Draft the Notice of Meeting that Mr. Edward Okoye is to send to the persons entitled.
(b) Prepare a checklist of persons entitled to attend the meeting
(c) Supposing that the resolution was passed because the charman failed to reckon the votes of Mr. Shehu Abiola and Rashida Salami when the resolution was proposed, state any three minority protection actions the duo can take to nullify the resolution.
(d) Advise the Board of Directors on how to resolve the deadiock.
(e)Give a legal opinion on whether or not the proposed resolution can be passed.
SECTION B
PLEASE USE ANOTHER BOOKLET FOR THIS SECTION
________________________________________________________________
QUESTION 4 (COMPULSORY)
You have just been called to the Bar and your father briefed you to incorporate a company for him. The proposed name of the company is Skylak Nigeria Plc. The share capital of the company is N10 million divided into 10 million ordinary shares of N1.00 each. The proposed object of the company is production and distribution of fruit juice.
At the 1st AGM of the company, it was resolved as follows:
(i) To increase the share capital of the company to N20 million divided into 20 milion ordinary shares of N1.00 each.
(ii) Allot the new shares to members of the public.
Answer the following questions:
(a) State fwo (2) statutory forms and three (3) other documents required for the incorporation Or the company.
(b) Draft the Memorandum of Association of the company, excluding the subscription clause and subscription box.
(c) Assuming the resolution increasing the share capital was signed by only Chief Zaki as the Director and Secretary because he occupies both posiions, Comment on the propriety of the execution of the resolution.
(d) Outline the steps that the company will adopt, to allot the shares to members of the public.
(e) Assuming one of the executive directors of the company is a foreigner, mention the relevant document (s) and approval(s) that the foreigner requires, to work in Nigeria.
(f) One of the directors who is also the majority shareholder, is desirous of:
(i) gaining control in the management of the company;
(ii)return on nvestments and
(iii) leverage on the shareholding structure.
Advise the director
QUESTION 5
Solar Lights Plc was incorporated on March 27th, 2018 with three Executive Directors and a Chairman who doubles as the Managing Director. Since incorporation, it has only held one meeting which was the meeting of the Board of Directors held on 25th May, 2018. The company has the following registers in its registered offfce:
(i)The Register of members.
(ii) The Accounting records.
(iii) The Register of substantial interest in shares.
(iv) Minutes Book.
The Company also has an Index of Members which is kept in the Chairman’s house. The Board of Directors appointed Mr. Abdul Shabi who is a chartered Accountant and cashier of the company as its Extermal Auditor. You have been employed as the Company Secretary to replace the Secretary appointed at incorporation.
Advise the company on the following:
(a) List the statutory register(s) the company must keep in addition to those listed in the scenario.
(b) Write a legal opinion on the appointment of Mr. Abdul Shabi as the Auditor of the company.
(c)Identify any three (3) compliances required of the company from the above scenario in line with the Code of Good Corporate Govermance for Public Companies in Nigeria.
(d) Advice the Company on the meeting it must hold before the end of September 2018.
(e) What, if any, is the legal consequence(s) of failure to hold the meeting you identified in (f) above?
QUESTION 6
Rubby Nigeria Plc was incorporated on 21st September, 2011. The subscribers and directors of the company at incorporation, who are businessmen, were Akpan Jadda and Reuben Agi. The address of the subscribers/shareholders is No. 6, Makurdi Street, Jalingo, Taraba State. The share capital of the company at incorporation was N1,000,000.00 divided into 1,000,000 ordinary shares of N1.00 each which was taken by subscribers in equal proportion.
Three years later, the membership of the company was increased to 10 through private placenent. An additional director was appointed in the person of Mrs Augasta Elem. Mrs. Cecilia Ogu was also appointed the Company Secretary to replace the out-going Company Secretary, Miss Favour Finetale.
Answer the following questions:
(a) Fill the attached Forms CAC 7A and CAC 2.1.
(b) Mention 6 rights of the shareholder of the above company
(c) Other than private placement, list and explain three(3) other ways the Company can adopt to offer its shares to the members of the public.
COUNCIL OF LEGAL EDUCATION
NIGERIAN LAW SCHOOL
BAR PT II EXAMINATIONS
AUGUST 2019
CORPORATE LAW PRACTICE
MARKING SCHEME
SECTION A
QUESTION 1( COMPULSORY)
a) The type of business organisations available to persons desirous of undertaking a business venture within the extant laws in Nigeria are as follows:
i. Sole Proprietorship;
ii. Busincss name
iii. Partnership; and
iv. Companies.
• Private Company Limited by Shares
• Private Company Limited by Guarantee,
• Private Company Unlimited; or
• Public Company Limited by Shares,
• Public Company Limited by Guarantee,
• Public Unlimited Company.
Although S. 21 of CAMA gives the impression that there can be 6 types of companies, in reality in accordance with the sections in CAMA regarding prohibition of re-registration of companies, ISA, Stock Exchange Listing Rules, these two types of Companies limited by Guarantee and Public Unlimited Companies do not exist namely: Public Companies Limited by Guarantee, Public Unlimited Companies. 4 Marks
b) The business formation identified in (a) above will advise my clients to undertake is Private Unlimited Company. 1 Mark
The reasons for the above advice as can be gleaned from the scenario are as follows:
i. The promoters of the company intend to restrict the membership of the company without throwing it open to the members of the public. This makes the company a private concern only; and
ii. The promoters intend to take full responsibility for any debt of the Company Which the business is unable to satisfy. This excludes the company from the limited liability concept. 2 Marks.
e)The two concerns I will raise with my clients assuming they desire a public company given the information elicited during my client interview as shown in the scenario are:
i. public company uniimited company is not available in practice
ii. Assuming it was possible to register a public unlimited company the following concerns will arise: lack of privacy, non-restriction of transfer of shares, additional notice for AGM.
iii. More statutory formalities e.g, qualification for Sectetaries, Special Notice in respect of over aged directors, separate resolutions for appointment of directors
2 Marks.
d) Two additional relevant information I may elicit from my clients in order to successfully carry out their instruction are
i..Restrictions on the powers of Company;
ii. Particulars of the Nominee of Bitex Agro Ltd in the Board of the proposed Company, since, Bitex cannot be a director of the company. 2 Marks.
e) Pre-inCorporations contracts are needed for the following reasons:
i. It enhances privacy. It ensures that some details, suoh as dividend policy, voting agreenment, which the company may not want to include in their Memorandum and Articles (which is a public document), are settled privately.
ii. It allows many detailed issues bothering on the operation of the company to be addressed through Shareholders Agreements, Confideitiality Agreement, Transfer of Technology Agreement, Directors Service Contract etc
iii. It helps to define the role of the parties in the operation or management of the company.
iv. It facilitates amicable settlement of disputes
2 Marks for any 2 Points.
(f) THIS AGREEMENT is made This………..day of…………..2018
BETWEEN Mr. Graham White, Businessman of 2, Isheri Coker Sreet, Lekki, Lagos, (hereinafter called The First Party,’ which expressioi shall where the context admits include his heirs, assigns and successors) AND Mr. Olanikpekun Williams, Businessman of 22, Thompson Street, Tkoyi, Lagos (hereinafter- called” The Second Party, which expression shall where the context admits include his heirs, assigns and successors)
AND Mrs Bella White, Law Graduate of 2, Isheri Colker Steet, Lekki, Lagos(hereinafter called he Third Party which expression shall where the context admits include her heirs, assigns and successors) AND Bitex Agro Ltd, a company incorporated under the laws of Nigeria, whose Registered Office is situate at 4 Duncan Street, lkeja- Lages, hereinafter called The Fourth Party. which expression hall where the context admits assigns and successors in title). 4 Marks:
g) See tlhe atached Form CAC 1.1 5 Marks
i) I will advise my clients that the three (3) guarantees, they have for doing business in Nigeria are as follows:
i. Non-expropriation of business, except for overriding public interest. In case of expropriation, prompt and adequate payment of compensation;
ii. Free lmportation of capital through an Authorised Dealer and repatriation of capital and profit;
iii. Framework for Settlement of Disputes. 3 Marks for any Points.
QUESTION 2
a) Those qualified to be appointed as trustees of the foundation ny virtue of S. 592 CAMA are:
i. A person who is not an infant
ii. A person who has not been adjudged to be of unsound mind by the Court
iii. A person who is not an undischarged Bankrupt
iv. A person who has not been convicted of an offence involving fraud or dishonesty within five (5) years of his proposed appointment. 3 Marks.
b) An appropriate name for the foundation is
“Incorporated Trustees of Fish Farmers in Epe Community Foundation”. 1 Mark
See the attached filled Form CAC IT 1. 1½ Marks
C) Clauses to be included in the constitution of the are
i. Name;
ii. Aims and objects
iii. Common seal;
iv. Special clause;
v. Appointment of Trustees;
vi. Governing body
vii. Meetings
vili. Accounts
ix. Contribution and Fund.
x. Audit
xi. Disbursement ot Fund. 2½ Marks.
d) The effect of registering the Foundation is that from the date of registration:
i. the trustees shall become a body corporate by the name described in the certificate;
ii. The Trustees shall have perpetual succession and a ccommon seal;
iii. The trustees shall have power to sue and be sued in its corporare name; and
c)The proccdure to be followed to change the object of the Foundation by virtue of S. 597 CAMA is:
i. Resolution of the general meeting approving the change of object
ii. Publication in two (2).daily Newspapers which must be circulating in the local area, calling for objection within 28 days;
iii. Display a notice of the proposed change Conspicuously mounted at the corporation headquarters, branches or such places where a majority of the members are likely to dee it;
iv. Formal application addressed to the Registrar-General, CAC requesting for his Consent/approval for the change accompanied by the following documents-
“A new duly Completed Application Form- CACIT/1.
*Evidence of Publication
*Constitution of the Association
*Extract of the minutes where the mecting was held and resolution passed, signed by the Chairman and Secretary of the Board of Trustees;
*Evidence of payment of Annual Rcturns, and
*Filling fees receipt.
v. If the alteration is approved, new CTCs of the Application Form CAC /IT/1 and the Constitution will be obtained.
3 Marks.
QUESTION 3
a) Draft of the Notice of Meeting
MOTORCASON LTD
(ADDRESS)
RC NO
NOTICE OF EXTRA – ORDINARY GENERAL MEETING PURSUANT TO S. 215 OF THE COMPANIES AND ALLIED MATTERS ACT.
NOIICIS HEREBY GIVEN that an Extra-Ordinary General Meeting of the company will be held on the ………day of……..2018 at……….venue……. at……..(time) to transact the following business:
SPECIAL BUSINESS
To consider and if thoght tit. pass. a Special Resolution to alter the company’s object clause to incluicle the assemblage of Motor Vehicles in Nigeria.
Dated this………of ……..20….
.
BY THE ORDER OF THE BOARD
Signature
Edward Okoye
COMPANY SECRETARY
Proxy statement 5 Marks.
b) The persons entitled to attend the meeting of the company by virtue of S.219 CAMA are:
i. Every member of the company;
ii. Person on whose ownership of shares devolve, Legal representatives, Receiver or a Trustee in Bankruptcy of a member;
iii. Every Director
iv. Every Auditor; and
v. The Secretary. 3 Marks for any 3 points.
c) Three Minority protection actions the duo can take to nullify the resolution are:
i. By virtue of provision of S.46 (b) CAMA, Shehu Abiola and Rashida Salami being holders of 15% of the issued share capital of the company can apply court for cancellation of the resolution within 28days of the passage of resolution.
ii. Members Direct Action or Personal/Representative Action. S.300(c) CAMA
iii. Relief on grounds of unfairly prejudicial and oppressive conduct, S.310 CAMA
iv. Investigation of the Affairs of the Company by CAC. S. 315 CAMA.
3 Marks for any points.
I will advise the Board of Directors that in order fo resolve the deadlock, since they are four (4) Directors and have equal votes, the Chairman of the Board of Direetors should have a casting vote. This means that the Chairman of the Board of Directors shall cast a second vote. CAMA s.263 (2). 1 Mark.
e) Legal opinion on whether or not the proposed resolution can be passed:
The proposed resolution to alter the Object clause of the company can be passed Notwithstanding the fact the deadlock on the proposed resolutdon and the planned opposition of the proposed resolution by Shehu Abiola and Rashida Salami who jointly hold 15% of the total shares of the company. This is because for the object of the Company to be altered, it must be done by the members of the company passing Special Resolution which means ¾ of the total vote cast by members present and voting. Thus, even it Shehu Abiola and Rashida Salami vote against the resoltition, the Special resolution can still be passed since they only have 15% of the company’s paid up share capital.
However, Shehu Abiola and Rashida Salami can apply to Federal High Court for the cancellation of the special resolution being the holders af 15% of the issued share capital of the Company within 28 days of the passing of the special resolution by viriue provision of S.46 of CAMA.
3 Marks.
d) The steps the company will adopt to allot the shares to members of the public are:
i. After the issuing of the prospectus, open a subscription list;
ii. Receive their applications and record in Application anedl Allotment Sheets
iii. Convene Board; (or Allotment Commission) meeting to pass a resolution of allotment
iv. Issue Letters ofAllotment (and Letters of Regret);
v. Prepare Share Certificates;
vi. Enter allotees’ names in the register of members;
vii. File Return of Allotment (Form CAC 2A) within one month of allotment.
viii. If the shares were issued for a consicderation other than cash:
• Have thc consideration valued and obtain particulars of valuation report.
• Prepare and file along with Form CAC 2A-
i. Agreement for sale of property or for services of other
ii. Agreenment constituting the title of the’allotees to the allotment Consideration; and
iii. Particulars of Valuation. 5 marks
e).The relevant documents(s) and approval(s) that the foreigner requires to work in Nigeria are:
i. Application to the Nigerian Embassy in his home country for grant of Business Visa
ii. Application to Immigration Services for grant of:
Resident Permit;
Expatriate Quota; and work perm
CERPAC
3 Marks for any 2 points.
f) I will advise the director that if he is desirous of gaining control in the management of the company (ii) return on investments( iii), leverage on the shareholding structure, he should do the followings:
i. Appointment as the Chairnman of the Companys
i. Appointment as the Managing Director of the Compainy,
ii. Be a life director;
COUNCIL OF LEGAL EDUCATION
NIGERIAN LAW SCHOOL
BAR PT II EXAMINATIONS
AUGUST 2018
CORPORATE LAW PRACTICE
MARKING SCHEME
SECTION B
QUESTION 4:
a) two (2) statutory forms are:
i. Duly completed Form CAC1- Availability Check and Reservation of Name
ii. Duly completed Form CAC1.1- Application for registration of a company.
2 Marks
i. Three (3) ather documents required for the incorporation of a Company are as follows:-
ii. Stampecd copy of the Memorandum and Articles of Association
iii. Recognised form of identification for Directors, Subscribers and Secretary, e.g,Driver’s License, data page of International Passport, National Identity Card
iv. Stamp Duty E Certificate, and
v. Evidence of Payment of Filing Fee to CAC.
3 Marks for any 3 points.
b) Draft of the Memorandunm of Association:-
FEDERAL REPUBLIC OF NIGERIA
COMPANIES AND ALILIED MATTERS ACT
CAP C20, LAWS OF THE FEDERATION OF NIGERIA, 2004
COMPANY LIMITED BY SHARES
MEMORANDUM OF ASSOCIATION
OF
SKYLAK NIGERIA PLC
1. The Name of the company is Skylak Nigeria PiC.
2. The Registered Office of the Company is situate in NIgeria
3. The Object for which the company is established is to carry on the business of production and distribution of fruit juice.
4. The Company is a Public Company.
5. The Liability of the Members is Limited by Shares
6. The Aithorised Share Capital of the Company is Ten Million Naira (#10,000,000.00) divided into 10,000,000 ordinary shares of one Naira (N1.00) each. 5 Marks.
c) On the propriety ot the execution of the resolution, the resolution is not validly executed because one person is not allowed to sign a company document as a Director and Secretary of the company notwithstanding that he occupies both positions. Although by virtue of the provision of S.294 CAMA, a person can occupy the position of a Director and Company Secretary at the same time, acts that need to be done by a Director and Company Secretary cannot be validly done by one person occupying both positionS. What the law provides that such act must be done by two different persons, In other words, another Director should join him in signing the resolution for the resolution to be valid.
3 Marks.
iv. Become a signatory to all the documents of the company;
v. Acquire. Preference shares of the company:
vi. Acquire majority of Ordinary shares of the company; and
• Power to appoint and remove directors/ofticers . 41(3) 4 Marks
any 4 points.
QUESTION 5
a) The Statutory Register that the company must keep in addition to those listed in the scenario are:-
i. Register of debenture holders S.193 CAMA
ii. Register of Directors and Secretaries S.292 CAMA,
iii. Register of Directors’ Shareholdings. S.275 CAMA,
iv. Register of Charges S.191 & 192 CAMA; and
v.Record of Insruments. S.190, & 242 CAMA.
3 Marks for any points.
b) Legal opinion on the appointment of Mr. Abdul Shabi as the Auditor of the company:
Mr. Shabi is an officer or servant of the company by virtue of his being a cashier of the Company. By the provision of S. 358(1) of CAMA, an officer or servant of the company cannot be an External Auditor of the company. This is in consonance with the principle of Independence of Auditor as entrenched in the Code of Corporate Governance 2013
3 Marks
c) Three (3) compliance required of the company from the above scenario in line with the code of Good Corporate Covernance for Public Companies in Nigeria are:-
i. Office of the Chairman/Managing can no longer be combined in an individual,
ii. There must be appointment of both Executive Directors and Non-Executive Directors of the company and the majority must be Non-Executive,
iii. One of the Non-Executive Director must be an Independent Director;
iv. The board must meet once every quarter
v. There must ber a strong and independent Auditor that is not an employee of the Company;
vi. The Company Secretary should be a person possessing the relevant qualification and competence necessary to effectively discharge the duties of his office. Accordingly; the company secretary should be appointed through a rigorous selection process that is applicable for appointment of new directors; and
vii. Audit Committee.
3 Marks for any 3 points.
cptember,
d) The company will be advised to hold statutory Meeting before the end of September, 2018. This is because the company being a public company is expected to hold Statutory Meeting within six (6) months of its incorporation. S. 211 CAMA.
3Marks.
e) The legal consequence(s) of failure to hold the meeting identified in (d) above is fatal to both the company and officers of the company. Failure to hold Statutory Meeting or file Statutory Report will be:
i. Ground for compulsory winding up of a company by the Court under the provision of S.408 of CAMA; and
ii. The officers of the company will be liable to payment of fine by virtue of S. 212 of CAMA. 3 Marks.
.
QUESTION 6
a) See the attachecd filled Form CAC 7A. 4 Marks
See the attached filled Form CAC 2.1. 3 Marks
b)The rights of the shareholder of the above company are as follows-
i. Right to notice of company meetings
ii. Right to dividend as and when declared;
iii. Right to be given a copy of financial statement,
iv. Right to attend meetings by proxy,
v. Right to vote;
vi. Right to demand poll,
vii. Right to challenge the alternatioin of business / object clause of a company
viii. Right to transfer shares. (if fully paid);
ix. Right to requisition extra-ordinary general meeting;
x. Right to take up minority protection action
-5 Marks for any 5 points.
C) Three (3) other ways the company can adopt to offer its shares to the members of the public other than private placement are:-
i. Direct Offer;
ii. Offer tor Sale
iii. Hybrid offer
iv. Offer by Tender
v. Right Issue
vi. Debt Equity Conversion. 3 Marks for any 3 points
