MEMORANDUM AND ARTICLES OF ASSOCIATION
The black law dictionary defined the memorandum of association as a legal document, setting up
a corporation -either with or without liability, and including the company’s name, purpose, and
duration.
The memorandum of Association which is one of the two corporate constitutional instrument
regulate the external affairs of the company as it enables, prospective investors and interested
members of the public to attain from its contents, certain facts about the company.
All the particulars of the company are stated in the memorandum of association
Section 27 0f CAMA 2020 provides for the content of the memorandum of the company as
follows:
27(1) (a) name of the company
(b) the registered office of the company shall be situate in Nigeria
(c) the nature of the business, which the company is authorized to carry on, or the nature of the
object(s) for which it is established
(d) the restriction, if any, on the powers of the company
that the company is a private or public company as it case maybe
(e) that the liability of its members is limited by shares or by guarantee, or is unlimited, as the
case maybe
Section 27(2) if the company has a share capital
a. Memorandum shall state the amount of authorized share capital, not less than 100,000
naira in the case of a private company and 2,000,000 naira in the case of Republic company.
b. Subscribers to a memorandum shall take among them a total number of shares of the value
not less than 25%.
The name of the company
The name of a private company, limited by shares, shall end with the word “Limited” while that
of a public company with the word, Public Limited Company” (PLC) the name of the company,
limited by guarantee shall end with the words “Limited by Guarantee” and name of an unlimited
company shall end with “Unlimited”. No company can be registered under the Companies and
Allied matters act by name which is identical with that of another company already in existence
or that so nearly resembles that name calculated to deceive, or let the company in existence, of
course, is in the course of being dissolved, and consents to the use of its name.
Thus in Lagos Chamber of Commerce v Registrar of Companies (1945) 12 WACA page 197 for
registering “African Chambers of Commerce” where is generic description of bodies of person
and the word “African did not so nearly resemble “Lagos” has to be calculated to deceive. Thus
the common law restriction on the use of names is that if a particular name is used by a person
carrying on his business, it would protect it, used by another, who may mislead or deceive the
public with similar or identical name.
However, in Niger Chemists Ltd v Nigeria Chemists Ltd (1961) 1 ANLR page 171 the defendant
was restrained from using his name, because his name was similar to that of the plaintiff asked to
mislead or deceive the public.
Motor Manufacturers and Traders Ltd v Motor Manufacturers and Traders Mutual Assurance
Ltd (1925) 1 Ch. page 675.
See also Section 852(1) of CAMA 2020, Section 852 (2) of CAMA 2020.
In Amusike v Registrar General of CAC (2006) 3 NWLR part 968 page 462 the balance applied to
the respondent for availability and reservation of name, but the respondents refused on the
ground that the names were not registrable names under the arts in an application for the court,
to compare the responding to approve the use and reservation of the names, Court of Appeal,
while uploading the decision of the High Court That the respondent acted within statutory
powers, because certain names suggest the patronage of the government.
Company may also by special resolution and with the approval of the commission in writing
change its name, and such a change does not affect its rights or obligation.
Section 31 (1) of CAMA 2020 provides for the reservation of names.
Section 729 (1)(a) of CAMA 2020 provides that every company after incorporation shall paint or
affix its name and registration.
Section 729 (1)(b) of CAMA 2020
In Corporate Affairs Commisssion v Taiwo Ayegun (2005) 18 NWLR part 957 at pages 403-404.
the respondent with two other person approach the appearance we view to incorporating the
accompany with the name “Credit Registry Limited”. The appellant declined to register the name
on the ground that it would miss the public into thinking that it was a public institution, such as
Marriage Registry, Companies Registry or Deeds Registry.
The appellant claimed to have communicated its position to the respondent in a letter dated
25th, February 2002, which the respondent said is, did not get. The appellant was prepared to
register, and incorporate the object of the memorandum of association of the company, if the
name chosen was changed to another acceptable name, such as “Credit Data Limited”., Which
the respondent had even suggested as an alternative name. Respondents insisted on using the
rejected name “Credit Registry Limited” an issued a Notice to the Registrar General of the
Corporate Affairs Commission under Section 36(2) of the CAMA 1990 requiring the Registrar
General to apply to court within 21 days for direction in respect of the refusal to register the
name “Credit Registry Limited”. In its ruling the trial court granted the application. The Court of
Appeal held that by virtue of Section 30 (1)(c) and (2) of CAMA, no company should be
registered under on by the Act by name which opinion of the CAC is capable of misleading onto
the nature, or extent of its activities, or is undesirable, offensive or otherwise contrary to public
policy.
Except with the consent of the commission, no company shall be registered by name, which
includes ‘Federal’’ ‘National’, ‘Regional’, ‘State’ Government or in your word, which, in your
opinion of the commission suggest, or is calculated to suggest that it choice the patronage of the
Federation or the Government of the state in Nigeria as the case may be, or any Ministry or
Department of Government.
The Court of Appeal when further to hold that the provision of section 36(2) of CAMA does not
impose an obligation on the CAC to apply to court for Directors in respect of the Commission
refusal to register the name of the company.
Registered Office
The memorandum of association usually contains the statement that “the registered office of the
company shall be situated in Nigeria” - Section 27(1) (b) of CAMA every company must as from
the date in which is commences business or from the 14th day after its incorporation whichever
is earlier have a registered office to which all communications, writs and notices are to be
addressed. Every document of CAC contain the address of a registered office or head office of the
company Section 36(2)(b) of CAMA 2020. Notice of any change of address of the registered head
office of the company must be given to the commission within 14 days of change. Neither a post
office box or a private mail by address is acceptable for this purpose. The importance of the
registered office was finally resolved by the Supreme Court in Gresham Life Insurance Society
Nigeria Limited v Registrar of Companies & Anor (1973) 6 S.C. Page 1 where the court held that
the residence of the company is where its Head office is. Also in Nnaemeka Ibezue v African
Continental Bank Ltd (1974) 4 UILR page 193 the Supreme Court held that a company’s
residence is where it has its head office and not at any of the places where it has branches.
The Company and Allied Matters Act requires that certain books commonly referred to as
statutory books must be kept at the company’s registered office. These includes
I．Register of members - Section 109
II．Index of members - Section 111(3)
III．Register of Director’s shareholding - Section 318
IV．Register of directors and secretaries- Section 336(1)
V．Register of charges - Section 216
UBA PLCV CAC (2016) FWLR part (863) page 1761
VI．Instrument creating a charge Section 215
VII．Minutes book - Section 266(1) (b) and (c) minutes of proceedings of directors and
managers.
VIII．Accounting records Section 375 (1)
IX．Register of debenture holders Section 218
X．Register of substantial interest in Shares Section 112
In International Bank for West Africa v Fola Sasegbon (2007) 16 NWLR part 1059 page 195 at
202 where the Court of Appeal of Nigeria stated thus
“One of the ways of effecting service on corporation or a company is by leaving the process at
the registered office of the corporation or a company is by leaving the process at the registered
office of the corporation or by leaving the process at the principal place of business of the
company within jurisdiction”.
Cush Affairs Finance Ltd v Inland Bank Nigeria PLC (2005) 5NWLR part 658 page 568
Daniel’s v Insight Engineering Co Ltd (2002) 10 NWLR part 775 page 231.
THE BUSINESS OR OBJECT OF THE COMPANY
Every company is created formed for a specified purpose which must be the base of the
company’s activities. Section 44(1) of CAMA 2020 stipulates that a company shall not carry on
any business not authorized by its memorandum of association or the Act.
Where a company acts outside its specified objects, the company is due to have acted ultra vires
its powers.
This clause in the memorandum of association is what is referred to as the company’s object
clause.
Registered company pursue only those objects which are expressly authorized and possess only
those powers which are expressly conferred upon its by the object close, as well as those implied
as been reasonably incidental to the accomplishment of its authorized object. The object clause
determines the capacity of the company. Any business beyond those authorized by the
company’s object is regarded as ultra vires and void; meaning that it cannot be ratified, even if all
the members of the company wish to do so. The company’s objective must be the revolving
activities of the company which must be known and recognized by low. Section 41(1)(b) of
CAMA.
The express provision of the object clause in the memorandum of association is designed to help
prospective investors in the company to know precisely what their money is to be invested in, as
well as protecting outsiders, who deal with the company, since the power must exercised in
furtherance of the authorized business or object. See Edokpolo & Co Ltd v Sem EDo Wire
Industry Limited (1987) 7 S.C. Page 119.
According to Section 35 of the CAMA states that unless a company’s articles specifically
restricts the objects of the company, its objects are unrestricted.
Under the common law, the company is required to keep with the limit of its authorized business
or object, as listed in its memorandum. This rule was aimed at protecting person interested in
investing in the company, as well as the company’s creditors. Where are you company as a
transaction outside its memorandum, then, under the common law that transaction will be ultra
vires, and of no effect.
In Ashbury RAilway Carriage & Iron Co v Richie (1875) L.R H.L page 653 - the contract which the
company had made to construct the railway system was ultra vires and he being a subcontractor
under that ultra vires contract was not entitled to bring a claim for breach of same.
In the Nigerian jurisdiction effect of ultra virus rule has been whittled down by Section 44(3)
while Section 44 (1) embodies the ultra vires rule, Section 44 (3) whittles down the effect. The
effect of Section 44 (3) is not to be construed in authorizing a company to engage in a transaction
which is ultra vires. All it does is to give validity to act, conveyance or transfer of property which
though ultra vires has been concluded.
Section 44 (3) relates to the concluded acts while Section 44(1) relates to future acts of the
company. It is worth mentioning however that a company may still be restrained by an injunction
from entering into an ultra vires contract or from exceeding its powers.
RESTRICTION ON THE POWER OF THE COMPANY IF ANY:
According to Section 43(1) of CAMA 2020 every incorporated company is empowered to do
anything which, in natural person or full capacity, can do in furtherance of its authorized object,
except to the extent limited by the memorandum or any other document.
Section 44 (1) provides that acom, not carry on any business, not authorized by its
memorandum, and shall not exceeded the powers come upon it, but its memorandum or this
Act. Furthermore, a company may include in its memorandum or articles if restriction clause,
restrict the company’s power to carry on particular business.
TYPE OF COMPANY TO BE REGISTERED
Memorandum of association is expected to state the type of company that is to be established,
whether private or public company. Section 27(1) (c) CAMA 2020.
LIABILITY OF MEMBERS
Section 27(1) of CAMA provides that the memorandum is expected to show the nature of liability
of members, whether the liability of members is limited by shares, or by guarantee, or is
unlimited.
CAPITAL CLAUSE
The memorandum in its capital shall states the amount of authorized share capital, not being less
than hundred thousand naira in the case of a limited liability company, and 2,000,000 naira in
the case of a public limited liability company. Section 27 (2)(a) CAMA. The directors shall among
them take a total number of shares of a value not less than 25% of the authorized share capital,
and each subscriber shall write opposite to their name the number of shares taken. The
memorandum will be signed by each subscriber in the presence of at least one witness who shall
attest at the signature. Section 27(5) of CAMA 2020.
ASSOCIATION CLAUSE
The memorandum ends with an association clause. For a company limited by shares or an
unlimited company, the proprietor must comply with the provisions of section 27 of CAMA 2020
and the proprietor shall also insert their association clause in line with the format provided by
the CAC portal at the point of E registration here under reproduced or as provided in 1st
schedule Table D OF CAMA 2004
“we the several persons whose names are subscribed, are desirous of being formed to a
company, in importance of this memorandum of association, and we respectfully agreed to
take the number of shares in the capital of the company set opposite our respective names”
SIGNATURE AND STAMPING OF MEMORANDUM OF ASSOCIATION SECTION 23(5) AND (6)
CAMA 2020 also provides that the memorandum must be signed by its subscriber, in the
presence of at least one witness who must attest the signature. The memorandum shall be
stamped as a deed.
MEMBERS’ RIGHT TO COPIES OF MEMORANDUM AND ARTICLES OF ASSOCIATION
By the provision of section 47 (1)CAMA 2020 each member of the company on demand are
entitled to a copy of the memorandum and articles of association of the company on payments
of a certain sum of money. Failure of the company to comply with this demand attract sanction
against the company.
GUARANTEE CLAUSE
In the case of a company imited by guarantee, the guarantee clause should also state amount of
subscribers have undertaken to contribute in the event of winding up of the company or within
one year in which the member ceases to be a member or at least the minimum of 100,000 naira.
The guarantee clause is stated as follows:
“Every member of the company undertakes to contribute to the assets of the company in the
event of it being wound up while he is a member or within one year after he ceases to be a
member, and of the cost, charges and expenses of winding up and for the adjustment of rights
of the Contributories among themselves, such amount as may be required to be contributed
by all members shall not be less than 1,000,000 naira.
ALTERATION OF MEMORANDUM OF ASSOCIATION
An incorporated company being an artificial person can change its nature, name, address, and so
many other things about self, but it must follow. The rules lay down by the act. Hence, section
49(1) of CAMA 2020 states that a company may not alter its condition in its memorandum
except the cases and in the manner, and to the extent for which express provision is made in
the act. Such as name, object clause and share capital clause in the memorandum of
Association a capable of being altered only in line with due compliance with the provision of
the Act.
1. ALTERATION OF NAME
The company can change its name to a special resolution, along with approval of the commission.
Section 30 of CAMA. Therefore according to section 50(1) of the Act, the name of the company
shall not be altered, except with the consent of the commission in accordance with section 30 of
the Act.
The procedure is that the company will pass the special resolution in the company’s general
meeting and file such resolution with the CAC. if the CAC is satisfied with the new name, it shall
enter the new name in the register in place of the former name and issue a certificate of
corporation altered to meet the circumstances of the case. Section 30 (5) of CAMA.
But without the the company resolution, the company has the right to change its name if it is
discovered that such a name conflicts with an existing trademark or business name registered in
Nigeria prior to the registration of the company. Section 30(5) of CAMA.
Where the need for a change of name of a company arises through inadvertent or otherwise
during registration which causes the near resemblance of such name to the name of another
company in existence, which had previously been registered, with similar name or anything so
resembling it to be likely to deceive the first mentioned, company may be with with the approval
of the commission change its name and if the commission so directly within six months of its
being registered under the new name are, 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. Section 47(1) and (2) of CAMA.
A company in default of this provision shall be guilty of an offence and be liable to a penalty as
prescribed by the commission for every day during which the default continues.
If the company though a special resolution changes its name or the commission sup moto
decides that the company should change shall not affect the rights or obligations of the company.
2. ALTERATION OF OBJECT CLAUSES
According to Section 50(2) of CAMA 2020 the business which the company is authorised to carrry
on or if the company is not formed for the purpose of carrying on business, the objects for which
it is established may be altered or added to in accordance with the provision of Section 51 of
CAMA 2020.
Thus a company may after its business or object at any time and for any reason as long as the
alteration is carried out by special by special resolution and there is, the court has affirmed the
resolution. A company that wishes to alter its objects or business must give twenty - one days
notice of meeting and it must also specified in the notice, the intention to pass a special
resolution to alter the business or object.
The notice of the meeting must be sent to all members of the company and to all holders of
debentures secured by floating charge of the company.
At the meeting, a special resolution must be passed by three-fourths of members voting in
person or by proxy. Holders of fifteen percent in nominal value of the company’s issued share
capital or holders of debentures shall make application or cancellation of resolution to the
Federal High Court within 28 days of the pairing of the resolution cannot apply for cancellation.
The company must give notice of making application for alteration of its business or object to the
corporate Affairs Commission.
Where no application is made to the court within the specified 28days, Section 42 (2) - (12) of
CAMA from a copy of the special resolution must be delivered to the Corporate Affairs
Commission within 15 days from the end of the 28 days waiting period. If the commission in
satisfied with the resolution, then it, printed copy of the memorandum as altered will be
delivered to it. Section 51 (8) of CAMA 2020. But on the other hand, if the commission is not
satisfied, it will notify the company in writing of its dissatisfaction and the company has 21 days
from the days of the receipts of the notice to appeal against the decision of the commission.
On such application, the court may make an order, confirming the alteration either wholly or in
part or may adjourn the proceedings to allow an arrangement to be made to purchase the
interest of the dissenting members.
The reasons for alteration may include inter alia:
1. To carry-on its business, more economically or more efficiently.
Re Egyptian Delta Land Investment Co. (1907) W.N page 16
2. To attain its main purpose by new or improved means. Re Parent Tyre Company (1923) 2
Ch. page 222
3. To enlarge or change the local area of its operation. Re Egyptian Delta Land and Investment
Co. (supra)
4. To carry on some business which under existing which under which under existing
circumstances may conveniently or advantageously be combined with the business of the
company. Note that the additional business must not be destructive or inconsistent with the
existing business. Re Parent Tyre Company (Supra). Re Cylist Touring Club (1907) 1 Ch. page
99
5. To sell or dispose of the whole or part of the undertaking of the company.
6. To amalgamate with any other company or body of person. Section 117-151 of Investment
and Securities Act.
ALTERATION OF SHARE CAPITAL
According to Section 150 of CAMA 2020 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. Subdivide its shares or any of them into shares of smaller amount than is fixed by the
memorandum.
A company having a share may in general meeting and not otherwise increase its issued share
capital after passing an ordinary resolution by allotment of new shares of such amount as it
considers expedient. Section 127of CAMA 2020.
Despite a notice will be forwarded to the commission notifying it about the increment. See
Section 128 (1) of CAMA 2020 within a month of doing so.
Note that Section 50 (5) of CAMA 2020 deals with cases where there are no specific provision for
alteration. In such cases any alteration is to be subject to the same rules as the provisions for
alteration of object/ business contained in the memorandum i.e in accordance with Section 51
CAMA 2020. This would apply to alteration to:
I．Registered Office Clause
II．Restriction on Powers of a Company
III．Liability of Members.
