KASU

KADUNA STATE UNIVERSITY

NIGERIAN COMPANY LAW

BEING A LECTURE NOTES

FOR

300 LEVEL STUDENTS

(UNDER GRADUATE)
DEPARTMENT OF ACCOUNTING
KADUNA STATE UNIVERSITY (KASU)

BY
ABDULMUTALLAB IDRIS ESQ

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 COURSE OUTLINE
1. Foreign Participation in Nigeria

2. Formation/Incorporation of Companies

3. Business names, Partnership and Incorporated Trustees

4. Corporate Governance (Directors & Secretaries)

5. Membership, Meetings and Resolutions

6. Company Securities (Shares & Debentures)

7. Corporate Restructuring

8. Winding up

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CHAPTER ONE
Regulatory Bodies Governing Company Law Practice in Nigeria And Their
Roles.
1. Corporate Affairs Commission (CAC)
The CAC is established under S. 1 CAMA, headed by the Registrar-General-
Role/Functions of CAC- S. 8 CAMA
a. To administer the CAMA in terms of the regulation and supervision of the
formation, incorporation, registration, management and winding up of
companies.
b. To establish and maintain companies’ registry and office in all the states.
c. To arrange or conduct investigation into the affairs of any company.

NOTE the following about CAC

i. It has a governing board composed of 10 members (including a chairman
and a Registrar General)
ii. The chairman of the Governing board is appointed by the President on the
recommendation of the Minister while other members are appointed by the
Minister.
iii. All its members except the Registrar General are part-time members
iv. Anybody that wants to sue CAC must give it 30 days pre-action notice
Section 17

2. Securities And Exchange Commission (SEC) established by section 1 ISA

2007
Functions of SEC-section 8 Investments and Securities Act
a. To regulate investment and securities business in Nigeria
b. To regulate and register offers of securities by public companies.
c. Approve and regulate mergers acquisitions and all forms of business
combinations.
d. To register and regulate corporate and individual capital market operators.

NOTE: SEC must be given 30 days pre-action notice by any person intending to
sue the commission.
3. Nigerian Investment Promotion Commission (NIPC)
Established under Section 1 of NIPC Act and headed by an Executive secretary
Functions of NIPC: Section 4 of NIPC
a. To encourage, promote and coordinate investment in Nigeria.
b. To monitor all investment promotion activities.
c. The provision and dissemination of up-to-date information on incentives
available to investors

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 d. The NIPC houses a One – Stop Investment Centre/Shop. OSIC
e. To register and keep records of all enterprises.

4. National Office for Technological Acquisition and Promotion Commission

established by NOTAP Act.
Functions-Section 3 NOTAP Act:
a. They register contracts of transfer of foreign technology between Nigerians
and Aliens and issue certificate of registration.
b. It acts as a catalyst between research institutions and industries in Nigeria

5. Nigerian Deposit Insurance Corporation established under the NDIC Act

a. This is an insurer to Banks and financial institutions.
b. In collaboration with CBN, they monitor the activities of Banks.
c. When a bank falls into distress, the NDIC manages and assumes responsibility
of these failing banks.
d. The NDIC intervenes through purchase and assumption of the debt of failed
bank.
6. Asset Management Corporation Of Nigeria (AMCON)
Functions of AMCON
a. To resolve liquidity problems in the financial sector.
b. To assist banks in moderating the cost of bank distress.
c. To manage and dispose toxic assets of Nigerian banks including Non –
performing Loans

7. Federal High Court established by Sec. 249 CFRN

Functions/Powers of the FHC
a. A company may be wound up by the court S. 408 CAMA
b. Court may appoint or remove a liquidator in any voluntary winding up
c. The court may cancel the alteration of a company’s objects.
d. May order the rectification of register of members.
e. May order a meeting of creditors or class of creditors when necessary amongst
others.
8. Nigerian Immigration Service: established under the Immigration Act; it
basically issues visas and resident permits to foreigners entering into Nigeria

9. Federal Competition and Consumers Protection Commission (FCCPC);

established under the new FCCPC Act to regulate mergers and other business
combination in Nigeria.

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 a. It is a body corporate with perpetual succession and the power to sue and be
sued in its name.
b. It is composed of 8 members which includes:
i. A chairman
ii. A Chief Executive (who is the Vice Chairman)
iii. Two Executive commissioners
c. The members of the commission are appointed by the President FRN from the
six geo-political zones subject to confirmation by the Senate.
d. All complaints against the FCCPC must first go to the Competition and
Consumer Protection Tribunal

 COMMENCEMENT OF BUSINESS WITH CAC

As a legal practitioner/Chartered Accountant, it is required that you apply to CAC
for accreditation to be able to do some official transactions relating to Part A of
CAMA i.e. companies. The process of accreditation will authorize a person to be
able to deal with the CAC as agents on behalf their clients.

NOTE: It is no longer compulsory to engage a legal practitioner in respect of

incorporation of companies because any promoter or any of the first directors of the
proposed company can now apply to incorporate a company. However it is only a
legal practitioner that can sign the column for statutory declaration of compliance
during the incorporation of the company.

 PROCEDURE FOR ACCREDITATION:

1. Duly completed accreditation forms picked from the CAC
2. Pay the registration fee of N5, 000.00 for individuals or N10, 000.00 for Firms.
3. Submit the filled Accreditation Form with the following documents attached:
a. 2 passport photographs of the applicant
b. A copy of his qualifying Certificate (bar certificate)
c. A copy of his practicing fee receipt for the year of application
d. A copy of his NYSC discharge certificate or exemption certificate in lieu.

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 CHAPTER TWO
2.1 FORMATION/ REGISTERATION OFCOMPANY/ BUISNESS AND
NON BUISNESS ORGANIZATIONS IN NIGERIA
Here, we will be examining the various business and non-organizations in Nigeria.
By business organization we mean those established for the purpose of making
profit and by non-business organizations are non-profit oriented organizations.

2.2 Types of Business And Non-Business Organisation

There are 5 types of business organizations viz:

a. Sole Proprietorship
b. Business Name
c. Limited Partnership;
d. Incorporated companies
e. Limited Liability Partnership

There are two types of non-business organization viz:

1. Company limited by guarantee; and
2. Incorporated Trustees.

2.3 COMPANIES
This part includes the various types of companies a person can incorporate including
all provisions relating to every feature, practice and procedure of such companies.

2.3.1 TYPES OF COMPANIES - Section 21

This depends on the liability and membership as follows:
1. Companies limited by shares.
2. Companies limited by guarantee.
3. Unlimited company.
Any of the above companies may be:
i. A private company or
ii. A public company. Section 21 (2) CAMA

2.3.3 FEATURES OF A PRIVATE COMPANY ‘’LTD’’

 It restricts the transfer of its shares to the public-S.22(2) CAMA
 The authorized minimum share capital is N100,000-S.27(2) (a) CAMA
 The membership is between 1 to a maximum of 50 persons –S.22(3), S 18(2)
 No specific qualification of a secretary is needed except knowledge and skills
for the job

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 Not required to hold statutory meeting
 The name of a private company must end with the word limited
 Directors over 70 years can be appointed without complying with any
formality.

2.3.4 FEATURES OF A PUBLIC COMPANY

1. It is stated in its memorandum to be a public company; S. 24 CAMA
2. It has an unlimited number of members. S. 22(3) CAMA
3. The name ends with “Public Limited Company” PLC.-S.29(2) CAMA
4. The authorized minimum share capital is N2, 000,000. s.27(2)
5. There is no restriction on transfer of shares in a public company-S.151(1)
6. A person who is above 70 years to be made a Director in a public company
must give special Notice of his age to the members.-S. CAMA
7. It must hold its statutory meeting within 6 months of incorporation
8. It must publish additional notice of its Meetings in 2 daily Newspapers at least
21 days before meeting.
9. The Secretary of a public company must be qualified in accordance with S.
333 CAMA

2.3.5 FEATURES OF A COMPANY LIMITED BY GUARANTEE �

a. Members guarantee to contribute to its assets/ liabilities on winding-up to a
minimum of N100, 000 section 26(7) of CAMA.
b. It does not carry on business for the purpose of making profit for distribution
to its members but for the attainment of its objects-education, etc. – section
26(1) of CAMA.
c. It has no share capital upon incorporation.S.26(2) CAMA
d. The liability of its members is upon winding up and where the company
cannot satisfy the debts. –section 21(1)(b) of CAMA.
e. Consent of the Attorney-General of the Federation is required for registration.
section 26(5) of CAMA
f. Special Clause: Upon winding up, after the discharge of its debts, any assets
of the company remaining shall not be distributed among the members, but
shall be transferred to organizations with similar objects. S. 26(15)
g. Its name must include the word “limited by guarantee” Ltd/Gte.-S.29(3)
CAMA

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 1. Where all the valid documents have been furnished and no decision has been made by the
AGF within the 30-day period, the applicant is at liberty to place the advertisement of
the incorporation in 3 national dailies and invite objections within 28 days. S.26(7)
2. If after the 28 days have elapsed and there is no objection, the CAC shall, if satisfied that
the MEMART have complied with the provisions of CAMA, shall assent the application,
registration the company and issue a certificate of incorporation to the applicant. S.26(10)

2.4 CAPACITY TO FORM A COMPANY

Any two or more persons may form a company. However, the following persons
shall not be eligible to incorporate a company:
a. A minor that is less than 18 years of age, unless there are two other persons
of “full age and capacity”
b. A person who is of unsound mind and has been so found by a Court in Nigeria
or elsewhere.
c. A person who is an un-discharged bankrupt, and
d. A person who is disqualified under Section 280 of the Act from being a
Director of a company – having been convicted.
e. A corporate body in liquidation shall not join in the formation of a company
under the Act; section 20 CAMA

NOTE-Section 20(4) of CAMA provides that an ALIEN may join in the formation
of a company provided he complies with the provisions of any enactment regulating
the rights of aliens to engage in business in Nigeria.

2.4.1 NAME OF COMPANY

A company may adopt any name for incorporation provided that such name is not a
prohibited or restricted name.
The first step towards incorporation of a company is to conduct availability search
on the proposed name. A name when approved is reserved for 60 days within which
the company is to claim the name.

PROHIBITED NAMES-Section 852 CAMA

They are not registrable by the CAC and they include the following:
a. Identical names with that of an existing company
b. Names that in the opinion of CAC are misleading, offensive or contrary to
public policy.
c. Any name containing the word “Chamber of Commerce” can only be
registered as a Company Limited by guarantee; see August 2019 Q 1e

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 d. Names that in the opinion of CAC would violate any existing trade mark
UNLESS with consent of the owner.

RESTRICTED NAMES- Section 852 of CAMA

They are only registered with the consent of the CAC and the institution/locality
affected. It includes names containing:
a. Federal, National, Regional or State Government likely to give an impression
that it is owned by the State/Federation or ministry etc.
b. Municipal or ‘chartered or connected’ with a local authority
c. Co-operative/ building society
d. Group or holding

STEPS TAKEN TO REGISTER A NEW COMPANY

Due to the new CAC practice for incorporation/registration of company,
incorporation of company can now be in five main stages which are:
1. Taking Instruction: getting the proposed names of the company and
conducting availability search and reservation of name
2. Preparation of the relevant incorporation documents:
a. Preparation of the Memorandum and Articles of Association
b. Filing of CAC 1.1
3. Stamping of relevant incorporation documents at the FIRS
a. Two copies of the Memorandum and Articles of Association
b. Two copies of the Statement of Authorized Share Capital

4. Filing of relevant documents at Corporate Affairs Commission (which is

now done electronically on CAC portal).

5. Obtain Certificate of Incorporation and Certified True Copies (CTC) of other

documents from CAC.

RESERVATION OF NAME – SECTION 31(1) & (2)

The Commission may, upon receipt of an application delivered to it in hard copy or
through electronic communication and on payment of the prescribed fees, reserve a name
pending registration of a company or change of name by a company upon confirmation of
the availability of such name.

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DOCUMENTS Required For Incorporation of Company at CAC (PRIVATE
COMPANY)
The following documents are to be filled to CAC for incorporation of a company:
1. Form CAC 1.1- Application to Register a company;
2. Availability check and Reservation of Name; (CAC 1)
3. Memorandum and Articles of Association duly stamped;
4. Valid means of identification for subscribers, directors and company secretary
e.g. International Passport, Driver’s License, National Identity Card; Voter’s
Card, etc.
5. Evidence of payment of Stamp Duties Fees;1
6. Evidence of payment of filing fee; and
7. Any other document that may be required to comply with the law.

REQUIREMENTS FOR REGISTRATION OF COMPANIES GTE

1. Form CAC 1.1- Application to Register a company;
2. Availability and Reservation of Name; (CAC 1)
3. Memorandum and Articles of Association duly stamped;
4. Valid means of identification for subscribers, directors and company secretary
e.g. International Passport, Driver’s License, National Identity
5. Obtain the AGF consent
a) The AGF shall within 30 days grant authority to register where there are
no objections
b) Where after 30 days the AGF has no granted authority, the promoters
shall place an advertisement in 3 national newspapers and invite
objections (forward objections to cac within 28 days).
c) Where there are no objections the commission shall register the company
6. Evidence of payment of Stamp Duties Fees;
7. Evidence of payment of filing fee; and
8. Any other document that may be required to comply with the law.

Clauses to be included in the Articles of Association to Gain Control in a

Company
a. Appointment of the founder as a life director, S. 252 and 262 of CAMA
b. Power given to a particular person to appoint the other directors
c. Appointment of a person as Chairman /MD of the Board of Directors
d. Substantial shareholding.
e. To be in custody of the common seal of the company.
f. Creation of classes of shares with preferential rights.

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CIRCUMSTANCES when CAC Can Refuse Registration of A Company S. 41
CAMA
a. Where the Memorandum and Article of Association does not comply with the
provisions of CAMA
b. When the business the company wishes to carry on or the object for which it is
formed or any of them is illegal.
c. Where the subscribers to the memorandum are incompetent or disqualified by
virtue of section 20 of Companies Allied Matters Act
d. Where there is noncompliance with the requirement of any other law as to
registration and incorporation of a company or ;
e. Where the proposed name of the company conflict with or is likely to conflict
with an existing trademark or business name, including where the name is one of
those prohibited under section 852 of the Companies Allied Matters Act.

CONTENTS OF THE MEMORANDUM OF ASSOCIATION

1) The name clause
2) The Registered office clause
3) The business/ objects clause
4) The Status Clause
5) The Restriction clause, if any
6) The liability clause
7) The share capital clause
8) The subscription clause
9) Attestation Clause

BUSINESS NAMES
This includes small scale businesses usually registered with CAC to protect the
names of such business from being used by others. It does not confer legal
personality on such business.
Advantages of Business Name over Companies
a. It is cheaper to establish.
b. Ease of registration.
c. It is more private.
d. It is less formal.
e. Ease of decision making and management
f. Ease of dissolution
g. Registration is not mandatory in certain circumstances.

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RESTRICTIONS ON REGISTRATION OF BUISNESS NAMES
a. INFANTS unless the signature is countersigned by magistrate, legal
practitioner or police officer above rank of CADET ASP subject to the
discretion of the registrar-S. 815 (3) CAMA
b. Persons involved in fraudulent trade practices-
c. Where illiterate or blind persons are involved in the formation of business name,
a jurat must be affixed

When Registration of Business Name is Not Compulsory

Where the persons doing the business intend to avoid the requirement of registration,
they may adopt the following names:
1. For an individual, if he uses his/her:
a. full name
b. initial and surname
c. the surname without any addition- S.814.
2. Firm/Partnership, if it uses the:
a. full name of all the partners only
b. their initial and surname
c. their surnames only without any addition.
3. Company/Corporation, when it uses its corporate name without any addition

Examples:
a) OBI MARTINS, HUSSAINAT OLORIEGBE & UYANNA GEORGE (full
name only)
b) M. OBI, H. OLORIEGBE & G. UYANNA (Initials & Surnames only)
c) OBI, OLORIEGBE & UYANNA (surnames only)

NOTE: A business name must be registered within 28 days after

commencement of business. The date the business was commenced is excluded
from the computation. See section 815(1) CAMA

Importance/Reasons for Registration of Business Name

a. A certificate of registration of business name is issued.
b. It raises conclusive presumption of partnership.
c. It gives priority over the name registered so that no company/business will be
registered in that name.
d. It gives the public the true identity of the persons behind the business name.
S. 579(3) of CAMA.
e. It aids in official transactions using the business name
f. It creates trust in the mind of members of the public.
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 g. A certificate business name can be used to open a corporate account.

Procedure For The Registration of A Business Name

1. Conduct availability search and reservation of name using CAC 1
2. Fill online and file Form CAC/BN1-Application for Registration of Business
name.
3. Attaching the following documents to your application:
a. CAC 1 showing the approved name
b. 2 passports photograph of each partner if they are individuals
c. Tax Clearance Certificate of the Proprietors
d. Professional qualifying certificate if it involves professional
e. Valid means of Identification of proprietors/partners.
f. If any of the partners is a minor then attestation by a legal practitioner or a
Magistrate or will be required.
g. Receipt of payment of the processing fees
4. Collect Certificate of Registration of Business name from CAC

PARTNERSHIP

The Major Elements of a Partnership:

1. there must be a business
2. The business must be carried on in common by two or more persons
3. The business must be carried on with a view to make profit-Uredi v. Dada
4. Membership is limited to between 2 and 20 except for law and accountancy
firms.

ADVANTAGES OF PARTNERSHIP
1. It is easier to raise funds
2. It encourages specialization
3. There is quality decision making
4. Profits are mutually shared amongst the partners
5. It is easier to get more customers/clients since every partner is involved
DISADVANTAGES
1. There is shared liability since each partner is deemed an agent of others.
2. There is likelihood of delay in decision making.
3. There is high likelihood of disagreement amongst the partners which may
lead to dissolution of the partnership.
4. Greed and envy amongst the partner may also hinder its growth

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NUMBER OF PARTNERS.
The minimum number of persons required for partnership business is at least 2
persons; Uredi v Dada; while the maximum number is 20 persons except for a firm
of legal practitioners or chattered accountants; section 19 CAMA.

NOTE: a Minor can join the partnership but the signature of the minor must be
countersigned by a legal practitioner, a magistrate of a senior police officer.

PARTNERSHIP AGREEMENT
Once a business is carried on in partnership, it is advisable for the partners to execute
a written partnership agreement or deed.
The reasons/Importance of Written Partnership Agreement
a. It helps to avoid common law presumptions on partnership.
b. For ease of official transactions.
c. For ease of conflict resolution.
d. Obligations, liability and privileges can be determined easily.
e. It will be binding on the parties.
f. The terms of the partnership will be clearly stated.

Important Clauses that should be in A Partnership Agreement:

1. Profit sharing equilibrium
2. Capital contribution ratio
3. Partnership property
4. Remuneration of partners
5. Suspension/Expulsion of partners
6. Dispute resolution
7. Death of partner
8. Dissolution of partnership

The Implied Terms/Common Law Presumptions in Partnership

Where the partnership Deed is silent, the following is implied;
1. Equal sharing of profits
2. Equal sharing of losses
3. Equal contribution of capital/ assets of the business
4. The death of a partner dissolves the partnership
5. A partner cannot be suspended otherwise it is dissolved
6. No payment of salaries to partners

DISSOLUTION OF PARTNERSHIP
A partnership may be dissolved in 3 ways; which are:
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 1. Express acts or agreement of the parties.
2. By order of the court;
3. By operation of law for e.g. death of a partner where there is no agreement.

Procedure for Dissolution of the Partnership

1. Notice of retirement, dissolution, or expulsion is served on other partners
referring to the appropriate clause in the partnership agreement.
2. The partners prepare and execute the dissolution agreement.
3. Distribution of assets and liabilities will commence
4. Notice of dissolution/cessation is given to:
a) Corporate Affairs Commission, if registered
b) Published in the gazette and national newspapers.
c) Clients or customers

INCORPORATED TRUSTEES OF ASSOCIATIONS

Features of Incorporated Trustees.
1. The Trustees are the only persons who obtain legal personality not all the
members-s. 823 CAMA
2. The Name must start with the words “Incorporated Trustees of …” S. 825(1) of
CAMA.
3. It does not do business and does not distribute profits.
4. It receives incomes from grants, levies, dues to undertake its objects.
5. The Association must show within two years of registration, evidence of
acquisition or interest in landed property.
6. The minimum number of trustees/members is two (2) trustees S. 823(1)
7. Incorporated Trustees makes use of Constitution which must contain clauses
provided under CAMA

NOTE: Organizations that are registrable under Parts F of CAMA as incorporated

trustee can operate or carry out its objects without registration but cannot take
advantage of the incidence of incorporation unless registered
Contents of The Constitution of Incorporated Trustees
1. state the name or title of the association;
2. the aims and objects of the association
3. appointment, powers, duties, tenure of office and replacement of the trustees,
4. the use and custody of the common seal, if there is one
5. the meetings of the association
6. the number of members of the governing body, if any, the procedure for their
appointment and removal, and their powers,

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 7. keeping of accounts and auditing of such accounts

Qualification of Trustees
Everyone is qualified to be appointed as a Trustee EXCEPT the following persons
a. A person of unsound mind;
b. An un-discharged bankruptcy;
c. A person that has been convicted for an offence involving fraud or dishonesty
within 5 years of his proposed appointment.
d. He is a minor or infant below 18 years. Section 826 CAMA

Procedure for the Incorporation of Incorporated Trustees

1. Obtain the name and conduct Availability search and reservation of name.
2. Complete application Form CAC/IT1 to be submitted in triplicate
3. Submit/file to CAC the necessary documents together with Form I.T 1
4. Make a newspaper publication in at least two national daily newspapers to last
for 28 days
5. Collect the Certificate of Incorporation of the Association from CAC

Documents Required for Registration of Incorporated Trustees: the documents

required for registration of I.T are: Section. 825
1. Form CAC I-Availability check and reservation of name with the name stated
as “Incorporated Trustees of …”
2. Duly filled CAC form I.T 1 ( Application for registration IT
3. Two printed copies of the Constitution of the organization
4. Impression of the proposed common seal of the body.
5. Evidence of ownership of land or an undertaking in lieu to own a land within
two years of incorporation.
6. A copy of the Newspapers advertisement in three National dailies calling for
objections to the registration of the Association within 28 days.
7. Two passport photographs of each of the Trustees
8. Copy of the extract of the minutes of the meeting where the Trustees were
appointed, having the list of members present and votes scored.
9. Trustees Declaration Form duly sworn to by each trustee

Statutory Books To Be Kept By Incorporated Trustees

Register of members
1. Register of trustees
2. Minutes Book
3. Books of Account

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Differences between Company Limited by Guarantee (GTE) and Incorporated
Trustees (I.TG)
1. A GTE is required to have a Memo and Articles of Association while I.T
should have a constitution.
2. A company Limited by GTE may be allowed to engage in small business but
I.T is not allowed to engage in business.
3. For I.T, there must be evidence of advertisement in two National dailies; this
is not required for GTE
4. A company Ltd by GTE requires the consent of the AG Federation before it
can be registered; I.T requires no consent of AGF
5. There must be evidence of land ownership or undertaking in lieu for I.T; it is
not required for GTE
6. Two passport of each Trustee is required for registration of I.T but not
required for GTE.
7. For Incorporated Trustees, only the trustees acquire legal personality but for
company limited GTE all the members have legal personality.
8. For I.T the Association can carry out its object without registration but GTE
must be incorporated before it can execute its object.

Similarities between a Company Limited by Guarantee and Incorporated

Trustees
a. They are both non-profit making organizations.
b. Both bodies enjoy tax exemption.
c. They are both administered by CAC and governed by CAMA
d. Both have no share capital.
e. In the event of dissolution or winding up of these bodies and the remaining assets
must be transferred to an association/body with similar objects.(SPECIAL
CLAUSE)

Dissolution of Incorporated Trustees

Persons that petition for dissolution of I.T;
The Petition for dissolution of I.T can be brought by any of the following persons:
1. The Governing Body or Board of Trustees
2. One or more trustees of the association
3. Members of the Association constituting not less than 50% of the total
membership
4. The Corporate Affairs Commission; S. 850(1) & (5) of CAMA

Grounds For Dissolution S. 850(2) CAMA

The grounds for the dissolution of incorporated trustees may be any of the following:
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 1. That the aims and objects for which it was established have been fully
realized and no useful purpose would be served by keeping the
corporation alive
2. That the body corporate is formed to exist for a specified period and that
the period has expired
3. That all the aims and objects of the association have become illegal or
otherwise contrary to public policy; and
4. That it is just and equitable to do so in the circumstances

PROCEDURE FOR THE DISSOLUTION

1. It is dissolved voluntarily by an ordinary Resolution passed by not less
than 50 % of the members on any of the grounds stated above
2. File a Petition to the Court for a formal and effectual dissolution
All the persons likely to be affected by the dissolution (e.g. creditors/trustees) shall
be put on Notice. -S. 608(3) of CAMA.

NOTE: Two or more associations with the same aim and objectives may merge
under the terms and conditions as may be stipulated by CAC. Section 849
CAMA

EFFECT OF INCORPORATION
1. Legal Personality: upon incorporation a company becomes a person at law
distinct from the members that formed it – Salomon v Salomon
2. Power to own land
3. Power to sue and be sued – Kate enterprises v Daewoo
4. Perpetual succession

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 CHAPTER THREE
MANAGEMENT OF THE COMPANY

DIRECTORS
A director is a person duly appointed by a company to manage the affairs of that
company; S. 269(1). Director is the alter ego of a company-Yalaju Amaye v.Arec

LIFE DIRECTOR
This is a person appointed a director of company for life which means that he is not
subject to the rotation of directors but he is removable under S. 288 of CAMA;

MANAGING DIRECTOR
Per S. 88(b) unless otherwise provided in the articles, the board of directrors may
from time to time, appoint one or more of their body to the office of managing
director and may delegate all of their powers to such MD. Also S.289(5) CAMA
permits the board to delegate their powers to the Managing director
This is a director appointed by the Board of directors to run the day-to-day affairs of
the day company. They are directly involved in the running of the affairs of the
company and are considered as employees of the company with service contract;.
his appointment may be terminated like that of any other employee. If so terminated,
he reverts to the position of an ordinary director. Where the members remove him
as a director, he ceases to be both a director and the managing director

CHAIRMAN
The directors may elect a Chairman of their meetings and determine the period of
which he shall be in office. if no chairman is elected or if at any meeting the chairman
is not present within 5 minutes after the time appointed for the holding of the
meeting, the directors present may choose one of their members to be the chairman
of the meeting – S.289(6). The Act restricts the chairman board of directors of a
public company from acting in dual capacity as the CEO of the same company – S.
265(6)

NUMBER OF DIRECTORS
The minimum number of directors of a company is 2 directors, except a small
company section 271 CAMA
NOTE: If the number of directors’ falls less than 2 directors, more directors must
be appointed within 1 month of that been noticed-S. 271(2) CAMA
LIABILTY- If the breach extend to 60 days, the one director will be held
personally liable for any mismanagement that occurred during that period.
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Noncompliance with these provisions would lead to the lifting of the veil of
incorporation of the defaulting company. Section 271 (3) CAMA.

APPOINTMENT OF DIRECTORS (exam area: August 2014 Q 4a, 2016 Q 6)

i. FIRST DIRECTORS:
These are directors appointed by the Subscribers to Memorandum of
Association. They may also be named in the article of association - S. 272

ii. SUBSEQUENT DIRECTORS

1. By members at Annual General Meetings; 273(1)
2. By personal representatives or creditors where all the directors and
shareholders die; 273(2)
3. By board of directors to fill casual vacancy arising out of death, retirement
and resignation subject to ratification by members at the next annual general
meeting. S.274
QUALIFICATION OF DIRECTORS
Anybody can be appointed as a director of a Company EXCEPT the following
persons: S. 283
1. Infants under 18 years of age (totally prohibited)
2. A bankrupt or a person who has entered an agreement with his creditors
3. A company except its representative/nominee
4. A person disqualified from acting as a director under. S. 288
5. Person of unsound mind;

AGE OF DIRECTOR
 A director must be above 18 years of age. Therefore a minor cannot be a
director. – S.283
 Section 278 requires that where a who is 70 years to be appointed a director
of public company shall disclose this fact to members in general meeting
 THE EXCEPTION, a person may be appointed a director who is 70 years
notwithstanding his age shall provide special notice is given of the resolution
appointing or approving the appointment of such a director, 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. S. 282
 Failure to disclose his age and multiple directorship, will attract a fine/penalty;
S. 278(3)

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RETIREMENT/ ROTATION OF DIRECTORS
If no provision on the retirement or rotation of directors is made in the Articles of
Association of a company, then the provisions of the Companies and Allied-Matters
Act can apply which are as follows: S. 285
1. At the first Annual General Meeting (AGM), all the directors (excluding life
directors) are to retire.
2. In any subsequent AGM, one-third (1/3) of the directors must retire to the
nearest whole number in their order of appointment (i.e. first to be appointed
retires first).
3. Where two or more directors are appointed the same day, retirement shall be
by casting a lot unless they agree among themselves who should retire first.
4. Where a director at retirement presents himself for re-election then whether
the company is silent or not, he is deemed to have been re-elected as a
director, unless:
a. There is a resolution not to fill the vacancy or
b. The resolution for his re-appointment was put to the meeting and he lost
or
c. Another director has been elected in his place.

REMOVAL OF DIRECTORS
First look at the Articles of Association of the company if it has clauses on
the removal of a director, if yes then that should be followed.

The Procedure is as follows: S.288

1. Check to find out if direct and simpler power of removal other than S.
288 is provided by the articles or contract and apply it if available.
2. The person proposing the removal will send a special notice to the
company
3. Upon receipt of the notice, the secretary to the company will:
a. Send a copy of the Notice for his removal to the director
concerned.
b. Issue a notice of meeting to members at least 21 days before the
date of meeting which is accompanied by any representation
made by the director and state the fact of the representations
having been made
c. Where a copy of the representations is not sent due to receiving
it late or company’s default, the affected director may, without
prejudice to his right to be heard orally, request that the
representation be read out at the meeting
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 4. At the meeting an ordinary Resolution will be passed for his removal.
5. Company notifies the CAC using Form CAC 7A-notification of change
of directors to reflect the removal, attached with the said Resolution.
6. The company is to make the changes in its Register of Directors and
where necessary also amend the register of directors’ shareholding.

The Effect of Non-Compliance With the Above Procedure:

A director who is removed not in accordance with the procedure under the
Companies and Allied-Matters Act, the removal will be invalid and void and such
will be set aside; see Longe v. First Bank PLC, Yalaju-Amaye v. AREC

REMUNERATION OF DIRECTORS
Directors of a company are not entitled to remuneration unless expressly stated in
the Articles of Association. S.293(4). The remuneration of directors shall be
determined from time to time by the members in general meeting and shall be
deemed to accrue from day to day. S. 293(1) CAMA. The articles of association
may also fix directors remuneration where the articles fixes it, it is only alterable by
a special resolution – S. 293(3)
However, Executive/Managing directors are entitled to remuneration since they are
considered as employees of the company with Service Contracts
DUTIES OF DIRECTOR
The director shall exercise the powers and discharge his duties in
a. Act good faith,
b. Act in the best interest of the company and
c. shall exercise that degree of care, diligence and skill which a reasonable,
prudent director would exercise in comparable circumstances; section 305
d. Duty not to make secret profit.

PROCEEDINGS/MEETINGS OF DIRECTORS
The Board of directors shall hold meetings from time to time provided that the first
meeting of the Board of directors is to be held not later than 6 months after
incorporation of the company. - S. 289 (1) of CAMA.

Length of Notice of Board Meeting.

The length of Notice of Board meetings is 14 days’ notice. S. 292(2) of CAMA.
The notice must be sent to every director entitled to attend the meeting and the
company secretary.
Failure to give notice of the meeting to persons so entitled shall invalidate the
meetings, Section 292(3)

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QUORUM OF BOARD MEETINGS
The quorum of Board meetings is two (2) if the directors are not more than 6 or
1/3 if they are more than 6 directors of the company.-S. 290 of CAMA

NOTE that where the Board of Directors is unable to act because quorum cannot be
formed, the general meeting may act in place of the Board; S. 291 CAMA; August
2019 Corporate law)

COMPANY SECRETARY
Every company except a small company, must have a company secretary; S. 330

QUALIFICATIONS OF A COMPANY SECRETARY: S. 332

PRIVATE COMPANY (LTD)
There is no special qualification for the secretary of a private company. Provided
that the Board is satisfied that the person to be appointed a company secretary have
the requisite knowledge and experience to discharge the functions of a secretary.

PUBLIC COMPANY (PLC)

For a person to be appointed as a secretary of a public company, he/she must be
qualified as either:
1. A member of the Institute of Chartered Secretaries of Nigeria or
2. A Legal practitioner or
3. A member of of any professional body of accountants established from time
to time by an Act of the National Assembly
4. An person who had held the office of the company secretary for 3 years in a
Public company of the 5 years preceding his appointment
5. A body corporate or a firm who are qualified to hold the office of a secretary
as stated in 1-4,
NOTE: that a director of a company may be appointed as a secretary of that same
company but cannot validly act in the same capacity in a single (one) transaction;
section 294 CAMA;

APPOINTMENT OF SECRETARY
A company secretary is appointed and removable by the Board of Directors of the
company. S. 333(1) of CAMA.

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STATUS OF A COMPANY SECRETARY
A company secretary is an important officer of the company and can make
representations that will bind the company;, Wimpey Nig. Ltd v Balogun, Okeowo
& ors v Migliore

The Companies and Allied Matters Act has also elevated the status of a company
secretary by making the following provisions:
1. Statutory provision for the position of a secretary; section 330 CAMA
2. Statutory provision for the qualification of a company secretary (PLC); section
332 CAMA
3. Statutory provision for the appointment and removal of a secretary; section 333
CAMA
4. Statutory provision for the duties of a company secretary; section 335 CAMA

DUTIES OF A COMPANY SECRETARY

The Statutory Duties of Company Secretary are: S.335
1. To attend and take minutes of the meetings of all types of company meetings
2. Advising the meetings on the compliance with the applicable rules and the
provisions of CAMA
3. To maintain the registers and other records required to be kept by Law in a
company
4. To render the proper returns and give notifications to the Corporate Affairs
Commission as required by Law
5. To carry out other administrative and secretarial duties as directed by the
company
Duties Before A Meeting (General Duties):
a. Serve out Notice of meetings and the agendas on all members and
officers of the company
b. Receive the Notice of proxies attendance within 48 hours to the
meeting
c. Keep the statutory records
d. To ensure the venue of the meeting is secured
e. To publish additional Notice of meeting in at least two National
Newspapers (PLC only)
Duties During The Meetings:
a. To take down the minutes of the meeting
b. To ensure compliance with the Law
c. To assist the Chairman in the conduct of the meeting.

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 Duties After The Meeting:
a. To draft Resolutions of the meeting ready for filing at the Corporate
Affairs Commission
b. To prepare the minutes of the meetings to the Chairman/secretary to
sign
c. To file statutory returns at the CAC required by Law
d. To update Statutory Records/ Registers kept by the company to reflect
current Resolutions.

REMOVAL OF A COMPANY SECRETARY- S.333

PRIVATE COMPANY:
There is no special procedure for removal of the secretary of a private company,
provided it was done by a resolution of the Board of Directors. Upon such removal,
the company will notify CAC within 14 days by filing CAC Form 8A
NOTE: only the Managing Director cannot remove the secretary.

PUBLIC COMPANY – S. 333

The secretary of a public company can only be removed through the procedure stated
below:
1. Give the affected secretary a Notice which must state:
a. Intention to remove him as the
b. The grounds for his proposed removal;
c. That he has 7 working days to either resign his office or to make a defense

2. The Board may pass a Resolution removing the secretary where he does not
resign or does not make a defense the Board will remove him and report it to
the next Annual General Meeting.

3. Where without resigning his office, he makes a defence which the board does
not consider sufficient to exonerate him, the following options are open to the
board

a) If the ground is that of fraud or gross misconduct, the board may

remove him from office and shall report to the next general meeting
b) If the ground is other than fraud or serious misconduct, the board can
only suspend him and report same to the next general meeting

4. The company will notify CAC of the removal within 14 days and alter the
register of secretaries; using CAC 8A

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Note: where a secretary who is suspended from office eventually removed with the
approval of the general meeting, the removal takes effect from the date of the
suspension – S. (4)
REMEDIES FOR WRONGFUL REMOVAL
1. action in court for damages for wrongful removal
2. claim a declaration that the purported removal is void

REGISTER OF SECRETARIES
Section 336. Every public company shall maintain a register of secretaries which
shall contain if it’s an individual:
(a) Full name and any former name or names;
(b) Address; and
(c) Email address.

Section 338 in the case of a body corporate, or a firm—

(a) Corporate or firm name;
(b) Registered or principal office; and
(c) Email address

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