Ley sobre las Empresas y los Aliados Asuntos (Capítulo C20), Nigeria

Companies and Allied Matters Act

Chapter C20

Laws of the Federal Republic of Nigeria 2004

Contents

Part A

Companies

Part I Corporate Affairs Commission

Part II Incorporation of Companies and incidental matters

Part III Acts by or on behalf of Company

Part IV Membership of the Company

Part V Share Capital

Part VI Shares

Part VII Debentures

Part VIII Meetings and Proceedings of Companies

Part IX Directors and Secretaries of the Companies

Part X Protection of minorities against illegal and oppressive conduct

Part XI Financial Statement of Audit

Part XII Annual Returns

Part XIII Dividends and Profits

Part XIV Receivers and Managers

Part XV Winding-up of Companies

Part XVI Arrangements and Compromise

Part XVII Dealings in Companies Securities

The entire part (Section 541 – 623) has been repealed by section 263

(1)(d) of the Investments and Securities Decree No 45 of 1999

Part XVIII Miscellaneous and supplemental

Part B

Business Names

Part C

Incorporated Trustees

Part D

Short Title

Schedules

Companies and Allied Matters Act

Chapter 20

Laws of the Federal Republic of Nigeria 2004

2nd January 1990

An Act to establish the Corporate Affairs Commission, provide for the

incorporation of companies and incidental matters, registration of business

names and the incorporation of trustees of certain communities, bodies and

associations.

Part A

Companies

Part I

Corporate Affairs commission

1. (1) There is hereby established under this Decree, a body to be

known as the Corporate Affairs Commission (in this Decree referred

to as "the Commission").

(2) The Commission shall be-

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

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

(c) capable of acquiring, holding or disposing of any property,

movable or immovable, for the purpose of carrying out its

functions.

(3) The headquarters of the Commission shall be situated in the

Federal Capital Territory, Abuja, and there shall be established an

office of the Commission in each State of the Federation.

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

(a) a chairman who shall be appointed by the President,

Commander-in Chief of the Armed Forces on the recommendation

of the Minister, being a person who by reason of his ability,

experience or specialised knowledge of corporate, industrial,

commercial, financial or economic matters or of business or

professional attainments would in his opinion be capable of

making outstanding contributions to the work of the Commission;

(b) one representative of the business community, appointed by the

Minister on the recommendation of the Nigerian Association of

Chambers of Commerce, Industries, Mines and Agriculture;

(c) one representative of the legal profession, appointed by the

Minister on the recommendation of the Nigerian Bar Association;

(d) one representative of the accountancy profession, appointed by

the Minister on the recommendation of the Institute of Chartered

Accountants of Nigeria

(e) one representative of the Manufacturers Association of Nigeria,

appointed by the Minister on the recommendation of the

Association;

(f) one representative of the Securities and Exchange Commission

not below the grade of a Director or its equivalent;

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

that is-

(i) Trade and Tourisms,

(ii) Finance and Economic Development,

(iii) Justice,

(iv) Industry and Technology; and

(h) the Registrar-General of the Commission.

3. (1) Subject to the provisions of subsection (2) of this section, a person

appointed as a member of the Commission (not being an ex-officio

member) shall hold office for three years and shall be eligible for re-

appointment for one further term of two years.

(2) The minister may, with the approval of the President, Commander-

in Chief of the Armed Forces at any time remove any member of the

Commission from office if the Minister is of the opinion that it is not

in the interest of the Commission for the member to continue in office

and shall notify the member in writing to that effect.

(3) The members of the Commission except the Registrar-General

shall be part-time members of the Commission.

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

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

duties;

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

creditors;

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

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

(e) in the case of a person possessed of professional qualifications,

he is disqualified or suspended (other than at his own request)

from practising his profession in any part of Nigeria by the order

of any competent authority made in respect of him personally.

4. Members of the Commission appointed under section 2 (a), (b), (c),

(d), (e), (f), (g), and (h) shall be paid such remuneration and allowances

as the President, Commander-in-Chief of the Armed Forces may, from

time to time, direct.

5. (1) Subject to this section and section 26 of the Interpretation Act

1964, the Commission may make standing orders regulating its

proceedings.

(2) The Chairman shall preside at every meeting of the Commission

but, in his absence, the members present shall elect one of their

number present to preside at the meeting.

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

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

at any of its meetings.

6. (1) A member of the Commission who is directly interested in any

company or enterprise, the affairs of which are being deliberated upon

by the Commission, or is interested in any contract made or proposed

to be made by the Commission shall, as soon as possible after the

relevant facts have come to his knowledge, disclose the nature of his

interest at a meeting of the Commission.

(2) A disclosure, under subsection (1) of this section, shall be recorded

in the minutes of the Commission, and the member shall-

(a) not take part after such disclosure in any deliberation or

decision of the Commission with regard to the subject matter in

respect of which his interest is thus disclosed;

(b) be excluded for the purpose of constituting a quorum of the

Commission for any such deliberation or decision.

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

(a) subject to section 541 of this Act, administer this Act including

the regulation and supervision of the formation, incorporation,

registration, management, and winding-up of companies under or

pursuant of this Act;

(b) establish and maintain a companies registry and offices in all

the States of the Federation suitably and adequately equipped to

discharge its functions under this Act or any other law in respect

of which it is charged with responsibility;

(c) arrange or conduct an investigation into the affairs of any

company where the interest of the shareholders and the public so

demand;

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

enactment; and

(e) undertake such other activities as are necessary or expedient for

giving full effect to the provisions of this Act.

(2) Nothing in this section shall effect the powers, duties or jurisdiction

of the Securities and Exchange Commission under the Securities and

Exchange Commission Act.

8. (1) There shall be appointed by the Commission, a Registrar-General

who shall be qualified to practice as a legal practitioner in Nigeria and

has been so qualified for not less than 10 years and in addition, has

had experience in company law practice or administration for not less

than eight years.

(2) The Registrar-General shall be the chief executive of the

Commission and shall be subject to the directives of the Commission

and shall hold office on such terms and conditions as may be

specified in his letter of appointment and on such other terms and

conditions as may be determined from time to time, by the

Commission with the approval of the National Council of Ministers.

(3) The Registrar-General shall be the accounting officer for the

purpose of controlling and disbursing amounts from the fund

established pursuant to section 12 of this Act.

9. The Commission may appoint such other staff as it may deem

necessary for the efficient performance of the functions of the

Commissions under or pursuant to this Act.

10. Notwithstanding the provisions of any enactment to the contrary, a

person appointed to the office or Registrar-General under section 8 of

this Act or a person appointed under section 9 of this Act who is a

legal practitioner shall, while so appointed, be entitled to represent the

Commission as a legal practitioner for the purpose and in the course

of his employment.

11. Service in the Commission shall be approved service for the

purpose of the Pensions Act and accordingly, officers and other

persons employed in the Commission shall in respect of their service

in the Commission be entitled to pensions, gratuities and other

retirement benefits enjoyed by persons holding equivalent grades int

he public service of the Federation, so however that nothing in this

Act shall prevent the appointment of a person to any office on terms

which preclude the grant of a pension and gratuity in respect of that

office.

12. The Commission shall establish a fund which shall consist of such

sums as may be allocated to it by the Federal Government and such

other funds as may accrue to it in the discharge of its functions.

13. The Commission may, from time to time, apply the proceeds of

the fund established in pursuance of section 12 of this Act-

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

(b) for re-imbursing members of the Commission or any

committee set up by the Commission for such expenses as may

be authorised or approved by the Commission, in accordance

with the rate approved in that behalf by the National Council of

Ministers;

(c) to the payment of salaries, fees or other remuneration or

allowances, pensions and gratuities payable to the employees

of the Commission;

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

the Commission; and

(e) for, and in connection with, all or any of the functions of

the Commission under this Act.

14. (1) The Commission shall keep proper accounts and proper

records in relation thereto and shall prepare in respect or each year

a statement of accounts in such form as the National Council of

Ministers may direct.

(2) The accounts of the Commission shall be audited not later than

six months after the end of the year by auditors appointed by the

Commission from the list and in accordance with guidelines

supplied by the Auditor-General of the Federation, and the fees of

the auditors and the expenses of the audit generally shall be paid

from the funds of the Commission.

(3) The Commission shall cause to be prepared, not later than 30th

September in each year, an estimate or the expenditure and income

or the Commission during the next succeeding year and when

prepared they shall be submitted through the Minister for approval

by the National Council of Ministers.

15. The Commission shall, not later than 30th June in each year,

submit to the National Council of Ministers, a report on the activities

of the Commission during the immediately preceding year and shall

include in such report, the audited accounts of the Commission.

16. The Minister may, with the approval or the National Council of

Ministers, make regulations generally for the purpose of this Act and

in particular, without prejudice to the generality of the foregoing

provisions, make regulations-

(a) prescribing the forms and returns and other information

required under this Part, that is, Part A of this Act;

(b) requiring returns to be made within the period specified

therein by any company or enterprise to which this Part, that

is, Part A of this Act applies; and

(d) prescribing any fees payable under this Part, that is, Part

A of this Act.

17. In this Part of this Act-

"Chairman" means the Chairman of the Commission; and "member"

means any member of the Commission, including the Chairman.

Part II

Incorporation of companies and incidental matters

Chapter I

Formation of Company

18. As from the commencement of this Act, any two or more persons

may form and incorporate a company by complying with the

requirements of this Act in respect of registration of such company.

19. (1) No company, association, or partnership consisting of more

than twenty persons shall be formed for the purpose of carrying on

any business for profit or gain by the company, association, or

partnership, or by the individual members thereof, unless it is

registered as a company under this Act, or is formed in pursuance

of some other enactment in force in Nigeria.

(2) Nothing in this section shall apply to-

(a) any co-operative society registered under the provisions of

any enactment in force in Nigeria; or

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

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

practitioner; or

(ii) as accountants, by persons each of whom is entitled by

law to practice as an accountant.

(3) If at any time the number of members of a company,

association or partnership exceeds twenty in contravention of this

section and it carries on business for more than fourteen days

while the contravention continues, every person who is a member

of the company, association or partnership during the time that is

so carries on business after those fourteen days shall be guilty of

an offence and liable on conviction to a fine of 25 for every day

during which the default continues.

20. (1) Subject to subsection (2) of this section, an individual shall

not join in the formation of a company under this Act if-

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

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

Nigeria or elsewhere; or

(c) he is an undischarged bankrupt; or

(d) he is disqualified under section 254 of this Act from being

a director of a company.

(2) A person shall not be disqualified under paragraph (a) of

subsection (1) of this section, if two other persons not disqualified

under that subsection have subscribed to the memorandum.

(3) A body corporate in liquidation shall not join in the formation

of a company under this Act.

(4) Subject to the provisions of any enactment regulating the

rights and capacity of aliens to undertake or participate in trade or

business, an alien or a foreign company may join in forming a

company.

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

(a) having the liability of its members limited by the

memorandum to the amount, if any, unpaid on the shares

respectively held by them (in this Act referred to as "a

company limited by shares"); or

(b) having the liability of its members limited by the

memorandum to such amount as the members may respectively

thereby undertake to contribute to the assets of the company in

the event of its being wound up (in this Act referred to as "a

company limited by guarantee") or

(c) not having any limit on the liability of its members (in this

Act referred to as "an unlimited company").

(2) A company of any of the foregoing types may either be a

private company or a public company.

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

to be a private company.

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

of its shares.

(3) The total number of members of a private company shall not

exceed fifty, not including persons who are bona fide in the

employment of the company, or were while in that employment

and have continued after the determination of that employment to

be, members of the company.

(4) Where two or more persons hold one or more shares in a

company jointly, they shall for the purpose of subsection (3) of

this section, be treated as a single member.

(5) A private company shall not, unless authorised by law invite

the public to-

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

(b) deposit money for fixed periods or payable at call, whether

or not bearing interest.

23. (1) Subject to subsection (2) of this section, where default is

made in complying with any of the provisions of section 22 of this

Act in respect of a private company, the company shall cease to be

entitled to the privileges and exemptions conferred on private

companies by or under this Act and this Act shall apply to the

company as if it were not a private company.

(2) If a court, on the application of the company or any other

person interested, is satisfied that the failure to comply with the

provisions of section 22 of this Act was accidental or due to

inadvertence or to some other sufficient cause, or that on other

grounds it is just and equitable to grant relief, the court may, on

such terms and conditions as may seem to it to be just and

expedient, order that the company be relieved from the

consequences mentioned in subsection (1) of this section.

24. Any company other than a private company shall be a public

company and its memorandum shall state that it is a public company.

25. As from the commencement of this Act, an unlimited company

shall be registered with a share capital; and where an existing

unlimited company is not registered with a share capital, it shall, not

later than the appointed day, alter its memorandum so that it becomes

an unlimited company having a share capital not below the minimum

share capital permitted under section 99 of this Act.

26. (1) Where a company is to be formed for promoting commerce,

art, science, religion, sports, culture, education, research, charity

or other similar objects, and the income and property of the

company are to be applied solely towards the promotion of its

objects and on portion thereof is to be paid or transferred directly

or indirectly to the members of the company except as permitted

by this Act, the company shall not be registered as a company

limited by shares, but may be registered as a company limited

guarantee.

(2) As from the commencement of this Act, a company limited by

guarantee shall not be registered with a share capital; and every

existing company limited by guarantee and having share capital

shall, not later than the appointed day, alter its memorandum so

that it becomes a company limited by guarantee and not having a

share capital.

(3) In the case of a company limited by guarantee, every provision

in the memorandum or articles or in any resolution of the company

purporting to give any person a right to participate in the divisible

profits of the company otherwise than as a member or purporting

to divide the company's undertaking into shares or interests shall

be void.

(4) A company limited by guarantee shall not be incorporated with

the object of carrying on business for the purpose of making

profits for distribution to members.

(5) The memorandum of a company limited by guarantee shall not

be registered without the authority of the Attorney General of the

Federation.

(6) If any company limited by guarantee carries on business for

the purpose of distributing profits, all officers and members

thereof who are cognisant of the fact that it is so carrying on

business shall be jointly and severally liable for the payment and

discharge of all the debts and liabilities or the company incurred in

carrying on such business, and the company and every such officer

and member shall be guilty of an offence and liable on conviction

to a fine not exceeding 100 for every day during which it carries

on such business.

(7) The total liability of the members of a company limited by

guarantee to contribute to the assets of the company in the event of

its being wound up shall not at any time be less than 10,000.

(8) Subject to compliance with subsection (5) of this section, the

articles of association of a company limited by guarantee may

provide that members can retire or be excluded from membership

of the company.

(9) If, in breach of subsection (5) of this section, the total liability

of the members of any company limited by guarantee shall at any

time be less than 10,000, every director and member of the

company who is cognisant of the breach shall be guilty of an

offence and liable on conviction to a fine or 50 for every day

during which the default continues.

(10) If, upon the winding-up of a company limited by guarantee,

there remains after the discharge of all its debts and liabilities any

property of the company, the same shall not be distributed among

the members but shall be transferred to some other company

limited by guarantee having objects similar to the objects of the

company or applied to some charitable object and such other

company or charity shall be determined by the members prior to

the dissolution of the company.

Memorandum of Association

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

(a) the name of the company;

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

in Nigeria;

(c) the nature of the business or businesses which the company

is authorised to carry on, or, if the company is not formed for

the purpose of carrying on business, the nature of the object or

objects for which it is established;

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

(e) that the company is a private or public company, as the

case may be;

(f) that the liability of its members is limited by shares or by

guarantee or is unlimited, as the case may be.

(2) If the company has a share capital-

(a) the memorandum shall also state the amount of authorised

share capital, not being less than 10,000 in the case of a private

company and 500,000 in the case of a public company, with

which the company proposes to be registered, and the division

thereof into shares of a fixed amount;

(b) the subscribers of the memorandum shall take among them

a total number of shares of a value of not less than twenty-five

per cent of the authorised share capital; and

(c) each subscriber shall write opposite to his name the

number of shares he takes.

(3) A subscriber of the memorandum who holds the whole or any

part of the shares subscribed by him in trust for any other person

shall disclose in the memorandum that fact and the name of the

beneficiary.

(4) The memorandum of a company limited by guarantee shall

also state that-

(a) the income and property of the company shall be applied

solely towards the promotion of its objects, and that no portion

thereof shall be paid or transferred directly or indirectly to the

members of the company except as permitted by or under this

Act; and

(b) each member undertakes to contribute to the assets of the

company in the event of its being wound up while he is a

member or within one year after he ceases to be a member, for

payment of the debts and liabilities of the company, and of the

cost of winding up, such amount as may be required not

exceeding a specified amount and the total of which shall not

be less than 10,000.

(5) The memorandum shall be signed by each subscriber in the

presence of at least one witness who shall attest the signature.

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

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

memorandum of association of-

(a) a company limited by shares;

(b) a company limited by guarantee; and

(c) an unlimited company,

shall be specified in Tables B, C and D respectively, in the First

Schedule to this Act, or as near that form as circumstances

admit.

29. The name of a private company limited by shares shall end with the

word "Limited".

(2) The name of a public company limited by shares shall end

with the words "Public Limited Company".

(3) The name of a company limited by guarantee shall end with

the words "(Limited by Guarantee)" in brackets.

(4) The name of an unlimited company shall end with the word

"Unlimited".

(5) A company may use the abbreviations "Ltd", "PLC"

"(Ltd/Gte)" and "Ultd" for the words "Limited", "Public Limited

Company", "(Limited by Guarantee)" and "Unlimited"

respectively, in the name of the company.

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

which-

(a) is identical with that by which a company in existence is

already registered, or so nearly resembles that name as to be

calculated to deceive, except where the company in existence is

in the course of being dissolved and signifies its consent in

such manner as the Commission requires; or

(b) contains the words "Chamber of Commerce" unless it is a

company limited by guarantee; or

(c) in the opinion of the Commission is capable of misleading

as to the nature or extent or its activities or is undesirable,

offensive or otherwise contrary to public policy; or

(d) in the opinion of the Commission would violate any

existing trade mark or business name registered in Nigeria

unless the consent of the owner of the trade mark or business

name has been obtained.]

(2) Except with the consent of the Commission, no company shall

be registered by a name which-

(a) includes the word "Federal", "National', "Regional",

"State", "Government", or any other word which in the opinion

of the Commission suggests or is calculated to suggest that it

enjoys the patronage or the Government of the Federation or

the Government of a State in Nigeria, as the case may be, or

any Ministry or Department of Government; or

(b) contains the word "Municipal" or "Chartered" or in the

opinion of the Commission suggests, or is calculated to

suggest, connection with any municipality or other local

authority; or

(c) contains the word "Co-operative" or the words "Building

Society"; or

(d) contains the word "Group" or "Holding".

31. (1) If a company, through inadvertence or otherwise, on its first

registration or on its registration by a new name, is registered

under a name identical with that by which a company in existence

is previously registered, or so nearly resembling it as to be likely

to deceive, the first-mentioned company may, with the approval of

the Commission, change its name, and if the Commission so

directs within six months of its being registered under that name,

the company concerned shall change its name within a period of

six weeks from the date of the direction or such longer period as

the Commission may allow.

(2) If a company makes default in complying with a direction

under subsection (1) of this section, it shall be guilty of an offence

and liable on conviction to a fine of N 25 for every day during the

default continues.

(3) Any company may, by special resolution and with the approval

of the Commission signified in writing, change its name:

Provide that no such approval shall be required where the only

change in the name of a company is the substitution of the words

"Public Limited Company" for the word "Limited' or vice versa on

the conversion of a private company into a public company or a

public company into a private company in accordance with the

provisions of this Act.

(4) Nothing in this Act shall preclude the Commission from

requiring a company to change its name if it is discovered that

such a name conflicts with an existing trade mark or business

name registered in Nigeria prior to the registration of the company

and the consent of the owner of the trade mark or business name

was not obtained.

(5) Where a company changes its name, the Commission shall

enter the new name on the register in place of the former name,

and issue a certificate of incorporation altered to meet the

circumstances of the case.

(6) The change of name shall not affect any rights or obligations

of the company, or render defective any legal proceedings by or

against the company, and any legal proceedings that could have

been continued or commenced against it or by it in its former

name may be continued or commenced against or by it in its new

name.

(7) Any alteration made in the name under this section shall be

published by the Commission in the Gazette.

(8) A certificate or publication in the Gazette under this section

shall be evidence of the alteration to which it relates.

32. (1) The Commission may, on written application and on

payment of the prescribed fee, reserve a name pending registration

of a company or a change of name by a company.

(2) Such reservation as is mentioned in subsection (1) of this

section shall be for such period as the Commission shall think fit

not exceeding sixty days and during the period of reservation no

other company shall be registered under the reserved name or

under any other name which in the opinion of the Commission

bears too close a resemblance to the reserved name.

Article of Association

33. There shall be registered with the memorandum of association

articles of association signed by the subscribers to the memorandum

of association, and prescribing regulations for the company.

34. (1) The form and contents of the articles of association of a

public company having a share capital, a private company having

a share capital, a company limited by guarantee and an unlimited

company shall be as in Parts I, II, III, and IV respectively, of Table

A in the First Schedule to this Act with such additions, omissions

or alterations as may be required in the circumstances. (2) In the

case of a company limited by guarantee, the articles of association

shall state the number of members with which the company

proposes to be registered for the purpose of enabling the

Commission to determine the fees payable on registration.

(3) The articles of association shall-

(a) be printed;

(b) be divided into paragraph numbered consecutively; and

(c) be signed by each subscriber of the memorandum of

association in the presence of at least one witness who shall

attest the signature.

(4) The articles shall bear the same stamp duty as if they were

contained in a deed.

Registration of Companies

35. (1) As from the commencement of this Act, a company shall be

formed in the manner set out in this section.

(2) There shall be delivered to the Commission-

(a) the memorandum of association and articles of association

complying with the provisions of this Part of this Act;

(b) the notice of the address of the registered office of the

company and the head office if different from the registered

office;

(c) a statement in the prescribed form containing the list and

particulars together with the consent of the persons who are to

be the first directors of the company;

(d) a statement of the authorised share capital signed by at

least one director; and

(e) any other document required by the Commission to satisfy

the requirements of any law relating to the formation of a

company.

(3) A statutory declaration in the prescribed form by a legal

practitioner that those requirements of this Act for the registration

of a company have been compiled with shall be produced to the

Commission, and it may accept such a declaration as sufficient

evidence of compliance:

Provided that there where the Commission refuses a declaration, it

shall within thirty days of the date of receipt of the declaration

send to the declarant a notice of its refusal giving the grounds of

such refusal.

36. (1) The Commission shall register the memorandum and articles

unless in its opinion-

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

(b) the business which the company is to carry on, or the

objects for which it is formed, or any of them, are illegal; or

(c) any of the subscribers to the memorandum is incompetent

or disqualified in accordance with section 20 of this Act; or

(d) there is non-compliance with the requirement of any other

law as to registration and incorporation of a company; or

(e) the proposed name conflicts with or is likely to conflict

with an existing trade mark or business name registered in

Nigeria.

(2) Any person aggrieved by the decision of the Commission

under subsection (1) of this section, may give notice to the

Commission requiring it to apply to the court for directions and

the Commission shall within twenty-one days of the receipt of

such notice apply to the court for the directions.

(3) The Commission may, in order to satisfy itself as provided in

subsection (1) (c) of this section, by instrument in writing require a

person subscribing to the memorandum to make and lodge with

the Commission, a statutory declaration to the effect that he is not

disqualified under section 20 of this Act from joining in forming a

company.

(4) Steps to be taken under this Act to incorporate a company shall

not include any invitation to subscribe for shares or otherwise

howsoever on the basis of a prospectus.

(5) Upon registration of the memorandum and articles, the

Commission shall certify under its seal-

(a) that the company is incorporated;

(b) in the case of a limited company, that the liability of the

members is limited by shares or by guarantee; or

(c) in the case of an unlimited company, that the liability of

the members is unlimited; and

(d) that the company is a private or public company, as the

case may be.

(6) The certificate of incorporation shall be prima facie evidence

that all the requirements of this Act in respect of registration and

of matters precedent and incidental to it have been compiled with

and that the association is a company authorised to be registered

and duly registered under this Act.

37. As from the date of incorporation, the subscriber of the

memorandum together with such other persons as may, from time to

time, become members of the company, shall be a body corporate by

the name contained in the memorandum, capable forthwith of

exercising all the powers and functions of an incorporated company

including the power to hold land, and having perpetual succession and

a common seal, but with such liability on the part of the members to

contribute to the assets of the company in the event of its being

wound up as is mentioned in this Act.

Capacity and powers of companies

38. (1) Except to the extent that the company's memorandum or any

enactment otherwise provides, every company shall, for the

furtherance of its authorised business or objects, have all the

powers of a natural person of full capacity.

(2) A company shall not have or exercise power either directly or

indirectly to make a donation or gift of any of its property or funds

to a political party or political association, or for any political

purpose; and if any company, in breach of this subsection makes

any donations or gift of its property to a political party or

association, or for any political purpose, the officers in default and

any member who voted for the breach shall be jointly and

severally liable to refund to the company the sum or value of the

donation or gift and in addition, the company and every such

officer or member shall be guilty of an offence and liable to a fine

equal to the amount or value of the donation or gift.

39. (1) A company shall not carry on any business not authorised by

its memorandum and shall not exceed the powers conferred upon

it by its memorandum or this Decree.

(2) A breach of subsection (1) of this section, may be asserted in

any proceedings under sections 300 to 313 of this Decree or under

subsection (4) of this section. (3) Notwithstanding the provisions

of subsection (1) of this section, no act of a company and no

conveyance or transfer of property to or by a company shall be

invalid by reason of the fact that such act, conveyance or transfer

was not done or made for the furtherance of any of the authorised

business of the company or that the company was otherwise

exceeding its objects or powers.

(4) On the application of-

(a) any member of the company; or

(b) the holder of any debenture secured by a floating charge

over all or any of the company’s property or by the trustee of

the holders of any such debentures,

the court may prohibit by injunction, the doing of any act or the

conveyance or transfer of any property in breach of subsection (1) of

this section.

(5) If the transactions sought to be prohibited in any proceeding

under subsection (4) of this section are being, or are to be

performed or made pursuant to any contract to which the company

is a party, the court may, if it deems the same t be equitable and if

all the parties to the contract are parties to the proceedings, set

aside and prohibit the performance of such contract, and may

allow to the company or to the other parties to the contract

compensation for any loss or damage sustained by them by reason

of the setting aside or prohibition of the performance of such

contract but no compensation shall be allowed for loss of

anticipated profits to be derived from the performance of such

contract.

40. (1) Where there is provision in the memorandum of association

of a company restricting the powers and capacity of the company

to carry on its authorised business or object, the restriction may be

relied on and have effect only for the purpose of-

(a) proceedings against the company by a director or member

of the company, or where the company has issued debentures

secured by a floating charge over all or any of the company’s

property, by the holder of any of the debentures or the trustee

for the holders of the debentures; or

(b) proceedings by the company or a member of the company

against the present of former officers or the company for

failure to observe any such restriction; or

(c) proceedings by the Commission or a member of the

company to wind up the company; or

(d) proceedings for the purpose of restraining the company or

other person from acting in breach of the memorandum or

directing the company or such person to comply with the same.

(2) A person may not in proceedings referred to in subsection (1)

(a) (b) or (c), of this section, rely on a restriction of the power or

capacity of the company contained in the memorandum in any

case where he voted in favour of, or otherwise expressly or by

conduct agreed to the doing of an act by the company or the

conveyance by or to the company of property which, it is alleged

in the proceedings, was or would be contrary to such a restriction.

Effect of memorandum and articles

41. (1) Subject to the provisions of this Decree, the memorandum and

articles, when registered, shall have the effect of a contract under

seal between the company and its members and officers and

between the members and officers themselves whereby they agree

to observe and perform the provisions of the memorandum and

articles, as altered from time to time in so far as they relate to the

company, members, or officers as such.

(2) All money payable by any member to the company under the

memorandum or articles shall be a debt due from him to the

company and shall be of the nature of a speciality debt.

(3) Where the memorandum or articles empower any person to

appoint or remove any director or other officer of the company,

such power shall be enforceable by that person notwithstanding

that he is not a member or officer of the company.

(4) In any action by any member or officer to enforce any

obligation owed under the memorandum or articles to him and any

other member or officer, such member or officer may, if any other

member or officer is affected, by the alleged breach of such

obligation with his consent, sue in a representative capacity on

behalf of himself and all other members or officers who may be

affected other than any who are defendants and the provisions of

Part XI of this Decree shall apply.

Member's right to copy of memorandum and articles

42. (1) A company shall, on being so required by any member, send

to him a copy of the memorandum and of the articles, if any, and a

copy of any enactment which alters the memorandum, subject to

payment, in the case of a copy of the memorandum and of the

articles, of N20 or such less sum as the company may prescribe

and in the case of a copy of an enactment of such sum not

exceeding the published price thereof as the company may require.

(2) If a company makes default in complying with this section, the

company and every officer of the company who is in default shall

be liable for each offence to a fine not exceeding N25.

43. (1) Where an alteration is made in the memorandum of a

company every copy of the memorandum issued after the date of

the alteration shall be in accordance with the alteration.

(2) If, where any such alteration has been made, the company at

any time after the date of the alteration issues any copies of the

memorandum which are not in accordance with the alteration, it

shall be liable to a fine not exceeding N25 for each copy so issued,

and every officer of the company who is in default shall be liable

to the like penalty.

Alteration of memorandum and articles

44. (1) A company may not alter the conditions contained in its

memorandum except in the cases and in the manner and to the

extent for which express provision is made in this Decree.

(2) Only those provisions which are required by section 27 of this

Decree or by any other specific provision contained in this Decree,

to be stated in the memorandum of the company concerned shall

be deemed to be conditions contained in its memorandum.

45. (1) The name of the company shall not be altered except with the

consent of the Commission in accordance with section 31 of this

Decree.

(2) The business which the company is authorised to carry on or,

if the company is not formed for the purpose of carrying on

business, the objects or which it is established may be altered or

added to in accordance with the provisions of section 46 or of Part

XV of this Decree.

(3) Any restriction on the powers of the company may be altered

in the same way as the business or object of the company.

(4) The share capital of the company may be altered in accordance

with the provisions of section 100 to 111 of this Decree but not

otherwise.

(5) Subject to section 49 of this Decree, any other provision of the

memorandum may be altered in accordance with section 46 of this

Decree, or as otherwise provided in this Decree.

46. (1) A company may, at a meeting of which notice in writing has

been duly given to all members (whether or not otherwise entitled

thereto), by special resolution alter the provisions of its

memorandum with respect to the business or objects of the

company:

Provided that if an application is made to the court in accordance

with this section for the alteration to be cancelled, it shall not have

effect except in so far as it is confirmed by the court.

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

(a) by the holders of not less in the aggregate than fifteen per

cent in nominal value of the company’s issued share capital or

any class thereof or, if the company is not limited by shares not

less than fifteen per cent of the company’s members; or

(b) by the holders of not less than fifteen per cent of the

company’s debentures entitling the holders to object to

alterations of its objects:

Provided that any such application shall not be made by any

person who has consented to or voted in favour of the

alteration.

(3) An application under this section shall be made not later than

twenty-eight days after the date on which the resolution altering

the company’s business or objects was passed, and may be made

on behalf of the persons entitled to make the application by such

one or more of their number as they may appoint in writing for the

purpose.

(4) On an application under this section, the court may make an

order confirming the alteration either wholly or in part and on such

terms and conditions as it thinks fit, and may adjourn the

proceedings in order that an arrangement may be made to the

satisfaction of the court for the purchase of the interest of

dissentient members, and the court may give such directions and

make such orders as it thinks expedient for facilitating or carrying

into effect any such arrangement:

Provided that no part of the capital of the company shall be

expended in any purchase.

(5) The debentures entitling the holders to object to alterations of a

company’s business or objects shall be any debentures secured by

a floating charge.

(6) The special resolution altering a company’s business or objects

shall require the same notice to the holders of any such debentures

as to members of the company; and in default of any provisions

regulating the giving of notice to any such debenture holders, the

provisions of the company’s articles regulating the giving of

notice to members shall apply.

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

objects and-

(a) application is thereafter made to the court for its

confirmation under this section, the company shall forthwith

give notice to the Commission of the making of the

application, and thereafter there shall be delivered to the

Commission within 15 days from the date of its making-

(i) a certified true copy of the order in the case of refusal to

confirm the resolution; and

(ii) a certified true copy of the order in the case of

confirmation of the resolution together with a printed copy

of the memorandum as thereby altered;

(b) no application is made with respect thereto to a court under

this section, the company shall within fifteen days from the end

of the period for taking such an application deliver to the

Commission a copy of the resolution as passed; and if the

Commission-

(i) is satisfied, a printed copy of the memorandum as

altered by the resolution shall forthwith thereafter be

delivered to it;

(ii) is not satisfied, it shall give notice in writing to the

company of its decision and an appeal from its decision

shall thereafter lie to the court at the suit of any person

aggrieved, if made within 21 days from the date of the

receipt by the company of the notice of the rejection, or

within such extended time as the court may allow.

(8) The court may at any time extend the time for the delivery of

documents to the Commission under paragraph (a) of subsection

(7) of this section for such period as the court may think proper.

(9) If a company makes default in giving notice or delivering any

document to the Commission as required by subsection (6) of this

section, the company and every officer of the company who is in

default shall be liable to a fine of N50.

(10) The validity of an alteration of the provision of a company’s

memorandum with respect to the business or objects of the

company shall not be questioned on the ground that it was not

authorised by subsection (1) of this section except in proceedings

taken for the purpose (whether under this section or otherwise)

before the expiration of twenty-one days after the date of the

resolution in that behalf; and where any such proceedings are

taken otherwise than under this section, subsections (6), (7) and

(8) of this section shall apply in relation thereto as if they had been

taken under this section, and as if an order declaring the alteration

invalid were an order cancelling it and as if any order dismissing

the proceedings were an order confirming the alteration.

(11) In this section "member" includes any person financially

interested in the company.

47. (1) Subject to the provisions of section 44 of this Act and of this

section and of any Part of this Act which preserves the rights of

minorities in certain cases) any provision in a company's

memorandum which might lawfully have been in articles of

association instead of in the memorandum may be altered by the

company by special resolution; but if an application is made to the

court for the alteration to be cancelled, the alteration shall not have

effect except in so far as it is confirmed by the court.

(2) This section shall not apply where the memorandum itself

provides for or prohibits the alteration of all or any of the said

provisions, and shall not authorise any variation or abrogation of

the special rights of any class of members.

(3) Subsections (2), (3), (4), (7), (8) and (9) of section 46 of this

Act (which relate to mode of alteration of business or objects)

except paragraph (b) of subsection (2) thereof shall apply in

relation to any alteration and to any application made under this

section as they apply in relation to alterations and to applications

made under that section.

(4) This section shall apply to a company's memorandum whether

registered before or after the commencement of this Decree.

48. (1) Subject to the provisions of this Decree and to the conditions

or other provisions contained in its memorandum, a company may

by special resolution alter or add to its articles.

(2) Any alteration or addition so made in the articles shall, subject

to the provisions of this Decree, be as valid as if originally

contained therein and be subject, in like manner, to alteration by

special resolution.

49. Save to the extent to which a member of a company agrees in

writing at any time to be bound thereby, and anything to the contrary

in the memorandum or articles notwithstanding, the member shall not

be bound by any alteration made in the memoradnum or articles of the

company requiring him on or after the date of the alteration to-

(a) take or subscribe for more shares than he held at the date

on which he became a member; or

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

company; or

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

Chapter 2

Conversion and Re-registration of Companies

50. (1) Subject to this section, a private company having a share

capital may be re-registered as a public company if-

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

passed; and

(b) an application for re-registration is delivered to the

Commission together with the documents prescribed in

subsection (3) of this section.

(2) The special resolution shall-

(a) alter the company's memorandum so that it states that the

company is to be a public company; and

(b) make such other alterations in the memorandum as are

necessary to bring it into conformity with the requirements of

this Decree with respect to the memorandum of a public

company in accordance with section 27 of this Decree; and

(c) make such alterations in the company's articles as are

requisite in the circumstances

(3) The application shall be made to the Commission in the

prescribed form and be signed by at least one director and the

secretary of the company; and the documents to be delivered with

it are the following-

(a) a printed copy of the memorandum and articles as altered

in pursuance of the resolution; and

(b) a copy of a written statement by the directors and the

secretary certified on oath by them, and showing that the paid

up capital of the company as at the date of the application is

not less than 25 per cent of the authorised share capital as at

that date; and

(c) a copy of the balance sheet of the company as at the date of

the resolution or the preceding 6 months, whichever is later;

and

(d) a statutory declaration in the prescribed form by a director

and the secretary of the company-

(i) that the special resolution required under this section

has been passed; and

(ii) that the company's net assets are not less than the

aggregate of the paid up share capital and undistributable

reserves; and

(e) a copy of any prospectus or statement in lieu of prospectus

delivered within the preceding 12 months to the Securities and

Exchange Commission established under the Securities and

Exchange Commission Decree 1988.

(4) If the Commission is satisfied that a company has complied

with the provisions of this section and may be re-registered as a

public company, it shall-

(a) retain the application and other documents delivered to it

under this section;

(b) register the application and other documents; and

(c) issue the company a certificate of incorporation, stating

that the company is a public company.

(5) Upon the issue to a company of the certificate of incorporation

under this section-

(a) the company shall by virtue of this issue of that certificate

become a public company; and

(b) any alterations in the memorandum and articles set out in

the resolution shall take effect accordingly.

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

(a) the requirements of this Decree in respect of re-registration

and of matters precedent and incidental thereto have been

complied with; and

(b) the company is a public company.

(7) A company shall not be re-registered under this section if it

has previously been re-registered as an unlimited company.

51. (1) Subject as follows, a company which is registered as limited

by shares may be re-registered as unlimited in pursuance of an

application in that behalf complying with the requirements of this

section.

(2) A company shall be precluded from re-registering under this

section if it is limited by virtue of re-registration under section 52

of this Decree.

(3) A public company or a company which has previously been re-

registered as unlimited company shall not be registered under this

section.

(4) An application under this section shall be in the prescribed

form and signed by a director and the secretary of the company,

and be lodged with the Commission together with the documents

specified in subsection (6) of this section.

(5) The application shall sect out such alterations in the company's

memorandum and articles as are requisite to bring it into

conformity with the requirements of this Decree with respect to

the memorandum and articles of a company to be formed as an

unlimited company.

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

follows-

(a) the prescribed form of assent to the company being

registered as unlimited, subscribed by or on behalf of all the

members of the company;

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

company-

(i) that the persons by whom or on whose behalf the form

of assent is subscribed constitute the whole membership of

the company; and

(ii) if any of the members have not subscribed that form

themselves, that the directors have taken all reasonable

steps to satisfy themselves that each person who subscribed

to it on behalf of a member was lawfully empowered to do

so; and

(c) a printed copy of the memorandum and the articles

incorporating the alterations set out in the application.

(7) If the Commission is satisfied that the company be registered

under this section as an unlimited company, it shall retain the

application and other documents lodged with it under this section

and-

(a) register the application and other documents; and

(b) issue to the company a certificate of incorporation

appropriate to the status to be assumed by virtue of this section.

(8) On the issue of the certificate-

(a) the status of the company, by virtue of the issue, shall be

changed from limited to unlimited; and

(b) the alterations in the memorandum set out in the

application and any alteration in the articles so set out shall

take effect as if duly made by resolution of the company; and

(c) the provisions of this Decree shall apply accordingly to the

memorandum and articles as altered.

(9) The certificate shall be prima facie evidence that the

requirements of this section in respect of the re-registration and of

matters precedent and incidental to it have been complied with,

and that the company was authorised to be re-registered under this

Decree in pursuance of this section and was duly so re-registered.

52. (1) Subject as follows, a company which is registered as unlimited

may be re-registered as limited by shares if a special resolution

that it should be so registered is passed, and the requirements of

this section are complied with in respect of the resolution and

otherwise.

(2) A company shall not under this section be re-registered as a

public company or company limited by guarantee; and a company

shall be precluded from registering under it if it is unlimited by

virtue of re-registration under section 51 of this Decree.

(3) The special resolution shall state the proposed authorised share

capital and provide for the making of such alterations in the

memorandum as are necessary to bring it into conformity with the

requirements of this Decree with respect to the memorandum of a

company so limited, and such alterations in the articles as are

requisite in the circumstances.

(4) An application in the prescribed form for the company to be

re-registered as limited signed by a director and the secretary of

the company shall be lodged with the Commission together with

the necessary documents not earlier than the day on which the

resolution was filed under section 237 of this Decree.

(5) The documents to be lodged with the Commission shall be a

printed copy of the-

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

(b) articles as so altered.

(6) If the Commission is satisfied that the company be re-

registered under this section as a company limited by shares, it

shall retain the application and other documents lodged with it

under this section and register them, and it shall issue to the

company a certificate of incorporation appropriate to the status to

be assumed by the company by virtue of this section.

(7) On the issue of the certificate-

(a) the status of the company shall, by virtue of the issue,

change from unlimited to limited; and

(b) the alterations in the memorandum specified in the

resolution and the alterations in, and additions to, the articles so

specified shall take effect accordingly.

(8) The certificate shall be prima facie evidence that the

requirements of this section in respect of re-registration and of

matters precedent and incidental to it have been complied with,

and that the company was authorised to be re-registered in

pursuance of this section and was duly so re-registered.

(9) The re-registration of an unlimited company as a limited

company shall not affect the rights and liabilities of the company

in respect of any debt or obligation incurred, or any contract

entered into, by, to, with, or on behalf of the company before the

re-registration, and those rights or liabilities may be enforced in

the manner provided by Part III of this Decree as in the case of a

company registered pursuant to Part II of this Decree.

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

company if-

(a) a special resolution complying with subsection (2) of this

section that it should be so re-registered is passed and has not

been cancelled by the court under this section;

(b) an application for the purpose in the prescribed form and

signed by a director and the secretary of the company is

delivered to the Commission together with a printed copy of

the memorandum and articles of the company as altered by the

resolution; and

(c) either-

(i) the period during which an application for the

cancellation of the resolution under this section may be

made has expired without any such application having been

made; and

(ii) where such an application has been made, the

application has been withdrawn or an order has been made

confirming the resolution and a copy of that order has been

delivered to the Commission.

(2) The special resolution shall alter the company's memorandum

so that it states that the company is a private company and shall

make such other alterations in the company's memorandum and

articles as are requisite in the circumstances.

(3) Where the special resolution is passed, an application may be

made to the court for the cancellation of the resolution, and such

application may be made by-

(a) the holders of not less in the aggregate than 5 per cent in

the nominal value of the company's issued share capital, or any

class thereof; or

(b) not less than 5 per cent of the company's members; but not

by a person who has consented to or voted in favour of the

resolution.

(4) The application shall be made within 28 days after the passing

of the resolution and the applicant shall forthwith give notice of

the application in the prescribed form to the Commission and to

the company.

(5) On the hearing of the application, the court shall make an

order either cancelling or confirming the resolution and may make

all such orders or give such directions as it may think expedient

under the circumstances.

(6) The company shall, within 15 days from the making of the

court's order, or within such other period as the court may be by

order direct, deliver to the Commission a certified true copy of the

order.

(7) If a company fails to deliver to the Commission a certified true

copy of the order as required in subsection (6) of this section, the

company and any officer of it who is in default, shall be guilty of

an offence and liable to a fine of N100 and for continued

contravention, to a daily default fine of N25.

(8) If the Commission is satisfied that a company may be re-

registered under this section, it shall-

(a) retain the application and other documents delivered to it

under this section;

(b) register the application and other documents; and

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

private company.

(9) On the issue of the certificate-

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

(b) the alteration in the memorandum and articles set out in

the resolution shall take effect accordingly.

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

(a) the requirements of this section in respect of re-registration

and of matters precedent and incidental to it have been

complied with; and

(b) the company is a private company.

Chapter 3

Foreign Companies

54. (1) Subject to sections 56 to 59 of this Decree every foreign

company which before or after the commencement of this Decree

was incorporated outside Nigeria, and having the intention of

carrying on business in Nigeria shall take all steps necessary to

obtain incorporation as a separate entity in Nigeria for that

purpose, but until so incorporated, the foreign company shall not

carry on business in Nigeria or exercise any of the powers of a

registered company and shall not have a place of business or an

address for service of documents or processes in Nigeria for any

purpose other than the receipt of notices and other documents, as

matters preliminary to incorporation under this Decree.

(2) Any act of the company in contravention of subsection (1) of

this section shall be void.

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

(a) any foreign company which before the commencement of

this Decree was granted exemption from compliance with Part

X of the Companies Act 1968;

(b) any foreign companies exempted under any treaty to which

Nigeria is a party.

55. If any foreign company fails to comply with the requirements of

section 54 of this Decree in so far as they may apply to the company,

the company shall be guilty of an offence and liable on conviction to

a fine of not less than N2,500; and every officer or agent of the

company who knowingly and wilfully authorises or permits the

default or failure to comply shall, whether or not the company is also

convicted of any offence, be liable on conviction to a fine of not less

than N250 and where the offence is a continuing one to a further fine

of N25 for every day during which the default continues.

56. (1) A foreign company may apply to the National Council of

Ministers for exemption from the provisions of section 54 of this

Decree if that foreign company belongs to one of the following

categories, that is-

(a) foreign companies (other than those specified in paragraph

(d) of this subsection) invited to Nigeria by or with the

approval of the Federal Military Government to execute any

specified individual project;

(b) foreign companies which are in Nigeria for the execution

of specific individual loan project on behalf of a donor country

or international organisation;

(c) foreign government-owned companies engaged solely in

export promotion activities; and

(d) engineering consultants and technical experts engaged on

any individual specialist project under contract with any of the

governments in the Federation or any of their agencies or with

any other body or person, where such contract has been

approved by the Federal Military Government.

(2) An application for exemption under this section shall be in

writing addressed to the Secretary to the Federal Military

Government and shall set out-

(a) the name and place of business of the foreign company

outside Nigeria;

(b) the name and place of business or the proposed name and

place of business of the foreign company in Nigeria;

(c) the name and address of each director, partner or other

principal officer of the foreign company;

(d) a certified copy of the charter, statutes, or memorandum

and articles of association of the company, or other instrument

constituting or defining the constitution of the company and if

the instrument is not written in the English language, a certified

translation thereof;

(e) the names and addresses of some one or more persons

resident in Nigeria authorised to accept on behalf of the foreign

company services of process and any notices required to be

served on the company;

(f) the business or proposed business in Nigeria of the foreign

company and the duration of such business;

(g) particulars of any project previously carried out by the

company as an exempted foreign company; and

(h) such other particulars as may be required by the Secretary

to the Federal Military Government.

(3) Where the National Council of Ministers upon the receipt of an

application for exemption is of the opinion, that the circumstances

are such as to render it expedient that such an exemption should be

granted, the National Council of Ministers may, subject to such

conditions as it may prescribe, exempt the foreign company from

the obligations imposed by or under this Decree.

(4) Every exemption granted in pursuance of this section shall

specify the period or, as the case may be, the project or series of

projects, for which it is granted and shall lapse at the end of such

period or upon the completion of such project or series of projects.

(5) The National Council of Ministers may at any time revoke any

exemption granted to any company, if it is of the opinion that the

company has contravened any provision of this Decree or has

failed to fulfil any condition contained in the exemption order or

for any other good or sufficient reason.

(6) The National Council of Ministers shall cause to be published

in the Gazette the name of any company-

(a) to which an exemption has been granted and the period or,

as the case may be, the project or series of projects for which

the exemption is granted;

(b) whose exemption has been revoked and the effective date

of such revocation.

57. Every exempted foreign company shall deliver to the

Commission, every calendar year a report in the form prescribed by

the Commission.

58. Subject to this Decree and save as may be stated in the instrument

of exemption, a foreign company exempted pursuant to this Decree

shall have the status of an unregistered company and accordingly, the

provisions of this Decree applicable to an unregistered company shall

apply in relation to such an exempted company as they apply in

relation to an unregistered company under this Decree.

59. (1) Any person who for the purpose of obtaining an exemption or

of complying with any of the provisions of section 56 of this

Decree, makes any statement or presents any instrument which is

false in a material particular shall be guilty of an offence unless he

proves that he has taken all reasonable steps to ascertain the truth

of the statement made or contained in the instrument so presented.

(2) Any person who is guilty of an offence under this section shall

be liable on conviction to a fine of N5,000 or imprisonment for a

term of three years.

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

(a) save as provided in section 55, 56, 57 and 58 of this

Decree, nothing in this Decree shall be construed as

authorising the disregard by any exempted foreign company

of any enactment or rule of law; and

(b) nothing in this Chapter shall be construed as affecting

the rights or liability of a foreign company to sue or be sued

in its name or in the name of its agent.

Chapter 4

Promoters

61. Any person who undertakes to take part in forming a company

with reference to a given project and to set it going and who takes the

necessary steps to accomplish that purpose, or who, with regard to a

proposed or newly formed company, undertakes a part in raising

capital for it, shall prima facie be deemed a promoter of the company:

Provided that a person acting in a professional capacity for persons

engaged in procuring the formation of the company shall not thereby

be deemed to be promoter.

62. (1) A promoter stands in a fiduciary relationship to the company

and shall observe the utmost good faith towards the company in

any transaction with it or on its behalf and shall company for any

loss suffered by reason of his failure so to do.

(2) A promoter who acquired any property or information in

circumstances in which it was his duty as a fiduciary to acquire it

on behalf of the company shall account to the company for such

property and for any profit which he may have made from the use

of such property or information.

(3) Any transaction between a promoter and the company may be

rescinded by the company unless, after full disclosure of all

material facts known to the promoter, such transaction shall have

been entered into or ratified on behalf of the company-

(a) by the company's board of directors independent of the

promoter; or

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

(c) by the company at a general meeting at which neither the

promoter nor the holders of any shares of any in which he is

beneficially interested shall vote on the resolution to enter into

or ratify that transaction.

(4) No period of limitation shall apply to any proceedings brought

by the company to enforce any of its rights under this section but

in any such proceedings the court may relieve a promoter in whole

or in part and on such terms as it thinks fit from liability hereunder

if in all the circumstances, including lapse of time, the court thinks

it equitable to do so.

Part III

Acts by or on behalf of the Company

Exercise of Company's Powers

63. (1) A company shall act through its members in general meeting

or its board of directors or through officers or agents, appointed

by, or under authority derived from, the members in general

meeting or the board of directors.

(2) Subject to the provisions of this Decree, the respective powers

of the members in general meeting and the board of directors shall

be determined by the company's articles.

(3) Except as otherwise provided in the company's articles, the

business of the company shall be managed by the board of

directors who may exercise all such powers of the company as are

not by this Decree or the articles required to be exercised by the

members in general meeting.

(4) Unless the articles shall otherwise provide, the board of

directors, when acting within the powers conferred upon them by

this Decree or the articles, shall be bound to obey the directions or

instructions of the members in general meeting: Provided that the

directors acted in good faith and with due diligence.

(5) Notwithstanding the provisions of subsection (3) of this

section, the members in general meeting may-

(a) act in any matter if the members of the board of directors

are disqualified or are unable to act because of a deadlock on

the board or otherwise;

(b) institute legal proceedings in the name and on behalf of the

company, if the board of directors refuse or neglect to do so;

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

directors; or

(d) make recommendations to the board of directors regarding

action to be taken by the board.

(6) No alteration of the articles shall invalidate any prior act of the

board of directors which would have been valid if that alteration

had not been made.

64. Unless otherwise provided in this Decree or in the articles, the

board of directors may-

(a) exercise their powers through committees consisting of

such members of the body as they think fit; or

(b) from time to time, appoint one or more of their body to the

office of managing director and may delegate all or any of their

powers to such managing director.

Liability for acts of the company

65. Any act of the members in general meeting, the board of directors,

or of a managing director while carrying on in the usual way the

business of the company shall be treated as the act of the company

itself and the company shall be criminally and civilly liable therefor

to the same extent as if it were a natural person:

Provided that-

(a) the company shall not incur civil liability to any person if

that person had actual knowledge at the time of the transaction

in question that the general meeting, board of directors, or

managing director, as the case may be had no power to act in

the matter or had acted in an irregular manner or if, having

regard to his position with or relationship to the company, he

ought to have known of the absence of such power or of the

irregularity;

(b) if in fact a business is being carried on by the company, the

company shall not escape liability for acts undertaken in

connection with that business merely because the business in

question was not among the business authorised by the

company's memorandum.

66. (1) Except as provided in section 65 of this Decree, the acts of

any officer or agent of a company shall not be deemed to be acts

of the company, unless-

(a) the company, acting through its members in general

meeting, board of directors, or managing director, shall have

expressly or implied authorised such officer or agent to act in

the matter; or

(b) the company, acting as mentioned in paragraph (a) of this

subsection, shall have represented the officer or agent as

having its authority to act in the matter, in which event the

company shall be civilly liable to any person who has entered

into the transaction in reliance on such representation unless

such person had actual knowledge that the officer or agent had

no authority or unless having regard to his position with or

relationship to the company, he ought to have known of such

absence of authority.

(2) The authority of an officer or agent of the company may be

conferred prior to any action by him or by subsequent ratification,

and knowledge of such action by the officer or agent and

acquiescence therein by all the members of the company or by the

directors for the time being or by the managing director for the

time being by equivalent to ratification by the members in general

meeting, board of directors, or managing director, as the case may

be.

(3) Nothing in this section shall derogate from the vicarious

liability of the company for the acts of its servants while acting

within the scope of their employment.

67. (1) Any provision, whether contained in the articles of the

company or in any contract with a company or otherwise, for

exempting any officer of the company or any person (whether an

officer of the company or not) employed by the company as

auditor from, or indemnifying him against, any liability which by

virtue of any rule of law, would otherwise attach to him in respect

of any negligence, default, or breach of trust of which he may be

guilty in relation to the company, shall be void.

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

section-

(a) a person shall not be deprived of any exemption or right to

be indemnified in respect of anything done or omitted to be

done by him while any such provision as mentioned in that

subsection was in force; and

(b) a company may, in pursuance of any such provision as

mentioned in subsection (1) of this section, indemnify any such

officer or auditor against any liability incurred by him in

defending any proceedings, whether civil or criminal in which

judgement is given in his favour or in which he is acquitted or

in connection with any application under section 641 of this

Decree in which relief is granted to him by the court.

Constructive notice of registered documents

68. Except as mentioned in section 197 of this Decree, regarding

particulars in the register of particulars of charges, a person shall not

be deemed to have knowledge of the contents of the memorandum

and articles of a company or of any other particulars, documents, or

the contents of documents merely because such particulars or

documents are registered by the Commission or referred to in any

particulars or documents so registered, or are available for inspection

at an office of the company.

69. Any person having dealings with a company or with someone

deriving title under the company shall be entitled to make the

following assumptions and the company and those deriving title under

it shall be stopped from denying their truth that-

(a) the company's memorandum and articles have been duly

complied with;

(b) every person described in the particulars filed with the

Commission pursuant to sections 35 and 292 of this Decree as

a director, managing director secretary of the company, or

represented by the company, acting through its members in

general meeting, board of directors, or managing director, as an

officer or agent of the company, has been duly appointed and

has authority to exercise the powers and perform the duties

customarily exercised or performed by a director, managing

director, or secretary of a company carrying on business of the

type carried on by the company or customarily exercised or

performed by an officer or agent of the type concerned;

(c) the secretary of the company, and every officer or agent of

the company having authority to issue documents or certified

copies of documents on behalf of the company has authority to

warrant the genuiness of the documents or the accuracy of the

copies so issued;

(d) a document has been duly sealed by the company if it

bears what purports to be the seal of the company attested by

what purports to be the signatures of two persons who, in

accordance with paragraph (b) of this section, can be assumed

to be a director and the secretary of the company:

Provided that-

(i) a person shall not be entitled to make such assumptions

as aforesaid, if he had actual knowledge to the contrary or

if, having regard to his position with or relationship to the

company, he ought to have known the contrary;

(ii) a person shall not be entitled to assume that any one or

more of the directors of the company have been appointed

to act as a committee of the board of directors or that an

officer or agent of the company has the company's authority

merely because the company's articles provided that

authority to act in the matter may be delegated to a

committee or to an officer or agent.

70. Where, in accordance with section 65 to 69 of this Decree, a

company would be liable to a third party for the acts of any officer or

agent, the company shall, except where there is collusion between the

officer or agent and the third party, be liable notwithstanding that the

officer or agent has acted fraudulently or forged a document

purporting to be sealed by or signed on behalf of the company.

Company's contracts

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

discharged as follows-

(a) any contract which if made between individuals would be

by law required to be in writing under seal, or which would be

varied, or discharged only by writing under seal, may be made,

varied or discharged, as the case may be, in writing under the

common seal of the company;

(b) any contract which if made between individuals would be

by law required to be in writing, signed by the parties to be

charged therewith, or which could be varied or discharged only

by writing or written evidence signed by the parties to be

charged, may be made, varied or discharged as the case may

be, in writing signed in the name or on behalf of the company;

and

(c) any contract which if made between individuals would be

valid although made by parol only and not reduced into writing

or which could be varied or discharged by parol, may be made,

varied or discharged, as the case may be, by parol on behalf of

the company.

(2) A contract made according to this section shall be effectual in

law, and shall bind the company and its successors and all other

parties thereto, their heirs, executors, or administrators, as the case

may be; and may be varied or discharged in the same manner in

which it is authorised by this section to be made.

72. (1) Any contract or other transaction purporting to be entered into

by the company or by any person on behalf of the company prior

to its formation may be ratified by the company after its formation

and thereupon the company shall become bound by and entitled to

the benefit thereof as if it has been in existence at the date of such

contract or other transaction and had been a party thereto.

(2) Prior to ratification by the company, the person who purported

to act in the name of or on behalf of the company shall, in the

absence of express agreement to the contrary, be personally bound

by the contract or other transaction and entitled to the benefit

thereof.

73. (1) A bill of exchange or promissory note shall be deemed to

have been made, accepted, or endorsed on behalf of a company if

made, or expressed to be made, accepted, or endorsed in the name

of the company, or if expressed to be made, accepted or endorsed

on behalf or on account of the company by a person acting under

its authority.

(2) The company and its successors shall be bound thereby if the

company is in accordance with sections 65 to 67 of this Decree,

liable for the acts of these who made, accepted or endorsed it in its

name or on its behalf or account, and a signature by a director or

the secretary on behalf of the company shall not be deemed to be a

signature by procuration for the purposes of section 25 of the Bill

of Exchange Act.

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

regulated by the articles.

75. (1) A company whose objects require or comprise the transaction

of business in foreign countries may, if authorised by its articles,

have for use in any territory, district, or place outside Nigeria, an

official seal, which shall be a facsimile of the common seal of the

company, with the addition on its face of the name of every

territory, district, or place where it is to be used.

(2) A company having such an official seal may, by writing under

its common seal, authorise any person appointed for the purpose in

any territory, district, or place outside Nigeria, to affix the same to

any deed or other document to which the company is party in that

territory, district, or place.

(3) The authority of any such agent shall, as between the company

and any person dealing with the agent, continue during the period,

if any, mentioned in the instrument conferring the authority, or if

no period is there mentioned, then until notice of the revocation or

determination of the agent's authority has been given to the person

dealing with him.

(4) The person affixing any such official seal shall, by writing

under his hand, on the deed or other document to which the seal is

affixed, certify the date on which and place at which it is affixed.

(5) A deed or other document to which an official seal is duly

affixed shall bind the company as if it has been sealed with the

common seal of the company.

76. (1) A company may, by writing under seal, empower any person,

either generally or in respect of any specified matter, as its

attorney, to execute deeds on its behalf in any place within or

outside Nigeria.

(2) A deed signed by a person empowered as provided in

subsection (1) of this section shall bind the company and have the

same effect as it would have if it were under the company's

common seal.

Authentication and service of documents

77. A document or proceeding requiring authentication by a company

may be signed by a director, secretary, or other authorised officer of

the company, and need not be under its common seal unless otherwise

so required in this Part of this Decree.

78. A court process shall be served on a company in the manner

provided by the Rules of Court and any other document may be

served on a company by leaving it at, or sending it by post to, the

registered office or head office of the company.

Part IV

Membership of the company

79. (1) The subscribers of the memorandum of a company shall be

deemed to have agreed to become members of the company, and

on its registration shall be entered as members in its register of

members.

(2) Every other person who agrees in writing to become a member

of a company, and whose name is entered in its register of

members, shall be a member of the company.

(3) In the case of a company share capital, each member shall

be a shareholder of the company of the company and shall hold at

least one share.

80. (1) As from the commencement of this Act, an individual shall

not be capable of becoming a member of a company if -

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

Nigeria or elsewhere; or

(b) he is an undischarged bankrupt.

(2) A person under the age of eighteen years shall not be counted

for the purpose of determining the legal minimum number of

members of a company.

(3) A corporate body in liquidation shall not be capable of

becoming a member of a Company.

(4) Where at the commencement of this Act, any person falling

within the provisions of subsection (1) of this section is a member

of a Company by reason of being a shareholder of the Company,

his share shall vest in his committee or trustee, as the case may be.

(5) Where after the commencement of this Act, any shareholder

purports to transfer any shares to a person falling within the

provisions of subsection (1) of this section, the purported transfer

shall not vest the title in the shares in that person but the title shall

remain in the purported transfer or his personal representative who

hold the shares in trust for that person during the period of his

incapacity.

81. Every member shall, notwithstanding any provision in the articles,

have a right to attend any general meeting of the Company and to

speak and vote on any resolution before the meeting:

Provided that the articles may provide that a member shall not be

entitled to attend and vote unless all calls or other sums payable by

him in respect of shares in the Company have been paid.

82. If any person falsely deceitfully personates any member of a

Company and thereby obtains or endeavours to obtain any benefit due

to any such member, he shall be guilty of an offence and be liable on

conviction to imprisonment for a term of not more than seven years or

a fine of not more than N2,500.

Register of Members

83. (1) Every Company shall keep a register of its members and enter

in it the following particulars -

(a) the names and address of the members, and in the case of a

Company having a share, if capital a statement of the shares

and class of shares, if any, held by each member,

distinguishing each share by its number so long as the share

has a number, and of the amount paid or agreed to be

considered as paid on the share of each member.

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

and

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

Provided that, where the Company has converted any of its

shares into stock and given notice of the Conversion to the

Commission, the register shall show the amount of stock held

by each member instead of the amount of shares and the

particulars relating to share specified in paragraph (a) of this

subsection.

(2) The entry required under paragraph (a) or (b) of subsection (1)

of this section, shall be made within twenty eight days of the

conclusion of the agreement with the Company to become a

member or, in the case of a subscriber of the memorandum, within

twenty-eight days of the registration of the Company.

(3) The entry required under paragraph (c) of subsection (1) of this

section shall be made within twenty-eight days of the date on

which the person concerned ceased to be a member, or, if he

ceased to be a member otherwise than as a result of action by the

Company, within twenty-eight days of production to the Company

of evidence satisfactory to the Company of the occurrence of the

event whereby he ceased to be a member.

(4) Where a company makes in default in complying with the

provisions of this section, the company and very officer of the

company who is in default shall be guilty of an offence and liable

on conviction to a fine of N25 and a daily default fine of N5.

(5) Liability incurred by a company from the making or deletion

of an entry in its register of members, or from a failure to make or

delete any such entry, shall not be enforceable after the expiration

of twenty years from the date on which the entry was made or

deleted or, in the case of any such failure, from the date on which

the failure first occurred.

84. (1) The register of members shall be kept at the registered office

of the company, except that if -

(a) the work of making it up is done at another office of the

company, it may be kept at that other office; and

(b) the company arranges with some other person for the

making up of the register to be undertaken on behalf of the

company by that person, it may kept at the office of that other

person at which the work is done;

but the register shall not be kept in the case of company registered in

Nigeria, at a place outside Nigeria.

(2) Every company shall send notice of the Commission of the

place where the register is kept and of any change of that place.

(3) A company shall not be bound to send notice under this

subsection where the register has, at all times since it came into

existence or, in the case of a register in existence at the

commencement of this Act, at all times since then, been kept at the

registered office of the company.

(4) If a company makes default for twenty-eight days in

complying with subsection (2) of this section, the company and

every one of its officers who is in default shall be guilty of an

offence and liable on conviction to a fine of N10 and, for

continued contravention, to a daily default fine of N5.

85. (1) Every company having more than fifty members shall,

unless the register of members is in such a form as to constitute in

itself an index, of the names of the members of the company and

shall, within fourteen days after the date on which any alteration is

made in the register of members, make any necessary alteration in

the index

(2) The index shall in respect of the each member contain a

sufficient indication to enable the account of that member in the

register to be readily found.

(4) If default is made in complying with the provisions of this

section, the company and every officer of the company who is in

default be liable to a fine of N50.

86. No notice of any trust, express, implied or constructive shall be

entered on the register of members or be receivable by the

Commission.

87. (1) Except when the register of members is closed under the

provisions of this Act, the register and the index of members'

names shall be open during business hours (subject to such

reasonable restrictions as the company in general meeting may

impose, so however, that no less than two hours in each day shall

be allowed for inspection) to the inspection of any member of the

company without charge, and with the permission of the company

to any other person on payment of N1 or any less sum as the

company may prescribe for each inspection.

(2) Any member or, with the permission of the company any other

person may require a copy of the register, or of any part thereof,

on payment of 50 kobo, or such less sum as the company may

prescribe, for every 100 words or fractional part thereof required

to be copied; and the company shall cause any copy so required by

any person to be sent to that person within a period of ten days

commencing on the day next after the day on which the

requirement is received by the company.

(3) In the case of a member, if any inspection required under this

section is refused or if any copy required under this section is not

sent within the prescribed period, the company and every officer

of the company who is in default shall be liable in respect of each

offence to a fine of N10.

(4) In the case of any such refusal or default in the case of a

member, the court may by order compel an immediate inspection

of the register, and index or direct that the copies required shall be

sent to the persons requiring them.

88. Where, by virtue of paragraph (b) of subsection (1) of section 84

of this Act, the register of members is kept at the office of some

person other than the company, and by reason of any default of his,

the company fails to comply with subsection (1) or (2) of section 84

of this Act, or with any requirements of this Act as to the production

of the register, that other person shall be liable to the same penalties

as if he were an officer of the company who was in default, and the

power to the court under subsection (4) of section 87 of this Act shall

extend to the making of orders against that other person and his

officers and servants.

89. A company may, on giving notice be advertisement in a daily

newspapers circulating in the district in which the registered office of

the company is situated, close the register of members or any part of it

for any time or times and exceeding on the whole thirty days in each

year.

90. (1) If -

(a) the name of any person is, without sufficient cause, entered

in or omitted from the register of members of a company; or

(b) default is made or unnecessary delay takes place in

entering on the register the fact of any person having ceased to

be a member,

the person aggrieved, or any member of the company, or the

company, may apply to the court for rectification of the

register.

(2) The court may refuse the application, or order rectification of

the register and payment by the company of any damages

sustained by the party aggrieved.

(3) On an application under this section, the court may decide any

question relating to the title of any person who is a party to the

application to have his name entered in or omitted from the

register, whether the question arises between members or alleged

members or between members and alleged members on the one

hand and the company on the other hand, and generally may

decide any question necessary or expedient to be decided for

rectification of the register.

(4) In the case of a company required by this Act to send a list of

its members to the Commission, the court, when making an order

for rectification of the register shall, by its order, direct notice of

the rectification to be given to the Commission.

91. The register of members shall be prima facie evidence of matters

which are by this Act directed or authorised to be inserted in it.

Liability of members

92. (1) Prior to the winding-up of a company, a member of the

company with shares shall be liable to contribute the balance, if

any, of the amount payable in respect of the shares held by him in

accordance with the terms of the agreement under which the

shares were issued or in accordance with a call validly made by

the company pursuant to its articles.

(2) Where any contribution has become due and payable by reason

of a call validly made by the company pursuant to the articles or

where, under the terms of any agreement with the company, a

member has undertaken personal liability to make future payments

in respect of shares issued to him, the liability of the members

shall continue notwithstanding that the shares held by him are

subsequent transferred or forfeited under a provision to that effect

in the articles, but his liability shall cease if and when the

company shall have received payment in full of all such moneys in

respect of the shares.

(3) Subject to subsections (1) and (2) of this section, no member

or past member shall be liable to contribute to the assets of the

company, except in the event of its being wound up.

(4) In the event of a company being wound up, every present or

past member shall be liable to contribute to the assets of the

company to an amount sufficient for payment of its debts and

liabilities and for the costs, charges and expenses of the winding-

up and for the adjustment of the rights of the members and past

members among themselves but subject to the following

qualifications -

(a) a past member shall not be liable to contribute if he has

ceased to be a member for period of one year or upwards

before the commencement of the winding-up;

(b) as past member shall not be liable to contribute unless it

appears to the court that the existing members are unable to

satisfy the contributions required to be made by them in

pursuance of this section;

(c) in the case of a company limited by shares, no contribution

shall be required from any member or past member exceeding

the amount, if any unpaid on the shares in respect of which he

is liable as a present or past member;

(d) in the case of a company limited by guarantee, no

contribution shall be required from any member or past

member exceeding the amount undertaken to be contributed by

him to the assets of the company in the event of its being

wound up; and

(e) any sum due from the company to a member or past

member, in his capacity as member, by way of dividends or

otherwise shall not be set-off against the amount of which he is

liable to contribute in accordance with this section but any such

sum shall be taken into account for the purposes of final

adjustment of the rights of the members and past members

amongst themselves.

(5) For the purposes of this section, the expression "past member"

includes the estate of a deceased member and where any person

dies after becoming liable as a member or past member such

liability shall be enforceable against his estate.

(6) Except as contained in this section, a member or past member

shall not be liable as a member or past member for any of the

debts and liabilities of the company.

93. If a company carries on business without having at least two

members and does so for more than six months, every director or

officer of the company during the time that it so carries on business

after those six months who knows that it is carrying on business with

only one or no member shall be liable jointly and severally with the

company for the debts of the company contracted during that period.

Disclosure of beneficial interest in shares

94. (1) Notwithstanding the provision of section 95 of this Act, a

public company may by notice in writing require any member of

the company, within such reasonable time as is specified in the

notice -

(a) to indicate in writing the capacity in which he holds any

shares in the company; and

(b) if he holds them otherwise than as beneficial owner, to

indicate in writing the particulars of the identity of persons

interested in the shares in question and whether persons

interested in the same shares are parties to any agreement or

arrangement relating to the exercise of any rights conferred by

the holding of the shares.

(2) Where a company is informed in pursuance of a notice given

to any person under subsection (1) of this section, or under this

subsection that any other person has an interest in any shares in the

company, the company may, by notice in writing, require that

other person within such reasonable time as is specified in the

notice -

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

interest; and

(b) if he holds it otherwise than as beneficial owner, to

indicate in writing, so far as it lies within his knowledge, the

persons who have any interests in them (either by name and

address or by other particulars sufficient to enable them to be

identified) and the nature of their interests.

(3) Whenever a company receives information from a person in

pursuance of a requirement imposed on him under this section

with respects to shares held by a member of the company, it shall

be under an obligation to inscribe against the name of the member

in the register of members -

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

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

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

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

(b) in purported compliance with such a notice, makes any

statement which he knows to be false in a material particular or

recklessly makes any statement which is false in material

particular,

shall be guilty of an offence and liable on conviction to imprisonment

for six months or to a fine of N25 for every day during which the

default continues.

(5) A person shall not guilty of an offence under subsection (4)(a)

of this section, if he proves that the information ion question was

already in the possession of the company or that the requirement

to give it was for any other reason frivolous or vexatious.

95. (1) A person who is a substantial shareholder in a public

company shall give notice in writing to the company stating his

name and address and giving full particulars of the shares held by

him or his nominees (naming the nominee) by virtue of which he

is a substantial shareholder.

(2) A person is a substantial shareholder in a public company if he

holds himself or by his nominee, shares in the company which

entitle him to exercise at least ten per cent of the unrestricted

voting rights at any general meeting of the company.

(3) A person required to give a notice under subsection (1) of this

section, shall do so within fourteen days after that person becomes

aware that he is a substantial shareholder.

(4) The notice shall be so given notwithstanding that the person

has ceased to be a substantial shareholder before the expiration of

the period referred to in subsection (3) of this section.

(5) A person who fails to comply with the provisions of this

section shall be liable to a fine of N50 for every day during which

the default continues.

96. (1) A person who ceases to be a substantial shareholder in a

public company shall give notice in writing to the company stating

his name and the date on which he ceases to be substantial

shareholder and giving full particulars of the circumstances by

reason of which he ceased to be a substantial shareholder.

(2) A person required to give notice under subsection (1) of this

section shall do so within fourteen days after he becomes aware

that he has ceased to be a substantial shareholder.

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

-

(a) in a alphabetical order, the names of persons from whom it

has received a notice under section 95 of this Act; and

(b) against each name so entered, the information given in the

notice and where it receives a notice under section 95 of this

Act, the information given in that notice.

(2) The register shall be kept at the place where the register of

members required to be kept under section 84 of this Act is kept

and shall be subject to the same right to inspection the register of

members.

(3) The Commission may, at any time in writing, require the

company to furnish it with a copy of the register or any part of the

register and the company shall furnish the copy within fourteen

days after the day on which the requirement is received by the

company.

(4) If the company ceases to be public company, it shall continue

to keep the register until the end of the period of six years

beginning with the day next following that on which it ceases to be

such a company.

(5) A company shall not, by reason of anything done for the

purposes of this section, be affected with notice of, or put on

enquiry as to, a right of a person to or in relation to a share in the

company.

(6) If default is made in complying with this section, the company

and every officer of the company who is in default shall be guilty

of an offence and liable on conviction to a fine of N25 and a daily

fine of N5.

98. The matter relating to beneficial interests in shares required by

section 94 of this Act shall entered in a different part of the register of

interests which shall be so made up that the entries inscribed in it

appear in chronological order.

Part V

Share Capital

Minimum share capital

99. (1) Where, after the commencement of this Act, a memorandum

delivered to the Commission under this section 35 of this Act

states that the association to be registered is to be registered with

shares, the amount of the share capital stated in the memorandum

to be registered shall not be less than the authorised minimum

share capital and not less than twenty-five per cent of the capital

shall be taken by the subscribers of the memorandum.

(2) No company having a share capital shall, after the

commencement of this Act, be registered with an authorised share

capital less than the authorised minimum share capital.

(3) Where at the commencement of this Act, the authorised share

capital of an existing company is less than the authorized

minimum share capital, the company shall, not later than thirty

days after the appointed day, increase the share capital to an

amount not less than the authorised minimum share capital of

which not less than twenty-five per cent shall be issued.

(4) Subject to subsection (3) of this section and to section 103 of

this Act, where a company is registered with shares, its issued

capital shall not at any time be less than twenty-five per cent of the

authorised share capital.

(5) Where a company to which subsection (3) or (4) of this section

applies fails to comply with the applicable subsection, it shall be

guilty of an offence and liable on conviction to a fine of N2,500,

and every officer who is in default shall be liable to a fine of N50

for every day during which the default continues.

Alteration of share capital

100. (1) A company having a share capital may in general meeting

and not otherwise alter the conditions of its memorandum to the

following extent, that is to say, it may -

(a) consolidate and divide all or any part of its share capital

into shares of larger amount than its existing shares;

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

convert that stock into paid-up shares of any denomination;

(c) subdivide its shares or any of them, into shares of smaller

amount than is fixed by the memorandum, so however that in

the subdivision the proportion between the amount paid and the

amount, if any, unpaid on each reduced share be the seem as it

was in the case of the share from which the reduced share is

derived.

(d) cancel shares which, at the date of the passing of the

resolution in that behalf, have not been taken or agreed to be

taken by any person, and diminish the amount of its share

capital by the amount of the shares so cancelled.

(2) Cancellation of shares made in pursuance of this section shall

not be deemed to be a reduction of share capital within the

meaning of this Act.

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

(a) consolidated and divided its share capital into shares of

lager amount than its existing shares; or

(b) converted any shares into stock; or

(c) re-converted stock into shares; or

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

(e) cancelled any shares, otherwise than in connection with a

reduction of share capital under section 105 of this Act,

it shall within one month after so doing give notice of it to the

Commission specifying as the case may be, the shares consolidated,

subdivided, converted, cancelled, or the stock re-converted.

(2) If default is made in complying with this season, the company

and every officer of the company who is in default shall be liable

to a fine of N50 for every day during which the default continues.

102. (1) A company having a share capital whether or not the shares

have been converted into stock may, in general meeting and not

otherwise, increase its share capital by new shares of such amount

as it thinks expedient.

(2) Where a company has increased its shares capital it shall,

within fifteen days after the passing of the resolution authorising

the increase, give to the Commission, notice of the increase and

the Commission shall record the increase.

(3) Where in connection with the increase of shares any approval

is required to be obtained under any enactment other than this Act,

the Commission may on application by a company extend the time

within which to give notice of the increase to the Commission.

(4) The notice to be given under this section shall include any

particulars prescribed with respect to the classes of shares affected

and the condition subject to which the new shares have been or are

to be issued and the notice shall be accompanied by a printed copy

of the resolution authorising the increase.

(5) If default is made in complying with the provisions of this

section, the company in default shall be guilty of an offence and

liable on conviction to a fine of N50 for every day during which

the default continues.

103. Where a company passes a resolution increasing its authorised

share capital, the increase shall not take effect unless -

(a) within six months of giving notice of the increase to the

Commission, not less than twenty five per cent of the share

capital including the increase has been issued; and

(b) the directors have delivered to the Commission a statutory

declaration verifying that fact.

104. If an unlimited company resolves to be registered as a limited

company under this Act, it may -

(a) increase the nominal amount of its share capital by

increasing the nominal amount of each of its shares, but subject

to the condition that no part of the increased capital shall be

capable of being called up except in the event and for the

purposes of the company being would up, or

(b) provide that a specified portion of its uncalled share capital

shall not be capable of being called up except in the event and

for the purposes of the company being wound up.

Reduction of share capital

105. (1) Except as authorised by this Decree, a company having a

share capital shall not reduce its issued share capital.

(2) For the purposes of this and other sections relating to reduction

of share capital, any issued of share capital shall include the share

premium account and any capital redemption reserve account of a

company, and "issued share capital" shall be construed

accordingly.

106. (1) Subject to confirmation by the court, a company having share

capital may, if so authorised by its articles, by special resolution

reduce its share capital in any way.

(2) In particular, and without prejudice to subsection (1) of this

section, the company may-

(a) extinguish or reduce the liability on any of its shares in

respect of share capital not paid up; or

(b) either with or without extinguishing or reducing liability

on any of its shares, cancel any paid-up share capital which is

lost or unrepresented by available assets; or

(c) either with or without extinguishing or reducing liability

on any of its shares, cancel any paid-up share capital which is

in excess of the company's wants,

and the company may, if and so far as is necessary, alter its

memorandum by reducing the amount of its share capital and of its

shares accordingly.

(3) A special resolution under this section shall in this Decree be

referred to as "a resolution for reducing share capital".

107. (1) Where a company has passed a resolution for reducing share

capital, it may apply to the court for an order confirming the

reduction.

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

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

(b) subject to subsection (6) of this section, the payment to a

shareholder of any paid up share capital, and in any other case

if the court so directs, subsection (3), (4) and (5) of this section

shall have effect.

(3) Every creditor of the company who at the date fixed by the

court is entitled to any debt or claim which, if that date were the

commencement of the winding up of the company, would be

admissible in proof against the company shall be entitled to object

to the reduction of capital.

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

for that purpose-

(a) shall ascertain, as far as possible without requiring an

application from any creditor, the names of those creditors and

the nature and amount of the debts or claims;

(b) may publish notices fixing a day or days within which

creditors not entered on the list are to claim to be so entered or

are to be excluded from the right of objecting to the reduction

of capital.

(5) If a creditor entered on the list whose debt or claim is not

discharged or has not been determined does not consent to the

reduction, the court may, if it thinks fit, dispense with the consent

of that creditor, on the company securing payment of his debt or

claim by appropriating (as the court may direct) the following

amount if-

(a) the company admits the full amount of the debt or claim

or, though not admitting it, is willing to provide for it, then the

full amount of the debt or claim;

(b) the company does not admit, and is not willing to provide

for, the full amount of the debt or claim, or if the amount is

contingent or not ascertained, then an amount fixed by the

court after the like enquiry and adjudication as if the company

were being wound up by the court.

(6) If a proposed reduction of share capital involves either the

diminution of any liability in respect of unpaid share capital or the

payment to any shareholder of any paid up share capital, the court

may, if having regard to any special circumstances of the case it

thinks proper to do so, direct that subsections (3) to (5) of this

section shall not apply as regards any class or any classes of

creditors.

108. (1) The court, if satisfied-

(a) with respect to every creditor of the company who under

section 107 of this Decree is entitled to object to the reduction

of capital that either-

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

(ii) his debt or claim has been discharged or has

determined, or has been secured; and

(b) that the share capital does not by this reduction on such

terms and conditions as it thinks fit.

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

(a) if for any special reason it thinks proper to do so, make an

order directing that the company shall, during such period

(commencing on or at any time after the date of the order) as is

specified in the order, add to its name as its last words "and

reduced";

(b) make an order requiring the company to publish (as the

court directs) the reasons for reduction of capital or such other

information in regard to it as the court thinks expedient with a

view to giving proper information to the public and (if the

court thinks fit) the causes which led to the reduction.

109. (1) The Commission on production to it of the order of the court

confirming of a company's share capital, and the delivery to it of a

copy of the order and of minutes of the meeting of the company

(approved by the court) showing, with respect to the company's

share capital as altered by the order-

(a) the amount of the share capital;

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

amount of each share; and

(c) the amount (if any) at the date of the registration deemed to

be paid up on each shares,

shall register the order and minutes.

(2) On the registration of the order and minutes, and not before,

the resolution for reducing share capital as confirmed by the order

so registered shall take effect.

(3) A notice of the registration shall be published in such manner

as the Court may direct.

(4) The Commission shall certify the registration of the order and

minutes; and the certificate-

(a) may be either signed by the Registrar-General or

authenticated by its official seal;

(b) shall be prima facie evidence that all the requirements of

this Decree with respect to the reduction of share capital have

been complied with, and that the company's share capital is as

stated in the minutes.

(5) The minutes when registered shall be deemed to be substituted

for the corresponding part of the company's memorandum, and

valid and alterable as if it had been originally contained in it.

(6) The substitution of such minutes for part of the company's

memorandum shall be deemed an alteration of the memorandum.

110. (1) Where a company's share capital is reduced, a member of the

company (past or present) shall not be liable in respect of any

share to any call or contribution exceeding in amount the

difference (if any) between the amount of the shares as fixed by

the minute and the amount paid on the share or the reduced

amount (if any), which is deemed to have been paid on it, as the

case may be.

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

(a) a creditor, entitled in respect of a debt or claim to object to

the reduction of share capital, by reason of his ignorance of the

proceedings for reduction of share capital, or of their nature

and effect with respect to his claim, is not entered on the list of

creditors; and

(b) after the reduction of capital, the company is unable

(within the meaning of section 409 of this Decree) to pay the

amount of his debt or claim.

(3) Every person who was a member of the company at the date of

the registration of the order for reduction and minutes shall be

liable to contribute for the payment of the debt or claim in

question an amount not exceeding that which he would have been

liable to contribute if the company had commenced to be wound

up on the day before that date.

(4) If the company is wound up, the Court, on application of the

creditor in question and proof of ignorance referred to in

subsection (2) (a), of this section, may (if it thinks fit), settle

accordingly a list of persons so liable to contribute, and make and

enforce calls and orders on the contributories settled on the list, as

if they were ordinary contributories in a winding up.

(5) Nothing in this section shall affect the rights of the

contributories among themselves.

111. If an officer of the company-

(a) wilfully conceals the name of a creditor entitled to object

to the reduction of capital; or

(b) wilfully misrepresents the nature or amount of the debt or

claim of any creditor; or

(c) aids, abets or is privy to any such concealment or

misrepresentation as is mentioned above,

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

N500.

Miscellaneous matters relating to capital

112. (1) Where the net assets of a public company are half or less of

its called up share capital, the directors shall, not later than 30 days

from the earliest day on which that fact is known to a director of

the company, duly convene an extraordinary general meeting of

the company, duly later than 60 days from that day for the purpose

of considering whether any, and if so, what steps should be taken

to deal with the situation.

(2) If there is a failure to convene an extraordinary general

meeting as required by subsection (1) of this section, each of the

directors of the company who-

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

or

(b) after the expiry of the period during which that meeting

should have been convened, knowingly and wilfully authorises

or permits the failure to continue,

shall be liable to a fine of N500.

(3) Nothing in this section shall authorise the consideration, at a

meeting convened in pursuance of subsection (1) of this section, of

any matter which could have been considered at that meeting apart

from this section.

113. Where any shares of a company are issued for the purposes of

raising money to defray the expenses of the construction of any works

or buildings or the provision of any plant which cannot be made

profitable for a long period, the company may pay interest on so

much of that share capital as if for the time being paid up for the

period and subject to the conditions and restrictions mentioned in this

section, and may charge the same to capital as part of the cost of

construction of the work or building or the provision of plant:

Provided that-

(a) no such payment shall be made unless it is authorised by

the articles or by special resolution;

(b) no such payment, whether authorised by the articles or by

special resolution, shall be made without the previous sanction

of the Commission;

(c) before sanctioning any such payment the Commission

may, at the expense of the company, appoint a person to

inquire and report to it as to the circumstances of the case, and

may, before making the appointment, require the company to

give security for the payment of the costs of the inquiry;

(d) the payment shall be made only for such period as may be

determined by the Commission which shall in no case extend

beyond the close of six months after the half year during which

the works or buildings have been actually completed or the

plant provided;

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

(f) the payment of the interest shall not operate as a reduction

of the amount paid up on the shares in respect of which it is

paid.

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Part VI

Shares

Nature of shares

114. Subjects to the provisions of this Decree, the rights and liabilities

attaching to the shares of a company shall-

(a) be dependent on the terms of issue and of the company's

articles; and

(b) notwithstanding anything to the contrary in the terms or

the articles, include the right to attend any general meeting of

the company and vote at such a meeting.

115. The shares or other interests of a member in a company shall be

property transferable in the manner provided in articles of association

of the company.

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

(a) any shares issued by a company after the date of

commencement of this Decree, shall carry the right on a poll at

a general meeting of the company to one vote in respect of

each share and no company may by its articles or otherwise

authorise the issue of shares which carry more than one vote in

respect of each share or which do not carry any right to vote;

and

(b) where, at the commencement of this Decree, any share of a

company carries more than one vote or does not carry any vote

at a general meeting of the company, such a share shall be

deemed, as from the appointed day, to carry one vote only.

(2) If a company contravenes any of the provisions of this section,

the company and any officer in default shall be liable to a daily

default fine of N50 and any resolution passed in contravention of

this section shall be void.

(3) Nothing in this section shall affect any right attached to a

preference share under section 143 of this Decree.

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

(a) any shares issued by a company after the date of

commencement of this Decree, shall carry the right on a poll at

a general meeting of the company to one vote in respect of

each share and no company may by its articles or otherwise

authorise the issue of shares which carry more than one vote in

respect of each share or which do not carry any right to vote;

and

(b) where, at the commencement of this Decree, any share of a

company carries more than one vote or does not carry any vote

at a general meeting of the company, such a share shall be

deemed, as from the appointed day, to carry one vote only.

(2) If a company contravenes any of the provisions of this section,

the company and any officer in default shall be liable to a daily

default fine of N50 and any resolution passed in contravention of

this section shall be void.

(3) Nothing in this section shall affect any right attached to a

preference share under section 143 of this Decree.

Issue of shares

117. Subject to any limitation in the articles of a company with respect

to the number of shares which may be issued, and any pre-emptive

rights prescribed in the articles in relation to the shares, a company

shall have the power, at such times and for such consideration as it

shall determine, to issue shares up to the total number authorised in

the memorandum.

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

classes of shares.

(2) Shares shall not be treated as being of the same class unless

they rank equally for all purposes.

119. Without prejudice to any special rights previously conferred on the

holders of any existing shares or class shares, any share in a company

may be issued with such preferred, deferred or other special rights or

such restrictions, whether with regard to dividend, return of capital or

otherwise, as the company may, from time to time, determine by

ordinary resolution.

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

(2) Where a company issues at a premium, whether for cash or

otherwise, a sum equal to the aggregate amount or value of the

premium on those shares shall be transferred to an account, to be

called "the share premium account", and the provisions of this

Decree relating to the reduction of the share capital of a company

shall, except as provided in this section, apply as if the share

premium account were paid up share capital of the company.

(3) Notwithstanding, anything to the contrary in subsection (2) of

this section, the share premium account may be applied by the

company in paying up unissued shares of the company to be

issued to members of the company as fully paid bonus shares, in

writing off-

(a) the preliminary expenses of the company; or

(b) the expenses of, or the commission paid or discount

allowed on, any issue of shares of the company; or in providing

for the premium payable on redemption of any redeemable

share of the company.

(4) Where a company has before the commencement of this Decree

issued any shares at a premium, this section shall apply as if the

shares had been issued after the commencement of this Decree:

Provided that any part of the premium which has been so applied that it

does not at the commencement of this Decree form an identifiable part of

the company's reserves within the meaning of Schedule 2 to this Decree

shall be disregarded in determining the sum to be included in the share

premium account.

121. (1) Subject to the provisions of this section, it shall be lawful for

a company to issue at a discount shares in the company of a class

of shares already issued:

Provided that-

(a) the issue of the shares at a discount is authorised by

resolution passed in general meeting of the company, and

thereafter is sanctioned by the court;

(b) the resolution specifies the maximum rate of discount at

which the shares are to be issued; and

(c) the shares to be issued at a discount are issued within the

month after the date on which the issue is sanctioned by the

court or within such extended time as the court may allow.

(2) Where a company has passed a resolution authorising the issue

of shares at a discount, it may apply to the court for an order

sanctioning the issue, and on any such application the court,

having regard to all the circumstances of the case, amy if it thinks

fit so to do on such terms and conditions as it may impose, may

make an order sanctioning the issue.

(3) Every prospectus relating to the issue of the shares, shall

contain particulars of the discount allowed on the issue of the

shares or of so much of that discount as has not been written off at

the date of the issue of the prospectus.

(4) If default is made in complying with subsection (3) of this

section, the company and every officer of the company who is in

default shall be liable to a fine of N50 for everyday during which

the default continues.

122. Subject to the provisions of section 158 of this Decree, a company

limited by shares may, if so authorised by its articles, issue preference

shares which shall, or at the option of the company be liable, to be

redeemed.

123. (1) Where a company has purported to issue or allot shares and

the creation, issue or allotment of those shares was invalid by

reason of any provision of this Decree or any other enactment or

of the articles of the company or otherwise, or the terms of issue or

allotment were inconsistent with or unauthorised by any such

provision, the court may upon application made by the company

or by a holder or mortgagee of those shares or by a creditor of the

company, and upon being satisfied that in all the circumstances it

is just and equitable to do so, validate the issue or allotment of

those shares or confirm the terms of the issue and allotment, as the

case may be.

(2) In every case where the court validates an issue or allotment of

shares or confirms the terms of an issue or allotment in accordance

with subsection (1) of this section, it shall make, upon payment of

the prescribed fees and order which shall be proof of the validation

or confirmation and upon the issue of the order, those shares shall

be deemed to have been issued or allotted upon the relevant terms

of issue or allotment.

Allotment of Shares

124. Subject to the provisions of the Securities and Exchange

Commission Decree 1988, the power to allot shares shall be vested in

the company which may delegate it to the directors subject to any

conditions or directions that may be imposed in the articles or from

time to time by the company in general meeting.

125. Without prejudice to the provisions of section 566 to 574 of this

Decree, the following provisions shall apply in respect of an

application for an allotment of issued shares of a company-

(a) in the case of a private company or a public company

where the issue of shares is not public, there shall be submitted

to the company a written application signed by the person

wishing to purchase share and indicating the number of shares

required;

(b) in the case of a public company, subject to any conditions

imposed by the Securities and Exchange Commission where

the issue of shares is public, there shall be returned to the

company a form of application as prescribed in the company's

articles, duly completed and signed by the person wishing to

purchase shares;

(c) upon the receipt of an application, a company shall, where

it wholly or partially accepts the application, make an allotment

to the applicant and within 42 days after the allotment notify

the applicant of the fact of allotment and the number of shares

allotted to him;

(d) an applicant under this section shall have the right at any

time before allotment, to withdraw his application by written

notice to the company.

126. An allotment of shares made and notified to an applicant in

accordance with section 125 of this Decree shall be an acceptance by

the company of the offer by the applicant to purchase its shares and

the contract take effect on the date on which the allotment is made by

the company.

127. Subject to the provisions of sections 135 to 138 of this Decree, a

company may in its articles, make provision with respect to payments

on allotment of its shares.

128. (1) An allotment made by a company before the holding of the

statutory meeting to an applicant in contravention of the

provisions of this Decree, shall be voidable at the instance of the

applicant within one month after the holding of the statutory

meeting of the company and not later, or where the allotment is

made after the holding of the statutory meeting, within one month

after the date of the allotment, and not later, and the allotment

shall be so voidable notwithstanding that the company is in the

course of being wound up.

(2) If any director of a company knowingly contravenes or permits

or authorises the contravention of any of the provisions of this

Decree with respect to allotment, he shall be liable to compensate

the company and the allottee respectively for any loss, damages or

costs which the company or the allottee may have sustained or

incurred thereby:

Provided that proceedings to recover any such loss, damages, or costs

shall not be commenced after the expiration of two years from the date of

the allotment.

129. (1) Whenever a company limited by shares makes any allotment

of its shares, the company shall within one months thereafter

deliver to the Commission for registration-

(a) a return of the allotments stating the number and nominal

amount of the shares comprised in the allotment, the names,

addresses and description of the allottees, and the amount, if

any, paid or due and payable on each share; and

(b) in the case of shares allotted as fully or partly paid up

otherwise than in cash-

(i) a contract in writing constituting the title of the allottee

to the allotment together with any contract of sale, or for

services or other consideration in respect of which that

allotment was made, such contracts being duly stamped;

(ii) a return stating the number and nominal amount of

shares so allotted, the extent to which they are to be treated

as paid up, and the consideration for which they have been

allotted; and

(iii) particulars of the valuation of the consideration in

accordance with section 137 of this Decree, if any.

(2) If default is made in complying with this section, every officer

of the company who is in default shall be liable to a fine of N50

for every day during which the default continues:

Provided that, in case of default in delivering to the Commission within

one month after the allotment any document required to be delivered by

this section, the company or any officer liable for the default, may apply

to the court for relief, and the court, if satisfied that the omission to

deliver the document was accidental or due to inadvertence or that is just

and equitable to grant relief, may make an order extending the time for

the delivery of the document for such period as the court may think

proper.

Commission and discounts

130. (1) Except as provided in section 131 of this Decree, no

company shall apply any of its shares or capital money either

directly or indirectly in payment of any commission, discount or

allowance to any person in consideration of his subscribing or

agreeing to subscribe, whether absolutely or conditionally, for any

shares in the company, or procuring or agreeing to procure

subscriptions, whether absolute or conditional, for any shares in

the company, whether the shares or capital money are so applied

by being added to the purchase money of any property acquired by

the company or to the contract price of any work to be executed

for the company, or any such money is paid out of the nominal

purchase money or contract price, or otherwise.

(2) Nothing in this section shall affect the payment of any

brokerage as is usual for a company to pay.

(3) A vendor to, promoter of, or other person who receives

payment in money or shares from, a company shall have and shall

be deemed always to have had power to apply any part of the

money or shares so received in payment of any commission, the

payment of which, if made directly by the company, would have

been legal under this section.

131. (1) It shall be lawful for a company to pay person in

consideration of his subscribing or agreeing to subscribe, whether

absolutely or conditionally, for any shares in the company or

procuring or agreeing to procure subscription, whether absolute or

conditional, for any shares in the company if-

(a) the payment of the commission is authorised by the

articles; and

(b) the commission paid or agreed to be paid does not exceed

ten per cent of the price at which the shares are issued or the

amount or rate authorised by the articles, whichever is the

lesser; and

(c) the amount or rate per cent of the commission paid or

agreed to be paid is-

(i) in the case of shares offered to the public for

subscription, disclosed in the prospectus; or

(ii) in the case of shares not offered to the public for

subscription, disclosed in the statement in lieu of

prospectus, or in a statement in the prescribed form signed

in like manner as a statement in lieu of prospectus, and

delivered before the payment of the commission to the

Commission for registration, and where a circular or notice,

not being a prospectus inviting subscription for the shares is

issued, also disclosed in that circular or notice; and

(d) the number of shares which persons have agreed for a

commission to subscribe absolutely is disclosed in the manner

specified in this section.

(2) If default is made in delivering to the Commission any

document required to be delivered to the Commission under this

section, the company and every officer in default shall be liable to

a fine of N250.

132. (1) Where a company has paid any sum by way of commission

in respect of any shares in the company, the amount so paid or so

much of it as has not been written off, shall be stated in every

balance sheet of the company until the whole amount has been

written off.

(2) If default is made in complying with this section, the company

and every officer of the company in default is guilty of an offence

and liable to a fine or N50 for every day during which the default

continues.

Call on and payment for shares

133. (1) Subject to the terms of the issue of the shares and of the

articles the directors may from time to time make calls upon the

members in respect of any moneys unpaid on their shares (whether

on account of the nominal value of the shares or by way of

premium) and not by the conditions of allotment of the shares

made payable at fixed times:

Provided that no call shall exceed one fourth of the nominal value of the

share or be payable at less than one month from the date fixed for the

payment of the last preceding call, and each member shall (subject to

receiving at least 14 days notice specifying the time or times and place of

payment) pay to the company at the time or times and place so specified

the amount called on his shares, so however that a call may be revoked or

postponed as the directors may determine.

(2) A call shall be deemed to have been made at the time when the

resolution of the directors authorising the call was passed, and

may be required to be paid by instalments.

(3) The joint holders of a share shall be jointly and severally liable

to pay all calls in respect of the share.

(4) If a sum called in respect of a share is not paid before or on the

day appointed for payment, the person from whom the sum is due

shall pay interest on the sum from the day appointed for payment

to the time of actual payment at such rate not exceeding the

current bank rate per annum, as the directors may determine, but

the directors shall be at liberty to waive payment of such interest

wholly or in part.

(5) Any sum which the terms of issue of a share becomes payable

on allotment or at any fixed date, whether on account of the

nominal value of the shares or by way of premium shall, for the

purposes of these provisions, be deemed to be a call duly made

and payable on the date on which by the terms of issue the same

become payable, and in case of non-payment, all the relevant

provisions of this Decree as to payment of interest and expenses,

forfeiture or otherwise shall apply as if such sum had become

payable by virtue of a call duly made and notified.

(6) The directors may, if they think fit, receive from any member

willing to advance the same, all or any part of the moneys uncalled

and unpaid upon any shares held by him; and upon all or any of

the moneys so advanced may (until the same would but for such

advance, become payable) pay interest at such rate not exceeding

(unless the company in general meeting shall otherwise direct) the

current bank rate per annum as may be agreed upon between the

directors and the member paying such sum in advance.

134. A company limited by shares may by special resolution determine

that any portion of its share capital which has not been already called

up shall not be capable of being called up except in the event and for

the purposes of the company being wound up; and thereupon that

portion of its share capital shall not be capable of being called up,

except in the event and for the purposes specified in this section.

135. Subject to the provisions of sections 136 and 137 of this Decree,

the shares of a company and any premium on them shall be paid up in

cash, or where the articles so permit, by a valuable consideration

other than cash or partly in cash and partly by a valuable

consideration other than cash.

136. Shares shall not be deemed to have been paid for in cash except to

the extent that the company shall actually have received cash for them

at the time of, or subsequently to, the agreement to issue the shares,

and where shares are issued to a person who has sold or agreed to sell

property or rendered or agreed to render services to the company or to

persons nominated by him, the amount of any payment made for the

property or services shall be deducted from the amount of any cash

payment made for the shares and only the balance (if any) shall be

treated as having been paid in cash for such shares notwithstanding

any exchange of cheques or other securities for money.

137. (1) Where a company agrees to accept payment for its shares

otherwise than wholly in cash, it shall appoint an independent

valuer who shall determine the true value of the consideration

other than cash and prepare and submit to the company a report on

the value of the consideration.

(2) The valuer shall be entitled to require from the officers of the

company such information and explanation as he thinks necessary

to enable him carry out the valuation or make the report under

subsection (3) of this section.

(3) The company shall, not more than three days after the receipt

by it of the values report, send a copy of it to the proposed

purchaser of shares, and indicate to the proposed purchaser

whether or not it intends to accept the consideration as payment or

part-payment for its shares.

(4) A company shall not accept as payment or part-payment for its

shares consideration other than cash unless the case value of the

consideration as determined by the valuer is worth at least as much

as may be credited as paid up in respect of the shares allowed to

the proposed purchaser.

(5) A valuer who, in his report or otherwise, knowingly or

recklessly makes a statement which is misleading, false or

deceptive in a material particular shall be guilty of an offence and

liable to imprisonment for 12 months or to a fine of N1,000 or

both such imprisonment and fine.

(6) For the purposes of this section "valuer" means an auditor, a

valuer, a surveyor or an account not being a person in the

employment of the company nor an agent or associate of the

company or any of its directors or officers.

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

may-

(a) make arrangements on the issue of shares for a difference

between the shareholders in the amounts and times of payment

of calls on their shares;

(b) accept from any member the whole or a part of the amount

remaining unpaid on any shares held by him, although no part

of that amount has been called up;

(c) pay dividend in proportion to the amount paid up on each

share where a larger amount is paid up on some shares than on

others.

Lien and forfeiture of shares

139. (1) A company shall have a first and paramount lien on every

share, (not being a fully paid share for all moneys (whether

currently payable or not) called or payable at a fixed time in

respect of that share, and the company shall also have a first and

paramount lien on all shares (other than fully paid shares) standing

registered in the name of a single person or all moneys presently

payable by him or his estate to the company; but the directors may

at any time declare any share to be wholly or in part exempt from

the provisions of this subsection.

(2) A company's lien, if any, on a share shall extend to all

dividends payable on it.

(3) A company may sell, in such manner as the directors thinks fit

any shares on which the company has a lien, but no sale shall be

made unless a sum in respect of which the lien exists is currently

payable, nor until the expiration of 14 days after a notice in

writing, stating and demanding payment of such part of the

amount in respect of which the lien exists as is currently payable,

has been given to the registered holder for the time being of the

shares, or the person entitled to them by reason of his death or

bankruptcy.

(4) For the purpose of giving effect to any such sale the directors

may authorise some person to transfer the shares sold to the

purchaser of the shares and the purchaser shall be registered as the

holder of the shares comprised in any such transfer, and he shall

not be bound to see to the application of the purchase money, nor

shall his title to the shares be affected by any irregularity or

invalidity in the proceedings in reference to the sale.

140. (1) If a member fails to pay any call or instalment of a call on the

day appointed for payment, the directors may, at any time

thereafter during such time as any part of the call or instalment

remains unpaid, serve a notice on him requiring payment of so

much of the call or instalment as is unpaid, together with any

interest which may have accrued. (2) The notice shall name a

further day (not earlier than the expiration of 14 days from the date

of service of the notice) on or before which the payment required

by the notice is to be made, and it shall state that in the event of

non-payment at or before the time appointed, the shares in respect

of which the call was made shall be liable to be forfeited.

(3) If the requirements of any such notice as is mentioned in

subsections (1) and (2) of this section are not complied with, any

share in respect of which notice has been given may at any time

thereafter, before the payment required by the notice has been

made, by forfeited by a resolution of the directors to that effect.

(4) A forfeited share may be sold or otherwise disposed of on such

terms and in such manner, as the directors think fit, and at any

time before a sale or disposition, the forfeiture may be cancelled

on such terms as the directors think fit.

(5) A person whose shares have been forfeited shall cease to be a

member in respect of the forfeited shares, but shall, but shall,

notwithstanding, remain liable to pay to the company all moneys

which, at the date of forfeiture, were payable by him to the

company in respect of the shares, but his liability shall cease if and

when the company receives payment in full of all such moneys in

respect of the shares.

(6) A statutory declaration that the declarant is a director or the

secretary of the company, and that a share in the company has

been duly forfeited on a date stated in the declarations, shall be

prima facie evidence of the facts stated in it as against all persons

claiming to be entitled to the shares.

(7) The company may receive the consideration, if any, given for

the share on any sale or disposition of it and may executed a

transfer of the share in favour of the person to whom the share is

sold or disposed of, and he shall thereupon be registered as the

holder of the share, and shall not be bound to see to the application

of the purchase money, if any, nor shall his title to the share be

affected by any irregularity or invalidity in the proceedings in

reference to the forfeiture, sale or disposal of the share.

(8) The provisions of this section as to forfeiture shall apply in the

case of non-payment of any sum which, by the terms of issue of a

share, becomes payable at a fixed time, whether on account of the

nominal value of the share or by way of premium, as if the same

had been payable by virtue of a call duly made and notified.

Classes of shares

141. (1) If at any time the share capital of a company is divided

into different classes of shares under section 118 of this Decree,

the rights attached to any class (unless otherwise provided by the

terms of issue of the shares that class) may, whether or not the

company is being wound up, be varied with the consent, in

writing, of the holders of three-quarters of the issued shares of that

class, or with the sanction of a special resolution passed at a

separate general meeting of the holders of the shares of the class.

(2) To every such separate general meeting as is mentioned in

subsection (1) of this section, the provisions of this Decree relating

to general meetings shall apply, so however that the necessary

quorum shall be two persons at least holding or representing by

proxy one-third of the issued shares of the class and that any

holder of shares of the class present in person or by proxy may

demand a poll.

(3) If on any such application the court, after hearing the applicant

and any other persons applying to it to be heard and appearing to

be interested in the application, is satisfied that the variation would

unfairly prejudice the shareholders of the class represented by the

applicant, the court, having regard to all the circumstances of the

case, may disallow the variation, and shall, if not satisfied, confirm

the variation.

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

final.

(5) The company shall, within 15 days after the making of an

order by the court on an application to it under this section,

forward a copy of the order to the Commission and if default is

made in complying with the provisions of this subsection, the

company and every officer of the company who is in default shall

be liable to a fine of N50 for every during which the default

continues.

(6) In this section, "variation" includes abrogation and cognate

expressions shall be constructed accordingly.

143. (1) Notwithstanding the provisions of section 116 of this Decree,

the articles may provide that preference shares issued after the

commencement of this Decree shall carry the rights to attend

general meetings and on a poll at the meetings to more than one

vote per share in the following circumstances, but not otherwise,

that is to say-

(a) upon any resolution during such period as the preferential

dividend or any part of it remains in arrear and unpaid, such

starting from a date not more than 12 months or such lesser

period as the articles may provide, after the due date of the

dividend; or

(b) upon any resolution which varies the rights attached to

such shares; or

(c) upon any resolution to remove an auditor of the company

or to appoint another person in place of such auditor; or

(d) upon any resolution for the winding up of the company or

during the winding up of the company.

(2) Notwithstanding the provisions of section 116 of this Decree,

any special resolution of a company increasing the number of

shares of any class may validly resolve that any existing class of

preference shares shall carry the right to such votes additional to

one votes additional to one vote per share as shall be necessary in

order to preserve the existing ratio which the votes exercisable by

the holders of such preference shares at a general meeting of the

company bear to the total votes exercisable at the meeting.

(3) For the purposes of subsection (2) of this section, a dividend

shall be deemed to be due on the date appointed in the articles for

the payment of the dividend for any year or other period, or if no

such date is appointed, upon the day immediately following the

expiration of the year or other period, and whether or not such

dividend shall have been earned or declared.

144. In construing the provisions of a company's articles in respect of

the rights attached to shares, the following rules of construction shall

be observed-

(a) unless the contrary intention appears, no dividend shall be

payable on any shares unless the company shall resolve to

declare such dividend;

(b) unless the contrary intention appears, a fixed preferential

dividend payable on any class on any class of shares is

cumulative, that is to say, no dividend shall be payable on any

shares ranking subsequent to them until all the arrears of the

fixed dividend have paid;

(c) unless the contrary intention appears, in a winding up

arrears of any cumulative preferential dividend, whether earned

or declared or not are payable up to the date of actual payment

in the winding up;

(d) if any class of shares is expressed to have a right to a

preferential dividend, then, unless the contrary intention

appears, such class has no further right to participate in

dividends;

(e) if any class of shares is expressed to have preferential

rights to payment out of the assets of the company in the event

of winding up, then unless the contrary intention appears, such

class has no further right to participate in the distribution of

assets in the winding up;

(f) in determining the rights of the various classes to share in

the distribution of the company's property on a winding up, no

regard shall be paid, unless the contrary intention appears, to

whether or not such property represents accumulated profits or

surplus which would have been available for dividend while

the company remained a going concern;

(g) subject to this section, all shares rank equally in all

respects unless the contrary intention appears in the company's

articles.

Numbering of shares

145. Each share in a company having a share capital shall be

distinguished by its appropriate number:

Provided that, if any time all the issued shares in a company, or all of

its issued shares of a particular class, are fully paid up and rank pari

passu for all purposes, none of those shares need thereafter have a

distinguishing number so long as it remains fully paid up and ranks

pari passu for all purposes with all shares of the same claim for the

time being issued and fully paid up.

Shares certificates

146. (1) Every company shall, within two months after the allotment

of any of its shares and within 3 moths after the date on which a

transfer of any such shares is lodged with the company, complete

and have ready for delivery the certificates of all shares allotted or

transferred, unless the conditions of issue of the shares otherwise

provide.

(2) Every person whose name is entered as a member in the

register of members shall be entitled without payment to receive

within 3 months of allotment or lodgement of transfer or within

such other period as the conditions of issue shall provide one

certificate for all his shares or several certificates each for one or

more of his shares upon payment of a fee as the directors shall,

from time to time, determine.

(3) Every certificate issued by a company shall be under the

company's seal and shall specify the shares to which it relates and

the amount paid up on them:

Provided that in respect of shares held jointly by several persons, the

company shall not be bound to issue more than one certificate, and

delivery of a certificate for shares to one of several joint holders shall be

sufficient delivery to all such holders.

(4) If a share certificate is defaced, lost or destroyed, it may be

replaced on such terms (if any), as to evidence and indemnity and

the payment of out of pocket expenses of the company of

investigating evidence as the directors think fit.

(5) If any company on which a notice has been served requiring it

to make good any default in complying with the provisions of

subsection (1) of this section fails to make good the default within

10 days after the service of the notice, the court may, on the

application of the person entitled to have the certificate delivered

to him, make an order directing the company and any officer of

the company to make good the default with such time as amy be

specified in the order, and any such order may provide that all

costs of and incidental to the application shall be borne by the

company or by any officer of the company responsible for the

default.

(6) If default is made in complying with this section, the company

and every officer of the company who is default shall be liable to a

fine of N50 for every day during which the default continues.

(7) In this section, "transfer" means a transfer duly stamped and

otherwise valid, but does not include a transfer which under this

Decree, a company is for any reason entitled to refuse to and does

not, register.

147. (1) A certificate, under the common seal of the company,

specifying any shares held by any member, shall be prima facie

evidence of the title of the member to the shares.

(2) If any person changes his position to his detriment in good

faith on the continued accuracy of the statements made in a

certificate, the company shall be estopped from denying the

continued accuracy of such statements and shall compensate the

person for any loss suffered by him in reliance on them and which

he would not have suffered had the statements been or continued

to be accurate.

(3) Nothing contained in subsection (2) of this section shall

derogate from any right the company may have to be indemnified

by any other person.

148. The production to a company of any document which is by law

sufficient evidence of probate of the will, or letters of administration

of the estate, or confirmation as executor, of a deceased person having

been granted to some person, shall be accepted by the company as

sufficient evidence of the grant, notwithstanding anything in its

articles to the contrary.

149. (1) As from the date of commencement of this Decree, no

company shall have the power to issue warrants.

(2) Every company shall within a period of 30 days from the date

of commencement of this Decree, cancel any share warrants

previously issued by it which are still valid on that date and enter

in its register of members the names and relevant particulars of the

bearers of the share warrants.

(3) A person whose name is entered in a company's register of

members by virtue of subsection (2) of this section, shall be

deemed to be a member of the company with effect from the date

on which the share warrant thereby cancelled, was issued.

Conversion of shares into stock

150. (1) The provisions of this section shall apply with respect to the

conversion of all or any of the shares of a company into stock and

the reconversion of such stock into shares under the provisions of

section 100 of this Decree.

(2) The conversion of any paid-up shares into any stock into paid-

up shares shall be by ordinary of the company at a general

meeting.

(3) The holders of stock may transfer the same, or any part of it in

the same manner, and subject to the same conditions, as and

subject to which the shares from which the stock arose might

previous to the conversion have been transferred, or as near to it as

circumstances admit; and the directors may, from time to time, fix

the minimum amount of stock transferable, so however that such

minimum shall not exceed the nominal amount of the shares from

which the stock arose.

(4) The holders of stock shall, according to the amount of stock

held by them, have the same rights, privileges and advantages as

regards dividends, voting at meeting of the company and other

matters as if they held the shares from which the stock arose, but

no such privilege or advantage (except participation in the

dividends and profit of the company and in the assets on winding

up) shall be conferred by an amount of stock which would not, if

existing in shares, have conferred that privilege or advantage.

(5) Such of the articles of the company as are applicable to paid-

up shares shall apply to stock, and the words "shares" and

"shareholders" in those articles shall include "stock" and

"stockholder".

Transfer and transmission

151. (1) The transfer of a company's share shall be by instrument of

transfer and except as expressly provided in the articles, transfer of

shares shall be without restrictions.

(2) Notwithstanding anything in the articles of a company, it shall

not be lawful for the company to register a transfer of shares in the

company, unless a proper instrument of transfer has been delivered

to the company:

Provided that nothing in this section shall prejudice any power of the

company to register as shareholder, any person to whom the right to any

shares in the company has been transmitted by operation of law.

(3) The instrument of transfer of any share shall be executed by or

on behalf of the transferor and transferee, and the transferor shall

be deemed to remain a holder of the share until the name of the

transferee is entered in the register of members in respect of the

share.

(4) Subject to such of the restrictions of a company's articles as

may be applicable, any member may transfer all or any of his

shares by instrument in writing in any usual or common form or

any other form which the directors may approve.

152. (1) On the application of the transferor of any share or interest in

a company, the company shall enter in its register of members, the

name of the transferee in the same conditions as if the application

for the entry were made by the transferee.

(2) Until the name of the transferee is entered in the register of

members in respect of the transferred shares, the transferor shall,

so far as concerns the company, be deemed to remain the holder of

the shares.

(3) The company may refuse to register the transfer of a share (not

being a fully paid share) to a person of whom they do not approve,

and may also refused to register the transfer of a share on which

the company has a lien.

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

transfer unless-

(a) a fee as the company may, from time to time, determine is

paid to the company in respect of the instrument; and

(b) the instrument of transfer is accompanied by the certificate

of the shares to which it relates and such other evidence as the

directors may reasonably require to show the right of the

transferor to make the transfer; and

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

shares.

153. (1) If a company refuses to register a transfer of any shares it

shall, within two months after the date on which the transfer was

lodged with it, send notice of the refusal to the transferee.

(2) If default is made in complying with this section, the company

and every officer of the company who is in default shall be liable

to a fine of N200.

154. A transfer of the share or other interest of a deceased member of a

company made by his personal representative shall, although the

personal representative is not himself a member of the company, be as

valid as if he had been such a member at the time of the execution of

the instrument of transfer.

155. (1) In case of the death of a member, the survivor or survivors

where the deceased was a joint holder, or the legal personal

representative of the deceased where he was a sole holder, shall be

the only persons recognised by the company as having any title to

his interest in the shares; but nothing in this section shall release

the estate of a deceased joint holder from any liability in respect of

any share which had been jointly held by him with other persons.

(2) Any person becoming entitled to a share in consequence of the

death or bankruptcy of a member may, upon such evidence being

produced as may, from time to time, properly be required by the

directors and subject as hereafter provided in this section, elect

either to be registered himself as holder of the share, or to have

some person nominated by him registered as the transferee of the

share; but the company shall, in either case, have the same right to

decline or suspend registration as they would have had in the case

of a transfer of the share by that member before his death or

bankruptcy, as the case may be.

(3) If the person so becoming entitled elects to be registered

himself, he shall deliver or send to the company a notice in writing

signed by him stating that he so elects and if he elects to have

another person registered, he shall testify his election by executing

to that person a transfer of the share.

(4) All the limitations, restrictions and provisions of this Decree

and the company's articles relating to the rights to transfer and the

registration of transfers of share, shall be applicable to any such

notice or transfer as mentioned in subsection (3) of this section as

if the death or bankruptcy of the member had not occurred and the

notice or transfer were a transfer signed by that member.

(5) A person becoming entitled to a share by reason of the death or

bankruptcy of the holder, shall be entitled to the same dividends

and other advantages to which he would be entitled if he were the

registered holder of the share, except that he shall not, unless the

articles otherwise provide, before being registered as a member in

respect of the share, be entitled in respect of it to exercise any right

conferred by membership in relation to meetings of the company:

Provided that the directors may at any time give notice requiring any

such person to elect either to be registered himself or to transfer the

share, and if the notice is not complied with within 90 days the directors

may thereafter withhold payment of all dividends, bonuses or other

moneys payable in respect of the share until the requirements of the

notice have been complied with.

156. (1) Any person claiming to be interested in any shares or the

dividends or interest on them may protect his interest by serving

on the company concerned a notice and affidavit of interest.

(2) Notwithstanding the provisions of section 86 of this Decree,

the company shall enter on the register of members, the fact that

such notice has been served and shall not register any transfer or

make any payment or return in respect of the shares contrary to the

terms of the notice until the expiration of 42 days notice to the

claimant of the proposed transfer or payment.

(3) In the event of any default by the company in complying with

this section, the company shall compensate any person, injured by

the default.

157. (1) When the holder of any shares of a company wishes to any

person only a part of the shares represented by one or more

certificates, the instrument of transfer together with the relevant

certificates shall be delivered to the company with a request that

the instrument of transfer be recognised and registered.

(2) A company to which a request is made under subsection (1) of

this section, may recognise the instrument of transfer by endorsing

on it the words "certificate lodged" or words to the like effect.

(3) The recognition by a company of any instrument of transfer of

shares in the company shall be taken as a representation by the

company to an person acting on the faith of the recognition that

there have been produced to the company such documents as on

the face of them show a prime facie title to the shares in the

transferor named in the instrument of transfer, but not as a

representation that the transferor has any title to the shares.

(4) Where any person acts on the faith of a false recognition by a

company made negligently, the company shall be under the same

liability to that person as if the recognition has been made

fraudulently.

(5) For the purposes of this section-

(a) an instrument of transfer shall be deemed to be recognised

if it bears the words "certificate lodged" or words to the like

effect;

(b) the recognition of an instrument of transfer shall deemed to

be made by a company if-

(i) the person issuing the instrument is a person authorised

to recognise transfers of shares on the company's behalf,

and

(ii) the recognition is signed by a person authorised to

recognise transfers of shares on the company's behalf or by

any officer or servant either of the company or of a body

corporate so authorised;

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

if-

(i) it purports to be authenticated by his signature or initials

(whether handwritten or not); and

(ii) it is not shown that the signature or initials was or were

placed there by any person other than him or a person

authorised to use the signature or initials for the purpose of

transfers on the company's behalf.

Transaction by company in respect of its own shares

158. (1) The provisions of this section shall apply with respect to the

redemption by a company of any redeemable preference shares

issued by it under section 122 of this Act.

(2) The shares shall not be redeemed unless they are fully paid,

and redemption shall be made only out of -

(a) profits of the company which would otherwise be available

for dividend; or

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

purposes of the redemption.

(3) Before the shares are redeemed, the premium, if any, payable

on redemption, shall be provided for out of the profits of the

company or out of the company's share premium account.

(4) Where shares are redeemed otherwise than out of the proceeds

of a fresh issue, there shall, out of profits which would otherwise

have been available for dividend, be transferred to a reserve fund,

to be called the capital redemption reserve fund a sum equal to the

nominal amount of the shares redeemed, and the provisions of this

Act relating to the reduction of the share capital of a company

shall, except as provided in this section, apply as if the capital

redemption reserve fund were paid up share capital of the

company.

(5) Subject to the provisions of this section, the redemption of

preference shares thereunder may be affected on such terms and in

such manner as are provided by the articles of the company.

(6) The redemption of preference shares under this section by a

company shall not be taken as reducing the amount of the

company's authorised share capital.

(7) Where, in pursuance of this section a company has redeemed

or is about to redeem any preference shares, it shall have power to

issue shares up to the nominal amount of the shares redeemed or to

be redeemed as if those shares had never been issued, and

accordingly, the share capital of the company shall not, for the

purposes of any enactments relating to stamp duty, be deemed to

be increased by the issue of shares in pursuance of this subsection:

Provided that, where new shares are issued before the redemption of the

old shares, the new shares shall not, so far as relates to stamp duty, be

deemed to have been issued in pursuance of this subsection, unless the

old shares are redeemed within one month after the issue of the new

shares.

(8) The capital redemption reserve fund may, notwithstanding

anything in this section, be applied by the company in paying up

unissued shares of the company to be issued to members of the

company as fully paid bonus shares.

159. (1) In this section, financial assistance includes a gift, guarantee,

security or indemnity, loan, any form of credit and any financial

assistance given by a company, the net assets of which are thereby

reduced to a material extent or which has no net assets.

(2) Subject to the provisions of this section -

(a) where a person is acquiring or is proposing to acquire

shares in a company, it shall not be lawful for the company or

any of its subsidiaries to give financial assistance directly or

indirectly for the purpose of that acquisition before or at the

same time as the acquisition takes place; and

(b) where a person has acquired shares in a company and any

liability has been incurred (by that or any other person), for the

purpose of this acquisition, it shall not be lawful for the

company or any of its subsidiaries to give financial assistance

directly or indirectly for the purpose of reducing or discharging

the liability so incurred.

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

prohibit -

(a) the lending of money by the company in the ordinary

course of its business, where the lending of money is part of

the ordinary business of a company;

(b) the provision by a company, in accordance with any

scheme for the time being in force, of money for the purchase

of, or subscription for, fully paid shares in the company or its

holding company, being a purchase or subscription by trustees

of or for shares to be held by or for the benefit of employees of

the company, including any director holding a salaried

employment of office in the company;

(c) the making by a company of loans to persons, other than

directors, bona fide in the employment of the company with a

view to enabling those persons to purchase or subscribe for

fully paid shares in the company or its holding company, to be

held by themselves by way of beneficial ownership;

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

(4) If a company acts in contravention of this section, the

company and every officer of the company who is in default shall

be guilty of an offence and liable on conviction to a fine not

exceeding N500.

160. (1) Subject to the provisions of subsection (2) of this section and

its articles, a company may not purchase or otherwise acquire

shares issued by it.

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

(a) settling or compromising a debt or claim asserted by or

against the company; or

(b) eliminating fractional shares; or

(c) fulfilling the terms of a non assignable agreement under

which the company has an option or is obliged to purchase

shares owned by an officer or any employee of the company;

or

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

(e) complying with a court order.

(3) A company may accept, from any shareholder, a share in the

company surrendered to it as a gift, but may not extinguish or

reduce a liability in respect of an amount unpaid on any such

share, except in accordance with section 106 of this Act.

161. Notwithstanding any provision in the articles, a company shall not

purchase any of its own shares except on compliance with the

following conditions, that is -

(a) shares shall only be purchased out of profits of the

company which would otherwise be available for dividend or

the proceeds of a fresh issue of shares made for the purpose of

the purchase;

(b) redeemable shares shall not be purchased at a price greater

than the lowest price at which they are redeemable or shall be

redeemable at the next date thereafter at which they are due or

liable to be redeemed;

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

Act.

162. No transaction shall be entered into by or on behalf of a company

whereby the total number of its shares, or of its shares of any one

class, held by persons other than the company or its nominees

becomes less than eighty five per cent of the total number of shares,

or of shares of that class, which have been issued:

Provided that -

(a) redeemable shares shall be disregarded for the purposes of

this section, and

(b) where, after shares of any class have been issued, the

number of such shares has been reduced, this section shall

apply as if the number originally issued (including shares of

that class cancelled before the reduction took effect) has been

the number as so reduced.

163. (1) A contract with a company providing for the acquisition by

the company of shares in the company is specifically enforceable

against the company, except to the extent that the company cannot

perform the contract without thereby being a breach of the

provisions of section of this Act.

(2) In any action brought on a contract referred to in subsection

(1) of this section, the company shall have the burden of proving

that performance of the contract is prevented by the provisions of

section 160 of this Act.

164. Where shares in a company are redeemed, purchased, acquired or

forfeited, such shares shall, unless the company by alteration of its

articles of association cancels the shares, be available for re-issue by

the company.

165. (1) A company which is a subsidiary may acquire shares in its

holding company where the subsidiary company is concerned as

personal representative or trustee, unless the holding company or

any subsidiary of it is beneficially interested otherwise than by

way of security for the purposes of a transaction entered into by it

in the ordinary course of a business which includes the lending of

money.

(2) A subsidiary which, at the commencement of this Act, is a

holder of shares of its holding company, or a subsidiary which

acquired shares in its holding company before it became a

subsidiary of that holding company, may continue to hold such

shares but, subject to subsection (1) of this section, shall have no

right to vote at meetings of the holding company or any class of

shareholders of the holding company and shall not acquire any

future shares in it except on a capitalisation issue.

Part VII

Debentures

Creation of debenture and debenture stock.

166. A company may borrow money for the purpose of its business or

objects and may mortgage or charge its undertaking, property and

uncalled capital, or any part thereof, and issue debentures, debenture

stock and other securities whether outright or as security for any debt,

liability or obligation of the company or of any third party.

167. (1) Every company shall, within sixty days after the allotment of

any of its debentures or after the registration of the transfer of any

debentures, deliver to the registered holder thereof, the debenture

or a certificate of the debenture stock under the common seal of

the company.

(2) If a debenture or debenture stock certificate is defaced, lost or

destroyed, the company, at the request of the registered holder of

the debenture, shall issue a certified copy of the debenture or

renew the debenture stock certificate on payment of a fee not

exceeding N5 and on such terms as to evidence and indemnity and

the payment of the company's out of pocket expenses of

investigating evidence as the company may reasonably require.

(3) If default is made in complying with this section, the company

and any officer of the company who is in default shall be liable to

a fine not exceeding N25; and on application by any person

entitled to have the debentures or debenture stock certificate

delivered to him, the court may order the company to deliver the

debenture or debenture stock certificate and may require the

company and any such officer to bear all the costs of and

incidental to the application.

168. Every debenture shall include a statement on the following

matters, that is -

(a) the principal amount borrowed;

(b) the maximum discount which may be allowed on the issue

or re-issue of the debentures, and the maximum premium at

which the debentures may be made redeemable;

(c) the rate of and the dates on which interest on the

debentures issued shall be paid and the manner in which

payment shall be made;

(d) the date on which the principal amount shall be repaid or

the manner in which redemption shall be effected, whether by

the payment of instalments of principal or otherwise;

(e) in the case of convertible debentures, the date and terms on

which the debentures may be converted into shares and the

amounts which may be credited as paid up on those shares, and

the dates and terms on which the holders may exercise any

right to subscribe for shares in respect of the debentures held

by them;

(f) the charges securing the debenture and the conditions

subject to which the debenture shall take effect.

169. (1) Statements made in debenture or debenture stock certificates

shall be prima facie evidence of the title to the debentures of the

person named therein as the registered holder and of the amounts

secured thereby.

(2) If any person shall change his position to his detriment in

reliance in good faith on the continued accuracy of any statements

made in the debenture or debenture stock certificate, the company

shall be estopped in favour of such person from denying the

continued accuracy of such statements and shall compensate such

person for any loss suffered by him in reliance thereon and which

he would not have suffered had the statement been or continued to

be accurate:

Provided that nothing in this subsection shall derogate from any right the

company may have to be indemnified by any other person.

170. A contract with a company to take up and pay for any debentures

of the company may be enforced by an order for specific

performance.

Types of Debentures

171. A company may issue perpetual debentures, and a condition

contained in any debentures, or in any deed for securing any

debentures, shall not be invalid by reason only that the debentures are

made irredeemable or redeemable only on the happening of a

contingency, however remote, or on the expiration of a period,

however long, any rule of equity to the contrary notwithstanding.

172. Debentures may be issued upon the terms that in lieu of

redemption or repayments, they may, at the option of the holder or the

company, be converted into shares in the company upon such terms as

may be stated in the debentures.

173. (1) Debentures may either be secured by a charge over the

company's property or may be unsecured by any charge

(2) Debentures may be secured by a fixed charge on certain of the

company's property or a floating charge over the whole or a

specified part of the company's undertaking and assets, or by both

a fixed charge on certain property and a floating charge.

(3) A charge securing debentures shall become enforceable on the

occurrence of the events specified in the debentures or the deed

securing the same.

(4) Where any legal proceedings are brought by a debenture

holder to enforce the security of a series of debentures of which he

holds part, the debenture holder shall sue in a representative

capacity on behalf of himself and all other debenture holders of

that series.

(5) Where debentures are secured by a charge, the provisions of

section 197 of this Act relating to registration of particulars of

charges shall apply.

174. A company limited by shares may issue debentures which are, or

at the option of the company are to be liable, to be redeemed.

175. (1) Where either before or after the commencement of this Act,

a company has redeemed any debentures previously issued, then

unless -

(a) any provision, express or implied, to the contrary is

contained in the articles or in any contract entered into by the

company; or

(b) the company has, by passing a resolution to that effect or

by some other act, manifested its intention that the debentures

shall be cancelled, the company shall have, and shall be

deemed always to have had, power to re-issued the debentures,

either by re-issuing the same debentures or by issuing other

debentures in their place.

(2) On a re-issue of redeemed debentures, the person entitled to

the debentures, shall have, and shall be deemed always to have

had, the same priorities as if the debentures had never been

redeemed.

(3) Where a company has, either before or after the

commencement of this Act, deposited any of its debentures to

secure advances, from time to time, on current account or

otherwise, the debenture shall not be deemed to have been

redeemed by reason only of the account of the company having

ceased to be in debit, whilst the debentures remained so deposited.

(4) The re-issue of a debenture or the issue of another debenture in

its place under the power given by this section or deemed to have

been possessed by a company, whether the re-issue or issue was

made before or after the commencement of this Act, shall be

treated as the issue of a new debenture for the purposes of a stamp

duty, but it shall not be so treated for the purposes of any provision

limiting the amount or number of debentures to be issued:

Provided that any person lending money on the security of a debenture

re-issued under this section which appears to be duly stamped, may give

the debenture in evidence in any proceedings for enforcing his security

without payment of the stamp duty or any penalty in respect thereof,

unless he had notice or, but for his negligence, might have discovered,

that the debenture was not duly stamped, but in any such case the

company shall be liable to pay the proper stamp duty and penalty.

(5) Nothing in this section shall prejudice any power to issue

debentures in place of any debentures paid off or otherwise

satisfied or extinguished which, by its debentures or the securities

for the same, is reserved to a company.

176. (1) The trustee of a debenture trust deed shall hold all contracts,

stipulations and undertakings given to him and all mortgages,

charges and securities vested in him in connection with the

debentures covered by the deed, or some of those debentures,

exclusively for the benefit of the debenture holders concerned

(except in so far as the deed otherwise provides) and the trustee

shall exercise due diligence in respect of the enforcement of those

contracts, stipulations, undertakings, mortgages, charges and

securities and the fulfillment of his functions generally.

(2) A debenture holder may sue -

(a) the company which issued the debentures he holds for

payment of any amount payable to him in respect of the

debentures; or

(b) the trustee of the debenture trust deed covering the

debentures he holds for compensation for any breach of the

duties which the trustee owes him, and in any such action, it

shall not be necessary for any other debenture holders of the

same class, or if the action is brought against the company, the

trustee of the covering trust deed, to be joined as a party.

(3) This section shall apply notwithstanding anything contained in

a debenture trust deed or other instrument but a provision in a

debenture or trust deed shall be valid and binding on all the

debenture holders of the class convened in so far as it enables a

meeting of the debenture holders by a resolution supported by the

votes of the holders of at least three quarters in value of the

debentures of that class in respect of which votes are cast on the

resolution to -

(a) release any trustee from liability for any breach of his

duties to the debenture holders which he has already

committed, or generally from liability for all such breaches

(without necessarily specifying them) upon his ceasing to be a

trustee; or

(b) consent to the alteration or abrogation of any of the rights,

powers or remedies of the debenture holders and the trustee of

the debenture trust deed covering their debentures (except the

powers and remedies under section 215 of this Act); or

(c) consent to the substitution for the debentures of a different

class issued by the company or any other company or

corporation, or the cancellation of the debentures in

consideration of the issue to the debenture holders of shares

credited as fully paid in the company or any other company.

177. (1) The terms of any debentures or trust deed may provide for

the convening of general meetings of the debentures holders and

for the passing, at such meetings, of a resolution binding on all the

holders of the debentures of the same class.

(2) Whether or not the debentures or trust deed contain such

provisions as are referred to in subsection (1) of this section, the

commission may at any time direct a meeting of the debenture

holders of any class to be held and conducted in such manner as

the Commission thinks fit to consider ancillary or consequential

direction as it shall think fit.

(3) Notwithstanding anything contained in a debenture trust deed,

or in any debenture or contract or instrument the trustee of a

debenture deed shall, on the requisition of persons holding, at the

date of the deposit of the requisition debentures covered by the

trust deed which carrying not less than one tenth of the total voting

rights attached to all the issued and outstanding debentures of that

class, forthwith, proceed duly to convene a meeting of that class of

debenture holders.

Fixed and Floating charges

178. (1) A floating charge means an equitable charge over the whole

or a specified part of the company's undertakings and assets,

including cash and uncalled capital of the company both present

and future, but so that the charge shall not preclude the company

from dealing with such assets until -

(a) the security becomes enforceable and the holder thereof,

pursuant to a power in that behalf in the debenture or the deed

securing the same, appoints a receiver or manager or enters

into possession of such assets; or

(b) the court appoints a receiver or manager of such assets on

the application of the holder; or

(c) the company goes into liquidation;

(2) On the happening of any of the events mentioned in subsection

(1) of this section, the charge shall be deemed to crystallise and to

become a fixed equitable charge on such of the company's assets

as are subject to the charge, and if a receiver or manager is

withdrawn with the consent of the chargee, or the chargee

withdraws from possession, before the charge has been fully

discharged, the charge shall thereupon be deemed to cease to be a

fixed charge and again to become a floating charge.

179. A fixed charge on any property shall have priority over a floating

charge affecting that property, unless the terms on which the floating

charge was granted prohibited the company from granting any later

charge having priority over the floating charge and the person in

whose favour such later charge was granted had actual notice of that

prohibition at the time when the charge was granted to him.

180. (1) Whenever a fixed or floating charge has become

enforceable, the court shall have power to appoint a receiver and

in the case of a floating charge, a receiver and manager of the

assets subject to the charge.

(2) In the case of a floating charge, the court may, notwithstanding

that the charge has not become enforceable, appoint a receiver or

manager if satisfied that the security of the debenture holder is in

jeopardy; and the security of the debenture holder shall be deemed

to be in jeopardy if the court is satisfied that events have occurred

or are about to occur which render it unreasonable in the interests

of the debenture holder that the company should retain power to

dispose of its assets.

(3) A receiver or manager shall not be appointed as a means of

enforcing debentures not secured by any charge.

181. Where a receiver or a receiver and manager is appointed by the

court, advertisement to this effect shall be made by the receiver or the

receiver and manager in the Gazette and in two daily newspapers.

182. (1) Where a receiver is appointed on behalf of the holders of

any debentures of a registered company secured by a floating

charge, or possession is taken by, or on behalf of those debenture

holders of any property comprising or subject to the charge, then if

the company is not at the time in course of being wound up, the

debts which in every winding-up are under the provisions relating

to preferential payments in part XV of this Act to be paid in

priority to all other debts, shall be paid out of any assets coming to

the hands of the receiver or other person taking possession as

aforesaid in priority to any claim for principal or interest in respect

of the debentures.

(2) In the application of the provisions relating to preferential

payments -

(a) section 494 of this Act shall be construed as if, the

provision for payment of accrued holiday remuneration

becoming payable on the termination of employment before or

by the effect of the winding-up order or resolution, were a

provision for payment of such remuneration becoming payable

on the termination of employment before or by the effect of

appointment of the receiver or possession being taken as

aforesaid; and

(b) the periods of time mentioned therein shall be reckoned

from the date of the appointment of the receiver or of

possession being taken as aforesaid, as the case may be, and if

such date occurred before the commencement of this Act, the

provisions relating to preferential payments which would have

applied but for this Act, shall be deemed to remain in full force.

(3) Any payments made under this section, shall be recouped as

far as many be out of the assets of the company available for

payment of general creditors.

Debenture trust deed

183. (1) Every company which offers debentures to the public for

subscription or purchase shall, before issuing any of the

debentures, execute debenture trust deed in respect of them and

procure the execution of the deed by the trustee for the debenture

holders appointed by the deed.

(2) No debenture trust deed shall cover more than one class of

debentures, whether or not the trust deed is required by this section

to be executed.

(3) Where a trust deed is required to be executed by this section

but has not been executed, the court, on the application of a

debenture holder concerned, may-

(a) order the company to execute a trust deed;

(b) direct that a person nominated by the court shall be

appointed to be trustee; and

(c) give such consequential directions as it thinks fit, as to the

contents of the trust deed and its execution by the trustee

thereof.

(4) For the purposes of this Act, debentures shall belong to

different classes if different rights attach to them in respect of -

(a) the rate of, or dates for payment of interest;

(b) the dates when, or the instalments by which, the principal

of the debentures shall be repaid, unless difference is solely

that the class of debentures shall be repaid during a stated

period of time and particular debentures may be repaid at

different dates during that period according to selections made

by the company or by drawing ballot or otherwise;

(c) any right to subscribe for or convert the debentures into

shares in, or other debentures of, the company or any other

company; or

(d) the powers of the debentures holders to realise any

security.

(5) Debentures further belong to different classes, if they do not

rank equally for payment when any security invested in the

debenture holders under any trust deed is realised or when the

company is wound up, that is to say, if, in the circumstances

mentioned in subsection (4) of this subsection the subject matter of

any such security or the proceeds thereof, or any assets available

to satisfy the debentures, is or are not to be applied in satisfying

the debentures strictly in proportion to the amount of principal,

premiums and arrears of interest to which the holders of them are

respectively entitled.

(6) A debenture is covered by a trust deed if -

(a) the holder of the debenture is entitled to participate in any

money payable by the company under the deed; or

(b) is entitled to the benefit of any mortgage, charge or

security created by the deed, whether alone or together with

other persons.

(7) If a company issues debentures in circumstances in which this

section required a debenture trust deed to be executed without

such a deed, having been executed in compliance with this section,

or if the company issues debentures under a trust deed which

covers two or more classes of debentures, the directors of the

company who are in default of an offence and liable on conviction

to a fine of N5,000 jointly or severally.

184. (1) Every debenture trust deed, whether required by section 183

of this Act or not, shall state-

(a) the maximum sum which the company may raise by

issuing debentures of the same class;

(b) the maximum discount which may be allowed on the issue

or re-issue of the debentures, and the maximum premium at

which the debentures may be made redeemable;

(c) the nature of any assets over which a mortgage, charge or

security is created by the trust deed in favour of the trustee for

the benefit of the debenture holders equally, and except where

such a charge is a floating charge or a general floating charge,

the identity of the assets subject to it;

(d) the nature of any assets over which a mortgage, charge or

security has been or will be created in favour of any person

other than the trustee for the benefit of the debenture holders

equally, and except where such a charge is floating charge or a

general floating charge, the identity of the assets subject to it;

(e) whether the company has created or will create any

mortgage, charge or security for the benefit of some, but not

all, of the holder of debentures issued under the trust deed;

(f) any prohibition or restriction on the power of the company

of issue debentures or to create mortgages, charges or any

security on any of its assets ranking in priority to, or equally

with the debentures issued under the trust deed;

(g) whether the company shall have power to acquire

debentures issued under the truest deed before the date of their

redemption and to re-issue the debentures;

(h) the rate of and the dates on which interest on the

debentures issued under the trust deed shall paid and the

manner in which payment may be made;

(i) the date or dates on which the principal or the debentures

issued under the trust deed shall be repaid, and unless the

whole principal is to be repaid to all the debenture holders at

the same time, the manner in which redemption shall be

effected, whether by the payment of equal instalments of

principal in respect of each debenture, or by the selection of

debentures for redemption by the company, or by drawing,

ballot, or otherwise;

(j) in the case of convertible debentures, the dates and terms

on which the debentures may be converted into shares and the

amounts which may be credited as paid up on those shares in

right of the debentures held by them;

(k) the circumstances in which the debenture holders shall be

entitled to realise any mortgage, charge or security invested in

the trustee or any other person from their benefit (other than

the circumstances in which they are entitled to do so by this

Act);

(l) the power of the company and the trustee to call meetings

of the debentures holders and the rights of debenture holders to

require the company or the trustee to call such meetings;

(m) whether the rights of debenture holders may be altered or

abrogated and if so, the conditions which must be fulfilled, and

the procedure which must be followed, to effect such an

alteration or abrogation; and

(n) the amount or rate of the remuneration to be paid to the

trustee and the period for which it shall be paid, and whether it

shall be paid in priority to the principal, interest and costs in

respect of debentures issued under the trust deed.

(2) If debentures are issued without a covering debenture trust

deed being executed, the statements required by subsection (1) of

this section shall be included in each debenture or in a note

forming part of the same document or endorsed thereon, and in

applying that subsection references therein to "the debenture trust

deed" shall be construed as references to all or any of the

debentures of the same class.

(3) Subsection (2) of this section shall not apply if the debenture is

the only debenture of the class to which it belongs which has been

or may be issued, and the rights of the debenture holder shall not

be altered or abrogated without his consent.

(4) Any director who issues debenture in violation of the

provisions of this section shall be guilty of an offence.

185. (1) Every debenture covered by a debenture trust deed shall

state, either in the body thereof or in a note forming part of the

same document or endorsed thereon-

(a) the matters required to be stated in a debenture trust deed

by paragraphs (a), (b), (f), (h), (i), (j), (l) and (m) of subsection

184 of this Act;

(b) whether the trustee of the covering debenture trust deed

holds the mortgages, charges and securities vested in him by

the trust for the debenture holders equally, or in trust for some

only of the debenture holders, and if so, which debenture

holders; and

(c) whether the debenture is secured by a general floating

charge vested in the trustee of the covering debenture trust

deed or in the debenture holders.

(2) A debenture issued by a company shall state on its face in

clearly legible print, that it is unsecured if no mortgage, charge or

security is vested in the holder of the debenture or in any person

for his benefit as security for payment of principal or interest.

(3) Any director of a company who issues a debenture in violation

of the provisions of subsections (1) and (2) section shall be guilty

of an offence.

186. (1) Whether or not a debenture is secured by a charge over the

company's property it may be secured by a trust deed appointing

trustee for the debenture holders.

(2) It shall be the duty of such trustees to such trustees to

safeguard the right to the debenture holders and, on behalf of and

for the benefit of the debenture holders, to exercise the rights,

powers and discretions conferred upon them by the trust deed.

(3) Charges securing the debentures may be created in favour of

the debenture holders by vesting them in the trustees.

(4) Any provision contained in a trust deed or in any contract with

debenture holders secured by trust deed shall be void in so far as it

would have the effect of exempting a trustee thereof from, or

indemnifying him against, liability for any breach of trust or

failure to show the degree of care and diligence required of him as

trustee having regard to the powers, authorities or discretion

conferred on him by the trust deed.

Provided that nothing herein contained shall be deemed to invalidate any

release otherwise validly given in respect of anything done or omitted to

be done by a trustee on the agreement to such release of a majority of not

less than three quarters in value of the debenture holders present in

person, or where proxies are permitted, by proxy at a meeting summoned

for the purpose.

(5) Notwithstanding any provisions contained in the debentures or

trust deed, the court may, on the application of any debenture

holder or of the commission remove any trustee and appoint

another in his place if satisfied that such trustee has interests

which conflict or may conflict with those of the debenture holders

or that for any reason it is undesirable that such trustee should

continue to act.

Provided that where any such application is made by a debenture holder,

the court if it thinks fit, may order the applicant to give security for the

payment of the costs of the trustee and may direct that the application

shall be heard in Chambers.

187. (1) A person is not qualified for appointment as a trustee of a

debenture trust deed if he is -

(a) an officer or an employee of the company which issues

debentures covered by the trust deed or of a company in the

same group of companies as the company so issuing

debentures;

(b) less than eighteen years of age;

(c) of unsound mind and has been so found by a court in

Nigeria or elsewhere;

(d) an undischarged bankrupt;

(e) disqualified under section 257 of this Act from being

appointed as a director of a company;

(f) a substantial shareholder (as defined in section 95 of this

Act) of the company.

(2) If a trustee becomes subject to any of the disqualification

mentioned in subsection (1) of this section after he has been

appointed, he shall immediately cease to be qualified to act as a

trustee of the debenture trust deed.

(3) Any person who acts as trustee of a debenture trust deed shall

be guilty of an offence, if his appointment is invalid under

subsection (1) of this section or if he is disqualified from acting

under subsection (2) of this section.

188. (1) Subject to the provisions of this section anything contained in

a trust deed for securing an issue of debentures, or in any contract

with the holders of debentures secured by a trust deed, shall be

void in so far as it would have the effect of exempting a trustee

thereof from or indemnifying him against liability for breach of

trust, where he fails to show the degree of care and diligence

required of him as trustee, having regard to the provisions of the

trust deed conferring on him any powers, authorities of

discretions.

(2) Subsection (1) of this section shall not invalidate -

(a) any release otherwise validly given in respect of anything

done or omitted to be done by a trustee before the giving of the

release; or

(b) any provisions enabling such a release to be given -

(i) on the agreement thereto of a majority of not less than

three-quarters in value of the debenture holders present and

voting in person, where proxies are permitted, by proxy at a

meeting summoned for the purpose; and

(ii) either with respect to specific acts or omissions or on

the trustee dying or ceasing to act.

(3) Subsection (1) of this section shall not operate to -

(a) invalidate any provision in force at the commencement of

this Act in any such trust deed or contract, so long as any

person entitled to the benefit of that provision, or afterwards

given the benefit thereof under subsection (4) of this section,

remains a trustee of the trust deed in question; or

(b) deprive any person of any exemption or right to be

indemnified in respect of anything done or omitted to be done

by him, while any such provision was in force.

(4) While any trustee of a trust deed remains entitled to the benefit

of a provision saved by subsection (3) of this section, the benefit

of that provision may be given -

(a) to all trustees of the deed, present and future; and

(b) to any named trustee or proposed trustee thereof, by a

resolution, passed by a majority of not less than three-quarters

in value of the debenture holders present in person or, where

proxies are permitted by proxy at a meeting summoned for the

purpose in accordance with the provisions of the trust deed or,

if the trust deed makes no provision for summoning meetings

summoned for the purpose in any manner approved by the

court.

189. (1) Except as expressly provided in the terms of any debentures,

debentures shall be transferable without restriction by a written

transfer in common form and so that the transferee shall be

entitled to the debenture and to the moneys secured thereby

without regard to any equities, set-off, or cross claim between the

company and the original or any intermediate holder.

(2) The terms of any debentures may impose restrictions of any

nature whatsoever on the transferability of debentures, including

power for the company to refuse to register and transfer and

provisions for compulsory acquisition or rights of first refusal in

favour of other debenture holders, or members or officers of the

company:

Provided that if any restriction is imposed on the right to transfer any

debenture, notice of the restriction shall be endorsed on the face of the

debenture or debenture stock certificate and in the absence of such

endorsement, the restriction shall be ineffective as regards any transferee

for value, whether or not he has notice of the restriction.

190. Every company shall cause a copy of every instrument creating

any charge requiring registration under this Part of this Act to be kept

at the registered office of the company:

Provided that, in the case of a series of uniform debentures, a copy of one

debenture of the series shall be sufficient.

Company's register of charges.

191. (1) Every limited company shall keep at the registered office of

the company, a register of charges and enter therein all charges

specifically affecting property of the company and all floating

charges on the undertaking or any property of the company giving

in each case a short description of the property charged, the

amount of the charge, and, except in the case of securities to

bearer, the names of the persons entitled thereto.

(2) If any officer of the company knowingly and willfully

authorities or permits the omission of any entry required to be

made in pursuance of this section, he shall be guilty of an offence

and liable on conviction to a fine not exceeding N250.

192. (1) The copies of instruments creating any charge requiring

registration under this Part of this Act with the Commission and

the register of charges kept in pursuance of section 191 of this Act,

shall be open during business hours (but subject to such reasonable

restrictions as the company in general meeting may impose, so

that not less than two hours in each day shall be allowed for

inspection) to inspection by any creditor or member of the

company without fee and the register of charges also be open to

inspection by any other person on payment of such fee, not

exceeding N5 for each inspection as the company may prescribe.

(2) If inspection of copies of instruments creating charges or of the

register is refused, every officer of the company who is in default

shall be guilty of an offence and liable to a fine not exceeding N10

for every day during which the refusal continues.

(3) If any such refusal occurs in relation to a company registered

in Nigeria or, in so far as a foreign company has an established

place of business within Nigeria and an instrument creates a

charge over any of its property in Nigeria and the refusal relates to

that charge, the court may by order compel an immediate

inspection of the copies of instruments or register.

193. (1) A company which issues or has issued debentures shall

maintain a register of the holders thereof.

(2) The register shall contain the following information, that is -

(a) the names and addresses of the debenture holders;

(b) the principal of the debentures held each of them;

(c) the amount or the highest amount of any premium payable

on redemption of the debentures;

(d) the issue price of the debenture and the amount paid up on

the issue price;

(e) the date on which the name of each person was entered on

the register as a debenture holder; and

(f) the date on which each person ceased to be a debenture

holder.

(3) The entry required under this section shall be made within

thirty days of the conclusion of the agreement with the company to

become a debenture holder or within thirty days of the date at

which he ceases to be one.

194. (1) Every register of debenture holders of a company shall,

except when duly closed (but subject to such reasonable

restrictions as the company may in general meeting impose, so

that not less than two hours in each day shall be allowed for

inspection), be open to the inspection of any registered debenture

holder or any shareholder in the company without fee, and of any

other person on payment of a fee of N1 or such less sum as may be

prescribed by the company.

(2) Any such registered debenture holder as aforesaid or any other

person may require a copy of the register of the debenture holders

of the company or any part thereof on payment of 50 kobo for

every 100 words required to be copied.

(3) A copy of any trust deed for securing any issue debentures

shall be forwarded to every debenture holder at his request on

payment in the case of a printed trust deed, of the sum of N1 or

such less sum as may prescribed by the company, or, where the

trust deed has not been printed, on payment of 50 kobo for every

100 words required to be copied.

(4) If inspection is refused, or a copy is refused or not forwarded,

the company and every officer of the company who is default shall

be guilty of an offence and liable to a fine not exceeding N50 and

in case of a continuing default, to a further fine of N10 for every

day during which the default continues.

(5) Where a company is in default as aforesaid, the court

convicting may by order compel an immediate inspection of the

register or direct that the copies required shall be sent to the person

requiring them.

(6) For the purposes of this section, a register shall be deemed to

be duly closed in accordance with provisions contained in the

articles or in the debentures or, in the case of debenture stock, in

the stock certificates, or in the trust deed or other document

securing the debentures or debenture stock, during such periods,

not exceeding in the whole thirty days in any year, as may be

therein specified.

195. On the application of the transferor of any debenture in a

company, the company shall enter in its register of debenture holders

the name of the transferee in the same manner and subject to the same

conditions as if the application for the entry were made by the

transferee.

196. (1) If a company refuses to register a transfer of any debentures,

the company shall, within two months after the date on which the

transfer was lodged with the company, send to the transferee

notice of the refusal.

(2) If any default is made in complying with the provisions of this

section, the company and every officer of the company who is

default shall guilty of an offence and liable to a fine of N500.

Registration of Charges with Commission

197. (1) Subject to the provisions of this Part of this Act, every

charge created by a company, being a charge to which this section

applies, shall so far as any security on the company's property or

undertaking is conferred be void against the liquidator and creditor

of the company, unless the prescribed particulars of the charge

together with the instrument, if any by which the charge is created

or evidenced, have been or are delivered to or received by the

Commission for registration in the manner by this Act or by any

enactment repealed by this Act within ninety days after the date of

its creation but without prejudice to any contract or obligation for

repayment of the money thereby secured, and when a charge

becomes void under this section, the money thereby secured shall

immediately become payable.

(2) The provisions of this section shall apply to the following

charges, that is -

(a) a charge for the purpose of securing any issue of

debentures;

(b) a charge on uncalled share capital of the company;

(c) a charge created or evidenced by an instrument which, if

executed by an individual, would require registration as a bill

of sale;

(d) a charge on land, wherever situate, or any interest therein,

but not including a charge for rent or other periodical sum

issuing out of land;

(e) a charge on book debts of the company;

(f) a floating charge on the undertaking or property of the

company;

(g) a charge on calls made but not paid;

(h) a charge on a ship or aircraft or any share in a ship; and

(i) a charge on goodwill, on a patent or a licence under a

patent, on trademark or on a copyright or a licence under a

copyright.

(3) Where a charge affects or relates to property situated in

Nigeria and in addition to registration under subsection (1) of

make the charge valid or effectual, it shall, subject to this

subsection, be sufficient evidence of compliance with the

requirements of subsection (1) of this section, if, instead of

delivery of the original instrument creating or evidencing the

charge, there is delivered to and received by the commission

within the prescribed period of ninety days, or such extended time

as the court may allow, a true copy of it duly certified as such by

the secretary to the company.

(4) A reference in any enactment to the date of execution of an

instrument for the purposes of computation of time within which

registration is to be effected with or without penalty, shall be

construed as a reference to the date of presentation of copy of the

instrument to the commission under this Act, and time shall be

computed accordingly; and if a certified copy is delivered to the

Commission under this subsection, the original of it shall be

produced to it for inspection and comparison, if the Commission

so requires.

(5) In the case of a charge created out of Nigeria, affecting or in

relation to property situate outside Nigeria, the delivery to and the

receipt by the Commission of a copy verified in the prescribed

manner of the instrument by which the charge is created or

evidenced shall have the same effect for the purposes of this

section as the delivery and receipt of the instrument itself, and

ninety days after the date on which the instrument or copy could,

in due course of post, and if despatched with diligence, have been

received in Nigeria shall be substituted for ninety days after the

date of the creation of the charges as the time within the

particulars and instrument or copy are to be delivered to the

Commission.

(6) Where a charge is created in Nigeria but affects or relates to

property outside Nigeria, the instrument creating or purporting to

create the charge may be sent for registration under this section

notwithstanding that further proceedings may be necessary to

make the charge valid or effectual according to the law of the

country in which the property is situate.

(7) Where a negotiable instrument has been given to secure the

payment of any book debts of a company, the deposit of the

instrument for the purpose of securing an advance to the company

shall not, for the purposes of this section, be treated as a charge on

those book debts.

(8) The holding of debentures which entitles the debenture holder

to a charge on land shall not, for the purposes of this section, be

deemed to be an interest in land.

(9) Where a series of debentures containing, or giving by

reference to any other instrument, any charge to the benefit of

which the debenture holders of that series are entitled pari pasu is

created by a company, it shall, for the purposes of this section, be

sufficient if there are delivered to or received by the Commission

within ninety days after the execution o the deed containing the

charge or, if there is no such deed, after the execution of any

debentures of the series, the following particulars -

(a) the total amount secured by the whole series;

(b) the dates of the resolutions authorising the issues of the

series and the date of the covering deed, if any, by which the

security is created or defined;

(c) a general description of the property charged; and

(d) the names of the trustees, if any, for the debenture holders;

together with the deed containing the charge, or, if there is no

such deed, one of the debentures of the series:

Provided that, where more than one issue is made of debentures in the

series, there shall be sent to the Commission for entry in the register

particulars of the date and amount of each issues, but an omission to

do this shall not affect the validity of the debentures issued.

(10) Where any commission, allowance or discount has been paid

or made either directly or indirectly by a company to any person in

consideration of his subscribing or agreeing to subscribe, whether

absolutely or conditionally, for any debentures of the company, or

procuring or agreeing to procure subscriptions whether absolute or

conditional, for any such debentures, the particulars required to be

sent for registration under this section shall include particulars as

to the amount or rate per cent of commission, discount or

allowance so paid or made, but an omission to do this shall not

affect the validity of the debentures issued:

Provided that the deposit of any debentures as security for subsection, be

treated as the issue of the debentures at a discount.

(11) In this Part of this Act, charge includes mortgage.

198. (1) The Commission shall keep, with respect to each company,

a register in the prescribed form of all the charges requiring

registration under this Part of this Act, and shall on payment of

such fee as may be specified by regulations made by the

commission enter in the register with respect to such charges the

following particulars -

(a) in the case of a charge to the benefit of which the holders

of a series of debentures are entitled, such particulars as are

specified in section 197(9) of this Act;

(b) in the case of any other charge -

(i) if the charge is a charge created by the company, the

date of its creation, and if the charge was a charge existing

on property acquired by the company, the date of its

creation, and the date of the acquisition of the property;

(ii) the amount secured by the charge,

(iii) short particulars of the property, and

(iv) the persons entitled to the charge.

(2) Where a charge is registered under this Part of this Act, the

Commission shall issue a registration certificate setting out the

parties to the charge, the amount thereby secured, with such other

particulars as the Commission may consider necessary; and the

certificate shall be prima facie evidence of due compliance with

the requirements as to registration under this Part of this Act.

(3) The register kept in pursuance of this section shall be open to

inspection by any person on payment of such fee, not exceeding

N1 for each inspection as may be specified by regulations made by

the Commission.

199. (1) It shall be the duty of a company to send to the Commission

for registration, the particulars of every charge created by the

company and of the issues of debentures of a series requiring

registration under section 197 of this Act, but registration of any

such charge may be effected on the application of any person

interested therein.

(2) Where registration is effected on the application of some

person other than the company, that person shall be entitled to

recover from the company the amount of any fees properly paid by

him to the Commission on the registration.

(3) If any company makes default in sending to the Commission

for registration, the particulars of any charge created by the

company or of the issues of debentures of a series requiring

registration as aforesaid, then, unless the registration has been

effected on the application of some other person, the company and

every officer of the company who is in default shall be guilty of an

offence and liable to a fine of N500.

200. (1) Where a company acquires any property which is subject to

a charge of any such kind as would have been required, if it has

been created by the company after the acquisition of the property,

to be registered under this Part of this Act, the company shall

cause the prescribed particulars of the charge, together with a copy

(certified in the prescribed manner to be a correct copy) of the

instrument, if any, by which the charge was created or is

evidenced, to be delivered to the Commission for registration in

the manner required by this Act within ninety days after the date

on which acquisition is completed:

Provided that, if the property is situated and the charge was created

outside Nigeria, "ninety days after the date on which the copy of the

instrument could in due course of post, and if despatched with due

diligence, have been received in Nigeria" shall be substituted for ninety

days after the date on which acquisition is completed, as the time within

which the particulars and the copy of the instrument are to be delivered to

the Commission.

(2) If default is made in complying with this section, the company

and every officer of the company who is in default shall be guilty

of an offence and liable to a fine of N250

(3) It shall be sufficient compliance with this section in any case

affecting land registered under any enactment in a State, where the

charge is registered thereunder before the land is acquired by the

company, if a true copy of the charge duly certified by the

Registrar of Land is delivered to the Commission within the time

prescribed by this section.

201. (1) Where, at the date of commencement of this Act, a company

has property on which thee is a charge particulars of which would

require registration if it had been created by the company after the

date of such commencement then, ceased to be held by the

company prior to the expiration of six months from the date of

such commencement, the company shall, within that time, cause

particulars of the charge as prescribed by section 197 of this Act to

be delivered to the Commission for registration together with the

document, if any, by which the charge was created or a copy

thereof, certified as required by that section.

(2) Every existing company shall, prior to the expiration of six

months from the commencement of this Act, deliver to the

Commission for registration a statutory declaration made by a

director and the secretary of the company stating whether or not

there are any charges on the company's property of which

particulars required to be registered under this section and

confirming that particulars of any such charges have been duly

delivered to the Commission for registration.

(3) In the event of default in complying with subsection (2) of this

Section, the company and every officer of the company who is in

default shall be guilty of an offence and liable to a fine not

exceeding N50 for every day during which the default continues.

(4) Failure to comply with the provisions of this section shall not

affect the validity of the charge.

202. Where a charge, particulars of which require registration under

section 197 of this Act, is expressed to secure all sums due or to

become due or some other uncertain or fluctuating amount, the

particulars required under paragraph (a) of subsection (9) of section

197 of this Act shall state the maximum sum deemed to be secured by

such charge (being the maximum sum covered by the stamp duty paid

thereon) and such charge shall be void, so far as any security on the

company's property is thereby conferred, as respects any excess over

the stated maximum:

Provided that, if -

(a) additional stamp duty is subsequently paid on such charge;

and

(b) at any time thereafter prior to the commencement of the

winding-up of the company, amended particulars of the said

charge stating the increased maximum sum deemed to be

secured thereby (together with the original instrument by which

the charge was created or evidenced) are delivered to the

Commission for registration, then, as from the date of such

delivery the charge, if otherwise valid, shall be effective to the

extent of such increased maximum sum except as regards any

person who, prior to the date of such delivery, has acquired any

proprietary rights in, or a fixed or floating charge on, the

property subject to the charge.

203. (1) The company shall cause a copy of every certificate of

registration given under section 198 of this Act to be endorsed on

every debenture or certificate of debenture stock which is issued

by the company and the payment of which is secured by the

charge so registered:

Provided that nothing in this subsection shall be construed as requiring a

company to cause a certificate of registration of any charge so

given to be enforced on any debenture or certificate of debenture stock

issued by the company before the charge was created.

(2) If any person knowingly and willfully authorises or permits the

delivery of any debenture or certificate of debenture stock which

under the provisions of this section is required to have endorsed on

it a copy of a certificate of registration without the copy being so

endorsed upon it, he shall, without prejudice to any other liability,

be guilty of an offence an liable to a fine not exceeding N500.

204. If the Commission is satisfied with respect to any registered

charge that -

(a) the debt for which the charge was given has been paid or

satisfied in whole or in part; or

(b) part of the property or undertaking charged has been

released from the charge or has ceased to form part of the

company's property or undertaking,

it may enter on the register a memorandum of satisfaction to the

extent necessary to give effect thereto and, where it enters a

memorandum of satisfaction it shall, if required, furnish the company

with a copy of the entry, and any such entry shall have effect, subject

to the requirement of any other enactment as to registration.

205. The court, on being satisfied that the omission to register a charge

within the time required by this Act or that the omission or mis-

statement of any particular with respect to any such charge or in a

memorandum of satisfaction was accidental, or due to inadvertence or

to some other sufficient cause, or is not of a nature to prejudice the

position of creditors or shareholders of the company, or that on other

grounds it is just and equitable to grant relief, may, on the application

of the company or any person interested and on such terms and

conditions as seems to the court just and expedient, order that the time

for registration shall be extended or, as the case may be, that the

omission or mis-statement shall be rectified.

Registration of appointment order, etc.

206. (1) If any person obtains an order for the appointment of a

receiver or manager of the property of a company, or appoints

such a receiver or manager under any powers contained in any

instrument, he shall, within seven days from the date of the order

or the appointment under the said powers, give notice of the fact to

the Commission and the Commission shall, on payment of such

fee as may be specified by regulations made under this Act, enter

the fact in the register of charges.

(2) Where any person appointed receiver or manager of the

property of a company under the powers contained in any

instrument, ceases to act as such receiver or manager, he shall, on

so ceasing, give the Commission notice to that effect, and the

Commission shall enter, the notice in the register of charges.

(3) If any person makes default in complying with the

requirements of this section, he shall be guilty of an offence and

liable to a fine not exceeding N50 for every day during which the

default continues.

207. (1) The copies of instruments creating any charge requiring

registration under this part of this Act with the Commission and

the register of charges kept in pursuance of section 198 of this Act,

shall be open during business hours (but subject to such reasonable

restrictions as the company in general meeting may impose, so

that not less than two hours in each day shall be allowed for

inspection) to inspection by any creditor or member of the

company without fee, and the register of charges shall also be

open to inspection by any other person on payment of such fee,

not exceeding N1 for each inspection, as the company may

prescribe.

(2) If inspection of copies of instruments creating charges or of the

register is refused, every officer of the company who is in default

shall be guilty of an offence and liable to a fine not exceeding N50

for every day during which the refusal continues.

(3) If any such refusal occurs in relation to a company registered

in Nigeria or, in so far as a foreign company has an creates a

charge over any of its property in Nigeria and the refusal relates to

that charge, the court may by order compel an immediate

inspection of the copies or register.

208. (1) A debenture holder shall be entitled to realise any security

vested in him or in any other person for his benefit if -

(a) the company fails to pay any instalment of interest, or the

whole or part of the principal or any premium, owing under the

debenture or the debenture trust deed covering the debenture

within one month after it becomes due; or

(b) the company fails to fulfil any of the obligations imposed

on it by the debentures or the debenture trust deed; or

(c) any circumstances occur which by the terms of the

debentures or debenture trust deed entitled the holder of the

debenture to realise his security; or

(d) the company is wound up.

(2) A debenture holder whose debenture is secured by a general

floating charge vested in him or the trustee of the covering

debenture trust deed or any other person shall additionally be

entitled to realise his security if -

(a) any creditor of the company issues a process of execution

against any of its assets or commences proceedings for

winding-up of the company by order of any court of competent

jurisdiction; or

(b) the company ceases to pay its debts as they fall due; or

(c) the company ceases to carry on business; or

(d) the company suffers, after the issue of debenture of the

class concerned, losses or diminutions in the value of its assets

which in the aggregate amount to more than one half of the

total amount owing in respect of who seeks to enforce his

security and debentures whose holder ranks before him for

payment of principal or interest; or

(e) any circumstances occur which entitles a debenture holder

who ranks for payment of principal or interest in priority to the

debentures secured by the general floating charges to realise

his security.

209. (1) At any time after a debenture holder or a class of debenture

holders becomes entitled to realise his or their security, a receiver

of any assets subject to a mortgage, charge or security in favour of

the class of debenture holders or the trustee of the covering

debenture trust deed or any other person may be appointed by -

(a) that trustee;

(b) the debentures holders of the same class containing power

to appoint; or

(c) debenture holders having more than one half of the total

amount owing in respect of all the debentures of the same

class; or

(d) the court on the application of the trustee.

(2) Subject to any conditions imposed in the debenture or

debenture trust deed, a debenture holder or a trustee, in the case of

a trust, deed may -

(a) bring an action in a representative capacity against the

company for payment and enforcement of the security;

(b) realise his security by -

(i) bringing a foreclosure action, or

(ii) commencing a winding-up proceeding.

(3) A receiver appointed under this section shall, subject to any

order made by the court, have power to take possession of the

assets subject to the mortgage, charge or security and to sell those

assets and, if the mortgage, charge or security extends to such

assets, to collect debts owed to the company, to enforce claims

vested in the company, to compromise, settle and enter into

arrangements in respect of with a view to selling it on the most

favourable terms, to grant, or accept leases of land and licences in

respect of patents, designs, copyright or trademarks, and to recover

any instalment unpaid on the company's issued shares.

(4) Where a representative action is being brought under

paragraph (a) of subsection (2) of this section, the approval of the

court shall be obtained where the company is being wound up.

(5) The remedies given by this section shall be in addition to, and

not in substitution for, any other powers and remedies conferred

on the trustee or the debenture trust deed or on the debenture

holders by the debentures or debenture trust deed, and any power

or remedy which is expressed in any instrument to be exercisable

if the debenture holders become entitled to realise their security

shall be exercisable on the occurrence of any of the events

specified in subsection (1) of subsections (1) and (2) of section

208 of this Act; but a manager of the business or of any of the

assets of a company may not be appointed for the benefit of

debenture holders unless a receiver has also been appointed and

has not ceased to act.

(6) The provisions of sections 387 to 400 of this Act shall apply to

receivers and managers under this Part of this Act.

(7) No provision in any instrument which purports to exclude or

restrict the remedies given by this section shall be valid.

210. Subject to the provisions of this Part of this Act and unless the

context otherwise admits, the provisions of sections 146, 147, 151,

153, 156 and 157 of this Act relating to share certificates and transfer

of shares shall apply in respect of shares as if debentures were

substituted for shares and debentures holders for shareholders

Part VIII

Meetings and Proceedings of Companies

Statutory meeting.

211. (1) Every public company shall, within a period of six months

from the date of its incorporation, hold a general meeting of the

members of the company (in this Act referred to as the statutory

meeting).

(2) The directors shall, at least twenty one days before the day on

which the statutory meeting is held, forward to every member of

the company a copy of the statutory report.

(3) The statutory report shall be certified by not less than two

directors or by a director and the secretary of the company and

shall state -

(a) the total number of shares allotted, distinguishing shares

allotted as fully or partly paid up otherwise than in cash, and

stating in the case of shares partly paid up the extent to which

they are so paid up, and in either case, the consideration for

which they have been allotted;

(b) the total amount of cash received by the company in

respect of all the shares allotted and distinguished as aforesaid;

(c) the names, addresses and descriptions of the directors,

auditors, managers, if any, and secretary of the company;

(d) the particulars of any pe-incorporation contract together

with the particulars of any modification or proposed

modification thereon;

(e) any underwriting contract that has not been carried out and

the reasons therefore;

(f) the arrears, if any, due on calls from every director; and

(g) the particulars of any commission or brokerage paid or to

be paid in connection with the issue or sale of shares or

debentures to any director or to the manager.

(4) The report shall also contain an abstract of the receipts of the

company and of the payments made from them up to a date within

seven days of the date of the report, exhibiting under distinctive

headings the receipts of the company from shares and debentures

and other sources, the payments made from such receipts and

particulars concerning the balance remaining in hand, and an

account or estimate of the preliminary expenses of the company.

(5) The statutory report shall, so far as it relates to the shares allotted

by the company, and to the cash received in respect of such shares,

and to the receipts and payments of the company on capital

account, be certified as correct by the auditors of the company.

(6) The directors shall cause a copy of the statutory report,

certified as required by this section, to be delivered to the

Commission for registration forthwith after the sending of copies

to the members of the company.

(7) The directors shall cause a list showing the names, descriptions

and addresses of the members of the company, and the number of

shares held by them respectively, to be produced at the

commencement of the meeting and to remain open and accessible

to any member of the company during the continuance of the

statutory meeting.

(8) The members of the company present at the statutory meeting

shall be at liberty to discuss any matter relating to the formation of

the company, and its commencement of business or arising out of

the statutory report.

(9) Any member who wishes a resolution to be passed on any

matter arising out of the statutory report shall give further twenty

one days notice from the date on which the statutory report was

received to the company of his intention to propose such a

resolution.

(10) The statutory meeting may adjourn from time to time, and at

any adjourned meeting any resolution of which notice has been

given in accordance with the articles, either before or subsequently

to the former meeting, may be passed, and the adjourned meeting

shall have the same powers as an original meeting.

212. Without prejudice to the provisions of section 408 of this Act, if a

company fails to comply with the requirements of section 211 of this

Act, the company and any officer in default shall be guilty of an

offence and liable to a fine of N50 for every day during which the

default continues.

General meeting.

213. (1) Every company shall in each year hold a general meeting as

its annual general meeting in addition to any other meetings in that

year, and shall specify the meeting as such in the notices calling it;

and not more than fifteen months shall elapse between the date of

one annual general meeting of a company and that of the next:

Provided that -

(a) if a company holds its first annual general meeting within

eighteen months of its incorporation it need not hold it in that

year or in the following year;

(b) except for the first annual general meeting, the

Commission shall have the power to extend the time within

which any annual general meeting shall be held, by a period

not exceeding three months.

(2) If default is made in holding a meeting of a company in

accordance with subsection (1) of this section, the Commission

may, on the application of any member of the company call, or

direct the calling of, a general meeting of the company and give

such ancillary or consequential directions as the Commission

thinks expedient, including directions modifying or

supplementing, in relation to the calling, holding and conducting

of the meeting, the operation of the company's articles; and it is

hereby declared that the directions that may be given under this

subsection shall include a direction that one member of the

company present in person or by proxy may apply to the court for

an order to take a decision which shall bind all the members.

(3) A general meeting held in pursuance of subsection (2) of this

section shall, subject to any directions of the Commission, be

deemed to be an annual general meeting of the company; but,

where a meeting so held is not held in the year in which the default

in holding the company's annual general meeting occurred, the

meeting so held shall not be treated as the annual general meeting

for the year in which it is held unless at that meeting the company

resolves that it shall be so treated.

(4) Where a company resolves that a meeting shall be treated as its

annual general meeting, a copy of the resolution shall, within

fifteen days after the passing thereof, be filed with the

Commission.

(5) If default is made in holding a meeting of the company in

accordance with subsection (1) of this section, or in complying

with any directions of the Commission under subsection (2)

thereof, the company and every officer of the company who is in

default shall be guilty of an offence and be liable to a fine of N500

and if default is made in complying with subsection (4) of this

section, the company and every officer of the company who is in

default shall be liable to a fine of N25.

214. All businesses transacted at annual general meetings shall be

deemed special business, except declaring a dividend, the presentation

of the financial statements and the reports of the directors and

auditors, the election of directors in the place of those retiring, the

appointment, and the fixing of the remuneration of the auditors and

the appointment of the members of the audit committee under section

59 of this Act which shall be ordinary business.

Extraordinary General Meeting.

215. (1) The Board of directors may convene an extraordinary

general meeting whenever they deem fit, and if at any time there

are not within Nigeria sufficient directors capable of acting to

form a quorum, any director may convene an extraordinary

general meeting.

(2) An extraordinary general meeting of a company may be

requisitioned by any member or members of the company holding

at the date of the requisition not less than one tenth of the paid up

capital of the company as at the date of the deposit carrying the

right of voting, or in the case of a company not having a share

capital, members of the company representing not less than one

tenth of the total voting rights of all the members having at the

said date a right to vote at general meetings of the company, and

the directors shall on receipt of the requisition forthwith proceed

duly to convene an extraordinary general meeting of the company,

notwithstanding anything in its articles.

(3) The requisition shall state the objects of the meeting, and be

signed by the requisitionists and deposited at the registered office

of the company, and the requisition may consist of several

documents in like form each signed by one or more requisitionists.

(4) If the directors do not within twenty one days from the date of

the deposit of the requisition proceed duly to convene a meeting,

the requisitionists, or any one or more of them representing more

than one half of the total voting rights of all of them, may

themselves convene a meeting:

Provided that any meeting so convened shall not be held after the

expiration of three months from that date.

(5) A meeting convened under this section by a requisitionist or

requisitionists shall be convened in the same manner, as nearly as

possible, as that in which meetings are to be convened by

directors.

(6) Any reasonable expenses incurred by the requisitionist or

requisitionists by reason of the failure of the directors duly to

convene a meeting shall be repaid to the requisitionists by the

company, and any sum so repaid shall be retained by the company

out of any sums due or to become due from the company by way

of fees or other remuneration in respect of their services to such of

the directors as were in default.

(7) For the purpose of this section the directors shall, in the case of

a meeting at which a resolution is to be proposed as a special

resolution, be deemed not to have duly convened the meeting if

they do not give such notice as is required by section 217 of this

Act.

(8) All businesses transacted at an extraordinary general meeting

shall be deemed special.

216. All statutory and annual general meetings shall be held in Nigeria.

Notice of Meetings.

217. (1) The notice required for all types of general meetings from the

commencement of this Act shall be twenty one days from the date

on which the notice was sent out.

(2) A general meeting of a company shall, notwithstanding that

it is called by a shorter notice than that specified in subsection (1)

of this section, be deemed to have been duly called if it is so

agreed in the case of -

(a) a meeting called as the annual general meeting, by all the

members entitled to attend and vote thereat; and

(b) any other general meeting, by a majority in number of the

members having a right to attend and vote at the meeting, being

a majority together holding not less than ninety five per cent in

nominal value of the shares giving a right to attend and vote at

the meeting or, in the case of a company not having a share

capital, together representing not less than ninety five per cent

of the total voting rights at that meeting of all the members.

218. (1) The notice of a meeting shall specify the place, date and

time of the meeting, and the general nature of the business to be

transacted thereat in sufficient detail to enable those to whom it is

given to decide whether to attend or not, and where the meeting is

to consider a special resolution shall set out the terms of the

resolution.

(2) In the case of notice of an annual general meeting a statement

that the purpose is to transact the ordinary business of an annual

general meeting shall be deemed to be a sufficient specification

that the business is for the declaration of dividends, presentation of

the financial statements, reports of the directors and auditors, the

election of directors in the place of those retiring, the fixing of the

remuneration of the auditors and, if the requirements of sections

362 and 363 of this Act are duly complied with, the removal and

election of auditors and directors.

(3) No business may be transacted at any general meeting unless

notice of it has been duly given.

(4) In every case in which a member is entitled, pursuant to

section 230 of this Act, to appoint a proxy to attend and vote

instead of him, the notice shall contain with reasonable

prominence, a statement that the member has the right to appoint a

proxy to attend and vote instead of him and that the proxy need

not be a member of the company, and if default is made in

complying with this subsection as respects any meeting, every

officer of the company who is in default shall be guilty of an

offence and liable to a fine not exceeding N500.

(5) An error or omission in a notice with respect to the place, date,

time or general nature of the business of a meeting shall not

invalidate the meeting, unless the officer of the company

responsible for the error or omission acted in bad faith and failed

to exercise due care and diligence:

Provided that in the case of accidental error or omission, the

officer responsible shall effect the necessary correction either

before or during the meeting.

219. (1) The following persons shall be entitled to receive notice of a

general meeting -

(a) every member;

(b) every person upon whom the ownership of a share

devolves by reason of his being a legal representative, receiver

or a trustee in bankruptcy of a member;

(c) every director of the company;

(d) every auditor for the time being of the company; and

(e) the secretary of the company.

(2) No person other than those mentioned in subsection (1) of this

section shall be entitled to receive notices of general meetings.

220. (1) A notice may be given by the company to any member

either personally or by sending it by post to him or to his

registered address, or (if he has no registered address within

Nigeria) to the address, if any, supplied by him to the company for

the giving of notice to him.

(2) Where a notice is sent by post, service of the notice shall be

deemed to be effected by properly addressing, pre-paying, and

posting a letter containing the notice, and to have been effected in

the case of a notice of a meeting at the expiration of seven days

after the letter containing the same is posted, and in any other case

at the time at which the letter would be delivered in the ordinary

course of post.

(3) A Notice may be given by the company to the joint holders of

shares by giving the notice to the joint holder first named in the

register of members in respect of the share.

(4) A notice may be given by the company to the persons entitled

to shares in consequence of the death or bankruptcy of a member

by sending it through the post in a prepaid letter addressed to them

by name, or by the title of representatives of the deceased, or

trustee of the bankrupt, or by any like description, at the address, if

any within Nigeria supplied for the purpose by the person claiming

to be so entitled, or (until such an address has been so supplied) by

giving the notice in any manner in which the same might have

been given if the death or bankruptcy had not occurred.

(5) Registered address means, in the case of a member, any

address supplied by him to the company for the giving of notice to

him.

221. (1) Failure to give notice of any meeting to a person entitled to

receive it shall invalidate the meeting unless such failure is an

accidental omission on the part of the person or persons giving the

notice.

(2) Failure to give notice to a person entitled to it due to a

misrepresentation or misinterpretation of the provisions of this

Act, or of the articles shall not amount to an accidental omission

for the purposes of the foregoing subsection.

222. In addition to the notice required to be given to those entitled to

receive it in accordance with the provisions of this Act, every public

company shall, at least twenty one days before any general meeting,

advertise a notice of such meeting in at least two daily newspapers.

223. (1) If for any reason it is impracticable to call a meeting of a

company or of the board of directors in any manner in which

meetings of that company or board may be called, or to conduct

the meeting of the company or board in the manner prescribed by

the articles or this Act, the court may, either of its own motion or

on the application of any director of the company or of any

member of the company who would be entitled to vote at the

meeting, in the case of the meeting of the company, and of any

director of the company, in case of the meeting of the board, order

a meeting of the company or board, as the case may be, to be

called, held and conduced in such manner as the court thinks fit,

and where any such order is made may give such ancillary or

consequential directions as it thinks expedient.

(2) It is hereby declared that the directions that may be given

under subsection (1) of this section shall include a direction that

one member of the company present in person or by proxy, in the

case of a meeting of the company, and one director, in the case of

the Board may apply to the court for an order to take a decision

which shall bind all the members.

(3) Any meeting called, held and conducted in accordance with an

order under subsection (1) of this section, shall for all purposes be

deemed to be a meeting of the company or of the board of

directors duly called, held and conducted.

Voting

224. (1) At any general meeting, a resolution put to the vote shall be

decided on a show of hands, unless a poll is (before or on the

declaration of the result of the show of hands) demanded by -

(a) the chairman, where he is a shareholder or a proxy;

(b) at least three members present in person or by proxy;

(c) any member or members present in person or by proxy and

representing not less than one tenth of the total voting rights of

all the members having the right to vote at the meeting; or

(d) a member or members holding shares in the company

conferring a right to vote at the meeting being shares on which

an aggregate sum has been paid up equal to not less than one

tenth of the total sum paid up on all the shares conferring that

right.

(2) Unless a poll is so demanded, a declaration by the chairman

that a resolution has, on a show of hands, been carried or carried

unanimously, or by a particular majority, or minutes of the

proceedings of the company, shall be conclusive evidence of the

fact, without proof of the number or proportion of the votes

recorded in favour of, or against, the resolution.

225. (1) Any provision contained in a company's articles shall be

void in so far as it would have the effect either of -

(a) excluding the right to demand a poll at a general meeting

on any question other than the election of the chairman of the

meeting or the adjournment of the meeting; or

(b) making ineffective a demand for a poll on any such

question which is made by any of the persons mentioned in

section 224 of this Act.

(2) The instrument appointing a proxy to vote at a meeting of a

company shall be deemed also to confer authority to demand or

join in demanding a poll, and for the purposes of subsection (1) of

this section, a demand by a person as proxy for a member shall be

the same as a demand by the member.

(3) Notwithstanding section 224 of this Act and subsection (1) and

(2) of this section, there shall be no right to demand a poll on the

election of members of the Audit Committee under section 359 of

this Act.

226. (1) On a poll taken at a meeting of a company, or a meeting of

any class of members of a company, a member entitled to more

than one vote need not, if he votes, use all his votes or cast all the

votes the uses in the same way.

(2) Except as provided in subsection (4) of this section, if a poll is

duly demanded, it shall be taken in such manner as the chairman

directs, and the result of the poll shall be deemed to be the

resolution of the meeting at which the poll was demanded.

(3) In the case of an equality of votes, whether on a show of hands

or on a poll, the chairman of the meeting at which the show of

hands takes place or at which the poll is demanded, shall be

entitled to a second or casting vote.

(4) A poll demanded on the election of a chairman or on a

question of adjournment shall be taken forthwith, and on any other

question, shall be taken at such time as the chairman of the

meeting directs, and any business other than that upon which a

poll has been demanded may be proceeded with pending the

taking of the poll.

227. (1) Subject to section 228 of this Act, every member shall have

a right to attend any general meeting of the company in

accordance with the provisions of section 81 of this Act.

(2) In the case of joint holders of shares, the vote of the senior

joint holder who tenders a vote, whether in person or by proxy,

shall be accepted to the exclusion of the votes of the other joint

holders; and for this purpose seniority shall be determined by the

order in which the names stand in the register of members.

(3) A member of unsound mind, or in respect of whom an order

has been made by any court having jurisdiction in lunacy, may

vote, whether on a show of hands or on a poll, by his committee,

receiver, curator bonis, or other person in the nature of a

committee, receiver or curator bonis appointed by that court, and

any such committee, receiver, curator bonis or other person may

vote by proxy.

228. Every person who is entitled to receive notice of a general meeting

of the company as provided by section 227 of this Act shall be

entitled to attend such a meeting.

229. No objections shall be raised to the qualification of any voter

except at the meeting or adjourned meeting at which the vote objected

to is given or tendered, and every vote not disallowed at such meeting

shall be valid for all purposes and any such objection made in due

time shall be referred to the chairman of the meeting, whose decision

shall be final and conclusive.

230. (1) Any member of a company entitled to attend and vote at a

meeting of the company shall be entitled to appoint another person

(whether a member or not) as his proxy to attend and vote instead

of him, and a proxy appointment to attend and vote instead of a

member shall also have the same right as the member to speak at

the meeting:

Provided that, unless the articles otherwise provide, this section shall not

apply in the case of a company not having a share capital.

(2) In every notice calling a meeting of a company having a share

capital, there shall appear with reasonable prominence a statement

that a member entitled to attend and vote is entitled to appoint a

proxy or, where that is allowed, two or more proxies, to attend and

vote instead of him, and that a proxy need not be a member and if

default is made in complying with this subsection as respects any

meeting, every officer of the company who in default shall be

guilty of an offence and liable to a fine of N250.

(3) Any provision contained in a company's articles shall be void

in so far as it would have the effect of requiring the instrument

appointing a proxy or any other document necessary to show the

validity of or otherwise relating to the appointment of a proxy, to

be received by the company or any other person more than forty

eight hours before a meeting or adjourned meeting in order that

the appointment may be effective at the meeting.

(4) If, for the purpose of any meeting of a company, invitations to

appoint as proxy a person or one of a number of persons specified

in the invitations are issued at the company's expense to some only

of the members entitled to be sent notice of the meeting and to

vote by proxy at the meeting, every officer of the company who

knowingly and willfully authorises or permits their issue as

aforesaid shall be guilty of an offence and liable to a fine of N500:

Provided that an officer shall not be liable under this subsection by

reason only of the issue to a member at his request in writing of a form of

appointment naming the proxy or of a list of persons willing to act as

proxy if the form or list is available on request in writing to every

member entitled to vote at the meeting by proxy.

(5) A vote given in accordance with the terms of an instrument of

proxy shall be valid notwithstanding the previous death or insanity

of the principal or revocation of the proxy or of the authority under

which the proxy was executed, or the transfer of the share in

respect of which the proxy is given:

Provided that no intimation in writing of such death, insanity, revocation

or transfer as aforesaid has been received by the company before the

commencement of the meeting or adjourned meeting at which the proxy

is used.

(6) The instrument appointing a proxy shall be in writing under

the hand of the appointer or of his attorney duly authorised in

writing or; if the appointer is a corporation, either under seal, or

under the hand of an officer or attorney duly authorised.

(7) The instrument appointing a proxy and the power of attorney

or other authority, if any, under which it is signed or a certified

copy of that power or authority shall be deposited at the registered

office or head office of the company or at such other place within

Nigeria as is specified for that purpose in the notice convening the

meeting, not less than forty eight hours before the time for holding

the meeting or adjourned meeting, at which the person named in

the instrument proposes to vote, or, in the case of a poll, not less

than twenty four hours before the time appointed for the taking of

the poll; and in default, the instrument of proxy shall not be treated

as valid.

(8) This section shall apply to meetings of any class of members

of a company as it applies to general meetings of the company.

231. (1) A corporation, whether a company within the meaning of this

Act or not, may if it is -

(a) a member of another corporation, being a company within

the meaning of this Act, by resolution of its directors or other

governing body authorise such person as it thinks fit to act as

its representative at any meeting of the company or at any

meeting of any class of members of the company;

(b) a creditor (including a debenture holder) of another

corporation, being a company within the meaning of this Act,

by resolution of its directors or other governing body authorise

such person as it thinks fit to act as its representative at any

meeting of any creditors of the company held in pursuance of

the provisions contained in any debenture or trust deed, as the

case may be.

(2) A person, authorised as provided in subsection (1) of this

section, shall be entitled to exercise the same powers on behalf of

the corporation which he represents as that corporation might

exercise if it were an individual shareholder, creditor or holder of

debentures of that other company.

232. (1) Unless otherwise provided in the articles, no business shall

be transacted at any general meeting unless a quorum of members

is present at the time when the meeting proceeds to business and

throughout the meeting.

(2) Unless otherwise provided in the articles, the quorum for the

meeting of a company shall be one third of the total number of

members of the company or twenty five members (whichever is

less) present in person or by proxy:

Provided that where the number of members is not a multiple of three,

then the number nearest to one third, and where the number of members

is six or less, the quorum shall be two members.

(3) For the purpose of determining a quorum, all members or their

proxies shall be counted.

(4) Where a member or members withdraw from the meeting for

what appears to the chairman to be insufficient reasons and for the

purpose of reducing the quorum, and in fact the quorum is no

longer present, the meeting may continue with the number present,

and their decision shall bind all the shareholders and where there

is only one member, he may seek direction of the court to take a

decision.

(5) Where there is a quorum at the beginning, but no quorum later

due to some shareholders leaving for what appears to the chairman

to be sufficient reasons, the meeting shall be adjourned to the same

place, and time, in a week's time, and if there is no quorum still at

the adjourned meeting, the members present shall then be the

quorum and their decision shall bind all shareholders and where

only one member is present, he may seek direction of the court to

take a decision.

Resolutions.

233. (1) A resolution shall be an ordinary resolution when it has been

passed by a simple majority of votes cast by such members of the

company as, being entitled to do so, vote in person or by proxy at

a general meeting.

(2) A resolution shall be a special resolution when it has been

passed by not less than three fourths of the votes cast by such

members of the company as, being entitled to do so, vote in person

or by proxy at a general meeting of which twenty one days' notice,

specifying the intention to propose the resolution as a special

resolution, has been duly given:

Provided that, if it is so agreed by majority in number of the members

having the right to attend and vote at any such meeting, being a majority

together holding not less than ninety five per cent in nominal value of the

shares giving that right or, in the case of a company not having a share

capital, together representing not less than ninety five per cent of the total

voting rights at that meeting of all the members, a resolution may be

proposed and passed as a special resolution at a meeting of which less

than twenty one days' notice has been given.

(3) At any meeting at which a special resolution is submitted to be

passed, a declaration of the chairman that the resolution is carried

shall, unless a poll is demanded, be conclusive evidence of the fact

without proof of the number of proportion of the votes recorded in

favour of or against the resolution.

(4) In computing the majority of a poll demanded on the question

that a special resolution be passed, reference shall be had to the

number of votes cast for and against the resolution.

(5) For the purposes of this section, notice of a meeting shall be

deemed to be duly given and the meeting to be duly held when the

notice is given and the meeting held in the manner provided by

this Act or the articles.

(6) A company may, by its articles provide that any matter not

required by the articles or by this Act to be passed by a special

resolution shall be passed by an ordinary resolution.

234. All resolutions shall be passed at general meetings and shall not be

effective unless so passed:

Provided that in the case of a private company a written resolution signed

by all the members entitled to attend and vote shall be as valid and

effective as if passed in a general meeting.

235. (1) Subject to the following provisions of this section, it shall be

the duty of a company, on the requisition in writing of such

number of members as is hereinafter specified and (unless the

company otherwise resolves) at the expense of the company to -

(a) give to members of the company entitled to receive notice

of the next annual general meeting notice of any resolution

submitted by a member which may properly be moved and is

intended to be moved at that meeting;

(b) circulate to members entitled to have notice of any general

meeting sent to them, any statement of not general meeting

sent to them, any statement of not more than 1,000 words with

respect to the matter referred to in any proposed resolution or

the business to be dealt with at that meeting, and where the

statements has more than 1,000 words to circulate a summary

of it.

(2) The number of members necessary for a requisition under

subsection (1) of this section shall be -

(a) any one or more members representing not less than one

twentieth of the total voting rights of all the members having at

the date of the requisition a right to vote at the meeting to

which the requisition relates; or

(b) not less than one hundred members holding shares in the

company on which there has been paid up an average sum, per

member, of not less than N500,

(3) Notice of any such resolution shall be given, and any such

statement shall be circulated, to members of the company entitled

to have notice of the meeting sent to them by serving a copy of the

resolution or statement on each such member in any manner

permitted for service of notice of the meeting, and notice of any

such resolution shall be given to any other member of the

company by giving notice of the meeting, and notice of any such

resolution shall be given to any other member of the company by

giving notice of the general effect of the resolution in any manner

permitted for giving notice of meetings of the company:

Provided that the copy shall be served, or notice of the effect of the

resolution shall be given, as the case may be, in the same manner and so

far as practicable, at the same time as notice of the meeting and, where it

is not practicable for it to be served or given at that time, it shall be

served or given as soon as practicable thereafter.

(4) A company shall not be bound under this section to give notice

of any resolution or to circulate any statement unless -

(a) a copy of the requisition signed by the requisitionists (or

two or more copies which between them contain the signatures

of all the requisitionists) is deposited at the registered office of

the company -

(i) in the case of a requisition requiring notice of a

resolution, not less than six weeks before the meeting, and

(ii) in the case of any other requisition, not less than one

week before the meeting; and

(b) there is deposited or tendered with the requisition, a sum

reasonably sufficient to meet the company's expenses in giving

effect thereto:

Provided that if, after a copy of a requisition requiring notice of a

resolution has been deposited at the registered office of the company,

an annual general meeting is called for a date six weeks or less after

the copy has been deposited, the copy though not deposited within the

time required by this subsection shall be deemed to have been

properly deposited for the purposes thereof.

(5) The company shall also not be bound under this section to

circulate any statement if, on the application either of the company

or of any other person who claims to be aggrieved, the court is

satisfied that the rights conferred by this section are being abused

to secure needless publicity for defamatory matter; and the court

may order the company's costs on an application under this section

to be paid in whole or in part by the requisitionist, notwithstanding

that the requisitionist is not party to the application.

(6) Notwithstanding anything in the company's articles, the

business which may be dealt with at an annual general meeting

shall include any resolution of which notice if given in accordance

with this section and for the purposes of this subsection, notice

shall be deemed to have been so given, notwithstanding the

accidental omission in giving it to one or more members.

(7) In the event of any default in complying with the provisions of

this section, every officer of the company who is in default shall

be guilty of an offence and liable to a fine of N500.

236. Where by any provision contained in this Act, special notice is

required of a resolution, the resolution shall not be effective unless

notice of the intention to move it has been given to the company not

less than twenty-eight days before the meeting at which it is to be

moved, and the company shall give its members notice of any such

resolution at the same time and in the same manner as it gives notice

of the meeting or, if that is not practicable, shall give them notice

thereof, either by advertisement in a newspaper having an appropriate

circulation or in any other mode allowed by the articles, not less than

twenty one days before the meeting:

Provided that if, after notice of the intention to move such a resolution

has been given to the company, a meeting is called for a date twenty

eight days or less after the notice has been given, the notice though not

given within the time required by this section shall be deemed to have

been properly given for purposes thereof.

237. (1) Subject to subsection (7)(b) of section 46 of this Act, a

printed copy of every resolution or agreement to which this section

applies shall, within fifteen days after the passing or making of the

resolution or agreement, as the case may be, be forwarded to the

Commission.

(2) Where, pursuant to the provisions of sections 44 to 47 of this

Act, a company by special resolution alters the provisions of its

memorandum and the Commission is satisfied that the alteration is

not in compliance with the applicable provisions of those sections,

it may refuse to file a copy of the resolution in its records and shall

notify the company accordingly and any person aggrieved by the

refusal may appeal to the court within twenty one days from the

receipt of the notification.

(3) A copy of every resolution or agreement as is mentioned in

subsection (1) of this section for the time being in force shall be

embodied in or annexed to every copy of the articles issued after

the passing of the resolution or the making of the agreement.

(4) This section shall apply to -

(a) special resolutions;

(b) resolutions which have been agreed to by all the members

of a company, but which, if not so agreed to, would not have

been effective for their purpose, unless, as the case may be,

they had been passed as special resolution; or

(c) resolutions or agreements which have been agreed to by all

the members of any class of shareholders but which, if not so

agreed to would not have been effective for their purpose,

unless they had been passed by some particular majority or

otherwise in some particular manner, and all resolutions or

agreements which effectively bind all the members of any class

of shareholders though not agreed to by all those members; and

(d) resolutions requiring a company to be wound up

voluntarily, passed under paragraph (a) of section 457 of this

Act.

(5) If a company fails to comply with subsection (1) of this

section, the company and every officer of the company who is in

default shall be guilty of an offence and liable to a fine of N5 for

each copy in respect of which default is made.

(6) If a company fails to comply with subsection (3) of this

section, the company and every officer of the company who is in

default shall be guilty of an offence and liable to a fine of N5 for

each copy in respect of which default is made.

(7) For the purposes of subsections (5) and (6) of this section, a

liquidator of the company shall be deemed to be an officer of the

company.

238. Where a resolution is passed at an adjourned meeting of -

(a) a company;

(b) the holders of any class of shares in a company; or

(c) the directors of a company,

the resolution shall for all purposes be treated as having been passed

on the date on which it was in fact passed, and shall not be deemed to

have been passed on any earlier date.

239. (1) The chairman may, with the consent of any meeting at which

a quorum is present (and shall if so directed by the meeting),

adjourn the meeting from time to time and from place to place, but

no business shall be transacted at any adjourned meeting other

than the business left unfinished at the meeting from which the

adjournment took place.

(2) When a meeting is adjourned for thirty days or more, notice of

the adjourned meeting shall be given as in the case of an original

meeting; but otherwise it shall not be necessary to give any notice

of an adjournment or of the business to be transacted at an

adjourned meeting.

(3) if within one hour from the time appointed for the meeting a

quorum is not present, the meeting if convened upon the

requisition of members shall be dissolved, but in any other case, it

shall stand adjourned to the same day in the next week, at the same

time and place or to such other day and at such other time and

place as the chairman and in his absence, the directors may direct.

(4) If a meeting stands adjourned under subsection (3) of this

section, any two or more members present at the place and time to

which it so stands adjourned shall form a quorum and their

decision shall bind all shareholders, and where only one member

is present, he may seek the direction of the court to take a

decision.

240. (1) The chairman, if any, of the board of directors shall preside

as chairman at every general meeting of the company, or if there is

no such chairman, or if he is not present within one hour after the

time appointed for the holding of the meeting or is unwilling to

act, the directors present shall elect one of their number to be

chairman of the meeting.

(2) If at any meeting no director is willing to act as chairman or if

no director is present within one hour after the time appointed for

holding the meeting, the members present shall choose one of their

number to be chairman of the meeting.

(3) The duties and powers of the chairman shall include the duty

to -

(a) preserve order and the power to take such measures as are

reasonably necessary to do so;

(b) ensure that proceedings are conducted in a regular manner;

(c) ensure that the true intention of the meeting is carried out

in resolving any issue that arises before it;

(d) ensure that all questions that arise are promptly decided;

and

(e) act bona fide in the interest of the company.

(4) The chairman shall cast his vote bonafide in the interest of the

company as a whole, provided that if he is also a shareholder, he

may cast it in his own interest.

(5) The chairman shall have power to adjourn a meeting in

accordance with section 239(1) of this Act.

241. (1) Every company shall -

(a) cause minutes of all proceedings of general meetings;

(b) all proceedings at meetings of its directors; and

(c) where there are managers, all proceedings at meetings of

its managers, to be entered in books kept for that purpose.

(2) Any such minute of purporting to be signed by the chairman of

the meeting at which the proceedings were held, or by the

chairman of the next succeeding meeting, shall be prima facie

evidence of the proceedings.

(3) Where minutes have been made, in accordance with the

provisions of this section, of the proceedings at any general

meeting of the company or meeting of directors or managers, then

until the contrary is proved, the meeting shall be deemed to have

been duly held and convened, and all proceedings had at the

meeting to have been duly had, and all appointment of directors,

managers or liquidators shall be deemed to be valid.

(4) If a company fails to comply with the provisions of subsection

(1) of this section, the company and every officer of the company

who is in default shall be guilty of an offence and liable to a fine

of N500.

242. (1) The books containing the minutes of proceedings of any

general meeting of a company held on or after the commencement

of this Act, shall be kept at the registered office of the company,

and shall during business hours (subject to such reasonable

restrictions as the company may by its articles or in general

meeting impose, but so that no less than six hours in each day be

allowed for inspection) be open to inspection by members without

charge.

(2) Any member shall be entitled to be furnished within seven

days after receipt of his request in that behalf to the company, with

a copy of any such minutes certified by the secretary at a charge

not exceeding ten kobo for every hundred words.

(3) If any inspection required under this section is refused or if

any copy required under this section is not sent within the proper

time, the company and every officer of the company who is in

default shall be guilty of an offence and liable in respect of each

offence to a fine of N25

(4) In the case of any such refusal or default, the court may by

order compel an immediate inspection of the books in respect of

all proceedings of general meetings, or direct that the copies

required shall be sent to the persons requiring them.

243. The provisions of the foregoing sections shall apply to any class

meeting except where expressly excluded by this Act.

Next >>>

Part IX

Directors and Secretaries of the company

Chapter 1

Directors

Meaning of Directors

244. (1) Directors of a company registered under this Decree are

persons duly appointed by the company or direct and manage the

business of the company.

(2) In favour of any person dealing with the company there shall

be a rebuttable presumption that all persons who are described by

the company as directors, whether as executive or otherwise, have

been duly appointed.

(3) Where a person not duly appointed acts or holds himself out as

a director, he shall be guilty of an offence, and on conviction shall

be liable to imprisonment for 2 years or to a fine of N100 for each

day he so acts or holds out himself as a director, or to both such

imprisonment or fine and shall be restrained by the company.

(4) If it is the company that holds him out as a director, it shall be

liable to a fine of N1,000 each day it holds him out, and he and the

company may be restrained by any member from so acting unless

or until he is duly appointed.

245. (1) Without prejudice to the provisions of sections 244 and 250,

and for the purposes of sections 253, 275 and 281 of this Decree,

"director" shall include any person on whose instructions and

directions the directors are accustomed to act.

(2) Subject to sections 275, 280 and 281 of this Decree, nothing

contained in section 250 of this Decree shall be deemed to

derogate from the duties or liabilities of the duly appointed

directors.

(3) For the avoidance of doubt, the fact that a person in his

professional capacity gives advice and a director acts on it shall

not be constructed to make such a person under this Decree person

in accordance with whose directions or instructions the director of

a company is accustomed to act.

Appointment of Directors

246. (1) Every company registered on or after the commencement of

this Decree shall have at least two directors and every company

registered before that date shall before the expiration of 6 months

from the commencement of this Decree have at least tow directors.

(2) Any company whose number of directors falls below two, shall

within one months of its so falling appoint new directors and shall

not carry on business after the expiration of one month, unless

such new directors are appointed.

(3) A director or member of a company who knows that a

company carries on business after the number of directors has

fallen below two for more than 60 days shall be liable for all

liabilities and debts incurred by the company during that period

when the company so carried on business.

247. Subject to section 246 of this Decree, the number of directors and

the names of the first directors shall be determined in writing by the

subscribers of the memorandum of association or a majority of them

or the directors may be named in the articles.

248. (1) The members at the annual general meeting shall have power

to re-elect or reject directors and appoint new ones.

(2) In the event of all the directors and shareholders dying, any of

the personal representatives shall be able to apply to the Court for

an order to convene a meeting of all the personal representatives

of the shareholders entitled to attend and vote at a general meeting

to appoint new directors to manage the company, and if they fail

to convene a meeting, the creditors, if any shall be able to do so.

249. (1) The board of directors shall have power to appoint new

directors to fill any casual vacancy arising out of death,

resignation, retirement or removal.

(2) Where a casual vacancy is filled by the directors, the person

may be approved by the general meeting at the next annual general

meeting, and if not so approved, he shall forthwith cease to be a

director.

(3) The directors may increase the number of directors so long as

it does not exceed the maximum allowed by the articles, but the

general meeting shall have power to increase or reduce the number

of directors generally and may determine in what rotation the

directors shall retire:

Provided that such reduction shall not invalidate any prior act of the

removed director.

250. Where a person not duly appointed as a director acts as such on

behalf of the company, his act shall not bind the company and he shall

be personally liable for such action:

Provided that where it is the company which holds him out as director,

the company shall be bound by his acts.

251. (1) The shareholding qualification for directors may be fixed by

the articles of association of the company and unless and until so

fixed no shareholding qualification shall be required.

(2) It shall be the duty of every director who is by the articles of

the company required to hold a specified share qualification, and

who is not already so qualified to obtain qualification within 2

months after his appointment.

(3) The office of director of a company shall be vacated if the

director does not within 2 months from the date of his

appointment, obtain his qualification or after the expiration of the

said period, he ceases at any time to hold his shareholding

qualification.

(4) A person vacating office under this section shall be incapable

of being re-appointed director of the company until he has

obtained his shareholding qualification.

(5) If after the expiration of the said period, any unqualified

person acts as a director of the company, he shall be liable to a

fine of N50 for every day between the expiration of the said period

or the day on which he ceased to be qualified, as the case may be,

and the last day on which it is proved that he acted as a director.

252. (1) Any person who is appointed or to his knowledge proposed to

be appointed director of a public company and who is 70 or more

years old shall disclose this fact to the members at the general

meeting.

(2) Any person who fails to disclose his age as required under this

section shall be guilty of an offence and liable to a fine of N500.

253. (1) If any person, being an insolvent person acts as director of or

directly or indirectly takes part in or is concerned in the

management of any company, he shall be guilty of an offence and

liable on conviction to a fine of N500, or to imprisonment for a

term not less than 6 months or more than two years, or both.

(2) In this section, "company" includes an unregistered company.

254. (1) Where-

(a) a person is convicted by a High Court of any offence in

connection with the promotion, formation or management of a

company; or

(b) in the course of winding up a company it appears that a

person-

(i) has been guilty of any offence for which he is liable

(whether he has been convicted or not) under section 513 of

this Decree; or

(ii) has otherwise been guilty, while an officer of the

company, of any fraud in relation to the company or of any

breach of his duty to the company;

the Court shall make an order that that person shall not be a director

of or in any way, whether directly or indirectly, be concerned or take

part in the management of a company for a specified period not

exceeding 10 years.

(2) In the foregoing subsection, the High Court had the court

where used in relation to the making of an order against any

person by virtue of paragraph (a) of subsection (1) of this section,

include the court before which he is convicted, as well as any

court having jurisdiction to wind up the company, and in relation

to the granting of leave means any court having jurisdiction to

wind up the company as respects which leave is sought.

(3) A person intending to apply for the making of an order under

this section by the Court having jurisdiction to wind up a company

shall give not less than 10 days notice of his intention to the

person against whom the order is sought, and on the hearing of the

application, the last mentioned person may appear and himself

give evidence or all witnesses.

(4) An application for the making of an order under this section by

the court having jurisdiction to wind up a company may be made

by the official receiver, or by the liquidator of the company or by

any person who is or has been a member or creditor of the

company; and on the hearing of any application for an order under

this section by the official receiver or the liquidator, or of any

application for leave under this section by a person against whom

an order has been made on the application of the official receiver

or liquidator, the official receiver or liquidator shall appear and

call the attention of the court to any matters which seemed to him

to be relevant, and may himself give evidence or call witnesses.

(5) An order may be made by virtue of paragraph (b) (ii) of

subsection (1) of this section, notwithstanding that the person

concerned may be criminally liable in respect of the matters on the

ground of which the order is to be made and for the purposes of

the said paragraph (b) (ii) "officer" includes any person in

accordance with whose directions or instructions the directors of

the company have been accustomed to act.

(6) If any person acts in contravention of an order made under this

section, he shall be guilty of an offence and in respect of each

offence, be liable on conviction to a fine of N500 or to

imprisonment for a term of not less than 6 months or more than

two years, or both.

255. A person may be appointed a director for life provided that he

shall be removable under section 262 of this Decree.

256. Subject to the provisions of this Decree, a person may be

appointed a director of a public company notwithstanding that he is

70 years or more of age but special notice shall be required of any

resolution appointing or approving the appointment of such a director

for the purposes of this section, and the notice given to the company

and by the company to its members shall state the age of the person to

whom it relates.

257. (1) The following persons shall be disqualified from being

director-

(a) an infant, that is, a person under the age of 18 years;

(b) a lunatic or person of unsound mind;

(c) a person disqualified under sections 253 and 258 of this

Decree;

(d) a corporation other than its representative appointed t the

board for a given term.

258. (1) The office of director shall be vacated if the director-

(a) ceases to be a director by virtue of section 251 of this

Decree; or

(b) becomes bankrupt or makes any arrangement or

composition with his creditors generally; or

(c) becomes prohibited from being a director by reason of any

order made under section 254 of this Decree; or

(d) becomes of unsound mind; or

(e) resigns his office by notice in writing to the company.

(2) Where a director presents himself for a re-election, a record of

his attendance at the meetings of the board during the preceding

one year shall be made available to members at the general

meeting where he is to be re-elected.

259. (1) Unless the articles otherwise provided, at the first annual

general meeting of the company, all the directors shall retire from

office, and at the annual general meeting in every subsequent year

one-third of the directors for the time being, or if their number is

not three or a multiple of three, then the number nearest one-third

shall retire from office.

(2) The directors to retire in every year shall be those who have

been longest in office since their last election, but as between

persons who became directors on the same day those to retire shall

(unless they otherwise agree among themselves) be determined by

lot.

(3) The company at the meeting at which a director retires in the

manner mentioned in subsections (1) (2) of this section, may fill

the vacated office by electing a person to that office and in default

the retiring director shall, if offering for re-election, be deemed to

have been re-elected, unless at such meeting it is expressly

resolved not to fill such vacated office or unless a resolution for

the re-election of such director shall have been put to the meeting

and lost.

(4) No person other than a director retiring at the meeting shall

unless recommended by the directors, be eligible for election to

the office of director at any general meeting unless not less than 3

nor more than 21 days before the date appointed for the meeting

there shall have been left at the registered office or head office of

the company notice in writing, signed by a member duly qualified

to attend and vote at the meeting for which such notice is given, of

his intention to propose such person for election, and also notice in

writing signed by that person of his willingness to be elected.

260. The acts of a director, manager, or secretary shall be valid

notwithstanding any defect that may afterwards be discovered in his

appointment or qualification.

261. (1) At a general meeting of a company other than a private

company, a motion for the appointment of two or more persons as

directors of the company by a single resolution shall not be made,

unless resolution that it shall be so made has first been agreed to

by the meeting without any vote being given against it.

(2) A resolution moved in contravention of this section shall be

void, whether or not its being so moved was objected to at the

time:

Provided that-

(a) this subsection shall not be taken as excluding the

operation of section 260 of this Decree; and

(b) where a resolution so moved is passed, no provision for

automatic re-appointment of retiring directors in default of

another appointment shall apply.

(3) For the purposes of this section, a motion for approving a

person's appointment or for nominating a person for appointment

shall be treated as motion for his appointment.

(4) Nothing in this section shall apply to a resolution altering the

company's articles.

Removal of Directors

262. (1) A company may be ordinary resolution remove a director

before the expiration of his period of office, notwithstanding

anything in its articles or in any agreement between it and him.

(2) A special notice shall be required of any resolution or remove

a director under this section, or to appoint some other person

instead of a director so removed, at the meeting at which he is

removed, and on receipt of notice of an intended resolution to

remove a director under this section, the company shall forthwith

send a copy of it to the director concerned, and the director

(whether or not he is a member of the company) shall be entitled

to be heard on the resolution at the meeting.

(3) Where notice is given of an intended resolution or remove a

director under this section and the director concerned makes with

respect to it representations in writing to the company (not

exceeding a reasonable length) and requests their notification to

members of the company, the company shall, unless the

representations are received by it too late for it to do so-

(a) in any notice of the resolution given to members of the

company state the fact of the representations having been

made; and

(b) send a copy of the representations to every member of the

company to whom notice of the meeting is sent (whether

before or after receipt of the representations by the company);

and if a copy of the representations is not sent as required in this

section because it is received too late or because of the company's

default, the director may (without prejudice to his right to be heard

orally) require that the representations shall be read out at the

meeting:

Provided that copies of the representations need not be sent out

and the representations need not be read out at the meeting if, on

the application either of the company or any other person who

claims to be aggrieved, the court is satisfied that the rights

conferred by this section are being abused to secure needless

publicity for defamatory matter and the court may order the

company's costs on an application under this section to be paid in

whole or in part by the director, notwithstanding that he is not a

party to the application.

(4) A vacancy created by the removal of a director under this

section, if not filled at the meeting at which he is removed, may be

filled as a casual vacancy.

(5) A person appointed director in place of a person removed

under this section shall be treated, for the purpose of determining

the time at which he or any other director is to retire, as if he had

become director on the day on which the person in whose place he

is appointed was last appointed a director.

(6) Nothing in this section shall be taken as depriving a person

removed under it of compensation or damages payable to him in

respect of the termination of his appointment as a director or of

any appointment terminating with that as director, or as derogating

from any power to remove a director which may exist apart from

this section.

Proceedings of Directors

263. (1) The directors may meet together for the despatch of business,

adjourn and otherwise regulate their meetings as they think fit:

Provided that the first meeting of the directors shall be held not later than

6 months after the incorporation of the company.

(2) Any question arising at any meeting shall be decided by a

majority of votes, and in case of an equality of votes, the chairman

shall have a second or casting vote.

(3) A director may, and the secretary on the requisition of a

director shall, at any time summon a meeting of the directors.

(4) The directors may elect a chairman of their meetings and

determine the period for which he is to hold office; but if no such

chairman is elected or if at any meeting the chairman is not present

within five minutes after the time appointed for holding the same,

the directors present may choose one of their number to be

chairman of the meeting.

(5) The directors may delegate any of their powers to a managing

directors or to committees consisting of such member or members

of their body as they think fit and the managing director or any

committee so formed shall, in the exercise of the powers so

delegated, conform to any regulations that may be made by the

directors.

(6) A committee may elect a chairman of its meeting; and if no

such chairman is elected, or if at any meeting the chairman is not

present within five minutes after the time appointed for holding

the same, the members present may choose one of their number to

be chairman of the meeting.

(7) A committee may meet and adjourn as it thinks proper, and

any questions arising shall be determined by a majority of votes of

the members present, and in the case of equality of votes the

chairman shall have a second or casting vote.

(8) A resolution in writing, signed by all the directors for the time

being entitled to receive notice of a meeting of the directors, shall

be as valid and effectual as if it had been passed at a meeting of

the directors duly convened and held.

(9) In all the directors' meetings, each director shall be entitled to

one vote.

264. (1) Unless the articles otherwise provide, the quorum necessary

for the transaction of the business of directors shall be 2 where

there are not more than 6 directors, but where there are more than

6 directors, the quorum shall be one third of the number of

directors, and where the number of directors is not a multiple of

three, then the quorum shall be one-third to the nearest number.

(2) Where a committee of directors is appointed by the board of

directors, the board shall fix its quorum, but where no quorum is

fixed, the whole committed shall meet and act by a majority.

265. Where the board is unable to act because a quorum cannot be

formed, the general meeting may act in place of the board and where

a committee in unable to act because a quorum cannot be formed, the

board may act in place of the committee.

266. (1) Every director shall be entitled to receive notice of the

directors' meetings, unless he is disqualified by any reason under

the Decree from continuing with the office of director.

(2) There shall be given 14 days notice in writing to all directors

entitled to receive notice unless otherwise provided in the articles.

(3) Failure to give notice in accordance with subsection (2) of this

section shall invalidate the meeting.

(4) Unless the articles otherwise provide, it shall not be necessary

to give notice of a meeting of directors to any director for the time

being absent from Nigeria, provided that if he has given an address

in Nigeria, the notice shall be sent to such an address.

Remuneration and other payments

267. (1) The remuneration of the directors shall from time to time be

determined by the company in general meeting and such

remuneration shall be deemed to accrue from day to day.

(2) The directors may also be paid all travelling, hotel and other

expenses properly incurred by them in attending and returning

from meetings of the directors or any committee of the directors or

general meetings of the company or in connection with the

business of the company.

(3) Where remuneration has been fixed by the articles, it shall be

alterable only by a special resolution.

(4) A company shall not be bound to pay remuneration to

directors, but where the company agrees to pay, the directors shall

be paid such remuneration out of the fund of the company.

(5) The amount of remuneration shall be a debt from the company

so that if directors take office on the basis of the articles, they shall

be able to sue the company on account of the debt or prove it in

the liquidation.

(6) A director who receives more money than he is entitled to,

shall be guilty of misfeasance and shall be accountable to the

company for such money.

(7) The remunerations of directors shall be apportionable .

268. (1) A managing director shall receive such remuneration

(whether by way of salary, commission or participation in profits,

or partly in one way and partly in another) as the directors may

determine.

(2) Where a managing director is removed for any reason

whatsoever under section 262 of this Decree, he shall have a claim

for breach of contract if there is any or where a contract could be

inferred from the terms of the articles.

(3) Where he performs some services without a contract, he shall

be entitled to payment on a quantum meriut

269. (1) It shall not be lawful for a company to pay a director

remuneration (whether as director or otherwise) free of income

tax, or otherwise calculated by reference to or varying with the

amount of his income tax, or at or with the rate or standard rate of

income tax, except under a contract which was in force at the

commencement of this Act, and provides expressly, and not by

reference to the articles, for payment or remuneration as aforesaid.

(2) Any such provision contained in a company's articles or in any

contract other than such a contract as mentioned in subsection (1)

of this section or in any resolution of a company or the resolution

of a company's directors for payment to a director of remuneration

as mentioned in subsection (1) of this section, shall have effect as

if it provided for payment, as a gross sum subject to income tax, of

the net sum for which it actually provides.

(3) This section shall not apply to remuneration due before this

Act comes into force or in respect of a period before it comes into

force.

270. (1) It shall not be lawful for a company to make a loan to any

person who is its director or a director of its holding company, or

to enter into any guarantee or provide any security in connection

with a loan made to such a person as earlier mentioned by any

other person:

Provided that nothing in this section shall apply -

(a) subject to subsection (2) of this section, to anything done

to provide any such person as mentioned in this subsection

with funds to meet expenditure incurred or to be incurred by

him for the purposes of the company or for the purpose of

enabling him properly to perform his duties as an officer of the

company; or

(b) in the case of a company whose ordinary business includes

the lending of money or the giving of guarantees in connection

with loans made by other persons, to anything done by the

company in the ordinary course of that business.

(2) Proviso (a) to subsection (1) of this section shall not authorise

the making of any loan, or the entering into any guarantee, or the

provision of any security except

(a) with the prior approval of the company given at a general

meeting at which the purposes of the expenditure and the

amount of the loan or the extent of the guarantee or security, as

the case may be, are disclosed; or

(b) on condition that, if the approval of the company is not

given as in subsection (1) of this section at or before the next

following annual general meeting, the loan shall be repaid or

the liability under the guarantee or security shall be discharged,

as the case may be, within six months from the conclusion of

that meeting.

(3) Where the approval of the company is not given as required by

any such condition, the directors authorising the making of the

loan, or the entering into the guarantee, or the provision of the

security, shall be jointly and severally liable to indemnify the

company against any loss arising therefrom.

271. It shall not be lawful for a company to make to any director of the

company, any payment by way of compensation for loss of office, or

as consideration for or in connection with his retirement from office,

unless particulars with respect to the proposed payment and the

amount have been disclosed to members of the company and the

proposal is approved by the company.

272. (1) If in connection with the transfer of the whole or any part of

the undertaking or property of a company, it is proposed to make

any payment to a director of the company by way of compensation

for loss of office, or as consideration for or in connection with his

retirement from office, the payment shall be unlawful unless

particulars with respect to the proposal and the amount, have been

disclosed to members of the company and the proposal is

approved by the company.

(2) Where a payment declared by this section to be illegal is made

to a director of a company, the amount received shall be deemed

to have been received by him in trust for the company.

273. (1) Where, in connection with the transfer to any persons of all

or any of the shares in a company, being a transfer resulting from -

(a) an offer made to the general body of shareholders;

(b) an offer made by or on behalf of some other body

corporate with a view to the company becoming its subsidiary

or a subsidiary of its holding company;

(c) an offer made by or on behalf of an individual with a view

to his obtaining the right to exercise or control the exercise of

not less than one third of the voting power at any general

meeting of the company; or

(d) any other offer which is conditional on acceptance to a

given extent that payment is to be made to a director of the

company by way of compensation for loss of office, or as

consideration for or in connection with his retirement from

office,

it shall be the duty of that director to do all things reasonably

necessary to secure that particulars with respect to the proposed

payment and the amount, are included in or sent with any notice of

the offer made for their shares which is given to any shareholders.

(2) If -

(a) any such director fails to do all things reasonably necessary

as mentioned in this section; or

(b) any person who has been properly required by any such

director to include the said particulars in or send them with any

such notice as aforesaid fails so to do;

he shall be guilty of an offence and liable to a fine of N 20.

(3) If

(a) the requirements of subsection (1) of this section are not

complied with in relation to any such payments as are

mentioned there; or

(b) the making of the proposed payment is not, before the

transfer of any shares in pursuance of the offer, approved by a

meeting summoned for the purpose of the holders of the shares

to which the offer relates and of other holders of shares of the

same class as any of the said shares;

any sum received by the director on account of the payment shall

be deemed to have been received by him in trust for any person

who has sold his shares as a result of the offer made, and the

expenses incurred by him in distributing that sum amongst those

persons shall be borne by him and not retained out of that sum.

(4) Where the shareholders referred to in subsection (3)(b) of this

section are not all the members of the company and no provision is

made by the articles for summoning or regulating such a meeting

as is mentioned in that paragraph, the provisions of this Act and of

the company's articles relating to general meetings of the company

shall, for that purpose, apply to the meeting either without

modification or with such modifications as the Commission on the

application of any person concerned may direct for the purpose of

adapting them to the circumstances of the meeting.

(5) If at a meeting summoned for the purpose of approving any

payment as required by paragraph (b) of subsection (3) of this

section, a quorum is not present and, after the meeting has been

adjourned to a later date, a quorum is again not present, the

payment shall, for the purposes of that subsection be deemed to

have been approved.

274. (1) Where in proceedings for the recovery of any payment

which has been received by any person in trust by virtue of

subsections (I) and (2) of subsection 272 or subsections (I) and (3)

of section 273 of this Act, it is shown that -

(a) the payment was made in pursuance of any arrangement

entered into as part of the agreement for the transfer in

question, or within one year but before two years after that

agreement or the offer leading thereto; and

(b) the company or any person to whom the transfer was made

was privy to that arrangement;

the payment shall be deemed, except in so far as the contrary is

shown, to be one to which the subsections apply.

(2) If in connection with any such transfer as is mentioned in

sections 272 and 273 of this Act -

(a) the price to be paid to a director of the company whose

office is to be abolished or who is to retire from office for any

shares in the company held by him is in excess of the price

obtainable at the time by other holders of the like shares; or

(b) any valuable consideration is given to any such director;

the excess or the money value of the consideration, as the case

may be, shall, for the purposes of that section, be deemed to have

been a payment made to him by way of compensation for loss of

office, or as consideration for or in connection with his retirement

from office.

(3) It is hereby declared that references in sections 271 to 273 of

this Act to payments made to any director of a company by way of

compensation for loss of office, or as consideration for or in

connection with his retirement from office shall not include any

bona <do payment by way of damages for breach of contract or by

way of pension in respect of past services, and for the purposes of

this subsection, "pension" includes any superannuation allowance,

superannuation gratuity or similar payment.

(4) Nothing in section 272 or 273 of this Act shall be taken to

prejudice the operation of any rule of law requiring disclosure to

be made with respect to any such payments as are mentioned

there, or with respect to any other like payments made, or to be

made. to the directors of a company.

Disclosure of directors' interests

275. (1) Every company shall keep a register showing as respects

each director of the company (not being its holding shareholding

company) the number, description and amount of any shares etc in

or debentures of the company or any other body corporate, being

the company's subsidiary or holding company, or a subsidiary of

the company's holding company, which are had by or in trust for

him or of which he has any right to become the holder (whether on

payment or not):

Provided that the register need not include shares in any body

corporate which is the wholly-owned subsidiary of another body

corporate, and for this purpose, a body corporate shall be deemed

to be the wholly-owned subsidiary of another if it has no members

but that other and that other's wholly-owned subsidiaries and its or

their nominees.

(2) Where any shares or debentures fall to be or cease to be

recorded in the said register in relation to any director by reason of

a transaction entered into after the commencement of this Act and

while he is a director, the register shall also show the date ofl and

price or other consideration for the transaction;

Provided that where there is an interval between the agreement for

any such transaction and the completion thereof, the date shall be

that of the agreement.

(3) The nature and extent of a director's interest or right in or over

any shares or debentures recorded in relation to him in the said

register shall, if he so requires, be indicated in the register.

(4) The company shall not by virtue of anything done for the

purposes of this section, be affected with notice of, or put upon

inquiry as to the rights of any person in relation to any shares or

debentures.

(5) The said register shall, subject to the provisions of this section

be kept at the company's registered or head office and shall be

open to inspection during business hours (subject to such

reasonable restrictions as the company may by its articles or in

general meeting impose, so that not less than two hours in each

day be allowed for inspection) as follows -

(a) during the period beginning fourteen days before the date

of the company's annual general meeting and ending three days

after the date of its conclusion, it shall be open to the

inspection of any member or holder of debentures of the

company; and

(b) during that or any other period, it shall be open to the

inspection of any person acting on behalf of the Commission.

(6) In computing the fourteen days and the three days mentioned

in subsection (5) of this section, any day which is a Saturday or

Sunday or a public holiday shall be disregarded.

(7) Without prejudice to the rights conferred by subsection (5) of

this section, the Commission may, at any time, request for the

production to it of a copy of the register, or any part thereof.

(8) The register shall also be produced at the commencement of

the company's annual general meeting and remain open and

accessible during the continuance of the meeting to any person

attending the meeting.

(9) If default is made in complying with subsection (1) or (2) of

this section, or if any inspection required under this section is

refused, or any copy required thereunder is not sent within a

reasonable time, the company and every officer of the company

who is in default shall be guilty of an offence and liable to a fine

of N 500, and if default is made in complying with subsection (8)

of this section, the company and every officer of the company who

is in default shall be liable to a fine of N50.

(10) If any inspection required under this section is refused, the

court may, by order, compel an immediate inspection of the

register.

(11) For the purposes of this section-

(a) any person in accordance with whose directions or

instructions, the directors of a company are accustomed to act

shall be deemed to be a director of the company; and

(b) a director of a company shall be deemed to hold or to have

any interest or right in or over, any shares or debentures if a

permanent representative of the body corporate other than the

company holds them or has that interest or right in or over

them, and either-

(i) that permanent representative is accustomed to act in

accordance with his directions or instructions; or

(ii) he is entitled to exercise or control the exercise of one-

third or more of the voting power at any general meeting of

that body corporate.

276. (1) It shall be the duty of any director of a company notice to the

company of such matters relating to as may be necessary for the

purposes of sections 275 and 277 of this Act except so far as it

relates to loans made by the company or by any other person under

a guarantee from or on a security provided by the company, to an

officer thereof.

(2) Any such notice given for the purposes of section 275 of this

Act, shall be in writing and if it is not given at a meeting of the

directors, the director giving it shall do all things reasonably

necessary to secure that it is brought up and read at the next

meeting of directors after it is given.

(3) Subsection (1) of this section shall, to the extent to which it

applies in relation to directors, apply to the like extent for

(a) the purposes of section 277 of this Act in relation to

officers other than directors;

(b) the purposes of sections 276 and 277 of this Act in relation

to persons who are or have at any time during the preceding

five years been officers of the company.

(4) Any person who makes default in complying with the

foregoing provisions of this section shall be guilty of an offence

and liable to a fine of N50.

277. (1) Subject to the provisions of this section, it shall be the duty

of a director of a company who is in any way whether directly or

indirectly, interested in a contract or proposed contract with the

company to declare the nature of his interest at a meeting of the

directors of the company.

(2) In the case of a proposed contract, the declaration required by

this section to be made by a director shall be made at the meeting

of the directors at which the question of entering into the contract

is first taken into consideration or if the director was not at the

date of that meeting interested in the proposed contract, at the next

meeting of the directors held after he became so interested, and in

a case where the director becomes interested in a contract after it is

made, the said declaration shall be made at the first meeting of the

directors held after he becomes so interested.

(3) For the purpose of this section, a general notice given to the

directors of a company by a director to the effect that he is a

member of a specified company or firm and is to be regarded as

interested in any contract which may, after the date of the notice,

be made with that company or firm, shall be deemed to be a

sufficient declaration of interest in relation to any contract so

made:

Provided that any such notice shall not have effect, unless it is

given at a meeting of the directors or the director does all things

reasonably necessary to secure that it is brought up and read at the

next meeting of the directors after it is given.

(4) Any director who fails to comply with the provisions of this

section shall be guilty of an offence and liable to a fine of N100.

(5) Nothing in this section shall be taken to prejudice the operation

of any rule of law restricting directors of a company from having

any interest in contracts with the company.

278. (1) Every company to which this section applies shall, in all

trade catalogues, trade circulars, showcards and business letters on

or in which the company's name appears and which are issued or

sent by the company to any person in Nigeria state in legible

characters with respect to every director the following particulars

(a) his present forename, or the initials thereof, and present

surname;

(b) any former forenames and surnames;

(c) his nationality, if not a Nigerian:

Provided that, if special circumstances exist which the

Commission is of opinion render it expedient that such an

exemption should be granted, the Commission may, subject to

such conditions as it may prescribe by notice published in the

Gazette, exempt a company from the obligations imposed by this

subsection.

(2) This section shall apply to every company incorporated under

this Act, or any enactment repealed by it.

(3) If a company makes default in complying with this section

every officer of the company who is in default shall be guilty of an

offence and liable on conviction for each offence to a fine of N50:

Provided that no proceedings shall be instituted under this section

except by, or with the consent O{ the Attorney-General of the

Federation.

(4) For the purposes of this section -

(a) "initials" includes a recognised abbreviation of a forename;

(b) references to a former forename or surname in the case of

a married woman do not include the name or surname by

which she was known previous to the marriage; and

(c) "showcards" means cards containing or exhibiting articles

dealt with, or samples or representations thereof.

Duties of Directors

279. (1) A director of a company stands in a fiduciary directors.

relationship towards the company and shall observe the utmost

good faith towards the company in any transaction with it or on its

behalf.

(2) A director shall also owe fiduciary relationship with the

company in the following circumstances-

(a) where a director is acting as agent of a particular

shareholder;

(b) where even shareholder, dealing with though he is not an

agent of any such a shareholder or other person is the

company's securities.

(3) A director shall act at all times in what he believes to be the

best interests of the company as a whole so as to preserve its

assets, further its business, and promote the purposes for which it

was formed, and in such manner as a faithful, diligent, careful and

ordinarily skilful director would act in the circumstances.

(4) The matters to which the director of a company is to have

regard in the performance of his functions include the interest of

the company's employees in general, as well as the interests of its

members.

(5) A director shall exercise his powers for the purpose for which

he is specified and shall not do so for a collateral purpose, and the

power, if exercised for the right purpose does not constitute a

breach of duty, if it, incidentally, affects a member adversely.

(6) A director shall not fetter his discretion to vote in a particular

way.

(7) Where a director is allowed to delegate his powers under any

provision of this Act such a director shall not delegate the power

in such a way and manner as may amount to an abdication of duty.

(8) No provision, whether contained in the articles or resolutions

of a company, or in any contract shall relieve any director from the

duty to act in accordance with this section or relieve him from any

liability incurred as a result of any breach of the duties conferred

upon him under this section.

(9) Any duty imposed on a director under this section shall be

enforceable against the director by the company.

280. (1) The personal interest of a director shall not conflict with any

of his duties as a director under this Act.

(2) A director shall not -

(a) in the course of management of affairs of the company; or

(b) in the utilisation of the company's property,

Part X

Protection of Minority against illegal and oppressive conduct

Action by or against the company

299. Subject to the provisions of this Act, where an irregularity has

been committed in the course of a company's affairs or any wrong has

been done to the company, only the company can sue to remedy that

wrong and only the company can ratify the irregular conduct.

300. Without prejudice to the rights of members under sections 303 to

30S and sections 310 to 312 of this Act or any other provisions of this

Act, the court on the application of any member, may by injunction or

declaration restrain the company from the following -

(a) entering into any transaction which is illegal or ultra vires;

(b) purporting to do by ordinary resolution any act which by

its constitution or the Act requires to be done by special

resolution;

(c) any act or omission affecting the applicant's individual

rights as a member;

(d) committing fraud on either the company or the minority

shareholders where the directors fail to take appropriate action

to redress the wrong done;

(e) where a company meeting cannot be called in time to be of

practical use in redressing a wrong done to the company or to

minority shareholders; and

(f) where the directors are likely benefit, or have profited or

negligence or from their breach of duty.

301. (1) Where a member institutes a personal action to enforce a right

due to him personally, he shall not be entitled to any damages but

to a declaration or injunction to restrain the company or the

directors from doing a particular act.

(2) Where a member institutes a representative action on behalf of

himself and other affected members to enforce any rights due to

them, he shall not be entitled to any damages but to a declaration

or injunction to restrain the company and/or directors from doing a

particular act.

(3) Where any member institutes an action under this section, the

court may award costs to him personally whether or not his action

succeeds.

(4) In any proceedings by a member under section 300 of this Act,

the court may, if it thinks fit order that the member shall give

security for costs.

302. For the purpose of sections 300 and 301 of this Act, "member"

includes -

(a) the personal representative of a deceased member; and

(b) any person to whom shares have been transferred or

transmitted by operation of law.

303. (1) Subject to the provisions of subsection (2) of this section, an

applicant may apply to the court for leave to bring an action in the

name or on behalf of a company, or to intervene in an action to

which the company is a party, for the purpose of prosecuting,

defending or discontinuing the action on behalf of the company.

(2) No action may be brought and no intervention may be made

under subsection (1) of this section, unless the court is satisfied

that -

(a) the wrongdoers are the directors who are in control, and

will not take necessary action;

(b) the applicant has given reasonable notice to the directors of

the company of his intention to apply to the court under

subsection (1) of this section if the directors of the company do

not bring, diligently prosecute or defend or discontinue the

action;

(c) the applicant is acting in good faith; and

(d) it appears to be in the best interest of the company that the

action be brought, prosecuted, defended or discontinued.

304. (1) In connection with an action brought or intervened under

section 303 of this section, the court may, at any time, make any

such order or orders as it thinks fit.

(2) Without prejudice to the generality of subsection (I) of this

section, the court may make one or more of the following orders.

that is an order -

(a) authorising the applicant or any other person to control the

conduct of the action;

(b) giving directions for the conduct of the action;

(c) directing that any amount adjudged payable by a defendant

in the action shall be paid in whole or in part. directly to former

and present security holders of the company instead of to the

company;

(d) requiring the company to pay reasonable legal fees

incurred by the applicant in connection with the proceedings.

305. An application made or an action brought or intervened in under

section 303 of this Act shall not be stayed or dismissed by reason only

that it is shown that an alleged breach of a right or a duty owed to the

company has been or may be approved by the shareholders of such

company, but evidence of approval by the shareholders may be taken

into account by the court in making an order under section 304 of this

Act.

306. An application made or an action brought or intervened in under

section 303 of this Act shall not be stayed, discontinued, settled or

dismissed for want of prosecution without the approval of the court

given upon such terms as the court thinks fit and. if the court

determines that the rights of any applicant may be substantially

affected by such stay, discontinuance. settlement or dismissal, the

court may order any party to the application or action to give notice to

the applicant.

307. An applicant shall not be required to give security for costs in any

application made or action brought or intervened in under section 303

of this Act.

308. In an application made or an action brought or intervened in under

section 303 of this Act the court may, at any time. order the company

to pay to the applicant interim costs before the final disposition of the

application or action.

309. In sections 303 to 308 of this Act9 "applicant" means -

(a) a registered holder or a beneficial owner and a former

registered holder or beneficial owner, of a security of a

company;

(b) a director or an officer or a former director or officer of a

company;

(c) the Commission; or

(d) any other person who in the discretion of the court, is a

proper person to make an application under section 303 of this

Act.

Relief on the grounds of unfairly prejudicial and oppressive conduct

310. (1) An application to the Court by petition for an order under

section 311 of this Act in relation to a company may be made by

any of the following persons -

(a) a member of the company;

(b) a director or officer or former director or officer of the

company;

(c) a creditor;

(d) the Commission; or

(e) any other person who, in the discretion of the court, is the

proper person to make an application under section 311 of this

Act.

(2) In sections 3 11 to 313 of this Act, "member" includes -

(a) the personal representative of a deceased member; and

(b) any person to whom shares have been transferred or

transmitted by operation of law.

311. (1) An application for relief on the ground that the affairs of a

company are being conducted in an illegal or oppressive may be

made to the court by petition.

(2) An application to the court by petition for an order under this

section in relation to a company may be made--

(a) by a member of the company who alleges -

(i) that the affairs of the company are being conducted in a

manner that is oppressive or unfairly pre-judicial to, or

unfairly discriminatory against, a member or members, or in

a manner that is in disregard of the interests of a member or

the members as a whole, or

(ii) than an act or omission or a proposed act or omission,

by or on behalf of' the company or a resolution, or a

proposed resolution, of a class of members, was or would

be oppressive or unfairly prejudicial to, or unfairly

discriminatory against, a member or members or was or

would be in a manner which is in disregard of the interests

of a member or the members as a whole; or

(b) by any of the persons mentioned tinder paragraphs (h), (c)

and (e) of subsection (I) of section 310 of this Act who alleges-

(i) that the affairs of the company are being conducted in a

manner oppressive or unfairly pre-judicial to or

discriminatory against or in a manner in disregard of the

interests of that person,

(ii) that an act or omission, or a proposed act or omission

was or would be oppressive or unfairly prejudicial to. or

unfairly discriminatory against, or which is in a manner in

disregard of the interests of that person; or

(c) by the Commission in a case where it appears to it in the

exercise of its powers under the provisions of this Act or any

other enactment thaw-

(i) the affairs of the company are being conducted in a

manner that is oppressive or unfairly prejudicial to, or

unfairly discriminatory against a member or members or in

a manner which is in disregard of the public interest or

(ii) any actual or proposed act or omission of the company

(including an act or omission on its behalf) which was or

would be oppressive, or unfairly prejudicial to or unfairly

discriminatory against a member or members in a manner

which is in disregard of the public interest.

312. (1) If the court is satisfied that a petition under sections 310 and

311 of this Act is well founded, it may make such order or orders

as it thinks fit for giving relief in respect of the matter complained

of.

(2) Without prejudice to the generality of subsection (1) of this

section, the court may make one or more of the following orders

that is, an order -

(a) that the company be wound up;

(b) for regulating the conduct of the affairs of the company in

futures

(c) for the purchase of the shares of any member by other

members of the company;

(d) for the purchase of the shares of any member by the

company and for the reduction accordingly of the company's

capitals

(e) directing the company to institute, prosecute, defend or

discontinue specific proceedings. or authorising a member or

members or the company to institute, prosecute, defend or

discontinue specific proceedings in the name or on behalf of

the company;

(f) varying or setting aside a transaction or contract to which

the company is a party and compensating the company or any

other party to the transaction or contract;

(g) directing an investigation to be made by the Commission;

(h) appointing a receiver or a receiver and manager of the

property of the company;

(i) restraining a person from engaging in specific conduct or

from doing a specific act or thing;

(j) requiring a person to do a specific act or thing.

(3) Where an order that a company be wound up is made under

this section, the provisions of this Act relating to winding-up of

companies shall apply, with such adaptations as are necessary, as

if the order had been made upon an application duly filed in the

court by the company.

(4) Where an order under this section makes any alteration in

addition to the memorandum or articles of a company, then,

notwithstanding anything in any other provision of this Act but

subject to the provisions of the order, the company shall not have

power without the leave of the court, to make any further

alteration or addition to the memorandum and articles inconsistent

with the provisions of the order but, subject to the foregoing

provisions of this subsection, the alteration or addition shall have

effect as if it had been duly made by a resolution of the company.

(5) A certified true copy of an order made under this section

altering or giving leave to alter, a company's memorandum or

articles shall, within fourteen days from the making of the order or

such longer period as the court may allow, be delivered by the

company to the Commission for registration; and if the company

makes default in complying with the provisions of this subsection,

the company and every officer of it who is in default shall be

guilty of an offence and liable to a fine of N 50 and, for continued

contravention, to a daily default fine of N25.

313. Any person who contravenes or fails to comply with an order

made under section 3 12 of this Act that is applicable to him shall be

guilty of an offence and be liable to a fine of N 500 or imprisonment

for one year or to both such fine and imprisonment.

314. (1) The Commission may appoint one or more competent

inspectors to investigate the affairs of a company and to report on

them in such manner as it may direct.

(2) The appointment may be made

(a) in the case of a company having a share capital on the

application of members holding not less than one-quarter of the

class of shares issued;

(b) in the case of a company not having a share capital, on the

application of not less than one-quarter in number of the

persons on the company's register of members; and

(c) in any other case, on application of the company.

(3) The application shall be supported by such evidence as the

Commission may require for the purpose of showing that the

applicant or applicants have good reason for requiring the

investigation.

315. (1) The Commission shall appoint one or more competent

inspectors to investigate the affairs of a company and report on

them in such manner as it directs, if the court by order declares

that its affairs ought be so investigated.

(2) The Commission may make such an appointment if it appears

to it that there are circumstances suggesting that

(a) the company's affairs are being or have been conducted

with intent to defraud its creditors or the creditors of any other

person, or in a manner which is unfairly prejudicial to some

part of its members; or

(b) any actual or proposed act or omission of the company

(including an act or omission on its behalf) is or would be so

prejudicial, or that the company was formed for any fraudulent

or unlawful purpose; or

(c) persons concerned with the company's formation or the

management of its affairs have in connection therewith been

guilty of fraud, misfeasance or other misconduct towards it or

towards its members; or

(d) the company's members have not been given all the

information with respect to its affairs which they might

reasonably expect.

(3) Subsections (I) and (2) of this section shall be without

prejudice to the powers of the Commission under section 322 of

this Act and the power conferred by subsection (2) of this section,

shall be exercisable with respect to a body corporate

notwithstanding that it is in course of being voluntarily wound up.

(4) Reference in subsection (2) of this section to a company's

members includes any of the following persons-

(a) the personal representatives of a deceased member; and

(b) any person to whom shares have been transferred or

transmitted by operation of law.

316. (1) If an inspector appointed under section 314 or 315 of this

Act to investigate the affairs of a company thinks it necessary for

the purposes of his investigation to investigate also the affairs of

another body corporate which is or at any relevant time has been

the company's subsidiary or holding company or a subsidiary of its

holding company or a holding company of its subsidiary, he shall

report on the affairs of the other body corporate so far as he thinks

that the results of his investigation of its affairs are relevant to the

investigation of the affairs of the company first mentioned above.

(2) An inspector appointed under either section 314 or 315 of this

Act may at any time in the course of his investigation, without the

necessity of making an interim report, inform the Commission of

matters coming to his knowledge as a result of the investigation

tending to show that an offence has been conimitted.

317. (1) When an inspector is appointed under section 314 or 315 of

this Act, it shall be the duty of all officers and agents of the

company, and of all officers and agents of any other body

corporate whose affairs are investigated under section 31 6 of this

Act -

(a) to produce to the inspector all books and documents of or

relating to the company or, as the case may be, the other body

corporate which are in their custody or power;

(b) to attend before the inspector when required to do so; and

(c) otherwise to give the inspector all assistance in connection

with the investigation which he is reasonably able to give.

(2) If the inspector considers that a person other than an officer or

agent of the company or other body corporate is or may be in

possession of information concerning its affairs, he may require

that person to produce to him any books or documents in his

custody or power relating to the company or other body corporate,

to attend before him and otherwise to give him all assistance in

connection with the investigation which he is reasonably able to

give; and it is that person's duty to comply with the requirement.

(3) An inspector may examine on oath the officers and agents of

the company or other body corporate, and any such person as is

mentioned in subsection (2) of this section in relation to the affairs

of the company or other body, and administer an oath accordingly.

(4) In this section, a reference to officers or to agents includes

past, as well as present, officers or agents (as the case may be);

and "agents" in relation to a company or other body corporate,

includes its bankers and solicitors and persons employed by it as

auditors, whether these persons are or are not officers of the

company or other body corporate.

(5) An answer given by a person to a question put to him in

exercise of powers conferred by this section (whether as it has

effect in relation to an investigation under any of sections 314 to

316 of this Act as applied by any other section in this Act) may be

used in evidence against him.

318. (1) If an inspector has reasonable grounds for believing that a

director, or past director, of the company or other body corporate

whose affairs he is investigating maintains or has maintained a

bank account of any description (whether alone or jointly with

another person and whether in Nigeria or elsewhere), into or out of

which there has been paid -

(a) the emoluments or part of the emoluments of his office as

such director particulars of which have not been disclosed in

the financial statements of the company or other body

corporate for any financial year, contrary to the provisions of

Part V of the Fourth Schedule to this Act (in relation to

particular in accounts of directors);

(b) any money which has resulted from or been used in the

financing of an undisclosed transaction, arrangement or

agreement; or

(c) any money which has been in any way connected with an

act or omission or series of acts or omissions, which on the part

of that director constituted misconduct (whether fraudulent or

not) towards the company or body corporate or its members,

the inspector may require the director to produce to him all

documents in the director's possession, or under his control,

relating to that bank account.

(2) For purposes of subsection (1)(b), of this section, an

"undisclosed" transaction, arrangement or agreement is one the

particulars of which have not been disclosed in the financial

statement of any company or in a statement annexed thereto for

any financial year, including the disclosure of contracts between

companies and their directors.

319. (1) When an inspector is appointed under section 314 or 315 of

this Act to investigate the affairs of a company, the following

applies in the case of -

(a) any officer or agent of the company;

(b) any officer or agent of another body corporate whose

affairs are investigated under section 316 of this Act; and

(c) any such person as is mentioned in section 317(2) of this

Act.

(2) Subsection (4) of section 317 of this Act, shall apply with

regards to references in subsection (I) of this section to an officer

or agent.

(3) If that person

(a) refuses to produce any book or document which it is his

duty under section 317 or 318 of this Act to produce; or

(b) refuses to attend before the inspector when required to do

so; or

(c) refuses to answer any question put to him by the inspector

with respect to the affairs of the company or other body

corporate (as the case may be);

the inspector may certify the refusal in writing to the court.

(4) The court may thereupon enquire into the case; and after

hearing any witnesses who may be produced against or on behalf

of the alleged offender and after hearing any statement which may

be offered in defence, the court may punish the offender in like

manner as if he had been guilty of contempt of the court.

320. (1) The inspector may and if so directed by the Inspector's

Commission shall, make interim reports to the Commission,

rLp()rr. and on the conclusion of his investigation shall make a

final report to it and any such report shall be written or printed9 as

the Commission may direct.

(2) The Commission may direct that a copy of the inspector's

report be forwarded to the company at its registered or head office.

(3) Where an inspector is appointed under section 314 of this Act

in pursuance of an order of the court, the Commission shall furnish

a copy of any of its reports to the court.

(4) In any other case, the Commission may, if it thinks fit -

(a) furnish a copy on request and on payment of the prescribed

fee to

(i) any member of the company or other body corporate

which is the subject of the report,

(ii) any person whose conduct is referred to in the report,

(iii) the auditors of that company or body corporate,

(iv) the applicants for the investigation,

(v) any other person whose financial interests appear to the

Commission to be affected by the matters dealt with in the

report, whether as creditors of the company or body

corporate, or otherwise; and

(b) cause any such report to be printed and published.

321. (1) If, from any report made under section 320 of this Act; it

appears to the Commission, that any civil proceedings ought in the

public interest to be brought by the company or any body

corporate, the Commission may itself bring such proceedings in

the name and on behalf of the company or the body corporate.

(2) The Commission shall indemnify the body corporate against

any costs or expenses incurred by it in or in connection with

proceedings brought under this section; and any costs or expenses

so incurred shall be, if not otherwise recoverable be defrayed out

of the Consolidated Revenue Fund.

322. (1) If, from any report made under section 320 of this Act it

appears that any person has, in relation to the company or any

body corporate whose affairs have been investigated by virtue of

section 316 of this Act, been guilty of any offence for which he is

criminally liable, the report shall be referred to the Attorney-

General of the Federation.

(2) If the Attorney-General of the Federation considers that the

case referred to him is one in which a prosecution ought to be

instituted, he shall direct action accordingly9 and it shall be the

duty of all officers and agents of the company or other body

corporate, as the case may be (other than the defendant in the

proceedings), to give all assistance in connection with the

prosecution which they are reasonably able to give.

(3) If, from any report made under section 320 of this Act, it

appears to the Commission that proceedings ought in the public

interest to be brought by the body corporate dealt with by the

report for the recovery of damages in respect of any fraud,

misfeasance or other misconduct in connection with the promotion

or formation of that body corporate or the management of its

affairs, or for the recovery of any property of the body corporate

which has been misapplied or wrong-fully retained, it may refer

the case to the Attorney-General of the Federation for his opinion

as to the bringing of proceedings for that purpose in the name of

the body corporate and if proceedings are brought it shall be the

duty of all officers and agents of the company or other body

corporate as the case may be (other than the defendant in the

proceedings), to give him all assistance in connection with the

proceedings which they are reasonably able to give.

(4) Costs and expenses incurred by a body corporate in or in

connection with any proceedings brought by it under subsection

(3) of this section shall, if not otherwise recover-able, be defrayed

out of the Consolidated Revenue Fund.

323. If, in the case of any body corporate liable to be wound up under

this Act it appears to the Commission from a report made, by an

inspector under section 320 of this Act that it is expedient in the

public interest that the body should be wound up, the Commission

may (unless the body is already wound up by the court) present a

petition for it to be so wound up if the court thinks it just and

equitable to do so.

324. (1) The expenses of an incidental to an investigation by an

inspector appointed by the Commission under the foregoing

provisions of this Act, shall be defrayed in the first instance out of

the Consolidated Revenue Fund, but the following persons shall,

to the extent mentioned, be liable to make repayment, that is to say

-

(a) any person who is convicted on a prosecution instituted, as

a result of the investigation by the Attorney-General of the

Federation, or who is ordered to pay damages or restore any

property in proceedings brought by virtue of subsection (3) of

section 322 of this Act, may in the same proceedings be

ordered to pay the said expenses to such extent as are specified

in the order;

(b) any body corporate in whose name proceedings are

brought as aforesaid shall be liable to the extent of the amount

or value of any sums or property recovered by it as a result of

those proceedings;

(c) unless as the result of the investigation a prosecution is

instituted by the Attorney-General of the Federation, the

applicants for the investigation, where the inspector was

appointed under section 314 of this Act shall be liable to such

extent (if any), as the Commission may direct;

and any amount for which a body corporate is liable by virtue of

paragraph (b) of this subsection, shall be a first charge on the sums

or property mentioned in that paragraph.

(2) For the purposes of this section, any cost or expenses incurred

by the Commission in or in connection with proceedings brought

by virtue of subsection (2) of section 321 of this Act, shall be

treated as expenses of the investigation giving rise to the

proceedings.

(3) Expenses to be defrayed by the Commission under this section

shall, so far as not recovered thereunder be paid out of the

appropriate Consolidated Revenue Fund.

325. (1) A copy of any report of an inspector appointed under sections

314 and 315 of this Act, certified by the Commission to be a true

copy, shall be admissible in any legal proceedings as evidence of

the opinion of the inspector in relation to any matter contained in

the report.

(2) A document purporting to be such a certificate as is mentioned

above shall be received in evidence and be deemed to be such a

certificate, unless the contrary is proved.

326. (1) Where it appears to the Commission, that there is good

reason so to do, it may appoint one or more competent inspectors

to investigate and report on the membership of any company and

otherwise with respect to the company for the purpose of

determining the true persons who are or have been financially

interested in the success or failure (real or apparent) of the

company or able to control or materially to influence the policy of

the company.

(2) The appointment of an inspector under this section may define

the scope of his investigation, whether as respects the matter or the

period to which it is to extend or otherwise and in particular may

limit investigation to matters connected with particular shares or

debentures.

(3) Where an application for an investigation under this section

with respect to particular shares or debentures of a company is

made to the Commission by members of the company and the

number of applicants or the amount of the shares held by them is

not less than that required for an application for the appointment

of an inspector under paragraphs (a) and (P') of subsection (2) of

section 314 of this Act

(a) the Commission shall appoint an inspector to conduct the

investigation unless it is satisfied that the application is

vexatious; and

(b) the inspector9s appointment shall not exclude from the

scope of his investigation any' matter which the application

seeks to include except insofar as the Commission is satisfied

that it is reasonable for the matter to be investigated.

(4) Subject to the terms of an inspector's appointment, his powers

shall extend to the investigation of any circumstances suggesting

the existence of an arrangement or understanding which, though

not legally binding, is or was observed or likely to be observed in

practice and which is relevant to the purposes of his investigation.

327. (1) For the purposes of any investigation under section 326 of this

Act, the provisions of sections 316 to 320 of this Act shall apply

with the necessary modifications to references to the affairs of the

company or to those of any body corporate, so however, that

(a) the said sections shall apply in relation to all persons who

are or have been, or whom the inspector has reasonable cause

to believe to be or have been, financially interested in the

success or failure or the apparent success or failure of the

company or any other body corporate whose membership is

investigated with that of the company, or able to control or

materially to influence the policy thereof, including persons

concerned only on behalf of others, as they apply in relation to

officers and agents of the company or of the other body

corporate, as the case may be; and

(b) the Commission shall not be bound to furnish the company

or any other person with a copy of any report by an inspector

appointed under this section or with a complete copy thereof if

he is of the opinion that there is good reason for not divulging

the contents of the reports or of part thereof, but shall keep a

copy of any such report, or, as the case may be, the parts of any

report as regards which he is not of that opinion.

(2) The expenses of any investigation under section 326 of this

Act shall be defrayed out of the Consolidated Revenue Fund.

328. (1) Where it is made to appear to the Commission, that there is

good reason to investigate the ownership of any shares in or

debentures of a company and that it is unnecessary to appoint an

inspector for the purpose, the Commission may require any person

who it has reasonable cause to believe

(a) to be or to have been interested in those shares or

debentures; or

(b) to act or to have acted in relation to those shares or

debentures as a legal practitioner or an agent of some one

interested therein,

to give to the Commission any information which the person has

or might reasonably be expected to obtain as to the present and

past interest in those shares or debentures and the names and

addresses of the persons interested, and of any persons who act or

have acted on their behalf in relation to the shares or debentures.

(2) For the purposes of this section, a person shall be deemed to

have an interest in a share or debenture if he has any right to

acquire or dispose of the share or debenture or any interest therein

or to vote in respect thereof, or if his consent is necessary for the

exercise of any of the rights of other persons interested therein, or

if other persons interested therein can be required or are

accustomed to exercise their rights in accordance with his

instructions.

(3) Any person, who fails to give any information required of him

under this section, or who in giving any such information makes

any statement which he knows to be false in a material particular,

or recklessly makes any statement which is false in a material

particular shall be guilty of an offence and liable to a fine of N 500

or to imprisonment for a term of six months or to both.

329. (1) Where in connection with an investigation under section 326

or 328 of this Act, it appears to the Commission that there is

difficulty in finding out the relevant facts about any share (whether

issued or to be issued), and that the difficulty is due wholly or

mainly to the unwillingness of the persons concerned or any of

them to assist the investigation as required by this Act, the

Commission may in writing direct that the shares shall until

further notice be subject to the restrictions imposed by this section.

(2) So long as any shares are directed to be subject to the

restrictions imposed by this section -

(a) any transfer of those shares, or in case of unissued shares

any transfer of the right to be issued therewith and any issue

thereof, shall be void;

(b) no voting rights shall be exercisable in respect of those

shares;

(c) no further shares shall be issued in right of those shares or

in pursuance of any offer made to the holder thereof;

(d) except in a liquidation, no payment shall be made of any

sums due from the company on those shares, whether in

respect of capital or otherwise.

(3) Where the Commission directs shares to be subject to

restrictions under this section, or refuses to direct that shares shall

cease to be subject thereto, any person aggrieved thereby may

appeal to the court, and the court may, if it sees fit, direct that the

shares shall cease to be subject to the said restrictions.

(4) Any direction or order of the court that shares shall cease to be

subject to restrictions under this section, expressed to be made

with a view to permitting a transfer of those shares may continue

the restrictions mentioned in paragraphs (c) and (d) of subsection

(2) of this section, either in whole or in part, so far as they relate to

any right acquired or offer made before the transfer.

(5) Any person who

(a) exercises or purports to exercise any right to dispose of any

shares which, to his knowledge, are for the time being subject

to restrictions under this section; or

(b) votes in respect of any such shares, whether as holder or

proxy, or appoints a proxy to vote in respect thereof; or

(c) being the holder of any such shares, fails to notify that they

are subject to the said restrictions,

shall be guilty of an offence and liable to a fine of N 500 or

imprisonment for a term of six months, or to both.

(6) Where shares in any company are issued in contravention of

the said restrictions, the company and every officer of the

company who is in default shall be guilty of an offence and liable

to a fine of N 500.

(7) A prosecution shall not be instituted under this section except

by or with the consent of the Attorney-General of the Federation.

(8) This section shall apply in relation to debentures as it applies

in relation to shares.

330. Nothing in the foregoing provisions of this Part of this Act shall

require disclosure to the Commission or to an inspector appointed by

it by

(a) a legal practitioner of any privileged communication made

to him in that capacity, except as regards the name and address

of his client; or

(b) a company s bankers as such, of any information as to the

affairs of any of their customers other than the company.

Next >>>

Part XI

Financial Statement and Audit

Chapter l

Financial Statements

Accounting records

331. (1) Every company shall cause accounting records to be kept in

accordance with this section.

(2) The accounting records shall be sufficient to show and explain

the transactions of the company and shall be such as to

(a) disclose with reasonable accuracy, at any time, the

financial position of the company; and

(b) enable the directors to ensure that any financial statements

prepared under this Part comply with the requirements of this

Act as to the form and content of the company's statements.

(3) The accounting records shall, in particular, contain-

(a) entries from day to day of all sums of money received and

expended by the company, and the matters in respect of which

the receipt and expenditure took place; and

(b) a record of the assets and liabilities of the company;

(4) If the business of the company involves dealing in goods, the

accounting records shall contain

(a) statements of stocks held by the company at the end of

each year of the company;

(b) all statements of stocktakings from which any such

statement of stock as is mentioned in paragraph (a) of this

subsection has been or is to be prepared; and

(c) except in the case of goods sold by way of ordinary retail

trade, statements of all goods sold and purchased, showing the

goods and the buyers and sellers in sufficient detail to enable

all these to be identified.

332. (1) The accounting records of a company shall be kept at its

registered office or such other place in Nigeria as the directors

think fit, and shall at all times be open to inspection by the officers

of the company.

(2) Subject to any direction with respect to the disposal of records

given under winding-up rules made under section 635 of this Act,

accounting records which a company is required by section 331 of

this Act to keep shall be preserved by it for a period of six years

from the date on which they were made.

333. (1) If a company fails to comply with any provision of section

331 or 332(1) of this Act, every officer of the company who is in

default shall be guilty of an offence unless he shows that he acted

honestly and that in the circumstances in which the business of the

company was carried on, the default was excusable.

(2) An officer of a company shall be guilty of an offence if he fails

to take all reasonable steps, for securing compliance by the

company with section 332 of this Act, or has intentionally caused

any default by the company under it.

(3) A person guilty of an offence under this section, shall be liable

to imprisonment for a term not exceeding six months or to a fine

of N 500.

334. (1) In the case of every company, the directors shall in respect of

each year of the company, prepare financial statements for the

year.

(2) Subject to subsection (3) of this section, the financial

statements required under subsection (1) of this section shall

include -

(a) statement of the accounting policies;

(b) the balance sheet as at the last day of the year;

(c) a profit and loss account or, in the case of a company not

trading for profit, an income and expenditure account for the

year;

(d) notes on the accounts;

(e) the auditors' reports;

(f) the directors' report;

(g) a statement of the source and application of fund;

(h) a value added statement for the year;

(i) a five-year financial summary; and

(j) in the case of a holding company, the group financial

statements.

(3) The financial statements of a private company need not include

the matters stated in paragraphs (a), (g), (h) and (i) of subsection

(2) of this section.

(4) The directors shall at their first meeting after the incorporation

of the company, determine to what date in each year financial

statements shall be made up, and they shall give notice of the date

to the Commission within fourteen days of the determination.

(5) In the case of a holding company, the directors ensure that,

except where in their opinion there are reasons against it, the year

of each of its subsidiaries coincide with the year of the company.

Form and content of company individual and group financial statements

335. (1) The financial statements of a company prepared under section

334 of this Act, shall comply with the requirements of the Second

Schedule to this Act (so far as applicable) with respect to their

form and content, and with the accounting standards laid down in

the Statements of Accounting Standards issued from time to time

by the Nigerian Accounting Standards Board to be constituted by

the Minister after due consultation with such accounting bodies as

he may deem fit in circumstances for this purpose;

Provided that such accounting standards do not conflict with the

provisions of this Act or the Second Schedule to this Act.

(2) The balance sheet shall give a true and fair view of the state of

affairs of the company as at the end of the year; and the profit and

loss account shall give a true and fair view of the profit or loss of

the company for the year.

(3) The statement of the source and application of funds shall

provide information on the generation and utilisation of funds by

the company during the year.

(4) The value added statement shall report the wealth created by

the company during the year and its distribution among various

interest groups such as the employees, the government, creditors,

proprietors and the company.

(5) The five-year financial summary shall provide a report for a

comparison over a period of five years or more of vital financial

information.

(6) Subsection (2) of this section shall override-

(a) the requirements of the Second Schedule to this Act; and

(b) all other requirements of this Act as to the matters to be

included in the accounts of a company or in notes to those

accounts;

and accordingly the provisions of subsections (7) and (8) of this

section shall have effect.

(7) If the balance sheet or profit and loss account drawn up in

accordance with those requirements would not provide sufficient

information to comply with subsection (2) of this section, any

necessary additional information shall be provided in that balance

sheet or profit and loss account, or in a note to the accounts.

(8) If, owing to special circumstances in the case of any company

compliance with any such requirement in relation to the balance

sheet or profit and loss account would prevent compliance with

subsection (2) of this section, (even if additional information were

provided in accordance with subsection (4) of this section, the

directors shall depart from that requirement in preparing the

balance sheet or profit and loss account (so far as necessary) in

order to comply with subsection (2) of this section.

(9) If the directors depart from any such requirements, particulars

of the departure, the reasons for it and its effects shall be given in

a note to the accounts.

(10) Subsections (1) to (9) of this section, shall not apply to group

accounts prepared under section 336 of this Act and subsections

(1) and (2) of this section shall not apply to a company's profit and

loss account (or require the notes otherwise required in relation to

that account) if

(a) the company has subsidiaries; and

(b) the profit and loss account is framed as a consolidated

account dealing with all or any of the subsidiaries of the

company as well as the company;

(i) complies with the requirements of this Act relating to

consolidated profit and loss account, and

(ii) shows how much of the consolidated profit and loss for

the year is dealt with in the individual financial statements

of the company.

(11) If group financial statements are prepared and advantage is

taken of subsection (7) of this section, that fact shall be disclosed

in a note to the group financial statements.

336. (1) If, at the end of a year a company has subsidiaries, the

directors shall, as well as preparing individual accounts for that

year, also prepare group financial statements being accounts or

statements which deal with the state of affairs and profit or loss of

the company and the subsidiaries.

(2) The provisions of subsection (1) of this section shall not apply

if the company is a wholly owned subsidiary of another body

corporate incorporated in Nigeria.

(3) A group financial statement may not deal with a subsidiary, if

the directors of the company are of the opinion that

(a) it is impracticable, or would be of no real value to the

members, in view of the insignificant amounts involved; or

(b) it would involve expense or delay out of proportion to its

value to members of the company; or

(c) the result would be misleading, or harmful to the business

of the company or any of its subsidiaries; or

(d) the business of the holding company and that of the

subsidiary are so different that they cannot reasonably be

treated as a single undertaking.

(4) The group financial statements of a company shall consist of a

consolidated-

(a) balance sheet dealing with the state of affairs of the

company and all the subsidiaries of the company; and

(b) profit and loss account of the company and its subsidiaries.

(5) If the directors are of the opinion that it is better for the

purpose of presenting the same or equivalent information about

the state of affairs and profit or loss of the company and its

subsidiaries, and that to so present it may be readily appreciated by

the members of the company, the group financial statements may

be prepared in a form not consistent with subsection (1) of this

section and in particular the group financial statement may consist

of

(a) more than one set of consolidated financial statements

dealing respectively with the company and one group of

subsidiaries and with other groups of subsidiaries; or

(b) separate financial statements dealing with each of the

subsidiaries; or

(c) statements expanding the information about the

subsidiaries in individual financial statements of the company,

or in any other form.

(6) The group financial statements may be wholly or partly

incorporated in the individual balance sheet and profit and loss

account of the holding company.

337. (1) The group financial statements of a holding company shall

comply with the requirements of the Second Schedule to this Act,

so far as applicable to group financial statements in the form in

which those accounts are prepared with respect to the form and

content of those statements and any additional information to be

provided by way of notes to those accounts.

(2) Group financial statements together with any notes thereon

shall give a true and fair view of the state of affairs and profit or

loss of the company and the subsidiaries dealt with by those

statements as a whole.

(3) Subsection (2) of this section shall override

(a) the requirements of the Second Schedule to this Act; and

(b) all other requirements of this Act as to the matters to be

included in group financial statements or in notes to those

statements, and accordingly subsections (4) and (5) of this

section shall have effect.

(4) If group financial statements are not in accordance with the

requirements of this Act by not providing sufficient information in

compliance with subsection (2) of this section, any necessary

additional information shall be provided in, or in a note to, the

group financial statements.

(5) If; owing to special circumstances in the case of any company,

compliance with any requirements of the Second Schedule to this

Act in relation to its group financial statements would prevent the

statements from complying with subsection (2) of this section,

(even if additional information were provided in accordance with

subsection (4) of this section) the directors may depart from that

requirement in preparing the group financial statements.

338. (1) Subject to subsection (4) of this section, a company shall for

the purposes of this Act be deemed to be a subsidiary of another

company if -

(a) the company -

(i) is a member of it and controls the composition of its

board of directors, or

(ii) holds more than half in nominal value of its equity

share capital; or

(b) the first-mentioned company is a subsidiary of any

company which is that other's subsidiary.

(d) any shares held or power exercisable by, or by a nominee

for, the other or its subsidiary (not being held or exercisable as

mentioned in paragraph (c) of this subsection shall be treated as

not held or exercisable by the other, if the ordinary business of

the other or its subsidiary (as the case may be) includes the

lending of money and the shares are held or the power is

exercisable as above mentioned by way of security only for the

purposes of a transaction entered into in the ordinary course of

that business.

(5) For the purposes of this Act

(a) a company shall be deemed to be the holding company of

another, if the other is its subsidiary; and

(b) a body corporate shall be deemed to be the wholly-owned

subsidiary of another, if it has no member except that other and

that other's wholly owned subsidiaries are its or their nominees.

(6) In this section, "company" includes any body corporate.

339. (1) The additional matters contained in Schedule 3 to this Decree

shall be disclosed in the company's financial statements for the

year; and in that Schedule, where a thing is required to be stated or

shown or information is required to be given, it shall be construed

to mean that the thing shall be stated or shown, or the information

is to be given in note or those statements.

(2) In schedule 3 to this Decree -

(a) Parts 1 and 11 deal respectively with the disclosure of

particulars of the subsidiaries of the company and its

shareholders;

(b) Part III deals with the disclosure of financial information

relating to subsidiaries;

(c) Part IV requires a subsidiary company to disclosure its

ultimate holding company;

(d) Part V deals with the emoluments of directors, including

emoluments waived, pensions of directors and compensation

for loss of office to directors and past directors; and

(e) Part VI deals with disclosure of the number of the

employees of the company who are remunerated at higher

rates.

(3) Whenever it is stated in Schedule 3 to this Decree that this

subsection shall apply to certain particulars or information, that

particulars or information shall be annexed to the annual return

first made by the company after copies of its financial statements

have been laid before its share holders in a general meeting and if

a company fails to satisfy an obligation thus imposed, the

company and every officer of it who is in default shall be guilty of

an offence and liable to a fine of 50 and for continued

contravention, to a daily default fine of 10.

(4) It shall be the duty of any director of a company to give notice

to the company of such matters relating to himself as may be

necessary for the purposes of Part V of Schedule 3 to this Decree

and this applies to persons who are or have at any time in the

preceding 3 years been officers as it applies to directors.

(5) A person who makes default in complying with the provisions

of subsection (4) of this section shall be guilty of an offence and

liable to a fine of 10 for every day during which the default

continues.

340. (1) The group financial statements of a holding company for a

year shall comply with Part 1 of Schedule 4 to this Decree (so far

as applicable) as regards the disclosure of transactions,

arrangements and agreements mentioned therein, including loans,

quasi loans and other dealings in favour of directors.

(2) In the case of a company other than a holding company, its

individual accounts shall comply with Part 1 of Schedule 4 to this

Decree (so far as applicable) as regards disclosure matters

contained therein.

(3) Particulars which are required to be contained in Part 1 of

Schedule 4 to this Decree in any financial statements shall be

required in respect of shadow directors as well as a director given

by way of notes.

(4) Where by virtue of subsection (2) or (3) of section 336 of this

Decree, a company does not prepare group financial statements for

a year, it shall disclose such matters in its individual statements as

would have been disclosed in group financial statements.

(5) The requirements of this section shall apply with such

modifications as are necessary to bring them in line with Part 1 of

Schedule 4 to this Decree (including with particulars of exceptions

in respect of recognised banks) it shall disclose.

341. (1) The group financial statements of a holding company for a

year shall comply with Part II of Schedule 4 to this Decree (so far

as applicable as regards transactions, arrangements and

agreements made by the company or a subsidiary of it for persons

who at any time during that year were officers of the company but

not directors.

(2) In the case of a company other than a holding company, its

individual accounts shall comply with Part II of Schedule 4 to this

Decree (so far as applicable) as regards matters contained therein.

(3) Subsections (1) and (2) of this section shall not apply in

relation to any transaction or agreement made by a recognised

bank for any of its officers or for any of the officers of its holding

company.

(4) Particulars required by Part II of Schedule 4 to this Decree to

be in any accounts shall be given by way of notes to the accounts.

(5) Where by virtue of subsection (2) or (3) of section 336 of this

Decree, a company does not prepare group financial statements for

year, it shall disclose this fact in its individual financial statements

as required by subsection (1) of this section.

Directors' Reports

342. (1) In the case of every company, there shall be prepared in

respect, of each year a report by the directors -

(a) containing a fair view of the development of the business

of the company and its subsidiaries during the year and of their

position at the end of it; and

(b) stating the amount (if any) which they recommend should

be paid as dividend and the amount (if any) which they propose

to carry to reserves.

(2) The directors' report shall state the names of the persons who,

at any time during the year, were directors of the company, and the

financial activities of the company and its subsidiaries in the

course of the year and any significant change in those activities in

the year.

(3) The report shall also state the matters, and give the particulars,

required by Part 1 of Schedule 5 to this Decree.

(4) Part II of Schedule 5 to this Decree shall apply as regards the

matters to be stated in the report of the directors in the

circumstances specified therein.

(5) Part III of Schedule 5 to this Decree shall apply as regards the

matters to be stated in the directors' report relative to the

employment, training and advancement of disabled persons, the

health, safety and welfare at work of the employees of the

company and the involvement of employees in the affairs, policy

and performance of the company.

(6) In respect of any failure to comply with the requirements of

this Decree as to the matters to be stated, and the particulars to be

given, in the directors' report, every person who was a director of

the company immediately before the end of the period prescribed

for laying and delivering financial statements shall be guilty of an

offence and liable on conviction to a term of imprisonment for not

more than 6 months or to a fine of 500.

(7) In proceedings for an offence under subsection (6) of this

section, it shall be a defence for the person to prove that he took

all reasonable steps for securing compliance with the requirements

in question.

Procedure on completion of financial statements

343. (1) A company's balance sheet and every copy of it which is laid

before the company in general meeting or delivered to the

Commission shall be signed on behalf of the board by two of the

directors of the company

(2) If a copy of the balance sheet -

(a) is laid before the company or delivered to the Commission

without being signed as required by this section; or

(b) not being a copy so laid or delivered, is issued, circulated

or published in a case where the balance sheet has not been

signed as so required or where (the balance sheet having been

so signed) the copy does not include a copy of the signature as

the case may be,

the company and every officer of it who is in default shall be guilty of an

offence and liable on conviction to a fine of 300.

(3) A company's profit and loss account and so far as not

incorporated in its individual balance sheet or profit and loss

account, any group accounts of a holding company shall be

annexed to the balance sheet, and the auditors' report and the

directors' report shall also be attached to the balance sheet.

(4) The balance sheet and the profit and loss account annexed to it

shall be approved by the board of directors and signed on their

behalf by two directors authorised to do so.

344. (1) In the case of every company, a copy of the company's

financial statements for the year shall, not less than 21 days before

the date of the meeting at which they are to be laid in accordance

with section 345 of this Decree be sent to each of the following

persons -

(a) every member of the company (whether or not entitled to

receive notice of general meetings);

(b) every holder of the company's debentures, (whether or not

so entitled); and

(c) all persons other than members and debenture holders,

being persons so entitled.

(2) In the case of a company not having a share capital, subsection

(1) of this section shall not require a copy of the financial

statements to be sent to a member of the company who is not

entitled to receive notices of general meetings of the company, or

to a holder of the company's debenture who is not so entitled.

(3) Subsection (1) of this section shall not require copies of the

financial statements to be sent to -

(a) a member of the company or a debenture holder, being in

either case a person who is not entitled to receive notices of

general meetings, and of whose address the company is

unaware; or

(b) more than one of the joint holders of any shares or

debentures none of whom are entitled to receive such notices;

or

(c) those who are not so entitled in the case of joint holders of

shares or debentures some of whom are not entitled to receive

such notices.

(4) If copies of the financial statements are sent less than 21 days

before the date of the meeting, it shall, notwithstanding that fact,

be deemed to have been duly sent if it is so agreed by all the

members entitled to attend and vote at the meeting.

(5) If default is made in complying with subsection (1) of this

section, the company and every officer of it who is in default shall

be guilty of an offence and is liable to a fine of N250.

345. (1) In respect of each year, the directors shall at a date not later

than 18 months after incorporation of the company and

subsequently once at least in every year, lay before the company in

general meeting copies of the financial statements of the company

made up to a date not exceeding nine months previous to the date

of the meeting.

(2) The auditors' report shall be read before the company in

general meeting, and be open to the inspection of any member of

the company.

(3) In respect of each year, the directors shall deliver with the

annual return to the Commission a copy of the balance sheet, the

profit and loss account and the notes on the statements which were

laid before the general meeting as required by this section.

(4) In the case of an unlimited company, the directors shall not be

required by subsection (3) of this section to deliver a copy of the

accounts if -

(a) at no time during the accounting reference period has the

company been, to its knowledge, the subsidiary of a company

that was then limited and at no such time, to its knowledge

have there been held or been exercisable, by or on behalf of

two or more companies that were then limited, shares or

powers which, if they had been held or been exercisable by one

of them, would have made the company its subsidiary; and

(b) at no such time has the company been the holding

company of a company which was then limited.

(5) References in this section to a company that was limited at a

particular time are to a body corporate (under whatever law

incorporated) the liability of whose members was at that time

limited.

346. (1) If in a year any of the requirements of section 345 (1) or (3)

of this Decree is not complied with by any company every person

who immediately before the end of that period was a director of

the company shall in respect of each of those subsections which is

not so complied with, be guilty of an offence and liable to a daily

default more fine of 50 in the case of a small company, a company

limited by guarantee or an unlimited company, and 500 in the case

of any other company.

(2) If a person is charged with an offence in respect of any of the

requirements of subsection (1) or (3) of section 345 of this Decree,

it shall be a defence for him to prove that he took all reasonable

steps for securing that those requirements be complied with before

the end of the period allowed for laying and delivering accounts.

(3) In proceedings under this section with respect to a requirement

to lay a copy of a document before a company in general meeting,

or to deliver a copy of a document to the Commission, it shall not

be a defence to prove that the document in question was not in fact

prepared as required by this Part of this Decree.

347. (1) If -

(a) in respect of a year, any of the requirements of subsections

(1) and (3) of section 345 of 345 Decree has not been complied

with by a company before the end of the period allowed for

laying and delivering financial statements; and

(b) the directors of the company fail to make good the default

within 14 days after the service of a notice on them requiring

compliance, the court may on application by any member or

creditor of the company or by the Commission make an order

directing the directors (or any of them) to make good the

default within such time as may be specified in the order.

(2) The court's order may provide that all costs of and incidental to

the application shall be borne by the directors.

(3) Nothing in this section shall affect the provisions of section

346 of this Decree.

348. (1) If any financial statements of a company (other than its group

financial statement) of which a copy is laid before the shareholders

in general meeting or delivered to the Commission do not comply

with the requirement of this Decree as to the matters to be

included in, or in a note to, those financial statements, every

person who at the time when the copy is laid or delivered is a

director of the company shall be guilty of an offence and in respect

of each offence, liable to a fine of 100.

(2) If any group financial statements of which a copy is laid before

a company in a general meeting or delivered to the Commission

do not comply with section 345(4) to (7) or section 346 of this

Decree and with the other requirements of this Decree as to the

matters to be included in or in a note to those financial statements,

every person who at the time when the copy was so laid or

delivered was a director of the company shall be guilty of an

offence and liable to a fine of 250.

(3) In proceedings against a person for an offence under this

section, it shall be a defence for him to prove that he took all

reasonable steps for securing compliance with the requirements in

question.

349. (1) Any member of a company, whether or not he is entitled to

have sent to him copies of the company's financial statements, and

any holder of the company's debentures (whether or not so

entitled) shall be entitled to be furnished (on demand and without

charge) with a copy of the company's last financial statements.

(2) If, when a person makes a demand for a document with which

he is entitled by this section to be furnished, default is made in

complying with the demand within 7 days after its making, the

company and every officer of it who is in default shall be guilty of

an offence and liable to a daily default fine of 100, unless it is

proved that the person has already made a demand for, and been

furnished with, a copy of the documents.

Modified financial statements

350. (1) In certain cases a company's directors may, in accordance

with Part 1 of Schedule 6 to this Decree, deliver modified financial

statements in respect of a year as a small company.

(2) For the purposes of sections 351 to 353 and Schedule 6 to this

Decree, "deliver' means deliver to the Commission.