(FabReads) Company Law - BUL 501

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This note is compiled and brought to you by FabReads and the LSS’ Academic Committee of
21/22 Session. Go to FabReads.com for more Notes and Materials.
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BUL 501:
COMPANY LAW 1
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This note is brought to you by the Law Student Society’s Academic Committee of the
2021/2022 Academic Session in partnership with FabReads.
Major contributors of this resource material are;
1. Olayinka Abass
2. Laponism
3. Akinkunmi Abolade
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Recommended Texts
1. Gawa
2. Charles worth
3. Pellington Company law.
4. Professor Olawoye Company law.
5. Dr. Olakunle Orojo.
6. CAMA CAP C20 LFN 2004.
See Chapter 3 of OROJO on Development of Company Law
HISTORICAL BACKGROUND OF COMPANY LAW IN NIGERIA
(Prof Fubara)
Following the amalgamation of the Northern and Southern Protectorate in 1914, the Supreme
Court ordinance in 1914 under S14, provides:
“Subject to the terms of this or any other ordinance, the Common Law, doctrine of
Equity and Statutes of General Application in England on the 1st January 1900
shall be in force within the jurisdiction”.
As a result of this, the English company law consisting of Common law principles, doctrine
of Equity and Statutes General Application applicable in England as at the stated date
automatically became applicable in Nigeria- pending the time Nigeria was able to pass her
own law on relevant matters.
Consequent upon the 1914 Supreme Court Ordinance, the origin of Nigerian Company law
was to be found upon the numerous cases decided by the English Courts and in the English
Companies Act (ECA) 1862 then in force in 1914 which were generally regarded as the
genesis of Modern Company Law.
The first local company law Statutes in Nigeria was passed in 1912 but was applicable only
to the Lagos Colony and was later applicable in all the Country in 1917. So the preamble to
the 1912 ordinance sets out the object and reasons as being: “To provide for the formation
of Limited companies within the colony and protectorate. It is hoped thereby to foster
the principles of corporative trading and efforts in the country.”
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By 1922, the Companies Ordinance of 1912 and 1917 were consolidated and re-enacted with
some amendments as the Companies Ordinance of 1922. This now became CAP. 38 LFN
1948 edition and CAP 37 LFN 1958 edition. In 1963, it was re-designated Companies Act
1963 and continued to be applicable to the whole country before it was repealed in 1968.
This gave us The Companies Decree 1968. The origin of the 1968 Companies decree can be
traced to the period shortly after independence in 1960 when it became apparent that CAP 37
1958 LFN was inadequate and could not adequately cope with our emerging economic
activities. So this is the background of the Companies Decree 1968. Economic activities now
transcend the Companies Decree.
It was felt that a developing country like Nigeria needed a more robust Modern Companies
Legislation to facilitate business and also to give greater protection to investors and creditors.
The outcome of these years of efforts was the Companies Decree 1968. This 1968 Act was
remarkable in some respect. On of it is that: It made provisions for account and encourage
greater accountability as well as more effective participation of shareholders in the affairs of
their company. NB, under the 1968 act, not much attention was given to the problem of
insider trading or other similar serious activities inimical to the sound and efficient
management of Companies and operation of the stock market.
Also, there were some Allied statutes in between the 1968 Act and CAMA. One of it is the
Nigerian Enterprise Promotion Act/Decree. The legislative intention was to promote the
indigenization of enterprises which expose the inadequacies of the principles and Legal
practice governing Companies administration in Nigeria. In spite of all these, the
astronomical growth witnessed in the Nigerian economy further showed the need for a more
vibrant, systematic and comprehensive laws not rooted on the antiquated U.K. Companies
1948 Act. Nigeria set up a Law Reform Commission in 1987 which was directed by the
Attorney General and Minister of Justice to undertake a review and reform of the Nigerian
Company law. The Consulate Assembly met from 1988 – 1989, and after exhaustive
deliberations, the committee submitted its Report to the Attorney- General. This Report was
considered by the Ministry of Justice and the draft Decree was promulgated into law as the
Companies and Allied Matters Decree 1990 (No.1 of 1990) with effect from January 1,
1990. Under the Laws of the Federation 2004, it can now be found in Chapter C.20.
BACGROUND OF CORPORATION:
Where did this word come from?
No one really knows and historians have struggled with ancient and medieval history to try
and locate the origin of Corporation. There is a dispute between English scholars whether the
British Crown created corporations or found and took over the control of preexisting
collectivities. Most students incline to the latter view which seems to be supported by the
balance of EVIDENCE.
For sure there are in England, Corporations which appeared to have originated before the
King put a seal of charter giving them Legal recognition. A prime example here is the
University of Oxford.
What is perhaps clear and important to take note of is the Preoccupation of the English King
or the state to bring these entities under his control and to also promote the doctrine that they
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(Corporation) could only exist by state recognition. Whether through fear or power which
might challenge the state or through desire to obtain revenue or through the fearful instinct
which list government have of seeking to determine the life of social and economic
development.
The Tudor kings and Stuarts vigorously insisted that there could be no Corporation except
by a Royal grant. Lord Coke set out the necessity of Lawful authority of Incorporation as
arriving from -the common Law, from the authority of Parliament or by the Kings Charter.
The Stuarts subsequently argued that the King could grant, take away and could enter or
intervene in the ordering of the Corporation.
Queen Elizabeth the 1st had held this view in her time; the Colonial Companies which
envisaged were held clearly branches of government and has 1st successors...
The British East Indian Company and the South Sea Company were collectivities for the
combined purpose of profit making Enterprises and political government.
BLACKSTONE came along and this doctrine was settled as he said "but we thought in
England the King‟s consent is absolutely necessary to the erecting of a corporation either
impliedly or expressly."
In 1780, during the American Revolution, CUMMINGS States "A corporation is a

franchise created by the king." Because a corporation was an instrument and an act of the
state, it was regarded in the Country (America) which was just gaining it's independent with a
kind of fear almost precisely opposite the fear which exists today. Now questions are even
whether enterprises so great as those we see should be substantially independent of state
control. At that time, the creation of Subject prices was considered to be dangerous because
they give so great power to the government. Subsequently, a new movement gained
momentum. Taking the form that- special Charters were inherently barred and that the
privilege of doing business as a corporation ought to be available to anyone and by
consequence that states should have a general Incorporation law, permitting any business
group which fulfills its duties (formalities) to obtain Charter from the state. The privilege of
doing business as a corporation thus became generally available. See S 18 CAMA.
S 18 CAMA 1990 "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 companies."
Google Agenda 21- this is the blueprint for implementing the real declaration. This Agenda
paid particular attention to the role of enterprise in archiving this global development. You
would see this in Chapter 30 of Agenda 21 companies‟ responsibility on environmental
sustainability.
Also, Agenda 21 Cap 30 recognizes that business and industries should be full participants in
the implementation and evaluation of activities related to agenda 21 and Company policies
and operations can play a major role in reducing impacts on resources used and the
environment.
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FORMS OF BUSINESS ORGANIZATIONS
1. Sole proprietorship
2. Partnerships
3. Incorporated companies.
1. Sole Proprietorship:
Advantage (s) of the Sole proprietorship is that (the owner) is the CEO of the company.
There are minimal legal restrictions and encumbrances. Also there is low cost of business
administration. There is also business flexibility. These advantages are nothing much in the
face of some reality. This includes:
2. Unlimited liability
3. Little opportunity to raise funds and consequently slow down growth
4. Poor working conditions for employees
5. Little or no opportunity for capacity building
6. Little or no opportunity for acquiring efficient man power
7. Absence of perpetual succession. Absence of the owner is the death of the business.
2. PARTNERSHIP:
This is the relationship existing between persons with a common objective with a view to
making profit is a partnership… a partnership isn‟t a separate entity like a registered
company. It is referred to as an unincorporated entity. They are not subject to public scrutiny
and cannot provide for security for its subscribers.
THE COMPANY; WHAT IS A LIMITTED COMPANY?
The limited Company is the Legal devise normally adopted to set up a business enterprise as
an independent entity. I,e, separate and distinct from the incorporators and owners of the
shares. Such a limited company is capable of employing people and of buying and selling
goods and services in its own right. It is capable in law of owning all the property required
for the conducts of its business and it is capable of being bought and sold by successive
owners as well as of being dismembered or Balkanized.
The company is a legal personality whereas we are natural persons. Thus, the legal concept
that underlies company law is the idea of a corporation. i.e, an entity established by a process
of law in order to be a nominal artificial party to legal relationships.
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DEBATE ON LIMITTED LIABILTY; 19th CENTURY ENGLAND.
Bromwell & Hodgson Merchant Bankers in this debate came out uncompromisingly in
favour of Laisser-faire. Bronwell says “if ever there is a rule established by reason,
authority and experience, it is that the interest of a community is best consulted by living it
to its members as far as possible. The unrestricted and unfettered exercise of their own
talents and industry.”
In his opinion, the restraint on limited liability offended this golden rule. Brownwell
recommended that persons should be allowed as of rights to form partnership limiting the
liability of all some by private agreement followed by registration and that where the liability
of all was to be limited, the partnership should be incorporated and the word limited added to
its name. The majority against limited liability was 6 v 8. Despite this, the House of
Commons immediately pass a motion in favour of limited liability. In effect, the legislature
adopted Lord Brownwells recommendation and accepted his view that those who dealt with
companies knowing them to be limited have only themselves to blame if they burnt their
fingers. The mystic word “Limited” was intended to act a Red flag warning the public of the
dangers which they ran if they had dealings with the dangerous new invention. See Western
Nigeria Finance Co v West Coast Builders Ltd. 1971 UILR Pg 93. The agreement in this
case didn‟t bare the word Limited. It was simply „West Coast Builders‟. The court held that
there was no valid execution of an agreement by a limited company. Today the name of an
incorporation must end with the word PLC.
CONSEQUENCES OF INCOPORATION
1. Corporate personalities
2. Legal and practical advantages
NB, every unincorporated body do not necessarily lack all the privileges which incorporation
automatically provides. Eg, early 19th century statutes enables the Crown by Patents to
confer all or any of the advantages of incorporation without actually granting persons
corporate personality. Similarly a statute may confer many of these privileges without actual
incorporation. This been done in several cases. The result is that between the two extremes of
an unincorporated club or society and the corporations, there are many hybrids which though
formally unincorporated possess a greater or lesser number of the attributes of a corporation.
Among these hybrids, we may also include Partnerships because incorporating partners may
sue or be sued in their own name. Nb S19 CAMA which prohibits partnership of more than
20 members. Exception includes
Partnerships of lawyers, accountants, doctors, etc… See the case of Akinlose v AIT 1961.
NLR pg 213.
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TYPES OF COMPANY S25, 26

Incorporation of Company is provided for in S35-37 CAMA. Section 18 gives a right to form
a company stating that any two or more persons may form a company with due reference to
CAMA. S20 talks of Capacity. S21 gives us the types of Company.
1. Company limited by shares 2.
Company limited by guarantee
3. An unlimited company.
Either of these 3 can either be a private or public company. A private company may be found
in S22 of CAMA. This is a company of 2 and not more than 50. Public company is a
minimum of 2 with no closure.
1. Company limited by Shares:
Majority of company belongs to this category. The reason is majorly because of the Indices
of this type of company.
1. The shares create very valuable shares
2. Limitation of liability enable shareholders to determine the level of liability and
indebtedness
3. Subject to special circumstances, a person who has paid his shares in full cannot be held
liable for any part of the liability of the company.
2. Company limited by Guarantee Ltd/Gte:
Where a company is to be formed for promoting Commerce, art, Science, sports, religion,
culture, education, research, charity or other similar objects. Under S26 (5) CAMA, the
memorandum of such a company shall not be registered except it passes through the AG
FED. Again such a company shall not be incorporated for the purpose of making profit
3. Unlimited Company ULTD -S27 CAMA:
This kind of Company isn‟t Common because it is limited in its usefulness. Although it is a
corporate body, it is also like a partnership such that every member is personally liable for the
full debt of the company while he is still a member. The unlimited liability makes it
unattractive for business purposes. It is used mainly by professionals who assume personal
liability for their incorporation. S25 CAMA provides that unlimited company must be
registered with a Share Capital.
20/05/19.
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RUDIMENT OF INCORPORATION
The US Supreme Court under Chief Justice Marshall made corporation possible in the early
19th century. Marshal himself defined Corporation in case of Darkwood v Woodward 4
WHEAT Pg 158 1819 in the following terms:
“A corporation is an artificial being, invisible, intangible, and existing only in the
contemplation of the law. Being the mere creation of law, it possesses only few
qualities which the charter of the creation conferred upon it either expressly or as
incidental to its very existence. The most important are immortality and if the
expression may be allowed, individuality; propertied by which a perpetual
succession of many persons are considered as the same and may act as a single
individual.”
In summary, a corporation is a creation of law and has legal standings, independent of its
owners. 3 features have made the Corporation attractive:
1. Its unlimited life

2. The limited liability of its owners
3. The divisibility of ownership that permits transfer of ownership interests without
destruction if the structure of the organization.
Also, the company is the primary scene of organized economic activities in both capitalist
and socialist systems. Companies are privately or publicly owned and companies have
become the dominant factor in the modern private and public economic sectors in virtually all
developed and developing countries.
THE MORDERN LEGAL THEORY OF A CORPORATION

The modern theory of a corporation or company is one of the most dynamic legacies of the
economic impacts of the industrial revolution. Prior to incorporation, businesses were
organized as sole proprietorships or partnerships. The sole proprietorships and trading
associations in the form of partnerships have existed earlier and subsequent to the 18 th
century economic development in mercantile Europe. However in strict legal terms, the
incorporated business association (organization) emerged in the 19th century. Recollect that
the US Supreme Court under Chief Justice Marshall made corporation possible in the case of
Darkwood College vs. Woodward.
In Northern America, the earliest attempt at a general corporation law is set to be that of the
state of NEW YORK carved in 1811. In 1844, the British parliament passed the first joint
Stock Companies Act. However, the incorporators remain personally liable for the death of
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the company under the 1844 statutes. It wasn‟t until 1855 that limited liability was
introduced under the Limited Liability Act of 1855. This was followed by the Joint Stock
Companies Act of 1856, which consolidated the 1856 and the 1855 Statutes.
The emergence of these incorporation Statutes in Europe and North America in the early 19 th
century was contemporaneous (at the same time) with the colonial and imperial economic
activities in Africa, Asia, Oceania and Latin America. And so out of sheer expediencies the
incorporated business associations was introduced into most part of the developing world as
early as the 19th century and these early corporations were governed by the same or similar
corporation laws and practices established in the colonial metropolis. It was only after the 2 nd
world war that local corporation laws were enacted in most part of the 3rd world.
In Nigeria for instance, the first Company statutes incorporated almost verbatim the same
general principle of law and Equity that obtained in the colonial metropolis. Because of this
historical connection, the legal theories of a corporation in most countries of the world,
particularly those operating the free enterprise system have continued to share major essential
norms in common. Recollect also S14 Supreme Court ordinance 1914
“Subject to the terms of this or any other ordinance, the common Law Doctrine of
Equity and statutes of general Application in England on the 1st January 1900 shall
be in force within the jurisdiction”.
THE VESTING OF LEGAL PERSONALITY/INCORPORATED

ORGANIZATION
What are the incidences of the legal personality of the Corporation? NB, the corporate status
is interlinked with a number of legal and practical advantages of incorporation.
*Legal theory of incorporation places emphasis on the independent personality of the
company, it also identify a group which exclusively enjoys legal recognition as members of
the Company. These are known as the SHAREHOLDERS. There is an assumption that the
shareholders own the company. This is only an economic logic. This may be so, however,
legal theory refutes its position. See the case of-
Short v Treasury Commissioners. 1948 1kb Pg. 116 @ Pg 122 CAP and affirm by the
House of Lords in 1948 AC Pg 534. Per Lord Evershed stated thus:
“Shareholders are not in the eye of the law part owners of the undertaken. The
undertaken is something different from the totality of the shareholding.”
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This judicial reasoning quickly clarifies the point that what the shareholders own in the
company is shares and not the Company or its assets ipso facto. This legal reasons emerging
from the same legal theory of a corporation as separate and distinct from the shareholders
with full capacity for its rights and duties. For inconsistencies persists and the law is more
inclined to treating the corporation as shareholders property.
Dodd, the modern corporation, private properties and recent legislations (54 Harvard Law
Review. Pg 917-947).
Gawa‟s Artcle- Some contrast between British and American Corporation Law V69 Harvard
Law Review 1369 (1956). See also Salomon v Salomon & co 1897 AC Pg 22. @ Pg51 In
that case Salomon a leather merchant and boot manufacturer in 1892 formed a limited
company to take over his business. Salomon and six other members of his family
subscribed to its memorandum for one share each, and two of his sons were appointed
directors. The Company paid about ₤39.000 to Salomon for the business, the mode of
payment being to give Salomon ₤10.000 in debentures secured by a floating charge on the
Company‟s asset and ₤20,000 shares of ₤1 each, the balance of ₤9,000 was paid to Salomon
in cash. The business did not however prosper and when it was wound up, a year later its
liabilities (including debenture debt) exceeded its asset by ₤8,000. The liquidator representing
the unsecured creditors claimed that the Company‟s business was in actual fact still
Salomon‟s liability for debts incurred in carrying it on and therefore Salomon should be
ordered to indemnify the Company against its debts and payment of the debenture debt to
him should be suspended until the Company‟s other creditors are paid. The trial judge agreed
with the reasoning of the liquidator and he further held that all the subscribers of the
memorandum (Except Salomon) held their shares as mere nominees because Salomon‟s
motive in forming the Company was to use it as an agent to manage his business for him. A
similar position was taken at the Court of Appeal and Salomon went further to contest the
issue at the House of Lords where Lord McNaughten stated the position as follows:
“When the memorandum is duly signed and registered, though there be only seven
shares taken, the subscribers are a body corporate “capable forthwith”, to use the
enactment, „of exercising all the functions of incorporated company‟. Those are
strong words; there is no period of minority on its birth, no interval of incapacity. I
cannot understand how a body corporate such as this made capable by statute can
lose individuality by issuing the bulk of its capital to one person, whether he be a
subscriber to the memorandum or not. The Company is at law a different person
altogether from the subscriber to the memorandum; and, though it may be that
after incorporation, the business is precisely the same as it was before and the same
persons are managers, and the same hands receive the profits, the company is not
in law the agent of the subscribers or trustee for them. Nor are the members
subscribers as members liable in any shape or form, except to the extent and in the
manner provided by the Act. That is, I think the declared intention of the
enactment”.
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See Dunlop Nigeria Industries Ltd. v Forward Nigeria Enterprises Ltd & Anor (1976)
NCLR PG 243. In RE Stanley (1906) 1 Chancery pg 131 & 134 , BUCKLEY J says “the
word Company has no strict legal meaning.” And going forward, LORD JUSTICE
LINDLEY posited another clear definition of a Company. He said:
“A company is meant an association of many persons who contribute money or
money‟s worth to a common stock and employs it in some trade or business, and
who share the profit and loss (as the case may be) arising there from. The common
stock contributed is denoted in money and is the capital of the company. The
persons who contribute it, or to whom it belongs, are members.
The proportion of capital to which each member is entitled is his share. Shares are
always transferable although the right to transfer them is often more or less
restricted”
Also FRANK EVANS- what is a company? 26, Law Quarterly review (1910) Pg 259 - 264
“The success of our business rests on the confidence and trust put into our company by
employees, stock holders, business partners and communities” – Davis O‟ Reiley (2005)
CEO Chevron organization
Lord Branwell was proud of having invented the idea of „limitted‟. Liuelyn Smith states that
Lord Branwell suggested in a brighter mood that the word limited should be inscribed on his
tomb stone.
Nb, the company is the best invention of man since the industrial revolution.
- How to answer. See S279, 282, 283. - Economic growth and recovery plan. See also -
The SDGs.
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CORPORATE LEGAL PERSONALITY.
(Dr. Rahimi).
A company is an association of two or more persons who have come together to do business
for the purpose to make profit. But is not all company that comes or is formed to make profit.
Especially a company limited by guarantee. Before a company can be properly so called, it
must be dully incorporated under the Company and Allied Matters Act CAMA. The
implication is that that entity is now endowed with legal or corporate personality and from
that moment, it becomes a different personality apart from the flatters of the company.
Notably, from the date that a certificate of incorporation is issued by the CAC in Abuja, it
means that it can be sued and sue. It is a different artificial personality all by itself. This
didn‟t just happen. It happened in the case of Solomon v Aaron Salomon Co Ltd.
NOTE:
A company is defined as an association of person aimed at carrying on business with a view
to making and sharing of profit. In legal theory, a company has been defined as an
„Artificial person/legal entity‟ created by or under the authority of the laws of a state or a
nation. It consists of an association of numerous individuals who subsists as a body corporate
under a special denomination which is regarded in law as having a personality and existence,
distinct from that of the members. The company is by the same authority vested with the
same capacity of continuous succession irrespective of changing of membership either in
perpetuity or for a limited time of years.
NB what actually distinguishes a company from other forms of business association is the
fact of Incorporation / Registration. Incorporation/Registration of a company means no more
than- {an act of securing for a business concerned; a legal or a corporate personality. Upon
incorporation, the company becomes a distinct but artificial person distinct from its human
members who as we know are natural persons. The company then begins to have some rights
and it is also subject to liabilities, disabilities or duties just as human beings. The
PROMOTERS of the proposed company. See S61 CAMA:
“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
pro curing the formation of the company shall not thereby be deemed to be
a promoter.”
usually prepare a number of documents. The most important of which are the memorandum
and the articles of association which are prescribed by the companies and Allied Matters Act
and present them to the Corporate Affairs Commission. (CAC). The documents are then
registered and filled if they are in the prescribed form and on them is indicated the Act of
Incorporation. Thus, the company is born and human persons or natural persons who
subscribed to its memorandum of Association become its members.
See generally S1-16 CAMA.
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NB particularly S7 which deals with the duties of the Corporate Affairs Commission, CAC.
Because of its description of its artificial personality, a company is capable of owning
properties, suing and being sued in its name, among other things, just as human beings.
Incorporation then means among other things -that persons dealing with the company must
look basically towards the company and not its members for the performance of the
companies‟ obligation.
CORPORATE PERSONALITIES:
This is the most important of the fundamental principles of company law. Translated into a
simpler form, it means that upon incorporation, the company becomes a legal entity distinct
from its members. This concept is a creation of fiction which in itself is one of the greatest
devices of law through which men fit new legal norms into old principles so as to regulate
conducts without abandoning long standing principles. Corporate personality is essentially a
device to protect the creditors and other persons dealing with the company by predetermining
who to hold responsible for the companies‟ obligation.
Its implications were fully grasped by the court and were seen in the case of Salomon v
Aaron Salomon & Co Ltd. 1897 AC PG 22 which is the locus Clasicus on the principle. In
that case, Salomon who had for many years carried on a prosperous goods and legal trade
decided to form a limited liability company. He sold his original business to the company
who as consideration allotted him 20001 shares of 1 pound each, out of the companies issued
shares of 20007. 1000 pounds of the companies‟ money was paid to Salomon by way of
Secured Debenture and a balance was paid in cash. The remaining six of the companies
issued shares were held by Salomon‟s five children and wife who were also his nominees.
The company had some other unsecured creditors. Later, the company fell into financial
difficulties and an order was made by the court for its winding up. The assets of the company
were just enough to pay Salomon‟s secured debentures, leaving nothing to meet the
unsecured creditors place. The unsecured creditors brought an action contending that the
company was a sham and an agent or nominee by Salomon whom remained the real
proprietor of the business and as such, Salomon should be liable to indemnify the company
against its trade debt. The court held that the company was validly formed and thus was a
distinct person from Salomon and other shareholders since the Act merely required each
members of the company to have at least one share and said nothing about their being
independent or there being a balance of power in the company. Hence, the business was that
of the company who should be looked up to for the satisfaction of its debts, as the court put it,
bluntly and correctly; submit “either the limited company was a legal entity or it was not. If
it was, the business belongs to it and not Mr. Salomon. If it was not, there was no person
and nothing to be an agent at all and it is impossible to say at the same time that there is a
company or not…” the court went further to say as follows per MacNaughot @ pg 51:
“When the memorandum is duly signed and registered, though there be only seven
shares taken, the subscribers are a body corporate “capable forthwith”, to use the
enactment, „of exercising all the functions of incorporated company‟. Those are
strong words; there is no period of minority on its birth, no interval of incapacity. I
cannot understand how a body corporate such as this made capable by statute can
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lose individuality by issuing the bulk of its capital to one person, whether he be a
subscriber to the memorandum or not. The Company is at law a different person
altogether from the subscriber to the memorandum; and, though it may be that
after incorporation, the business is precisely the same as it was before and the same
persons are managers, and the same hands receive the profits, the company is not
in law the agent of the subscribers or trustee for them. Nor are the members
subscribers as members liable in any shape or form, except to the extent and in the
manner provided by the Act. That is, I think the declared intention of the
enactment”.
It must be noted that the judgment of the court in Salomon‟s Case isn‟t a license to an
unscrupulous promoter to defraud a company promoted by him. Had Salomon made a profit
from the sale which he concealed from his fellow shareholders, the position would have been
different. The decision was justifiable on the ground that there wasn‟t any fraud and the
creditors dealing with company had the freedom to make enquiries as to the companies‟
financial position. In Salomon‟s case, there wasn‟t any evidence of fraudulent or sharp
practice. The business was properly valid. All the facts surrounding the transaction were
disclosed to all interested parties as required by the Act (Companies
Act). See also Lee v Lee‟s Air Farming Ltd. 1960 3ALR Pg 420. See also Macaura v
Northern Assurance Co Ltd 1925 AC Pg 619. Herein, Lee and his wife and children
formed a company. The company provided air services. Lee was a pilot and a shareholder in
the company. One of the air strips caught fire and was destroyed. The wife brought an action
to recover money from the company. The court stated that the company was a different
person from its shareholders. See the following cases.
1. Pan Asian African Co Ltd v National Insurance Co Ltd. 1982 9 SC Pg 1
2. Kasikwu Farms Co Ltd v AG Bendel State 1986 NWLR Pg 695
3. In the case of Alhaji A Olalekan v Wema Bank PLC 2006 7 SCNJ Pg 158, the
Supreme Court held that the Chairman or Managing D director of the Company who
was also the sole signatory to the Companies account was a separate or distinct person
from the company.
NB, S 37 CAMA 1990 has now incorporated the concept of corporate legal personality in our
law. This section provides:
“As from the date of incorporation mentioned in the certificate 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
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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.”
(This tells us that the moment a company is incorporated, it can own life).
ADVANTAGES OF INCORPORATION
NB, some consequences flow from the incorporation of a Company. The most important of
this is the Legal Personality bestowed on the Company from which other consequences or
advantages flow. This includes:
1. Limited liability
2. Property
3. The right of Corporate Litigation (suing and being sued)
4. Perpetual succession
5. Power to borrow money
6. Transfer of shares.
NB, as we have merits, so do we have de- merits of Corporate Legal personality. It also has
restrictions and limitations. These include:
1. The properties or assets of the company belong to the company and not the shareholders
or members or management of the business of the company belongs has been given by
CAMA to the board of Directors and not the owners or shareholders. See S63 (3) of
CAMA.
“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 Act or the articles required to
be exercised by the members in general meeting.”
2. The doctrine of principles of ultra vires is automatically applicable to a registered

number or incorporated company. See S 39 (1),(3).
S 39 (1) A company shall not carry on any business not authorized by its
memorandum and shall not exceed the powers conferred upon it by its
memorandum or this Act.
18
S 39 (1) 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 authorized business of the
company or that the company was otherwise exceeding its objects or powers.
3. It may lead to incident of double taxation.
THE CONCEPT OF LIFTING OF CORPORATE VEIL

To recap, the concept of corporate personality endows the incorporated business with a
distinct legal personality. However, there are circumstances in which the court would
disregard and have often disregarded the company‟s personality. This in American tradition
is called „lifting the veil of incorporation.‟ According to Gowa‟s Principles of
Company Law, “in cases where the veil is lifted, the law either goes behind the corporate
personality to the individual members or it ignores the separate personality of each
Company in favour of the economic entity constituted by a group of associated
companies.”
The Act of lifting the veil of incorporation is a realistic treatment of the concept of corporate
personality. It may not only lead to identification of the company with its controlling
personalities but will also lead to identifying the company with the business conduct. NB, it
has been observed that there is no consistent principle on when the veil of incorporation
would be lifted. It has been said that the veil of incorporation would be lifted when the
principle of legal personality laid down in Salomon‟s Case is used to justice, NB. The veil of
the company would be lifted based on precedents and the provisions of the CAMA.
In any event, the following instances have been identified:
1. Where a company has been formed to be evade legal obligation. Sometimes a crook
may form a company and transfer his property to the company to avoid a personal legal
obligation following the principle of corporate personality; the transferred property
should ordinarily belong to the company. But the law in the interest of justice would
disregard the personality of the company in order to subject the unscrupulous promoter
to the occupation he has tried to evade. Such was the situation in the case of Jones v
Lipman 1962, 1 WLR Pg 832. In this case, Lipman agreed to sell a parcel of land to
jones. Subsequently, he incorporated a company and transferred the land to it in order
to avoid conveying the land to the purchaser and in order to side track any possible
order of Specific Performance which the Court might issue. Lipman and his Clerk of a
solicitor were the only shareholders and members of the company, nevertheless, jones
19
applied to court for an order of specific performance against Lipman and the company.
The court took cognizance of the reality of the situation and ignored the original
transfer and ordered a specific performance of the agreement between Lipman and
Jones on the ground that -the Company was nothing but mere cloaks for Lipman to
enable him achieve his clandestine end. See also the case of Gilford Motors Co Ltd.
v Horne 1933 CD Pg 935*.
2. Mis-description of the Company. See S631 CAMA LFN 2004
3. Carrying on business with membership of the company below legal minimum
(less than 2) see S96 CAMA‟
4. Fraudulent trading S506 CAMA.
5. Holding and company Subsidiary.
NB, generally the following point with regard to incorporation and corporate personality:
1. Proof of incorporation of the company is by the production of a genuine certificate of
Incorporation of the company. See Mr Adeoye Magbagbeola v Mr Temitope Saani.
2005 4 SCNJ Pg 190. See Also NNPC v Lutin Investsments Ltd & Anor 1 SCNJ
Pg 131.
On the circumstances that would warrant lifting the veil of incorporation. see
Akinwunmi O Alade v Alic Nigerian Ltd & Anor 2010 12 SCNJ Pg 143.
10/05/19.
See also the case of Marina Nominees v FBRI 1968 2 NWLR Pg 14. This has to do with a
holding and Subsidiary companies. In the case of Honourable Jumare Tanimu & 1 or v
Hon Lawal Muti‟D. Rabiu & 2 Ors 2018 EJSC Pg 73 Para (b)-(c). In caso, it was held
that a business name isn‟t a legal person known to law and can therefore not sign or
authenticate any legal document. Any document which is purported to be signed by a non-
legal person is fundamentally defective and consequently null and void. NB generally that
Foreign companies not regulated under CAMA can sue and be sued under S60 (b) of CAMA.
See the case of Agro Allied Development Enterprise Ltd v M V Northern Reefer & Ors
2009 6 SCNJ Pg 61. On Foreign companies see generally see S54-60 CAMA.
FORMATION OF A COMPANY
Basically, four stages are passed through in the formation of a Company.
1. The nature, Scope and Purpose of the proposed Company must be determined.
2. Formal Incorporation document must be put together
3. The document must be delivered to the Corporate Affairs Commission CAC (formally
registrar of Companies).
4. The commission has to register the company if all the requirement of law with respect
to incorporation or registration has been dully complied with.
20
Generally, two or more persons may form and incorporate a company by complying with the
provisions of the CAMA on registration. See S18 CAMA.
NB, under the 1968 Act, at least, 7 members were required to form a public Company.
However, under the 1990 CAMA CAP C20, that legal minimum has been done away with
because it was found that it served no practical purpose. See the provision of S 19 CAMA
which says that:
“(1) No company, association, or partnership consisting of more than 20 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.” NB However that- there are certain
exceptions to this general rule;
1. A Corporative society dully registered in Nigeria
2. A Partnership for the purpose of Legal Practice
3. A Partnership formed by accountants for the purpose of their trade or profession.
For non-compliance with this provision, see S19 (3) CAMA:
“(3) If at any time the number of members of a company, association or
partnership exceeds 20 in contravention of this section and it carries on business
for more than 14 days while the contravention continues, every person who is a
member of the company, association or partnership during the time that it so
carries on business after those 14 days shall be liable to a
fine of N25 for every day during which the default continues.”
See also the case of Akinloshe v African Industry & Timber Co. Ltd (1961) WNLR Pg
213. See also, S20 CAMA which has prohibited certain categories of person from joining in
the formation of a company. E.G, (an Infant under 18 years, a lunatic, a corporate body in
liquidation, an undischarged bankrupt & someone who is disqualified under S254 CAMA
from being a director of a company). S 20; S20. Capacity of individual to form company
(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 18 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
21
(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 corporate body 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.
NB, as regards an infant, by virtue of S20 (2) CAMA, a person shall not be disqualified
under paragraph (a) of subsection 1 of the section if two other persons not disqualified under
the subsection have subscribed to the memorandum. Generally, foreigners may take part in
forming a company unless they are expressly prohibited by an enactment which is in force.
TYPES OF COMPANIES:
There are 3 major types of companies. Namely:
1. REGISTERED / INCORPORATED COMPANIES: these are companies which are
incorporated under the CAMA.
2. STATUTORY COMPANIES / CORPORATIONS: these are usually utility
Companies they are in fact Corporations owned by the state to provide essential
services. But most of the time, they are loosely called Public Companies. They should
however not be confused with the Public Commercial Companies.
3. CHATTERED COMPANIES: these sets of Companies were established through the
grants of a charter by the Crown. They originated from England but are now purely of
historical importance because they no longer exists in Nigeria.
NB, we are only concerned with the registered or incorporated companies. i.e, companies
registered within the framework of the CAMA. Incorporated or registered companies may
either be
A. A company limited by Shares B.
A company limited by guarantee
C. An Unlimited Company.
See generally S21 CAMA. NB, the above 3 categories of company may either be a private or
Public Company. See S22-24 OF CAMA.
22
A COMPANY LIMITED BY SHARES is a company having the Liability of its members

Limited by the memorandum to the amount, if any, unpaid on the shares respectively held by
them
A COMPANY LIMITED BY GUARANTEE is a company having the liability of its

members limited by a memorandum to such amount as the members might have respectively
undertaken to contribute to the assets of the Company in the event of its being wound up
AN UNLIMITED COMPANY is a Company not having any limit on the liability of its
members.
See S21 (1) & (2) CAMA.
A PRIVATE COMPANY is one which is stated in its memorandum to be a private

Company. See S22 (1) CAMA.
By the provision of S24 CAMA, “Any company other than a private Company shall be a
public company and its memorandum shall state that it is a public Company.”
DISTINCTION BETWEEN A PRIVATE & PUBLIC COMPANY
1. Membership of a private Company must not exceed 50 excluding members who are
employed in the Company and those who had been member employees but had ceased
to be employees while they still retain their membership
2. Restriction on issue and transfer of shares. See S22 CAMA
3. The provision of S211 CAMA which requires a public Company to hold a Statutory
meeting (A special general meeting of the members of the Company) within a period
of 6 months from the date it is incorporated and which spells out complex procedures
for the meeting and its filing of its report does not apply to a private Company.
4. The provision of CAMA which requires a public Company which has a share Capital
to issue and file a prospectus or a statement in lieu of prospectus with the Corporate
Affairs Commission (CAC) at list 3 days before the issue of its shares does not apply
to a private Company.
5. The provision of S222 CAMA which require additional notice of a general meeting by
an advertisement in at least two daily newspapers, apart from personal notice to each
of the members by a public Company does not apply to a private Company.
23
CORPORATE AFFARS COMMISSION

The CAC is established by the CAMA, it is the body corporate with a perpetual succession
and common seal.it is capable of suing and being sued in its corporate name. it is also capable
of acquiring, holding, or disposing of any property movable or immovable for the purpose of
carrying out its functions. The headquarters of the CAC is situated in the FCT, Abuja and it
has offices in all the States of the Federation. See generally S1 (1)-(3) CAMA. For the
membership or composition of the CAC. See S2 Para (A-H) CAMA.
DUTIES/ FUNCTIONS OF THE CAC

These are contained in the S7 (1) (A)-(E) CAMA. They include the following:
(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 to this Act;
(b) establish and maintain a company‟s 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 interests of the shareholders and the public so demand;
(d) Perform such other functions as may be specified by any Act or enactment;
and
(e) Undertake such other activities as are necessary or expedient for giving full
effect to the provisions of this Act.
NB, By the S 7 (2) CAMA, the duties of the CAC must not affect the powers, duties or
jurisdiction under the Securities and Exchange Commission (SEC).
*NB, it must be noted however that S36 (1) CAMA had now given discretion of power to the
CAC to refuse to register a company if the subscribers have violated any of the provisions of
S36 (1) CAMA. Under the subsection, the CAC may refuse to register the subscribers as a
company if:
1. They do not comply with the provisions of the CAMA. Or
2. The business which the company is to carry on or the objects for which it is formed or
any of them are illegal or
3. Any of the subscribers to the memorandum is incompetent or disqualified in accordance
with section S 20 CAMA or
4. There is non-compliance with the requirement of any other law as to registration and
incorporation of a company or
24
5. The proposed name conflicts with or is likely to conflict with an existing trademark or
business name registered in Nigeria.
Of Importance is the provision of S36 (6) CAMA which says that:
“The certificate of incorporation shall be prima facie evidence that all the
requirements of CAMA in respect of registration and of matters precedent and
incidental to it have been complied with and that the association is a company
authorized to be registered and dully registered under CAMA”.
*NB, in answering the question as to the powers of the CAC to refuse the registration of a
company, recourse must always be made to the Companies Act 1968 and in particular to the
Register of Companies and what obtained under the old act. Under this Act, the Register of
Companies will have no choice but to register a company if the promoters furnish either the
(memorandum or articles) of such intended company to the CAC. This is practically opposed
to what obtains under the S36 CAMA. This basically outlines the vast powers of the CAC as
being able to suo moto not willing to register a company even if their articles and
memorandum are present.
25
LEGAL FRAMEWORK FOR COMPANY/CORPORATE LAW.

(Mr. Koyejo).
The contemporary means of incorporation is by going online to incorporate.
1. CAMA
2. Nigerian investment promotion commission
3. Foreign exchange (miscellaneous provisions Act)
4. Immigration Act
5. National office for Technology acquisition Act
6. Industrial inspectorate Act
7. Company Income Tax Act
8. Public enterprises (Privatization and Commercialization Act)
9. Partnership laws of various state of the federation
10. Stamp Duties Act.
11. Land Use Act
12. Money Laundering Prohibition Act
13. Income Tax Provision Act
14. Central Bank Act
15. Insurance Act
16. Access Management Corporation of Nigerian Act.
*PROMOTERS & PRE-INCORPORATION CONTRACT.
CLASSIFICATION OF BUSINESS ORGANIZATION:

• Sole proprietorship
• partnerships
• co-operative society
• Incorporated Companies
INCOPORATED COMPANIES. See S37 CAMA.

“As from the date of incorporation mentioned in the certificate of incorporation,
the subscriber of the memorandum together with such other persons as may,
26
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.”
Types of Incorporated Companies: This would include:

1. Company Limited by Shares (public)
2. Company limited by shares (Private)
3. Company limited by guarantee (public)
4. Company limited by guarantee (Private)
5. An Unlimited Company (public)
6. An Unlimited Company (Private).
In all, incorporated companies are 6 see S21 CAMA. COMPANY Limited by Guarantee.
See S26 CAMA
ADVANTAGES OF INCORPORATION
1. Power to acquire property
2. Perpetual succession
3. It can enter into contract with its members
4. They have the power to borrow
5. They can sue and be sued.
DISADVANTAGES
1. You cannot do something Ultra Vires (beyond the power of the company).
27
MEMORANDUM & ARTICLES OF ASSOCIATION

Article and Memorandum are the Constitution of a company the Memorandum governs the
actions of the company alongside with the outsiders while the Article regulates the activities
within the company. NB, The Memorandum will supersede where there is a conflict between
the Memo and the Article of Association. Thus, the Memorandum must prevail. When there
is a need to incorporate, both documents must stamped, which will be as the deed.
MEMORANDUM OF ASSOCIATION: see S27 Requirements with respect to the
memorandum of a company & 35 Documents of incorporation. The class exercise below
is pursuant to S27 CAMA.
Company Name: Abass Olayinka Nig Ltd.
1a. ADDRESS: Plot 6/7 Lekki phase 2.
b. OBJECT: the object of the company shall be... legal Consultancy and property
development. (Nb, you cannot engage in a business on the negative list. It cannot be immoral
or in contrast with the law). Also, there are some special businesses like banking; you need to
have certain criteria. Eg, objects like (school, legal consultancy, hospital, etc...) You need to
obtain a certificate of 'proficiency'.
c. RESTRICTION: Nb, some companies will restrict by the memo would expressly state
that they cannot participate in politics.
d. STATUS OF COMPANY: This area is asking whether it is a limited company by

shares (public /private), company limited by guarantee (public/private) or an unlimited
company (public/private).
However, for the purpose of this exercise, we would use 'Company limited by shares
(private)'.
Nb,' Liability Clause'. Where a company is limited by shares and the minimum share capital
of the company is #2,000,000 and you subscribe to a liability of #200,000, this is the amount
you will be liable to pay in the event of its winding up.
2a. Authorised share Capital: for a private company, the minimum share capital share is
#10,000 while that of the public is #5000,000.
Eg.if the minimum share capital of a Private Company limited by shares is #1,000,000 and it
has 30 members, you would divide the money between the 30 subscribers or share holders of
the Company.
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FOREIGN PARTICIPATION (Mr Koyejo)

Historically speaking, Nigeria was the colony of Britain the colonial masters determined the
economic phase and the rule or doing business in Nigeria. After independence in 1960, they
left and they put the destiny of Nigeria in their hands; both political and economically.
Shortly after, oil was discovered in Nigeria in commercial quantity. This was the period post-
civil war in 1967-1970 and also there was oil boom and Nigeria became a major exporter in
oil. Because of the oil boom, the economy of Nigeria was good and the Military government
enacted a decree which was the Nigerian Enterprise promotion Decree (NEPD/A) 1972
now Act, which made it possible for Nigerians to be the drivers of economic activities. They
further enacted the Indigenization Decree 1977. This concomitantly led to the exodus of
foreigners in Nigeria, and subsequently
„Nationalizing‟ some foreign institution Nigerian, thereby making them Nigerian
companies/corporations. Institute like Barclays bank which became (Union Bank), etc..
Became subjects of nationalization.
The consequences of this action of the government was a substantial capital flight and
diminution of foreign investments in Nigeria. This was the prevailing situation until 1987
when the Military government set a legal machineries in motion to begin the process of
wooing foreign investors to return to Nigeria, through a guided deregulation of Nigerian
economy. This was done through the promotion (issue of Non-Voting Equity Shares) Decree
which allowed foreign investors to own Non-voting paid up shares in Publicly quoted
companies.
The achievement of this decree was very insignificant. There was a follow up Decree in 1989
which may be said to have partially deregulated the Nigerian economy by permitting
foreigners to own 100% shares in Nigerian enterprises upon fufilment of certain basic
conditions.
However, it was until 1995 that the real bold step towards providing statutory framework for
the full deregulation and liberalization of the Nigerian economy was taken, again, by the
Military government. This led to The Nigerian Investments Promotion Decree now Act
(NIPCD/A) as well as the Foreign Exchange (Monitoring and Miscellaneous Provisions)
Decree now Act were promulgated. These Acts formed the foundation for opening the
country up for Foreign Direct Investment (FDI) and Foreign Portfolio Investment (FPI).
Thus, foreigners can participate either wholly or jointly in the Nigerian economy but cannot
participate of that on the „Negative list‟ like (arms and ammunition, narcotics and drugs,
armed forces uniform production).
There are two options for foreign investments which are:
FDI
FPI
The Foreign Direct Investment is an instance where a foreign company/personality registers
their company/corporation in line with provisions of our CAMA in Nigeria. Foreign
Portfolio Investment is where you don't need to incorporate a company in Nigeria.
However, you can buy shares in a quoted publicly listed company. If they (Foreign
corporations) have to buy the shares of a private company, they have to pass through the
Securities and Exchange Commission (SEC) and the (NIPC) Act. See generally S54 (1-3a-
b). this section stipulates- that if a company is registered in another country, they cannot have
any business operation but can have an office to receive receipt and notices except they
comply with the subsection 1 of this Act and the NIPC Act. But an exception is that if the
29
company has been incorporated before the enactment of CAMA or they come to pass
technological knowledge or a company which Nigeria is a party to the foreign treaty.
Where there is a conflict between a Nigerian and the Foreign investors, the 'Arbitration and
reconciliation Act' must first be looked into Nb, if this dispute happens to be between a
foreign company and a Nigerian Company, herein, they will need to look at the International
law regulating the affairs of the companies. Nb, the dispute resolution clause must first be
exhausted.
CHECKLIST OF ATTACHMENT FOR FORIGN PORTFOLIO
INVESTNMENTS:
1.Business permit
2.expertrate quota: this means that no non Nigerian is allowed to operate until they obtain this
quota. It may be permanent or temporary. Permanent is 5years while the 2-3years.
3. Resident cards:
4. CERPAC. This is combined Expatriate Resident permit and Alien card. This will allow him
to bring in his family and all other expertrate
5.Transfer of Technology:
This has to do with the transfer of technology and to do this, you must apply to NOTAP.
This commission may either accept or reject this technology impute. (National office of
Technology Acquisition and promotion Act NOTAPA)
INCENTIVES FOR DOING BUSINESS IN NIGERIA
1. Tax free in the first 5 years
2. Abolition of Nationalization
3. Pioneer status which brought in Tax relief for the first 3 years.
See generally S30 CAMA. COMPANY NAME.
30
(DR. MRS AJAYI)

❖ Memorandum of Association S27 CAMA.
❖ Alterations of memo
❖ Ultra vires
The memo is the constitution of the company. This is the chatter of the company. Ti's would
normally encapsulate the name of a company to be registered and other details. The essence
of a name is for identification and reference, responsibility and accountability. Essentially, a
memo has about 6 constituents:
1. The name ending with (Ltd, Ltd/gte, ultd, plc)
2. Place of operation. Must have a Registered office. Reason are for (serves, traceability,
correspondences) and your office must be situate in Nigeria (jurisdiction)
3. Object or business clause. This will the object or business it is doing. If it is a company
Ltd by guarantee, it will state the object of the company. Nb, they must be in the same class.
4. Restrictions:
5. Status of the company: whether it is a public or private
6. Liability of the Company:
7. Share Capital
8. Subscription clause: this is where each member will start the number of shares they
subscribe to. And someone must attest to that
REGISTRATION
One may choose any name but by S30 CAMA, some names are prohibited. Where there are
semblance betweenit and already subsisting ones, it wouldn't fly. As in the Case of Nija
Chemist v Nigerian Chemist. The exception is only where one company is about to wind
up. In fact, one will be required to bring at least 3 names.
Nb.
31
➢ one cannot register a name that will deceive the public, also, any name that includes
"Chamber of Commerce" unless it is a company Ltd by guarantee, such wouldn't fly.
➢ Again, where a business name will promote immorality. See R v Register of
companies, where the AG filled a suit as wanting to corrupt public morals
➢ Also, where it will conflicts with existing trademarks, it will not be registered. See
Adetola Mustapha v Corporate Affairs Commission.
➢ names having federal, municipal, regional, building society, etc... Wouldn't obtain.
ALTERATION OF MEMO
a company can only alter according to S41 (1&2) CAMA.
INSTANCES FOR ALTERATIONS
• Alteration of Name: where registration you made is already registered for another
company.
• If it conflicts with an existing trademark or business name. Here the board can decide
by a resolution to do that
• Voluntary change of name. This can only be done by a special resolution and approval
by commission see 32(1)
PROCEDURE
I. Directors resolution authorizing the change of name.

II. You must search for the availability of your proposed name
III. Passing of a special resolution. This is a decision reached by the board of directors. I.
E 2/3 of the board.
DOCUMENT TO BE DELIVERED
1. Decision of the resolution
2. A letter of request to change the name
3. Certificate of initial incorporation
32
4. The memo would have to be altered to reflect the new name They will also have to alter the
seal, Letter head, etc...
5. You must advertise your change of name in a news daily
6. The commission will enter it in the official gazette of the federation
HOW DO WE ALTER THE BUSINESS OR OBJECT CLAUSE OF A COMPANY:
1. this is done by a special resolution passed at a meeting in which notice of it has been given
to all the shareholders of the company. It must be 21 days. See S46(5&6)
2. A special resolution is 2/3 of members present and voting
Nb, where 15% of the members of a company having norminal shares feels they don't want
this resolution. They must within 28 days go to court to alter it.
3. If they all accept this alteration, they must communicate to the CAC in 15 days and where
such is done, the MEMO stands altered.
ULTRA VIRES
(Beyond the powers you have or authorized)
This rule says once you have listed out the object of practice or business of a company in a
memorandum, you are not allowed to go outside of that scope. If your object is to sell houses
and properties, you cannot now say you want to use that business for agriculture.
Essence of this rule:
This was to protect the shareholders and investors who have seen your memorandum and
subscribed to it. It is meant to protect the Investors so that your investments wouldn't be
decipated, reduced or destroyed.
Also, for suppliers and creditors of the company, where the company goes into a business not
included in the scope or object of the company, whatever happens may lead to the contract
being repudiated. This happened in Ashbury railway carriage & iron Co Ltd v ridge 1875
LR 7hl. Here, the company was to sell, lease, railway coaches and it entered into an
agreement with ridge that they would lay a railway track to Belgium. Other parties/members
of the company who subscribed to the memorandum weren't pleased with this dealing and
subsequently went to court and the court said that the contract is repudiated.
Because of this hardship experienced, the case of Cotman v Borohem came in to mitigate
this. What obtains now is that (companies now list a whole lot of activities as the activities of
the company). The court looked at this and said this cannot be obtainable. See the case of
Continental Chemist v Dr. Ifeakandu. The object of this company was to import, export
33
drugs. Ultimately the directors now added a clause that whatever would bring in more profit.
Later on, they sent someone abroad to study medicine and that he must serve for five years.
By the time he returned, a hospital was set up and he said he would only serve two years.
They went to court and the court says that general practice of medicine wasn't a part of the
object of the company. Eventually the court held that they couldn't hold the young man and
as such the contract stands repudiated.
What can we do in cases of Ultra VIRES. See S39 (1-3). This Clause is saying that Even
though this section still acknowledge ultra vires, it also takes into cognizance the possibility
of directors ratifying something outside the memorandum (those that are in the best interest
of the company). Nb, some members can go to court to seek an injunction against it and those
who have floating shares can equally go to court to seek approval to go ahead.
POWERS OF A COMPANY S38
Companies can actually do things for the benefit of the company but where a gift or donation
is made, it is very wrong and the board will become joint and Severally liable.
See generally S38.
(DR MA LATEEF).
1. ARTICLES OF ASSOCIATION
2. CONTRACTUAL EFFECTS OF MEMORANDUM AND ARTICLES OF
ASSOCIATION.
3. ULTERATION OF ARTICLES
4. DOCTRINE OF CONSTRCUTIVE NOTICE & INDOOR MANAGEMENT
ARTICLES OF ASSOCIATION:
Generally for incorporation of a company, the primary guiding law for incorporation of a
company is the law of a country and this is where the law (CAMA) comes in. beyond
CAMA, other laws coming in like the Investments and Securities Act (ISA) 2007, etc… As
regarding the management of the company itself, that is where the articles come in.
Thus, an Article of an Association (AOA) is the constitution of a company. This is the law
that defines the right and liability of member of a company. The article alone doesn‟t do this.
It does this with the Memorandum. These documents are the constitution of a company.
Pursuant to S33 CAMA. this says:
“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”.
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See also S34 (1) (2) CAMA. See S34 (3) this shows us what an article must look like:
(3) The articles of association shall
(a) be printed;
(b) be divided into paragraphs 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.
Basically, Articles are what make a company growing concern. It defines the rights and
liabilities of members/subscribers of that company so that when this is being tampered with,
it could have a far reaching effect on the company.
What exactly is the content of an article? See S119.

119. Issue with rights attached
Without prejudice to any special rights previously conferred on the holders of
any existing shares or class of 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.
This talks about shares. Particularly, an article must specify the classes of shares. See
S146, powers to allot shares,
146. Issue of share certificates
(1) Every company shall, within two months after the allotment of any of its
shares and within three months 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 three 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.
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(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 within such time as may 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 in 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 Act a company is for any
reason entitled to refuse to, and does not, register.
Also, restriction on transfer of shares by 152 (3)

(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 refuse to
register the transfer of a share on which the company has a lien.
36
Under S133 CAMA, there is „Call on Shares‟. It is possible that when a call is made to the
public to buy shares. These shares may not be totally subscribed to or some people may not
have paid for them fully. The articles must state, whether there can be a call on shares.
133. Call on shares
(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
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 by 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
37
same becomes payable, and in case of non payment, all the relevant provisions of
this Act 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.
Also, the article must state whether the company can increase its share Capital. See 102 &
103.
102. Increase of share capital and notice of increase
(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 share capital it shall, within 15 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 liable to a fine ofN50 for every day during which the
default continues.
38
103. Increase of paid up capital on increase of shares

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 25 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.
Meetings of the company, 213, 214.

213. Annual general meeting
(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 15 months shall
elapse between the date of one annual general meeting of a company and that of
the next:
Provided that
(a) so long as a company holds its first annual general meeting within 18
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
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
39
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 15 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. Businesses transacted at annual general meeting 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, which shall be ordinary
business.
See S215 for Extraordinary General Meetings, Voting 224, 224.

Procedure of voting
(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;
40
(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) any 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 lost, and an entry to that effect in the book containing the 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.
Proxies 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 appointed 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 com plying 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 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
41
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 48 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 wilfully 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
42
convening the meeting, not less than 48 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 24 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.
Quorum 264,
264. Quorum
(1) Unless the articles otherwise provide, the quorum necessary for the
transaction of the business of directors shall be two where there are not more than
six directors, but where there are more than six 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 committee
shall meet and act by a majority.
See generally S134,

Quorum of members for decision making S232.
(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 25
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.
43
(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
share holders 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.
248. Subsequent appointments of directors

(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
258. Vacation of office of director
(1) The office of director shall be vacated if the director
(a) ceases to be a director by virtue of section 251 of this Act; 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 Act; or
(d) becomes of unsound mind; or
(e) resigns his office by notice in writing to the company.
44
(2) Where a director presents himself for 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 reelected.
See generally S262 for the removal of directors; audit, appointment of auditors, S357.
Winding up of a company S401.
401. Modes of winding up
(1) The winding up of a company may be effected
(a) by the court; or
(b) voluntarily; or
(c) subject to the supervision of the court.
(2) The provisions of this Act with respect to winding up shall apply, unless the
contrary appears, to the winding up of a company in any of those modes .
Basically an article jointly with a memo, must contain all of these things, all of these sections
stated above are mandated to be on the articles. A memorandum on the other hand
communicates to the members of the public the Nature of the company.
S35(1) a CAMA. RELATIONSHIP BETWEEN ARTICLES & MEMORANDUM.

These are the most important incorporation documents. The essence of this is where there is a
conflict between the Memo and the Article. The memorandum takes the day. The
memorandum regulates the activities of the company and the public. See Kehide Vs
Registrars of Company Supra.
CONTRACTUAL EFFECT OF MEMORANDUM AND ARTICLE (MEMAT) S41
(1) CAMA.
Basically at common law, the Article is a contract under seal. i.e, it is a sacred document and
binding on parties. The implication of that is that it is a basically a contract between
subscribers to the memorandum and articles. This contract doesn‟t apply to any 3 rd party who
isn‟t a subscriber to that memorandum. This means that you cannot rely on the content of a
memorandum to sue the company.
In Hickman v Romney mash sheep breeders 1938, in this case, the articles provided the
reference of dispute to arbitration. Then Hickman went to court instead of arbitration first. An
injunction was granting in respect of striking his case out.
Under CAMA, the section provides:
41. Effect of memorandum and articles
(1) Subject to the provisions of this Act, 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
45
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.
These are deducible from the above

1. MEMAT once registered constitutes a contract under seal.
2. It also means that the members and company can sue themselves. Also, the company
can also sue its officers.
3. The members inter se (members can also sue themselves).
4. The officer against themselves. E.g, the CEO v The Manager of the Company.
The direct implication of this is that you are from time to time bound by the MEMAT of the
Companty. See Ladejobi v Odutola Holdings Co ltd, 2002 3NWLR Pt (733) 121 @ 152-
153. See also, Yalaju-Amaye Vs Associated Registered Engeneering Contrctors Ltd
(1992) 4NWLR Pt 145 422. (Read this case pls). here, the Supreme court held that the article
is a sacred document and the member is bound.
Also in Rayfeild v Barnes. The House of Lords held that they are bound by the articles of
association. See also Obikanya v Peter Ezenwa, Malik Matter 1968 2ALL NLR 133.
Finally, on the contractual nature of memorandum and articles, it only binds the members and
sunscriber to the MEMAT and not with 3rd parties. See Eley v Government
Security life.
ALTERATION OF ARTICLES.
This may be done at common law and in Equity. At Common law agrees that a company can
alter its articles. It stipulates through certain condition: 1. It must the done in good faith and
2. in the interest of the company.
The question is that –who determines the interest of the company. It is the members of the
company at an AGM and not even the Board of Directors can alter it. The court diesnt have
the power to alter the article of company. The ratio is this- the company is like and open
market. However, a member may approach the court if a member approach the court where
he feels that it is in bad faith or not in the interest of the company. The best the court can do is
to refer the member to the AGM.
See Brown V British Abrasive Shares ltd, where the minority shareholder refuse to sell their
interests to the majority shareholder. So the majority now purporting to buy the interest now
wrote a clause that a member who owns 90% or more can acquire the interest if a member
who owns less than 1% or more. This matter went to court and the court says that this attempt
was oppressive, and not in the interest of the company. The basic thing is that the court can
protect the minority from oppressive amendments. The court simply found that if you remove
minority, you have removed diversity from the company. And also, not only doing this, but
doing this in an oppressive manner. Under S48 (1) CAMA.
Nb, special resolution is a resolution of not less than 31/3 i.e, 75% can pass a special
resolution of a company in a meeting where a notice of 21 days is given to the members.
Under CAMA, there are certain business of a company that are beyond the BOD. Such
businesses are required to be decided by members of the company. That is why they are
46
special. One of which is Alteration of MOA under S46 1, Article S48 1, Reduction of
Authorized share Capital, Winding up, Re-registration of a public company as a Private
Company. For this, you need 75% of the members to decide. See S48 (2), see also 49
CAMA. What this section does is to examine certain instances where unless a member has
agreed in writing, you cannot alter an article: in the following
1. To increase the number of shares he held as at the time he joined the company
2. You cannot increase or purport to increase his liability to contribute to the share capital
of the company.
3. You cannot also alter the article to make a member pay money by any other means
What CAMA has done, is to codify the common law. See Obikoya Supra
PROCEDURE FOR ALTERATION

1. The proposer will go to the board
2. The will vote by a simple majority
3. The members will vote and
4. It will be forwarded to CAC to update the status of the company.
DOCTRINE OF CONSTCUTIVE NOTICE/INDOOR

MANAGEMENT
This means the internal governance/workings of a company.
CONSTRUCTIVE NOTICE:
This was a very bad common law doctrine which worked very great hardship against business
practices. This says that every person who deals with a company is deemed to have a
constructive notice of every document of that company. This means that you are deemed to
know the Memo and Article of the company, the decisions of the BOD, etc…the implication
is that in tne event of anything unfavorable, you will not be entitled to any equitable remedy.
The ratio for this under Common law is that a „Public Document‟ is a Public document and
is public knowledge. Under common law in summary, companies usually deny liabilities and
even defraud people. This was the case until Royal British Bank v Toquand. Nb, before this
case, you are presumed to know… the HOL decided that people who deal with companies are
deemed to have a “Presumption of Regularity”. this case lessened the burden on the party.
INTERNAL MANAGEMENT:
this is an old term and the appropriate term should be corporate governance. Because this
deals with the day to day running of a company. Again, the common law didn't say anything
on private and public document until the case of Royal British Bank v Tokwand. In this
case the HOL try to make a distinction between a public document and private document.
Expecially for private document, members of the document are allowed the principle of
regularity. But in the Case of a public document, the constructive notice should still apply.
47
For internal notice, one is presumed to rest on the statement of an officer or director to
believe what he says. Well, where it turns out that such a person isn't the director and you
were duped, one can rely on the doctrine of regularity.
However, even at that, this case didn't archive much success until the case of Mahony v East
oliford mining company, where the court says that for matters of internal management,
members of the public are entitle to presume regularity (belief that its true).
UNDER THE STATUTES:
the HARDSHIP of common law cases Led to the statutes. See 68,69 CAMA and 39-41 2006
UK Companies Act, the doctrine of constructive notice has been abolished.
In the case of mahony, it provided that cheques should be signed by any two parties and a
secretary. It later turned our that one of the directors who signed the cheque wasn't properly
appointed and as such, the court refused to allow the claim of the company stand and order
the payment of the money to the other party.
See 68 CAMA. It is noteworthy that it hasn't been totally abolish. See also S69 CAMA. NB,
this section in a way reenact the decision in Mahony case but it further delimit the
presumptions you can have see. S69 a-d. NB, one must note that Companies usually change
their board from time to time and it may be difficult to keep track of this.
Exceptions to this exists under the 69 (i-ii) . All of these wouldn't actually apply or avail a
person if he has acted In bad faith.
S70. This section is imputing vicarious liability on a company where an officer of it acted
fraudulently in relation to a 3rd party, the company would still be liable and it wouldn't be
allowed to state that it's not aware of such. See Lyod v grace and Smith. See that case.
Even though a company may be vicariously liable, such fraudulent act must have been done
or carried out by members of or a member of the company in the cause of acting on behalf of
of the company.
PROSPECTUS
(DR. OGUNFOLU).
This is a way of raising money from the capital market instead of going to collect loan from
the bank. This is achieved by selling your shares to members of the public. The ISA and the
CAMA 1990 are the Act that regulates the prospectus. See S67-96. S567 interpretation Claus
of CAMA defines a prospectus as "Notice, circular, advertisement or other invitation
offering to the public for subscription or purchase any shares or debentures of a
company and includes any document which say to the extent that it offers securities for
a consideration other than cash, is a prospectus".
Nb, A debenture is like a loan to the company and you get your share after the profits of the
company.
48
S315 ISA 2007 defines a prospectus as "any written or electronic information, notice,
advertisements or other forms of invitation offering to the public for subscription or
purchase, any shares, debentures or other approved and recognized securities of a
company and other issues or scheme".
S315 ISA 2007 Defines an Expert as "every engineer, legal practitioner, accountant and
any other person whose profession gives authority to a statement made by him".
S77 of the ISA requires an expert statement on a prospectus and non-compliance attracts
upon conviction a fine of #100,000 or imprisonment of not less than 3years or both.
A public company employs a prospectus as an invitation to a treat for members of the public
to subscribe for shares in the company. In other words, members of the public are invited to
table offers to the 'issuing house' marketing the shares of a public company and it is the
prerogative of the issuing house to accepts or decline the offers.
What happens when shares are under subscribed? After all the issuing house hopes to make a
profit.
Nb, after an IPO, a company may raise additional funds/Capital through a right issue for
existing shareholders. See S102 & 103 CAMA & S74, 79 (2) Paras a&b ISA.
The 3rd schedule of the ISA 2007 contains the mandatory content of a prospectus. In other
words, it is the template or the precedent you must follow in drafting a prospectus for your
clients (the issuing house). s90 ISA stipulates that "no allotment shall be made of any
securities of a company offered to the public for subscription unless the subscription
level exceeds the minimum percentage prescribes by the commission from time to time".
Nb, the ISA in S75(1) requires that "no person shall without the prior approval of the SEC
(commission) issue, circulate, publish, disseminate, or distribute any notice, circular or
advertisement to the public which;
a. Offers for subscription or purchase of securities in a Company;
b. Invites subscription for a purchase of securities; or
C. Calls attention to:-
II. An offer or intended offer for subscription or purchase of securities in a Company II. an
invitation or intended invitation to subscribe for or purchase any such securities;
III. A prospectus.
S94 ISA provides the remedy of rescission and States that: "A shareholder may bring an
action against a company which has allotted shares under a prospectus for the
rescission of all allotment and the repayment of the holders of the shares of the whole or
part of the issued price which has been paid in respect of the if the prospectus:
49
A. Contained a material statement, promise, or forcast which was false, deceptive or

misleading; or
B. Didn't contain a statement, report or account required to be contained in it. By S75 and
the 3rd schedule to this Act.
Allotment of securities and dealings on the securities exchange is regulated by S95 ISA. (Fill
up & Take note)
See generally S95(1-5)
ACCOUNTABILITY FOR UNTRUE STATEMENTS IN A PROSPECTUS:
A. Civil liability:
S83 ISA States that "for the purposes of the provisions of this Act, a statement:
a. Included in a prospectus shall be deemed to be untrue if it is misleading in the form and

content in which it is included;
b. Shall be deemed to be included in the prospectus if it is contained in the prospectus or

in any report or memorandum appearing on the face of it or by reference incorporated or issued
with it.
S85(1)ISA stipulates that the civil liability "where a prospectus invites persons to
subscribe for shares in a Company, The persons referred to in subsection two of this
section shall be liable to pay compensation to all person who subscribe for shares or
debentures relying on the prospectus for the loss Or damage they may have sustained
by reason of any untrue statement or misstatements included in it”.
S85(2) "A person liable to pay compensation under subsection 1 of this section includes: A.
Any director of the company at the time of the issue of the prospectus.
B. Any person who consented to be named and is named in the prospectus as a director or as
having agreed to become a director immediately or after an interval of time
C. Any employee of the company who participated in or facilitated the production of the
prospectus.
D. The issuing house and its principal officers.
50
S85(3) where under section S77 of this Act, the consent of a person is required to the issue of
a prospectus and he has given that consent that consent, he shall not by reason only of his
having given the consent be liable under this section as a person who has Authorized the
issue of a prospectus except in respect of an untrue statement or misstatements purported to
be made by him as an expert. See Subsection (4-8)S85.
CRIMINAL LIABILITY FOR MISTATEMENTS IN A PROSPECTUS:
Conrad Black
S86(1)States “where a prospectus includes any untrue statement or misstatements, any

director or officer who Authorised the issue of the prospectus commits an offence and is
liable”
A. On conviction to a fine of not less than #1billion or to imprisonment not exceeding 3

years or both.
B. On summary conviction to a fine of not less than #1billion Naira or imprisonment not
exceeding 3 months unless he proves that the untrue statement we immaterial or that he has
reasonable ground to believe and
D. Up to the time of the... Believes that the statement was true.
86(2) a person shall not be deemed for the purpose of this section to have Authorised the
issue of prospectus by reason only of his having given the consent required by s77 of this Act
to the inclusion in it of a statement purporting to be a statement he made as an expert.
EXPERT STATEMENTS IN A PROSPECTUS:
Nb, S77stipulates that
Sub(1) a prospectus inviting persons to subscribe for securities in a Company and including a
statement purporting to be made by an expert shall not be issued unless;
A. The expert has given and has not before delivery of a copy or the prospectus for
registration, withdrawn on his written consent the issue of the statement included in the form
and content in which it is;
B. A statement appears in the prospectus which the expert has given and has not withdrawn
his consent.
Subsection 2. If any prospectus is issued in contravention of this section, the company and
any company which is a party to this commits an offence and is liable to conviction of a fine
of #100,000 or a term of imprisonment of not less than 3years or to both.
51
The commission may in lieu of the prosecution for the offence prescribed in subsection 2 of
this section imposes the penalty of not less than #100,000 and a further penalty of not less
than #50000 every day the violation continues.
CONTROL OF INVITATIONS TO MEMBERS OF THE PUBLIC TO
SUBSCRIBE FOR SHARES OR SECURITIES.
See S67 ISA
See generally Pg 409 OROJO.

(FabReads) Company Law - BUL 501

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1

Major contributors of this resource material are;

See Chapter 3 of OROJO on Development of Company Law

HISTORICAL BACKGROUND OF COMPANY LAW IN NIGERIA

Where did this word come from?

In 1780, during the American Revolution, CUMMINGS States "A corporation is a

FORMS OF BUSINESS ORGANIZATIONS

THE COMPANY; WHAT IS A LIMITTED COMPANY?

DEBATE ON LIMITTED LIABILTY; 19th CENTURY ENGLAND.

TYPES OF COMPANY S25, 26

2. Company limited by Guarantee Ltd/Gte:

3. Unlimited Company ULTD -S27 CAMA:

1. Its unlimited life

THE MORDERN LEGAL THEORY OF A CORPORATION

THE VESTING OF LEGAL PERSONALITY/INCORPORATED

CORPORATE LEGAL PERSONALITY.

2. The doctrine of principles of ultra vires is automatically applicable to a registered

S 39 (1) Notwithstanding the provisions of subsection (1) of this section, no act of

3. It may lead to incident of double taxation.

THE CONCEPT OF LIFTING OF CORPORATE VEIL

A COMPANY LIMITED BY SHARES is a company having the Liability of its members

A COMPANY LIMITED BY GUARANTEE is a company having the liability of its

A PRIVATE COMPANY is one which is stated in its memorandum to be a private

CORPORATE AFFARS COMMISSION

DUTIES/ FUNCTIONS OF THE CAC

LEGAL FRAMEWORK FOR COMPANY/CORPORATE LAW.

*PROMOTERS & PRE-INCORPORATION CONTRACT.

CLASSIFICATION OF BUSINESS ORGANIZATION:

INCOPORATED COMPANIES. See S37 CAMA.

Types of Incorporated Companies: This would include:

MEMORANDUM & ARTICLES OF ASSOCIATION

Company Name: Abass Olayinka Nig Ltd.

1a. ADDRESS: Plot 6/7 Lekki phase 2.

d. STATUS OF COMPANY: This area is asking whether it is a limited company by

FOREIGN PARTICIPATION (Mr Koyejo)

1. Tax free in the first 5 years

See generally S30 CAMA. COMPANY NAME.

(DR. MRS AJAYI)

5. Status of the company: whether it is a public or private

6. Liability of the Company:

a company can only alter according to S41 (1&2) CAMA.

INSTANCES FOR ALTERATIONS

I. Directors resolution authorizing the change of name.

1. Decision of the resolution

2. A letter of request to change the name

3. Certificate of initial incorporation

seal, Letter head, etc...

5. You must advertise your change of name in a news daily

6. The commission will enter it in the official gazette of the federation

HOW DO WE ALTER THE BUSINESS OR OBJECT CLAUSE OF A COMPANY:

2. A special resolution is 2/3 of members present and voting

What exactly is the content of an article? See S119.

(2) Every person whose name is entered as a member in the register of

(4) If a share certificate is defaced, lost or destroyed, it may be replaced on

Also, restriction on transfer of shares by 152 (3)

103. Increase of paid up capital on increase of shares

Meetings of the company, 213, 214.

(2) If default is made in holding a meeting of a company in accordance with

(5) If default is made in holding a meeting of the company in accordance with

See S215 for Extraordinary General Meetings, Voting 224, 224.

(2) Unless a poll is so demanded, a declaration by the chairman that a resolution

(3) Any provision contained in a company's articles shall be void in so far as it

document necessary to show the validity of or otherwise relating to the