CORPORATE GOVERNANCE (II) – MEMBERSHIP,

MEETINGS & RESOLUTIONS

ACQUISITION OF MEMBERSHIP OF COMPANY

 A member of a company is a person having constituent proprietary

interest by subscription, allotment, transfer, or transmission in the
company and whose name has been entered in the Register of
Members. Members in general meeting constitute the primary
organ of company in corporate governance.
 In PONMILE V. SPARK ELECTRICS (NIG.) LTD, the court
distinguished between a shareholder of the company and a member
of a company limited by shares and also observed that “entry in the
register of the company is another method of proof of being a
shareholder, but it is not the only method nor can the absence of
that method of proof invalidate other methods.
 In OILFIELDS SUPPLY CENTRE LTD V. JOHNSON, it was
also held that the share certificate is not the only means of
establishing shareholders and that even oral evidence, if cogent,
may suffice. This is not so in the case of membership as entry in
the register is an indispensable condition.
 In JETHWANI V. NIGERIA WIRE IND PLC, the court held that
by virtue of S. 152(2) of the Act, until the name of the transferee of
 shares is entered in the register of members in respect of the
transferred shares, the transferor shall, so far as concerned the
company, be deemed to remain the holder of the shares.
 Rights of a member include:
1. The right to vote
2. The right to dividend when it is declared
3. The right to attend meetings
4. The right to sell, transfer or mortgage his shares
5. The right to notice of meeting
6. To receive a copy of the MEMOART
7. The right to a share in the surplus or reserve upon winding
up.
 A person may become a member of company in either of the
following ways –
By subscription;
By allotment and registration;
By transfer; or
By transmission.

SUBSCRIPTION

Upon registration, the subscribers of the memorandum of association

shall become members and their names must be inserted in the register
of members. In essence, they shall be deemed to have agreed to become
members. The first members acquire their membership by subscription.
They must together subscribe to shares amounting in value to at least 25
per cent of the authorised share capital – sections 79(1) and 27(2)(b) of
CAMA.

Section 27(3) of CAMA now enables a subscriber of the memorandum

to hold shares as a trustee for another person but he shall disclose in the
memorandum that fact and the name of the beneficiary.

A subscriber must take and pay for all the shares subscribed by him
when calls are duly made – Alexander v. Automatic Telephone Co.
(1900) 2 Ch. 56 CA, and the shares must be taken from the company.
Where a subscriber takes equivalent shares from another member, he is
still liable to pay for all the shares he subscribed for – Migotti’s case
(1867) LR 4 Eq. 238.

ALLOTMENT AND REGISTRATION

On an application for shares by an individual, the company may allot

shares to him by notifying him of the acceptance of offer made in his
application. He then becomes a member and entitled to have his name
entered in the Register of Members. Thus, there must be an agreement to
become a member and an entry in the register – Berliet Nigeria Ltd. v.
Mordi Francis (1987) 2 NWLR (Pt. 58) 673, per Kutigi JCA.
Where the company accepts the application, the company is expected to
make an allotment to the applicant (delivery of shares certificate) and
within 42 (forty two) days notify the applicant of the fact of the
allotment and the number of shares allotted to the applicant – sections
124 – 129 of CAMA.

Whenever a company limited by shares makes any allotment of its

shares, the company shall within one month thereafter deliver to the
Commission for registration.

TRANSFER

This is done from one member to another followed by registration or by

transmission from a deceased shareholder to his personal representatives
– sections 115 and 151 of CAMA.

The transfer from an existing member to another may be by sale, gift or

some other transaction which, to all intents and purposes, must be
lawful. Consequently, a holder of shares of a company may validly elect
to transfer those shares; and a person to whom the shares are transferred
becomes the holder of the shares, and a member when his name is
entered in the Register of Members to replace the former holder.

Entry into the register of members showing the transfer must be made
within 28 days of the transfer. S. 83(3) CAMA.

TRANSMISSION
This is an involuntary transfer occurring on the death or bankruptcy of a
member. The owner of the shares on the occurrence of such events will
automatically vest (by operation of law) in the personal representatives
in the case of a dead member, and trustee in bankruptcy in the case of a
bankrupt member respectively, and he shall become a member of the
company upon the registration of his name in the Register of members –
section 155 of CAMA.
 TYPES OF COMPANY MEETINGS

Meetings are important organs of company management. The effective

management of the company can be well achieved through the
instrumentality of meetings to enable directors brainstorm and cross
fertilise their ideas in the best interest of the company and its members.

There are 4 (four) types of meetings through which shareholders may

exercise their powers. These are –

1. Statutory meeting;
2. Annual General Meeting (AGM);
3. Extra-ordinary General Meeting; and
4. Court-ordered meeting.

STATUTORY MEETING

This is a type of meeting that must be held by every ‘public company’

within a period of six months from the date of incorporation – section
211(1) of CAMA. The directors are required to forward to every
member of the company, statutory reports at least 21 days before the
meeting which must contain the following –

(a)The total number of shares allotted;

(b) The total amount of cash received by the company in respect
of the shares allotted;
 (c)The names, addresses and description of directors, auditors,
managers, if any, and secretary of the company;
(d) The particulars of any pre-incorporation contracts together
with the particulars of any modification thereon;
(e)Any underwriting contract that has not been carried out and the
reasons therefore;
(f) Any arrears due on calls from every director; and
(g) Any particulars of any commission or brokerage paid in
connection with the issuance of shares – section 211(3) of CAMA.

Members at the meeting are free to discuss any matter relating to the
formation of the company and the commencement of its business or any
matter that arises from the statutory report – section 211(8) of CAMA.

The statutory report must be certified by at least 2 directors and

delivered to the Corporate Affairs Commission for registration and
copies sent to members – section 211(6) of CAMA. By section 408(b)
of CAMA, a company would be wound up by a Court where the
company fails to deliver its statutory report or to hold its statutory
meeting.

It is an offence under the Act not to hold statutory meetings and if any
company is in default, the company and its officers are guilty and are
liable to the payment of a fine of N50 (fifty naira) for every day that the
default continues – section 212 of CAMA.
 ANNUAL GENERAL MEETINGS (** NOTE: LIKELY EXAM
Q**)

The first AGM must be held within 15 months, but must not exceed a
maximum of 18 months.

Every company (private or public) is required to hold its annual general

meeting every year in addition to any other meeting and a period of 15
(fifteen) months must not elapse between the date of annual general
meeting of a company and another – section 213(1) of CAMA. Such
meeting must be between January to December – Gibson v. Barton
(1975) LR 10 GB 329. But a company which holds its first annual
general meeting within 18 months of its incorporation needs not hold it
in that year or in the following year – section 213(1)(a) of CAMA.

For subsequent annual general meetings, Corporate Affairs Commission

may extend the time for holding the meeting by not more than 3 (three)
months – section 213(1)(b) of CAMA.

Where default is made in holding annual general meeting, any member

may apply to the Commission, and the Commission may call or direct
the calling of a general meeting and give such ancillary or consequential
directions as it thinks expedient. Such directions may include holding
that one member of the company present in person or by proxy shall
constitute a quorum and any decision made by such company shall bind
all the members – section 213(2) of CAMA.
Such meeting done on the direction of the Commission shall be deemed
to be an annual general meeting of the company. But where it is held
after the year in default of holding the meeting, it will not be treated as
that year’s annual general meeting unless at the meeting, the company
resolves that it shall be treated as its annual general meeting. Such copy
of the resolution shall be filed with the Commission within 15 (fifteen)
days after it has been passed – section 213(3) & (4) of CAMA.

Where there is default to hold annual general meeting or to comply with

the Commission’s direction, 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 N500.00 (five hundred naira); and a fine of N25 (twenty five
naira) where there is failure to deliver a copy of the resolution to the
commission as regards adopting a meeting as its annual general meeting
– section 213(5) of CAMA.

The normal business (ordinary business) that are transacted at the annual
general meeting are declaration of dividend, the presentation of the
financial statement and reports of the directors and auditors, the election
of directors, the appointment and fixing of remuneration of auditors.
Any other business aside these shall be considered as special business –
section 214 of CAMA.

EXTRA-ORDINARY GENERAL MEETING

Extra-ordinary general meetings are held where issues cannot wait till
the next Annual General Meeting.

The power to convene an extra-ordinary meeting is vested on the board

of directors or any other director for that matter, or any member(s) who
held, at the date of the requisition not less than 1/10 (one-tenth) of the paid
up capital or not less than 1/10 (one-tenth) of the total voting rights of
members where the company has no share capital – section 215(1) & (2)
of CAMA.

If after 21 days of the deposit of the notice of requisition, the directors

fail to call a meeting, the requisitionists may themselves call the
meeting. The meeting shall not be held after the expiration of 3 months
of the deposit – section 215(4) of CAMA.

All business transacted at an extra-ordinary general meeting shall be

deemed special business – section 215(8) of CAMA.

COURT-ORDERED MEETINGS

The court may, either of its own motion or on the application of any
director of the company or of any member of the company who would
be entitled to vote at the meeting order the meeting of the company or
board – section 223 of CAMA.
Such meeting that is called and held is deemed to be a meeting of the
company or that of the board of directors duly called, held and
conducted – section 223(3) of CAMA.

The court may order a meeting suo motu when an action has been
brought in the name of the company and the court wishes to ascertain
whether the action has the support of the majority of its members –
Hogg v. Cramphorm (1967) Ch. 254; Dipcharima v. Ali (1974) 1 All
NLR 420.

The court also has powers to give ancillary relief and make
consequential orders where it has ordered a meeting in the interest of the
company and the members – Italcomm (Western Nig.) Ltd. v. Scavuzzo
& Anor. (1974) 3 ALR Comm. 73. Such powers must be in respect of
matters to be considered by the court-ordered meeting. In Iro v. Robert
Park (1972) 1 All NLR 474, the Supreme Court set aside the ancillary
directions granted by the lower court on the ground that it exceeded the
powers conferred by the Act to order such meetings – Okeowo v.
Migliore (1979) 11 SC 138; Ige-Edaba v. West African Glass
Industries Ltd (1977) 3 F.R.C.R 171.

TYPES OF RESOLUTIONS

This means the decisions taken at company meetings arrived at through

voting from members who have voting rights.
There are two types of resolutions viz:

1. Ordinary resolution
2. Special resolution
3. Unanimous resolution

ORDINARY RESOLUTION

This is defined as a resolution passed by a simple majority of votes cast

by members entitled to vote in person or by proxy at a general meeting –
section 233(1) of CAMA.

Ordinary resolutions are used for –

1. Ordinary business of an annual general meeting;

2. Increase of capital; and
3. Removal of a director.

SPECIAL RESOLUTION

This is a resolution passed by a majority of 75% or not less than ¾

(three-forth majority) at a general meeting of which not less than 21
(twenty-one) days’ notice specifying the intention to pass the resolution
as a special resolution has been duly given – section 233(2) of CAMA.
However, a majority of those entitled to attend and vote, holding 95% of
the shares giving the right, or 95% of total voting rights (in cases of a
company not having a share capital) may agree to shorter notice –
section 233(2) of CAMA.

Situations where special resolutions are required can be in any of the

following –

1. To alter the objects clause of the memorandum – section 46 of

CAMA;
2. To change the name of the company – section 31(3) of CAMA;
3. To alter any provision in the memorandum – section 44(5) of
CAMA;
4. To reduce capital, on the authorization of the article of association
with the consent of the court – section 106(1) of CAMA;
5. To make the liability of the directors unlimited on the authorization
of the articles of association – section 289 of CAMA;
6. To effect a winding-up by the court – section 408(a) of CAMA;
7. Winding-up voluntarily – section 457(b) of CAMA;
8. To re-register a private company with a share capital as a public
company – section 50(1)(a) of CAMA;
9. To re-register an unlimited company as a private company limited
by shares – section 52(1) of CAMA;
10. To re-register a public company as a private company –
section 53(1)(a) of CAMA;
11. To reduce any capital redemption fund – TABLE ‘A’ Article
6 of CAMA;
 12. To reduce any share premium account – TABLE ‘A’ Article
6 of CAMA;
13. To create reserve capital – section 134 of CAMA; and
14. To alter the articles of association – section 48(1) of CAMA.

All resolutions shall be passed at a General Meeting otherwise it shall

not be effective. But for a private company a written resolution signed
by all members is as valid and effective as if passed in a General
Meeting – section 234 of CAMA.

Where there is default, every officer of the company who is in default

shall be guilty of an offence and liable to a fine of N500.00 (five
hundred naira) – section 235(7) of CAMA.

A resolution requiring special notice is also not effective unless notice of

the intention to move it has been given to the company not less than 28
(twenty eight) days before the meeting which is to be moved and notice
of the resolution shall be given by the company to the members in the
same manner – section 236 of CAMA.

Section 237 of CAMA provides that printed copy of certain resolutions

and agreements must be sent to the Corporate Affairs Commission
within 15 days of passing the resolution for registration.

These resolution and agreements are enumerated in section 237(4) of

CAMA as follows:
 (a) Special resolution
(b) Unanimous resolution, on issue, which requires special
resolution
(c) Unanimous class resolution
(d) Resolution requiring a company to wind up voluntarily
passed under section 457(a).

Where a company fails to submit printed copies of certain resolutions

and agreements to the Commission, the company and every officer in
default shall be guilty of an offence and liable to a fine of N5 (five naira)
for each copy in respect of which default is made – section 237(5).
 PREPARATION AND PROCEEDINGS OF MEETINGS

In Caruth v. ICI Ltd. (1937) AC 707 at 761, it was stated that the
proceedings are largely regulated by the Act and the articles and the
details of the conduct of the meeting are decided by the meeting itself
under the direction of the chairman.

The following should be noted –

1. To maintain effective control over the company and monitor the

executive and management, the board should meet regularly and
not less than once in a quarter with sufficient notices and have
formal schedule of matters specifically reserved for its decision.
2. It should be conducted in such a manner as to allow free flow of
discussions. There should be enough time allocated to shareholders
(members) to allow them to speak and to enable them to contribute
effectively at the meeting.

MINUTES OF MEETING

This is one of the statutory books to be kept by a company. Thus, every

company must keep minutes of the proceedings at general meetings,
board meetings, and manager’s meetings, if any – section 241(1) of
CAMA.
The minutes, if signed by the chairman of the meeting or the next
succeeding meeting, are evidence of the proceedings. They are normally
only prima facie evidence – section 241(2) of CAMA. Though section
224(2) of CAMA provide for the exception to the prima facie evidence.

Where minutes have been made in accordance with the Act, the meeting
is deemed duly held and convened, the proceedings duly had, and
appointments of directors, managers, or liquidators valid, until the
contrary is proved – section 241(3) of CAMA.

Failure to keep minutes of the proceedings will make the company and
every officer in default liable to a fine of N500.00 (five hundred naira) –
section 241(4) of CAMA.

The minutes books of proceedings at general meetings must be kept at

the registered office of the company, and must be open to inspection for
at least 6 (six) hours a day during business hours to any member free –
section 242(1) of CAMA. Though, reasonable restrictions may be
imposed by the articles or general meeting.

Any member is entitled to a copy of the minutes within 7 (seven) days

on payment of a small charge (a charge not exceeding 10 kobo for every
hundred words) – section 242(2) of CAMA.

Refusal of inspection or failure to send a copy within the proper time,

the company and every officer in default will be liable in respect of each
offence to a fine of N25 (twenty five naira) – section 242(3) of CAMA.
The courts are empowered to order inspection or the provision of copies
if the company fails to comply – section 242(4) of CAMA.

The provisions dealing with general meetings of the company shall

apply to any class meetings except excluded by the Act – section 243 of
CAMA.

ATTENDANCE

Every person who is entitled to receive notice of a general meeting of

the company as provided by section 227 of CAMA is entitled to attend a
meeting – section 228 of CAMA.

Every member shall have a right to attend any general meeting of the
company in accordance with the provisions of section 81 of CAMA –
section 227(1) of CAMA.

NOTICES

A proper notice of every general meeting must be given to members

unless the articles otherwise provide – Smyth v. Darley (1849) 2 HL
Cas 789; Onwuka v. Taymani (1965) LLR 62; Young v. Ladies
Imperial Club (1920) 2 KB 523.

Such notice must contain the requisite information, and sufficient time
must be allowed and the notice must be properly served – Imonioro v.
Seemuth Electro Eng. (Nigeria) Ltd, Suit No. FRC/L45/78 of 12th
March 1981 (unreported)
Notice of all types of general meetings is generally fixed at 21 days from
the date on which the notice was sent out – section 217(1) of CAMA.
However, section 217(2) of CAMA provides for situations where a
shorter notice is permissible.

As regards to the contents of the notice; the notice must specify the
place, date and time of the meeting, and the general nature of the
business to be transacted thereat in sufficient detail to enable those to
whom it is given to decide whether to attend or not, and where the
meeting is to consider a special resolution, the terms of the resolution
must be set out – section 218(1).

A resolution which is not covered by the terms of notice cannot validly

be passed and if it is a special resolution, the exact wording of the
resolution must be given. In Re Moorgate Mercantile Holdings Ltd.
(1980) 1 W.L.R 277; (1980) 1 All ER 40, Slade J. said thus:

“There must be absolute identity at least in substance between

the intended resolution referred to in the notice and the
resolution actually passed.”

No business must be discussed in the meeting unless notice of it has

been duly given – section 218(3) of CAMA. Where a member is entitled
to appoint a proxy, the notice must specifically state so; otherwise, every
officer of the company who is in default shall be guilty of an offence and
liable to a fine not exceeding N500.00 (five hundred naira). Though,
failure to comply with giving of notice will not invalidate the meeting
unless the officer responsible for the error or omission acted in bad faith
or failed to exercise due care and diligence.

Those entitled to receive notice of a general meeting are –

1. Every member;
2. Every person upon whom the ownership of a share devolves by
reason of his being a legal representative, receiver or a trustee in
bankruptcy of a member
3. Every director of the company;
4. Every auditor of the company for the time being; and
5. The secretary – section 219(1) of CAMA.

Aside the above persons, no other person shall be entitled to receive

notice – section 219(2).

SERVICE OF NOTICE

Notice may be served in the following ways –

1. Personal service – The notice may be served on the member

personally.
2. Post – Notice may be effected through the post and where a notice
is sent by post, service of the notice shall be deemed to be effected
(by properly addressing, prepaying and posting a letter containing
 the notice) at the expiration of 7 (seven) days after postage, and in
any other case at the time which the letter would be delivered in
the ordinary course of post. Where notice is sent by post, the day
of service, that is, the day of posting, and the day for which it is
given will be excluded – section 220(2) of CAMA.
3. Registered address – This might apply to a registered company
which is a member of another company. But section 220(5) also
provides that the definition ‘registered address’ means in the case
of a member, any address supplied by him to the company for the
giving of notice to him.
4. Joint shareholders – Where there are joint shareholders, notice is
good if it is served on the person whose name appears first on the
register – section 220(3) of CAMA.
5. Deceased and bankrupt members – If the personal
representatives or trustees are not registered, then notice is served
by sending it to any address which they may have supplied. If they
have not supplied an address, notice is good if it is served on the
deceased or bankrupt at the address given in the register of
members.

It should be noted that a public company must at least 21 (twenty-one)

days before any general meeting, advertise a notice of such meeting in at
least two daily newspapers – section 222.
If a meeting is called for a date 28 (twenty-eight) days or less after the
notice has been given, the notice, though not given within the time
required by law, is still deemed to have been properly given. This is
made to defeat directors or auditors who are deliberately obstructive to
such resolutions – section 236 of CAMA.

VOTING

The resolution is decided by the votes of members. Only members have

a right to vote and so, even directors cannot vote at general meetings
unless they are members – Olumody v. Mohammed (1973) NCLR 452.

Voting must be decided on a show of hands unless a poll is demanded

before or on the declaration of the result of show of hands – section
224(1) of CAMA.

Unless a poll is demanded, a declaration by the chairman that a

resolution has by a show of hands been carried or lost, and on 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 – section 224(2)

A poll is demanded when members elect to vote in accordance with

number of shares held in the company. Any provision in the article
excluding the right to demand a poll at general meeting on any question
other than the election of the chairman or the adjournment of the
meeting is void – section 225 of CAMA.

In the case of a tie (equality) of votes, whether on a show of hands or on

a poll, the chairman shall be entitled to a second or casting vote –
section 226(3) of CAMA.

VENUE

All statutory and annual general meetings must be held in Nigeria –

section 216 of CAMA. Since there are no restrictions about other
meetings like extra-ordinary general meeting, they may be held either
within or outside Nigeria.

However, the Code of Corporate Governance in Nigeria issued jointly

by the Securities and Exchange Commission and the Corporate Affairs
Commission in October, 2003 provides in paragraph (c) on Page 10 that:

“The venue of a general meeting of shareholders should be

carefully chosen in such a way as to make it possible and
affordable (in terms of distance and cost) for the majority
of shareholders to attend and vote and not to
disenfranchise shareholders on account of choice of venue,
which is unreasonable to reach.”
 QUORUM

This is the total number of those that can be present at a meeting in order
for the meeting to take off effectively – section 232 of CAMA.

The quorum shall be 1/3 (one-third) of the total number of members or 25

members (whichever is lesser) present in person or by proxy unless the
articles provides otherwise – section 232(2). For the purpose of
determining a quorum, all members of their proxies shall be counted –
section 232(3) of CAMA.

AGENDA

The agenda is the order of business to be dealt with at the meeting.

Many outlines exist to help inexperienced leaders get started. Agendas
all have common attributes which help ensure that important items are
dealt with, that time is not wasted on trivial matters, and that decisions
are arrived at efficiently. An agenda must be flexible enough to
accommodate changes agreed upon by all members but consistent
enough so members become familiar with the routine

SAMPLE OF BOARD RESOLUTION TO CALL ANNUAL

GENERAL MEETING (AGM)

SOULBEEZ & GRAM LIMITED

 No. 3 Nedu Crescent, Bwari, Abuja

28th January 2010

We, being all the directors of Soulbeez & Gram Ltd. who are entitled to
receive notice of a meeting of the directors, RESOLVE that an annual
general meeting of the Company shall be convened on the
……………… day of ……………. 20….. for the following purposes:

1. Declaration of dividend,
2. The presentation of the financial statement and reports of the
directors and auditors,
3. The election of directors, and
4. The appointment and fixing of remuneration of auditors.

And that the secretary be instructed to give notice of the meeting to all
shareholders (and obtain consent of all members to the meeting being
held on short notice).

Dated this …………….. day of ………………. 20….

…………………………..

Director’s name and signature

…………………………..

Director’s name and signature

…………………………..

Director’s name and signature

NOTE: Notice of all types of general meetings is generally fixed at 21

days from the date on which the notice was sent out to members –
section 217(1) of CAMA.