COMPANIES AND ALLIED MATTERS ACT

COMPANIES AND ALLIED MATTERS ACT

ARRANGEMENT OF SECTIONS

PART A

Companies

PART I

Corporate Affairs Commission

SECTION

1. Establishment of the Corporate Affairs Commission.

2. Membership of the Commission.

3. Tenure of office.

4. Remuneration and allowance.

5. Proceedings of the Commission.

6. Disclosure of interest.

7. Functions.

8. Appointment of Registrar‐General.

9. Appointment of staff.

10. Right to appear in court.

11. Service in the Commission to be pensionable.

12. Fund of the Commission.

13. Expenditure of the Commission.

14. Annual accounts, audit and estimates.

15. Annual report.

16. Regulations.

17. Meaning of certain words used in this Part.

PART II

Incorporation of companies and incidental matters

CHAPTER 1

Formation of Company

18. Right to form a company.

19. Partnership, etc., of more than twenty members when permitted.

20. Capacity of individual to form company.

21. Types of companies.

22. Private company.

23. Consequences of default in complying with conditions constituting a private company.

24. Public company.

25. Unlimited company to have share capital.

26. Company limited by guarantee.

Memorandum of association

27. Requirements with respect to the memorandum of a company.

28. Form of memorandum.

Name of company

29. Name as stated in the memorandum.

30. Prohibited and restricted names.

31. Change of name of company.

32. Reservation of name.

Articles of association

33. Articles for regulating companies.

34. Form and contents of articles.

Registration of companies

35. Documents of incorporation.

36. Registration.

37. Effect of registration.

Capacity and powers of companies

38. Powers of companies.

39. Effect of ultra vires acts.

40. Effect of reliance on restrictions in the memorandum.

Effect of memorandum and articles

41. Effect of memorandum and articles.

Member’s right to copy of memorandum and articles

42. Member’s right to copies of memorandum, etc.

43. Copies of memorandum issued to embody alterations.

Alteration of memorandum and articles

44. Restriction on alteration of memorandum.

45. Alteration of memorandum.

46. Mode of alteration of business or objects.

47. Power to alter provisions in the memorandum in certain cases.

48. Alteration of articles.

49. Limitation of liability to contribute to share capital if memorandum, etc., altered.

CHAPTER 2

Conversion and re‐registration of companies

50. Re‐registration of private company as public.

51. Re‐registration of company limited by shares as unlimited.

52. Re‐registration of unlimited as limited by shares.

53. Re‐registration of public company as private.

CHAPTER 3

Foreign companies

54. Foreign companies intending to carry on business in Nigeria.

55. Penalties.

56. Power to exempt foreign companies.

57. Annual report.

58. Exempted foreign company to have status of unregistered company.

59. Penalties for false information.

60. Application of certain sections to foreign companies.

CHAPTER 4

Promoters

61. Persons promoting a company.

62. Duties and liabilities of a promoter.

PART III

Acts by or on behalf of the company Exercise of company’s powers
63. Division of powers between general meeting and board of directors.

64. Delegation to committees and managing directors.

Liability for acts of the company

65. Acts of general meeting, board of directors, or of managing directors.

66. Acts of officers or agents.

67. When provision exempting, etc., officer from liability to the company is void.

Constructive notice of registered documents

68. Abolition of constructive notice of registered documents.

69. Presumptions of regularity.

70. Liability of company not affected by fraud or forgery of officer.

Company’s contracts

71. Form of contract.

72. Pre‐incorporation contracts.

73. Bills of exchange and promissory note.

74. Common seal of the company.

75. Official seal for use abroad.

76. Powers of attorney.

Authentication and service of documents

SECTION

77. Authentication of documents.

78. Service of documents on companies.

PART IV

Membership of company

79. Definition of member.

80. Capacity to be a member.

81. Right of member to attend meetings and vote.

82. Personation of members.

Register of members

83. Register of members.

84. Location of register.

85. Index of members to be kept.

86. Entry of trusts prohibited.

87. Inspection of register and index.

88. Consequences of failure by agent’s default to keep register.

89. Power to close register.

90. Power of court to rectify register.

91. Register to be evidence.

Liability of members

92. Liability of members.

93. Liability for company debts where membership is below legal minimum.

Disclosure of beneficial interest in shares

94. Power of company to require disclosure.

95. Obligation of disclosure by substantial shareholder in public company.

96. Person ceasing to be a substantial shareholder to notify company.

97. Register of interests in shares.

98. Registration of interests to be disclosed.

PART V

Share capital Minimum share capital
99. Authorised minimum share capital.

Alteration of share capital

100. Alteration of share capital by consolidation, etc.

101. Notice required where shares and stock consolidated, etc.

102. Increase of share capital and notice of increase.

103. Increase of paid‐up capital on increase of shares.

104. Power for unlimited company to provide reserve share capital on re‐ registration.

Reduction of share capital

105. Restriction on reduction of issued share capital.

106. Special resolution for reduction of share capital.

107. Application to court for order of confirmation.

108. Court order confirming reduction.

109. Registration of order and minutes of reduction.

110. Liability of members on reduced shares.

111. Penalty for concealing name of creditor, etc.

Miscellaneous matters relating to capital

112. Duty of directors on serious loss of capital.

113. Power to pay interest out of capital in certain cases.

PART VI

Shares

Nature of shares

114. Rights and liabilities attached to shares.

115. Shares as transferable property.

116. Prohibition of non‐voting and weighted shares.

Issue of shares

117. Power of companies to issue shares.

118. Issue of classes of shares.

119. Issue with rights attached.

120. Issue of shares at a premium.

121. Issue of shares at a discount.

122. Issue of redeemable preference shares.

123. Validation of improperly issued shares.

Allotment of shares

124. Authority to allot shares.

125. Method of application and allotment.

126. Allotment as acceptance of contract.

127. Payment on allotment.

128. Effect of irregular allotment.

129. Return as to allotments.

Commissions and discounts

130. Prohibition of payment of commissions, discounts out of shares and capital.

131. Power to pay commission in certain cases.

132. Statement in balance sheet as to commission.

Call on and payment for shares

133. Call on shares.

134. Reserve liability of company having share capital.

135. Payment for shares.

136. Meaning of payment in cash.

137. Payment other than in cash.

138. Power to pay different amounts on shares.

Lien and forfeiture of shares

139. Lien on shares.

140. Forfeiture of shares.

Classes of shares

141. Power to vary rights.

142. Application for cancellation of variation.

143. Right of a preference share to more than one vote.

144. Construction of class rights.

Numbering of shares

145. Shares to be numbered.

Share certificates

146. Issue of share certificates.

147. Effect of share certificate.

148. Probate, etc., as evidence of grant.

149. Abolition of share warrants.

Conversion of shares into stock

150. Conversion of shares into stock.

Transfer and transmission

151. Transfer of shares.

152. Entry in register of transfers.

153. Notice of refusal to register.

154. Transfer by personal representative.

155. Transmission of shares.

156. Protection of beneficiaries.

157. Certification of transfers.

Transactions by company in respect of its own shares

158. Redemption of redeemable preference shares.

159. Prohibition of financial assistance by company for acquisition of its shares.

160. Acquisition by a company of its own shares.

161. Conditions for purchase by a company of its own shares.

162. Limit on number of shares acquired.

163. Enforceability of contract to acquire shares.

164. Re‐issue of shares acquired.

165. Acquisition of shares of holding company.

PART VII

Debentures

Creation of debenture and debenture stock

166. Power to borrow money, to charge property and to issue debenture.

167. Documents of title to debentures or certificate of debenture stock.

168. Statements to be included in debentures.

169. Effect of statements in debentures.

170. Enforcement of contracts relating to debentures.

Types of debentures

171. Perpetual debentures.

172. Convertible debentures.

173. Secured or naked debentures.

174. Redeemable debentures.

175. Power to re‐issue redeemed debentures in certain cases.

176. Rights of debenture holders.

177. Meetings of debenture holders.

Fixed and floating charges

178. Meaning of “floating” and “fixed” charges.

179. Priority of fixed over floating charge.

180. Powers of the court.

181. Advertisement of appointment of receiver and manager.

182. Preferential payment to debenture holders in certain cases.

Debenture trust deed

183. Execution of debenture of trust deed.

184. Contents of debenture trust deed.

185. Contents of debenture covered by trust deed.

186. Trustees for debenture holders.

187. Disqualification for appointment as trustee of debenture trust deed.

188. Liability of trustees for debenture holders.

189. Restrictions on transferability of debentures.

Provisions as to company’s register of charges, debenture holders and as to copies of instruments creating charges

190. Company to keep copies of instruments creating charges.

191. Company’s register of charges.

192. Inspection of register and copies of instruments.

193. Register of debenture holders.

194. Inspection of register of debentures, etc.

195. Entry in register of transfer.

196. Notice of refusal to register.

Registration of charges with Commission

197. Registration of charges created by companies.

198. Register of particulars of charges.

199. Duty of company to register charges.

200. Duty of company acquiring property to register subsisting charges.

201. Existing charges.

202. Charges to secure fluctuating amounts.

203. Endorsement of certificate of registration on debentures.

204. Entries of satisfaction of charges.

205. Rectification of register.

206. Registration of appointment order, etc.

207. Inspection of register and copies of instruments.

Realisation of security

208. Realisation of debenture holder’s security.

209. Remedies available to debenture holders.

210. Application of certain sections.

PART VIII

Meetings and proceedings of companies

Statutory meeting

211. Statutory meeting.

212. Non‐compliance and penalty.

General meeting

213. Annual general meeting.

214. Businesses transacted at annual general meeting.

Extraordinary general meeting

215. Extraordinary general meeting.

216. Place of meeting.

Notice of meetings

217. Length of notice for calling meetings.

218. Contents of notice.

219. Persons entitled to notice.

220. Service of notice.

221. Failure to give notice.

222. Additional notice.

223. Power of court to order meetings.

Voting

224. Procedure of voting.

225. Right to demand poll.

226. Voting on a poll.

227. Right of attendance at general meeting.

228. Attendance at meetings.

229. Objections as to qualification to vote.

230. Proxies.

231. Corporation representation at meetings of companies, etc.

232. Quorum.

Resolutions

233. Resolutions.

234. Written resolutions.

235. Circulation of members’ resolutions.

236. Resolutions requiring special notice.

237. Registration and copies of certain resolutions.

238. Effect of resolutions passed at adjourned meetings.

Miscellaneous matters relating to meetings and proceedings

239. Adjournment.

240. Powers and duties of the chairman of the general meeting.

241. Minutes of proceedings and effect.

242. Inspection of minute books and copies.

243. Class meetings.

PART IX

Directors and secretaries of the company

CHAPTER 1

Directors Meaning of directors
244. Meaning of “directors”.

245. Shadow director.

Appointment of directors

246. Number of directors.

247. Appointment of first directors.

248. Subsequent appointment of directors.

249. Casual vacancy.

250. Liability of a person where not duly appointed.

251. Share qualification of directors.

252. Duty of directors to disclose age to the company.

253. Provisions as to insolvent persons acting as directors.

254. Restraint of fraudulent persons.

255. Appointment of director for life.

256. Right to appoint a director at any age.

257. Disqualification for directorship.

258. Vacation of office of director.

259. Rotation of directors.

260. Validity of acts of directors.

261. Mode of voting on appointment of directors.

Removal of directors

262. Removal of directors.

Proceedings of directors

263. Proceedings of directors.

264. Quorum.

265. Failure to have a quorum.

266. Notice of meeting.

Remuneration and other payments

267. Remuneration of directors.

268. Remuneration of a managing director.

269. Prohibition of tax‐free payments to directors.

270. Prohibition of loans to directors in certain circumstances.

271. Payment by company for loss of office, etc., to be approved.

272. Payment to director for loss of office, etc., or transfer of property illegal.

273. Directors to disclose payment for loss of office, etc., in certain cases.

274. Provisions supplementary to sections 271 to 273.

Disclosure of directors’ interests

275. Register of directors’ shareholdings, etc.

276. General duty to give notice, etc.

277. Disclosure by directors of interests in contracts.

278. Particulars with respect to directors in trade catalogues, etc.

Duties of directors

279. Duties of directors.

280. Conflicts of duties and interests.

281. Multiple directorships.

282. Duty of care and skill.

283. Legal position of directors.

Property transactions by directors

284. Substantial property transactions involving directors, etc.

285. Exceptions from section 284.

286. Liabilities arising from contravention of section 284.

287. Prohibition of secret benefits.

Miscellaneous matters relating to directors

288. Directors with unlimited liability in respect of a limited company.

289. Special resolution of limited company making liability of directors unlimited.

290. Personal liability of directors and officers.

291. Director’s contract of employment for more than five years.

292. Register of directors and secretaries.

CHAPTER 2

Secretaries

293. Secretaries.

294. Avoidance of acts done by a person as director and secretary.

295. Qualification of a secretary.

296. Appointment and removal of a secretary.

297. Fiduciary interests of a secretary.

298. Duties of a secretary.

PART X

Protection of minority against illegal and oppressive conduct Action by or against the company
299. Only company may sue for wrong or ratify irregular conduct.

300. Protection of minority: injunction and declaration in certain cases.

301. Personal and representative action.

302. Definition of member.

303. Commencing derivative action.

304. Powers of the court.

305. Evidence of shareholders’ approval not decisive.

306. Court’s approval to discontinue.

307. No security for costs.

308. Interim costs.

309. Definition.

Relief on the grounds of unfairly prejudicial and oppressive conduct

310. Application.

311. Grounds upon which an application may be made.

312. Powers of the court.

313. Penalty for failure to comply with order of the court.

Investigation of companies and their affairs

314. Investigation of a company on its own application or that of its members.

315. Other investigations of company.

316. Inspectors’ powers during investigation.

317. Production of documents and evidence to inspectors.

318. Power of inspector to call for directors’ bank accounts.

319. Obstruction of inspectors to be treated as contempt of court.

320. Inspector’s report.

321. Power to bring civil proceedings on company’s behalf.

322. Criminal proceedings and other proceedings by the Attorney‐General of the Federation.

323. Power of the Commission to present winding‐up petition.

324. Expenses of investigation.

325. Inspectors’ report to be used as evidence in legal proceedings.

326. Appointment, etc., of inspectors to investigate ownership of a company.

327. Provisions applicable to investigation.

328. Power to require information as to persons interested in shares, etc.

329. Power to impose restrictions on shares, etc.

330. Savings for legal practitioners and bankers.

PART XI

Financial statements and audit

CHAPTER 1

Financial statements Accounting records
331. Companies to keep accounting records.

332. Place and duration of records.

333. Penalties for non‐compliance with sections 331 and 332.

334. Directors’ duty to prepare annual accounts.

Form and content of company individual and group financial statements

335. Form and content of individual financial statements.

336. Group financial statements of holding company.

337. Form and content of group financial statements.

338. Meaning of “holding company”, “subsidiary” and “wholly‐owned subsidiary”.

339. Additional disclosure required in notes to financial statements.

340. Disclosure of loans in favour of directors and connected persons.

341. Disclosure of loans etc., to officers of the company and statements of amount outstanding.

Directors’ reports

342. Directors’ report.

Procedure on completion of financial statements

343. Signing of balance sheet and documents to be annexed thereto.

344. Persons entitled to receive financial statements as of right.

345. Directors’ duty to lay and deliver financial statements.

346. Penalty for non‐compliance with section 345.

347. Default order in case of non‐compliance.

348. Penalty for laying or delivering defective financial statements.

349. Shareholders’ right to obtain copies of financial statements.

Modified financial statements

350. Entitlement to deliver financial statements in modified form.

351. Qualification of a small company.

352. Modified individual financial statements.

353. Modified financial statements of holding company.

Publication of financial statements

354. Publication by a company of full individual or group financial statements.

355. Publication of abridged financial statements.

Supplementary

356. Power to alter accounting requirements.

CHAPTER 2

Audit

357. Appointment of auditors.

358. Qualification of auditors.

359. Auditors’ report.

360. Auditors’ duties and powers.

361. Remuneration of auditors.

362. Removal of auditors.

363. Auditors’ right to attend company’s meetings.

364. Supplementary provisions relating to auditors.

365. Resignation of auditors.

366. Right of resigning auditor to requisition company meeting.

367. Powers of auditors in relation to subsidiaries.

368. Liability of auditors for negligence.

369. False statements to auditors.

PART XII

Annual returns

370. Annual return by company limited by shares or guarantee.

371. Annual return by company having shares other than small company.

372. Annual return by small company.

373. Annual return by company limited by guarantee.

374. Time for completion of annual return.

375. Documents to be annexed to annual return.

376. Certificates by private company and small company in annual return.

377. Exception in certain cases of unlimited companies and small companies from requirements of section 375.

378. Penalty for non‐compliance with sections 370 to 376.

PART XIII

Dividends and profits

379. Declaration of dividends and payment of interim dividend.

380. Distributable profits.

381. Restriction on declaration and payment of dividends.

382. Unclaimed dividends.

383. Reserve and capitalisation.

384. Employees’ shares and profit sharing.

385. Right of the shareholders to sue for dividends.

386. Liability for paying dividend out of capital.

PART XIV

Receivers and managers Appointment of receivers and managers
387. Disqualification for appointment as a receiver or manager.

388. Power of the court to appoint official receiver for debenture holders and others.

389. Appointment of receivers and managers by the court.

390. Receivers and managers appointed out of court.

391. Power of a receiver or manager appointed out of court to apply to the court for directions.

392. Notification that a receiver or manager has been appointed.

Duties, powers and liabilities of receivers and managers

393. Duties, powers, etc., of receivers and managers.

394. Liabilities of receivers and managers on contracts.

395. Power of court to fix remuneration on application of liquidator.

Procedure after appointment

396. Provisions as to information where receiver or manager appointed.

397. Special provisions as to statement submitted to receiver.

Accounts by receiver or manager

398. Delivery to Commission of accounts of receivers and managers.

Duty as to returns

399. Enforcement of duty of receivers and managers to make returns, etc.

Construction of references

400. Construction of references to receivers and managers.

PART XV

Winding up of companies

CHAPTER 1

Preliminary

Modes of winding up

401. Modes of winding up.

Contributories

402. Liability as contributories of present and past members.

403. Definition of contributory.

404. Nature of liability of contributory.

405. Contributories in case of death of member.

406. Contributories in case of bankruptcy of member.

CHAPTER 2

Winding up by the court

Jurisdiction

407. Jurisdiction as to winding up.

Cases in which company may be wound up by court

408. Circumstances in which companies may be wound up by court.

409. Definition of inability to pay debts.

Petitions for winding‐up and effects thereof

410. Provisions as to application for winding up.

411. Powers of court on hearing petition.

412. Power to stay or restrain proceedings against company.

413. Avoidance of dispositions of property, etc., after commencement of winding up.

414. Avoidance of attachments, etc.

Commencement of winding up

415. Commencement of a winding up by the court.

Consequences of winding‐up order

416. Copy of order to be forwarded to Commission.

417. Actions stayed on winding‐up order.

418. Effect of winding‐up order.

Official receiver

419. Definition of official receiver.

420. Statement of company’s affairs to be submitted to official receiver.

421. Report by official receiver.

Liquidators

422. Appointment, remuneration and title of liquidators.

423. Custody of company’s property.

424. Vesting of property of company in liquidator.

425. Powers of liquidator.

426. Liquidator to give information, etc., to official receiver.

427. Exercise and control of liquidator’s powers.

428. Payments by liquidator into companies liquidation account.

429. Audit, etc., of liquidator’s account.

430. Books to be kept by liquidator.

431. Release of liquidator.

432. Control over liquidators.

Committee of inspection, special manager, etc.

433. Power to appoint committee of inspection after meeting of creditors and others.

434. Powers, etc., of committee of inspection.

435. Powers where no committee of inspection is appointed.

436. Power to appoint special manager.

437. Official receiver as receiver for debenture holders, etc.

General powers of court in case of winding up by court

438. Power to stay winding up.

439. Settlement of list of contributories and application of assets.

440. Delivery of property to liquidator.

441. Payments by contributory to company and set‐off allowance.

442. Power of court to make calls.

443. Power to order payment into companies’ liquidation account.

444. Order on contributory to be conclusive evidence.

445. Power to exclude creditors not proving in time.

446. Adjustment of rights of contributories.

447. Inspection of books by creditors and contributories.

448. Power to order costs of winding up to be paid out of assets.

449. Power to summon persons suspected of having property of company, etc.

450. Power to order public examination of promoters, etc.

451. Power to arrest absconding contributory.

452. Powers of court cumulative.

453. Delegation to liquidator of certain powers of court.

454. Dissolution of company.

Enforcement of and appeals from orders

455. Power to enforce orders.

456. Appeals from orders.

CHAPTER 3

Voluntary winding up

Resolutions for and commencement of voluntary winding up

457. Circumstances in which company may be wound up voluntarily.

458. Notice of resolution to wind up voluntarily.

459. Commencement of voluntary winding up.

Consequences of voluntary winding up

460. Effect of voluntary winding up on business, etc., of company.

461. Avoidance of transfer, etc., after commencement of voluntary winding up.

Declaration of solvency

462. Statutory declaration of solvency where proposal to wind up voluntarily.

Provisions applicable to a members’ voluntary winding up

463. Provisions applicable to members’ voluntarily winding up.

464. Power to appoint, etc., liquidators.

465. Power to fill vacancy in office of liquidators.

466. Liquidator to call creditors’ meeting on insolvency.

467. Liquidator to call general meeting at end of each year.

468. Final meeting and dissolution.

469. Alternative provisions as to annual and final meetings in insolvency cases.

470. Books and accounts during members’ voluntary winding up.

Provisions applicable to a creditor’s voluntary winding up

471. Provisions applicable to creditors’ winding up voluntarily.

472. Meeting of creditors.

473. Appointment of liquidator and cesser of directors’ powers.

474. Appointment of committee of inspection.

475. Fixing of liquidators’ remuneration.

476. Power to fill vacancy in the office of liquidator.

477. Liquidator to call meetings of company and others at the end of each year.

478. Final meeting and dissolution.

Provisions applicable to every voluntary winding up

479. Provisions applicable to every voluntary winding up.

480. Distribution of property of company.

481. Powers, etc., of liquidator in every voluntary winding up.

482. Power of court to appoint, etc., liquidator.

483. Power to apply to court to determine questions or exercise powers.

484. Costs of voluntary winding up.

485. Saving of rights of creditors and contributories.

CHAPTER 4

Winding up subject to supervision of court

486. Power to order winding up subject to supervision.

487. Effect of petition for winding up subject to supervision.

488. Application of sections 413 and 414.

489. Power of court to appoint, etc., liquidators.

490. Effect of supervision order.

CHAPTER 5

Provisions applicable to every mode of winding up

491. Liquidator to give notice of appointment.

Proof and ranking of claims

492. Debts of all descriptions may be proved.

493. Application of bankruptcy rules in certain cases.

494. Preferential payments.

Effect of winding up on antecedent and other transactions

495. Fraudulent preference.

496. Liabilities and rights of certain fraudulently preferred persons.

497. Avoidance of attachments, etc., on winding up subject to supervision of the court.

498. Effect of floating charge.

499. Disclaimer of onerous property.

500. Restriction of rights of creditor as to execution, etc., on winding up of company.

501. Duty of sheriff as to goods taken in execution.

Offences antecedent to or in course of winding up

502. Offences by officers of company in liquidation.

503. Falsification of books.

504. Frauds by officers of companies in liquidation.

505. Liability where proper accounts not kept.

506. Responsibility for fraudulent trading.

507. Power of court to assess damages against delinquent directors, etc.

508. Prosecution of delinquent officers and members of a company.

Supplementary provisions as to winding up

509. Disqualifications for appointment as liquidator.

510. Corrupt inducement affecting appointment as liquidator.

511. Enforcement of duty of liquidator to make returns, etc.

512. Notification that a company is in liquidation.

513. Exemption from stamp duty.

514. Books of company to be evidence.

515. Disposal of books, etc., of company.

516. Information as to pending liquidations and disposal of unclaimed assets.

517. Resolutions passed at adjourned meetings of creditors, etc.

518. Power to make over assets to employees.

Supplementary powers of court

519. Meetings to ascertain wishes of creditors and others.

520. Judicial notice of signatures of officers of court, etc.

521. Judicial notice of signatures of certain government officials.

522. Special commissioners for receiving evidence.

523. Affidavits in Nigeria and elsewhere.

Provisions as to dissolution

524. Power of court to avoid dissolution of company.

525. Power of Commission to strike off defunct company.

526. Property of dissolved company to be declared as bona vacantia.

Central accounts

527. Companies liquidation account defined.

528. Investment of surplus funds in government securities, etc.

529. Separate accounts of particular estates.

Returns by officers of courts

530. Returns by officers in winding up.

Accounts to be prepared annually

531. Annual accounts of company winding up and disposal.

CHAPTER 6

Winding up of unregistered companies

532. Winding up of unregistered company.

533. Contributories in winding up of unregistered company.

534. Power of court to stay or restrain proceedings.

535. Action, etc., stayed on winding‐up order.

536. Provisions of this Part to be cummulative.

PART XVI

Arrangements and compromise

537. Definition of “arrangement”.

538. Arrangement on sale of company’s property during members’ voluntary winding up.

539. Power to compromise with creditors and members.

540. Information as to compromise with creditors and members.

PART XVII

Miscellaneous and supplemental Application of this Part of this Act

541. Application of this Part of this Act.

542. Act to over‐ride memorandum, articles, etc.

543. Application of Act to companies under former enactments.

544. Application of Act to companies registered but not formed.

545. Application of Act to unlimited companies registered under former enactments.

546. Restricted application of Act to unregistered companies.

Administration

547. Registered and head office of company.

548. Publication of name by company.

549. Fees.

550. Form of register, etc.

551. Inspection, etc., of documents kept by the Commission.

552. Rules of court for winding up of companies, etc.

553. Certain companies to publish statement in prescribed form.

Legal proceedings, etc.

554. Prosecution of offences.

555. Production, etc., of books where offences suspected.

556. Costs in actions by certain limited companies.

557. Saving for privileged communications.

558. Power of court to grant relief in certain cases.

559. Penalty for improper use of certain words.

560. Penalty for false statements.

561. Extended effect of penalty for offence of fraudulent trading.

562. Application of fines.

563. Application by the Commission to the court for directions.

Miscellaneous

564. Schedules, Tables, and Forms; alteration and application.

565. Enforcement of duty of company to make returns to Commission.

566. Power of company to provide for employees on cessation or transfer of business.

567. Interpretation of certain words used in Part A of this Act.

568. Repeal and savings.

PART B

Business names

569. The Commission to administer business names.

570. Establishment of business names’ registry in each State.

571. Appointment of Registrar and other officers.

572. Functions of Registrar and Assistant Registrars.

573. Registration of business names.

574. Procedure for registration.

575. Entry of business name in the register.

576. Certificate of registration.

577. Registration of changes.

578. Removal of name from register.

579. Prohibited and restricted names.

580. Searches.

581. Copies of entries in registers.

582. Publication of true name.

583. Liability of person in default.

584. Offences and penalties.

585. Regulations.

586. Validity of previous registration.

587. Annual returns.

588. Interpretation of words used in this Part.

589. Repeal of 1961 No. 17.

PARTC

Incorporated trustees

590. Incorporation of trustees of certain communities, bodies and associations.

591. Method of application.

592. Qualification of trustees.

593. Constitution.

594. Advertisement and objections.

595. Registration and certificate.

596. Effect of registration and certificate.

597. Changes of names or objects.

598. Alteration of provisions of the constitution.

599. Replacement and appointment of additional trustees.

600. Changes in contravention of certain provisions of this Part of this Act. 601. Councilor governing body.
602. Exercise of powers of trustee.

603. Application of income and property. 604. Common seal.
605. Contract of corporate body. 606. Documents and inspection. 607. Annual returns.

608. Dissolution of a corporate body formed under this Act. 609. Regulations.
610. Interpretation of words used in this Part. 611. Repeal of Cap. 98 of 1958 Edition.
612. Validity of previous registrations.

PART D

Short title

613. Short title.

SCHEDULES FIRST SCHEDULE
Tables A, B, C and D

SECOND SCHEDULE

Form and content of companies financial statements

THIRD SCHEDULE

Miscellaneous matters to be disclosed in notes to company financial statements

FOURTH SCHEDULE

Particulars in company financial statements of loan and other transactions favouring directors and officers

FIFTH SCHEDULE

Matters to be dealt with in director’s report

SIXTH SCHEDULE

Matters to be expressly stated in auditors report

SEVENTH SCHEDULE

Modified financial statements of companies qualifying as small companies

EIGHTH SCHEDULE

Contents and form of annual returns of a company having shares other than a small company

NINTH SCHEDULE

Annual return of a small company

TENTH SCHEDULE

Annual return of a company limited by guarantee

ELEVENTH SCHEDULE

Powers of receivers and managers of the whole or substantially the whole of the company’s property

TWELFTH SCHEDULE

Provisions not applicable on winding up under supervision of court

THIRTEENTH SCHEDULE

Provision of this Act applying to unregistered companies

FOURTEENTH SCHEDULE

Forms of statement to be published by banking and insurance companies and deposit, provident or benefit societies

FIFTEENTH SCHEDULE

Fees to be paid for matters under Part A of the Act

COMPANIES AND ALLIED MATTERS ACT

An Act to establish the Corporate Affairs Commission, provide for the incorporation of companies and incidental matters, registration of business names and the incorporation of trustees of certain committees, bodies and associations.

[1990 No. 1.]

[Commencement.] [2nd January, 1990] PART A
Companies

PART I

Corporate Affairs Commission

1. Establishment of the Corporate Affairs Commission

(1) There is hereby established under this Act, a body to be known as the Corporate Affairs Commission (in this Act referred to as “the Commission”).

(2) The Commission shall be‐

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

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

(c) capable of acquiring, holding or disposing of any property, movable or immovable, for the purpose of carrying out its functions.

(3) The headquarters of the Commission shall be situated in the Federal Capital Territory, Abuja, and there shall be established an office of the Commission in each State of the Federation.

2. Membership of the Commission

The Commission shall consist of the following members, that is‐

(a) a chairman who shall be appointed by the President on the recommendation of the Minister, being a person who by reason of his ability, experience or specialised knowledge of corporate, industrial, commercial, financial or economic matters or of business or professional attainments would in his opinion be capable of making outstanding contributions to the work of the Commission;

(b) one representative of the business community, appointed by the Minister on the recommendation of the Nigerian Association of Chambers of Commerce, Industries, Mines and Agriculture;

(c) one representative of the legal profession, appointed by the Minister on the recommendation of the Nigerian Bar Association;

(d) one representative of the accountancy profession, appointed by the Minister on the recommendation of the Institute of Chartered Accountants of Nigeria;

(e) one representative of the Manufacturers Association of Nigeria, appointed by the Minister on the recommendation of the Association;

(f) one representative of the Securities and Exchange Commission not below the grade of Director or its equivalent;

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

(i) Commerce;

(ii) Justice;

(iii) Industry, and

(h) the Registrar‐General of the Commission.

[1992 No. 40.]

3. Tenure of office

(1) Subject to the provisions of subsection (2) of this section, a person appointed as a member of the Commission (not being an ex‐officio member) shall hold office for three years and shall be eligible for re‐appointment for one further term of three years.

(2) The Minister may, with the approval of the President at any time remove any member of the Commission from office if the Minister is of the opinion that it is not in the interest of the Commission for the member to continue in office and shall notify the member in writing to that effect.

[1992 No. 40.]

(3) The members of the Commission except the Registrar‐General shall be part‐time members of the Commission.

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

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

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

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

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

(e) in the case of a person possessed of professional qualifications, he is disqualified or suspended (other than at his own request) from practising his profession in any part of Nigeria by the order of any competent authority made in respect of him personally.

4. Remuneration and allowance

Members of the Commission appointed under section 2 (a), (b), (c), (d), (e), (f), (g) and (h) shall be paid such remuneration and allowances as the President may, from time to time, direct.

5. Proceedings of the Commission

(1) Subject to this section and section 27 of the Interpretation Act, the Commission may make standing orders regulating its proceedings.

[Cap. 123.]

(2) The chairman shall preside at every meeting of the Commission but, in his absence, the members present shall elect one of their number present to preside at the meeting.

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

[1992 No. 40.]

(4) The Commission may appoint any of its officers to act as secretary at any of its meetings.

6. Disclosure of interest

(1) A member of the Commission who is directly interested in any company or enterprise, the affairs of which are being deliberated upon by the Commission, or is interested in any contract made or proposed to be made by the Commission shall, as soon as possible after the relevant facts have come to his knowledge, disclose the nature of his interest at a meeting of the Commission.

(2) A disclosure, under subsection (1) of this section, shall be recorded in the minutes of the Commission, and the member shall‐

(a) not take part after such disclosure in any deliberation or decision of the Commission with regard to the subject matter in respect of which his interest is thus disclosed;

(b) be excluded for the purpose of constituting a quorum of the Commission for any such deliberation or decision.

7. Functions

(1) The functions of the Commission shall be to‐

(a) subject to section 541 of this Act, administer this Act including the regulation and supervision of the formation, incorporation, registration, management, and winding up of companies under or pursuant 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.

(2) Nothing in this section shall affect the powers, duties or jurisdiction of the Securities and Exchange Commission under the Investments and Securities Act.

[Cap. 124.]

8. Appointment of Registrar‐General

(1) There shall be appointed by the Commission a Registrar‐General who shall be qualified to practise as a legal practitioner in Nigeria and has been so qualified for not less than 10 years and in addition, has had experience in company law practice or administration for not less than 8 years.

(2) The Registrar‐General shall be the chief executive of the Commission and shall be subject to the directives of the Commission and shall hold office on such terms and conditions as may be specified in his letter of appointment and on such other terms and conditions as may be determined, from time to time, by the Commission with the approval of the President.

(3) The Registrar‐General shall be the accounting officer for the purpose of controlling and disbursing amounts from the fund established pursuant to section 12 of this Act.

9. Appointment of staff

The Commission may appoint such other staff as it may deem necessary for the efficient performance of the functions of the Commission under or pursuant to this Act.

10. Right to appear in court

Notwithstanding the provisions of any enactment to the contrary, a person appointed to the office of Registrar‐ General under section 8 of this Act or a person appointed under section 9 of this Act who is a legal practitioner

shall, while so appointed, be entitled to represent the Commission as a legal practitioner for the purpose and in the course of his employment.

11. Service in the Commission to be pensionable

Service in the Commission shall be approved service for the purpose of the Pensions Act and accordingly, officers and other persons employed in the Commission shall in respect of their service in the Commission be entitled to pensions, gratuities and other retirement benefits enjoyed by persons holding equivalent grades in the public service of the Federation, so however that nothing in this Act shall prevent the appointment of a person to any office on terms which preclude the grant of a pension and gratuity in respect of that office.

[Cap. P4.]

12. Fund of the Commission

The Commission shall establish a fund which shall consist of such sums as may be allocated to it by the Federal Government and such other funds as may accrue to it in the discharge of its functions.

13. Expenditure of the Commission

The Commission may, from time to time, apply the proceeds of the fund established in pursuance of section 12 of this Act‐

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

(b) for re‐imbursing members of the Commission or any Committee set up by the Commission for such expenses as may be authorised or approved by the Commission, in accordance with the rate approved in that behalf by the President;

(c) to the payment of salaries, fees or other remuneration or allowances, pensions and gratuities payable to the employees of the Commission;

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

(e) for, and in connection with, all or any of the functions of the Commission under this Act.

14. Annual accounts, audit and estimates

(1) The Commission shall keep proper accounts and proper records in relation thereto and shall prepare in respect of each year a statement of accounts in such form as the President may direct.

(2) The accounts of the Commission shall be audited not later than six months after the end of the year by auditors appointed by the Commission from the list and in accordance with guidelines supplied by the Auditor‐General for the Federation; and the fees of the auditors and the expenses of the audit generally shall be paid from the funds of the Commission.

(3) The Commission shall cause to be prepared, not later than 30 September in each year, an estimate of the expenditure and income of the Commission during the next succeeding year and when prepared they shall be submitted through the Minister to the President.

15. Annual report

The Commission shall, not later than 30 June in each year, submit to the President a report on the activities of the Commission during the immediate preceding year, and shall include in such report the audited accounts of the Commission.

16. Regulations

The Minister may, with the approval of the President, make regulations generally for the purpose of this Act and in particular, without prejudice to the generality of the foregoing provisions, make regulations‐

(a) prescribing the forms and returns and other information required under this Act;

(b) prescribing the procedure for obtaining any information required under this Act;

(c) requiring returns to be made within the period specified therein by any company or enterprise to which this Act applies; and

(d) prescribing any fees payable under this Part, that is, Part A of this Act.

17. Meaning of certain words used in this Part

In this Part of this Act‐

“chairman” means the chairman of the Commission; and

“member” means any member of the Commission including the chairman.

PART II

Incorporation of companies and incidental matters

CHAPTER 1

Formation of Company

18. Right to form a company

As from the commencement of this Act, any two or more persons may form and incorporate a company by complying with the requirements of this Act in respect of registration of such company.

19. Partnership, etc., of more than 20 members when permitted

(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.

(2) Nothing in this section shall apply to‐

(a) any co‐operative society registered under the provisions of any enactment in force m Nigeria; or

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

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

(ii) as accountants by persons each of whom is entitled by law to practise as an accountant.

(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.

20. 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

(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.

21. Types of companies

(1) An incorporated company may be a company‐

(a) having the liability of its members limited by the memorandum to the amount, if any, unpaid on the shares respectively held by them (in this Act termed “a company limited by shares”); or

(b) having the liability of its members limited by the memorandum to such amount as the members may respectively thereby undertake to contribute to the assets of the company in the event of its being wound up (in this Act termed “a company limited by guarantee”); or

(c) not having any limit on the liability of its members (in this Act termed “an unlimited company”).

(2) A company of any of the foregoing types may either be a private company or a public company.

22. Private company

(1) A private company is one which is stated in its memorandum to be a private company.

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

(3) The total number of members of a private company shall not exceed 50, not including persons who are bona fide in the employment of the company, or were while in that employment and have continued after the determination of that employment to be, members of the company.

(4) Where two or more persons hold one or more shares in a company jointly, they shall for the purpose of subsection (3) of this section be treated as a single member.

(5) A private company shall not, unless authorised by law, invite the public to‐

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

(b) deposit money for fixed periods or payable at call, whether or not bearing interest.

23. Consequences of default in complying with conditions constituting a private company

(1) Subject to subsection (2) of this section, where default is made in complying with any of the provisions of section 22 of this Act in respect of a private company, the company shall cease to be entitled to the privileges and exemptions conferred on private companies by or under this Act and this Act shall apply to the company as if it were not a private company.

(2) If a court, on the application of the company or any other person interested, is satisfied that the failure to comply with the provisions of section 22 of this Act was accidental or due to inadvertence or to some other sufficient cause, or that on other grounds it is just and equitable to grant relief, the court may, on such terms and conditions as may seem to it to be just and expedient, order that the company be relieved from the consequences mentioned in subsection (1) of this section.

24. Public company

Any company other than a private company shall be a public company and its memorandum shall state that it is a public company.

25. Unlimited company to have share capital

As from the commencement of this Act, an unlimited company shall be registered with a share capital; and where an existing unlimited company is not registered with a share capital, it shall, not later than the appointed day, alter its memorandum so that it becomes an unlimited company having a share capital not below the minimum share capital permitted under section 99 of this Act.

26. Company limited by guarantee

(1) Where a company is to be formed for promoting commerce, art, science, religion, sports, culture, education, research, charity or other similar objects, and the income and property of the company are to be applied solely towards the promotion of its objects and no portion thereof is to be paid or transferred directly or indirectly to the members of the company except as permitted by this Act, the company shall not be registered as a company limited by shares, but may be registered as a company limited by guarantee.

(2) As from the commencement of this Act, a company limited by guarantee shall not be registered with a share capital and every existing company limited by guarantee and having a share capital shall, not later than the appointed day, alter its memorandum so that it becomes a company limited by guarantee and not having a share capital.

(3) In the case of a company limited by guarantee, every provision in the memorandum or articles or in any resolution of the company purporting to give any person a right to participate in the divisible profits of the company otherwise than as a member or purporting to divide the company’s undertaking into shares or interests shall be void.

(4) A company limited by guarantee shall not be incorporated with the object of carrying on business for the purpose of making profits for distribution to members.

(5) The memorandum of a company limited by guarantee shall not be registered without the authority of the Attorney‐General of the Federation.

[1990 No. 32.]

(6) If any company limited by guarantee carries on business for the purpose of distributing profits, all officers and members thereof who are cognisant of the fact that it is so carrying on business shall be jointly and severally liable for the payment and discharge of all the debts and liabilities of the company incurred in carrying on such business, and the company and every such officer and member shall be liable to a fine not exceeding N100 for every day during which it carries on such business.

(7) The total liability of the members of a company limited by guarantee to contribute to the assets of the company in the event of its being wound up shall not at any time be less than N10,000.

(8) Subject to compliance with subsection (6) of this section, the articles of association of a company limited by guarantee may provide that members can retire or be excluded from membership of the company.

(9) If, in breach of subsection (6) of this section, the total liability of the members of any company limited by guarantee shall at any time be less than N10,000, every director and member of the company who is cognisant of the breach shall be liable to a fine of N50 for every day during which the default continues.

(10) If, upon the winding up of a company limited by guarantee, there remains after the discharge of all its debts and liabilities any property of the company, the same shall not be distributed among the members but shall be transferred to some other company limited by guarantee having objects similar to the objects of the company or applied to some charitable object and such other company or charity shall be determined by the members prior to the dissolution of the company.

Memorandum of association

27. Requirements with respect to the memorandum of a company

(1) The memorandum of every company shall state‐

(a) the name of the company;

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

(c) the nature of the business or businesses which the company is authorised to carry on, or, if the company is not formed for the purpose of carrying on business, the nature of the object or objects for which it is established;

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

(e) that the company is a private or public company, as the case may be;

(f) that the liability of its members is limited by shares or by guarantee or is unlimited, as the case may be.

(2) If the company has a share capital‐

(a) the memorandum shall also state the amount of authorised share capital, not being less than N10,000 in the case of a private company and N500,000 in the case of a public company, with which the company proposed to be registered, and the division thereof into shares of a fixed amount;

(b) the subscribers of the memorandum shall take among them a total number of shares of a value of not less than 25 per cent of the authorised share capital; and

(c) each subscriber shall write opposite to his name the number of shares he takes.

(3) A subscriber of the memorandum who holds the whole or any part of the shares subscribed by him in trust for any other person shall disclose in the memorandum that fact and the name of the beneficiary.

(4) The memorandum of a company limited by guarantee shall also state that‐

(a) the income and property of the company shall be applied solely towards the promotion of its objects, and that no portion thereof shall be paid or transferred directly or indirectly to the members of the company except as permitted by or under this Act; and

(b) each member undertakes to contribute to the assets of the company in the event of its being wound up while he is a member or within one year after he ceases to be a member for payment of debts and liabilities of the company, and of the costs of winding up, such amount as may be required not exceeding a specified amount and the total of which shall not be less than Nl0.000,

(5) The memorandum shall be signed by each subscriber in the presence of at least one witness who shall attest the signature.

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

28. Form of memorandum

Subject to the provisions of section 27 of this Act, the form of a memorandum of association of‐

(a) a company limited by shares;

(b) a company limited by guarantee; and

(c) an unlimited company,

shall be as specified in Tables B, C and D respectively in the First Schedule to this Act, or as near that form as circumstances admit.

[First Schedule. Tables B, C and D.]

Name of company

29. Name as stated in the memorandum

(1) The name of a private company limited by shares shall end with the word “Limited”.

(2) The name of a public company limited by shares shall end with the words “Public Limited Company”.

(3) The name of a company limited by guarantee shall end with the words “(Limited by Guarantee)” in brackets.

(4) The name of an unlimited company shall end with the word “Unlimited”.

(5) A company may use the abbreviations “Ltd”, “PLC” “(Ltd/Gte)” and “Ultd” for the words “Limited”, “Public Limited Company”, “(Limited by Guarantee)” and “Unlimited” respectively in the name of the company.

30. Prohibited and restricted names

(1) No company shall be registered under this Act by a name which‐

(a) is identical with that by which a company in existence is already registered, or so nearly resembles that name as to be calculated to deceive, except where the company in existence is in the course of being dissolved and signifies its consent in such manner as the Commission requires; or

(b) contains the words “Chamber of Commerce” unless it is a company limited by guarantee; or

(c) in the opinion of the Commission is capable of misleading as to the nature or extent of its activities or is undesirable, offensive or otherwise contrary to public policy; or

(d) in the opinion of the Commission would violate any existing trade mark or business name registered in Nigeria unless the consent of the owner of the trade mark or business name has been obtained.

(2) Except with the consent of the Commission, no company shall be registered by a name which‐

(a) includes the word “Federal”, “National”, “Regional”, “State”, “Government”, or any other word which in the opinion of the Commission suggests or is calculated to suggest that it enjoys the patronage of the Government of the Federation or the Government of a State in Nigeria, as the case may be, or any Ministry or Department of Government; or

(b) contains the word “Municipal” or “Chartered” or in the opinion of the Commission suggests, or is calculated to suggest, connection with any municipality or other local authority; or

(c) contains the word “Co‐operative” or the words “Building Society”; or

(d) contains the word “Group” or “Holding”.

31. Change of name of company

(1) If a company, through inadvertence or otherwise, on its first registration or on its registration by a new name, is registered under a name identical with that by which a company in existence is previously registered, or so nearly resembling it as to be likely to deceive, the first‐mentioned company may, with the approval of the Commission, change its name; and if the Commission so directs, within six months of its being registered under that name, the company concerned shall change its name within a period of six weeks from the date of the direction or such longer period as the Commission may allow.

(2) If a company makes default in complying with a direction under subsection (1) of this section, it shall be liable to a fine of N25 for every day during which the default continues.

(3) Any company may, by special resolution and with the approval of the Commission signified in writing, change its name:

Provided that no such approval shall be required where the only change in the name of a company is the substitution of the words “Public Limited Company” for the word “Limited” or vice versa on the conversion of a private company into a public company or a public company into a private company in accordance with the provisions of this Act.

(4) Nothing in this Act shall preclude the Commission from requiring a company to change its name if it is discovered that such a name conflicts with an existing trade mark or business name registered in Nigeria prior to the registration of the company and the consent of the owner of the trade mark or business name was not obtained.

(5) Where a company changes its name, the Commission shall enter the new name on the register in place of the former name, and issue a certificate of incorporation altered to meet the circumstances of the case.

(6) The change of name shall not affect any rights or obligations of the company, or render defective any legal proceedings by or against the company, and any legal proceedings that could have been continued or commenced against it or by it in its former name may be continued or commenced against or by it in its new name.

(7) Any alteration made in the name under this section shall be published by the Commission in the Gazette.

(8) A certificate or publication in the Gazette under this section shall be evidence of the alteration to which it relates.

32. Reservation of name

(1) The Commission may on written application and on payment of the prescribed fee reserve a name pending registration of a company or a change of name by a company.

(2) Such reservation as is mentioned in subsection (1) of this section shall be for such period as the Commission shall think fit not exceeding 60 days, and during the period of reservation no other company shall be registered under the reserved name or under any other name which in the opinion of the Commission bears too close a resemblance to the reserved name.

Articles of association

33. Articles for regulating companies

There shall be registered, with the memorandum of association, articles of association signed by the subscribers to the memorandum of association, and prescribing regulations for the company.

34. Form and contents of articles

(1) The form and contents of the articles of association of a public company having a share capital, a private company having a share capital, a company limited by guarantee and an unlimited company shall be as in Parts I, II,

III and IV respectively, of Table A in the First Schedule to this Act with such additions, omissions or alterations as may be required in the circumstances.

[First Schedule. Parts I, II, III and IV. Table A.]

(2) In the case of a company limited by guarantee, the articles of association shall state the number of members with which the company proposes to be registered for the purpose of enabling the Commission to determine the fees payable on registration.

(3) The articles of association shall‐

(a) be printed;

(b) be divided into 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.

(4) The articles shall bear the same stamp duty as if they were contained in a deed.

Registration of companies

35. Documents of incorporation

(1) As from the commencement of this Act, a company shall be formed in the manner set out in this section.

(2) There shall be delivered to the Commission‐

(a) the memorandum of association and articles of association complying with the provisions of this Part of this Act;

(b) the notice of the address of the registered office of the company and the head office if different from the registered office:

Provided that a postal box address or a private bag address shall not be accepted by the Commission as the registered office;

(c) a statement in the prescribed form containing the list and particulars together with the consent of the persons who are to be the first directors of the company;

(d) a statement of the authorised share capital signed by at least one director; and

(e) any other document required by the Commission to satisfy the requirements of any law relating to the formation of a company.

(3) A statutory declaration in the prescribed form by a legal practitioner that those requirements of this Act for the registration of a company have been complied with shall be produced to the Commission, and it may accept such a declaration as sufficient evidence of compliance:

Provided that where the Commission refuses a declaration, it shall within 30 days of the date of receipt of the declaration send to the declarant a notice of its refusal giving the grounds of such refusal.

36. Registration

(1) The Commission shall register the memorandum and articles unless in its opinion‐

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

(b) the business which the company is to carry on, or the objects for which it is formed, or any of them, are illegal; or

(c) any of the subscribers to the memorandum is incompetent or disqualified in accordance with section 20 of this Act; or

(d) there is non‐compliance with the requirement of any other law as to registration and incorporation of a company; or

(e) the proposed name conflicts with or is likely to conflict with an existing trade mark or business name registered in Nigeria.

(2) Any person aggrieved by the decision of the Commission under subsection (1) of this section, may give notice to the Commission requiring it to apply to the court for directions and the Commission shall within 21 days of the receipt of such notice apply to the court for the directions.

(3) The Commission may, in order to satisfy itself as provided in subsection (1) (c) of this section, by instrument in writing require a person subscribing to the memorandum to make and lodge with the Commission, a statutory declaration to the effect that he is not disqualified under section 20 of this Act from joining in forming a company.

(4) Steps to be taken under this Act to incorporate a company shall not include any invitation to subscribe for shares or otherwise howsoever on the basis of a prospectus.

(5) Upon registration of the memorandum and articles, the Commission shall certify under its seal‐

(a) that the company is incorporated;

(b) in the case of a limited company, that the liability of the members is limited by shares or by guarantee; or

(c) in the case of an unlimited company, that the liability of the members is unlimited; and

(d) that the company is a private or public company, as the case may be.

(6) The certificate of incorporation shall be prima facie evidence that all the requirements of this Act in respect of registration and of matters precedent and incidental to it have been complied with and that the Association is a company authorised to be registered and duly registered under this Act.

37. Effect of registration

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 liability on the part of the members to contribute to the assets of the company in the event of its being wound up as is mentioned in this Act.

Capacity and powers of companies

38. Powers of companies

(1) Except to the extent that the company’s memorandum or any enactment otherwise provides, every company shall, for the furtherance of its authorised business or objects, have all the powers of a natural person of full capacity.

(2) A company shall not have or exercise power either directly or indirectly to make a donation or gift of any of its property or funds to a political party or political association, or for any political purpose; and if any company, in breach of this subsection makes any donation or gift of its property to a political party or political association, or for any political purpose, the officers in default and any member who voted for the breach shall be jointly and severally liable to refund to the company the sum or value of the donation or gift and in addition, the company and every such officer or member shall be guilty of an offence and liable to a fine equal to the amount or value of the donation or gift.

39. Effect of ultra vires acts

(1) A company shall not carry on any business not authorised by its memorandum and shall not exceed the powers conferred upon it by its memorandum or this Act.

(2) A breach of subsection (1) of this section, may be asserted in any proceedings under sections 300 to 313 of this Act or under subsection (4) of this section.

(3) Notwithstanding the provisions of subsection (1) of this section, no act of a company and no conveyance or transfer of property to or by a company shall be invalid by reason of the fact that such act, conveyance or transfer was not done or made for the furtherance of any of the authorised business of the company or that the company was otherwise exceeding its objects or powers.

(4) On the application of‐

(a) any member of the company; or

(b) the holder of any debenture secured by a floating charge over all or any of the company’s property or by the trustee of the holders of any such debentures,

the court may prohibit, by injunction, the doing of any act or the conveyance or transfer of any property in breach of subsection (1) of this section.

(5) If the transactions sought to be prohibited in any proceeding under subsection (4) of this section are being, or are to be performed or made pursuant to any contract to which the company is a party, the court may, if it deems the same to be equitable and if all the parties to the contract are parties to the proceedings, set aside and prohibit the performance of such contract, and may allow to the company or to the other parties to the contract compensation for any loss or damage sustained by them by reason of the setting aside or prohibition of the performance of such contract but no compensation shall be allowed for loss of anticipated profits to be derived from the performance of such contract.

40. Effect of reliance on restrictions in the memorandum

(1) Where there is provision in the memorandum of association of a company restricting the powers and capacity of the company to carry on its authorised business or object, the restriction may be relied on and have effect only for the purpose of‐

(a) proceedings against the company by a director or member of the company, or where the company has issued debentures secured by a floating charge over all or any of the company’s property, by the holder of any of the debentures or the trustee for the holders of the debentures; or

(b) proceedings by the company or a member of the company against the present or former officers of the company for failure to observe any such restriction; or

(c) proceedings by the Commission or a member of the company to wind up the company; or

(d) proceedings for the purpose of restraining the company or other person from acting in breach of the memorandum or directing the company or such person to comply with the same.

(2) A person may not in proceedings referred to in subsection (1) (a), (b) or (c), of this section, rely on a restriction of the power or capacity of the company contained in the memorandum in any case where he voted in favour of, or otherwise expressly or by conduct agreed to the doing of an act by the company or the conveyance by or to the company of property which, it is alleged in the proceedings, was or would be contrary to such a restriction.

Effect of memorandum and articles

41. 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 whereby they agree to observe and perform the provisions of the memorandum and articles, as altered from time to time in so far as they relate to the company, members, or officers as such.

(2) All money payable by any member to the company under the memorandum or articles shall be a debt due from him to the company and shall be of the nature of a speciality debt.

(3) Where the memorandum or articles empower any person to appoint or remove any director or other officer of the company, such power shall be enforceable by that person notwithstanding that he is not a member or officer of the company.

(4) In any action by any member or officer to enforce any obligation owed under the memorandum or articles to him and any other member or officer, such member or officer may, if any other member or officer is affected by the alleged breach of such obligation, with his consent, sue in a representative capacity on behalf of himself and all other members or officers who may be affected other than any who are defendants and the provisions of Part XI of this Act shall apply.

Member’s right to copy of memorandum and articles

42. Member’s right to copies of memorandum, etc.

(1) A company shall, on being so required by any member, send to him a copy of the memorandum and of the articles, if any, and a copy of any enactment which alters the memorandum, subject to payment, in the case of a copy of the memorandum and of the articles, of N20 or such less sum as the company may prescribe and in the

case of a copy of an enactment of such sum not exceeding the published price thereof as the company may require.

(2) If a company makes default in complying with this section, the company and every officer of the company who is in default shall be liable for each offence to a fine not exceeding N25.

43. Copies of memorandum issued to embody alterations

(1) Where an alteration is made in the memorandum of a company every copy of the memorandum issued after the date of the alteration shall be in accordance with the alteration.

(2) If, where any such alteration has been made, the company at any time after the date of the alteration issues any copies of the memorandum which are not in accordance with the alteration, it shall be liable to a fine not exceeding N25 for each copy so issued, and every officer of the company who is in default shall be liable to the like penalty.

Alteration of memorandum and articles

44. Restriction on alteration of memorandum

(1) A company may not alter the conditions contained in its memorandum except in the cases and in the manner and to the extent for which express provision is made in this Act.

(2) Only those provisions which are required by section 27 of this Act or by any other specific provision contained in this Act, to be stated in the memorandum of the company concerned, shall be deemed to be conditions contained in its memorandum.

45. Alteration of memorandum

(1) The name of the company shall not be altered except with the consent of the Commission in accordance with section 31 of this Act.

(2) The business which the company is authorised to carry on or, if the company is not formed for the purpose of carrying on business, the objects for which it is established, may be altered or added to in accordance with the provisions of section 46 or of Part XV of this Act.

(3) Any restriction on the powers of the company may be altered in the same way as the business or object of the company.

(4) The share capital of the company may be altered in accordance with the provisions of sections 100 to 111 of this Act, but not otherwise.

(5) Subject to section 49 of this Act, any other provision of the memorandum may be altered in accordance with section 46 of this Act, or as otherwise provided in this Act.

46. Mode of alteration of business or objects

(1) A company may, at a meeting of which notice in writing has been duly given to all members (whether or not otherwise entitled thereto), by special resolution alter the provisions of its memorandum with respect to the business or objects of the company:

Provided that if an application is made to the court in accordance with this section for the alteration to be cancelled, it shall not have effect except in so far as it is confirmed by the court.

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

(a) by the holders of not less in the aggregate than 15 per cent in nominal value of the company’s issued share capital or any class thereof or, if the company is not limited by shares, not less than 15 per cent of the company’s members; or

(b) by the holders of not less than 15 per cent of the company’s debentures entitling the holders to object to alterations of its objects:

Provided that any such application shall not be made by any person who has consented to or voted in favour of the alteration.

(3) An application under this section shall be made not later than 28 days after the date on which the resolution altering the company’s business or objects was passed, and may be made on behalf of the persons entitled to make the application by such one or more of their number as they may appoint in writing for the purpose.

(4) On an application under this section, the court may make an order confirming the alteration either wholly or in part and on such terms and conditions as it thinks fit, and may adjourn the proceedings in order that an arrangement may be made to the satisfaction of the court for the purchase of the interest of dissenting members, and the court may give such directions and make such orders as it thinks expedient for facilitating or carrying into effect any such arrangement:

Provided that no part of the capital of the company shall be expended in any purchase.

(5) The debentures entitling the holders to object to alterations of a company’s business or objects shall be any debentures secured by a floating charge.

(6) The special resolution altering a company’s business or objects shall require the same notice to the holders of any such debentures as to members of the company; and in default of any provisions regulating the giving of notice to any such debenture holders, the provisions of the company’s articles regulating the giving of notice to members shall apply.

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

(a) application is thereafter made to the court for its confirmation under this section, the company shall forthwith give notice to the Commission of the making of the application, and thereafter there shall be delivered to the Commission within 15 days from the date of its making‐

(i) a certified true copy of the order in the case of refusal to confirm the resolution; and

(ii) a certified true copy of the order in the case of confirmation of the resolution together with a printed copy of the memorandum as thereby altered;

(b) no application is made with respect thereto to a court under this section, the company shall within 15 days from the end of the period for making such an application deliver to the Commission a copy of the resolution as passed.

(8) If the Commission‐

(a) is satisfied, a printed copy of the memorandum as altered by the resolution shall forthwith thereafter be delivered to it;

(b) is not satisfied, it shall give notice in writing to the company of its decision and an appeal from its decision shall thereafter lie to the court at the suit of any person aggrieved, if made within 21 days from the date of the receipt by the company of the notice of the rejection, or within such extended time as the court may allow.

(9) The court may at any time extend the time for the delivery of documents to the Commission under paragraph
(a) of subsection (7) of this section for such period as the court may think proper.

(10) If a company makes default in giving notice or delivering any document to the Commission as required by subsection (6) of this section, the company and every officer of the company who is in default shall be liable to a fine of N50.

(11) The validity of an alteration of the provision of a company’s memorandum with respect to the business or objects of the company shall not be questioned on the ground that it was not authorised by subsection (1) of this section except in proceedings taken for the purpose (whether under this section or otherwise) before the expiration of 21 days after the date of the resolution in that behalf; and where any such proceedings are taken otherwise than under this section, subsections (6), (7), (8) and (9) of this section shall apply in relation thereto as if they had been taken under this section, and as if any order declaring the alteration invalid were an order cancelling it and as if any order dismissing the proceedings were an order confirming the alteration.

(12) In this section “member” includes any person financially interested in the company.

47. Power to alter provisions in the memorandum in certain cases

(1) Subject to the provisions of section 44 of this Act and of this section and of any part of Part A of this Act (which preserves the rights of minorities in certain cases) any provision in a company’s memorandum, which might lawfully have been in articles of association instead of in the memorandum, may be altered by the company by special resolution; but if an application is made to the court for the alteration to be cancelled, the alteration shall not have effect except in so far as it is confirmed by the court.

(2) This section shall not apply where the memorandum itself provides for or prohibits the alteration of all or any of the said provisions, and shall not authorise any variation or abrogation of the special rights of any class of members.

(3) Subsections (2), (3), (4), (7), (8) and (9) of section 46 of this Act (which relate to mode of alteration of business or objects) except paragraph (b) of subsection (2) thereof, shall apply in relation to any alteration and to any application made under this section as they apply in relation to alterations and to applications made under that section.

(4) This section shall apply to a company’s memorandum, whether registered before or after the commencement of this Act.

48. Alteration of articles

(1) Subject to the provisions of this Act and to the conditions or other provisions contained in its memorandum, a company may by special resolution alter or add to its articles.

(2) Any alteration or addition so made in the articles shall, subject to the provisions of this Act, be as valid as if originally contained therein and be subject, in like manner, to alteration by special resolution.

49. Limitation of liability to contribute to share capital if memorandum, etc., altered

Save to the extent to which a member of a company agrees in writing at any time to be bound thereby, and anything to the contrary in the memorandum or articles notwithstanding, the member shall not be bound by any alteration made in the memorandum or articles of the company requiring him on or after the date of the alteration to‐

(a) take or subscribe for more shares than he held at the date on which he became a member; or

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

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

CHAPTER 2

Conversion and re‐registration of companies

50. Re‐registration of private company as public

(1) Subject to this section, a private company having a share capital may be re‐registered as a public company if‐

(a) a special resolution that it should be so re‐registered is passed; and

(b) an application for re‐registration is delivered to the Commission together with the documents prescribed in subsection (3) of this section.

(2) The special resolution shall‐

(a) alter the company’s memorandum so that it states that the company is to be a public company; and

(b) make such other alterations in the memorandum as are necessary to bring it in‐to conformity with the requirements of this Act with respect to the memorandum of a public company in accordance with section 27 of this Act; and

(c) make such alterations in the company’s articles as are requisite in the circumstances.

(3) The application shall be made to the Commission in the prescribed form and be signed by at least one director and the secretary of the company; and the documents to be delivered with it are the following‐

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

(b) a copy of a written statement by the directors and the secretary certified on oath by them, and showing that the paid up capital of the company as at the date of the application is not less than 25 per cent of the authorised share capital as at that date; and

(c) a copy of the balance sheet of the company as at the date of the resolution or the preceding 6 months, whichever is later; and

(d) a statutory declaration in the prescribed form by a director and the secretary of the company‐

(i) that the special resolution required under this section has been passed; and

(ii) that the company’s net assets are not less than the aggregate of the paid up share capital and undistributable reserves; and

(e) a copy of any prospectus or statement in lieu of prospectus delivered within the preceding 12 months to the Securities and Exchange Commission established under the Investments and Securities Act.

[Cap. 124.]

(4) If the Commission is satisfied that a company has complied with the provisions of this section and may be re‐ registered as a public company, it shall‐

(a) retain the application and other documents delivered to it under this section;

(b) register the application and other documents; and

(c) issue to the company a certificate of incorporation, stating that the company is a public company.

(5) Upon the issue to a company of the certificate of incorporation under this section‐

(a) the company shall by virtue of the issue of that certificate become a public company; and

(b) any alterations in the memorandum and articles set out in the resolution shall take effect accordingly.

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

(a) the requirements of this Act in respect of re‐registration and of matters precedent and incidental thereto have been complied with; and

(b) the company is a public company.

(7) A company shall not be re‐registered under this section if it has previously been re‐registered as an unlimited company.

51. Re‐registration of company limited by shares as unlimited

(1) Subject as follows, a company which is registered as limited by shares may be re‐registered as unlimited in pursuance of an application in that behalf complying with the requirements of this section.

(2) A company shall be precluded from re‐registering under this section if it is limited by virtue of re‐registration under section 52 of this Act.

(3) A public company or a company which has previously been re‐registered as an unlimited company shall not be registered under this section.

(4) An application under this section shall be in the prescribed form and signed by a director and the secretary of the company, and be lodged with the Commission together with the documents specified in subsection (6) of this section.

(5) The application shall set out such alterations in the company’s memorandum and articles as are requisite to bring it into conformity with the requirements of this Act with respect to the memorandum and articles of a company to be formed as an unlimited company.

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

(a) the prescribed form of assent to the company being registered as unlimited, subscribed by or on behalf of all the members of the company;

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

(i) that the persons by whom or on whose behalf the form of assent is subscribed constitute the whole membership of the company; and

(ii) if any of the members have not subscribed that form themselves, that the directors have taken all reasonable steps to satisfy themselves that each person who subscribed to it on behalf of a member was lawfully empowered to do so; and

(c) a printed copy of the memorandum and the articles incorporating the alterations set out in the application.

(7) If the Commission is satisfied that the company be registered under this section as an unlimited company, it shall retain the application and other documents lodged with it under this section and‐

(a) register the application and other documents; and

(b) issue to the company a certificate of incorporation appropriate to the status to be assumed by virtue of this section.

(8) On the issue of the certificate‐

(a) the status of the company, by virtue of the issue, shall be changed from limited to unlimited; and

(b) the alterations in the memorandum set out in the application and any alteration in the articles so set out shall take effect as if duly made by resolution of the company; and

(c) the provisions of this Act shall apply accordingly to the memorandum and articles as altered.

(9) The certificate shall be prima facie evidence that the requirements of this section in respect of the re‐ registration and of matters precedent and incidental to it have been complied with, and that the company was authorised to be re‐registered under this Act in pursuance of this section and was duly so re‐registered.

52. Re‐registration of unlimited as limited by shares

(1) Subject as follows, a company which is registered as unlimited may be re‐registered as limited by shares if a special resolution that it should be so registered is passed, and the requirements of this section are complied with in respect of the resolution and otherwise.

(2) A company shall not under this section be re‐registered as a public company or company limited by guarantee; and a company shall be precluded from registering under it if it is unlimited by virtue of re‐registration under section 51 of this Act.

(3) The special resolution shall state the proposed authorised share capital and provide for the making of such alterations in the memorandum as are necessary to bring it into conformity with the requirements of this Act with respect to the memorandum of a company so limited, and such alterations in the articles as are requisite in the circumstances.

(4) An application in the prescribed form for the company to be re‐registered as limited signed by a director and the secretary of the company shall be lodged with the Commission together with the necessary documents not earlier than the day on which the resolution was filed under section 237 of this Act.

(5) The documents to be lodged with the Commission shall be a printed copy of the‐

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

(b) articles as so altered.

(6) If the Commission is satisfied that the company be re‐registered under this section as a company limited by shares, it shall retain the application and other documents lodged with it under this section and register them, and it shall issue to the company a certificate of incorporation appropriate to the status to be assumed by the company by virtue of this section.

(7) On the issue of the certificate‐

(a) the status of the company shall, by virtue of the issue, change from unlimited to limited; and

(b) the alterations in the memorandum specified in the resolution and the alterations in, and additions to, the articles so specified shall take effect accordingly.

(8) The certificate shall be prima facie evidence that the requirements of this section in respect of re‐registration and of matters precedent and incidental to it have been complied with, and that the company was authorised to be re‐registered in pursuance of this section and was duly so re‐registered.

(9) The re‐registration of an unlimited company as a limited company shall not affect the rights and liabilities of the company in respect of any debt or obligation incurred, or any contract entered into, by, to, with, or on behalf of the company before the re‐registration, and those rights or liabilities may be enforced in the manner provided by Part III of this Act as in the case of a company registered pursuant to Part II of this Act.

53. Re‐registration of public company as private

(1) A public company may be re‐registered as a private company if‐

(a) a special resolution complying with subsection (2) of this section that it should be so re‐registered is passed and has not been cancelled by the court under this section;

(b) an application for the purpose in the prescribed form and signed by a director and the secretary of the company is delivered to the Commission together with a printed copy of the memorandum and articles of the company as altered by the resolution; and

(c) either‐

(i) the period during which an application for the cancellation of the resolution under this section may be made has expired without any such application having been made; or

(ii) where such an application has been made, the application has been withdrawn or an order has been made confirming the resolution and a copy of that order has been delivered to the Commission.

(2) The special resolution shall alter the company’s memorandum so that it states that the company is a private company and shall make such other alterations in the company’s memorandum and articles as are requisite in the circumstances.

(3) Where the special resolution is passed, an application may be made to the court for the cancellation of the resolution, and such application may be made by‐

(a) the holders of not less in the aggregate than five per cent in nominal value of the company’s issued share capital, or any class thereof; or

(b) not less than five per cent of the company’s members; but not by a person who has consented to or voted in favour of the resolution.

(4) The application shall be made within 28 days after the passing of the resolution and the applicant shall forthwith give notice of the application in the prescribed form to the Commission and to the company.

(5) On the hearing of the application, the court shall make an order either cancelling or confirming the resolution and may make all such orders or give such directions as it may think expedient under the circumstances.

(6) The company shall, within 15 days from the making of the court’s order, or with‐in such other period as the court may by order direct, deliver to the Commission a certified true copy of the order.

(7) If a company fails to deliver to the Commission a certified true copy of the order as required in subsection (6) of this section, the company and any officer of it who is in default, shall be guilty of an offence and liable to a fine of NI00 and for continued contravention, to a daily default fine of N25.

(8) If the Commission is satisfied that a company may be re‐registered under this section, it shall‐

(a) retain the application and other documents delivered to it under this section;

(b) register the application and other documents; and

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

(9) On the issue of the certificate‐

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

(b) the alteration in the memorandum and articles set out in the resolution shall take effect accordingly.

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

(a) the requirements of this section in respect of re‐registration and of matters precedent and incidental to it have been complied with; and

(b) the company is a private company.

CHAPTER 3

Foreign companies

54. Foreign companies intending to carryon business in Nigeria

(1) Subject to sections 56 to 59 of this Act, every foreign company which before or after the commencement of this Act was incorporated outside Nigeria, and having the intention of carrying on business in Nigeria, shall take all steps necessary to obtain incorporation as a separate entity in Nigeria for that purpose, but until so incorporated, the foreign company shall not carryon business in Nigeria or exercise any of the powers of a registered company and shall not have a place of business or an address for service of documents or processes in Nigeria for any purpose other than the receipt of notices and other documents, as matters preliminary to incorporation under this Act.

(2) Any act of the company in contravention of subsection (1) of this section shall be void.

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

(a) any foreign company which before the commencement of this Act was granted exemption from compliance with Part X of the Companies Act 1968;

(b) any foreign companies exempted under any treaty to which Nigeria is a party.

55. Penalties

If any foreign company fails to comply with the requirements of section 54 of this Act in so far as they may apply to the company, the company shall be guilty of an offence and liable on conviction to a fine of not less than N2,500; and every officer or agent of the company who knowingly and wilfully authorises or permits the default or failure to comply shall, whether or not the company is also convicted of any offence, be liable on conviction to a fine of not less than N250 and where the offence is a continuing one to a further fine of N25 for every day during which the default continues.

56. Power to exempt foreign companies

(1) A foreign company may apply to the President for exemption from the provisions of section 54 of this Act if that foreign company belongs to one of the following categories, that is‐

(a) foreign companies (other than those specified in paragraph (d) of this subsection) invited to Nigeria by or with the approval of the Federal Government to execute any specified individual project;

(b) foreign companies which are in Nigeria for the execution of specific individual loan projects on behalf of a donor country or international organisation;

(c) foreign government‐owned companies engaged solely in export promotion activities; and

(d) engineering consultants and technical experts engaged on any individual specialist project under contract with any of the governments in the Federation or any of their agencies or with any other body or person, where such contract has been approved by the Federal Government.

(2) An application for exemption under this section shall be in writing addressed to the Secretary to the Government of the Federation and shall set out‐

(a) the name and place of business of the foreign company outside Nigeria;

(b) the name and place of business or the proposed name and place of business of the foreign company in Nigeria;

(c) the name and address of each director, partner or other principal officer of the foreign company;

(d) a certified copy of the charter, statutes, or memorandum and articles of association of the company, or other instrument constituting or defining the constitution of the company and if the instrument is not written in the English language, a certified translation thereof;

(e) the names and addresses of some one or more persons resident in Nigeria authorised to accept on behalf of the foreign company services of process and any notices required to be served on the company;

(f) the business or proposed business in Nigeria of the foreign company and the duration of such business;

(g) particulars of any project previously carried out by the company as an exempted foreign company; and

(h) such other particulars as may be required by the Secretary to the Federal Government.

(3) Where the President upon the receipt of an application for exemption is of the opinion that the circumstances are such as to render it expedient that such an exemption should be granted, the President may, subject to such conditions as it may prescribe, exempt the foreign company from the obligations imposed by or under this Act.

(4) Every exemption granted in pursuance of this section shall specify the period or, as the case may be, the project or series of projects, for which it is granted and shall lapse at the end of such period or upon the completion of such project or series of projects.

(5) The President may at any time revoke any exemption granted to any company if it is of the opinion that the company has contravened any provision of this Act or has failed to fulfill any condition contained in the exemption order or for any other good or sufficient reason.

(6) The President shall cause to be published in the Gazette the name of any company‐

(a) to which an exemption has been granted and the period or, as the case may be, the project or series of projects for which the exemption is granted;

(b) whose exemption has been revoked and the effective date of such revocation.

57. Annual report

Every exempted foreign company shall deliver to the Commission, every calendar year, a report in the form prescribed by the Commission.

58. Exempted foreign company to have status of unregistered company

Subject to this Act and save as may be stated in the instrument of exemption, a foreign company exempted pursuant to this Act shall have the status of an unregistered company and accordingly, the provisions of this Act

applicable to an unregistered company shall apply in relation to such an exempted company as they apply in relation to an unregistered company under this Act.

59. Penalties for false information

(1) Any person who for the purpose of obtaining an exemption or of complying with any of the provisions of section 56 of this Act, makes any statement or presents any instrument which is false in a material particular shall be guilty of an offence unless he proves that he has taken all reasonable steps to ascertain the truth of the statement made or contained in the instrument so presented.

(2) Any person who is guilty of an offence under this section shall be liable on conviction to a fine of N5,000 or imprisonment for a term of three years.

60. Application of certain sections to foreign companies

For the avoidance of doubt, it is hereby declared that‐

(a) save as provided in sections 55, 56, 57 and 58 of this Act, nothing in this Act shall be construed as authorising the disregard by any exempted foreign company of any enactment or rule of law; and

(b) nothing in this Chapter shall be construed as affecting the rights or liability of a foreign company to sue or be sued in its name or in the name of its agent.

CHAPTER 4

Promoters

61. Persons promoting a company

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.

62. Duties and liabilities of a promoter

(1) A promoter stands in a fiduciary relationship to the company and shall observe the utmost good faith towards the company in any transaction with it or on its behalf and shall compensate the company for any loss suffered by reason of his failure so to do.

(2) A promoter who acquired any property or information in circumstances in which it was his duty as a fiduciary to acquire it on behalf of the company shall account to the company for such property and for any profit which he may have made from the use of such property or information.

(3) Any transaction between a promoter and the company may be rescinded by the company unless, after full disclosure of all material facts known to the promoter, such transaction shall have been entered into or ratified on behalf of the company‐

(a) by the company’s board of directors independent of the promoter; or

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

(c) by the company at a general meeting at which neither the promoter nor the holders of any shares in which he is beneficially interested shall vote on the resolution to enter into or ratify that transaction.

(4) No period of limitation shall apply to any proceedings brought by the company to enforce any of its rights under this section but in any such proceedings the court may relieve a promoter in whole or in part and on such terms as it thinks fit from liability here‐under if in all the circumstances, including lapse of time, the court thinks it equitable to do so.

PART III

Acts by or on behalf of the company Exercise of company’s powers
63. Division of powers between general meeting and board of directors

(1) A company shall act through its members in general meeting or its board of directors or through officers or agents, appointed by, or under authority derived from, the members in general meeting or the board of directors.

(2) Subject to the provisions of this Act, the respective powers of the members in general meeting and the board of directors shall be determined by the company’s articles.

(3) Except as otherwise provided in the company’s articles, the business of the company shall be managed by the board of directors who may exercise all such powers of the company as are not by this Act or the articles required to be exercised by the members in general meeting.

(4) Unless the articles shall otherwise provide, the board of directors, when acting within the powers conferred upon them by this Act or the articles, shall not be bound to obey the directions or instructions of the members in general meeting:

Provided that the directors acted in good faith and with due diligence.

(5) Notwithstanding the provisions of subsection (3) of this section, the members in general meeting may‐

(a) act in any matter if the members of the board of directors are disqualified or are unable to act because of a deadlock on the board or otherwise;

(b) institute legal proceedings in the name and on behalf of the company, if the board of directors refuse or neglect to do so;

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

(d) make recommendations to the board of directors regarding action to be taken by the board.

(6) No alteration of the articles shall invalidate any prior act of the board of directors which would have been valid if that alteration had not been made.

64. Delegation to committees and managing directors

Unless otherwise provided in this Act or in the articles, the board of directors may‐

(a) exercise their powers through committees consisting of such members of the body as they think fit; or

(b) from time to time, appoint one or more of their body to the office of managing director and may delegate all or any of their powers to such managing director.

Liability for acts of the company

65. Acts of general meeting, board of directors, or of managing directors

Any act of the members in general meeting, the board of directors, or of a managing director while carrying on in the usual way the business of the company, shall be treated as the act of the company itself and the company shall be criminally and civilly liable therefore to the same extent as if it were a natural person:

Provided that‐

(a) the company shall not incur civil liability to any person if that person had actual knowledge at the time of the transaction in question that the general meeting, board of directors, or managing director, as the case may be, had no power to act in the matter or had acted in an irregular manner or if, having regard to his position with or relationship to the company, he ought to have known of the absence of such power or of the irregularity;

(b) if in fact a business is being carried on by the company, the company shall not escape liability for acts undertaken in connection with that business merely because the business in question was not among the business authorised by the company’s memorandum.

66. Acts of officers or agents

(1) Except as provided in section 65 of this Act, the acts of any officer or agent of a company shall not be deemed to be acts of the company, unless‐

(a) the company, acting through its members in general meeting, board of directors, or managing director, shall have expressly or impliedly authorised such officer or agent to act in the matter; or

(b) the company, acting as mentioned in paragraph (a) of this subsection, shall have represented the officer or agent as having its authority to act in the matter, in which event the company shall be civilly liable to any person who has entered into the transaction in reliance on such representation unless such person had actual knowledge that the officer or agent had no authority or unless having regard to his position with or relationship to the company, he ought to have known of such absence of authority.

(2) The authority of an officer or agent of the company may be conferred prior to any action by him or by subsequent ratification, and knowledge of such action by the officer or agent and acquiescence therein by all the members of the company or by the directors for the time being, or by the managing director for the time being, shall be equivalent to ratification by the members in general meeting, board of directors, or managing director, as the case may be.

(3) Nothing in this section shall derogate from the vicarious liability of the company for the acts of its servants while acting within the scope of their employment.

67. When provision exempting, etc., officer from liability to the company is void

(1) Any provision, whether contained in the articles of the company or in any contract with a company or otherwise, for exempting any officer of the company or any person (whether an officer of the company or not) employed by the company as auditor from, or indemnifying him against any liability which by virtue of any rule of law would otherwise attach to him in respect of any negligence, default, or breach of trust of which he may be guilty in relation to the company, shall be void.

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

(a) a person shall not be deprived of any exemption or right to be indemnified in respect of anything done or omitted to be done by him while any such provision as mentioned in that subsection was in force; and

(b) a company may, in pursuance of any such provision as mentioned in subsection (1) of this section, indemnify any such officer or auditor against any liability incurred by him in defending any proceedings, whether civil or criminal, in which judgment is given in his favour or in which he is acquitted or in connection with any application under section 641 of this Act in which relief is granted to him by the court.

Constructive notice of registered documents

68. Abolition of constructive notice of registered documents

Except as mentioned in section 197 of this Act, regarding particulars in the register of particulars of charges, a person shall not be deemed to have knowledge of the contents of the memorandum and articles of a company or of any other particulars, documents, or the contents of documents merely because such particulars or documents are registered by the Commission or referred to in any particulars or documents so registered, or are available for inspection at an office of the company.

69. Presumptions of regularity

Any person having dealings with a company or with someone deriving title under the company, shall be entitled to make the following assumptions and the company and those deriving title under it shall be estopped from denying their truth that‐

(a) the company’s memorandum and articles have been duly complied with;

(b) every person described in the particulars filed with the Commission pursuant to sections 35 and 292 of this Act as a director, managing director or secretary of the company, or represented by the company, acting through its members in general meeting, board of directors, or managing director, as an officer or agent of the company, has been duly appointed and has authority to exercise the powers and perform the duties customarily exercised or performed by a director, managing director, or secretary of a company carrying on business of the type carried on by the company or customarily exercised or performed by an officer or agent of the type concerned;

(c) the secretary of the company, and every officer or agent of the company having authority to issue documents or certified copies of documents on behalf of the company, has authority to warrant the genuineness of the documents or the accuracy of the copies so issued;

(d) a document has been duly sealed by the company if it bears what purports to be the seal of the company attested by what purports to be the signatures of two persons who, in accordance with paragraph (b) of this section, can be assumed to be a director and the secretary of the company:

Provided that‐

(i) a person shall not be entitled to make such assumptions as aforesaid, if he had actual knowledge to the contrary or if, having regard to his position with or relationship to the company, he ought to have known the contrary;

(ii) a person shall not be entitled to assume that anyone or more of the directors of the company have been appointed to act as a committee of the board of directors or that an officer or agent of the company has the company’s authority merely because the company’s articles provided that authority to act in the matter may be delegated to a committee or to an officer or agent.

70. Liability of company not affected by fraud or forgery of officer

Where, in accordance with sections 65 to 69 of this Act, a company would be liable to a third party for the acts of any officer or agent, the company shall, except where there is collusion between the officer or agent and the third party, be liable notwithstanding that the officer or agent has acted fraudulently or forged a document purporting to be sealed by or signed on behalf of the company.

Company’s contracts

71. Form of contract

(1) Contracts on behalf of a company may be made, varied or discharged as follows‐

(a) any contract which if made between individuals would be by law required to be in writing under seal, or which would be varied, or discharged only by writing under seal, may be made, varied or discharged, as the case may be, in writing under the common seal of the company;

(b) any contract which if made between individuals would be by law required to be in writing, signed by the parties to be charged therewith, or which could be varied or discharged only by writing or written evidence signed by the parties to be charged, may be made, varied or discharged, as the case may be, in writing signed in the name or on behalf of the company; and

(c) any contract which if made between individuals would be valid although made by parol only and not reduced into writing or which could be varied or discharged by parol, may be made varied or discharged, as the case may be, by parol on behalf of the company.

(2) A contract made according to this section shall be effectual in law, and shall bind the company and its successors and all other parties thereto, their heirs, executors, or administrators, as the case may be; and may be varied or discharged in the same manner in which it is authorised by this section to be made.

72. Pre‐incorporation contracts

(1) Any contract or other transaction purporting to be entered into by the company or by any person on behalf of the company prior to its formation may be ratified by the company after its formation and thereupon the company shall become bound by and entitled to the benefit thereof as if it has been in existence at the date of such contract or other transaction and had been a party thereto.

(2) Prior to ratification by the company, the person who purported to act in the name of or on behalf of the company shall, in the absence of express agreement to the contrary, be personally bound by the contract or other transaction and entitled to the benefit thereof.

73. Bills of exchange and promissory note.

(1) A bill of exchange or promissory note shall be deemed to have been made, accepted, or endorsed on behalf of a company if made, or expressed to be made, accepted, or endorsed in the name of the company, or if expressed to be made, accepted or endorsed on behalf or on account of the company by a person acting under its authority.

(2) The company and its successors shall be bound thereby if the company is, in accordance with sections 65 to 67 of this Act, liable for the acts of those who made, accepted or endorsed it in its name or on its behalf or account, and a signature by a director or the secretary on behalf of the company shall not be deemed to be a signature by procuration for the purposes of section 25 of the Bills of Exchange Act.

[Cap. B8.]

74. Common seal of the company

A company shall have a common seal, the use of which shall be regulated by the articles.

75. Official seal for use abroad

(1) A company whose objects require or compromise the transaction of business in foreign countries may, if authorised by its articles, have for use in any territory, district, or place outside Nigeria, an official seal, which shall be a facsimile of the common seal of the company, with the addition on its face of the name of every territory, distract, or place where it is to be used.

(2) A company having such an official seal may, by writing under its common seal, authorize any person appointed for the purpose in any territory, district, or place outside Nigeria, to affix the same to any deed or other document to which the company is party in that territory, district, or place.

(3) The Authority of any such agent shall, as between the company and any person dealing with the agent, continue during the period, if any, mentioned in the instrument conferring the authority, or if no period is there mentioned, then until notice of the revocation or determination of the agent’s authority has been given to the person dealing with him.

(4) The person affixing any such official seal shall, by writing under his hand, on the deed or other document to which the seal is affixed, certify the date on which and place at which it is affixed.

(5) A deed or other document to which an official seal is duly affixed shall bind the company as if it has been sealed with the common seal of the company.

76. Powers of attorney

(1) A company may, by writing under seal, empower any person, either generally or in respect of any specified matter, as its attorney, to execute deeds on its behalf in any place within or outside Nigeria.

(2) A deed signed by a person empowered as provided in subsection (1) of this section shall bind the company and have the same effect as it would have if it were under the company’s common seal.

Authentication and service of documents

77. Authentication of documents

A document or proceeding requiring authentication by a company may be signed by a director, secretary, or other authorised officer of the company, and need not be under its common seal unless otherwise so required in this Part of this Act.

78. Service of documents on companies

A court process shall be served on a company in the manner provided by the Rules of Court and any other document may be served on a company by leaving it at, or sending it by post to, the registered office or head office of the company.

PART IV

Membership of the company

79. Definition of member

(1) The subscribers of the memorandum of a company shall be deemed to have agreed to become members of the company, and on its registration shall be entered as members in its register of members.

(2) Every other person who agrees in writing to become a member of a company, and whose name is entered in its register of members, shall be a member of the company.

(3) In the case of a company having a share capital, each member shall be a shareholder of the company and shall hold at least one share.

80. Capacity to be a member

(1) As from the commencement of this Act, an individual shall not be capable of becoming a member of a company if‐

(a) he is of unsound mind and has been so found by a court in Nigeria or elsewhere; or

(b) he is an undischarged bankrupt.

(2) A person under the age of 18 years shall not be counted for the purpose of determining the legal minimum number of members of a company.

(3) A corporate body in liquidation shall not be capable of becoming a member of a company.

(4) Where at the commencement of this Act, any person falling within the provisions of subsection (1) of this section is a member of a company by reason of being a shareholder of the company, his share shall vest in his committee or trustee, as the case may be.

(5) Where after the commencement of this Act, any shareholder purports to transfer any shares to a person falling within the provisions of subsection (1) of this section, the purported transfer shall not vest the title in the shares in that person, but the title shall remain in the purported transferor or his personal representative who shall hold the shares in trust for that person during the period of his incapacity.

81. Right of member to attend meetings and vote

Every member shall notwithstanding any provision in the articles, have a right to attend any general meeting of the company and to speak and vote on any resolution before the meeting:

Provided that the articles may provide that a member shall not be entitled to attend and vote unless all calls or other sums payable by him in respect of shares in the company have been paid.

82. Personation of members

If any person falsely and deceitfully personates any member of a company and thereby obtains or endeavours to obtain any benefit due to any such member, he shall be guilty of an offence and be liable on conviction to imprisonment for a term of not more than 7 years or a fine of not more than N2,500.

Register of members

83. Register of members

(1) Every company shall keep a register of its members and enter in it the following particulars‐

(a) the names and addresses of the members, and in the case of a company having a share capital, a statement of the shares and class of shares, if any, held by each member, distinguishing each share by its number so long as the share has a number, and of the amount paid or agreed to be considered as paid on the shares of each member;

(b) the date on which each person was registered as a member; and

(c) the date on which any person ceased to be a member:

Provided that, where the company has converted any of its shares into stock and given notice of the conversion to the Commission, the register shall show the amount of stock held by each member instead of the amount of shares and the particulars relating to shares specified in paragraph (a) of this subsection.

(2) The entry required under paragraph (a) or (b) of subsection (1) of this section, shall be made within 28 days of the conclusion of the agreement with the company to be‐come a member or, in the case of a subscriber of the memorandum, within 28 days of the registration of the company.

(3) The entry required under paragraph (c) of subsection (1) of this section, shall be made within 28 days of the date on which the person concerned ceased to be a member, or if he ceased to be a member otherwise than as a result of action by the company, within 28 days of production to the company of evidence satisfactory to the company of the occurrence of the event whereby he ceased to be a member.

(4) Where a company makes default in complying with the provisions of this section, the company and every officer of the company who is in default shall be liable to a fine of N25 and a daily default fine of N5.

(5) Liability incurred by a company from the making or deletion of an entry in its register of members, or from a failure to make or delete any such entry, shall not be enforceable after the expiration of 20 years from the date on which the entry was made or deleted or, in the case of any such failure, from the date on which the failure first occurred.

84. Location of register

(1) The register of members shall be kept at the registered office of the company, except that if‐

(a) the work of making it up is done at another office of the company, it may be kept at that other office; and

(b) the company arranges with some other person for the making up of the register to be undertaken on behalf of the company by that person, it may be kept at the office of that other person at which the work is done,

but the register shall not be kept in the case of a company registered in Nigeria at a place outside Nigeria.

(2) Every company shall send notice to the Commission of the place where the register is kept and of any change of that place.

(3) A company shall not be bound to send notice under this subsection where the register has, at all times since it came into existence or, in the case of a register in existence at the commencement of this Act, at all times since then, been kept at the registered office of the company.

(4) If a company makes default for 28 days in complying with subsection (2) of this section, the company and every one of its officers who is in default shall be liable to a fine of N10 and, for continued contravention, to a daily default fine of N5.

85. Index of members to be kept

(1) Every company having more than 50 members shall, unless the register of members is in such a form as to constitute in itself an index, keep an index of the names of the members of the company and shall, within 14 days after the date on which any alteration is made in the register of members, make any necessary alteration in the index.

(2) The index shall in respect of each member contain sufficient indication to enable the account of that member in the register to be readily found.

(3) The index shall, at all times, be kept at the same place as the register of members.

(4) If default is made in complying with the provisions of this section, the company and every officer of the company who is in default shall be liable to a fine of N50.

86. Entry of trusts prohibited

No notice of any trust, express, implied or constructive, shall be entered on the register of members or be receivable by the Commission.

87. Inspection of register and index

(1) Except when the register of members is closed under the provisions of this Act, the register and the index of members’ names shall be open during business hours (subject to such reasonable restrictions as the company in general meeting may impose, so however, that not less than 2 hours in each day shall be allowed for inspection) to the inspection of any member of the company without charge, and with the permission of the company to any other person on payment of N1 or any less sum as the company may prescribe for each inspection.

(2) Any member or, with the permission of the company, any other person may require a copy of the register, or of any part thereof, on payment of 50 kobo, or such less sum as the company may prescribe, for every 100 words or

fractional part thereof required to be copied; and the company shall cause any copy so required by any person to be sent to that person within a period of 10 days commencing on the day next after the day on which the requirement is received by the company.

(3) In the case of a member, if any inspection required under this section is refused or if any copy required under this section is not sent within the prescribed period, the company and every officer of the company who is in default shall be liable in respect of each offence to a fine of N10.

(4) In the case of any such refusal or default in the case of a member, the court may by order compel an immediate inspection of the register and index or direct that the copies required shall be sent to the persons requiring them.

88. Consequences of failure by agents’ default to keep register

Where, by virtue of paragraph (b) of subsection (1) of section 84 of this Act, the register of members is kept at the office of some person other than the company, and by reason of any default of his, the company fails to comply with subsection (1) or (2) of section 84 of this Act, or with any requirements of this Act as to the production of the register, that other person shall be liable to the same penalties as if he were an officer of the company who was in default, and the power of the court under subsection (4) of section 87 of this Act shall extend to the making of orders against that other person and his officers and servants.

89. Power to close register

A company may, on giving notice by advertisement in a daily newspaper circulating in the district in which the registered office of the company is situated, close the register of members or any part of it for any time or times not exceeding on the whole 30 days in each year.

90. Power of court to rectify register

(1) If‐

(a) the name of any person is, without sufficient cause, entered in or omitted from the register of members of a company; or

(b) default is made or unnecessary delay takes place in entering on the register the fact of any person having ceased to be a member,

the person aggrieved, or any member of the company, or the company, may apply to the court for rectification of the register.

(2) The court may refuse the application, or order rectification of the register and payment by the company of any damages sustained by the party aggrieved.

(3) On an application under this section, the court may decide any question relating to the title of any person who is a party to the application to have his name entered in or omitted from the register, whether the question arises between members or alleged members, or between members and alleged members on the one hand and the company on the other hand, and generally may decide any question necessary or expedient to be decided for rectification of the register.

(4) In the case of a company required by this Act to send a list of its members to the Commission, the court, when making an order for rectification of the register shall, by its order, direct notice of the rectification to be given to the Commission.

91. Register to be evidence

The register of members shall be prima facie evidence of matters which are by this Act directed or authorised to be inserted in it.

Liability of members

92. Liability of members

(1) Prior to the winding up of a company, a member of the company with shares shall be liable to contribute the balance, if any, of the amount payable in respect of the shares held by him in accordance with the terms of the agreement under which the shares were issued or in accordance with a call validly made by the company pursuant to its articles.

(2) Where any contribution has become due and payable by reason of a call validly made by the company pursuant to the articles or where, under the terms of any agreement with the company, a member has undertaken personal liability to make future payments in respect of shares issued to him, the liability of the member shall continue notwithstanding that the shares held by him are subsequently transferred or forfeited under a provision to that effect in the articles, but his liability shall cease if and when the company shall have received payment in full of all such moneys in respect of the shares.

(3) Subject to subsections (1) and (2) of this section, no member or past member shall be liable to contribute to the assets of the company, except in the event of its being wound up.

(4) In the event of a company being wound up, every present or past member shall be liable to contribute to the assets of the company to an amount sufficient for payment of its debts and liabilities and for the costs, charges and expenses of the winding up and for the adjustment of the rights of the members and past members among themselves, but subject to the following qualifications‐

(a) a past member shall not be liable to contribute if he has ceased to be a member for a period of 1 year or upwards before the commencement of the winding up;

(b) a past member shall not be liable to contribute unless it appears to the court that the existing members are unable to satisfy the contributions required to be made by them in pursuance of this section;

(c) in the case of a company limited by shares, no contribution shall be required from any member or past member exceeding the amount, if any, unpaid on the shares in respect of which he is liable as a present or past member;

(d) in the case of a company limited by guarantee, no contribution shall be required from any member or past member exceeding the amount undertaken to be contributed by him to the assets of the company in the event of its being wound up; and

(e) any sum due from the company to a member or past member, in his capacity as member, by way of dividends or otherwise shall not be set‐off against the amount for which he is liable to contribute in accordance with this section but any such sum shall be taken into account for the purposes of final adjustment of the rights of the members and past members amongst themselves.

(5) For the purposes of this section, the expression “past member” includes the estate of a deceased member and where any person dies after becoming liable as a member or past member, such liability shall be enforceable against his estate.

(6) Except as contained in this section, a member or past member shall not be liable as a member or past member for any of the debts and liabilities of the company.

93. Liability for company debts where membership is below legal minimum

If a company carries on business without having at least two members and does so for more than 6 months, every director or officer of the company during the time that it so carries on business with only one or no member shall be liable jointly and severally with the company for the debts of the company contracted during that period.

Disclosure of beneficial interest in shares

94. Power of company to require disclosure

(1) Notwithstanding the provisions of section 95 of this Act, a public company may, by notice in writing, require any member of the company, within such reasonable time as is specified in the notice‐

(a) to indicate in writing the capacity in which he holds any shares in the company; and

(b) if he holds them other than as beneficial owner, to indicate in writing the particulars of the identity of persons interested in the shares in question and whether persons interested in the same shares are parties to any agreement or arrangement relating to the exercise of any rights conferred by the holding of the shares.

(2) Where a company is formed in pursuance of a notice given to any person under subsection (1) of this section, or under this subsection, that any other person has an interest in any shares in the company, the company may, by notice in writing, require that other person within such reasonable time as is specified in the notice‐

(a) to indicate in writing the capacity in which he holds that interest; and

(b) if he holds it otherwise than as beneficial owner, to indicate in writing, so far as it lies within his knowledge, the persons who have any interests in them (either by name and address or by other particulars sufficient to enable them to be identified) and the nature of their interests.

(3) Whenever a company receives information from a person in pursuance of a requirement imposed on him under this section with respect to shares held by a member of the company, it shall be under an obligation to inscribe against the name of the member in the register of members‐

(a) the fact that the requirement was imposed; and

(b) the information received in pursuance of the requirement.

(4) Subject to subsection (5) of this section, any person who‐

(a) fails to comply with a notice under this section; or

(b) in purported compliance with such a notice, makes any statement which he knows to be false in a material particular or recklessly makes any statement which is false in a material particular,

shall be guilty of an offence and liable to imprisonment for six months or to a fine of N25 for every day during which the default continues.

(5) A person shall not be guilty of an offence under subsection (4) (a) of this section, if he proves that the information in question was already in the possession of the company or that the requirement to give it was for any other reason frivolous or vexatious.

95. Obligation of disclosure by substantial shareholder in public company

(1) A person who is a substantial shareholder in a public company shall give notice in writing to the company stating his name and address and giving full particulars of the shares held by him or his nominee (naming the nominee) by virtue of which he is a substantial shareholder.

(2) A person is a substantial shareholder in a public company if he holds himself or by his nominee, shares in the company which entitle him to exercise at least 10 per cent of the unrestricted voting rights at any general meeting of the company.

(3) A person required to give a notice under subsection (1) of this section, shall do so within 14 days after that person becomes aware that he is a substantial shareholder.

(4) The notice shall be so given notwithstanding that the person has ceased to be a substantial shareholder before the expiration of the period referred to in subsection (3) of this section.

(5) A person who fails to comply with the provisions of this section shall be liable to a fine of N50 for every day during which the default continues.

96. Person ceasing to be a substantial shareholder to notify company

(1) A person who ceases to be a substantial shareholder in a public company shall give notice in writing to the company stating his name and the date on which he ceased to be a substantial shareholder and giving full particulars of the circumstances by reason of which he ceased to be substantial shareholder.

(2) A person required to give notice under subsection (1) of this section, shall do so within 14 days after he becomes aware that he has ceased to be substantial shareholder.

97. Register of interests in shares

(1) A public company shall keep a register in which it shall enter‐

(a) in alphabetical order, the names of persons from whom it has received a notice under section 95 of this Act; and

(b) against each name so entered, the information given in the notice, and where it receives a notice under section 95 of this Act, the information given in that notice.

(2) The register shall be kept at the place where the register of members required to be kept under section 84 of this Act is kept and subject to the same right of inspection as the register of members.

(3) The Commission may, at any time, in writing, require the company to furnish it with a copy of the register or any part of the register and the company shall furnish the copy within 14 days after the day on which the requirement is received by the company.

(4) If the company ceases to be public company, it shall continue to keep the register until the end of the period of six years beginning with the day next following that on which it ceases to be such a company.

(5) A company shall not, by reason of anything done for the purposes of this section, be affected with notice of, or put on enquiry as to, a right of a person to or in relation to a share in the company.

(6) If default is made in complying with this section, the company and every officer of the company who is in default shall be liable to a fine of N25 and a daily default fine of N5.

98. Registration of interests to be disclosed

The matter relating to beneficial interests in shares required by section 94 of this Act shall be entered in a different part of the register of interests which shall be so made up that the entries inscribed in it appear in chronological order.

PART V

Share capital Minimum share capital
99. Authorised minimum share capital

(1) Where, after the commencement of this Act, a memorandum delivered to the Commission under section 35 of this Act states that the association to be registered is to be registered with shares, the amount of the share capital stated in the memorandum to be registered shall not be less than the authorised minimum share capital and not less than 25 per cent of that capital shall be taken by the subscribers of the memorandum.

(2) No company having a share capital shall, after the commencement of this Act, be registered with an authorised share capital less than the authorised minimum share capital.

(3) Where, at the commencement of this Act, the authorised share capital of an existing company is less than the authorised minimum share capital, the company shall, not later than 30 days after the appointed day, increase the share capital to an amount not less than the authorised minimum share capital of which not less than 25 per cent shall be issued.

(4) Subject to subsection (3) of this section and to section 103 of this Act, where a company is registered with shares, its issued capital shall not at any time be less than 25 per cent of the authorised share capital.

(5) Where a company to which subsections (3) and (4) of this section apply fails to comply with the applicable subsection, it shall be liable to a fine of N2,500, and every officer who is in default shall be liable to a fine of N50 for every day during which the default continues.

Alteration of share capital

100. Alteration of share capital by consolidation, etc.

(1) A company having a share capital may in general meeting and not otherwise alter the conditions of its memorandum to the following extent, that is to say, it may‐

(a) consolidate and divide all or any part of its share capital into shares of larger amount than its existing shares;

(b) convert all or any of its paid‐up shares into stock, and re‐convert that stock into paid‐up shares of any denomination;

(c) subdivide its shares or any of them, into shares of smaller amount than is fixed by the memorandum, so however, that in the subdivision the proportion between the amount paid and the amount, if any, unpaid on each reduced share shall be the same as it was in the case of the share from which the reduced share is derived;

(d) cancel shares which, at the date of the passing of the resolution in that behalf, have not been taken or agreed to be taken by any person, and diminish the amount of its share capital by the amount of the shares so cancelled.

(2) Cancellation of shares made in pursuance of this section shall not be deemed to be a reduction of share capital within the meaning of this Act.

101. Notice required where shares and stock consolidated, etc.

(1) If a company having share capital has‐

(a) consolidated and divided its share capital into shares of larger amount than its existing shares; or

(b) converted any shares into stock; or

(c) re‐converted stock into shares; or

(d) subdivided its shares or any of them; or

(e) cancelled any shares, otherwise than in connection with a reduction of share capital under section 105 of this Act,

it shall within one month after so doing, give notice of it to the Commission specifying, as the case may be, the shares consolidated, divided, converted, subdivided, cancelled, or the stock re‐converted.

(2) If default is made in complying with this section, the company and every officer of the company who is in default shall be liable to a fine of N50 for every day during which the default continues.

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.

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.

104. Power for unlimited company to provide reserve share capital on re‐registration

If an unlimited company resolves to be registered as a limited company under this Act, it may‐

(a) increase the nominal amount of its share capital by increasing the nominal amount of each of its shares, but subject to the condition that no part of the increased capital shall be capable of being called up except in the event and for the purpose of the company being wound up; or

(b) provide that a specified portion of its uncalled share capital shall not be capable of being called up except in the event and for the purposes of the company being wound up.

Reduction of share capital

105. Restriction on reduction of issued share capital

(1) Except as authorised by this Act, a company having a share capital shall not reduce its issued share capital.

(2) For the purposes of this and other sections relating to reduction of share capital, any issue of share capital shall include the share premium account and any capital redemption reserve account of a company, and “issued share capital” shall be construed accordingly.

106. Special resolution for reduction of share capital

(1) Subject to confirmation by the court, a company having share capital may, if so authorised by its articles, by special resolution reduce its share capital in any way.

(2) In particular, and without prejudice to subsection (1) of this section, the company may‐

(a) extinguish or reduce the liability on any of its shares in respect of share capital not paid up; or

(b) either with or without extinguishing or reducing liability on any of its shares, cancel any paid‐up share capital which is lost or unrepresented by available assets; or

(c) either with or without extinguishing or reducing liability on any of its shares, cancel any paid‐up share capital which is in excess of the company’s wants,

and the company may, if and so far as is necessary, alter its memorandum by reducing the amount of its share capital and of its shares accordingly.

(3) A special resolution under this section shall in this Act be referred to as “a resolution for reducing share capital”.

107. Application to court for order of confirmation

(1) Where a company has passed a resolution for reducing share capital, it may apply to the court for an order confirming the reduction.

(2) If the proposed reduction of share capital involves either‐

(a) diminution of liability in respect of unpaid share capital; or

(b) subject to subsection (6) of this section, the payment to a shareholder of any paid‐up share capital, and in any other case if the court so directs, subsection (3), (4) and (5) of this section shall have effect.
(3) Every creditor of the company who at the date fixed by the court is entitled to any debt or claim which, if that date were the commencement of the winding up of the company, would be admissible in proof against the company, shall be entitled to object to the reduction of capital.

(4) The court shall settle a list of creditors entitled to object, and for that purpose‐

(a) shall ascertain, as far as possible without requiring an application from any creditor, the names of those creditors and the nature and amount of the debts or claims;

(b) may publish notices fixing a day or days within which creditors not entered on the list are to claim to be so entered or are to be excluded from the right of objecting to the reduction of capital.

(5) If a creditor entered on the list whose debt or claim is not discharged or has not been determined does not consent to the reduction, the court may, if it thinks fit, dispense with the consent of that creditor, on the company securing payment of his debt or claim by appropriating (as the court may direct) the following amount if‐

(a) the company admits the full amount of the debt or claim or, though not admitting it, is willing to provide for it, then the full amount of the debt or claim;

(b) the company does not admit, and is not willing to provide for, the full amount of the debt or claim, or if the amount is contingent or not ascertained, then an amount fixed by the court after the like enquiry and adjudication as if the company were being wound up by the court.

(6) If a proposed reduction of share capital involves either the diminution of any liability in respect of unpaid share capital or the payment to any shareholder of any paid‐up share capital, the court may, if having regard to any special circumstances of the case it thinks proper to do so, direct that subsections (3) to (5) of this section shall not apply as regards any class or any classes of creditors.

108. Court order confirming reduction

(1) The court, if satisfied‐

(a) with respect to every creditor of the company who under section 107 of this Act is entitled to object to the reduction of capital, that either‐

(i) his consent to the reduction has been obtained; or

(ii) his debt or claim has been discharged or has determined, or has been secured; and

(b) that the share capital does not by this reduction fall below the authorised mini‐mum share capital, may make an order confirming the reduction on such terms and conditions as it thinks fit.
(2) Where the Court so orders, it may also‐

(a) if for any special reason it thinks it proper to do so, make an order directing that the company shall, during such period (commencing on or at any time after the date of the order) as is specified in the order, add to its name as its last words “and reduced”;

(b) make an order requiring the company to publish (as the court directs) the reasons for reduction of capital or such other information in regard to it as the court thinks expedient with a view to giving proper information to the public and (if the court thinks fit) the causes which led to the reduction.

(3) Where the company is ordered to add to its name the words “and reduced”, those words shall, until the expiration of the period specified in the order, be deemed to be part of the company’s name.

109. Registration of order and minutes of reduction

(1) The Commission, on production to it of the order of the court confirming the reduction of a company’s share capital, and the delivery to it of a copy of the order and of minutes of the meeting of the company (approved by the court) showing, with respect to the company’s share capital as altered by the order‐

(a) the amount of the share capital;

(b) the number of shares into which it is to be divided, and the amount of each share; and

(c) the amount (if any) at the date of the registration deemed to be paid up on each share, shall register the order and minutes.
(2) On the registration of the order and minutes, and not before, the resolution for reducing share capital as confirmed by the order so registered shall take effect.

(3) A notice of the registration shall be published in such manner as the court may direct.

(4) The Commission shall certify the registration of the order and minutes; and the certificate‐ (a)may be either signed by the Registrar‐General or authenticated by its official seal;
(b) shall be prima facie evidence that all the requirements of this Act with respect to the reduction of share capital have been complied with, and that the company’s share capital is as stated in the minutes.

(5) The minutes, when registered, shall be deemed to be substituted for the corresponding part of the company’s memorandum, and valid and alterable as if it had been originally contained in it.

(6) The substitution of such minutes for part of the company’s memorandum shall be deemed an alteration of the memorandum.

110. Liability of members on reduced shares

(1) Where a company’s share capital is reduced, a member of the company (past or present) shall not be liable in respect of any share to any call or contribution exceeding in amount the difference (if any) between the amount of the share as fixed by the minutes and the amount paid on the share or the reduced amount (if any), which is deemed to have been paid on it, as the case may be.

(2) Subsections (3) and (4) of this section shall apply if‐

(a) a creditor, entitled in respect of a debt or claim to object to the reduction of share capital, by reason of his ignorance of the proceedings for reduction of share capital, or of their nature and effect with respect to his claim, is not entered on the list of creditors; and

(b) after the reduction of capital, the company is unable (within the meaning of section 409 of this Act) to pay the amount of his debt or claim.

(3) Every person who was a member of the company at the date of the registration of the order for reduction and minutes, shall be liable to contribute for the payment of the debt or claim in question an amount not exceeding that which he would have been liable to contribute if the company had commenced to be wound up on the day before that date.

(4) If the company is wound up, the Court, on application of the creditor in question and proof of ignorance referred to in subsection (2) (a), of this section, may (if it thinks fit), settle accordingly a list of persons so liable to contribute, and make and enforce calls and orders on the contributories settled on the list, as if they were ordinary contributories in a winding up.

(5) Nothing in this section shall affect the rights of the contributories among themselves.

111. Penalty for concealing name of creditor, etc.

If an officer of the company‐

(a) wilfully conceals the name of a creditor entitled to object to the reduction of capital; or

(b) wilfully misrepresents the nature or amount of the debt or claim of any creditor; or

(c) aids, abets or is privy to any such concealment or misrepresentation as is mentioned above, he shall be guilty of an offence and liable on conviction to a fine of N500
Miscellaneous matters relating to capital

112. Duty of directors on serious loss of capital

(1) Where the net assets of a public company are half or less of its called‐up share capital, the directors shall, not later than 30 days from the earliest day on which that fact is known to a director of the company, duly convene an extraordinary general meeting of the company, for a day not later than 60 days from that day for the purpose of considering whether any, and if so, what steps should be taken to deal with the situation.

(2) If there is a failure to convene an extraordinary general meeting as required by subsection (1) of this section, each of the directors of the company who‐

(a) knowingly and wilfully authorises or permits the failure; or

(b) after the expiry of the period during which that meeting should have been convened, knowingly and wilfully authorises or permits the failure to continue, shall be liable to a fine of N500

(3) Nothing in this section shall authorise the consideration, at a meeting convened in pursuance of subsection (1) of this section, of any matter which could have been considered at that meeting apart from this section.

113. Power to pay interest out of capital in certain cases

Where any shares of a company are issued for the purposes of raising money to defray the expenses of the construction of any works or buildings or the provision of any plant which cannot be made profitable for a long period, the company may pay interest on so much of that share capital as if for the time being paid up for the period and subject to the conditions and restrictions mentioned in this section, and may charge the same to capital as part of the cost of construction of the work or building or the provision of plant:

Provided that‐

(a) no such payment shall be made unless it is authorised by the articles or by special resolution;

(b) no such payment, whether authorised by the articles or by special resolution, shall be made without the previous sanction of the Commission;

(c) before sanctioning any such payment the Commission may, at the expense of the company, appoint a person to inquire and report to it as to the circumstances of the case, and may, before making the appointment, require the company to give security for the payment of the costs of the inquiry;

(d) the payment shall be made only for such period as may be determined by the Commission which shall in no case extend beyond the close of six months after the half year during which the works or buildings have been actually completed or the plant provided;

(e) the rate of interest shall not exceed the current bank rate;

(f) the payment of the interest shall not operate as a reduction of the amount paid up on the shares in respect of which it is paid.

PART VI

Shares Nature of shares
114. Rights and liabilities attached to shares

Subject to the provisions of this Act, the rights and liabilities attaching to the shares of a company shall‐

(a) be dependent on the terms of issue and of the company’s articles; and

(b) notwithstanding anything to the contrary in the terms or the articles, include the right to attend any general meeting of the company and vote at such a meeting.

115. Shares as transferable property

The shares or other interests of a member in a company shall be property transferable in the manner provided in articles of association of the company.

116. Prohibition of non‐voting and weighted shares

(1) Unless otherwise provided by any other enactment‐

(a) any share issued by a company after the date of commencement of this Act, shall carry the right on a poll at a general meeting of the company to one vote in respect of each share and no company may by its articles or otherwise authorise the issue of shares which carry more than one vote in respect of each share or which do not carry any right to vote; and

(b) where, at the commencement of this Act, any share of a company carries more than one vote or does not carry any vote at a general meeting of the company, such a share shall be deemed, as from the appointed day, to carry one vote only.

(2) If a company contravenes any of the provisions of this section, the company and any officer in default shall be liable to a daily default fine of N50 and any resolution passed in contravention of this section shall be void.

(3) Nothing in this section shall affect any right attached to a preference share under section 143 of this Act.

Issue of shares

117. Power of companies to issue shares

Subject to any limitation in the articles of a company with respect to the number of shares which may be issued, and any pre‐emptive rights prescribed in the articles in relation to the shares, a company shall have the power, at such times and for such consideration as it shall determine, to issue shares up to the total number authorised in the memorandum.

118. Issue of classes of shares

(1) A company may, where so authorised by its articles, issue classes of shares.

(2) Shares shall not be treated as being of the same class unless they rank equally for all purposes.

119. 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.

120. Issue of shares at a premium

(1) Shares of a company may be issued at a premium.

(2) Where a company issues shares at a premium, whether for cash or otherwise, a sum equal to the aggregate amount or value of the premium on those shares shall be transferred to an account, to be called “the share premium account”, and the provisions of this Act relating to the reduction of the share capital of a company shall, except as provided in this section, apply as if the share premium account were paid‐up share capital of the company.

(3) Notwithstanding, anything to the contrary in subsection (2) of this section, the share premium account may be applied by the company in paying up unissued shares of the company to be issued to members of the company as fully‐paid bonus shares, in writing off‐

(a) the preliminary expenses of the company; or

(b) the expenses of, or the commission paid or discount allowed on, any issue of shares of the company; or in providing for the premium payable on redemption of any redeemable share of the company.

(4) Where a company has before the commencement of this Act issued any shares at a premium, this section shall apply as if the shares had been issued after the commencement of this Act:

Provided that any part of the premium which has been so applied that it does not at the commencement of this Act form an identifiable part of the company’s reserves within the meaning of the Second Schedule to this Act, shall be disregarded in determining the sum to be included in the share premium account.

[Second Schedule.]

121. Issue of shares at a discount

(1) Subject to the provisions of this section, it shall be lawful for a company to issue at a discount shares in the company of a class of shares already issued:

Provided that‐

(a) the issue of the shares at a discount is authorised by resolution passed in general meeting of the company, and thereafter is sanctioned by the court;

(b) the resolution specifies the maximum rate of discount at which the shares are to be issued; and

(c) the shares to be issued at a discount are issued within the month after the date on which the issue is sanctioned by the court or within such extended time as the court may allow.

(2) Where a company has passed a resolution authorising the issue of shares at a discount, it may apply to the court for an order sanctioning the issue, and on any such application the court, having regard to all the circumstances of the case, and if it thinks fit so to do on such terms and conditions as it may impose, may make an order sanctioning the issue.

(3) Every prospectus relating to the issue of the shares, shall contain particulars of the discount allowed on the issue of the shares or of so much of that discount as has not been written off at the date of the issue of the prospectus.

(4) If default is made in complying with subsection (3) of this section, the company and every officer of the company who is in default shall be liable to a fine of N50 for every day during which the default continues.

Subject to the provisions of section 158 of this Act, a company limited by shares may, if so authorised by its articles, issue preference shares which shall, or at the option of the company, be liable to be redeemed.

123. Validation of improperly issued shares

(1) Where a company has purported to issue or allot shares and the creation, issue or allotment of those shares was invalid by reason of any provision of this Act or any other enactment or of the articles of the company or otherwise, or the terms of issue or allotment were inconsistent with or unauthorised by any such provision, the court may upon application made by the company or by a holder or mortgagee of those shares or by a creditor of the company, and upon being satisfied that in all the circumstances it is just and equitable to do so, validate the issue or allotment of those shares or confirm the terms of the issue and allotment, as the case may be.

(2) In every case where the court validates an issue or allotment of shares or confirms the terms of an issue or allotment in accordance with subsection (1) of this section, it shall make, upon payment of the prescribed fees, an order which shall be proof of the validation or confirmation and upon the issue of the order, those shares shall be deemed to have been issued or allotted upon the relevant terms of issue or allotment.

Allotment of shares

124. Authority to allot shares

Subject to the provisions of the Investment and Securities Act, the power to allot shares shall be vested in the company, which may delegate it to the directors, subject to any conditions or directions that may be imposed in the articles or from time to time by the company in general meeting.

[Cap. 124.]

125. Method of application and allotment

Without prejudice to the provisions of sections 566 to 574 of this Act, the following provisions shall apply in respect of an application for an allotment of issued shares of a company‐

(a) in the case of a private company or a public company where the issue of shares is not public, there shall be submitted to the company a written application signed by the person wishing to purchase shares and indicating the number of shares required;

(b) in the case of a public company, subject to any conditions imposed by the Securities and Exchange Commission where the issue of shares is public, there shall be returned to the company a form of application as prescribed in the company’s articles, duly completed and signed by the person wishing to purchase shares;

(c) upon the receipt of an application, a company shall, where it wholly or partially accepts the application, make an allotment to the applicant and within 42 days after the allotment notify the applicant of the fact of allotment and the number of shares allotted to him;

(d) an applicant under this section shall have the right at any time before allotment, to withdraw his application by written notice to the company.

126. Allotment as acceptance of contract

An allotment of shares made and notified to an applicant in accordance with section 125 of this Act shall be an acceptance by the company of the offer by the applicant to purchase its shares and the contract takes effect on the date on which the allotment is made by the company.

127. Payment on allotment

Subject to the provisions of sections 135 to 138 of this Act, a company may, in its articles, make provision with respect to payments on allotment of its shares.

128. Effect of irregular allotment

(1) An allotment made by a company before the holding of the statutory meeting to an applicant in contravention of the provisions of this Act, shall be voidable at the instance of the applicant within one month after the holding of the statutory meeting of the company and not later, or where the allotment is made after the holding of the statutory meeting, within one month after the date of the allotment, and not later, and the allotment shall be so voidable notwithstanding that the company is in the course of being wound up.

(2) If any director of a company knowingly contravenes or permits or authorises the contravention of any of the provisions of this Act with respect to allotment, he shall be liable to compensate the company and the allottee respectively for any loss, damages or costs which the company or the allottee may have sustained or incurred thereby:

Provided that proceedings to recover any such loss, damages, or costs shall not be commenced after the expiration of two years from the date of the allotment.

129. Return as to allotment

(1) 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‐

(a) a return of the allotments, stating the number and nominal amount of the shares comprised in the allotment, the names, addresses and description of the allottees, and the amount, if any, paid or due and payable on each share; and

(b) in the case of shares allotted as fully or partly paid up otherwise than in cash‐

(i) a contract in writing, constituting the title of the allottee to the allotment together with any contract of sale, or for services or other consideration in respect of which that allotment was made, such contracts being duly stamped;

(ii) a return stating the number and nominal amount of shares so allotted, the extent to which they are to be treated as paid up, and the consideration for which they have been allotted; and

(iii) particulars of the valuation of the consideration in accordance with section 137 of this Act, if any.

(2) If default is made in complying with this section, every officer of the company who is in default shall be liable to a fine of N50 for every day during which the default continues:

Provided that, in case of default in delivering to the Commission within one month after the allotment any document required to be delivered by this section, the company or any officer liable for the default, may apply to the court for relief, and the court, if satisfied that the omission to deliver the document was accidental or due to inadvertence or that it is just and equitable to grant relief, may make an order extending the time for the delivery of the document for such period as the court may think proper.

Commissions and discounts

130. Prohibition of payments of commissions, discounts out of shares and capital

(1) Except as provided in section 131 of this Act, no company shall apply any of its shares or capital money either directly or indirectly in payment of any commission, discount or allowance to any person in consideration of his subscribing or agreeing to subscribe, whether absolutely or conditionally, for any shares in the company, or procuring or agreeing to procure subscriptions, whether absolute or conditional, for any shares in the company, whether the shares or capital money are so applied by being added to the purchase money of any property acquired by the company or to the contract price of any work to be executed for the company, or any such money is paid out of the nominal purchase money or contract price, or otherwise.

(2) Nothing in this section shall affect the payment of any brokerage as is usual for a company to pay.

(3) A vendor to, promoter of, or other person who receives payment in money or shares from a company, shall have and shall be deemed always to have had power to apply any part of the money or shares so received in payment of any commission, the payment of which, if made directly by the company, would have been legal under this section.

131. Power to pay commission in certain cases

(1) It shall be lawful for a company to pay a commission to any person in consideration of his subscribing or agreeing to subscribe, whether absolutely or conditionally, for any shares in the company or procuring or agreeing to procure subscription, whether absolute or conditional, for any shares in the company if‐

(a) the payment of the commission is authorised by the articles; and

(b) the commission paid or agreed to be paid does not exceed ten per cent of the price at which the shares are issued or the amount or rate authorised by the articles, whichever is the lesser;

(c) the amount or rate per cent of the commission paid or agreed to be paid is‐

(i) in the case of shares offered to the public for subscription disclosed in the prospectus; or

(ii) in the case of shares not offered to the public for subscription, disclosed in the statement in lieu of prospectus, or in a statement in the prescribed form signed in like manner as a statement in lieu of prospectus, and delivered before the payment of the commission to the Commission for registration, and where a circular or notice, not being a prospectus inviting subscription for the shares is issued, also disclosed in that circular or notice; and

(d) the number of shares which persons have agreed for a commission to subscribe absolutely is disclosed in the manner specified in this section.

(2) If default is made in delivering to the Commission any document required to be delivered to the Commission under this section, the company and every officer in default shall be liable to a fine of N250.

132. Statement in balance sheet as to commission

(1) Where a company has paid any sum by way of commission in respect of any shares in the company, the amount so paid or so much of it as has not been written off, shall be stated in every balance sheet of the company until the whole amount has been written off.

(2) If default is made in complying with this section, the company and every officer of the company in default is guilty of an offence and liable to a fine of N50 for every day during which the default continues.

Call on and payment for 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 by instalments.

(3) The joint holders of a share shall be jointly and severally liable to pay all calls in respect of the share.

(4) If a sum called in respect of a share is not paid before or on the day appointed for payment, the person from whom the sum is due shall pay interest on the sum from the day appointed for payment to the time of actual payment at such rate not exceeding the current bank rate per annum, as the directors may determine, but the directors shall be at liberty to waive payment of such interest wholly or in part.

(5) Any sum which 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 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.

134. Reserve liability of company having share capital

A company limited by shares may by special resolution determine that any portion of its share capital which has not been already called up shall not be capable of being called up except in the event and for the purposes of the company being wound up; and thereupon that portion of its share capital shall not be capable of being called up, except in the event and for the purposes specified in this section.

135. Payment for shares

Subject to the provisions of sections 136 and 137 of this Act, the shares of a company and any premium on them shall be paid up in cash, or where the articles so permit, by a valuable consideration other than cash or partly in cash and partly by a valuable consideration other than cash.

136. Meaning of payment in cash

Shares shall not be deemed to have been paid for in cash except to the extent that the company shall actually have received cash for them at the time of, or subsequently to, the agreement to issue the shares, and where shares are issued to a person who has sold or agreed to sell property or rendered or agreed to render services to the company or to persons nominated by him, the amount of any payment made for the property or services shall be deducted from the amount of any cash payment made for the shares and only the balance (if any) shall be treated as having been paid in cash for such shares notwithstanding any exchange of cheques or other securities for money.

137. Payment other than in cash

(1) Where a company agrees to accept payment for its shares otherwise than wholly in cash, it shall appoint an independent valuer who shall determine the true value of the consideration other than cash and prepare and submit to the company a report on the value of the consideration.

(2) The valuer shall be entitled to require from the officers of the company such information and explanation as he thinks necessary to enable him to carry out the valuation or make the report under subsection (3) of this section.

(3) The company shall, not more than three days after the receipt by it of the valuer’s report, send a copy of it to the proposed purchaser of shares, and indicate to the proposed purchaser whether or not it intends to accept the consideration as payment or part‐payment for its shares.

(4) A company shall not accept as payment or part‐payment for its shares consideration other than cash unless the cash value of the consideration as determined by the valuer is worth at least as much as may be credited as paid up in respect of the shares allowed to the proposed purchaser.

(5) A valuer who, in his report or otherwise, knowingly or recklessly makes a statement which is misleading, false or deceptive in a material particular, shall be guilty of an offence and liable to imprisonment for 12 months or to a fine of N1,000 or both such imprisonment and fine.

(6) For the purposes of this section “valuer” means an auditor, a valuer, a surveyor or engineer or an accountant not being a person in the employment of the company nor an agent or associate of the company or any of its directors or officers.

[1991 No. 46.]

138. Power to pay different amounts on shares

To the extent to which it is so authorised by its articles, a company may‐

(a) make arrangements on the issue of shares for a difference between the shareholders in the amounts and times of payment of calls on their shares;

(b) accept from any member the whole or a part of the amount remaining unpaid on any shares held by him, although no part of that amount has been called up;

(c) pay dividend in proportion to the amount paid up on each share where a larger amount is paid up on some shares than on others.

Lien and forfeiture of shares

139. Lien on shares

(1) A company shall have a first and paramount lien on every share, (not being a fully paid share for all moneys (whether currently payable or not) called or payable at a fixed time in respect of that share, and the company shall also have a first and paramount lien on all shares (other than fully paid shares) standing registered in the name of a single person for all moneys presently payable by him or his estate to the company; but the directors may at any time declare any share to be wholly or in part exempt from the provisions of this subsection.

(2) A company’s lien, if any, on a share shall extend to all dividends payable on it.

(3) A company may sell, in such manner as the directors think fit, any shares on which the company has a lien, but no sale shall be made unless a sum in respect of which the lien exists is currently payable, nor until the expiration of 14 days after a notice in writing, stating and demanding payment of such part of the amount in respect of which the lien exists as is currently payable, has been given to the registered holder for the time being of the shares, or the person entitled to them by reason of his death or bankruptcy.

(4) For the purpose of giving effect to any such sale, the directors may authorise some person to transfer the shares sold to the purchaser of the shares and the purchaser shall be registered as the holder of the shares comprised in any such transfer.

(5) The purchaser shall not be bound to see to the application of the purchase money and his title to the shares shall not be affected by any irregularity or invalidity in the proceedings in reference to the sale.

140. Forfeiture of shares

(1) If a member fails to pay any call or instalment of a call on the day appointed for payment, the directors may, at any time thereafter during such time as any part of the call or instalment remains unpaid, serve a notice on him requiring payment of so much of the call or instalment as is unpaid, together with any interest which may have accrued.

(2) The notice shall name a further day (not earlier than the expiration of 14 days from the date of service of the notice) on or before which the payment required by the notice is to be made, and it shall state that in the event of

non‐payment at or before the time appointed, the shares in respect of which the call was made shall be liable to be forfeited.

(3) If the requirements of any such notice as is mentioned in subsections (1) and (2) of this section are not complied with, any share in respect of which notice has been given may at any time thereafter, before the payment required by the notice has been made, be forfeited by a resolution of the directors to that effect.

(4) A forfeited share may be sold or otherwise disposed of on such terms and in such manner as the directors think fit, and at any time before a sale or disposition, the forfeiture may be cancelled on such terms as the directors think fit.

(5) A person whose shares have been forfeited shall cease to be a member in respect of the forfeited shares, but shall, notwithstanding, remain liable to pay to the company all moneys which, at the date of forfeiture, were payable by him to the company in respect of the shares, but his liability shall cease if and when the company receives payment in full of all such moneys in respect of the shares.

(6) A statutory declaration that the declarant is a director or the secretary of the company, and that a share in the company has been duly forfeited on a date stated in the declarations, shall be prima facie evidence of the facts stated in it as against all persons claiming to be entitled to the shares.

(7) The company may receive the consideration, if any, given for the share on any sale or disposition of it and may execute a transfer of the share in favour of the person to whom the share is sold or disposed of, and he shall thereupon be registered as the holder of the share, and shall not be bound to see to the application of the purchase money, if any, nor shall his title to the share be affected by any irregularity or invalidity in the proceedings in reference to the forfeiture, sale or disposal of the share.

(8) The provisions of this section as to forfeiture shall apply in the case of non‐payment of any sum which, by the terms of issue of a share, becomes payable at a fixed time, whether on account of the nominal value of the share or by way of premium, as if the same had been payable by virtue of a call duly made and notified.

Classes of shares

141. Power to vary rights

(1) If at any time the share capital of a company is divided into different classes of shares under section 118 of this Act, the rights attached to any class (unless otherwise provided by the terms of issue of the shares of that class) may, whether or not the company is being wound up, be varied with the consent, in writing, of the holders of three‐quarters of the issued shares of that class, or with the sanction of a special resolution passed at a separate general meeting of the holders of the shares of the class.

(2) To every such separate general meeting as is mentioned in subsection (1) of this section, the provisions of this Act relating to general meetings shall apply, so however that the necessary quorum shall be two persons at least holding or representing by proxy one‐third of the issued shares of the class and that any holder of shares of the class present in person or by proxy may demand a poll.

(3) The rights conferred upon the holders of the shares of any class issued with preferred or other rights shall not, unless otherwise expressly provided by the terms of issue of the shares of that class, be deemed to be varied by the creation or issue of further shares ranking pari passu with them.

142. Application for cancellation of variation

(1) Where in pursuance of section 141 of this Act, the rights attached to any class of shares are at any time varied, the holder of not less in the aggregate than fifteen per cent of the issued shares of that class, being persons who did not consent to or vote in favour of the resolution for the variation, may apply to the court to have the variation cancelled, and, where any such application is made, the variation shall not have effect, unless and until it is confirmed by the court.

(2) An application to the court under this section shall, in a proper case, be made within 21 days after the date on which the consent was given or the resolution was passed, as the case may be, and may be made on behalf of the shareholders entitled to make the application or by such one or more of their number as they may appoint in writing for the purpose.

(3) If on any such application the court, after hearing the applicant and any other persons applying to it to be heard and appearing to be interested in the application, is satisfied that the variation would unfairly prejudice the shareholders of the class represented by the applicant, the court, having regard to all the circumstances of the case, may disallow the variation, and shall, if not satisfied, confirm the variation.

(4) The decision of the court on any such application shall be final.

(5) The company shall, within 15 days after the making of an order by the court on an application to it under this section, forward a copy of the order to the Commission and if default is made in complying with the provisions of this subsection, the company and every officer of the company who is in default shall be liable to a fine of N50 for every day during which the default continues.

(6) In this section, “variation” includes abrogation and cognate expressions shall be constructed accordingly.

143. Right of a preference share to more than one vote

(1) Notwithstanding the provisions of section 116 of this Act, the articles may provide that preference shares issued after the commencement of this Act shall carry the rights to attend general meetings and on a poll at the meetings, to more than one vote per share in the following circumstances, but not otherwise, that is to say‐

(a) upon any resolution during such period as the preferential dividend or any part of it remains in arrears and unpaid, such period starting from a date not more than 12 months or such lesser period as the articles may provide, after the due date of the dividend; or

(b) upon any resolution which varies the rights attached to such shares; or

(c) upon any resolution to remove an auditor of the company or to appoint another person in place of such auditor; or

(d) upon any resolution for the winding up of the company or during the winding up of the company.

(2) Notwithstanding the provisions of section 116 of this Act, any special resolution of a company increasing the number of shares of any class, may validly resolve that any existing class of preference shares shall carry the right to such votes additional to one vote per share as shall be necessary in order to preserve the existing ratio which the votes exercisable by the holders of such preference shares at a general meeting of the company bear to the total votes exercisable at the meeting.

(3) For the purposes of subsection (2) of this section, a dividend shall be deemed to be due on the date appointed in the articles for the payment of the dividend for any year or other period, or if no such date is appointed, upon the day immediately following the expiration of the year or other period, and whether or not such dividend shall have been earned or declared.

144. Construction of class rights

In construing the provisions of a company’s articles in respect of the rights attached to shares, the following rules of construction shall be observed‐

(a) unless the contrary intention appears, no dividend shall be payable on any shares unless the company shall resolve to declare such dividend;

(b) unless the contrary intention appears, a fixed preferential dividend payable on any class of shares is cumulative, that is to say, no dividend shall be payable on any shares ranking subsequent to them until all the arrears of the fixed dividend have been paid;

(c) unless the contrary intention appears, in a winding up arrears of any cumulative preferential dividend, whether earned or declared or not, are payable up to the date of actual payment in the winding up;

(d) if any class of shares is expressed to have a right to a preferential dividend, then, unless the contrary intention appears, such class has no further right to participate in dividends;

(e) if any class of shares is expressed to have preferential rights to payment out of the assets of the company in the event of winding up, then unless the contrary intention appears, such class has no further right to participate in the distribution of assets in the winding up;

(f) in determining the rights of the various classes to share in the distribution of the company’s property on a winding up, no regard shall be paid, unless the contrary intention appears, to whether or not such property represents accumulated profits or surplus which would have been available for dividend while the company remained a going concern;

(g) subject to this section, all shares rank equally in all respects unless the contrary intention appears in the company’s articles.

Numbering of shares

145. Shares to be numbered

Each share in a company having a share capital shall be distinguished by its appropriate number:

Provided that, if at any time all the issued shares in a company, or all of its issued shares of a particular class, are fully paid up and rank pari passu for all purposes, none of those shares need thereafter have a distinguishing number so long as it remains fully paid up and ranks pari passu for all purposes with all shares of the same class for the time being issued and fully paid up.

Share certificates

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.

(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.

147. Effect of share certificate

(1) A certificate, under the common seal of the company, specifying any shares held by any member, shall be prima facie evidence of the title of the member to the shares.

(2) If any person changes his position to his detriment in good faith on the continued accuracy of the statements made in a certificate, the company shall be estopped from denying the continued accuracy of such statements and shall compensate the person for any loss suffered by him in reliance on them and which he would not have suffered had the statements been or continued to be accurate.

(3) Nothing contained in subsection (2) of this section shall derogate from any right the company may have to be indemnified by any other person.

148. Probate, etc., as evidence of grant

The production to a company of any document which is by law sufficient evidence of probate of the will, or letters of administration of the estate, or confirmation as executor, of a deceased person having been granted to some

person, shall be accepted by the company as sufficient evidence of the grant, notwithstanding anything in its articles to the contrary.

149. Abolition of share warrants

(1) As from the date of commencement of this Act, no company shall have the power to issue warrants.

(2) Every company shall within a period of 30 days from the date of commencement of this Act, cancel any share warrants previously issued by it which are still valid on that date and enter in its register of members the names and relevant particulars of the bearers of the share warrants.

(3) A person whose name is entered in a company’s register of members by virtue of subsection (2) of this section, shall be deemed to be a member of the company with effect from the date on which the share warrant thereby cancelled, was issued.

Conversion of shares into stock

150. Conversion of shares into stock

(1) The provisions of this section shall apply with respect to the conversion of all or any of the shares of a company into stock and the re‐conversion of such stock into shares under the provisions of section 100 of this Act.

(2) The conversion of any paid‐up shares into stock and the re‐conversion of any stock into paid‐up shares shall be by ordinary resolution of the company at a general meeting.

(3) The holders of stock may transfer the same, or any part of it, in the same manner and subject to the same conditions, as and subject to which the shares from which the stock arose might, previous to the conversion, have been transferred, or as near to it as circumstances admit; and the directors may, from time to time, fix the minimum amount of stock transferable, so however that such minimum shall not exceed the nominal amount of the shares from which the stock arose.

(4) The holders of stock shall, according to the amount of stock held by them, have the same rights, privileges and advantages as regards dividends, voting at meetings of the company and other matters as if they held the shares from which the stock arose, but no such privilege or advantage (except participation in the dividends and profit of the company and in the assets on winding up) shall be conferred by an amount of stock which would not, if existing in shares, have conferred that privilege or advantage.

(5) Such of the articles of the company as are applicable to paid‐up shares shall apply to stock, and the words
“shares” and “shareholder” in those articles shall include “stock” and “stockholder” .

Transfer and transmission

151. Transfer of shares

(1) The transfer of a company’s shares shall be by instrument of transfer and except as expressly provided in the articles, transfer of shares shall be without restrictions.

(2) Notwithstanding anything in the articles of a company, it shall not be lawful for the company to register a transfer of shares in the company, unless a proper instrument of transfer has been delivered to the company:

Provided that nothing in this section shall prejudice any power of the company to register as shareholder, any person to whom the right to any shares in the company has been transmitted by operation of law.

(3) The instrument of transfer of any share shall be executed by or on behalf of the transferor and transferee, and the transferor shall be deemed to remain a holder of the share until the name of the transferee is entered in the register of members in respect of the share.

(4) Subject to such of the restrictions of a company’s articles as may be applicable, any member may transfer all or any of his shares by instrument in writing in any usual or common form or any other form which the directors may approve.

152. Entry in register of transfers

(1) On the application of the transferor of any share or interest in a company, the company shall enter in its register of members, the name of the transferee in the same conditions as if the application for the entry were made by the transferee.

(2) Until the name of the transferee is entered in the register of members in respect of the transferred shares, the transferor shall, so far as concerns the company, be deemed to remain the holder of the shares.

(3) The company may refuse to register the transfer of a share (not being a fully paid share) to a person of whom they do not approve, and may also refuse to register the transfer of a share on which the company has a lien.

(4) The company may refuse to recognise any instrument of transfer unless‐

(a) a fee as the company may, from time to time, determine is paid to the company in respect of the instrument; and

(b) the instrument of transfer is accompanied by the certificate of the shares to which it relates and such other evidence as the directors may reasonably require to show the right of the transferor to make the transfer; and

(c) the instrument of transfer is in respect of only one class of shares.

153. Notice of refusal to register

(1) If a company refuses to register a transfer of any shares it shall, within two months after the date on which the transfer was lodged with it, send notice of the refusal to the transferee.

(2) If default is made in complying with this section, the company and every officer of the company who is in default shall be liable to a fine of N200.

154. Transfer by personal representative

A transfer of the share or other interest of a deceased member of a company made by his personal representative shall, although the personal representative is not himself a member of the company, be as valid as if he had been such a member at the time of the execution of the instrument of transfer.

155. Transmission of shares

(1) In case of the death of a member, the survivor or survivors where the deceased was a joint holder, or the legal personal representative of the deceased where he was a sole holder, shall be the only persons recognised by the

company as having any title to his interest in the shares; but nothing in this section shall release the estate of a deceased joint holder from any liability in respect of any share which had been jointly held by him with other persons.

(2) Any person becoming entitled to a share in consequence of the death or bankruptcy of a member may, upon such evidence being produced as may, from time to time, properly be required by the directors and subject as hereafter provided in this section, elect either to be registered himself as holder of the share, or to have some person nominated by him registered as the transferee of the share; but the company shall, in either case, have the same right to decline or suspend registration as they would have had in the case of a transfer of the share by that member before his death or bankruptcy, as the case may be.

(3) If the person so becoming entitled elects to be registered himself, he shall deliver or send to the company a notice in writing signed by him stating that he so elects and if he elects to have another person registered, he shall testify his election by executing to that person a transfer of the share.

(4) All the limitations, restrictions and provisions of this Act and the company’s articles relating to the rights to transfer and the registration of transfers of share, shall be applicable to any such notice or transfer as mentioned in subsection (3) of this section as if the death or bankruptcy of the member had not occurred and the notice or transfer were a transfer signed by that member.

(5) A person becoming entitled to a share by reason of the death or bankruptcy of the holder, shall be entitled to the same dividends and other advantages to which he would be entitled if he were the registered holder of the share, except that he shall not, unless the articles otherwise provide, before being registered as a member in respect of the share, be entitled in respect of it to exercise any right conferred by membership in relation to meetings of the company:

Provided that the directors may at any time give notice requiring any such person to elect either to be registered himself or to transfer the share, and if the notice is not complied with within 90 days the directors may thereafter withhold payment of all dividends, bonuses or other moneys payable in respect of the share until the requirements of the notice have been complied with.

156. Protection of beneficiaries

(1) Any person claiming to be interested in any shares or the dividends or interest on them, may protect his interest by serving on the company concerned a notice and affidavit of interest.

(2) Notwithstanding the provisions of section 86 of this Act, the company shall enter on the register of members, the fact that such notice has been served and shall not register any transfer or make any payment or return in respect of the shares contrary to the terms of the notice until the expiration of 42 days’ notice to the claimant of the proposed transfer or payment.

(3) In the event of any default by the company in complying with this section, the company shall compensate any person injured by the default.

157. Certification of transfers

(1) When the holder of any shares of a company wishes to transfer to any person only a part of the shares represented by one or more certificates, the instrument of transfer together with the relevant certificates shall be delivered to the company with a request that the instrument of transfer be recognised and registered.

(2) A company to which a request is made under subsection (1) of this section, may recognise the instrument of transfer by endorsing on it the words “certificate lodged” or words to the like effect.

(3) The recognition by a company of any instrument of transfer of shares in the company shall be taken as a representation by the company to any person acting on the faith of the recognition that there have been produced to the company such documents as on the face of them show a prime facie title to the shares in the transferor named in the instrument of transfer, but not as a representation that the transferor has any title to the shares.

(4) Where any person acts on the faith of a false recognition by a company made negligently, the company shall be under the same liability to that person as if the recognition has been made fraudulently.

(5) For the purposes of this section‐

(a) an instrument of transfer shall be deemed to be recognised if it bears the words “certificate lodged” or words to the like effect;

(b) the recognition of an instrument of transfer shall deemed to be made by a company if‐

(i) the person issuing the instrument is a person authorised to issue certificated instruments of transfers on the company’s behalf; and

(ii) the recognition is signed by a person authorised to recognise transfers of shares on the company’s behalf or by any officer or servant either of the company or of a body corporate so authorised;

(c) a recognition shall be deemed to be signed by any person if‐

(i) it purports to be authenticated by his signature or initials (whether handwritten or not); and

(ii) it is not shown that the signature or initials was or were placed there by any person other than him or a person authorised to use the signature or initials for the purpose of transfers on the company’s behalf.

Transactions by company in respect of its own shares

158. Redemption of redeemable preference shares

(1) The provisions of this section shall apply with respect to the redemption by a company of any redeemable preference shares issued by it under section 122 of this Act.

(2) The shares shall not be redeemed unless they are fully paid, and redemption shall be made only out of‐

(a) profits of the company which would otherwise be available for dividend; or

(b) the proceeds of a fresh issue of shares made for the purposes of the redemption.

(3) Before the shares are redeemed, the premium, if any, payable on redemption, shall be provided for out of the profits of the company or out of the company’s share premium account.

(4) Where shares are redeemed otherwise than out of the proceeds of a fresh issue, there shall, out of profits which would otherwise have been available for dividend, be transferred to a reserve fund, to be called “the capital redemption reserve fund”, a sum equal to the nominal amount of the shares redeemed, and the provisions of this

Act relating to the reduction of the share capital of a company shall, except as provided in this section, apply as if the capital redemption reserve fund were paid‐up share capital of the company.

(5) Subject to the provisions of this section, the redemption of preference shares thereunder may be effected on such terms and in such manner as are provided by the articles of the company.

(6) The redemption of preference shares under this section by a company shall not be taken as reducing the amount of the company’s authorised share capital.

(7) Where, in pursuance of this section, a company has redeemed or is about to redeem any preference shares, it shall have power to issue shares up to the nominal amount of the shares redeemed or to be redeemed as if those shares had never been issued, and accordingly, the share capital of the company shall not, for the purposes of any enactments relating to stamp duty, be deemed to be increased by the issue of shares in pursuance of this subsection:

Provided that, where new shares are issued before the redemption of the old shares, the new shares shall not, so far as relates to stamp duty, be deemed to have been issued in pursuance of this subsection, unless the old shares are redeemed within one month after the issue of the new shares.

(8) The capital redemption reserve fund may, notwithstanding anything in this section, be applied by the company in paying up unissued shares of the company to be issued to members of the company as fully paid bonus shares.

159. Prohibition of financial assistance by company for acquisition of its shares

(1) In this section, financial assistance includes a gift, guarantee, security or indemnity, loan, any form of credit and any financial assistance given by a company, the net assets of which are thereby reduced to a material extent or which has no net assets.

(2) Subject to the provisions of this section‐

(a) where a person is acquiring or is proposing to acquire shares in a company, it shall not be lawful for the company or any of its subsidiaries to give financial assistance directly or indirectly for the purpose of that acquisition before or at the same time as the acquisition takes place; and

(b) where a person has acquired shares in a company and any liability has been incurred (by that or any other person), for the purpose of this acquisition, it shall not be lawful for the company or any of its subsidiaries to give financial assistance directly or indirectly for the purpose of reducing or discharging the liability so incurred.

(3) Nothing in subsection (1) of this section shall be taken to prohibit‐

(a) the lending of money by the company in the ordinary course of its business, where the lending of money is part of the ordinary business of a company;

(b) the provision by a company, in accordance with any scheme for the time being in force, of money for the purchase of, or subscription for, fully‐paid shares in the company or its holding company, being a purchase or subscription by trustees of or for shares to be held by or for the benefit of employees of the company, including any director holding a salaried employment or office in the company;

(c) the making by a company of loans to persons, other than directors, bona fide in the employment of the company with a view to enabling those persons to purchase or subscribe for fully‐paid shares in the company or its holding company, to be held themselves by way of beneficial ownership;

(d) any act or transaction otherwise authorised by law.

(4) If a company acts in contravention of this section, the company and every officer of the company who is in default shall be liable to a fine not exceeding N500.

160. Acquisition by a company of its own shares

(1) Subject to the provisions of subsection (2) of this section and its articles, a company may not purchase or otherwise acquire shares issued by it.

(2) A company may acquire its own shares for the purpose of‐

(a) settling or compromising a debt or claim asserted by or against the company; or

(b) eliminating fractional shares; or

(c) fulfilling the terms of a non‐assignable agreement under which the company has an option or is obliged to purchase shares owned by an officer or an employee of the company; or

(d) satisfying the claim of a dissenting shareholder; or

(e) complying with a court order.

(3) A company may accept from any shareholder, a share in the company surrendered to it as a gift, but may not extinguish or reduce a liability in respect of an amount unpaid on any such share, except in accordance with section 106 of this Act.

161. Conditions for purchase by a company of its own shares

Notwithstanding any provision in the articles, a company shall not purchase any of its own shares except on compliance with the following conditions, that is‐

(a) shares shall only be purchased out of profits of the company which would otherwise be available for dividend or the proceeds of a fresh issue of shares made for the purpose of the purchase;

(b) redeemable shares shall not be purchased at a price greater than the lowest price at which they are redeemable or shall be redeemable at the next date thereafter at which they are due or liable to be redeemed;

(c) no purchase shall be made in breach of section 162 of this Act.

162. Limit on number of shares acquired

No transaction shall be entered into by or on behalf of a company whereby the total number of its shares, or of its shares of anyone class, held by persons other than the company or its nominees becomes less than 85 per cent of the total number of shares, or of shares of that class, which have been issued:

Provided that‐

(a) redeemable shares shall be disregarded for the purposes of this section; and

(b) where, after shares of any class have been issued, the number of such shares has been reduced, this section shall apply as if the number originally issued (including shares of that class cancelled before the reduction took effect) has been the number as so reduced.

163. Enforceability of contract to acquire shares

(1) A contract with a company providing for the acquisition by the company of shares in the company is specifically enforceable against the company, except to the extent that the company cannot perform the contract without thereby being a breach of the provisions of section 160 of this Act.

(2) In any action brought on a contract referred to in subsection (1) of this section, the company shall have the burden of proving that performance of the contract is prevented by the provisions of section 160 of this Act.

164. Re‐issue of shares acquired

Where shares in a company are redeemed, purchased, acquired or forfeited, such shares shall, unless the company by alteration of its articles of association cancels the shares, be available for re‐issue by the company.

165. Acquisition of shares of holding company

(1) A company which is a subsidiary may acquire shares in its holding company where the subsidiary company is concerned as personal representative or trustee, unless the holding company or any subsidiary of it is beneficially interested otherwise than by way of security for the purposes of a transaction entered into by it in the ordinary course of a business which includes the lending of money.

(2) A subsidiary which is, at the commencement of this Act, a holder of shares of its holding company or a subsidiary which acquired shares in its holding company before it became a subsidiary of that holding company, may continue to hold such shares but, subject to subsection (1) of this section, shall have no right to vote at meetings of the holding company or any class of shareholders of the holding company and shall not acquire any future shares in it except on a capitalisation issue.

PART VII

Debentures

Creation of debenture and debenture stock

166. Power to borrow money, to charge property and to issue debentures

A company may borrow money for the purpose of its business or objects and may mortgage or charge its undertaking, property and uncalled capital, or any part thereof, and issue debentures, debenture stock and other securities whether outright or as security for any debt, liability or obligation of the company or of any third party.

167. Documents of title to debentures or certificate of debenture stock

(1) Every company shall, within 60 days after the allotment of any of its debentures or after the registration of the transfer of any debentures, deliver to the registered holder thereof, the debenture or a certificate of the debenture stock under the common seal of the company.

(2) If a debenture or debenture stock certificate is defaced, lost or destroyed, the company, at the request of the registered holder of the debenture, shall issue a certified copy of the debenture or renew the debenture stock certificate on payment of a fee not exceeding N5 and on such terms as to evidence and indemnity and the payment of the company’s out‐of‐pocket expenses of investigating evidence, as the company may reasonably require.

(3) If default is made in complying with this section, the company and any officer of the company who is in default, shall be liable to a fine not exceeding N25; and on application by any person entitled to have the debentures or debenture stock certificate delivered to him, the court may order the company to deliver the debenture or debenture stock certificate and may require the company and any such officer to bear all the costs of and incidental to the application.

168. Statements to be included in debentures

Every debenture shall include a statement on the following matters, that is‐

(a) the principal amount borrowed;

(b) the maximum discount which may be allowed on the issue or re‐issue of the debentures, and the maximum premium at which the debentures may be made redeemable;

(c) the rate of and the dates on which interest on the debentures issued shall be paid and the manner in which payment shall be made;

(d) the date on which the principal amount shall be repaid or the manner in which redemption shall be effected, whether by the payment of instalments of principal or otherwise;

(e) in the case of convertible debentures, the date and terms on which the debentures may be converted into shares and the amounts which may be credited as paid up on those shares, and the dates and terms on which the holders may exercise any right to subscribe for shares in respect of the debentures held by them;

(f) the charges securing the debenture and the conditions subject to which the debenture shall take effect.

169. Effect of statements in debentures

(1) Statements made in debenture or debenture stock certificates shall be prima facie evidence of the title to the debentures of the person named therein as the registered holder and of the amounts secured thereby.

(2) If any person shall change his position to his detriment in reliance in good faith on the continued accuracy of any statements made in the debenture or debenture stock certificate, the company shall be estopped in favour of such person from denying the continued accuracy of such statements and shall compensate such person for any loss suffered by him in reliance thereon and which he would not have suffered had the statement been or continued to be accurate:

Provided that nothing in this subsection shall derogate from any right the company may have to be indemnified by any other person.

170. Enforcement of contracts relating to debentures

A contract with a company to take up and pay for any debentures of the company may be enforced by an order for specific performance.

Types of debentures

171. Perpetual debentures

A company may issue perpetual debentures, and a condition contained in any debentures, or in any deed for securing any debentures, shall not be invalid by reason only that the debentures are made irredeemable or redeemable only on the happening of a contingency, however remote, or on the expiration of a period, however long, any rule of equity to the contrary notwithstanding.

172. Convertible debentures

Debentures may be issued upon the terms that in lieu of redemption or repayment, they may, at the option of the holder or the company, be converted into shares in the company upon such terms as may be stated in the debentures.

173. Secured or naked debentures

(1) Debentures may either be secured by a charge over the company’s property or may be unsecured by any charge.

(2) Debentures may be secured by a fixed charge on certain of the company’s property or a floating charge over the whole or a specified part of the company’s undertaking and assets, or by both a fixed charge on certain property and a floating charge.

(3) A charge securing debentures shall become enforceable on the occurrence of the events specified in the debentures or the deed securing the same.

(4) Where any legal proceedings are brought by a debenture holder to enforce the security of a series of debentures of which he holds part, the debenture holder shall sue in a representative capacity on behalf of himself and all other debenture holders of that series.

174. Redeemable debentures

A company limited by shares may issue debentures which are, or at the option of the company are to be liable, to be redeemed.

175. Power to re‐issue redeemed debentures in certain cases

(1) Where either before or after the commencement of this Act, a company has redeemed any debentures previously issued, then unless‐

(a) any provision, express or implied, to the contrary is contained in the articles or in any contract entered into by the company; or

(b) the company has, by passing a resolution to that effect or by some other act, manifested its intention that the debentures shall be cancelled, the company shall have, and shall be deemed always to have had, power to re‐issue the debentures, either by re‐issuing the same debentures or by issuing other debentures in their place.

(2) On a re‐issue of redeemed debentures, the person entitled to the debentures, shall have, and shall be deemed always to have had, the same priorities as if the debentures had never been redeemed.

(3) Where a company has, either before or after the commencement of this Act, deposited any of its debentures to secure advances, from time to time, on current account or otherwise, the debenture shall not be deemed to have been redeemed by reason only of the account of the company having ceased to be in debit, whilst the debentures remained so deposited.

(4) The re‐issue of a debenture or the issue of another debenture in its place under the power given by this section to or deemed to have been possessed by a company, whether the re‐issue or issue was made before or after the commencement of this Act, shall be treated as the issue of a new debenture for the purposes of a stamp duty, but it shall not be so treated for the purposes of any provision limiting the amount or number of debentures to be issued:

Provided that any person lending money on the security of a debenture re‐issued under this section which appears to be duly stamped, may give the debenture in evidence in any proceedings for enforcing his security without payment of the stamp duty or any penalty in respect thereof, unless he had notice or, but for his negligence, might have discovered, that the debenture was not duly stamped, but in any such case the company shall be liable to pay the proper stamp duty and penalty.

(5) Nothing in this section shall prejudice any power to issue debentures in place of any debentures paid off or otherwise satisfied or extinguished which, by its debentures or the securities for the same, is reserved to a company.

176. Rights of debenture holders

(1) The trustee of a debenture trust deed shall hold all contracts, stipulations and undertakings given to him and all mortgages, charges and securities vested in him in connection with the debentures covered by the deed, or some of those debentures, exclusively for the benefit of the debenture holders concerned (except in so far as the deed otherwise provides) and the trustee shall exercise due diligence in respect of the enforcement of those contracts, stipulations, undertakings, mortgages, charges and securities and the fulfillment of his functions generally.

(2) A debenture holder may sue‐

(a) the company which issued the debentures he holds for payment of any amount payable to him in respect of the debentures; or

(b) the trustee of the debenture trust deed covering the debentures he holds for compensation for any breach of the duties which the trustee owes him, and in any such action, it shall not be necessary for any other debenture holders of the same class, or if the action is brought against the company, the trustee of the covering trust deed, to be joined as a party.

(3) This section shall apply notwithstanding anything contained in a debenture or trust deed or other instrument, but a provision in a debenture or trust deed shall be valid and binding on all the debenture holders of the class concerned in so far as it enables a meeting of the debenture holders by a resolution supported by the votes of the holders of at least three quarters in value of the debentures of that class in respect of which votes are cast on the resolution to‐

(a) release any trustee from liability for any breach of his duties to the debenture holders which he has already committed, or generally from liability for all such breaches (without necessarily specifying them) upon his ceasing to be trustee;

(b) consent to the alteration or abrogation of any of the rights, powers or remedies of the debenture holders and the trustee of the debenture trust deed covering their debentures (except the powers and remedies under section 209 of this Act); or

(c) consent to the substitution for the debentures of a different class issued by the company or any other company or corporation, or the cancellation of the debentures in consideration of the issue to the debenture holders of shares credited as fully paid in the company or any other company.

177. Meetings of debenture holders

(1) The terms of any debentures or trust deed may provide for the convening of general meetings of the debenture holders and for the passing, at such meetings, of a resolution binding on all the holders of the debentures of the same class.

(2) Whether or not the debentures or trust deed contain such provisions as are referred to in subsection (1) of this section, the Commission may at any time direct a meeting of the debenture holders of any class to be held and conducted in such manner as the Commission thinks fit to consider ancillary or consequential direction as it shall think fit.

(3) Notwithstanding anything contained in a debenture trust deed, or in any debenture or contract or instrument, the trustee of a debenture deed shall, on the requisition of persons holding, at the date of the deposit of the acquisition debentures covered by the trust deed which carry not less than one tenth of the total voting rights attached to all the issued and outstanding debentures of that class, forthwith, proceed duly to convene a meeting of that class of debenture holders.

Fixed and floating charges

178. Meaning of “floating” and “fixed” charges

(1) A “floating charge” means an equitable charge over the whole or a specified part of the company’s undertakings and assets, including cash and uncalled capital of the company both present and future, but so that the charge shall not preclude the company from dealing with such assets until‐

(a) the security becomes enforceable and the holder thereof, pursuant to a power in that behalf in the debenture or the deed securing the same, appoints a receiver or manager or enters into possession of such assets; or

(b) the court appoints a receiver or manager of such assets on the application of the holder; or

(c) the company goes into liquidation.

(2) On the happening of any of the events mentioned in subsection (1) of this section, the charge shall be deemed to crystallise and to become a fixed equitable charge on such of the company’s assets as are subject to the charge, and if a receiver or manager is withdrawn with the consent of the chargee, or the chargee withdraws from possession before the charge has been fully discharged, the charge shall thereupon be deemed to cease to be a fixed charge and again to become a floating charge.

179. Priority of fixed over floating charge

A fixed charge on any property shall have priority over a floating charge affecting that property, unless the terms on which the floating charge was granted prohibited the company from granting any later charge having priority over the floating charge and the person in whose favour such later charge was granted had actual notice of that prohibition at the time when the charge was granted to him.

180. Powers of the court

(1) Whenever a fixed or floating charge has become enforceable, the court shall have power to appoint a receiver and in the case of a floating charge, a receiver and manager of the assets subject to the charge.

(2) In the case of a floating charge, the court may, notwithstanding that the charge has not become enforceable, appoint a receiver or manager if satisfied that the security of the debenture holder is in jeopardy; and the security of the debenture holder shall be deemed to be in jeopardy if the court is satisfied that events have occurred or are about to occur which render it unreasonable in the interests of the debenture holder that the company should retain power to dispose of its assets.

(3) A receiver or manager shall not be appointed as a means of enforcing debentures not secured by any charge.

181. Advertisement of appointment of receiver and manager

Where a receiver or a receiver and manager is appointed by the court, advertisement to this effect shall be made by the receiver or the receiver and manager in the Gazette and in two daily newspapers.

182. Preferential payment to debenture holders in certain cases

(1) Where a receiver is appointed on behalf of the holders of any debentures of a registered company secured by a floating charge, or possession is taken by, or on behalf of those debenture holders of any property comprising or subject to the charge, then if the company is not at the time in course of being wound up, the debts which in every winding up are under the provisions relating to preferential payments in Part XV of this Act to be paid in priority to all other debts, shall be paid out of any assets coming to the hands of the receiver or other person taking possession as aforesaid in priority to any claim for principal or interest in respect of the debentures.

(2) In the application of the provisions relating to preferential payments‐

(a) section 494 of this Act shall be construed as if the provision for payment of accrued holiday remuneration becoming payable on the termination of employment before or by the effect of the winding‐up order or resolution, were a provision for payment of such remuneration becoming payable on the termination of employment before or by the effect of appointment of the receiver or possession being taken as aforesaid; and

(b) the periods of time mentioned therein shall be reckoned from the date of the appointment of the receiver or of possession being taken as aforesaid, as the case may be, and if such date occurred before the commencement of this Act, the provisions relating to preferential payments which would have applied but for this Act, shall be deemed to remain in full force.

(3) Any payments made under this section, shall be recouped as far as may be out of the assets of the company available for payment of general creditors.

Debenture trust deed