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Part IX

Directors and Secretaries of the company

 

Chapter 1

Directors

 

Meaning of Directors

 

 

244.    (1)         Directors of a company registered under this Decree are persons duly appointed by the company or direct and manage the business of the company.

 

  (2)          In favour of any person dealing with the company there shall be a rebuttable presumption that all persons who are described by the company as directors, whether as executive or otherwise, have been duly appointed.

 

  (3)          Where a person not duly appointed acts or holds himself out as a director, he shall be guilty of an offence, and on conviction shall be liable to imprisonment for 2 years or to a fine of N100 for each day he so acts or holds out himself as a director, or to both such imprisonment or fine and shall be restrained by the company.

 

  (4)          If it is the company that holds him out as a director, it shall be liable to a fine of N1,000 each day it holds him out, and he and the company may be restrained by any member from so acting unless or until he is duly appointed.

 

245.   (1)         Without prejudice to the provisions of sections 244 and 250, and for the purposes of sections 253, 275 and 281 of this Decree, "director" shall include any person on whose instructions and directions the directors are accustomed to act.

 

  (2)          Subject to sections 275, 280 and 281 of this Decree, nothing contained in section 250 of this Decree shall be deemed to derogate from the duties or liabilities of the duly appointed directors.

 

  (3)          For the avoidance of doubt, the fact that a person in his professional capacity gives advice and a director acts on it shall not be constructed to make such a person under this Decree person in accordance with whose directions or instructions the director of a company is accustomed to act.

 

 

Appointment of Directors

 

 

246.    (1)         Every company registered on or after the commencement of this Decree shall have at least two directors and every company registered before that date shall before the expiration of 6 months from the commencement of this Decree have at least tow directors. (2) Any company whose number of directors falls below two, shall within one months of its so falling appoint new directors and shall not carry on business after the expiration of one month, unless such new directors are appointed.

 

  (3)          A director or member of a company who knows that a company carries on business after the number of directors has fallen below two for more than 60 days shall be liable for all liabilities and debts incurred by the company during that period when the company so carried on business.

 

247.          Subject to section 246 of this Decree, the number of directors and the names of the first directors shall be determined in writing by the subscribers of the memorandum of association or a majority of them or the directors may be named in the articles.

 

248.    (1)         The members at the annual general meeting shall have power to re-elect or reject directors and appoint new ones.

 

  (2)          In the event of all the directors and shareholders dying, any of the personal representatives shall be able to apply to the Court for an order to convene a meeting of all the personal representatives of the shareholders entitled to attend and vote at a general meeting to appoint new directors to manage the company, and if they fail to convene a meeting, the creditors, if any shall be able to do so.

 

249.    (1)         The board of directors shall have power to appoint new directors to fill any casual vacancy arising out of death, resignation, retirement or removal.

 

  (2)          Where a casual vacancy is filled by the directors, the person may be approved by the general meeting at the next annual general meeting, and if not so approved, he shall forthwith cease to be a director.

 

  (3)          The directors may increase the number of directors so long as it does not exceed the maximum allowed by the articles, but the general meeting shall have power to increase or reduce the number of directors generally and may determine in what rotation the directors shall retire:

 

Provided that such reduction shall not invalidate any prior act of the removed director.

 

250.         Where a person not duly appointed as a director acts as such on behalf of the company, his act shall not bind the company and he shall be personally liable for such action:

 

Provided that where it is the company which holds him out as director, the company shall be bound by his acts.

 

251.    (1)         The shareholding qualification for directors may be fixed by the articles of association of the company and unless and until so fixed no shareholding qualification shall be required.

 

  (2)          It shall be the duty of every director who is by the articles of the company required to hold a specified share qualification, and who is not already so qualified to obtain qualification within 2 months after his appointment.

 

  (3)          The office of director of a company shall be vacated if the director does not within 2 months from the date of his appointment, obtain his qualification or after the expiration of the said period, he ceases at any time to hold his shareholding qualification.

 

  (4)          A person vacating office under this section shall be incapable of being re-appointed director of the company until he has obtained his shareholding qualification.

 

  (5)          If after the expiration of the said period, any unqualified person acts as a director of the company, he shall be liable to a fine of N50 for every day between the expiration of the said period or the day on which he ceased to be qualified, as the case may be, and the last day on which it is proved that he acted as a director.

 

252.  (1)          Any person who is appointed or to his knowledge proposed to be appointed director of a public company and who is 70 or more years old shall disclose this fact to the members at the general meeting.

 

  (2)          Any person who fails to disclose his age as required under this section shall be guilty of an offence and liable to a fine of N500.

 

253.   (1)         If any person, being an insolvent person acts as director of or directly or indirectly takes part in or is concerned in the management of any company, he shall be guilty of an offence and liable on conviction to a fine of N500, or to imprisonment for a term not less than 6 months or more than two years, or both.

 

  (2)          In this section, "company" includes an unregistered company.

 

254.   (1)         Where-

 

(a)             a person is convicted by a High Court of any offence in connection with the promotion, formation or management of a company; or

 

(b)             in the course of winding up a company it appears that a person-

 

(i)             has been guilty of any offence for which he is liable (whether he has been convicted or not) under section 513 of this Decree; or

 

(ii)             has otherwise been guilty, while an officer of the company, of any fraud in relation to the company or of any breach of his duty to the company;

the Court shall make an order that that person shall not be a director of or in any way, whether directly or indirectly, be concerned or take part in the management of a company for a specified period not exceeding 10 years.

 

  (2)          In the foregoing subsection, the High Court had the court where used in relation to the making of an order against any person by virtue of paragraph (a) of subsection (1) of this section, include the court before which he is convicted, as well as any court having jurisdiction to wind up the company, and in relation to the granting of leave means any court having jurisdiction to wind up the company as respects which leave is sought.

 

  (3)          A person intending to apply for the making of an order under this section by the Court having jurisdiction to wind up a company shall give not less than 10 days notice of his intention to the person against whom the order is sought, and on the hearing of the application, the last mentioned person may appear and himself give evidence or all witnesses.

 

  (4)          An application for the making of an order under this section by the court having jurisdiction to wind up a company may be made by the official receiver, or by the liquidator of the company or by any person who is or has been a member or creditor of the company; and on the hearing of any application for an order under this section by the official receiver or the liquidator, or of any application for leave under this section by a person against whom an order has been made on the application of the official receiver or liquidator, the official receiver or liquidator shall appear and call the attention of the court to any matters which seemed to him to be relevant, and may himself give evidence or call witnesses.

 

  (5)          An order may be made by virtue of paragraph (b) (ii) of subsection (1) of this section, notwithstanding that the person concerned may be criminally liable in respect of the matters on the ground of which the order is to be made and for the purposes of the said paragraph (b) (ii) "officer" includes any person in accordance with whose directions or instructions the directors of the company have been accustomed to act.

 

  (6)          If any person acts in contravention of an order made under this section, he shall be guilty of an offence and in respect of each offence, be liable on conviction to a fine of N500 or to imprisonment for a term of not less than 6 months or more than two years, or both.

 

255.         A person may be appointed a director for life provided that he shall be removable under section 262 of this Decree.

 

256.         Subject to the provisions of this Decree, a person may be appointed a director of a public company notwithstanding that he is 70 years or more of age but special notice shall be required of any resolution appointing or approving the appointment of such a director for the purposes of this section, and the notice given to the company and by the company to its members shall state the age of the person to whom it relates.

 

257.  (1)         The following persons shall be disqualified from being director-

 

(a)             an infant, that is, a person under the age of 18 years;

 

(b)             a lunatic or person of unsound mind;

 

(c)             a person disqualified under sections 253 and 258 of this Decree;

 

(d)             a corporation other than its representative appointed t the board for a given term.

 

258.    (1)         The office of director shall be vacated if the director-

 

(a)             ceases to be a director by virtue of section 251 of this Decree; or

 

(b)             becomes bankrupt or makes any arrangement or composition with his creditors generally; or

 

(c)             becomes prohibited from being a director by reason of any order made under section 254 of this Decree; or

 

(d)             becomes of unsound mind; or

 

(e)             resigns his office by notice in writing to the company.

 

  (2)          Where a director presents himself for a re-election, a record of his attendance at the meetings of the board during the preceding one year shall be made available to members at the general meeting where he is to be re-elected.

 

259.   (1)         Unless the articles otherwise provided, at the first annual general meeting of the company, all the directors shall retire from office, and at the annual general meeting in every subsequent year one-third of the directors for the time being, or if their number is not three or a multiple of three, then the number nearest one-third shall retire from office.

 

  (2)          The directors to retire in every year shall be those who have been longest in office since their last election, but as between persons who became directors on the same day those to retire shall (unless they otherwise agree among themselves) be determined by lot.

 

  (3)          The company at the meeting at which a director retires in the manner mentioned in subsections (1) (2) of this section, may fill the vacated office by electing a person to that office and in default the retiring director shall, if offering for re-election, be deemed to have been re-elected, unless at such meeting it is expressly resolved not to fill such vacated office or unless a resolution for the re-election of such director shall have been put to the meeting and lost.

 

  (4)         No person other than a director retiring at the meeting shall unless recommended by the directors, be eligible for election to the office of director at any general meeting unless not less than 3 nor more than 21 days before the date appointed for the meeting there shall have been left at the registered office or head office of the company notice in writing, signed by a member duly qualified to attend and vote at the meeting for which such notice is given, of his intention to propose such person for election, and also notice in writing signed by that person of his willingness to be elected.

 

260.         The acts of a director, manager, or secretary shall be valid notwithstanding any defect that may afterwards be discovered in his appointment or qualification.

 

261.   (1)         At a general meeting of a company other than a private company, a motion for the appointment of two or more persons as directors of the company by a single resolution shall not be made, unless resolution that it shall be so made has first been agreed to by the meeting without any vote being given against it.

 

  (2)          A resolution moved in contravention of this section shall be void, whether or not its being so moved was objected to at the time:

 

Provided that-

 

(a)             this subsection shall not be taken as excluding the operation of section 260 of this Decree; and

 

(b)             where a resolution so moved is passed, no provision for automatic re-appointment of retiring directors in default of another appointment shall apply.

 

  (3)          For the purposes of this section, a motion for approving a person's appointment or for nominating a person for appointment shall be treated as motion for his appointment.

 

  (4)          Nothing in this section shall apply to a resolution altering the company's articles.

 

 

Removal of Directors

 

 

262.   (1)         A company may be ordinary resolution remove a director before the expiration of his period of office, notwithstanding anything in its articles or in any agreement between it and him.

 

  (2)          A special notice shall be required of any resolution or remove a director under this section, or to appoint some other person instead of a director so removed, at the meeting at which he is removed, and on receipt of notice of an intended resolution to remove a director under this section, the company shall forthwith send a copy of it to the director concerned, and the director (whether or not he is a member of the company) shall be entitled to be heard on the resolution at the meeting.

 

  (3)          Where notice is given of an intended resolution or remove a director under this section and the director concerned makes with respect to it representations in writing to the company (not exceeding a reasonable length) and requests their notification to members of the company, the company shall, unless the representations are received by it too late for it to do so-

 

(a)             in any notice of the resolution given to members of the company state the fact of the representations having been made; and

 

(b)             send a copy of the representations to every member of the company to whom notice of the meeting is sent (whether before or after receipt of the representations by the company);

 

and if a copy of the representations is not sent as required in this section because it is received too late or because of the company's default, the director may (without prejudice to his right to be heard orally) require that the representations shall be read out at the meeting:

 

Provided that copies of the representations need not be sent out and the representations need not be read out at the meeting if, on the application either of the company or any other person who claims to be aggrieved, the court is satisfied that the rights conferred by this section are being abused to secure needless publicity for defamatory matter and the court may order the company's costs on an application under this section to be paid in whole or in part by the director, notwithstanding that he is not a party to the application.

 

  (4)          A vacancy created by the removal of a director under this section, if not filled at the meeting at which he is removed, may be filled as a casual vacancy.

 

  (5)          A person appointed director in place of a person removed under this section shall be treated, for the purpose of determining the time at which he or any other director is to retire, as if he had become director on the day on which the person in whose place he is appointed was last appointed a director.

 

  (6)          Nothing in this section shall be taken as depriving a person removed under it of compensation or damages payable to him in respect of the termination of his appointment as a director or of any appointment terminating with that as director, or as derogating from any power to remove a director which may exist apart from this section.

 

 

Proceedings of Directors

 

 

263.    (1)         The directors may meet together for the despatch of business, adjourn and otherwise regulate their meetings as they think fit:

 

Provided that the first meeting of the directors shall be held not later than 6 months after the incorporation of the company.

 

  (2)          Any question arising at any meeting shall be decided by a majority of votes, and in case of an equality of votes, the chairman shall have a second or casting vote.

 

  (3)          A director may, and the secretary on the requisition of a director shall, at any time summon a meeting of the directors.

 

  (4)          The directors may elect a chairman of their meetings and determine the period for which he is to hold office; but if no such chairman is elected or if at any meeting the chairman is not present within five minutes after the time appointed for holding the same, the directors present may choose one of their number to be chairman of the meeting.

 

  (5)          The directors may delegate any of their powers to a managing directors or to committees consisting of such member or members of their body as they think fit and the managing director or any committee so formed shall, in the exercise of the powers so delegated, conform to any regulations that may be made by the directors.

 

  (6)          A committee may elect a chairman of its meeting; and if no such chairman is elected, or if at any meeting the chairman is not present within five minutes after the time appointed for holding the same, the members present may choose one of their number to be chairman of the meeting.

 

  (7)          A committee may meet and adjourn as it thinks proper, and any questions arising shall be determined by a majority of votes of the members present, and in the case of equality of votes the chairman shall have a second or casting vote.

 

  (8)          A resolution in writing, signed by all the directors for the time being entitled to receive notice of a meeting of the directors, shall be as valid and effectual as if it had been passed at a meeting of the directors duly convened and held.

 

  (9)          In all the directors' meetings, each director shall be entitled to one vote.

 

264.    (1)         Unless the articles otherwise provide, the quorum necessary for the transaction of the business of directors shall be 2 where there are not more than 6 directors, but where there are more than 6 directors, the quorum shall be one third of the number of directors, and where the number of directors is not a multiple of three, then the quorum shall be one-third to the nearest number.

 

  (2)          Where a committee of directors is appointed by the board of directors, the board shall fix its quorum, but where no quorum is fixed, the whole committed shall meet and act by a majority.

 

265.        Where the board is unable to act because a quorum cannot be formed, the general meeting may act in place of the board and where a committee in unable to act because a quorum cannot be formed, the board may act in place of the committee.

 

266.   (1)         Every director shall be entitled to receive notice of the directors' meetings, unless he is disqualified by any reason under the Decree from continuing with the office of director.

 

  (2)          There shall be given 14 days notice in writing to all directors entitled to receive notice unless otherwise provided in the articles.

 

  (3)          Failure to give notice in accordance with subsection (2) of this section shall invalidate the meeting.

 

  (4)          Unless the articles otherwise provide, it shall not be necessary to give notice of a meeting of directors to any director for the time being absent from Nigeria, provided that if he has given an address in Nigeria, the notice shall be sent to such an address.

 

 

Remuneration and other payments

 

 

267.   (1)          The remuneration of the directors shall from time to time be determined by the company in general meeting and such remuneration shall be deemed to accrue from day to day.

 

   (2)          The directors may also be paid all travelling, hotel and other expenses properly incurred by them in attending and returning from meetings of the directors or any committee of the directors or general meetings of the company or in connection with the business of the company.

 

  (3)          Where remuneration has been fixed by the articles, it shall be alterable only by a special resolution.

 

  (4)          A company shall not be bound to pay remuneration to directors, but where the company agrees to pay, the directors shall be paid such remuneration out of the fund of the company.

 

  (5)          The amount of remuneration shall be a debt from the company so that if directors take office on the basis of the articles, they shall be able to sue the company on account of the debt or prove it in the liquidation.

 

  (6)          A director who receives more money than he is entitled to, shall be guilty of misfeasance and shall be accountable to the company for such money.

 

  (7)          The remunerations of directors shall be apportionable .

   

268.   (1)         A managing director shall receive such remuneration (whether by way of salary, commission or participation in profits, or partly in one way and partly in another) as the directors may determine.

 

  (2)          Where a managing director is removed for any reason whatsoever under section 262 of this Decree, he shall have a claim for breach of contract if there is any or where a contract could be inferred from the terms of the articles.

 

  (3)          Where he performs some services without a contract, he shall be entitled to payment on a quantum meriut

 

269.    (1)         It shall not be lawful for a company to pay a director remuneration (whether as director or otherwise) free of income tax, or otherwise calculated by reference to or varying with the amount of his income tax, or at or with the rate or standard rate of income tax, except under a contract which was in force at the commencement of this Act, and provides expressly, and not by reference to the articles, for payment or remuneration as aforesaid.

 

  (2)          Any such provision contained in a company's articles or in any contract other than such a contract as mentioned in subsection (1) of this section or in any resolution of a company or the resolution of a company's directors for payment to a director of remuneration as mentioned in subsection (1) of this section, shall have effect as if it provided for payment, as a gross sum subject to income tax, of the net sum for which it actually provides.

 

  (3)          This section shall not apply to remuneration due before this Act comes into force or in respect of a period before it comes into force.

 

270. (1)          It shall not be lawful for a company to make a loan to any person who is its director or a director of its holding company, or to enter into any guarantee or provide any security in connection with a loan made to such a person as earlier mentioned by any other person:

 

Provided that nothing in this section shall apply -

 

(a)             subject to subsection (2) of this section, to anything done to provide any such person as mentioned in this subsection with funds to meet expenditure incurred or to be incurred by him for the purposes of the company or for the purpose of enabling him properly to perform his duties as an officer of the company; or

 

(b)             in the case of a company whose ordinary business includes the lending of money or the giving of guarantees in connection with loans made by other persons, to anything done by the company in the ordinary course of that business.

 

  (2)           Proviso (a) to subsection (1) of this section shall not authorise the making of any loan, or the entering into any guarantee, or the provision of any security except

 

(a)             with the prior approval of the company given at a general meeting at which the purposes of the expenditure and the amount of the loan or the extent of the guarantee or security, as the case may be, are disclosed; or

 

(b)             on condition that, if the approval of the company is not given as in subsection (1) of this section at or before the next following annual general meeting, the loan shall be repaid or the liability under the guarantee or security shall be discharged, as the case may be, within six months from the conclusion of that meeting.

 

  (3)          Where the approval of the company is not given as required by any such condition, the directors authorising the making of the loan, or the entering into the guarantee, or the provision of the security, shall be jointly and severally liable to indemnify the company against any loss arising therefrom.

 

271.         It shall not be lawful for a company to make to any director of the company, any payment by way of compensation for loss of office, or as consideration for or in connection with his retirement from office, unless particulars with respect to the proposed payment and the amount have been disclosed to members of the company and the proposal is approved by the company.

 

272.    (1)         If in connection with the transfer of the whole or any part of the undertaking or property of a company, it is proposed to make any payment to a director of the company by way of compensation for loss of office, or as consideration for or in connection with his retirement from office, the payment shall be unlawful unless particulars with respect to the proposal and the amount, have been disclosed to members of the company and the proposal is approved by the company.

 

  (2)          Where a payment declared by this section to be illegal is made to a director of a company, the amount received shall be deemed to have been received by him in trust for the company.

 

273.    (1)         Where, in connection with the transfer to any persons of all or any of the shares in a company, being a transfer resulting from -

 

(a)             an offer made to the general body of shareholders;

 

(b)             an offer made by or on behalf of some other body corporate with a view to the company becoming its subsidiary or a subsidiary of its holding company;

(c)             an offer made by or on behalf of an individual with a view to his obtaining the right to exercise or control the exercise of not less than one third of the voting power at any general meeting of the company; or

(d)             any other offer which is conditional on acceptance to a given extent that payment is to be made to a director of the company by way of compensation for loss of office, or as consideration for or in connection with his retirement from office,

 

it shall be the duty of that director to do all things reasonably necessary to secure that particulars with respect to the proposed payment and the amount, are included in or sent with any notice of the offer made for their shares which is given to any shareholders.

 

  (2)          If -

 

(a)             any such director fails to do all things reasonably necessary as mentioned in this section; or

 

(b)             any person who has been properly required by any such director to include the said particulars in or send them with any such notice as aforesaid fails so to do;

 

he shall be guilty of an offence and liable to a fine of N 20.

 

  (3)          If

 

(a)             the requirements of subsection (1) of this section are not complied with in relation to any such payments as are mentioned there; or

 

(b)             the making of the proposed payment is not, before the transfer of any shares in pursuance of the offer, approved by a meeting summoned for the purpose of the holders of the shares to which the offer relates and of other holders of shares of the same class as any of the said shares;

 

any sum received by the director on account of the payment shall be deemed to have been received by him in trust for any person who has sold his shares as a result of the offer made, and the expenses incurred by him in distributing that sum amongst those persons shall be borne by him and not retained out of that sum.

 

  (4)          Where the shareholders referred to in subsection (3)(b) of this section are not all the members of the company and no provision is made by the articles for summoning or regulating such a meeting as is mentioned in that paragraph, the provisions of this Act and of the company's articles relating to general meetings of the company shall, for that purpose, apply to the meeting either without modification or with such modifications as the Commission on the application of any person concerned may direct for the purpose of adapting them to the circumstances of the meeting.

 

  (5)          If at a meeting summoned for the purpose of approving any payment as required by paragraph (b) of subsection (3) of this section, a quorum is not present and, after the meeting has been adjourned to a later date, a quorum is again not present, the payment shall, for the purposes of that subsection be deemed to have been approved.

 

274.     (1)         Where in proceedings for the recovery of any payment which has been received by any person in trust by virtue of subsections (I) and (2) of subsection 272 or subsections (I) and (3) of section 273 of this Act, it is shown that -

 

(a)             the payment was made in pursuance of any arrangement entered into as part of the agreement for the transfer in question, or within one year but before two years after that agreement or the offer leading thereto; and

 

(b)             the company or any person to whom the transfer was made was privy to that arrangement;

 

the payment shall be deemed, except in so far as the contrary is shown, to be one to which the subsections apply.

 

  (2)          If in connection with any such transfer as is mentioned in sections 272 and 273 of this Act -

 

(a)             the price to be paid to a director of the company whose office is to be abolished or who is to retire from office for any shares in the company held by him is in excess of the price obtainable at the time by other holders of the like shares; or

 

(b)             any valuable consideration is given to any such director;

 

the excess or the money value of the consideration, as the case may be, shall, for the purposes of that section, be deemed to have been a payment made to him by way of compensation for loss of office, or as consideration for or in connection with his retirement from office.

 

  (3)          It is hereby declared that references in sections 271 to 273 of this Act to payments made to any director of a company by way of compensation for loss of office, or as consideration for or in connection with his retirement from office shall not include any bona <do payment by way of damages for breach of contract or by way of pension in respect of past services, and for the purposes of this subsection, "pension" includes any superannuation allowance, superannuation gratuity or similar payment.

 

  (4)          Nothing in section 272 or 273 of this Act shall be taken to prejudice the operation of any rule of law requiring disclosure to be made with respect to any such payments as are mentioned there, or with respect to any other like payments made, or to be made. to the directors of a company.

 

 

Disclosure of directors' interests

 

 

275.    (1)         Every company shall keep a register showing as respects each director of the company (not being its holding shareholding company) the number, description and amount of any shares etc in or debentures of the company or any other body corporate, being the company's subsidiary or holding company, or a subsidiary of the company's holding company, which are had by or in trust for him or of which he has any right to become the holder (whether on payment or not):

 

Provided that the register need not include shares in any body corporate which is the wholly-owned subsidiary of another body corporate, and for this purpose, a body corporate shall be deemed to be the wholly-owned subsidiary of another if it has no members but that other and that other's wholly-owned subsidiaries and its or their nominees.

 

  (2)          Where any shares or debentures fall to be or cease to be recorded in the said register in relation to any director by reason of a transaction entered into after the commencement of this Act and while he is a director, the register shall also show the date ofl and price or other consideration for the transaction;

 

Provided that where there is an interval between the agreement for any such transaction and the completion thereof, the date shall be that of the agreement.

 

  (3)          The nature and extent of a director's interest or right in or over any shares or debentures recorded in relation to him in the said register shall, if he so requires, be indicated in the register.

 

 (4)          The company shall not by virtue of anything done for the purposes of this section, be affected with notice of, or put upon inquiry as to the rights of any person in relation to any shares or debentures.

 

 (5)          The said register shall, subject to the provisions of this section be kept at the company's registered or head office and shall be open to inspection during business hours (subject to such reasonable restrictions as the company may by its articles or in general meeting impose, so that not less than two hours in each day be allowed for inspection) as follows -

 

(a)             during the period beginning fourteen days before the date of the company's annual general meeting and ending three days after the date of its conclusion, it shall be open to the inspection of any member or holder of debentures of the company; and

 

(b)             during that or any other period, it shall be open to the inspection of any person acting on behalf of the Commission.

 

  (6)          In computing the fourteen days and the three days mentioned in subsection (5) of this section, any day which is a Saturday or Sunday or a public holiday shall be disregarded.

 

  (7)          Without prejudice to the rights conferred by subsection (5) of this section, the Commission may, at any time, request for the production to it of a copy of the register, or any part thereof.

 

  (8)          The register shall also be produced at the commencement of the company's annual general meeting and remain open and accessible during the continuance of the meeting to any person attending the meeting.

 

  (9)          If default is made in complying with subsection (1) or (2) of this section, or if any inspection required under this section is refused, or any copy required thereunder is not sent within a reasonable time, the company and every officer of the company who is in default shall be guilty of an offence and liable to a fine of N 500, and if default is made in complying with subsection (8) of this section, the company and every officer of the company who is in default shall be liable to a fine of N50.

 

 (10)          If any inspection required under this section is refused, the court may, by order, compel an immediate inspection of the register.

 

 (11)          For the purposes of this section-

 

(a)             any person in accordance with whose directions or instructions, the directors of a company are accustomed to act shall be deemed to be a director of the company; and

 

(b)             a director of a company shall be deemed to hold or to have any interest or right in or over, any shares or debentures if a permanent representative of the body corporate other than the company holds them or has that interest or right in or over them, and either-

 

(i)             that permanent representative is accustomed to act in accordance with his directions or instructions; or

 

(ii)             he is entitled to exercise or control the exercise of one-third or more of the voting power at any general meeting of that body corporate.

 

276.    (1)         It shall be the duty of any director of a company notice to the company of such matters relating to as may be necessary for the purposes of sections 275 and 277 of this Act except so far as it relates to loans made by the company or by any other person under a guarantee from or on a security provided by the company, to an officer thereof.

 

  (2)          Any such notice given for the purposes of section 275 of this Act, shall be in writing and if it is not given at a meeting of the directors, the director giving it shall do all things reasonably necessary to secure that it is brought up and read at the next meeting of directors after it is given.

 

  (3)          Subsection (1) of this section shall, to the extent to which it applies in relation to directors, apply to the like extent for

 

(a)             the purposes of section 277 of this Act in relation to officers other than directors;

 

(b)             the purposes of sections 276 and 277 of this Act in relation to persons who are or have at any time during the preceding five years been officers of the company.

 

  (4)          Any person who makes default in complying with the foregoing provisions of this section shall be guilty of an offence and liable to a fine of N50.

 

277.    (1)         Subject to the provisions of this section, it shall be the duty of a director of a company who is in any way whether directly or indirectly, interested in a contract or proposed contract with the company to declare the nature of his interest at a meeting of the directors of the company.

 

  (2)          In the case of a proposed contract, the declaration required by this section to be made by a director shall be made at the meeting of the directors at which the question of entering into the contract is first taken into consideration or if the director was not at the date of that meeting interested in the proposed contract, at the next meeting of the directors held after he became so interested, and in a case where the director becomes interested in a contract after it is made, the said declaration shall be made at the first meeting of the directors held after he becomes so interested.

 

  (3)          For the purpose of this section, a general notice given to the directors of a company by a director to the effect that he is a member of a specified company or firm and is to be regarded as interested in any contract which may, after the date of the notice, be made with that company or firm, shall be deemed to be a sufficient declaration of interest in relation to any contract so made:

 

Provided that any such notice shall not have effect, unless it is given at a meeting of the directors or the director does all things reasonably necessary to secure that it is brought up and read at the next meeting of the directors after it is given.

 

  (4)          Any director who fails to comply with the provisions of this section shall be guilty of an offence and liable to a fine of N100.

 

  (5)          Nothing in this section shall be taken to prejudice the operation of any rule of law restricting directors of a company from having any interest in contracts with the company.

 

 

 

278.    (1)         Every company to which this section applies shall, in all trade catalogues, trade circulars, showcards and business letters on or in which the company's name appears and which are issued or sent by the company to any person in Nigeria state in legible characters with respect to every director the following particulars

 

(a)             his present forename, or the initials thereof, and present surname;

 

(b)             any former forenames and surnames;

 

(c)             his nationality, if not a Nigerian:

 

Provided that, if special circumstances exist which the Commission is of opinion render it expedient that such an exemption should be granted, the Commission may, subject to such conditions as it may prescribe by notice published in the Gazette, exempt a company from the obligations imposed by this subsection.

 

  (2)          This section shall apply to every company incorporated under this Act, or any enactment repealed by it.

 

  (3)          If a company makes default in complying with this section every officer of the company who is in default shall be guilty of an offence and liable on conviction for each offence to a fine of N50:

 

Provided that no proceedings shall be instituted under this section except by, or with the consent O{ the Attorney-General of the Federation.

 

  (4)          For the purposes of this section -

 

(a)             "initials" includes a recognised abbreviation of a forename;

 

(b)             references to a former forename or surname in the case of a married woman do not include the name or surname by which she was known previous to the marriage; and

 

(c)             "showcards" means cards containing or exhibiting articles dealt with, or samples or representations thereof.

 

 

Duties of Directors

 

 

279.   (1)         A director of a company stands in a fiduciary directors. relationship towards the company and shall observe the utmost good faith towards the company in any transaction with it or on its behalf.

 

   (2)          A director shall also owe fiduciary relationship with the company in the following circumstances-

 

(a)            where a director is acting as agent of a particular shareholder;

 

(b)            where even shareholder, dealing with though he is not an agent of any such a shareholder or other person is the company's securities.

 

   (3)          A director shall act at all times in what he believes to be the best interests of the company as a whole so as to preserve its assets, further its business, and promote the purposes for which it was formed, and in such manner as a faithful, diligent, careful and ordinarily skilful director would act in the circumstances.

 

  (4)          The matters to which the director of a company is to have regard in the performance of his functions include the interest of the company's employees in general, as well as the interests of its members.

 

  (5)          A director shall exercise his powers for the purpose for which he is specified and shall not do so for a collateral purpose, and the power, if exercised for the right purpose does not constitute a breach of duty, if it, incidentally, affects a member adversely.

 

  (6)          A director shall not fetter his discretion to vote in a particular way.

 

  (7)          Where a director is allowed to delegate his powers under any provision of this Act such a director shall not delegate the power in such a way and manner as may amount to an abdication of duty.

 

  (8)          No provision, whether contained in the articles or resolutions of a company, or in any contract shall relieve any director from the duty to act in accordance with this section or relieve him from any liability incurred as a result of any breach of the duties conferred upon him under this section.

 

  (9)       Any duty imposed on a director under this section shall be enforceable against the director by the company.

 

280.     (1)         The personal interest of a director shall not conflict with any of his duties as a director under this Act.

 

 

   (2)          A director shall not -

 

(a)            in the course of management of affairs of the company; or

 

(b)            in the utilisation of the company's property,

Part X

Protection of Minority against illegal and oppressive conduct

 

 

Action by or against the company

 

 

299.         Subject to the provisions of this Act, where an irregularity has been committed in the course of a company's affairs or any wrong has been done to the company, only the company can sue to remedy that wrong and only the company can ratify the irregular conduct.

 

 

300.         Without prejudice to the rights of members under sections 303 to 30S and sections 310 to 312 of this Act or any other provisions of this Act, the court on the application of any member, may by injunction or declaration restrain the company from the following -

 

(a)             entering into any transaction which is illegal or ultra vires;

 

(b)             purporting to do by ordinary resolution any act which by its constitution or the Act requires to be done by special resolution;

 

(c)             any act or omission affecting the applicant's individual rights as a member;

 

(d)             committing fraud on either the company or the minority shareholders where the directors fail to take appropriate action to redress the wrong done;

 

(e)             where a company meeting cannot be called in time to be of practical use in redressing a wrong done to the company or to minority shareholders; and

 

(f)             where the directors are likely benefit, or have profited or negligence or from their breach of duty.

 

301.   (1)         Where a member institutes a personal action to enforce a right due to him personally, he shall not be entitled to any damages but to a declaration or injunction to restrain the company or the directors from doing a particular act.

 

  (2)          Where a member institutes a representative action on behalf of himself and other affected members to enforce any rights due to them, he shall not be entitled to any damages but to a declaration or injunction to restrain the company and/or directors from doing a particular act.

 

  (3)          Where any member institutes an action under this section, the court may award costs to him personally whether or not his action succeeds.

 

  (4)          In any proceedings by a member under section 300 of this Act, the court may, if it thinks fit order that the member shall give security for costs.

 

302.         For the purpose of sections 300 and 301 of this Act, "member" includes -

 

(a)             the personal representative of a deceased member; and

 

(b)             any person to whom shares have been transferred or transmitted by operation of law.

 

303.     (1)         Subject to the provisions of subsection (2) of this section, an applicant may apply to the court for leave to bring an action in the name or on behalf of a company, or to intervene in an action to which the company is a party, for the purpose of prosecuting, defending or discontinuing the action on behalf of the company.

 

  (2)          No action may be brought and no intervention may be made under subsection (1) of this section, unless the court is satisfied that -

 

(a)             the wrongdoers are the directors who are in control, and will not take necessary action;

 

(b)             the applicant has given reasonable notice to the directors of the company of his intention to apply to the court under subsection (1) of this section if the directors of the company do not bring, diligently prosecute or defend or discontinue the action;

 

(c)             the applicant is acting in good faith; and

 

(d)             it appears to be in the best interest of the company that the action be brought, prosecuted, defended or discontinued.

 

304.   (1)         In connection with an action brought or intervened under section 303 of this section, the court may, at any time, make any such order or orders as it thinks fit.

 

  (2)          Without prejudice to the generality of subsection (I) of this section, the court may make one or more of the following orders. that is an order -

 

(a)             authorising the applicant or any other person to control the conduct of the action;

 

(b)             giving directions for the conduct of the action;

 

(c)             directing that any amount adjudged payable by a defendant in the action shall be paid in whole or in part. directly to former and present security holders of the company instead of to the company;

 

(d)             requiring the company to pay reasonable legal fees incurred by the applicant in connection with the proceedings.

 

305.         An application made or an action brought or intervened in under section 303 of this Act shall not be stayed or dismissed by reason only that it is shown that an alleged breach of a right or a duty owed to the company has been or may be approved by the shareholders of such company, but evidence of approval by the shareholders may be taken into account by the court in making an order under section 304 of this Act.

 

306.         An application made or an action brought or intervened in under section 303 of this Act shall not be stayed, discontinued, settled or dismissed for want of prosecution without the approval of the court given upon such terms as the court thinks fit and. if the court determines that the rights of any applicant may be substantially affected by such stay, discontinuance. settlement or dismissal, the court may order any party to the application or action to give notice to the applicant.

 

307.         An applicant shall not be required to give security for costs in any application made or action brought or intervened in under section 303 of this Act.

 

308.         In an application made or an action brought or intervened in under section 303 of this Act the court may, at any time. order the company to pay to the applicant interim costs before the final disposition of the application or action.

 

309.         In sections 303 to 308 of this Act9 "applicant" means -

 

(a)            a registered holder or a beneficial owner and a former registered holder or beneficial owner, of a security of a company;

 

(b)             a director or an officer or a former director or officer of a company;

 

(c)             the Commission; or

 

(d)             any other person who in the discretion of the court, is a proper person to make an application under section 303 of this Act.

 

 

Relief on the grounds of unfairly prejudicial and oppressive conduct

 

 

310.   (1)         An application to the Court by petition for an order under section 311 of this Act in relation to a company may be made by any of the following persons -

 

(a)            a member of the company;

 

(b)            a director or officer or former director or officer of the company;

 

 

(c)             a creditor;

 

(d)             the Commission; or

 

(e)            any other person who, in the discretion of the court, is the proper person to make an application under section 311 of this Act.

 

  (2)          In sections 3 11 to 313 of this Act, "member" includes -

 

(a)            the personal representative of a deceased member; and

 

(b)             any person to whom shares have been transferred or transmitted by operation of law.

 

311.  (1)         An application for relief on the ground that the affairs of a company are being conducted in an illegal or oppressive may be made to the court by petition.

 

  (2)          An application to the court by petition for an order under this section in relation to a company may be made--

 

(a)             by a member of the company who alleges -

 

(i)             that the affairs of the company are being conducted in a manner that is oppressive or unfairly pre-judicial to, or unfairly discriminatory against, a member or members, or in a manner that is in disregard of the interests of a member or the members as a whole, or

 

(ii)             than an act or omission or a proposed act or omission, by or on behalf of' the company or a resolution, or a proposed resolution, of a class of members, was or would be oppressive or unfairly prejudicial to, or unfairly discriminatory against, a member or members or was or would be in a manner which is in disregard of the interests of a member or the members as a whole; or

 

(b)             by any of the persons mentioned tinder paragraphs (h), (c) and (e) of subsection (I) of section 310 of this Act who alleges-

 

(i)             that the affairs of the company are being conducted in a manner oppressive or unfairly pre-judicial to or discriminatory against or in a manner in disregard of the interests of that person,

 

(ii)             that an act or omission, or a proposed act or omission was or would be oppressive or unfairly prejudicial to. or unfairly discriminatory against, or which is in a manner in disregard of the interests of that person; or

 

(c)             by the Commission in a case where it appears to it in the exercise of its powers under the provisions of this Act or any other enactment thaw-

 

(i)             the affairs of the company are being conducted in a manner that is oppressive or unfairly prejudicial to, or unfairly discriminatory against a member or members or in a manner which is in disregard of the public interest or

 

(ii)             any actual or proposed act or omission of the company (including an act or omission on its behalf) which was or would be oppressive, or unfairly prejudicial to or unfairly discriminatory against a member or members in a manner which is in disregard of the public interest.

 

 

312.     (1)        If the court is satisfied that a petition under sections 310 and 311 of this Act is well founded, it may make such order or orders as it thinks fit for giving relief in respect of the matter complained of.

 

  (2)          Without prejudice to the generality of subsection (1) of this section, the court may make one or more of the following orders that is, an order -

 

(a)             that the company be wound up;

 

(b)             for regulating the conduct of the affairs of the company in futures

 

(c)             for the purchase of the shares of any member by other members of the company;

 

(d)             for the purchase of the shares of any member by the company and for the reduction accordingly of the company's capitals

 

(e)             directing the company to institute, prosecute, defend or discontinue specific proceedings. or authorising a member or members or the company to institute, prosecute, defend or discontinue specific proceedings in the name or on behalf of the company;

 

(f)             varying or setting aside a transaction or contract to which the company is a party and compensating the company or any other party to the transaction or contract;

 

(g)             directing an investigation to be made by the Commission;

 

(h)             appointing a receiver or a receiver and manager of the property of the company;

 

(i)             restraining a person from engaging in specific conduct or from doing a specific act or thing;

 

(j)             requiring a person to do a specific act or thing.

 

  (3)          Where an order that a company be wound up is made under this section, the provisions of this Act relating to winding-up of companies shall apply, with such adaptations as are necessary, as if the order had been made upon an application duly filed in the court by the company.

 

 (4)          Where an order under this section makes any alteration in addition to the memorandum or articles of a company, then, notwithstanding anything in any other provision of this Act but subject to the provisions of the order, the company shall not have power without the leave of the court, to make any further alteration or addition to the memorandum and articles inconsistent with the provisions of the order but, subject to the foregoing provisions of this subsection, the alteration or addition shall have effect as if it had been duly made by a resolution of the company.

 

  (5)          A certified true copy of an order made under this section altering or giving leave to alter, a company's memorandum or articles shall, within fourteen days from the making of the order or such longer period as the court may allow, be delivered by the company to the Commission for registration; and if the company makes default in complying with the provisions of this subsection, the company and every officer of it who is in default shall be guilty of an offence and liable to a fine of N 50 and, for continued contravention, to a daily default fine of N25.

 

313.         Any person who contravenes or fails to comply with an order made under section 3 12 of this Act that is applicable to him shall be guilty of an offence and be liable to a fine of N 500 or imprisonment for one year or to both such fine and imprisonment.

 

314.   (1)         The Commission may appoint one or more competent inspectors to investigate the affairs of a company and to report on them in such manner as it may direct.

 

  (2)          The appointment may be made

 

(a)             in the case of a company having a share capital on the application of members holding not less than one-quarter of the class of shares issued;

 

(b)             in the case of a company not having a share capital, on the application of not less than one-quarter in number of the persons on the company's register of members; and

 

(c)             in any other case, on application of the company.

 

  (3)          The application shall be supported by such evidence as the Commission may require for the purpose of showing that the applicant or applicants have good reason for requiring the investigation.

 

 

315.  (1)           The Commission shall appoint one or more competent inspectors to investigate the affairs of a company and report on them in such manner as it directs, if the court by order declares that its affairs ought be so investigated.

 

  (2)          The Commission may make such an appointment if it appears to it that there are circumstances suggesting that

 

(a)             the company's affairs are being or have been conducted with intent to defraud its creditors or the creditors of any other person, or in a manner which is unfairly prejudicial to some part of its members; or

 

(b)            any actual or proposed act or omission of the company (including an act or omission on its behalf) is or would be so prejudicial, or that the company was formed for any fraudulent or unlawful purpose; or

 

(c)             persons concerned with the company's formation or the management of its affairs have in connection therewith been guilty of fraud, misfeasance or other misconduct towards it or towards its members; or

 

(d)             the company's members have not been given all the information with respect to its affairs which they might reasonably expect.

 

  (3)          Subsections (I) and (2) of this section shall be without prejudice to the powers of the Commission under section 322 of this Act and the power conferred by subsection (2) of this section, shall be exercisable with respect to a body corporate notwithstanding that it is in course of being voluntarily wound up.

 

  (4)          Reference in subsection (2) of this section to a company's members includes any of the following persons-

 

(a)             the personal representatives of a deceased member; and

 

(b)             any person to whom shares have been transferred or transmitted by operation of law.

 

316.     (1)         If an inspector appointed under section 314 or 315 of this Act to investigate the affairs of a company thinks it necessary for the purposes of his investigation to investigate also the affairs of another body corporate which is or at any relevant time has been the company's subsidiary or holding company or a subsidiary of its holding company or a holding company of its subsidiary, he shall report on the affairs of the other body corporate so far as he thinks that the results of his investigation of its affairs are relevant to the investigation of the affairs of the company first mentioned above.

 

  (2)          An inspector appointed under either section 314 or 315 of this Act may at any time in the course of his investigation, without the necessity of making an interim report, inform the Commission of matters coming to his knowledge as a result of the investigation tending to show that an offence has been conimitted.

 

 

317.     (1)         When an inspector is appointed under section 314 or 315 of this Act, it shall be the duty of all officers and agents of the company, and of all officers and agents of any other body corporate whose affairs are investigated under section 31 6 of this Act -

 

(a)             to produce to the inspector all books and documents of or relating to the company or, as the case may be, the other body corporate which are in their custody or power;

 

(b)             to attend before the inspector when required to do so; and

 

(c)             otherwise to give the inspector all assistance in connection with the investigation which he is reasonably able to give.

 

  (2)          If the inspector considers that a person other than an officer or agent of the company or other body corporate is or may be in possession of information concerning its affairs, he may require that person to produce to him any books or documents in his custody or power relating to the company or other body corporate, to attend before him and otherwise to give him all assistance in connection with the investigation which he is reasonably able to give; and it is that person's duty to comply with the requirement.

 

  (3)          An inspector may examine on oath the officers and agents of the company or other body corporate, and any such person as is mentioned in subsection (2) of this section in relation to the affairs of the company or other body, and administer an oath accordingly.

 

  (4)          In this section, a reference to officers or to agents includes past, as well as present, officers or agents (as the case may be); and "agents" in relation to a company or other body corporate, includes its bankers and solicitors and persons employed by it as auditors, whether these persons are or are not officers of the company or other body corporate.

 

  (5)          An answer given by a person to a question put to him in exercise of powers conferred by this section (whether as it has effect in relation to an investigation under any of sections 314 to 316 of this Act as applied by any other section in this Act) may be used in evidence against him.

 

 

318.     (1)         If an inspector has reasonable grounds for believing that a director, or past director, of the company or other body corporate whose affairs he is investigating maintains or has maintained a bank account of any description (whether alone or jointly with another person and whether in Nigeria or elsewhere), into or out of which there has been paid -

 

(a)             the emoluments or part of the emoluments of his office as such director particulars of which have not been disclosed in the financial statements of the company or other body corporate for any financial year, contrary to the provisions of Part V of the Fourth Schedule to this Act (in relation to particular in accounts of directors);

 

(b)             any money which has resulted from or been used in the financing of an undisclosed transaction, arrangement or agreement; or

 

(c)            any money which has been in any way connected with an act or omission or series of acts or omissions, which on the part of that director constituted misconduct (whether fraudulent or not) towards the company or body corporate or its members,

 

the inspector may require the director to produce to him all documents in the director's possession, or under his control, relating to that bank account.

 

  (2)          For purposes of subsection (1)(b), of this section, an "undisclosed" transaction, arrangement or agreement is one the particulars of which have not been disclosed in the financial statement of any company or in a statement annexed thereto for any financial year, including the disclosure of contracts between companies and their directors.

 

319.  (1)         When an inspector is appointed under section 314 or 315 of this Act to investigate the affairs of a company, the following applies in the case of -

 

(a)             any officer or agent of the company;

 

(b)             any officer or agent of another body corporate whose affairs are investigated under section 316 of this Act; and

 

(c)             any such person as is mentioned in section 317(2) of this Act.

 

  (2)          Subsection (4) of section 317 of this Act, shall apply with regards to references in subsection (I) of this section to an officer or agent.

 

  (3)          If that person

 

(a)             refuses to produce any book or document which it is his duty under section 317 or 318 of this Act to produce; or

 

(b)             refuses to attend before the inspector when required to do so; or

 

(c)             refuses to answer any question put to him by the inspector with respect to the affairs of the company or other body corporate (as the case may be);

the inspector may certify the refusal in writing to the court.

 

  (4)          The court may thereupon enquire into the case; and after hearing any witnesses who may be produced against or on behalf of the alleged offender and after hearing any statement which may be offered in defence, the court may punish the offender in like manner as if he had been guilty of contempt of the court.

 

320.    (1)         The inspector may and if so directed by the Inspector's Commission shall, make interim reports to the Commission, rLp()rr. and on the conclusion of his investigation shall make a final report to it and any such report shall be written or printed9 as the Commission may direct.

 

  (2)          The Commission may direct that a copy of the inspector's report be forwarded to the company at its registered or head office.

 

  (3)          Where an inspector is appointed under section 314 of this Act in pursuance of an order of the court, the Commission shall furnish a copy of any of its reports to the court.

 

  (4)          In any other case, the Commission may, if it thinks fit -

 

(a)             furnish a copy on request and on payment of the prescribed fee to

 

(i)             any member of the company or other body corporate which is the subject of the report,

 

(ii)             any person whose conduct is referred to in the report,

 

(iii)             the auditors of that company or body corporate, 

 

(iv)             the applicants for the investigation,

 

(v)             any other person whose financial interests appear to the Commission to be affected by the matters dealt with in the report, whether as creditors of the company or body corporate, or otherwise; and 

 

(b)             cause any such report to be printed and published.

 

321.   (1)         If, from any report made under section 320 of this Act; it appears to the Commission, that any civil proceedings ought in the public interest to be brought by the company or any body corporate, the Commission may itself bring such proceedings in the name and on behalf of the company or the body corporate.

 

  (2)           The Commission shall indemnify the body corporate against any costs or expenses incurred by it in or in connection with proceedings brought under this section; and any costs or expenses so incurred shall be, if not otherwise recoverable be defrayed out of the Consolidated Revenue Fund.

 

 

322.   (1)         If, from any report made under section 320 of this Act it appears that any person has, in relation to the company or any body corporate whose affairs have been investigated by virtue of section 316 of this Act, been guilty of any offence for which he is criminally liable, the report shall be referred to the Attorney-General of the Federation.

 

  (2)          If the Attorney-General of the Federation considers that the case referred to him is one in which a prosecution ought to be instituted, he shall direct action accordingly9 and it shall be the duty of all officers and agents of the company or other body corporate, as the case may be (other than the defendant in the proceedings), to give all assistance in connection with the prosecution which they are reasonably able to give.

 

  (3)          If, from any report made under section 320 of this Act, it appears to the Commission that proceedings ought in the public interest to be brought by the body corporate dealt with by the report for the recovery of damages in respect of any fraud, misfeasance or other misconduct in connection with the promotion or formation of that body corporate or the management of its affairs, or for the recovery of any property of the body corporate which has been misapplied or wrong-fully retained, it may refer the case to the Attorney-General of the Federation for his opinion as to the bringing of proceedings for that purpose in the name of the body corporate and if proceedings are brought it shall be the duty of all officers and agents of the company or other body corporate as the case may be (other than the defendant in the proceedings), to give him all assistance in connection with the proceedings which they are reasonably able to give.

 

  (4)          Costs and expenses incurred by a body corporate in or in connection with any proceedings brought by it under subsection (3) of this section shall, if not otherwise recover-able, be defrayed out of the Consolidated Revenue Fund.

 

 

323.         If, in the case of any body corporate liable to be wound up under this Act it appears to the Commission from a report made, by an inspector under section 320 of this Act that it is expedient in the public interest that the body should be wound up, the Commission may (unless the body is already wound up by the court) present a petition for it to be so wound up if the court thinks it just and equitable to do so.

 

 

324.  (1)         The expenses of an incidental to an investigation by an inspector appointed by the Commission under the foregoing provisions of this Act, shall be defrayed in the first instance out of the Consolidated Revenue Fund, but the following persons shall, to the extent mentioned, be liable to make repayment, that is to say -

 

(a)             any person who is convicted on a prosecution instituted, as a result of the investigation by the Attorney-General of the Federation, or who is ordered to pay damages or restore any property in proceedings brought by virtue of subsection (3) of section 322 of this Act, may in the same proceedings be ordered to pay the said expenses to such extent as are specified in the order;

 

(b)             any body corporate in whose name proceedings are brought as aforesaid shall be liable to the extent of the amount or value of any sums or property recovered by it as a result of those proceedings;

 

(c)             unless as the result of the investigation a prosecution is instituted by the Attorney-General of the Federation, the applicants for the investigation, where the inspector was appointed under section 314 of this Act shall be liable to such extent (if any), as the Commission may direct;

 

and any amount for which a body corporate is liable by virtue of paragraph (b) of this subsection, shall be a first charge on the sums or property mentioned in that paragraph.

 

  (2)          For the purposes of this section, any cost or expenses incurred by the Commission in or in connection with proceedings brought by virtue of subsection (2) of section 321 of this Act, shall be treated as expenses of the investigation giving rise to the proceedings.

 

  (3)          Expenses to be defrayed by the Commission under this section shall, so far as not recovered thereunder be paid out of the appropriate Consolidated Revenue Fund.

 

325.   (1)         A copy of any report of an inspector appointed under sections 314 and 315 of this Act, certified by the Commission to be a true copy, shall be admissible in any legal proceedings as evidence of the opinion of the inspector in relation to any matter contained in the report.

 

  (2)          A document purporting to be such a certificate as is mentioned above shall be received in evidence and be deemed to be such a certificate, unless the contrary is proved.

 

326.     (1)         Where it appears to the Commission, that there is good reason so to do, it may appoint one or more competent inspectors to investigate and report on the membership of any company and otherwise with respect to the company for the purpose of determining the true persons who are or have been financially interested in the success or failure (real or apparent) of the company or able to control or materially to influence the policy of the company.

 

  (2)          The appointment of an inspector under this section may define the scope of his investigation, whether as respects the matter or the period to which it is to extend or otherwise and in particular may limit investigation to matters connected with particular shares or debentures.

 

  (3)          Where an application for an investigation under this section with respect to particular shares or debentures of a company is made to the Commission by members of the company and the number of applicants or the amount of the shares held by them is not less than that required for an application for the appointment of an inspector under paragraphs (a) and (P') of subsection (2) of section 314 of this Act

 

(a)             the Commission shall appoint an inspector to conduct the investigation unless it is satisfied that the application is vexatious; and

 

(b)             the inspector9s appointment shall not exclude from the scope of his investigation any' matter which the application seeks to include except insofar as the Commission is satisfied that it is reasonable for the matter to be investigated.

 

  (4)          Subject to the terms of an inspector's appointment, his powers shall extend to the investigation of any circumstances suggesting the existence of an arrangement or understanding which, though not legally binding, is or was observed or likely to be observed in practice and which is relevant to the purposes of his investigation.

 

 

327.  (1)         For the purposes of any investigation under section 326 of this Act, the provisions of sections 316 to 320 of this Act shall apply with the necessary modifications to references to the affairs of the company or to those of any body corporate, so however, that

 

(a)             the said sections shall apply in relation to all persons who are or have been, or whom the inspector has reasonable cause to believe to be or have been, financially interested in the success or failure or the apparent success or failure of the company or any other body corporate whose membership is investigated with that of the company, or able to control or materially to influence the policy thereof, including persons concerned only on behalf of others, as they apply in relation to officers and agents of the company or of the other body corporate, as the case may be; and

 

(b)             the Commission shall not be bound to furnish the company or any other person with a copy of any report by an inspector appointed under this section or with a complete copy thereof if he is of the opinion that there is good reason for not divulging the contents of the reports or of part thereof, but shall keep a copy of any such report, or, as the case may be, the parts of any report as regards which he is not of that opinion.

 

  (2)          The expenses of any investigation under section 326 of this Act shall be defrayed out of the Consolidated Revenue Fund.

 

 

328.   (1)         Where it is made to appear to the Commission, that there is good reason to investigate the ownership of any shares in or debentures of a company and that it is unnecessary to appoint an inspector for the purpose, the Commission may require any person who it has reasonable cause to believe

 

(a)             to be or to have been interested in those shares or debentures; or

 

(b)             to act or to have acted in relation to those shares or debentures as a legal practitioner or an agent of some one interested therein,

 

to give to the Commission any information which the person has or might reasonably be expected to obtain as to the present and past interest in those shares or debentures and the names and addresses of the persons interested, and of any persons who act or have acted on their behalf in relation to the shares or debentures.

 

  (2)          For the purposes of this section, a person shall be deemed to have an interest in a share or debenture if he has any right to acquire or dispose of the share or debenture or any interest therein or to vote in respect thereof, or if his consent is necessary for the exercise of any of the rights of other persons interested therein, or if other persons interested therein can be required or are accustomed to exercise their rights in accordance with his instructions.

 

  (3)          Any person, who fails to give any information required of him under this section, or who in giving any such information makes any statement which he knows to be false in a material particular, or recklessly makes any statement which is false in a material particular shall be guilty of an offence and liable to a fine of N 500 or to imprisonment for a term of six months or to both.

 

329.   (1)         Where in connection with an investigation under section 326 or 328 of this Act, it appears to the Commission that there is difficulty in finding out the relevant facts about any share (whether issued or to be issued), and that the difficulty is due wholly or mainly to the unwillingness of the persons concerned or any of them to assist the investigation as required by this Act, the Commission may in writing direct that the shares shall until further notice be subject to the restrictions imposed by this section.

 

  (2)          So long as any shares are directed to be subject to the restrictions imposed by this section -

 

(a)             any transfer of those shares, or in case of unissued shares any transfer of the right to be issued therewith and any issue thereof, shall be void;

 

(b)             no voting rights shall be exercisable in respect of those shares;

 

(c)             no further shares shall be issued in right of those shares or in pursuance of any offer made to the holder thereof;

 

(d)             except in a liquidation, no payment shall be made of any sums due from the company on those shares, whether in respect of capital or otherwise.

 

  (3)          Where the Commission directs shares to be subject to restrictions under this section, or refuses to direct that shares shall cease to be subject thereto, any person aggrieved thereby may appeal to the court, and the court may, if it sees fit, direct that the shares shall cease to be subject to the said restrictions.

 

  (4)          Any direction or order of the court that shares shall cease to be subject to restrictions under this section, expressed to be made with a view to permitting a transfer of those shares may continue the restrictions mentioned in paragraphs (c) and (d) of subsection (2) of this section, either in whole or in part, so far as they relate to any right acquired or offer made before the transfer.

 

  (5)          Any person who

 

(a)             exercises or purports to exercise any right to dispose of any shares which, to his knowledge, are for the time being subject to restrictions under this section; or

(b)             votes in respect of any such shares, whether as holder or proxy, or appoints a proxy to vote in respect thereof; or

 

(c)             being the holder of any such shares, fails to notify that they are subject to the said restrictions,

 

shall be guilty of an offence and liable to a fine of N 500 or imprisonment for a term of six months, or to both.

 

  (6)          Where shares in any company are issued in contravention of the said restrictions, the company and every officer of the company who is in default shall be guilty of an offence and liable to a fine of N 500.

 

  (7)          A prosecution shall not be instituted under this section except by or with the consent of the Attorney-General of the Federation.

 

  (8)          This section shall apply in relation to debentures as it applies in relation to shares.

 

330.         Nothing in the foregoing provisions of this Part of this Act shall require disclosure to the Commission or to an inspector appointed by it by

 

(a)            a legal practitioner of any privileged communication made to him in that capacity, except as regards the name and address of his client; or

 

(b)            a company s bankers as such, of any information as to the affairs of any of their customers other than the company.

 

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CompaniesAndAlliedMattersActPartIX-X

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Part IX

Directors and Secretaries of the company

 

Chapter 1

Directors

 

Meaning of Directors

 

 

244.    (1)         Directors of a company registered under this Decree are persons duly appointed by the company or direct and manage the business of the company.

 

  (2)          In favour of any person dealing with the company there shall be a rebuttable presumption that all persons who are described by the company as directors, whether as executive or otherwise, have been duly appointed.

 

  (3)          Where a person not duly appointed acts or holds himself out as a director, he shall be guilty of an offence, and on conviction shall be liable to imprisonment for 2 years or to a fine of N100 for each day he so acts or holds out himself as a director, or to both such imprisonment or fine and shall be restrained by the company.

 

  (4)          If it is the company that holds him out as a director, it shall be liable to a fine of N1,000 each day it holds him out, and he and the company may be restrained by any member from so acting unless or until he is duly appointed.

 

245.   (1)         Without prejudice to the provisions of sections 244 and 250, and for the purposes of sections 253, 275 and 281 of this Decree, "director" shall include any person on whose instructions and directions the directors are accustomed to act.

 

  (2)          Subject to sections 275, 280 and 281 of this Decree, nothing contained in section 250 of this Decree shall be deemed to derogate from the duties or liabilities of the duly appointed directors.

 

  (3)          For the avoidance of doubt, the fact that a person in his professional capacity gives advice and a director acts on it shall not be constructed to make such a person under this Decree person in accordance with whose directions or instructions the director of a company is accustomed to act.

 

 

Appointment of Directors

 

 

246.    (1)         Every company registered on or after the commencement of this Decree shall have at least two directors and every company registered before that date shall before the expiration of 6 months from the commencement of this Decree have at least tow directors. (2) Any company whose number of directors falls below two, shall within one months of its so falling appoint new directors and shall not carry on business after the expiration of one month, unless such new directors are appointed.

 

  (3)          A director or member of a company who knows that a company carries on business after the number of directors has fallen below two for more than 60 days shall be liable for all liabilities and debts incurred by the company during that period when the company so carried on business.

 

247.          Subject to section 246 of this Decree, the number of directors and the names of the first directors shall be determined in writing by the subscribers of the memorandum of association or a majority of them or the directors may be named in the articles.

 

248.    (1)         The members at the annual general meeting shall have power to re-elect or reject directors and appoint new ones.

 

  (2)          In the event of all the directors and shareholders dying, any of the personal representatives shall be able to apply to the Court for an order to convene a meeting of all the personal representatives of the shareholders entitled to attend and vote at a general meeting to appoint new directors to manage the company, and if they fail to convene a meeting, the creditors, if any shall be able to do so.

 

249.    (1)         The board of directors shall have power to appoint new directors to fill any casual vacancy arising out of death, resignation, retirement or removal.

 

  (2)          Where a casual vacancy is filled by the directors, the person may be approved by the general meeting at the next annual general meeting, and if not so approved, he shall forthwith cease to be a director.

 

  (3)          The directors may increase the number of directors so long as it does not exceed the maximum allowed by the articles, but the general meeting shall have power to increase or reduce the number of directors generally and may determine in what rotation the directors shall retire:

 

Provided that such reduction shall not invalidate any prior act of the removed director.

 

250.         Where a person not duly appointed as a director acts as such on behalf of the company, his act shall not bind the company and he shall be personally liable for such action:

 

Provided that where it is the company which holds him out as director, the company shall be bound by his acts.

 

251.    (1)         The shareholding qualification for directors may be fixed by the articles of association of the company and unless and until so fixed no shareholding qualification shall be required.

 

  (2)          It shall be the duty of every director who is by the articles of the company required to hold a specified share qualification, and who is not already so qualified to obtain qualification within 2 months after his appointment.

 

  (3)          The office of director of a company shall be vacated if the director does not within 2 months from the date of his appointment, obtain his qualification or after the expiration of the said period, he ceases at any time to hold his shareholding qualification.

 

  (4)          A person vacating office under this section shall be incapable of being re-appointed director of the company until he has obtained his shareholding qualification.

 

  (5)          If after the expiration of the said period, any unqualified person acts as a director of the company, he shall be liable to a fine of N50 for every day between the expiration of the said period or the day on which he ceased to be qualified, as the case may be, and the last day on which it is proved that he acted as a director.

 

252.  (1)          Any person who is appointed or to his knowledge proposed to be appointed director of a public company and who is 70 or more years old shall disclose this fact to the members at the general meeting.

 

  (2)          Any person who fails to disclose his age as required under this section shall be guilty of an offence and liable to a fine of N500.

 

253.   (1)         If any person, being an insolvent person acts as director of or directly or indirectly takes part in or is concerned in the management of any company, he shall be guilty of an offence and liable on conviction to a fine of N500, or to imprisonment for a term not less than 6 months or more than two years, or both.

 

  (2)          In this section, "company" includes an unregistered company.

 

254.   (1)         Where-

 

(a)             a person is convicted by a High Court of any offence in connection with the promotion, formation or management of a company; or

 

(b)             in the course of winding up a company it appears that a person-

 

(i)             has been guilty of any offence for which he is liable (whether he has been convicted or not) under section 513 of this Decree; or

 

(ii)             has otherwise been guilty, while an officer of the company, of any fraud in relation to the company or of any breach of his duty to the company;

the Court shall make an order that that person shall not be a director of or in any way, whether directly or indirectly, be concerned or take part in the management of a company for a specified period not exceeding 10 years.

 

  (2)          In the foregoing subsection, the High Court had the court where used in relation to the making of an order against any person by virtue of paragraph (a) of subsection (1) of this section, include the court before which he is convicted, as well as any court having jurisdiction to wind up the company, and in relation to the granting of leave means any court having jurisdiction to wind up the company as respects which leave is sought.

 

  (3)          A person intending to apply for the making of an order under this section by the Court having jurisdiction to wind up a company shall give not less than 10 days notice of his intention to the person against whom the order is sought, and on the hearing of the application, the last mentioned person may appear and himself give evidence or all witnesses.

 

  (4)          An application for the making of an order under this section by the court having jurisdiction to wind up a company may be made by the official receiver, or by the liquidator of the company or by any person who is or has been a member or creditor of the company; and on the hearing of any application for an order under this section by the official receiver or the liquidator, or of any application for leave under this section by a person against whom an order has been made on the application of the official receiver or liquidator, the official receiver or liquidator shall appear and call the attention of the court to any matters which seemed to him to be relevant, and may himself give evidence or call witnesses.

 

  (5)          An order may be made by virtue of paragraph (b) (ii) of subsection (1) of this section, notwithstanding that the person concerned may be criminally liable in respect of the matters on the ground of which the order is to be made and for the purposes of the said paragraph (b) (ii) "officer" includes any person in accordance with whose directions or instructions the directors of the company have been accustomed to act.

 

  (6)          If any person acts in contravention of an order made under this section, he shall be guilty of an offence and in respect of each offence, be liable on conviction to a fine of N500 or to imprisonment for a term of not less than 6 months or more than two years, or both.

 

255.         A person may be appointed a director for life provided that he shall be removable under section 262 of this Decree.

 

256.         Subject to the provisions of this Decree, a person may be appointed a director of a public company notwithstanding that he is 70 years or more of age but special notice shall be required of any resolution appointing or approving the appointment of such a director for the purposes of this section, and the notice given to the company and by the company to its members shall state the age of the person to whom it relates.

 

257.  (1)         The following persons shall be disqualified from being director-

 

(a)             an infant, that is, a person under the age of 18 years;

 

(b)             a lunatic or person of unsound mind;

 

(c)             a person disqualified under sections 253 and 258 of this Decree;

 

(d)             a corporation other than its representative appointed t the board for a given term.

 

258.    (1)         The office of director shall be vacated if the director-

 

(a)             ceases to be a director by virtue of section 251 of this Decree; or

 

(b)             becomes bankrupt or makes any arrangement or composition with his creditors generally; or

 

(c)             becomes prohibited from being a director by reason of any order made under section 254 of this Decree; or

 

(d)             becomes of unsound mind; or

 

(e)             resigns his office by notice in writing to the company.

 

  (2)          Where a director presents himself for a re-election, a record of his attendance at the meetings of the board during the preceding one year shall be made available to members at the general meeting where he is to be re-elected.

 

259.   (1)         Unless the articles otherwise provided, at the first annual general meeting of the company, all the directors shall retire from office, and at the annual general meeting in every subsequent year one-third of the directors for the time being, or if their number is not three or a multiple of three, then the number nearest one-third shall retire from office.

 

  (2)          The directors to retire in every year shall be those who have been longest in office since their last election, but as between persons who became directors on the same day those to retire shall (unless they otherwise agree among themselves) be determined by lot.

 

  (3)          The company at the meeting at which a director retires in the manner mentioned in subsections (1) (2) of this section, may fill the vacated office by electing a person to that office and in default the retiring director shall, if offering for re-election, be deemed to have been re-elected, unless at such meeting it is expressly resolved not to fill such vacated office or unless a resolution for the re-election of such director shall have been put to the meeting and lost.

 

  (4)         No person other than a director retiring at the meeting shall unless recommended by the directors, be eligible for election to the office of director at any general meeting unless not less than 3 nor more than 21 days before the date appointed for the meeting there shall have been left at the registered office or head office of the company notice in writing, signed by a member duly qualified to attend and vote at the meeting for which such notice is given, of his intention to propose such person for election, and also notice in writing signed by that person of his willingness to be elected.

 

260.         The acts of a director, manager, or secretary shall be valid notwithstanding any defect that may afterwards be discovered in his appointment or qualification.

 

261.   (1)         At a general meeting of a company other than a private company, a motion for the appointment of two or more persons as directors of the company by a single resolution shall not be made, unless resolution that it shall be so made has first been agreed to by the meeting without any vote being given against it.

 

  (2)          A resolution moved in contravention of this section shall be void, whether or not its being so moved was objected to at the time:

 

Provided that-

 

(a)             this subsection shall not be taken as excluding the operation of section 260 of this Decree; and

 

(b)             where a resolution so moved is passed, no provision for automatic re-appointment of retiring directors in default of another appointment shall apply.

 

  (3)          For the purposes of this section, a motion for approving a person's appointment or for nominating a person for appointment shall be treated as motion for his appointment.

 

  (4)          Nothing in this section shall apply to a resolution altering the company's articles.

 

 

Removal of Directors

 

 

262.   (1)         A company may be ordinary resolution remove a director before the expiration of his period of office, notwithstanding anything in its articles or in any agreement between it and him.

 

  (2)          A special notice shall be required of any resolution or remove a director under this section, or to appoint some other person instead of a director so removed, at the meeting at which he is removed, and on receipt of notice of an intended resolution to remove a director under this section, the company shall forthwith send a copy of it to the director concerned, and the director (whether or not he is a member of the company) shall be entitled to be heard on the resolution at the meeting.

 

  (3)          Where notice is given of an intended resolution or remove a director under this section and the director concerned makes with respect to it representations in writing to the company (not exceeding a reasonable length) and requests their notification to members of the company, the company shall, unless the representations are received by it too late for it to do so-

 

(a)             in any notice of the resolution given to members of the company state the fact of the representations having been made; and

 

(b)             send a copy of the representations to every member of the company to whom notice of the meeting is sent (whether before or after receipt of the representations by the company);

 

and if a copy of the representations is not sent as required in this section because it is received too late or because of the company's default, the director may (without prejudice to his right to be heard orally) require that the representations shall be read out at the meeting:

 

Provided that copies of the representations need not be sent out and the representations need not be read out at the meeting if, on the application either of the company or any other person who claims to be aggrieved, the court is satisfied that the rights conferred by this section are being abused to secure needless publicity for defamatory matter and the court may order the company's costs on an application under this section to be paid in whole or in part by the director, notwithstanding that he is not a party to the application.

 

  (4)          A vacancy created by the removal of a director under this section, if not filled at the meeting at which he is removed, may be filled as a casual vacancy.

 

  (5)          A person appointed director in place of a person removed under this section shall be treated, for the purpose of determining the time at which he or any other director is to retire, as if he had become director on the day on which the person in whose place he is appointed was last appointed a director.

 

  (6)          Nothing in this section shall be taken as depriving a person removed under it of compensation or damages payable to him in respect of the termination of his appointment as a director or of any appointment terminating with that as director, or as derogating from any power to remove a director which may exist apart from this section.

 

 

Proceedings of Directors

 

 

263.    (1)         The directors may meet together for the despatch of business, adjourn and otherwise regulate their meetings as they think fit:

 

Provided that the first meeting of the directors shall be held not later than 6 months after the incorporation of the company.

 

  (2)          Any question arising at any meeting shall be decided by a majority of votes, and in case of an equality of votes, the chairman shall have a second or casting vote.

 

  (3)          A director may, and the secretary on the requisition of a director shall, at any time summon a meeting of the directors.

 

  (4)          The directors may elect a chairman of their meetings and determine the period for which he is to hold office; but if no such chairman is elected or if at any meeting the chairman is not present within five minutes after the time appointed for holding the same, the directors present may choose one of their number to be chairman of the meeting.

 

  (5)          The directors may delegate any of their powers to a managing directors or to committees consisting of such member or members of their body as they think fit and the managing director or any committee so formed shall, in the exercise of the powers so delegated, conform to any regulations that may be made by the directors.

 

  (6)          A committee may elect a chairman of its meeting; and if no such chairman is elected, or if at any meeting the chairman is not present within five minutes after the time appointed for holding the same, the members present may choose one of their number to be chairman of the meeting.

 

  (7)          A committee may meet and adjourn as it thinks proper, and any questions arising shall be determined by a majority of votes of the members present, and in the case of equality of votes the chairman shall have a second or casting vote.

 

  (8)          A resolution in writing, signed by all the directors for the time being entitled to receive notice of a meeting of the directors, shall be as valid and effectual as if it had been passed at a meeting of the directors duly convened and held.

 

  (9)          In all the directors' meetings, each director shall be entitled to one vote.

 

264.    (1)         Unless the articles otherwise provide, the quorum necessary for the transaction of the business of directors shall be 2 where there are not more than 6 directors, but where there are more than 6 directors, the quorum shall be one third of the number of directors, and where the number of directors is not a multiple of three, then the quorum shall be one-third to the nearest number.

 

  (2)          Where a committee of directors is appointed by the board of directors, the board shall fix its quorum, but where no quorum is fixed, the whole committed shall meet and act by a majority.

 

265.        Where the board is unable to act because a quorum cannot be formed, the general meeting may act in place of the board and where a committee in unable to act because a quorum cannot be formed, the board may act in place of the committee.

 

266.   (1)         Every director shall be entitled to receive notice of the directors' meetings, unless he is disqualified by any reason under the Decree from continuing with the office of director.

 

  (2)          There shall be given 14 days notice in writing to all directors entitled to receive notice unless otherwise provided in the articles.

 

  (3)          Failure to give notice in accordance with subsection (2) of this section shall invalidate the meeting.

 

  (4)          Unless the articles otherwise provide, it shall not be necessary to give notice of a meeting of directors to any director for the time being absent from Nigeria, provided that if he has given an address in Nigeria, the notice shall be sent to such an address.

 

 

Remuneration and other payments

 

 

267.   (1)          The remuneration of the directors shall from time to time be determined by the company in general meeting and such remuneration shall be deemed to accrue from day to day.

 

   (2)          The directors may also be paid all travelling, hotel and other expenses properly incurred by them in attending and returning from meetings of the directors or any committee of the directors or general meetings of the company or in connection with the business of the company.

 

  (3)          Where remuneration has been fixed by the articles, it shall be alterable only by a special resolution.

 

  (4)          A company shall not be bound to pay remuneration to directors, but where the company agrees to pay, the directors shall be paid such remuneration out of the fund of the company.

 

  (5)          The amount of remuneration shall be a debt from the company so that if directors take office on the basis of the articles, they shall be able to sue the company on account of the debt or prove it in the liquidation.

 

  (6)          A director who receives more money than he is entitled to, shall be guilty of misfeasance and shall be accountable to the company for such money.

 

  (7)          The remunerations of directors shall be apportionable .

   

268.   (1)         A managing director shall receive such remuneration (whether by way of salary, commission or participation in profits, or partly in one way and partly in another) as the directors may determine.

 

  (2)          Where a managing director is removed for any reason whatsoever under section 262 of this Decree, he shall have a claim for breach of contract if there is any or where a contract could be inferred from the terms of the articles.

 

  (3)          Where he performs some services without a contract, he shall be entitled to payment on a quantum meriut

 

269.    (1)         It shall not be lawful for a company to pay a director remuneration (whether as director or otherwise) free of income tax, or otherwise calculated by reference to or varying with the amount of his income tax, or at or with the rate or standard rate of income tax, except under a contract which was in force at the commencement of this Act, and provides expressly, and not by reference to the articles, for payment or remuneration as aforesaid.

 

  (2)          Any such provision contained in a company's articles or in any contract other than such a contract as mentioned in subsection (1) of this section or in any resolution of a company or the resolution of a company's directors for payment to a director of remuneration as mentioned in subsection (1) of this section, shall have effect as if it provided for payment, as a gross sum subject to income tax, of the net sum for which it actually provides.

 

  (3)          This section shall not apply to remuneration due before this Act comes into force or in respect of a period before it comes into force.

 

270. (1)          It shall not be lawful for a company to make a loan to any person who is its director or a director of its holding company, or to enter into any guarantee or provide any security in connection with a loan made to such a person as earlier mentioned by any other person:

 

Provided that nothing in this section shall apply -

 

(a)             subject to subsection (2) of this section, to anything done to provide any such person as mentioned in this subsection with funds to meet expenditure incurred or to be incurred by him for the purposes of the company or for the purpose of enabling him properly to perform his duties as an officer of the company; or

 

(b)             in the case of a company whose ordinary business includes the lending of money or the giving of guarantees in connection with loans made by other persons, to anything done by the company in the ordinary course of that business.

 

  (2)           Proviso (a) to subsection (1) of this section shall not authorise the making of any loan, or the entering into any guarantee, or the provision of any security except

 

(a)             with the prior approval of the company given at a general meeting at which the purposes of the expenditure and the amount of the loan or the extent of the guarantee or security, as the case may be, are disclosed; or

 

(b)             on condition that, if the approval of the company is not given as in subsection (1) of this section at or before the next following annual general meeting, the loan shall be repaid or the liability under the guarantee or security shall be discharged, as the case may be, within six months from the conclusion of that meeting.

 

  (3)          Where the approval of the company is not given as required by any such condition, the directors authorising the making of the loan, or the entering into the guarantee, or the provision of the security, shall be jointly and severally liable to indemnify the company against any loss arising therefrom.

 

271.         It shall not be lawful for a company to make to any director of the company, any payment by way of compensation for loss of office, or as consideration for or in connection with his retirement from office, unless particulars with respect to the proposed payment and the amount have been disclosed to members of the company and the proposal is approved by the company.

 

272.    (1)         If in connection with the transfer of the whole or any part of the undertaking or property of a company, it is proposed to make any payment to a director of the company by way of compensation for loss of office, or as consideration for or in connection with his retirement from office, the payment shall be unlawful unless particulars with respect to the proposal and the amount, have been disclosed to members of the company and the proposal is approved by the company.

 

  (2)          Where a payment declared by this section to be illegal is made to a director of a company, the amount received shall be deemed to have been received by him in trust for the company.

 

273.    (1)         Where, in connection with the transfer to any persons of all or any of the shares in a company, being a transfer resulting from -

 

(a)             an offer made to the general body of shareholders;

 

(b)             an offer made by or on behalf of some other body corporate with a view to the company becoming its subsidiary or a subsidiary of its holding company;

(c)             an offer made by or on behalf of an individual with a view to his obtaining the right to exercise or control the exercise of not less than one third of the voting power at any general meeting of the company; or

(d)             any other offer which is conditional on acceptance to a given extent that payment is to be made to a director of the company by way of compensation for loss of office, or as consideration for or in connection with his retirement from office,

 

it shall be the duty of that director to do all things reasonably necessary to secure that particulars with respect to the proposed payment and the amount, are included in or sent with any notice of the offer made for their shares which is given to any shareholders.

 

  (2)          If -

 

(a)             any such director fails to do all things reasonably necessary as mentioned in this section; or

 

(b)             any person who has been properly required by any such director to include the said particulars in or send them with any such notice as aforesaid fails so to do;

 

he shall be guilty of an offence and liable to a fine of N 20.

 

  (3)          If

 

(a)             the requirements of subsection (1) of this section are not complied with in relation to any such payments as are mentioned there; or

 

(b)             the making of the proposed payment is not, before the transfer of any shares in pursuance of the offer, approved by a meeting summoned for the purpose of the holders of the shares to which the offer relates and of other holders of shares of the same class as any of the said shares;

 

any sum received by the director on account of the payment shall be deemed to have been received by him in trust for any person who has sold his shares as a result of the offer made, and the expenses incurred by him in distributing that sum amongst those persons shall be borne by him and not retained out of that sum.

 

  (4)          Where the shareholders referred to in subsection (3)(b) of this section are not all the members of the company and no provision is made by the articles for summoning or regulating such a meeting as is mentioned in that paragraph, the provisions of this Act and of the company's articles relating to general meetings of the company shall, for that purpose, apply to the meeting either without modification or with such modifications as the Commission on the application of any person concerned may direct for the purpose of adapting them to the circumstances of the meeting.

 

  (5)          If at a meeting summoned for the purpose of approving any payment as required by paragraph (b) of subsection (3) of this section, a quorum is not present and, after the meeting has been adjourned to a later date, a quorum is again not present, the payment shall, for the purposes of that subsection be deemed to have been approved.

 

274.     (1)         Where in proceedings for the recovery of any payment which has been received by any person in trust by virtue of subsections (I) and (2) of subsection 272 or subsections (I) and (3) of section 273 of this Act, it is shown that -

 

(a)             the payment was made in pursuance of any arrangement entered into as part of the agreement for the transfer in question, or within one year but before two years after that agreement or the offer leading thereto; and

 

(b)             the company or any person to whom the transfer was made was privy to that arrangement;

 

the payment shall be deemed, except in so far as the contrary is shown, to be one to which the subsections apply.

 

  (2)          If in connection with any such transfer as is mentioned in sections 272 and 273 of this Act -

 

(a)             the price to be paid to a director of the company whose office is to be abolished or who is to retire from office for any shares in the company held by him is in excess of the price obtainable at the time by other holders of the like shares; or

 

(b)             any valuable consideration is given to any such director;

 

the excess or the money value of the consideration, as the case may be, shall, for the purposes of that section, be deemed to have been a payment made to him by way of compensation for loss of office, or as consideration for or in connection with his retirement from office.

 

  (3)          It is hereby declared that references in sections 271 to 273 of this Act to payments made to any director of a company by way of compensation for loss of office, or as consideration for or in connection with his retirement from office shall not include any bona <do payment by way of damages for breach of contract or by way of pension in respect of past services, and for the purposes of this subsection, "pension" includes any superannuation allowance, superannuation gratuity or similar payment.

 

  (4)          Nothing in section 272 or 273 of this Act shall be taken to prejudice the operation of any rule of law requiring disclosure to be made with respect to any such payments as are mentioned there, or with respect to any other like payments made, or to be made. to the directors of a company.

 

 

Disclosure of directors' interests

 

 

275.    (1)         Every company shall keep a register showing as respects each director of the company (not being its holding shareholding company) the number, description and amount of any shares etc in or debentures of the company or any other body corporate, being the company's subsidiary or holding company, or a subsidiary of the company's holding company, which are had by or in trust for him or of which he has any right to become the holder (whether on payment or not):

 

Provided that the register need not include shares in any body corporate which is the wholly-owned subsidiary of another body corporate, and for this purpose, a body corporate shall be deemed to be the wholly-owned subsidiary of another if it has no members but that other and that other's wholly-owned subsidiaries and its or their nominees.

 

  (2)          Where any shares or debentures fall to be or cease to be recorded in the said register in relation to any director by reason of a transaction entered into after the commencement of this Act and while he is a director, the register shall also show the date ofl and price or other consideration for the transaction;

 

Provided that where there is an interval between the agreement for any such transaction and the completion thereof, the date shall be that of the agreement.

 

  (3)          The nature and extent of a director's interest or right in or over any shares or debentures recorded in relation to him in the said register shall, if he so requires, be indicated in the register.

 

 (4)          The company shall not by virtue of anything done for the purposes of this section, be affected with notice of, or put upon inquiry as to the rights of any person in relation to any shares or debentures.

 

 (5)          The said register shall, subject to the provisions of this section be kept at the company's registered or head office and shall be open to inspection during business hours (subject to such reasonable restrictions as the company may by its articles or in general meeting impose, so that not less than two hours in each day be allowed for inspection) as follows -

 

(a)             during the period beginning fourteen days before the date of the company's annual general meeting and ending three days after the date of its conclusion, it shall be open to the inspection of any member or holder of debentures of the company; and

 

(b)             during that or any other period, it shall be open to the inspection of any person acting on behalf of the Commission.

 

  (6)          In computing the fourteen days and the three days mentioned in subsection (5) of this section, any day which is a Saturday or Sunday or a public holiday shall be disregarded.

 

  (7)          Without prejudice to the rights conferred by subsection (5) of this section, the Commission may, at any time, request for the production to it of a copy of the register, or any part thereof.

 

  (8)          The register shall also be produced at the commencement of the company's annual general meeting and remain open and accessible during the continuance of the meeting to any person attending the meeting.

 

  (9)          If default is made in complying with subsection (1) or (2) of this section, or if any inspection required under this section is refused, or any copy required thereunder is not sent within a reasonable time, the company and every officer of the company who is in default shall be guilty of an offence and liable to a fine of N 500, and if default is made in complying with subsection (8) of this section, the company and every officer of the company who is in default shall be liable to a fine of N50.

 

 (10)          If any inspection required under this section is refused, the court may, by order, compel an immediate inspection of the register.

 

 (11)          For the purposes of this section-

 

(a)             any person in accordance with whose directions or instructions, the directors of a company are accustomed to act shall be deemed to be a director of the company; and

 

(b)             a director of a company shall be deemed to hold or to have any interest or right in or over, any shares or debentures if a permanent representative of the body corporate other than the company holds them or has that interest or right in or over them, and either-

 

(i)             that permanent representative is accustomed to act in accordance with his directions or instructions; or

 

(ii)             he is entitled to exercise or control the exercise of one-third or more of the voting power at any general meeting of that body corporate.

 

276.    (1)         It shall be the duty of any director of a company notice to the company of such matters relating to as may be necessary for the purposes of sections 275 and 277 of this Act except so far as it relates to loans made by the company or by any other person under a guarantee from or on a security provided by the company, to an officer thereof.

 

  (2)          Any such notice given for the purposes of section 275 of this Act, shall be in writing and if it is not given at a meeting of the directors, the director giving it shall do all things reasonably necessary to secure that it is brought up and read at the next meeting of directors after it is given.

 

  (3)          Subsection (1) of this section shall, to the extent to which it applies in relation to directors, apply to the like extent for

 

(a)             the purposes of section 277 of this Act in relation to officers other than directors;

 

(b)             the purposes of sections 276 and 277 of this Act in relation to persons who are or have at any time during the preceding five years been officers of the company.

 

  (4)          Any person who makes default in complying with the foregoing provisions of this section shall be guilty of an offence and liable to a fine of N50.

 

277.    (1)         Subject to the provisions of this section, it shall be the duty of a director of a company who is in any way whether directly or indirectly, interested in a contract or proposed contract with the company to declare the nature of his interest at a meeting of the directors of the company.

 

  (2)          In the case of a proposed contract, the declaration required by this section to be made by a director shall be made at the meeting of the directors at which the question of entering into the contract is first taken into consideration or if the director was not at the date of that meeting interested in the proposed contract, at the next meeting of the directors held after he became so interested, and in a case where the director becomes interested in a contract after it is made, the said declaration shall be made at the first meeting of the directors held after he becomes so interested.

 

  (3)          For the purpose of this section, a general notice given to the directors of a company by a director to the effect that he is a member of a specified company or firm and is to be regarded as interested in any contract which may, after the date of the notice, be made with that company or firm, shall be deemed to be a sufficient declaration of interest in relation to any contract so made:

 

Provided that any such notice shall not have effect, unless it is given at a meeting of the directors or the director does all things reasonably necessary to secure that it is brought up and read at the next meeting of the directors after it is given.

 

  (4)          Any director who fails to comply with the provisions of this section shall be guilty of an offence and liable to a fine of N100.

 

  (5)          Nothing in this section shall be taken to prejudice the operation of any rule of law restricting directors of a company from having any interest in contracts with the company.

 

 

 

278.    (1)         Every company to which this section applies shall, in all trade catalogues, trade circulars, showcards and business letters on or in which the company's name appears and which are issued or sent by the company to any person in Nigeria state in legible characters with respect to every director the following particulars

 

(a)             his present forename, or the initials thereof, and present surname;

 

(b)             any former forenames and surnames;

 

(c)             his nationality, if not a Nigerian:

 

Provided that, if special circumstances exist which the Commission is of opinion render it expedient that such an exemption should be granted, the Commission may, subject to such conditions as it may prescribe by notice published in the Gazette, exempt a company from the obligations imposed by this subsection.

 

  (2)          This section shall apply to every company incorporated under this Act, or any enactment repealed by it.

 

  (3)          If a company makes default in complying with this section every officer of the company who is in default shall be guilty of an offence and liable on conviction for each offence to a fine of N50:

 

Provided that no proceedings shall be instituted under this section except by, or with the consent O{ the Attorney-General of the Federation.

 

  (4)          For the purposes of this section -

 

(a)             "initials" includes a recognised abbreviation of a forename;

 

(b)             references to a former forename or surname in the case of a married woman do not include the name or surname by which she was known previous to the marriage; and

 

(c)             "showcards" means cards containing or exhibiting articles dealt with, or samples or representations thereof.

 

 

Duties of Directors

 

 

279.   (1)         A director of a company stands in a fiduciary directors. relationship towards the company and shall observe the utmost good faith towards the company in any transaction with it or on its behalf.

 

   (2)          A director shall also owe fiduciary relationship with the company in the following circumstances-

 

(a)            where a director is acting as agent of a particular shareholder;

 

(b)            where even shareholder, dealing with though he is not an agent of any such a shareholder or other person is the company's securities.

 

   (3)          A director shall act at all times in what he believes to be the best interests of the company as a whole so as to preserve its assets, further its business, and promote the purposes for which it was formed, and in such manner as a faithful, diligent, careful and ordinarily skilful director would act in the circumstances.

 

  (4)          The matters to which the director of a company is to have regard in the performance of his functions include the interest of the company's employees in general, as well as the interests of its members.

 

  (5)          A director shall exercise his powers for the purpose for which he is specified and shall not do so for a collateral purpose, and the power, if exercised for the right purpose does not constitute a breach of duty, if it, incidentally, affects a member adversely.

 

  (6)          A director shall not fetter his discretion to vote in a particular way.

 

  (7)          Where a director is allowed to delegate his powers under any provision of this Act such a director shall not delegate the power in such a way and manner as may amount to an abdication of duty.

 

  (8)          No provision, whether contained in the articles or resolutions of a company, or in any contract shall relieve any director from the duty to act in accordance with this section or relieve him from any liability incurred as a result of any breach of the duties conferred upon him under this section.

 

  (9)       Any duty imposed on a director under this section shall be enforceable against the director by the company.

 

280.     (1)         The personal interest of a director shall not conflict with any of his duties as a director under this Act.

 

 

   (2)          A director shall not -

 

(a)            in the course of management of affairs of the company; or

 

(b)            in the utilisation of the company's property,

Part X

Protection of Minority against illegal and oppressive conduct

 

 

Action by or against the company

 

 

299.         Subject to the provisions of this Act, where an irregularity has been committed in the course of a company's affairs or any wrong has been done to the company, only the company can sue to remedy that wrong and only the company can ratify the irregular conduct.

 

 

300.         Without prejudice to the rights of members under sections 303 to 30S and sections 310 to 312 of this Act or any other provisions of this Act, the court on the application of any member, may by injunction or declaration restrain the company from the following -

 

(a)             entering into any transaction which is illegal or ultra vires;

 

(b)             purporting to do by ordinary resolution any act which by its constitution or the Act requires to be done by special resolution;

 

(c)             any act or omission affecting the applicant's individual rights as a member;

 

(d)             committing fraud on either the company or the minority shareholders where the directors fail to take appropriate action to redress the wrong done;

 

(e)             where a company meeting cannot be called in time to be of practical use in redressing a wrong done to the company or to minority shareholders; and

 

(f)             where the directors are likely benefit, or have profited or negligence or from their breach of duty.

 

301.   (1)         Where a member institutes a personal action to enforce a right due to him personally, he shall not be entitled to any damages but to a declaration or injunction to restrain the company or the directors from doing a particular act.

 

  (2)          Where a member institutes a representative action on behalf of himself and other affected members to enforce any rights due to them, he shall not be entitled to any damages but to a declaration or injunction to restrain the company and/or directors from doing a particular act.

 

  (3)          Where any member institutes an action under this section, the court may award costs to him personally whether or not his action succeeds.

 

  (4)          In any proceedings by a member under section 300 of this Act, the court may, if it thinks fit order that the member shall give security for costs.

 

302.         For the purpose of sections 300 and 301 of this Act, "member" includes -

 

(a)             the personal representative of a deceased member; and

 

(b)             any person to whom shares have been transferred or transmitted by operation of law.

 

303.     (1)         Subject to the provisions of subsection (2) of this section, an applicant may apply to the court for leave to bring an action in the name or on behalf of a company, or to intervene in an action to which the company is a party, for the purpose of prosecuting, defending or discontinuing the action on behalf of the company.

 

  (2)          No action may be brought and no intervention may be made under subsection (1) of this section, unless the court is satisfied that -

 

(a)             the wrongdoers are the directors who are in control, and will not take necessary action;

 

(b)             the applicant has given reasonable notice to the directors of the company of his intention to apply to the court under subsection (1) of this section if the directors of the company do not bring, diligently prosecute or defend or discontinue the action;

 

(c)             the applicant is acting in good faith; and

 

(d)             it appears to be in the best interest of the company that the action be brought, prosecuted, defended or discontinued.

 

304.   (1)         In connection with an action brought or intervened under section 303 of this section, the court may, at any time, make any such order or orders as it thinks fit.

 

  (2)          Without prejudice to the generality of subsection (I) of this section, the court may make one or more of the following orders. that is an order -

 

(a)             authorising the applicant or any other person to control the conduct of the action;

 

(b)             giving directions for the conduct of the action;

 

(c)             directing that any amount adjudged payable by a defendant in the action shall be paid in whole or in part. directly to former and present security holders of the company instead of to the company;

 

(d)             requiring the company to pay reasonable legal fees incurred by the applicant in connection with the proceedings.

 

305.         An application made or an action brought or intervened in under section 303 of this Act shall not be stayed or dismissed by reason only that it is shown that an alleged breach of a right or a duty owed to the company has been or may be approved by the shareholders of such company, but evidence of approval by the shareholders may be taken into account by the court in making an order under section 304 of this Act.

 

306.         An application made or an action brought or intervened in under section 303 of this Act shall not be stayed, discontinued, settled or dismissed for want of prosecution without the approval of the court given upon such terms as the court thinks fit and. if the court determines that the rights of any applicant may be substantially affected by such stay, discontinuance. settlement or dismissal, the court may order any party to the application or action to give notice to the applicant.

 

307.         An applicant shall not be required to give security for costs in any application made or action brought or intervened in under section 303 of this Act.

 

308.         In an application made or an action brought or intervened in under section 303 of this Act the court may, at any time. order the company to pay to the applicant interim costs before the final disposition of the application or action.

 

309.         In sections 303 to 308 of this Act9 "applicant" means -

 

(a)            a registered holder or a beneficial owner and a former registered holder or beneficial owner, of a security of a company;

 

(b)             a director or an officer or a former director or officer of a company;

 

(c)             the Commission; or

 

(d)             any other person who in the discretion of the court, is a proper person to make an application under section 303 of this Act.

 

 

Relief on the grounds of unfairly prejudicial and oppressive conduct

 

 

310.   (1)         An application to the Court by petition for an order under section 311 of this Act in relation to a company may be made by any of the following persons -

 

(a)            a member of the company;

 

(b)            a director or officer or former director or officer of the company;

 

 

(c)             a creditor;

 

(d)             the Commission; or

 

(e)            any other person who, in the discretion of the court, is the proper person to make an application under section 311 of this Act.

 

  (2)          In sections 3 11 to 313 of this Act, "member" includes -

 

(a)            the personal representative of a deceased member; and

 

(b)             any person to whom shares have been transferred or transmitted by operation of law.

 

311.  (1)         An application for relief on the ground that the affairs of a company are being conducted in an illegal or oppressive may be made to the court by petition.

 

  (2)          An application to the court by petition for an order under this section in relation to a company may be made--

 

(a)             by a member of the company who alleges -

 

(i)             that the affairs of the company are being conducted in a manner that is oppressive or unfairly pre-judicial to, or unfairly discriminatory against, a member or members, or in a manner that is in disregard of the interests of a member or the members as a whole, or

 

(ii)             than an act or omission or a proposed act or omission, by or on behalf of' the company or a resolution, or a proposed resolution, of a class of members, was or would be oppressive or unfairly prejudicial to, or unfairly discriminatory against, a member or members or was or would be in a manner which is in disregard of the interests of a member or the members as a whole; or

 

(b)             by any of the persons mentioned tinder paragraphs (h), (c) and (e) of subsection (I) of section 310 of this Act who alleges-

 

(i)             that the affairs of the company are being conducted in a manner oppressive or unfairly pre-judicial to or discriminatory against or in a manner in disregard of the interests of that person,

 

(ii)             that an act or omission, or a proposed act or omission was or would be oppressive or unfairly prejudicial to. or unfairly discriminatory against, or which is in a manner in disregard of the interests of that person; or

 

(c)             by the Commission in a case where it appears to it in the exercise of its powers under the provisions of this Act or any other enactment thaw-

 

(i)             the affairs of the company are being conducted in a manner that is oppressive or unfairly prejudicial to, or unfairly discriminatory against a member or members or in a manner which is in disregard of the public interest or

 

(ii)             any actual or proposed act or omission of the company (including an act or omission on its behalf) which was or would be oppressive, or unfairly prejudicial to or unfairly discriminatory against a member or members in a manner which is in disregard of the public interest.

 

 

312.     (1)        If the court is satisfied that a petition under sections 310 and 311 of this Act is well founded, it may make such order or orders as it thinks fit for giving relief in respect of the matter complained of.

 

  (2)          Without prejudice to the generality of subsection (1) of this section, the court may make one or more of the following orders that is, an order -

 

(a)             that the company be wound up;

 

(b)             for regulating the conduct of the affairs of the company in futures

 

(c)             for the purchase of the shares of any member by other members of the company;

 

(d)             for the purchase of the shares of any member by the company and for the reduction accordingly of the company's capitals

 

(e)             directing the company to institute, prosecute, defend or discontinue specific proceedings. or authorising a member or members or the company to institute, prosecute, defend or discontinue specific proceedings in the name or on behalf of the company;

 

(f)             varying or setting aside a transaction or contract to which the company is a party and compensating the company or any other party to the transaction or contract;

 

(g)             directing an investigation to be made by the Commission;

 

(h)             appointing a receiver or a receiver and manager of the property of the company;

 

(i)             restraining a person from engaging in specific conduct or from doing a specific act or thing;

 

(j)             requiring a person to do a specific act or thing.

 

  (3)          Where an order that a company be wound up is made under this section, the provisions of this Act relating to winding-up of companies shall apply, with such adaptations as are necessary, as if the order had been made upon an application duly filed in the court by the company.

 

 (4)          Where an order under this section makes any alteration in addition to the memorandum or articles of a company, then, notwithstanding anything in any other provision of this Act but subject to the provisions of the order, the company shall not have power without the leave of the court, to make any further alteration or addition to the memorandum and articles inconsistent with the provisions of the order but, subject to the foregoing provisions of this subsection, the alteration or addition shall have effect as if it had been duly made by a resolution of the company.

 

  (5)          A certified true copy of an order made under this section altering or giving leave to alter, a company's memorandum or articles shall, within fourteen days from the making of the order or such longer period as the court may allow, be delivered by the company to the Commission for registration; and if the company makes default in complying with the provisions of this subsection, the company and every officer of it who is in default shall be guilty of an offence and liable to a fine of N 50 and, for continued contravention, to a daily default fine of N25.

 

313.         Any person who contravenes or fails to comply with an order made under section 3 12 of this Act that is applicable to him shall be guilty of an offence and be liable to a fine of N 500 or imprisonment for one year or to both such fine and imprisonment.

 

314.   (1)         The Commission may appoint one or more competent inspectors to investigate the affairs of a company and to report on them in such manner as it may direct.

 

  (2)          The appointment may be made

 

(a)             in the case of a company having a share capital on the application of members holding not less than one-quarter of the class of shares issued;

 

(b)             in the case of a company not having a share capital, on the application of not less than one-quarter in number of the persons on the company's register of members; and

 

(c)             in any other case, on application of the company.

 

  (3)          The application shall be supported by such evidence as the Commission may require for the purpose of showing that the applicant or applicants have good reason for requiring the investigation.

 

 

315.  (1)           The Commission shall appoint one or more competent inspectors to investigate the affairs of a company and report on them in such manner as it directs, if the court by order declares that its affairs ought be so investigated.

 

  (2)          The Commission may make such an appointment if it appears to it that there are circumstances suggesting that

 

(a)             the company's affairs are being or have been conducted with intent to defraud its creditors or the creditors of any other person, or in a manner which is unfairly prejudicial to some part of its members; or

 

(b)            any actual or proposed act or omission of the company (including an act or omission on its behalf) is or would be so prejudicial, or that the company was formed for any fraudulent or unlawful purpose; or

 

(c)             persons concerned with the company's formation or the management of its affairs have in connection therewith been guilty of fraud, misfeasance or other misconduct towards it or towards its members; or

 

(d)             the company's members have not been given all the information with respect to its affairs which they might reasonably expect.

 

  (3)          Subsections (I) and (2) of this section shall be without prejudice to the powers of the Commission under section 322 of this Act and the power conferred by subsection (2) of this section, shall be exercisable with respect to a body corporate notwithstanding that it is in course of being voluntarily wound up.

 

  (4)          Reference in subsection (2) of this section to a company's members includes any of the following persons-

 

(a)             the personal representatives of a deceased member; and

 

(b)             any person to whom shares have been transferred or transmitted by operation of law.

 

316.     (1)         If an inspector appointed under section 314 or 315 of this Act to investigate the affairs of a company thinks it necessary for the purposes of his investigation to investigate also the affairs of another body corporate which is or at any relevant time has been the company's subsidiary or holding company or a subsidiary of its holding company or a holding company of its subsidiary, he shall report on the affairs of the other body corporate so far as he thinks that the results of his investigation of its affairs are relevant to the investigation of the affairs of the company first mentioned above.

 

  (2)          An inspector appointed under either section 314 or 315 of this Act may at any time in the course of his investigation, without the necessity of making an interim report, inform the Commission of matters coming to his knowledge as a result of the investigation tending to show that an offence has been conimitted.

 

 

317.     (1)         When an inspector is appointed under section 314 or 315 of this Act, it shall be the duty of all officers and agents of the company, and of all officers and agents of any other body corporate whose affairs are investigated under section 31 6 of this Act -

 

(a)             to produce to the inspector all books and documents of or relating to the company or, as the case may be, the other body corporate which are in their custody or power;

 

(b)             to attend before the inspector when required to do so; and

 

(c)             otherwise to give the inspector all assistance in connection with the investigation which he is reasonably able to give.

 

  (2)          If the inspector considers that a person other than an officer or agent of the company or other body corporate is or may be in possession of information concerning its affairs, he may require that person to produce to him any books or documents in his custody or power relating to the company or other body corporate, to attend before him and otherwise to give him all assistance in connection with the investigation which he is reasonably able to give; and it is that person's duty to comply with the requirement.

 

  (3)          An inspector may examine on oath the officers and agents of the company or other body corporate, and any such person as is mentioned in subsection (2) of this section in relation to the affairs of the company or other body, and administer an oath accordingly.

 

  (4)          In this section, a reference to officers or to agents includes past, as well as present, officers or agents (as the case may be); and "agents" in relation to a company or other body corporate, includes its bankers and solicitors and persons employed by it as auditors, whether these persons are or are not officers of the company or other body corporate.

 

  (5)          An answer given by a person to a question put to him in exercise of powers conferred by this section (whether as it has effect in relation to an investigation under any of sections 314 to 316 of this Act as applied by any other section in this Act) may be used in evidence against him.

 

 

318.     (1)         If an inspector has reasonable grounds for believing that a director, or past director, of the company or other body corporate whose affairs he is investigating maintains or has maintained a bank account of any description (whether alone or jointly with another person and whether in Nigeria or elsewhere), into or out of which there has been paid -

 

(a)             the emoluments or part of the emoluments of his office as such director particulars of which have not been disclosed in the financial statements of the company or other body corporate for any financial year, contrary to the provisions of Part V of the Fourth Schedule to this Act (in relation to particular in accounts of directors);

 

(b)             any money which has resulted from or been used in the financing of an undisclosed transaction, arrangement or agreement; or

 

(c)            any money which has been in any way connected with an act or omission or series of acts or omissions, which on the part of that director constituted misconduct (whether fraudulent or not) towards the company or body corporate or its members,

 

the inspector may require the director to produce to him all documents in the director's possession, or under his control, relating to that bank account.

 

  (2)          For purposes of subsection (1)(b), of this section, an "undisclosed" transaction, arrangement or agreement is one the particulars of which have not been disclosed in the financial statement of any company or in a statement annexed thereto for any financial year, including the disclosure of contracts between companies and their directors.

 

319.  (1)         When an inspector is appointed under section 314 or 315 of this Act to investigate the affairs of a company, the following applies in the case of -

 

(a)             any officer or agent of the company;

 

(b)             any officer or agent of another body corporate whose affairs are investigated under section 316 of this Act; and

 

(c)             any such person as is mentioned in section 317(2) of this Act.

 

  (2)          Subsection (4) of section 317 of this Act, shall apply with regards to references in subsection (I) of this section to an officer or agent.

 

  (3)          If that person

 

(a)             refuses to produce any book or document which it is his duty under section 317 or 318 of this Act to produce; or

 

(b)             refuses to attend before the inspector when required to do so; or

 

(c)             refuses to answer any question put to him by the inspector with respect to the affairs of the company or other body corporate (as the case may be);

the inspector may certify the refusal in writing to the court.

 

  (4)          The court may thereupon enquire into the case; and after hearing any witnesses who may be produced against or on behalf of the alleged offender and after hearing any statement which may be offered in defence, the court may punish the offender in like manner as if he had been guilty of contempt of the court.

 

320.    (1)         The inspector may and if so directed by the Inspector's Commission shall, make interim reports to the Commission, rLp()rr. and on the conclusion of his investigation shall make a final report to it and any such report shall be written or printed9 as the Commission may direct.

 

  (2)          The Commission may direct that a copy of the inspector's report be forwarded to the company at its registered or head office.

 

  (3)          Where an inspector is appointed under section 314 of this Act in pursuance of an order of the court, the Commission shall furnish a copy of any of its reports to the court.

 

  (4)          In any other case, the Commission may, if it thinks fit -

 

(a)             furnish a copy on request and on payment of the prescribed fee to

 

(i)             any member of the company or other body corporate which is the subject of the report,

 

(ii)             any person whose conduct is referred to in the report,

 

(iii)             the auditors of that company or body corporate, 

 

(iv)             the applicants for the investigation,

 

(v)             any other person whose financial interests appear to the Commission to be affected by the matters dealt with in the report, whether as creditors of the company or body corporate, or otherwise; and 

 

(b)             cause any such report to be printed and published.

 

321.   (1)         If, from any report made under section 320 of this Act; it appears to the Commission, that any civil proceedings ought in the public interest to be brought by the company or any body corporate, the Commission may itself bring such proceedings in the name and on behalf of the company or the body corporate.

 

  (2)           The Commission shall indemnify the body corporate against any costs or expenses incurred by it in or in connection with proceedings brought under this section; and any costs or expenses so incurred shall be, if not otherwise recoverable be defrayed out of the Consolidated Revenue Fund.

 

 

322.   (1)         If, from any report made under section 320 of this Act it appears that any person has, in relation to the company or any body corporate whose affairs have been investigated by virtue of section 316 of this Act, been guilty of any offence for which he is criminally liable, the report shall be referred to the Attorney-General of the Federation.

 

  (2)          If the Attorney-General of the Federation considers that the case referred to him is one in which a prosecution ought to be instituted, he shall direct action accordingly9 and it shall be the duty of all officers and agents of the company or other body corporate, as the case may be (other than the defendant in the proceedings), to give all assistance in connection with the prosecution which they are reasonably able to give.

 

  (3)          If, from any report made under section 320 of this Act, it appears to the Commission that proceedings ought in the public interest to be brought by the body corporate dealt with by the report for the recovery of damages in respect of any fraud, misfeasance or other misconduct in connection with the promotion or formation of that body corporate or the management of its affairs, or for the recovery of any property of the body corporate which has been misapplied or wrong-fully retained, it may refer the case to the Attorney-General of the Federation for his opinion as to the bringing of proceedings for that purpose in the name of the body corporate and if proceedings are brought it shall be the duty of all officers and agents of the company or other body corporate as the case may be (other than the defendant in the proceedings), to give him all assistance in connection with the proceedings which they are reasonably able to give.

 

  (4)          Costs and expenses incurred by a body corporate in or in connection with any proceedings brought by it under subsection (3) of this section shall, if not otherwise recover-able, be defrayed out of the Consolidated Revenue Fund.

 

 

323.         If, in the case of any body corporate liable to be wound up under this Act it appears to the Commission from a report made, by an inspector under section 320 of this Act that it is expedient in the public interest that the body should be wound up, the Commission may (unless the body is already wound up by the court) present a petition for it to be so wound up if the court thinks it just and equitable to do so.

 

 

324.  (1)         The expenses of an incidental to an investigation by an inspector appointed by the Commission under the foregoing provisions of this Act, shall be defrayed in the first instance out of the Consolidated Revenue Fund, but the following persons shall, to the extent mentioned, be liable to make repayment, that is to say -

 

(a)             any person who is convicted on a prosecution instituted, as a result of the investigation by the Attorney-General of the Federation, or who is ordered to pay damages or restore any property in proceedings brought by virtue of subsection (3) of section 322 of this Act, may in the same proceedings be ordered to pay the said expenses to such extent as are specified in the order;

 

(b)             any body corporate in whose name proceedings are brought as aforesaid shall be liable to the extent of the amount or value of any sums or property recovered by it as a result of those proceedings;

 

(c)             unless as the result of the investigation a prosecution is instituted by the Attorney-General of the Federation, the applicants for the investigation, where the inspector was appointed under section 314 of this Act shall be liable to such extent (if any), as the Commission may direct;

 

and any amount for which a body corporate is liable by virtue of paragraph (b) of this subsection, shall be a first charge on the sums or property mentioned in that paragraph.

 

  (2)          For the purposes of this section, any cost or expenses incurred by the Commission in or in connection with proceedings brought by virtue of subsection (2) of section 321 of this Act, shall be treated as expenses of the investigation giving rise to the proceedings.

 

  (3)          Expenses to be defrayed by the Commission under this section shall, so far as not recovered thereunder be paid out of the appropriate Consolidated Revenue Fund.

 

325.   (1)         A copy of any report of an inspector appointed under sections 314 and 315 of this Act, certified by the Commission to be a true copy, shall be admissible in any legal proceedings as evidence of the opinion of the inspector in relation to any matter contained in the report.

 

  (2)          A document purporting to be such a certificate as is mentioned above shall be received in evidence and be deemed to be such a certificate, unless the contrary is proved.

 

326.     (1)         Where it appears to the Commission, that there is good reason so to do, it may appoint one or more competent inspectors to investigate and report on the membership of any company and otherwise with respect to the company for the purpose of determining the true persons who are or have been financially interested in the success or failure (real or apparent) of the company or able to control or materially to influence the policy of the company.

 

  (2)          The appointment of an inspector under this section may define the scope of his investigation, whether as respects the matter or the period to which it is to extend or otherwise and in particular may limit investigation to matters connected with particular shares or debentures.

 

  (3)          Where an application for an investigation under this section with respect to particular shares or debentures of a company is made to the Commission by members of the company and the number of applicants or the amount of the shares held by them is not less than that required for an application for the appointment of an inspector under paragraphs (a) and (P') of subsection (2) of section 314 of this Act

 

(a)             the Commission shall appoint an inspector to conduct the investigation unless it is satisfied that the application is vexatious; and

 

(b)             the inspector9s appointment shall not exclude from the scope of his investigation any' matter which the application seeks to include except insofar as the Commission is satisfied that it is reasonable for the matter to be investigated.

 

  (4)          Subject to the terms of an inspector's appointment, his powers shall extend to the investigation of any circumstances suggesting the existence of an arrangement or understanding which, though not legally binding, is or was observed or likely to be observed in practice and which is relevant to the purposes of his investigation.

 

 

327.  (1)         For the purposes of any investigation under section 326 of this Act, the provisions of sections 316 to 320 of this Act shall apply with the necessary modifications to references to the affairs of the company or to those of any body corporate, so however, that

 

(a)             the said sections shall apply in relation to all persons who are or have been, or whom the inspector has reasonable cause to believe to be or have been, financially interested in the success or failure or the apparent success or failure of the company or any other body corporate whose membership is investigated with that of the company, or able to control or materially to influence the policy thereof, including persons concerned only on behalf of others, as they apply in relation to officers and agents of the company or of the other body corporate, as the case may be; and

 

(b)             the Commission shall not be bound to furnish the company or any other person with a copy of any report by an inspector appointed under this section or with a complete copy thereof if he is of the opinion that there is good reason for not divulging the contents of the reports or of part thereof, but shall keep a copy of any such report, or, as the case may be, the parts of any report as regards which he is not of that opinion.

 

  (2)          The expenses of any investigation under section 326 of this Act shall be defrayed out of the Consolidated Revenue Fund.

 

 

328.   (1)         Where it is made to appear to the Commission, that there is good reason to investigate the ownership of any shares in or debentures of a company and that it is unnecessary to appoint an inspector for the purpose, the Commission may require any person who it has reasonable cause to believe

 

(a)             to be or to have been interested in those shares or debentures; or

 

(b)             to act or to have acted in relation to those shares or debentures as a legal practitioner or an agent of some one interested therein,

 

to give to the Commission any information which the person has or might reasonably be expected to obtain as to the present and past interest in those shares or debentures and the names and addresses of the persons interested, and of any persons who act or have acted on their behalf in relation to the shares or debentures.

 

  (2)          For the purposes of this section, a person shall be deemed to have an interest in a share or debenture if he has any right to acquire or dispose of the share or debenture or any interest therein or to vote in respect thereof, or if his consent is necessary for the exercise of any of the rights of other persons interested therein, or if other persons interested therein can be required or are accustomed to exercise their rights in accordance with his instructions.

 

  (3)          Any person, who fails to give any information required of him under this section, or who in giving any such information makes any statement which he knows to be false in a material particular, or recklessly makes any statement which is false in a material particular shall be guilty of an offence and liable to a fine of N 500 or to imprisonment for a term of six months or to both.

 

329.   (1)         Where in connection with an investigation under section 326 or 328 of this Act, it appears to the Commission that there is difficulty in finding out the relevant facts about any share (whether issued or to be issued), and that the difficulty is due wholly or mainly to the unwillingness of the persons concerned or any of them to assist the investigation as required by this Act, the Commission may in writing direct that the shares shall until further notice be subject to the restrictions imposed by this section.

 

  (2)          So long as any shares are directed to be subject to the restrictions imposed by this section -

 

(a)             any transfer of those shares, or in case of unissued shares any transfer of the right to be issued therewith and any issue thereof, shall be void;

 

(b)             no voting rights shall be exercisable in respect of those shares;

 

(c)             no further shares shall be issued in right of those shares or in pursuance of any offer made to the holder thereof;

 

(d)             except in a liquidation, no payment shall be made of any sums due from the company on those shares, whether in respect of capital or otherwise.

 

  (3)          Where the Commission directs shares to be subject to restrictions under this section, or refuses to direct that shares shall cease to be subject thereto, any person aggrieved thereby may appeal to the court, and the court may, if it sees fit, direct that the shares shall cease to be subject to the said restrictions.

 

  (4)          Any direction or order of the court that shares shall cease to be subject to restrictions under this section, expressed to be made with a view to permitting a transfer of those shares may continue the restrictions mentioned in paragraphs (c) and (d) of subsection (2) of this section, either in whole or in part, so far as they relate to any right acquired or offer made before the transfer.

 

  (5)          Any person who

 

(a)             exercises or purports to exercise any right to dispose of any shares which, to his knowledge, are for the time being subject to restrictions under this section; or

(b)             votes in respect of any such shares, whether as holder or proxy, or appoints a proxy to vote in respect thereof; or

 

(c)             being the holder of any such shares, fails to notify that they are subject to the said restrictions,

 

shall be guilty of an offence and liable to a fine of N 500 or imprisonment for a term of six months, or to both.

 

  (6)          Where shares in any company are issued in contravention of the said restrictions, the company and every officer of the company who is in default shall be guilty of an offence and liable to a fine of N 500.

 

  (7)          A prosecution shall not be instituted under this section except by or with the consent of the Attorney-General of the Federation.

 

  (8)          This section shall apply in relation to debentures as it applies in relation to shares.

 

330.         Nothing in the foregoing provisions of this Part of this Act shall require disclosure to the Commission or to an inspector appointed by it by

 

(a)            a legal practitioner of any privileged communication made to him in that capacity, except as regards the name and address of his client; or

 

(b)            a company s bankers as such, of any information as to the affairs of any of their customers other than the company.

 

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