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Part VI

Shares

 

Nature of shares

 

 

114.         Subjects to the provisions of this Decree, the rights and liabilities attaching to the shares of a company shall- 

 

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

 

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

 

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

 

116.    (1)         Unless otherwise provided by any other enactment-

 

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

 

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

 

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

 

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

 

116.    (1)         Unless otherwise provided by any other enactment-

 

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

 

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

 

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

 

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

 

 

 

Issue of shares

 

 

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

 

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

 

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

 

119.        Without prejudice to any special rights previously conferred on the holders of any existing shares or class shares, any share in a company may be issued with such preferred, deferred or other special rights or such restrictions, whether with regard to dividend, return of capital or otherwise, as the company may, from time to time, determine by ordinary resolution.

 

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

 

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

 

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

 

(a)             the preliminary expenses of the company; or

 

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

 

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

 

Provided that any part of the premium which has been so applied that it does not at the commencement of this Decree form an identifiable part of the company's reserves within the meaning of Schedule 2 to this Decree shall be disregarded in determining the sum to be included in the share premium account.

 

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

 

Provided that-

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

 

Allotment of Shares

 

 

124.         Subject to the provisions of the Securities and Exchange Commission Decree 1988, the power to allot shares shall be vested in the company which may delegate it to the directors subject to any conditions or directions that may be imposed in the articles or from time to time by the company in general meeting.

 

125.         Without prejudice to the provisions of section 566 to 574 of this Decree, the following provisions shall apply in respect of an application for an allotment of issued shares of a company-

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

129.    (1)         Whenever a company limited by shares makes any allotment of its shares, the company shall within one months thereafter deliver to the Commission for registration-

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

 

 

Commission and discounts

 

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

 

 

Call on and payment for shares

 

 

133.    (1)         Subject to the terms of the issue of the shares and of the articles the directors may from time to time make calls upon the members in respect of any moneys unpaid on their shares (whether on account of the nominal value of the shares or by way of premium) and not by the conditions of allotment of the shares made payable at fixed times:

 

Provided that no call shall exceed one fourth of the nominal value of the share or be payable at less than one month from the date fixed for the payment of the last preceding call, and each member shall (subject to receiving at least 14 days notice specifying the time or times and place of payment) pay to the company at the time or times and place so specified the amount called on his shares, so however that a call may be revoked or postponed as the directors may determine.

 

  (2)          A call shall be deemed to have been made at the time when the resolution of the directors authorising the call was passed, and may be required to be paid by instalments.

 

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

 

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

 

  (5)          Any sum which the terms of issue of a share becomes payable on allotment or at any fixed date, whether on account of the nominal value of the shares or by way of premium shall, for the purposes of these provisions, be deemed to be a call duly made and payable on the date on which by the terms of issue the same become payable, and in case of non-payment, all the relevant provisions of this Decree as to payment of interest and expenses, forfeiture or otherwise shall apply as if such sum had become payable by virtue of a call duly made and notified.

 

  (6)          The directors may, if they think fit, receive from any member willing to advance the same, all or any part of the moneys uncalled and unpaid upon any shares held by him; and upon all or any of the moneys so advanced may (until the same would but for such advance, become payable) pay interest at such rate not exceeding (unless the company in general meeting shall otherwise direct) the current bank rate per annum as may be agreed upon between the directors and the member paying such sum in advance.

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

Lien and forfeiture of shares

 

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

 

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

 

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

 

  (4)          For the purpose of giving effect to any such sale the directors may authorise some person to transfer the shares sold to the purchaser of the shares and the purchaser shall be registered as the holder of the shares comprised in any such transfer, and he shall not be bound to see to the application of the purchase money, nor shall his title to the shares be affected by any irregularity or invalidity in the proceedings in reference to the sale.

 

140.    (1)         If a member fails to pay any call or instalment of a call on the day appointed for payment, the directors may, at any time thereafter during such time as any part of the call or instalment remains unpaid, serve a notice on him requiring payment of so much of the call or instalment as is unpaid, together with any interest which may have accrued. (2) The notice shall name a further day (not earlier than the expiration of 14 days from the date of service of the notice) on or before which the payment required by the notice is to be made, and it shall state that in the event of non-payment at or before the time appointed, the shares in respect of which the call was made shall be liable to be forfeited.

 

  (3)          If the requirements of any such notice as is mentioned in subsections (1) and (2) of this section are not complied with, any share in respect of which notice has been given may at any time thereafter, before the payment required by the notice has been made, by forfeited by a resolution of the directors to that effect.

 

  (4)          A forfeited share may be sold or otherwise disposed of on such terms and in such manner, as the directors think fit, and at any time before a sale or disposition, the forfeiture may be cancelled on such terms as the directors think fit.

 

  (5)          A person whose shares have been forfeited shall cease to be a member in respect of the forfeited shares, but shall, but shall, notwithstanding, remain liable to pay to the company all moneys which, at the date of forfeiture, were payable by him to the company in respect of the shares, but his liability shall cease if and when the company receives payment in full of all such moneys in respect of the shares.

  

(6)          A statutory declaration that the declarant is a director or the secretary of the company, and that a share in the company has been duly forfeited on a date stated in the declarations, shall be prima facie evidence of the facts stated in it as against all persons claiming to be entitled to the shares.

 

  (7)          The company may receive the consideration, if any, given for the share on any sale or disposition of it and may executed a transfer of the share in favour of the person to whom the share is sold or disposed of, and he shall thereupon be registered as the holder of the share, and shall not be bound to see to the application of the purchase money, if any, nor shall his title to the share be affected by any irregularity or invalidity in the proceedings in reference to the forfeiture, sale or disposal of the share.

 

  (8)          The provisions of this section as to forfeiture shall apply in the case of non-payment of any sum which, by the terms of issue of a share, becomes payable at a fixed time, whether on account of the nominal value of the share or by way of premium, as if the same had been payable by virtue of a call duly made and notified.

 

Classes of shares

 

141.    (1)             If at any time the share capital of a company is divided into different classes of shares under section 118 of this Decree, the rights attached to any class (unless otherwise provided by the terms of issue of the shares that class) may, whether or not the company is being wound up, be varied with the consent, in writing, of the holders of three-quarters of the issued shares of that class, or with the sanction of a special resolution passed at a separate general meeting of the holders of the shares of the class.

 

  (2)          To every such separate general meeting as is mentioned in subsection (1) of this section, the provisions of this Decree relating to general meetings shall apply, so however that the necessary quorum shall be two persons at least holding or representing by proxy one-third of the issued shares of the class and that any holder of shares of the class present in person or by proxy may demand a poll.

 

  (3)          If on any such application the court, after hearing the applicant and any other persons applying to it to be heard and appearing to be interested in the application, is satisfied that the variation would unfairly prejudice the shareholders of the class represented by the applicant, the court, having regard to all the circumstances of the case, may disallow the variation, and shall, if not satisfied, confirm the variation.

 

  (4)          The decision of the court on any such application shall be final.

 

  (5)          The company shall, within 15 days after the making of an order by the court on an application to it under this section, forward a copy of the order to the Commission and if default is made in complying with the provisions of this subsection, the company and every officer of the company who is in default shall be liable to a fine of N50 for every during which the default continues.

 

  (6)          In this section, "variation" includes abrogation and cognate expressions shall be constructed accordingly.

 

143.    (1)         Notwithstanding the provisions of section 116 of this Decree, the articles may provide that preference shares issued after the commencement of this Decree shall carry the rights to attend general meetings and on a poll at the meetings to more than one vote per share in the following circumstances, but not otherwise, that is to say-

 

(a)             upon any resolution during such period as the preferential dividend or any part of it remains in arrear and unpaid, such starting from a date not more than 12 months or such lesser period as the articles may provide, after the due date of the dividend; or

 

(b)             upon any resolution which varies the rights attached to such shares; or

 

(c)             upon any resolution to remove an auditor of the company or to appoint another person in place of such auditor; or

 

(d)             upon any resolution for the winding up of the company or during the winding up of the company.

 

  (2)          Notwithstanding the provisions of section 116 of this Decree, any special resolution of a company increasing the number of shares of any class may validly resolve that any existing class of preference shares shall carry the right to such votes additional to one votes additional to one vote per share as shall be necessary in order to preserve the existing ratio which the votes exercisable by the holders of such preference shares at a general meeting of the company bear to the total votes exercisable at the meeting.

 

  (3)          For the purposes of subsection (2) of this section, a dividend shall be deemed to be due on the date appointed in the articles for the payment of the dividend for any year or other period, or if no such date is appointed, upon the day immediately following the expiration of the year or other period, and whether or not such dividend shall have been earned or declared.

 

144.         In construing the provisions of a company's articles in respect of the rights attached to shares, the following rules of construction shall be observed-

 

(a)             unless the contrary intention appears, no dividend shall be payable on any shares unless the company shall resolve to declare such dividend;

 

(b)             unless the contrary intention appears, a fixed preferential dividend payable on any class on any class of shares is cumulative, that is to say, no dividend shall be payable on any shares ranking subsequent to them until all the arrears of the fixed dividend have paid;

 

(c)             unless the contrary intention appears, in a winding up arrears of any cumulative preferential dividend, whether earned or declared or not are payable up to the date of actual payment in the winding up;

 

(d)             if any class of shares is expressed to have a right to a preferential dividend, then, unless the contrary intention appears, such class has no further right to participate in dividends;

 

(e)             if any class of shares is expressed to have preferential rights to payment out of the assets of the company in the event of winding up, then unless the contrary intention appears, such class has no further right to participate in the distribution of assets in the winding up;

 

(f)             in determining the rights of the various classes to share in the distribution of the company's property on a winding up, no regard shall be paid, unless the contrary intention appears, to whether or not such property represents accumulated profits or surplus which would have been available for dividend while the company remained a going concern;

 

(g)             subject to this section, all shares rank equally in all respects unless the contrary intention appears in the company's articles.

 

Numbering of shares

 

145.         Each share in a company having a share capital shall be distinguished by its appropriate number:

 

Provided that, if any time all the issued shares in a company, or all of its issued shares of a particular class, are fully paid up and rank pari passu for all purposes, none of those shares need thereafter have a distinguishing number so long as it remains fully paid up and ranks pari passu for all purposes with all shares of the same claim for the time being issued and fully paid up.

 

Shares certificates

 

146.    (1)         Every company shall, within two months after the allotment of any of its shares and within 3 moths after the date on which a transfer of any such shares is lodged with the company, complete and have ready for delivery the certificates of all shares allotted or transferred, unless the conditions of issue of the shares otherwise provide.

 

  (2)          Every person whose name is entered as a member in the register of members shall be entitled without payment to receive within 3 months of allotment or lodgement of transfer or within such other period as the conditions of issue shall provide one certificate for all his shares or several certificates each for one or more of his shares upon payment of a fee as the directors shall, from time to time, determine.

 

  (3)          Every certificate issued by a company shall be under the company's seal and shall specify the shares to which it relates and the amount paid up on them:

 

Provided that in respect of shares held jointly by several persons, the company shall not be bound to issue more than one certificate, and delivery of a certificate for shares to one of several joint holders shall be sufficient delivery to all such holders.

 

  (4)          If a share certificate is defaced, lost or destroyed, it may be replaced on such terms (if any), as to evidence and indemnity and the payment of out of pocket expenses of the company of investigating evidence as the directors think fit.

 

  (5)          If any company on which a notice has been served requiring it to make good any default in complying with the provisions of subsection (1) of this section fails to make good the default within 10 days after the service of the notice, the court may, on the application of the person entitled to have the certificate delivered to him, make an order directing the company and any officer of the company to make good the default with such time as amy be specified in the order, and any such order may provide that all costs of and incidental to the application shall be borne by the company or by any officer of the company responsible for the default.

 

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

 

  (7)          In this section, "transfer" means a transfer duly stamped and otherwise valid, but does not include a transfer which under this Decree, a company is for any reason entitled to refuse to and does not, register.

 

147.    (1)         A certificate, under the common seal of the company, specifying any shares held by any member, shall be prima facie evidence of the title of the member to the shares.

 

  (2)          If any person changes his position to his detriment in good faith on the continued accuracy of the statements made in a certificate, the company shall be estopped from denying the continued accuracy of such statements and shall compensate the person for any loss suffered by him in reliance on them and which he would not have suffered had the statements been or continued to be accurate.

 

  (3)          Nothing contained in subsection (2) of this section shall derogate from any right the company may have to be indemnified by any other person.

 

148.        The production to a company of any document which is by law sufficient evidence of probate of the will, or letters of administration of the estate, or confirmation as executor, of a deceased person having been granted to some person, shall be accepted by the company as sufficient evidence of the grant, notwithstanding anything in its articles to the contrary.

 

149.   (1)         As from the date of commencement of this Decree, no company shall have the power to issue warrants.

 

  (2)          Every company shall within a period of 30 days from the date of commencement of this Decree, cancel any share warrants previously issued by it which are still valid on that date and enter in its register of members the names and relevant particulars of the bearers of the share warrants.

 

  (3)          A person whose name is entered in a company's register of members by virtue of subsection (2) of this section, shall be deemed to be a member of the company with effect from the date on which the share warrant thereby cancelled, was issued.

 

Conversion of shares into stock

 

150.    (1)         The provisions of this section shall apply with respect to the conversion of all or any of the shares of a company into stock and the reconversion of such stock into shares under the provisions of section 100 of this Decree.

 

  (2)          The conversion of any paid-up shares into any stock into paid-up shares shall be by ordinary of the company at a general meeting.

 

  (3)          The holders of stock may transfer the same, or any part of it in the same manner, and subject to the same conditions, as and subject to which the shares from which the stock arose might previous to the conversion have been transferred, or as near to it as circumstances admit; and the directors may, from time to time, fix the minimum amount of stock transferable, so however that such minimum shall not exceed the nominal amount of the shares from which the stock arose.

 

  (4)          The holders of stock shall, according to the amount of stock held by them, have the same rights, privileges and advantages as regards dividends, voting at meeting of the company and other matters as if they held the shares from which the stock arose, but no such privilege or advantage (except participation in the dividends and profit of the company and in the assets on winding up) shall be conferred by an amount of stock which would not, if existing in shares, have conferred that privilege or advantage.

 

  (5)          Such of the articles of the company as are applicable to paid-up shares shall apply to stock, and the words "shares" and "shareholders" in those articles shall include "stock" and "stockholder".

 

Transfer and transmission

 

151.    (1)         The transfer of a company's share shall be by instrument of transfer and except as expressly provided in the articles, transfer of shares shall be without restrictions.

 

  (2)          Notwithstanding anything in the articles of a company, it shall not be lawful for the company to register a transfer of shares in the company, unless a proper instrument of transfer has been delivered to the company:

 

Provided that nothing in this section shall prejudice any power of the company to register as shareholder, any person to whom the right to any shares in the company has been transmitted by operation of law.

 

  (3)          The instrument of transfer of any share shall be executed by or on behalf of the transferor and transferee, and the transferor shall be deemed to remain a holder of the share until the name of the transferee is entered in the register of members in respect of the share.

 

  (4)          Subject to such of the restrictions of a company's articles as may be applicable, any member may transfer all or any of his shares by instrument in writing in any usual or common form or any other form which the directors may approve.

 

152.    (1)         On the application of the transferor of any share or interest in a company, the company shall enter in its register of members, the name of the transferee in the same conditions as if the application for the entry were made by the transferee.

 

  (2)          Until the name of the transferee is entered in the register of members in respect of the transferred shares, the transferor shall, so far as concerns the company, be deemed to remain the holder of the shares.

 

  (3)          The company may refuse to register the transfer of a share (not being a fully paid share) to a person of whom they do not approve, and may also refused to register the transfer of a share on which the company has a lien.

 

  (4)          The company may refuse to recognise any instrument of transfer unless-

 

(a)             a fee as the company may, from time to time, determine is paid to the company in respect of the instrument; and

 

(b)             the instrument of transfer is accompanied by the certificate of the shares to which it relates and such other evidence as the directors may reasonably require to show the right of the transferor to make the transfer; and

 

(c)             the instrument of transfer is in respect of only one class of shares.

 

153.    (1)         If a company refuses to register a transfer of any shares it shall, within two months after the date on which the transfer was lodged with it, send notice of the refusal to the transferee.

 

  (2)          If default is made in complying with this section, the company and every officer of the company who is in default shall be liable to a fine of N200.

 

154.         A transfer of the share or other interest of a deceased member of a company made by his personal representative shall, although the personal representative is not himself a member of the company, be as valid as if he had been such a member at the time of the execution of the instrument of transfer.

 

155.    (1)     In case of the death of a member, the survivor or survivors where the deceased was a joint holder, or the legal personal representative of the deceased where he was a sole holder, shall be the only persons recognised by the company as having any title to his interest in the shares; but nothing in this section shall release the estate of a deceased joint holder from any liability in respect of any share which had been jointly held by him with other persons.

 

  (2)          Any person becoming entitled to a share in consequence of the death or bankruptcy of a member may, upon such evidence being produced as may, from time to time, properly be required by the directors and subject as hereafter provided in this section, elect either to be registered himself as holder of the share, or to have some person nominated by him registered as the transferee of the share; but the company shall, in either case, have the same right to decline or suspend registration as they would have had in the case of a transfer of the share by that member before his death or bankruptcy, as the case may be.

 

  (3)          If the person so becoming entitled elects to be registered himself, he shall deliver or send to the company a notice in writing signed by him stating that he so elects and if he elects to have another person registered, he shall testify his election by executing to that person a transfer of the share.

 

  (4)          All the limitations, restrictions and provisions of this Decree and the company's articles relating to the rights to transfer and the registration of transfers of share, shall be applicable to any such notice or transfer as mentioned in subsection (3) of this section as if the death or bankruptcy of the member had not occurred and the notice or transfer were a transfer signed by that member.

 

  (5)          A person becoming entitled to a share by reason of the death or bankruptcy of the holder, shall be entitled to the same dividends and other advantages to which he would be entitled if he were the registered holder of the share, except that he shall not, unless the articles otherwise provide, before being registered as a member in respect of the share, be entitled in respect of it to exercise any right conferred by membership in relation to meetings of the company:

 

Provided that the directors may at any time give notice requiring any such person to elect either to be registered himself or to transfer the share, and if the notice is not complied with within 90 days the directors may thereafter withhold payment of all dividends, bonuses or other moneys payable in respect of the share until the requirements of the notice have been complied with.

 

 

156.    (1)         Any person claiming to be interested in any shares or the dividends or interest on them may protect his interest by serving on the company concerned a notice and affidavit of interest.

 

  (2)          Notwithstanding the provisions of section 86 of this Decree, the company shall enter on the register of members, the fact that such notice has been served and shall not register any transfer or make any payment or return in respect of the shares contrary to the terms of the notice until the expiration of 42 days notice to the claimant of the proposed transfer or payment.

 

  (3)          In the event of any default by the company in complying with this section, the company shall compensate any person, injured by the default.

 

157.    (1)         When the holder of any shares of a company wishes to any person only a part of the shares represented by one or more certificates, the instrument of transfer together with the relevant certificates shall be delivered to the company with a request that the instrument of transfer be recognised and registered.

 

  (2)          A company to which a request is made under subsection (1) of this section, may recognise the instrument of transfer by endorsing on it the words "certificate lodged" or words to the like effect.

 

  (3)          The recognition by a company of any instrument of transfer of shares in the company shall be taken as a representation by the company to an person acting on the faith of the recognition that there have been produced to the company such documents as on the face of them show a prime facie title to the shares in the transferor named in the instrument of transfer, but not as a representation that the transferor has any title to the shares.

 

  (4)          Where any person acts on the faith of a false recognition by a company made negligently, the company shall be under the same liability to that person as if the recognition has been made fraudulently.

 

  (5)          For the purposes of this section-

 

(a)             an instrument of transfer shall be deemed to be recognised if it bears the words "certificate lodged" or words to the like effect;

 

(b)             the recognition of an instrument of transfer shall deemed to be made by a company if-

 

(i)             the person issuing the instrument is a person authorised to recognise transfers of shares on the company's behalf, and

 

(ii)             the recognition is signed by a person authorised to recognise transfers of shares on the company's behalf or by any officer or servant either of the company or of a body corporate so authorised;

 

(c)             a recognition shall be deemed to be signed by any person if-

 

(i)             it purports to be authenticated by his signature or initials (whether handwritten or not); and

 

(ii)             it is not shown that the signature or initials was or were placed there by any person other than him or a person authorised to use the signature or initials for the purpose of transfers on the company's behalf.

 

Transaction by company in respect of its own shares

 

158.     (1)         The provisions of this section shall apply with respect to the redemption by a company of any redeemable preference shares issued by it under section 122 of this Act.

 

  (2)          The shares shall not be redeemed unless they are fully paid, and redemption shall be made only out of -

 

(a)             profits of the company which would otherwise be available for dividend; or

 

(b)             the proceeds of a fresh issue of shares made for the purposes of the redemption.

 

  (3)          Before the shares are redeemed, the premium, if any, payable on redemption, shall be provided for out of the profits of the company or out of the company's share premium account.

 

  (4)          Where shares are redeemed otherwise than out of the proceeds of a fresh issue, there shall, out of profits which would otherwise have been available for dividend, be transferred to a reserve fund, to be called the capital redemption reserve fund a sum equal to the nominal amount of the shares redeemed, and the provisions of this Act relating to the reduction of the share capital of a company shall, except as provided in this section, apply as if the capital redemption reserve fund were paid up share capital of the company.

 

  (5)          Subject to the provisions of this section, the redemption of preference shares thereunder may be affected on such terms and in such manner as are provided by the articles of the company.

 

  (6)          The redemption of preference shares under this section by a company shall not be taken as reducing the amount of the company's authorised share capital.

 

  (7)          Where, in pursuance of this section a company has redeemed or is about to redeem any preference shares, it shall have power to issue shares up to the nominal amount of the shares redeemed or to be redeemed as if those shares had never been issued, and accordingly, the share capital of the company shall not, for the purposes of any enactments relating to stamp duty, be deemed to be increased by the issue of shares in pursuance of this subsection:

 

Provided that, where new shares are issued before the redemption of the old shares, the new shares shall not, so far as relates to stamp duty, be deemed to have been issued in pursuance of this subsection, unless the old shares are redeemed within one month after the issue of the new shares.

 

  (8)          The capital redemption reserve fund may, notwithstanding anything in this section, be applied by the company in paying up unissued shares of the company to be issued to members of the company as fully paid bonus shares.


159.     (1)         In this section, financial assistance includes a gift, guarantee, security or indemnity, loan, any form of credit and any financial assistance given by a company, the net assets of which are thereby reduced to a material extent or which has no net assets.

 

  (2)          Subject to the provisions of this section -

 

(a)             where a person is acquiring or is proposing to acquire shares in a company, it shall not be lawful for the company or any of its subsidiaries to give financial assistance directly or indirectly for the purpose of that acquisition before or at the same time as the acquisition takes place; and

 

(b)             where a person has acquired shares in a company and any liability has been incurred (by that or any other person), for the purpose of this acquisition, it shall not be lawful for the company or any of its subsidiaries to give financial assistance directly or indirectly for the purpose of reducing or discharging the liability so incurred.

 

  (3)          Nothing in subsection (1) of this section shall be taken to prohibit -

 

(a)             the lending of money by the company in the ordinary course of its business, where the lending of money is part of the ordinary business of a company;

 

(b)             the provision by a company, in accordance with any scheme for the time being in force, of money for the purchase of, or subscription for, fully paid shares in the company or its holding company, being a purchase or subscription by trustees of or for shares to be held by or for the benefit of employees of the company, including any director holding a salaried employment of office in the company;

 

(c)             the making by a company of loans to persons, other than directors, bona fide in the employment of the company with a view to enabling those persons to purchase or subscribe for fully paid shares in the company or its holding company, to be held by themselves by way of beneficial ownership;

 

(d)             any act or transaction otherwise authorised by law.

 

  (4)          If a company acts in contravention of this section, the company and every officer of the company who is in default shall be guilty of an offence and liable on conviction to a fine not exceeding N500.

 

160.     (1)         Subject to the provisions of subsection (2) of this section and its articles, a company may not purchase or otherwise acquire shares issued by it.

 

  (2)           A company may acquire its own shares for the purpose of -

 

(a)             settling or compromising a debt or claim asserted by or against the company; or

 

(b)             eliminating fractional shares; or

 

(c)             fulfilling the terms of a non assignable agreement under which the company has an option or is obliged to purchase shares owned by an officer or any employee of the company; or

 

(d)             satisfying the claim of a dissenting shareholder; or

 

(e)             complying with a court order.

 

  (3)          A company may accept, from any shareholder, a share in the company surrendered to it as a gift, but may not extinguish or reduce a liability in respect of an amount unpaid on any such share, except in accordance with section 106 of this Act.

 

161.         Notwithstanding any provision in the articles, a company shall not purchase any of its own shares except on compliance with the following conditions, that is -

(a)             shares shall only be purchased out of profits of the company which would otherwise be available for dividend or the proceeds of a fresh issue of shares made for the purpose of the purchase;

 

(b)             redeemable shares shall not be purchased at a price greater than the lowest price at which they are redeemable or shall be redeemable at the next date thereafter at which they are due or liable to be redeemed;

 

(c)             no purchase shall be made in breach of section 162 of this Act.

 

162.         No transaction shall be entered into by or on behalf of a company whereby the total number of its shares, or of its shares of any one class, held by persons other than the company or its nominees becomes less than eighty five per cent of the total number of shares, or of shares of that class, which have been issued:

 

Provided that -

(a)             redeemable shares shall be disregarded for the purposes of this section, and

 

(b)             where, after shares of any class have been issued, the number of such shares has been reduced, this section shall apply as if the number originally issued (including shares of that class cancelled before the reduction took effect) has been the number as so reduced.

 

163.     (1)         A contract with a company providing for the acquisition by the company of shares in the company is specifically enforceable against the company, except to the extent that the company cannot perform the contract without thereby being a breach of the provisions of section of this Act.

 

  (2)          In any action brought on a contract referred to in subsection (1) of this section, the company shall have the burden of proving that performance of the contract is prevented by the provisions of section 160 of this Act.

 

164.         Where shares in a company are redeemed, purchased, acquired or forfeited, such shares shall, unless the company by alteration of its articles of association cancels the shares, be available for re-issue by the company.

 

165.   (1)         A company which is a subsidiary may acquire shares in its holding company where the subsidiary company is concerned as personal representative or trustee, unless the holding company or any subsidiary of it is beneficially interested otherwise than by way of security for the purposes of a transaction entered into by it in the ordinary course of a business which includes the lending of money.

 

  (2)          A subsidiary which, at the commencement of this Act, is a holder of shares of its holding company, or a subsidiary which acquired shares in its holding company before it became a subsidiary of that holding company, may continue to hold such shares but, subject to subsection (1) of this section, shall have no right to vote at meetings of the holding company or any class of shareholders of the holding company and shall not acquire any future shares in it except on a capitalisation issue.

 

 

 

Part VII

Debentures

 

Creation of debenture and debenture stock.


166.         A company may borrow money for the purpose of its business or objects and may mortgage or charge its undertaking, property and uncalled capital, or any part thereof, and issue debentures, debenture stock and other securities whether outright or as security for any debt, liability or obligation of the company or of any third party.

 

167.     (1)         Every company shall, within sixty days after the allotment of any of its debentures or after the registration of the transfer of any debentures, deliver to the registered holder thereof, the debenture or a certificate of the debenture stock under the common seal of the company.

 

  (2)          If a debenture or debenture stock certificate is defaced, lost or destroyed, the company, at the request of the registered holder of the debenture, shall issue a certified copy of the debenture or renew the debenture stock certificate on payment of a fee not exceeding N5 and on such terms as to evidence and indemnity and the payment of the company's out of pocket expenses of investigating evidence as the company may reasonably require.

 

  (3)          If default is made in complying with this section, the company and any officer of the company who is in default shall be liable to a fine not exceeding N25; and on application by any person entitled to have the debentures or debenture stock certificate delivered to him, the court may order the company to deliver the debenture or debenture stock certificate and may require the company and any such officer to bear all the costs of and incidental to the application.

 

168.         Every debenture shall include a statement on the following matters, that is -

(a)             the principal amount borrowed;

 

(b)             the maximum discount which may be allowed on the issue or re-issue of the debentures, and the maximum premium at which the debentures may be made redeemable;

 

(c)             the rate of and the dates on which interest on the debentures issued shall be paid and the manner in which payment shall be made;

 

(d)             the date on which the principal amount shall be repaid or the manner in which redemption shall be effected, whether by the payment of instalments of principal or otherwise;

 

(e)             in the case of convertible debentures, the date and terms on which the debentures may be converted into shares and the amounts which may be credited as paid up on those shares, and the dates and terms on which the holders may exercise any right to subscribe for shares in respect of the debentures held by them;

 

(f)             the charges securing the debenture and the conditions subject to which the debenture shall take effect.

 

169.   (1)         Statements made in debenture or debenture stock certificates shall be prima facie evidence of the title to the debentures of the person named therein as the registered holder and of the amounts secured thereby.

 

  (2)          If any person shall change his position to his detriment in reliance in good faith on the continued accuracy of any statements made in the debenture or debenture stock certificate, the company shall be estopped in favour of such person from denying the continued accuracy of such statements and shall compensate such person for any loss suffered by him in reliance thereon and which he would not have suffered had the statement been or continued to be accurate:

 

Provided that nothing in this subsection shall derogate from any right the company may have to be indemnified by any other person.

 

170.         A contract with a company to take up and pay for any debentures of the company may be enforced by an order for specific performance.

 

Types of Debentures

 

171.         A company may issue perpetual debentures, and a condition contained in any debentures, or in any deed for securing any debentures, shall not be invalid by reason only that the debentures are made irredeemable or redeemable only on the happening of a contingency, however remote, or on the expiration of a period, however long, any rule of equity to the contrary notwithstanding.

 

172.         Debentures may be issued upon the terms that in lieu of redemption or repayments, they may, at the option of the holder or the company, be converted into shares in the company upon such terms as may be stated in the debentures.

 

173.   (1)         Debentures may either be secured by a charge over the company's property or may be unsecured by any charge

 

  (2)          Debentures may be secured by a fixed charge on certain of the company's property or a floating charge over the whole or a specified part of the company's undertaking and assets, or by both a fixed charge on certain property and a floating charge.

 

  (3)          A charge securing debentures shall become enforceable on the occurrence of the events specified in the debentures or the deed securing the same.

 

  (4)          Where any legal proceedings are brought by a debenture holder to enforce the security of a series of debentures of which he holds part, the debenture holder shall sue in a representative capacity on behalf of himself and all other debenture holders of that series.

 

  (5)          Where debentures are secured by a charge, the provisions of section 197 of this Act relating to registration of particulars of charges shall apply.

 

174.         A company limited by shares may issue debentures which are, or at the option of the company are to be liable, to be redeemed.

 

175.     (1)         Where either before or after the commencement of this Act, a company has redeemed any debentures previously issued, then unless -

(a)             any provision, express or implied, to the contrary is contained in the articles or in any contract entered into by the company; or

 

(b)             the company has, by passing a resolution to that effect or by some other act, manifested its intention that the debentures shall be cancelled, the company shall have, and shall be deemed always to have had, power to re-issued the debentures, either by re-issuing the same debentures or by issuing other debentures in their place.

 

  (2)          On a re-issue of redeemed debentures, the person entitled to the debentures, shall have, and shall be deemed always to have had, the same priorities as if the debentures had never been redeemed.

 

  (3)          Where a company has, either before or after the commencement of this Act, deposited any of its debentures to secure advances, from time to time, on current account or otherwise, the debenture shall not be deemed to have been redeemed by reason only of the account of the company having ceased to be in debit, whilst the debentures remained so deposited.

 

  (4)          The re-issue of a debenture or the issue of another debenture in its place under the power given by this section or deemed to have been possessed by a company, whether the re-issue or issue was made before or after the commencement of this Act, shall be treated as the issue of a new debenture for the purposes of a stamp duty, but it shall not be so treated for the purposes of any provision limiting the amount or number of debentures to be issued:

 

Provided that any person lending money on the security of a debenture re-issued under this section which appears to be duly stamped, may give the debenture in evidence in any proceedings for enforcing his security without payment of the stamp duty or any penalty in respect thereof, unless he had notice or, but for his negligence, might have discovered, that the debenture was not duly stamped, but in any such case the company shall be liable to pay the proper stamp duty and penalty.

 

  (5)          Nothing in this section shall prejudice any power to issue debentures in place of any debentures paid off or otherwise satisfied or extinguished which, by its debentures or the securities for the same, is reserved to a company.

 

176.    (1)         The trustee of a debenture trust deed shall hold all contracts, stipulations and undertakings given to him and all mortgages, charges and securities vested in him in connection with the debentures covered by the deed, or some of those debentures, exclusively for the benefit of the debenture holders concerned (except in so far as the deed otherwise provides) and the trustee shall exercise due diligence in respect of the enforcement of those contracts, stipulations, undertakings, mortgages, charges and securities and the fulfillment of his functions generally.

 

  (2)          A debenture holder may sue -

 

(a)             the company which issued the debentures he holds for payment of any amount payable to him in respect of the debentures; or

 

(b)             the trustee of the debenture trust deed covering the debentures he holds for compensation for any breach of the duties which the trustee owes him, and in any such action, it shall not be necessary for any other debenture holders of the same class, or if the action is brought against the company, the trustee of the covering trust deed, to be joined as a party.

 

  (3)          This section shall apply notwithstanding anything contained in a debenture trust deed or other instrument but a provision in a debenture or trust deed shall be valid and binding on all the debenture holders of the class convened in so far as it enables a meeting of the debenture holders by a resolution supported by the votes of the holders of at least three quarters in value of the debentures of that class in respect of which votes are cast on the resolution to -

 

(a)             release any trustee from liability for any breach of his duties to the debenture holders which he has already committed, or generally from liability for all such breaches (without necessarily specifying them) upon his ceasing to be a trustee; or

 

(b)             consent to the alteration or abrogation of any of the rights, powers or remedies of the debenture holders and the trustee of the debenture trust deed covering their debentures (except the powers and remedies under section 215 of this Act); or

 

(c)             consent to the substitution for the debentures of a different class issued by the company or any other company or corporation, or the cancellation of the debentures in consideration of the issue to the debenture holders of shares credited as fully paid in the company or any other company.

 

177.     (1)         The terms of any debentures or trust deed may provide for the convening of general meetings of the debentures holders and for the passing, at such meetings, of a resolution binding on all the holders of the debentures of the same class.

 

  (2)          Whether or not the debentures or trust deed contain such provisions as are referred to in subsection (1) of this section, the commission may at any time direct a meeting of the debenture holders of any class to be held and conducted in such manner as the Commission thinks fit to consider ancillary or consequential direction as it shall think fit.

 

  (3)          Notwithstanding anything contained in a debenture trust deed, or in any debenture or contract or instrument the trustee of a debenture deed shall, on the requisition of persons holding, at the date of the deposit of the requisition debentures covered by the trust deed which carrying not less than one tenth of the total voting rights attached to all the issued and outstanding debentures of that class, forthwith, proceed duly to convene a meeting of that class of debenture holders.

 

Fixed and Floating charges

 

178.     (1)         A floating charge means an equitable charge over the whole or a specified part of the company's undertakings and assets, including cash and uncalled capital of the company both present and future, but so that the charge shall not preclude the company from dealing with such assets until -

 

(a)             the security becomes enforceable and the holder thereof, pursuant to a power in that behalf in the debenture or the deed securing the same, appoints a receiver or manager or enters into possession of such assets; or

 

(b)             the court appoints a receiver or manager of such assets on the application of the holder; or

 

(c)             the company goes into liquidation;

 

  (2)          On the happening of any of the events mentioned in subsection (1) of this section, the charge shall be deemed to crystallise and to become a fixed equitable charge on such of the company's assets as are subject to the charge, and if a receiver or manager is withdrawn with the consent of the chargee, or the chargee withdraws from possession, before the charge has been fully discharged, the charge shall thereupon be deemed to cease to be a fixed charge and again to become a floating charge.

 

179.         A fixed charge on any property shall have priority over a floating charge affecting that property, unless the terms on which the floating charge was granted prohibited the company from granting any later charge having priority over the floating charge and the person in whose favour such later charge was granted had actual notice of that prohibition at the time when the charge was granted to him.

 

180.     (1)         Whenever a fixed or floating charge has become enforceable, the court shall have power to appoint a receiver and in the case of a floating charge, a receiver and manager of the assets subject to the charge.

 

  (2)          In the case of a floating charge, the court may, notwithstanding that the charge has not become enforceable, appoint a receiver or manager if satisfied that the security of the debenture holder is in jeopardy; and the security of the debenture holder shall be deemed to be in jeopardy if the court is satisfied that events have occurred or are about to occur which render it unreasonable in the interests of the debenture holder that the company should retain power to dispose of its assets.

 

  (3)          A receiver or manager shall not be appointed as a means of enforcing debentures not secured by any charge.

 

181.         Where a receiver or a receiver and manager is appointed by the court, advertisement to this effect shall be made by the receiver or the receiver and manager in the Gazette and in two daily newspapers.

 

182.     (1)         Where a receiver is appointed on behalf of the holders of any debentures of a registered company secured by a floating charge, or possession is taken by, or on behalf of those debenture holders of any property comprising or subject to the charge, then if the company is not at the time in course of being wound up, the debts which in every winding-up are under the provisions relating to preferential payments in part XV of this Act to be paid in priority to all other debts, shall be paid out of any assets coming to the hands of the receiver or other person taking possession as aforesaid in priority to any claim for principal or interest in respect of the debentures.

 

  (2)          In the application of the provisions relating to preferential payments -

 

(a)             section 494 of this Act shall be construed as if, the provision for payment of accrued holiday remuneration becoming payable on the termination of employment before or by the effect of the winding-up order or resolution, were a provision for payment of such remuneration becoming payable on the termination of employment before or by the effect of appointment of the receiver or possession being taken as aforesaid; and

 

(b)             the periods of time mentioned therein shall be reckoned from the date of the appointment of the receiver or of possession being taken as aforesaid, as the case may be, and if such date occurred before the commencement of this Act, the provisions relating to preferential payments which would have applied but for this Act, shall be deemed to remain in full force.

 

  (3)          Any payments made under this section, shall be recouped as far as many be out of the assets of the company available for payment of general creditors.

 

Debenture trust deed

 

183.     (1)         Every company which offers debentures to the public for subscription or purchase shall, before issuing any of the debentures, execute debenture trust deed in respect of them and procure the execution of the deed by the trustee for the debenture holders appointed by the deed.

 

   (2)          No debenture trust deed shall cover more than one class of debentures, whether or not the trust deed is required by this section to be executed.

 

  (3)          Where a trust deed is required to be executed by this section but has not been executed, the court, on the application of a debenture holder concerned, may-

 

(a)             order the company to execute a trust deed;

 

(b)             direct that a person nominated by the court shall be appointed to be trustee; and

 

(c)             give such consequential directions as it thinks fit, as to the contents of the trust deed and its execution by the trustee thereof.

 

  (4)          For the purposes of this Act, debentures shall belong to different classes if different rights attach to them in respect of -

 

(a)             the rate of, or dates for payment of interest;

 

(b)             the dates when, or the instalments by which, the principal of the debentures shall be repaid, unless difference is solely that the class of debentures shall be repaid during a stated period of time and particular debentures may be repaid at different dates during that period according to selections made by the company or by drawing ballot or otherwise;

 

(c)             any right to subscribe for or convert the debentures into shares in, or other debentures of, the company or any other company; or

 

(d)             the powers of the debentures holders to realise any security.

 

  (5)          Debentures further belong to different classes, if they do not rank equally for payment when any security invested in the debenture holders under any trust deed is realised or when the company is wound up, that is to say, if, in the circumstances mentioned in subsection (4) of this subsection the subject matter of any such security or the proceeds thereof, or any assets available to satisfy the debentures, is or are not to be applied in satisfying the debentures strictly in proportion to the amount of principal, premiums and arrears of interest to which the holders of them are respectively entitled.

 

  (6)          A debenture is covered by a trust deed if -

 

(a)             the holder of the debenture is entitled to participate in any money payable by the company under the deed; or

 

(b)             is entitled to the benefit of any mortgage, charge or security created by the deed, whether alone or together with other persons.

 

  (7)          If a company issues debentures in circumstances in which this section required a debenture trust deed to be executed without such a deed, having been executed in compliance with this section, or if the company issues debentures under a trust deed which covers two or more classes of debentures, the directors of the company who are in default of an offence and liable on conviction to a fine of N5,000 jointly or severally.

 

184.     (1)         Every debenture trust deed, whether required by section 183 of this Act or not, shall state-

 

(a)             the maximum sum which the company may raise by issuing debentures of the same class;

 

(b)             the maximum discount which may be allowed on the issue or re-issue of the debentures, and the maximum premium at which the debentures may be made redeemable;

 

(c)             the nature of any assets over which a mortgage, charge or security is created by the trust deed in favour of the trustee for the benefit of the debenture holders equally, and except where such a charge is a floating charge or a general floating charge, the identity of the assets subject to it;

 

(d)             the nature of any assets over which a mortgage, charge or security has been or will be created in favour of any person other than the trustee for the benefit of the debenture holders equally, and except where such a charge is floating charge or a general floating charge, the identity of the assets subject to it;

 

(e)             whether the company has created or will create any mortgage, charge or security for the benefit of some, but not all, of the holder of debentures issued under the trust deed;

 

(f)             any prohibition or restriction on the power of the company of issue debentures or to create mortgages, charges or any security on any of its assets ranking in priority to, or equally with the debentures issued under the trust deed;

 

(g)             whether the company shall have power to acquire debentures issued under the truest deed before the date of their redemption and to re-issue the debentures;

 

(h)             the rate of and the dates on which interest on the debentures issued under the trust deed shall paid and the manner in which payment may be made;

 

(i)             the date or dates on which the principal or the debentures issued under the trust deed shall be repaid, and unless the whole principal is to be repaid to all the debenture holders at the same time, the manner in which redemption shall be effected, whether by the payment of equal instalments of principal in respect of each debenture, or by the selection of debentures for redemption by the company, or by drawing, ballot, or otherwise;

 

(j)             in the case of convertible debentures, the dates and terms on which the debentures may be converted into shares and the amounts which may be credited as paid up on those shares in right of the debentures held by them;

 

(k)             the circumstances in which the debenture holders shall be entitled to realise any mortgage, charge or security invested in the trustee or any other person from their benefit (other than the circumstances in which they are entitled to do so by this Act);

 

(l)             the power of the company and the trustee to call meetings of the debentures holders and the rights of debenture holders to require the company or the trustee to call such meetings;

 

(m)             whether the rights of debenture holders may be altered or abrogated and if so, the conditions which must be fulfilled, and the procedure which must be followed, to effect such an alteration or abrogation; and

 

(n)             the amount or rate of the remuneration to be paid to the trustee and the period for which it shall be paid, and whether it shall be paid in priority to the principal, interest and costs in respect of debentures issued under the trust deed.

 

  (2)          If debentures are issued without a covering debenture trust deed being executed, the statements required by subsection (1) of this section shall be included in each debenture or in a note forming part of the same document or endorsed thereon, and in applying that subsection references therein to "the debenture trust deed" shall be construed as references to all or any of the debentures of the same class.

 

  (3)          Subsection (2) of this section shall not apply if the debenture is the only debenture of the class to which it belongs which has been or may be issued, and the rights of the debenture holder shall not be altered or abrogated without his consent.

 

  (4)          Any director who issues debenture in violation of the provisions of this section shall be guilty of an offence.

 

185.     (1)         Every debenture covered by a debenture trust deed shall state, either in the body thereof or in a note forming part of the same document or endorsed thereon-

 

(a)             the matters required to be stated in a debenture trust deed by paragraphs (a), (b), (f), (h), (i), (j), (l) and (m) of subsection 184 of this Act;

 

(b)             whether the trustee of the covering debenture trust deed holds the mortgages, charges and securities vested in him by the trust for the debenture holders equally, or in trust for some only of the debenture holders, and if so, which debenture holders; and

 

(c)             whether the debenture is secured by a general floating charge vested in the trustee of the covering debenture trust deed or in the debenture holders.

 

  (2)          A debenture issued by a company shall state on its face in clearly legible print, that it is unsecured if no mortgage, charge or security is vested in the holder of the debenture or in any person for his benefit as security for payment of principal or interest.

 

  (3)          Any director of a company who issues a debenture in violation of the provisions of subsections (1) and (2) section shall be guilty of an offence.

 

186.     (1)         Whether or not a debenture is secured by a charge over the company's property it may be secured by a trust deed appointing trustee for the debenture holders.

 

  (2)          It shall be the duty of such trustees to such trustees to safeguard the right to the debenture holders and, on behalf of and for the benefit of the debenture holders, to exercise the rights, powers and discretions conferred upon them by the trust deed.

 

  (3)          Charges securing the debentures may be created in favour of the debenture holders by vesting them in the trustees.

 

  (4)          Any provision contained in a trust deed or in any contract with debenture holders secured by trust deed shall be void in so far as it would have the effect of exempting a trustee thereof from, or indemnifying him against, liability for any breach of trust or failure to show the degree of care and diligence required of him as trustee having regard to the powers, authorities or discretion conferred on him by the trust deed.

 

Provided that nothing herein contained shall be deemed to invalidate any release otherwise validly given in respect of anything done or omitted to be done by a trustee on the agreement to such release of a majority of not less than three quarters in value of the debenture holders present in person, or where proxies are permitted, by proxy at a meeting summoned for the purpose.

 

  (5)          Notwithstanding any provisions contained in the debentures or trust deed, the court may, on the application of any debenture holder or of the commission remove any trustee and appoint another in his place if satisfied that such trustee has interests which conflict or may conflict with those of the debenture holders or that for any reason it is undesirable that such trustee should continue to act.

 

Provided that where any such application is made by a debenture holder, the court if it thinks fit, may order the applicant to give security for the payment of the costs of the trustee and may direct that the application shall be heard in Chambers.

 

187.     (1)         A person is not qualified for appointment as a trustee of a debenture trust deed if he is -

 

(a)             an officer or an employee of the company which issues debentures covered by the trust deed or of a company in the same group of companies as the company so issuing debentures;

 

(b)             less than eighteen years of age;

 

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

 

(d)             an undischarged bankrupt;

 

(e)             disqualified under section 257 of this Act from being appointed as a director of a company;

 

(f)             a substantial shareholder (as defined in section 95 of this Act) of the company.

 

  (2)          If a trustee becomes subject to any of the disqualification mentioned in subsection (1) of this section after he has been appointed, he shall immediately cease to be qualified to act as a trustee of the debenture trust deed.

 

  (3)          Any person who acts as trustee of a debenture trust deed shall be guilty of an offence, if his appointment is invalid under subsection (1) of this section or if he is disqualified from acting under subsection (2) of this section.

 

188.   (1)         Subject to the provisions of this section anything contained in a trust deed for securing an issue of debentures, or in any contract with the holders of debentures secured by a trust deed, shall be void in so far as it would have the effect of exempting a trustee thereof from or indemnifying him against liability for breach of trust, where he fails to show the degree of care and diligence required of him as trustee, having regard to the provisions of the trust deed conferring on him any powers, authorities of discretions.

 

  (2)          Subsection (1) of this section shall not invalidate -

 

(a)             any release otherwise validly given in respect of anything done or omitted to be done by a trustee before the giving of the release; or

 

(b)             any provisions enabling such a release to be given -

 

(i)             on the agreement thereto of a majority of not less than three-quarters in value of the debenture holders present and voting in person, where proxies are permitted, by proxy at a meeting summoned for the purpose; and

 

(ii)             either with respect to specific acts or omissions or on the trustee dying or ceasing to act.

 

  (3)          Subsection (1) of this section shall not operate to -

 

(a)             invalidate any provision in force at the commencement of this Act in any such trust deed or contract, so long as any person entitled to the benefit of that provision, or afterwards given the benefit thereof under subsection (4) of this section, remains a trustee of the trust deed in question; or

 

(b)             deprive any person of any exemption or right to be indemnified in respect of anything done or omitted to be done by him, while any such provision was in force.

 

  (4)          While any trustee of a trust deed remains entitled to the benefit of a provision saved by subsection (3) of this section, the benefit of that provision may be given -

 

(a)             to all trustees of the deed, present and future; and

 

(b)             to any named trustee or proposed trustee thereof, by a resolution, passed by a majority of not less than three-quarters in value of the debenture holders present in person or, where proxies are permitted by proxy at a meeting summoned for the purpose in accordance with the provisions of the trust deed or, if the trust deed makes no provision for summoning meetings summoned for the purpose in any manner approved by the court.

 

189.    (1)         Except as expressly provided in the terms of any debentures, debentures shall be transferable without restriction by a written transfer in common form and so that the transferee shall be entitled to the debenture and to the moneys secured thereby without regard to any equities, set-off, or cross claim between the company and the original or any intermediate holder.

 

  (2)          The terms of any debentures may impose restrictions of any nature whatsoever on the transferability of debentures, including power for the company to refuse to register and transfer and provisions for compulsory acquisition or rights of first refusal in favour of other debenture holders, or members or officers of the company:

 

Provided that if any restriction is imposed on the right to transfer any debenture, notice of the restriction shall be endorsed on the face of the debenture or debenture stock certificate and in the absence of such endorsement, the restriction shall be ineffective as regards any transferee for value, whether or not he has notice of the restriction.

 

190.         Every company shall cause a copy of every instrument creating any charge requiring registration under this Part of this Act to be kept at the registered office of the company:

 

Provided that, in the case of a series of uniform debentures, a copy of one debenture of the series shall be sufficient.

Company's register of charges.

 

191.     (1)         Every limited company shall keep at the registered office of the company, a register of charges and enter therein all charges specifically affecting property of the company and all floating charges on the undertaking or any property of the company giving in each case a short description of the property charged, the amount of the charge, and, except in the case of securities to bearer, the names of the persons entitled thereto.

 

  (2)          If any officer of the company knowingly and willfully authorities or permits the omission of any entry required to be made in pursuance of this section, he shall be guilty of an offence and liable on conviction to a fine not exceeding N250.

 

192.     (1)         The copies of instruments creating any charge requiring registration under this Part of this Act with the Commission and the register of charges kept in pursuance of section 191 of this Act, shall be open during business hours (but subject to such reasonable restrictions as the company in general meeting may impose, so that not less than two hours in each day shall be allowed for inspection) to inspection by any creditor or member of the company without fee and the register of charges also be open to inspection by any other person on payment of such fee, not exceeding N5 for each inspection as the company may prescribe.

 

  (2)          If inspection of copies of instruments creating charges or of the register is refused, every officer of the company who is in default shall be guilty of an offence and liable to a fine not exceeding N10 for every day during which the refusal continues.

 

  (3)          If any such refusal occurs in relation to a company registered in Nigeria or, in so far as a foreign company has an established place of business within Nigeria and an instrument creates a charge over any of its property in Nigeria and the refusal relates to that charge, the court may by order compel an immediate inspection of the copies of instruments or register.

 

193.   (1)         A company which issues or has issued debentures shall maintain a register of the holders thereof.

 

  (2)          The register shall contain the following information, that is -

 

(a)             the names and addresses of the debenture holders;

 

(b)             the principal of the debentures held each of them;

 

(c)             the amount or the highest amount of any premium payable on redemption of the debentures;

 

(d)             the issue price of the debenture and the amount paid up on the issue price;

 

(e)             the date on which the name of each person was entered on the register as a debenture holder; and

 

(f)             the date on which each person ceased to be a debenture holder.

 

  (3)          The entry required under this section shall be made within thirty days of the conclusion of the agreement with the company to become a debenture holder or within thirty days of the date at which he ceases to be one.

 

194.   (1)         Every register of debenture holders of a company shall, except when duly closed (but subject to such reasonable restrictions as the company may in general meeting impose, so that not less than two hours in each day shall be allowed for inspection), be open to the inspection of any registered debenture holder or any shareholder in the company without fee, and of any other person on payment of a fee of N1 or such less sum as may be prescribed by the company.

 

  (2)          Any such registered debenture holder as aforesaid or any other person may require a copy of the register of the debenture holders of the company or any part thereof on payment of 50 kobo for every 100 words required to be copied.

 

  (3)          A copy of any trust deed for securing any issue debentures shall be forwarded to every debenture holder at his request on payment in the case of a printed trust deed, of the sum of N1 or such less sum as may prescribed by the company, or, where the trust deed has not been printed, on payment of 50 kobo for every 100 words required to be copied.

 

  (4)          If inspection is refused, or a copy is refused or not forwarded, the company and every officer of the company who is default shall be guilty of an offence and liable to a fine not exceeding N50 and in case of a continuing default, to a further fine of N10 for every day during which the default continues.

 

  (5)          Where a company is in default as aforesaid, the court convicting may by order compel an immediate inspection of the register or direct that the copies required shall be sent to the person requiring them.

 

  (6)          For the purposes of this section, a register shall be deemed to be duly closed in accordance with provisions contained in the articles or in the debentures or, in the case of debenture stock, in the stock certificates, or in the trust deed or other document securing the debentures or debenture stock, during such periods, not exceeding in the whole thirty days in any year, as may be therein specified.

 

195.         On the application of the transferor of any debenture in a company, the company shall enter in its register of debenture holders the name of the transferee in the same manner and subject to the same conditions as if the application for the entry were made by the transferee.

 

196.     (1)         If a company refuses to register a transfer of any debentures, the company shall, within two months after the date on which the transfer was lodged with the company, send to the transferee notice of the refusal.

 

  (2)          If any default is made in complying with the provisions of this section, the company and every officer of the company who is default shall guilty of an offence and liable to a fine of N500.

 

Registration of Charges with Commission

 

197.     (1)         Subject to the provisions of this Part of this Act, every charge created by a company, being a charge to which this section applies, shall so far as any security on the company's property or undertaking is conferred be void against the liquidator and creditor of the company, unless the prescribed particulars of the charge together with the instrument, if any by which the charge is created or evidenced, have been or are delivered to or received by the Commission for registration in the manner by this Act or by any enactment repealed by this Act within ninety days after the date of its creation but without prejudice to any contract or obligation for repayment of the money thereby secured, and when a charge becomes void under this section, the money thereby secured shall immediately become payable.

 

  (2)          The provisions of this section shall apply to the following charges, that is -

 

(a)             a charge for the purpose of securing any issue of debentures;

 

(b)             a charge on uncalled share capital of the company;

 

(c)             a charge created or evidenced by an instrument which, if executed by an individual, would require registration as a bill of sale;

 

(d)             a charge on land, wherever situate, or any interest therein, but not including a charge for rent or other periodical sum issuing out of land;

 

(e)             a charge on book debts of the company;

 

(f)             a floating charge on the undertaking or property of the company;

 

(g)             a charge on calls made but not paid;

 

(h)             a charge on a ship or aircraft or any share in a ship; and

 

(i)             a charge on goodwill, on a patent or a licence under a patent, on trademark or on a copyright or a licence under a copyright.

 

  (3)          Where a charge affects or relates to property situated in Nigeria and in addition to registration under subsection (1) of make the charge valid or effectual, it shall, subject to this subsection, be sufficient evidence of compliance with the requirements of subsection (1) of this section, if, instead of delivery of the original instrument creating or evidencing the charge, there is delivered to and received by the commission within the prescribed period of ninety days, or such extended time as the court may allow, a true copy of it duly certified as such by the secretary to the company.

 

  (4)          A reference in any enactment to the date of execution of an instrument for the purposes of computation of time within which registration is to be effected with or without penalty, shall be construed as a reference to the date of presentation of copy of the instrument to the commission under this Act, and time shall be computed accordingly; and if a certified copy is delivered to the Commission under this subsection, the original of it shall be produced to it for inspection and comparison, if the Commission so requires.

 

  (5)          In the case of a charge created out of Nigeria, affecting or in relation to property situate outside Nigeria, the delivery to and the receipt by the Commission of a copy verified in the prescribed manner of the instrument by which the charge is created or evidenced shall have the same effect for the purposes of this section as the delivery and receipt of the instrument itself, and ninety days after the date on which the instrument or copy could, in due course of post, and if despatched with diligence, have been received in Nigeria shall be substituted for ninety days after the date of the creation of the charges as the time within the particulars and instrument or copy are to be delivered to the Commission.

 

   (6)          Where a charge is created in Nigeria but affects or relates to property outside Nigeria, the instrument creating or purporting to create the charge may be sent for registration under this section notwithstanding that further proceedings may be necessary to make the charge valid or effectual according to the law of the country in which the property is situate.

 

  (7)          Where a negotiable instrument has been given to secure the payment of any book debts of a company, the deposit of the instrument for the purpose of securing an advance to the company shall not, for the purposes of this section, be treated as a charge on those book debts.

 

  (8)          The holding of debentures which entitles the debenture holder to a charge on land shall not, for the purposes of this section, be deemed to be an interest in land.

 

  (9)          Where a series of debentures containing, or giving by reference to any other instrument, any charge to the benefit of which the debenture holders of that series are entitled pari pasu is created by a company, it shall, for the purposes of this section, be sufficient if there are delivered to or received by the Commission within ninety days after the execution o the deed containing the charge or, if there is no such deed, after the execution of any debentures of the series, the following particulars -

 

(a)             the total amount secured by the whole series;

 

(b)             the dates of the resolutions authorising the issues of the series and the date of the covering deed, if any, by which the security is created or defined;

 

(c)             a general description of the property charged; and

 

(d)             the names of the trustees, if any, for the debenture holders; together with the deed containing the charge, or, if there is no such deed, one of the debentures of the series:

 

Provided that, where more than one issue is made of debentures in the series, there shall be sent to the Commission for entry in the register particulars of the date and amount of each issues, but an omission to do this shall not affect the validity of the debentures issued.

 

 (10)         Where any commission, allowance or discount has been paid or made either directly or indirectly by a company to any person in consideration of his subscribing or agreeing to subscribe, whether absolutely or conditionally, for any debentures of the company, or procuring or agreeing to procure subscriptions whether absolute or conditional, for any such debentures, the particulars required to be sent for registration under this section shall include particulars as to the amount or rate per cent of commission, discount or allowance so paid or made, but an omission to do this shall not affect the validity of the debentures issued:

 

Provided that the deposit of any debentures as security for subsection, be treated as the issue of the debentures at a discount.

 

 (11)          In this Part of this Act, charge includes mortgage.

 

198.     (1)         The Commission shall keep, with respect to each company, a register in the prescribed form of all the charges requiring registration under this Part of this Act, and shall on payment of such fee as may be specified by regulations made by the commission enter in the register with respect to such charges the following particulars -

 

(a)             in the case of a charge to the benefit of which the holders of a series of debentures are entitled, such particulars as are specified in section 197(9) of this Act;

 

(b)             in the case of any other charge -

 

(i)             if the charge is a charge created by the company, the date of its creation, and if the charge was a charge existing on property acquired by the company, the date of its creation, and the date of the acquisition of the property;

 

(ii)             the amount secured by the charge,

 

(iii)             short particulars of the property, and

 

(iv)             the persons entitled to the charge.

 

  (2)          Where a charge is registered under this Part of this Act, the Commission shall issue a registration certificate setting out the parties to the charge, the amount thereby secured, with such other particulars as the Commission may consider necessary; and the certificate shall be prima facie evidence of due compliance with the requirements as to registration under this Part of this Act.

 

  (3)          The register kept in pursuance of this section shall be open to inspection by any person on payment of such fee, not exceeding N1 for each inspection as may be specified by regulations made by the Commission.

 

199.     (1)         It shall be the duty of a company to send to the Commission for registration, the particulars of every charge created by the company and of the issues of debentures of a series requiring registration under section 197 of this Act, but registration of any such charge may be effected on the application of any person interested therein.

 

  (2)          Where registration is effected on the application of some person other than the company, that person shall be entitled to recover from the company the amount of any fees properly paid by him to the Commission on the registration.

 

  (3)          If any company makes default in sending to the Commission for registration, the particulars of any charge created by the company or of the issues of debentures of a series requiring registration as aforesaid, then, unless the registration has been effected on the application of some other person, the company and every officer of the company who is in default shall be guilty of an offence and liable to a fine of N500.

 

200.     (1)         Where a company acquires any property which is subject to a charge of any such kind as would have been required, if it has been created by the company after the acquisition of the property, to be registered under this Part of this Act, the company shall cause the prescribed particulars of the charge, together with a copy (certified in the prescribed manner to be a correct copy) of the instrument, if any, by which the charge was created or is evidenced, to be delivered to the Commission for registration in the manner required by this Act within ninety days after the date on which acquisition is completed:

 

Provided that, if the property is situated and the charge was created outside Nigeria, "ninety days after the date on which the copy of the instrument could in due course of post, and if despatched with due diligence, have been received in Nigeria" shall be substituted for ninety days after the date on which acquisition is completed, as the time within which the particulars and the copy of the instrument are to be delivered to the Commission.

 

  (2)         If default is made in complying with this section, the company and every officer of the company who is in default shall be guilty of an offence and liable to a fine of N250

 

  (3)          It shall be sufficient compliance with this section in any case affecting land registered under any enactment in a State, where the charge is registered thereunder before the land is acquired by the company, if a true copy of the charge duly certified by the Registrar of Land is delivered to the Commission within the time prescribed by this section.

 

201.     (1)         Where, at the date of commencement of this Act, a company has property on which thee is a charge particulars of which would require registration if it had been created by the company after the date of such commencement then, ceased to be held by the company prior to the expiration of six months from the date of such commencement, the company shall, within that time, cause particulars of the charge as prescribed by section 197 of this Act to be delivered to the Commission for registration together with the document, if any, by which the charge was created or a copy thereof, certified as required by that section.

 

  (2)          Every existing company shall, prior to the expiration of six months from the commencement of this Act, deliver to the Commission for registration a statutory declaration made by a director and the secretary of the company stating whether or not there are any charges on the company's property of which particulars required to be registered under this section and confirming that particulars of any such charges have been duly delivered to the Commission for registration.

 

 (3)          In the event of default in complying with subsection (2) of this Section, the company and every officer of the company who is in default shall be guilty of an offence and liable to a fine not exceeding N50 for every day during which the default continues.

 

  (4)          Failure to comply with the provisions of this section shall not affect the validity of the charge.

 

202.         Where a charge, particulars of which require registration under section 197 of this Act, is expressed to secure all sums due or to become due or some other uncertain or fluctuating amount, the particulars required under paragraph (a) of subsection (9) of section 197 of this Act shall state the maximum sum deemed to be secured by such charge (being the maximum sum covered by the stamp duty paid thereon) and such charge shall be void, so far as any security on the company's property is thereby conferred, as respects any excess over the stated maximum:

 

Provided that, if -

(a)             additional stamp duty is subsequently paid on such charge; and

 

(b)             at any time thereafter prior to the commencement of the winding-up of the company, amended particulars of the said charge stating the increased maximum sum deemed to be secured thereby (together with the original instrument by which the charge was created or evidenced) are delivered to the Commission for registration, then, as from the date of such delivery the charge, if otherwise valid, shall be effective to the extent of such increased maximum sum except as regards any person who, prior to the date of such delivery, has acquired any proprietary rights in, or a fixed or floating charge on, the property subject to the charge.

 

203.      (1)         The company shall cause a copy of every certificate of registration given under section 198 of this Act to be endorsed on every debenture or certificate of debenture stock which is issued by the company and the payment of which is secured by the charge so registered:

 

Provided that nothing in this subsection shall be construed as requiring a company to cause a certificate of registration of any charge so 

given to be enforced on any debenture or certificate of debenture stock issued by the company before the charge was created.

 

  (2)          If any person knowingly and willfully authorises or permits the delivery of any debenture or certificate of debenture stock which under the provisions of this section is required to have endorsed on it a copy of a certificate of registration without the copy being so endorsed upon it, he shall, without prejudice to any other liability, be guilty of an offence an liable to a fine not exceeding N500.

 

204.         If the Commission is satisfied with respect to any registered charge that -

(a)             the debt for which the charge was given has been paid or satisfied in whole or in part; or

 

(b)             part of the property or undertaking charged has been released from the charge or has ceased to form part of the company's property or undertaking,

 

it may enter on the register a memorandum of satisfaction to the extent necessary to give effect thereto and, where it enters a memorandum of satisfaction it shall, if required, furnish the company with a copy of the entry, and any such entry shall have effect, subject to the requirement of any other enactment as to registration.

 

205.         The court, on being satisfied that the omission to register a charge within the time required by this Act or that the omission or mis-statement of any particular with respect to any such charge or in a memorandum of satisfaction was accidental, or due to inadvertence or to some other sufficient cause, or is not of a nature to prejudice the position of creditors or shareholders of the company, or that on other grounds it is just and equitable to grant relief, may, on the application of the company or any person interested and on such terms and conditions as seems to the court just and expedient, order that the time for registration shall be extended or, as the case may be, that the omission or mis-statement shall be rectified.

Registration of appointment order, etc.

206.     (1)         If any person obtains an order for the appointment of a receiver or manager of the property of a company, or appoints such a receiver or manager under any powers contained in any instrument, he shall, within seven days from the date of the order or the appointment under the said powers, give notice of the fact to the Commission and the Commission shall, on payment of such fee as may be specified by regulations made under this Act, enter the fact in the register of charges.

 

  (2)          Where any person appointed receiver or manager of the property of a company under the powers contained in any instrument, ceases to act as such receiver or manager, he shall, on so ceasing, give the Commission notice to that effect, and the Commission shall enter, the notice in the register of charges.

 

  (3)          If any person makes default in complying with the requirements of this section, he shall be guilty of an offence and liable to a fine not exceeding N50 for every day during which the default continues.

 

207.     (1)        The copies of instruments creating any charge requiring registration under this part of this Act with the Commission and the register of charges kept in pursuance of section 198 of this Act, shall be open during business hours (but subject to such reasonable restrictions as the company in general meeting may impose, so that not less than two hours in each day shall be allowed for inspection) to inspection by any creditor or member of the company without fee, and the register of charges shall also be open to inspection by any other person on payment of such fee, not exceeding N1 for each inspection, as the company may prescribe.

 

  (2)          If inspection of copies of instruments creating charges or of the register is refused, every officer of the company who is in default shall be guilty of an offence and liable to a fine not exceeding N50 for every day during which the refusal continues.

 

  (3)          If any such refusal occurs in relation to a company registered in Nigeria or, in so far as a foreign company has an creates a charge over any of its property in Nigeria and the refusal relates to that charge, the court may by order compel an immediate inspection of the copies or register.

 

208.   (1)         A debenture holder shall be entitled to realise any security vested in him or in any other person for his benefit if -

 

(a)             the company fails to pay any instalment of interest, or the whole or part of the principal or any premium, owing under the debenture or the debenture trust deed covering the debenture within one month after it becomes due; or

 

(b)             the company fails to fulfil any of the obligations imposed on it by the debentures or the debenture trust deed; or

 

(c)             any circumstances occur which by the terms of the debentures or debenture trust deed entitled the holder of the debenture to realise his security; or

 

(d)                 the company is wound up.

 

  (2)          A debenture holder whose debenture is secured by a general floating charge vested in him or the trustee of the covering debenture trust deed or any other person shall additionally be entitled to realise his security if -

 

(a)             any creditor of the company issues a process of execution against any of its assets or commences proceedings for winding-up of the company by order of any court of competent jurisdiction; or

 

(b)             the company ceases to pay its debts as they fall due; or

 

(c)             the company ceases to carry on business; or

 

(d)             the company suffers, after the issue of debenture of the class concerned, losses or diminutions in the value of its assets which in the aggregate amount to more than one half of the total amount owing in respect of who seeks to enforce his security and debentures whose holder ranks before him for payment of principal or interest; or

 

(e)             any circumstances occur which entitles a debenture holder who ranks for payment of principal or interest in priority to the debentures secured by the general floating charges to realise his security.

 

209.     (1)         At any time after a debenture holder or a class of debenture holders becomes entitled to realise his or their security, a receiver of any assets subject to a mortgage, charge or security in favour of the class of debenture holders or the trustee of the covering debenture trust deed or any other person may be appointed by -

 

(a)             that trustee;

 

(b)             the debentures holders of the same class containing power to appoint; or

 

(c)             debenture holders having more than one half of the total amount owing in respect of all the debentures of the same class; or

 

(d)             the court on the application of the trustee.

 

 (2)            Subject to any conditions imposed in the debenture or debenture trust deed, a debenture holder or a trustee, in the case of a trust, deed may -

 

(a)             bring an action in a representative capacity against the company for payment and enforcement of the security;

 

(b)             realise his security by -

 

(i)             bringing a foreclosure action, or

 

(ii)             commencing a winding-up proceeding.

 

  (3)          A receiver appointed under this section shall, subject to any order made by the court, have power to take possession of the assets subject to the mortgage, charge or security and to sell those assets and, if the mortgage, charge or security extends to such assets, to collect debts owed to the company, to enforce claims vested in the company, to compromise, settle and enter into arrangements in respect of with a view to selling it on the most favourable terms, to grant, or accept leases of land and licences in respect of patents, designs, copyright or trademarks, and to recover any instalment unpaid on the company's issued shares.

 

  (4)          Where a representative action is being brought under paragraph (a) of subsection (2) of this section, the approval of the court shall be obtained where the company is being wound up.

 

  (5)          The remedies given by this section shall be in addition to, and not in substitution for, any other powers and remedies conferred on the trustee or the debenture trust deed or on the debenture holders by the debentures or debenture trust deed, and any power or remedy which is expressed in any instrument to be exercisable if the debenture holders become entitled to realise their security shall be exercisable on the occurrence of any of the events specified in subsection (1) of subsections (1) and (2) of section 208 of this Act; but a manager of the business or of any of the assets of a company may not be appointed for the benefit of debenture holders unless a receiver has also been appointed and has not ceased to act.

 

  (6)          The provisions of sections 387 to 400 of this Act shall apply to receivers and managers under this Part of this Act.

 

  (7)          No provision in any instrument which purports to exclude or restrict the remedies given by this section shall be valid.

 

210.         Subject to the provisions of this Part of this Act and unless the context otherwise admits, the provisions of sections 146, 147, 151, 153, 156 and 157 of this Act relating to share certificates and transfer of shares shall apply in respect of shares as if debentures were substituted for shares and debentures holders for shareholders

 

 

Part VIII

Meetings and Proceedings of Companies

 

Statutory meeting.


211.     (1)         Every public company shall, within a period of six months from the date of its incorporation, hold a general meeting of the members of the company (in this Act referred to as the statutory meeting).

 

  (2)          The directors shall, at least twenty one days before the day on which the statutory meeting is held, forward to every member of the company a copy of the statutory report.

 

  (3)          The statutory report shall be certified by not less than two directors or by a director and the secretary of the company and shall state -

 

(a)             the total number of shares allotted, distinguishing shares allotted as fully or partly paid up otherwise than in cash, and stating in the case of shares partly paid up the extent to which they are so paid up, and in either case, the consideration for which they have been allotted;

 

(b)             the total amount of cash received by the company in respect of all the shares allotted and distinguished as aforesaid;

 

(c)             the names, addresses and descriptions of the directors, auditors, managers, if any, and secretary of the company;

 

(d)             the particulars of any pe-incorporation contract together with the particulars of any modification or proposed modification thereon;

 

(e)             any underwriting contract that has not been carried out and the reasons therefore;

 

(f)             the arrears, if any, due on calls from every director; and

 

(g)             the particulars of any commission or brokerage paid or to be paid in connection with the issue or sale of shares or debentures to any director or to the manager.

 

  (4)       The report shall also contain an abstract of the receipts of the company and of the payments made from them up to a date within seven days of the date of the report, exhibiting under distinctive headings the receipts of the company from shares and debentures and other sources, the payments made from such receipts and particulars concerning the balance remaining in hand, and an account or estimate of the preliminary expenses of the company.

 

 (5)       The statutory report shall, so far as it relates to the shares allotted by the company, and to the cash received in respect of such shares, and to the receipts and payments of the company on capital account, be certified as correct by the auditors of the company.

 

  (6)          The directors shall cause a copy of the statutory report, certified as required by this section, to be delivered to the Commission for registration forthwith after the sending of copies to the members of the company.

 

  (7)          The directors shall cause a list showing the names, descriptions and addresses of the members of the company, and the number of shares held by them respectively, to be produced at the commencement of the meeting and to remain open and accessible to any member of the company during the continuance of the statutory meeting.

 

  (8)          The members of the company present at the statutory meeting shall be at liberty to discuss any matter relating to the formation of the company, and its commencement of business or arising out of the statutory report.

 

  (9)          Any member who wishes a resolution to be passed on any matter arising out of the statutory report shall give further twenty one days notice from the date on which the statutory report was received to the company of his intention to propose such a resolution.

 

(10)         The statutory meeting may adjourn from time to time, and at any adjourned meeting any resolution of which notice has been given in accordance with the articles, either before or subsequently to the former meeting, may be passed, and the adjourned meeting shall have the same powers as an original meeting.

 

212.         Without prejudice to the provisions of section 408 of this Act, if a company fails to comply with the requirements of section 211 of this Act, the company and any officer in default shall be guilty of an offence and liable to a fine of N50 for every day during which the default continues.

 

General meeting.

213.     (1)         Every company shall in each year hold a general meeting as its annual general meeting in addition to any other meetings in that year, and shall specify the meeting as such in the notices calling it; and not more than fifteen months shall elapse between the date of one annual general meeting of a company and that of the next:

 

Provided that -

 

(a)             if a company holds its first annual general meeting within eighteen months of its incorporation it need not hold it in that year or in the following year;

 

(b)             except for the first annual general meeting, the Commission shall have the power to extend the time within which any annual general meeting shall be held, by a period not exceeding three months.

 

  (2)          If default is made in holding a meeting of a company in accordance with subsection (1) of this section, the Commission may, on the application of any member of the company call, or direct the calling of, a general meeting of the company and give such ancillary or consequential directions as the Commission thinks expedient, including directions modifying or supplementing, in relation to the calling, holding and conducting of the meeting, the operation of the company's articles; and it is hereby declared that the directions that may be given under this subsection shall include a direction that one member of the company present in person or by proxy may apply to the court for an order to take a decision which shall bind all the members.

 

  (3)          A general meeting held in pursuance of subsection (2) of this section shall, subject to any directions of the Commission, be deemed to be an annual general meeting of the company; but, where a meeting so held is not held in the year in which the default in holding the company's annual general meeting occurred, the meeting so held shall not be treated as the annual general meeting for the year in which it is held unless at that meeting the company resolves that it shall be so treated.

 

  (4)         Where a company resolves that a meeting shall be treated as its annual general meeting, a copy of the resolution shall, within fifteen days after the passing thereof, be filed with the Commission.

 

  (5)          If default is made in holding a meeting of the company in accordance with subsection (1) of this section, or in complying with any directions of the Commission under subsection (2) thereof, the company and every officer of the company who is in default shall be guilty of an offence and be liable to a fine of N500 and if default is made in complying with subsection (4) of this section, the company and every officer of the company who is in default shall be liable to a fine of N25.

 

214.         All businesses transacted at annual general meetings shall be deemed special business, except declaring a dividend, the presentation of the financial statements and the reports of the directors and auditors, the election of directors in the place of those retiring, the appointment, and the fixing of the remuneration of the auditors and the appointment of the members of the audit committee under section 59 of this Act which shall be ordinary business.

 

 

Extraordinary General Meeting.

 

215.     (1)         The Board of directors may convene an extraordinary general meeting whenever they deem fit, and if at any time there are not within Nigeria sufficient directors capable of acting to form a quorum, any director may convene an extraordinary general meeting.

 

  (2)           An extraordinary general meeting of a company may be requisitioned by any member or members of the company holding at the date of the requisition not less than one tenth of the paid up capital of the company as at the date of the deposit carrying the right of voting, or in the case of a company not having a share capital, members of the company representing not less than one tenth of the total voting rights of all the members having at the said date a right to vote at general meetings of the company, and the directors shall on receipt of the requisition forthwith proceed duly to convene an extraordinary general meeting of the company, notwithstanding anything in its articles.

 

  (3)           The requisition shall state the objects of the meeting, and be signed by the requisitionists and deposited at the registered office of the company, and the requisition may consist of several documents in like form each signed by one or more requisitionists.

 

  (4)          If the directors do not within twenty one days from the date of the deposit of the requisition proceed duly to convene a meeting, the requisitionists, or any one or more of them representing more than one half of the total voting rights of all of them, may themselves convene a meeting:

 

Provided that any meeting so convened shall not be held after the expiration of three months from that date.

 

  (5)          A meeting convened under this section by a requisitionist or requisitionists shall be convened in the same manner, as nearly as possible, as that in which meetings are to be convened by directors.

 

  (6)          Any reasonable expenses incurred by the requisitionist or requisitionists by reason of the failure of the directors duly to convene a meeting shall be repaid to the requisitionists by the company, and any sum so repaid shall be retained by the company out of any sums due or to become due from the company by way of fees or other remuneration in respect of their services to such of the directors as were in default.

 

  (7)          For the purpose of this section the directors shall, in the case of a meeting at which a resolution is to be proposed as a special resolution, be deemed not to have duly convened the meeting if they do not give such notice as is required by section 217 of this Act.

 

  (8)         All businesses transacted at an extraordinary general meeting shall be deemed special.

 

216.         All statutory and annual general meetings shall be held in Nigeria.

 

Notice of Meetings.

217.     (1)        The notice required for all types of general meetings from the commencement of this Act shall be twenty one days from the date on which the notice was sent out.

 

    (2)             A general meeting of a company shall, notwithstanding that it is called by a shorter notice than that specified in subsection (1) of this section, be deemed to have been duly called if it is so agreed in the case of -

 

(a)             a meeting called as the annual general meeting, by all the members entitled to attend and vote thereat; and

 

(b)             any other general meeting, by a majority in number of the members having a right to attend and vote at the meeting, being a majority together holding not less than ninety five per cent in nominal value of the shares giving a right to attend and vote at the meeting or, in the case of a company not having a share capital, together representing not less than ninety five per cent of the total voting rights at that meeting of all the members.

 

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

 

  (2)          In the case of notice of an annual general meeting a statement that the purpose is to transact the ordinary business of an annual general meeting shall be deemed to be a sufficient specification that the business is for the declaration of dividends, presentation of the financial statements, reports of the directors and auditors, the election of directors in the place of those retiring, the fixing of the remuneration of the auditors and, if the requirements of sections 362 and 363 of this Act are duly complied with, the removal and election of auditors and directors.

 

  (3)          No business may be transacted at any general meeting unless notice of it has been duly given.

 

 (4)           In every case in which a member is entitled, pursuant to section 230 of this Act, to appoint a proxy to attend and vote instead of him, the notice shall contain with reasonable prominence, a statement that the member has the right to appoint a proxy to attend and vote instead of him and that the proxy need not be a member of the company, and if default is made in complying with this subsection as respects any meeting, every officer of the company who is in default shall be guilty of an offence and liable to a fine not exceeding N500.

 

  (5)          An error or omission in a notice with respect to the place, date, time or general nature of the business of a meeting shall not invalidate the meeting, unless the officer of the company responsible for the error or omission acted in bad faith and failed to exercise due care and diligence:

 

Provided that in the case of accidental error or omission, the officer responsible shall effect the necessary correction either before or during the meeting.


219.     (1)         The following persons shall be entitled to receive notice of a general meeting -

 

(a)                 every member;

 

(b)             every person upon whom the ownership of a share devolves by reason of his being a legal representative, receiver or a trustee in bankruptcy of a member;

 

(c)             every director of the company;

 

(d)             every auditor for the time being of the company; and

 

(e)             the secretary of the company.

 

  (2)          No person other than those mentioned in subsection (1) of this section shall be entitled to receive notices of general meetings.

 

220.     (1)         A notice may be given by the company to any member either personally or by sending it by post to him or to his registered address, or (if he has no registered address within Nigeria) to the address, if any, supplied by him to the company for the giving of notice to him.

 

  (2)          Where a notice is sent by post, service of the notice shall be deemed to be effected by properly addressing, pre-paying, and posting a letter containing the notice, and to have been effected in the case of a notice of a meeting at the expiration of seven days after the letter containing the same is posted, and in any other case at the time at which the letter would be delivered in the ordinary course of post.

 

  (3)          A Notice may be given by the company to the joint holders of shares by giving the notice to the joint holder first named in the register of members in respect of the share.

 

  (4)          A notice may be given by the company to the persons entitled to shares in consequence of the death or bankruptcy of a member by sending it through the post in a prepaid letter addressed to them by name, or by the title of representatives of the deceased, or trustee of the bankrupt, or by any like description, at the address, if any within Nigeria supplied for the purpose by the person claiming to be so entitled, or (until such an address has been so supplied) by giving the notice in any manner in which the same might have been given if the death or bankruptcy had not occurred.

 

  (5)          Registered address means, in the case of a member, any address supplied by him to the company for the giving of notice to him.

 

221.   (1)         Failure to give notice of any meeting to a person entitled to receive it shall invalidate the meeting unless such failure is an accidental omission on the part of the person or persons giving the notice.

 

  (2)          Failure to give notice to a person entitled to it due to a misrepresentation or misinterpretation of the provisions of this Act, or of the articles shall not amount to an accidental omission for the purposes of the foregoing subsection.

 

222.         In addition to the notice required to be given to those entitled to receive it in accordance with the provisions of this Act, every public company shall, at least twenty one days before any general meeting, advertise a notice of such meeting in at least two daily newspapers.

 

223.     (1)          If for any reason it is impracticable to call a meeting of a company or of the board of directors in any manner in which meetings of that company or board may be called, or to conduct the meeting of the company or board in the manner prescribed by the articles or this Act, the court may, either of its own motion or on the application of any director of the company or of any member of the company who would be entitled to vote at the meeting, in the case of the meeting of the company, and of any director of the company, in case of the meeting of the board, order a meeting of the company or board, as the case may be, to be called, held and conduced in such manner as the court thinks fit, and where any such order is made may give such ancillary or consequential directions as it thinks expedient.

 

  (2)          It is hereby declared that the directions that may be given under subsection (1) of this section shall include a direction that one member of the company present in person or by proxy, in the case of a meeting of the company, and one director, in the case of the Board may apply to the court for an order to take a decision which shall bind all the members.

 

  (3)          Any meeting called, held and conducted in accordance with an order under subsection (1) of this section, shall for all purposes be deemed to be a meeting of the company or of the board of directors duly called, held and conducted.

 

Voting

224.     (1)         At any general meeting, a resolution put to the vote shall be decided on a show of hands, unless a poll is (before or on the declaration of the result of the show of hands) demanded by -

 

(a)             the chairman, where he is a shareholder or a proxy;

 

(b)             at least three members present in person or by proxy;

 

(c)             any member or members present in person or by proxy and representing not less than one tenth of the total voting rights of all the members having the right to vote at the meeting; or

 

(d)             a member or members holding shares in the company conferring a right to vote at the meeting being shares on which an aggregate sum has been paid up equal to not less than one tenth of the total sum paid up on all the shares conferring that right.

 

  (2)          Unless a poll is so demanded, a declaration by the chairman that a resolution has, on a show of hands, been carried or carried unanimously, or by a particular majority, or minutes of the proceedings of the company, shall be conclusive evidence of the fact, without proof of the number or proportion of the votes recorded in favour of, or against, the resolution.

 

225.     (1)         Any provision contained in a company's articles shall be void in so far as it would have the effect either of -

 

(a)             excluding the right to demand a poll at a general meeting on any question other than the election of the chairman of the meeting or the adjournment of the meeting; or

 

(b)             making ineffective a demand for a poll on any such question which is made by any of the persons mentioned in section 224 of this Act.

 

  (2)          The instrument appointing a proxy to vote at a meeting of a company shall be deemed also to confer authority to demand or join in demanding a poll, and for the purposes of subsection (1) of this section, a demand by a person as proxy for a member shall be the same as a demand by the member.

 

  (3)          Notwithstanding section 224 of this Act and subsection (1) and (2) of this section, there shall be no right to demand a poll on the election of members of the Audit Committee under section 359 of this Act.

 

226.     (1)         On a poll taken at a meeting of a company, or a meeting of any class of members of a company, a member entitled to more than one vote need not, if he votes, use all his votes or cast all the votes the uses in the same way.

 

  (2)          Except as provided in subsection (4) of this section, if a poll is duly demanded, it shall be taken in such manner as the chairman directs, and the result of the poll shall be deemed to be the resolution of the meeting at which the poll was demanded.

 

  (3)          In the case of an equality of votes, whether on a show of hands or on a poll, the chairman of the meeting at which the show of hands takes place or at which the poll is demanded, shall be entitled to a second or casting vote.

 

  (4)          A poll demanded on the election of a chairman or on a question of adjournment shall be taken forthwith, and on any other question, shall be taken at such time as the chairman of the meeting directs, and any business other than that upon which a poll has been demanded may be proceeded with pending the taking of the poll.

 

227.     (1)         Subject to section 228 of this Act, every member shall have a right to attend any general meeting of the company in accordance with the provisions of section 81 of this Act.

 

  (2)          In the case of joint holders of shares, the vote of the senior joint holder who tenders a vote, whether in person or by proxy, shall be accepted to the exclusion of the votes of the other joint holders; and for this purpose seniority shall be determined by the order in which the names stand in the register of members.

 

  (3)          A member of unsound mind, or in respect of whom an order has been made by any court having jurisdiction in lunacy, may vote, whether on a show of hands or on a poll, by his committee, receiver, curator bonis, or other person in the nature of a committee, receiver or curator bonis appointed by that court, and any such committee, receiver, curator bonis or other person may vote by proxy.

 

228.         Every person who is entitled to receive notice of a general meeting of the company as provided by section 227 of this Act shall be entitled to attend such a meeting.

 

229.         No objections shall be raised to the qualification of any voter except at the meeting or adjourned meeting at which the vote objected to is given or tendered, and every vote not disallowed at such meeting shall be valid for all purposes and any such objection made in due time shall be referred to the chairman of the meeting, whose decision shall be final and conclusive.

 

230.     (1)         Any member of a company entitled to attend and vote at a meeting of the company shall be entitled to appoint another person (whether a member or not) as his proxy to attend and vote instead of him, and a proxy appointment to attend and vote instead of a member shall also have the same right as the member to speak at the meeting:

 

Provided that, unless the articles otherwise provide, this section shall not apply in the case of a company not having a share capital.

 

  (2)          In every notice calling a meeting of a company having a share capital, there shall appear with reasonable prominence a statement that a member entitled to attend and vote is entitled to appoint a proxy or, where that is allowed, two or more proxies, to attend and vote instead of him, and that a proxy need not be a member and if default is made in complying with this subsection as respects any meeting, every officer of the company who in default shall be guilty of an offence and liable to a fine of N250.

 

  (3)          Any provision contained in a company's articles shall be void in so far as it would have the effect of requiring the instrument appointing a proxy or any other document necessary to show the validity of or otherwise relating to the appointment of a proxy, to be received by the company or any other person more than forty eight hours before a meeting or adjourned meeting in order that the appointment may be effective at the meeting.

 

  (4)          If, for the purpose of any meeting of a company, invitations to appoint as proxy a person or one of a number of persons specified in the invitations are issued at the company's expense to some only of the members entitled to be sent notice of the meeting and to vote by proxy at the meeting, every officer of the company who knowingly and willfully authorises or permits their issue as aforesaid shall be guilty of an offence and liable to a fine of N500:

 

Provided that an officer shall not be liable under this subsection by reason only of the issue to a member at his request in writing of a form of appointment naming the proxy or of a list of persons willing to act as proxy if the form or list is available on request in writing to every member entitled to vote at the meeting by proxy.

 

  (5)          A vote given in accordance with the terms of an instrument of proxy shall be valid notwithstanding the previous death or insanity of the principal or revocation of the proxy or of the authority under which the proxy was executed, or the transfer of the share in respect of which the proxy is given:

 

Provided that no intimation in writing of such death, insanity, revocation or transfer as aforesaid has been received by the company before the commencement of the meeting or adjourned meeting at which the proxy is used.

 

  (6)          The instrument appointing a proxy shall be in writing under the hand of the appointer or of his attorney duly authorised in writing or; if the appointer is a corporation, either under seal, or under the hand of an officer or attorney duly authorised.

 

  (7)          The instrument appointing a proxy and the power of attorney or other authority, if any, under which it is signed or a certified copy of that power or authority shall be deposited at the registered office or head office of the company or at such other place within Nigeria as is specified for that purpose in the notice convening the meeting, not less than forty eight hours before the time for holding the meeting or adjourned meeting, at which the person named in the instrument proposes to vote, or, in the case of a poll, not less than twenty four hours before the time appointed for the taking of the poll; and in default, the instrument of proxy shall not be treated as valid.

 

  (8)          This section shall apply to meetings of any class of members of a company as it applies to general meetings of the company.

 

231.  (1)         A corporation, whether a company within the meaning of this Act or not, may if it is -

 

(a)             a member of another corporation, being a company within the meaning of this Act, by resolution of its directors or other governing body authorise such person as it thinks fit to act as its representative at any meeting of the company or at any meeting of any class of members of the company;

 

(b)             a creditor (including a debenture holder) of another corporation, being a company within the meaning of this Act, by resolution of its directors or other governing body authorise such person as it thinks fit to act as its representative at any meeting of any creditors of the company held in pursuance of the provisions contained in any debenture or trust deed, as the case may be.

 

  (2)          A person, authorised as provided in subsection (1) of this section, shall be entitled to exercise the same powers on behalf of the corporation which he represents as that corporation might exercise if it were an individual shareholder, creditor or holder of debentures of that other company.

 

232.   (1)          Unless otherwise provided in the articles, no business shall be transacted at any general meeting unless a quorum of members is present at the time when the meeting proceeds to business and throughout the meeting.

 

  (2)          Unless otherwise provided in the articles, the quorum for the meeting of a company shall be one third of the total number of members of the company or twenty five members (whichever is less) present in person or by proxy:

 

Provided that where the number of members is not a multiple of three, then the number nearest to one third, and where the number of members is six or less, the quorum shall be two members.

 

  (3)          For the purpose of determining a quorum, all members or their proxies shall be counted.

 

  (4)           Where a member or members withdraw from the meeting for what appears to the chairman to be insufficient reasons and for the purpose of reducing the quorum, and in fact the quorum is no longer present, the meeting may continue with the number present, and their decision shall bind all the shareholders and where there is only one member, he may seek direction of the court to take a decision.

 

  (5)          Where there is a quorum at the beginning, but no quorum later due to some shareholders leaving for what appears to the chairman to be sufficient reasons, the meeting shall be adjourned to the same place, and time, in a week's time, and if there is no quorum still at the adjourned meeting, the members present shall then be the quorum and their decision shall bind all shareholders and where only one member is present, he may seek direction of the court to take a decision.

 

Resolutions.

233.   (1)         A resolution shall be an ordinary resolution when it has been passed by a simple majority of votes cast by such members of the company as, being entitled to do so, vote in person or by proxy at a general meeting.

 

  (2)          A resolution shall be a special resolution when it has been passed by not less than three fourths of the votes cast by such members of the company as, being entitled to do so, vote in person or by proxy at a general meeting of which twenty one days' notice, specifying the intention to propose the resolution as a special resolution, has been duly given:

 

Provided that, if it is so agreed by majority in number of the members having the right to attend and vote at any such meeting, being a majority together holding not less than ninety five per cent in nominal value of the shares giving that right or, in the case of a company not having a share capital, together representing not less than ninety five per cent of the total voting rights at that meeting of all the members, a resolution may be proposed and passed as a special resolution at a meeting of which less than twenty one days' notice has been given.

 

  (3)          At any meeting at which a special resolution is submitted to be passed, a declaration of the chairman that the resolution is carried shall, unless a poll is demanded, be conclusive evidence of the fact without proof of the number of proportion of the votes recorded in favour of or against the resolution.

 

  (4)          In computing the majority of a poll demanded on the question that a special resolution be passed, reference shall be had to the number of votes cast for and against the resolution.

 

  (5)          For the purposes of this section, notice of a meeting shall be deemed to be duly given and the meeting to be duly held when the notice is given and the meeting held in the manner provided by this Act or the articles.

 

  (6)          A company may, by its articles provide that any matter not required by the articles or by this Act to be passed by a special resolution shall be passed by an ordinary resolution.

 

234.         All resolutions shall be passed at general meetings and shall not be effective unless so passed:

 

Provided that in the case of a private company a written resolution signed by all the members entitled to attend and vote shall be as valid and effective as if passed in a general meeting.

 

235.     (1)         Subject to the following provisions of this section, it shall be the duty of a company, on the requisition in writing of such number of members as is hereinafter specified and (unless the company otherwise resolves) at the expense of the company to -

 

(a)             give to members of the company entitled to receive notice of the next annual general meeting notice of any resolution submitted by a member which may properly be moved and is intended to be moved at that meeting;

 

(b)             circulate to members entitled to have notice of any general meeting sent to them, any statement of not general meeting sent to them, any statement of not more than 1,000 words with respect to the matter referred to in any proposed resolution or the business to be dealt with at that meeting, and where the statements has more than 1,000 words to circulate a summary of it.

 

  (2)          The number of members necessary for a requisition under subsection (1) of this section shall be -

 

(a)             any one or more members representing not less than one twentieth of the total voting rights of all the members having at the date of the requisition a right to vote at the meeting to which the requisition relates; or

 

(b)             not less than one hundred members holding shares in the company on which there has been paid up an average sum, per member, of not less than N500,

 

  (3)          Notice of any such resolution shall be given, and any such statement shall be circulated, to members of the company entitled to have notice of the meeting sent to them by serving a copy of the resolution or statement on each such member in any manner permitted for service of notice of the meeting, and notice of any such resolution shall be given to any other member of the company by giving notice of the meeting, and notice of any such resolution shall be given to any other member of the company by giving notice of the general effect of the resolution in any manner permitted for giving notice of meetings of the company:

 

Provided that the copy shall be served, or notice of the effect of the resolution shall be given, as the case may be, in the same manner and so far as practicable, at the same time as notice of the meeting and, where it is not practicable for it to be served or given at that time, it shall be served or given as soon as practicable thereafter.

 

  (4)          A company shall not be bound under this section to give notice of any resolution or to circulate any statement unless -

 

(a)             a copy of the requisition signed by the requisitionists (or two or more copies which between them contain the signatures of all the requisitionists) is deposited at the registered office of the company -

 

(i)             in the case of a requisition requiring notice of a resolution, not less than six weeks before the meeting, and

 

(ii)             in the case of any other requisition, not less than one week before the meeting; and

 

(b)             there is deposited or tendered with the requisition, a sum reasonably sufficient to meet the company's expenses in giving effect thereto:

 

Provided that if, after a copy of a requisition requiring notice of a resolution has been deposited at the registered office of the company, an annual general meeting is called for a date six weeks or less after the copy has been deposited, the copy though not deposited within the time required by this subsection shall be deemed to have been properly deposited for the purposes thereof.

 

  (5)          The company shall also not be bound under this section to circulate any statement if, on the application either of the company or of any other person who claims to be aggrieved, the court is satisfied that the rights conferred by this section are being abused to secure needless publicity for defamatory matter; and the court may order the company's costs on an application under this section to be paid in whole or in part by the requisitionist, notwithstanding that the requisitionist is not party to the application.

 

  (6)          Notwithstanding anything in the company's articles, the business which may be dealt with at an annual general meeting shall include any resolution of which notice if given in accordance with this section and for the purposes of this subsection, notice shall be deemed to have been so given, notwithstanding the accidental omission in giving it to one or more members.

 

  (7)          In the event of any default in complying with the provisions of this section, every officer of the company who is in default shall be guilty of an offence and liable to a fine of N500.

 

236.         Where by any provision contained in this Act, special notice is required of a resolution, the resolution shall not be effective unless notice of the intention to move it has been given to the company not less than twenty-eight days before the meeting at which it is to be moved, and the company shall give its members notice of any such resolution at the same time and in the same manner as it gives notice of the meeting or, if that is not practicable, shall give them notice thereof, either by advertisement in a newspaper having an appropriate circulation or in any other mode allowed by the articles, not less than twenty one days before the meeting:

 

Provided that if, after notice of the intention to move such a resolution has been given to the company, a meeting is called for a date twenty eight days or less after the notice has been given, the notice though not given within the time required by this section shall be deemed to have been properly given for purposes thereof.

 

237.     (1)         Subject to subsection (7)(b) of section 46 of this Act, a printed copy of every resolution or agreement to which this section applies shall, within fifteen days after the passing or making of the resolution or agreement, as the case may be, be forwarded to the Commission.

 

  (2)          Where, pursuant to the provisions of sections 44 to 47 of this Act, a company by special resolution alters the provisions of its memorandum and the Commission is satisfied that the alteration is not in compliance with the applicable provisions of those sections, it may refuse to file a copy of the resolution in its records and shall notify the company accordingly and any person aggrieved by the refusal may appeal to the court within twenty one days from the receipt of the notification.

 

  (3)          A copy of every resolution or agreement as is mentioned in subsection (1) of this section for the time being in force shall be embodied in or annexed to every copy of the articles issued after the passing of the resolution or the making of the agreement.

 

  (4)          This section shall apply to -

 

(a)             special resolutions;

 

(b)             resolutions which have been agreed to by all the members of a company, but which, if not so agreed to, would not have been effective for their purpose, unless, as the case may be, they had been passed as special resolution; or

 

(c)             resolutions or agreements which have been agreed to by all the members of any class of shareholders but which, if not so agreed to would not have been effective for their purpose, unless they had been passed by some particular majority or otherwise in some particular manner, and all resolutions or agreements which effectively bind all the members of any class of shareholders though not agreed to by all those members; and

 

(d)             resolutions requiring a company to be wound up voluntarily, passed under paragraph (a) of section 457 of this Act.

 

  (5)          If a company fails to comply with subsection (1) of this section, the company and every officer of the company who is in default shall be guilty of an offence and liable to a fine of N5 for each copy in respect of which default is made.

 

  (6)           If a company fails to comply with subsection (3) of this section, the company and every officer of the company who is in default shall be guilty of an offence and liable to a fine of N5 for each copy in respect of which default is made.

 

  (7)          For the purposes of subsections (5) and (6) of this section, a liquidator of the company shall be deemed to be an officer of the company.

 

238.         Where a resolution is passed at an adjourned meeting of -

 

(a)             a company;

 

(b)             the holders of any class of shares in a company; or

 

(c)             the directors of a company,

 

the resolution shall for all purposes be treated as having been passed on the date on which it was in fact passed, and shall not be deemed to have been passed on any earlier date.

 

 

239.   (1)         The chairman may, with the consent of any meeting at which a quorum is present (and shall if so directed by the meeting), adjourn the meeting from time to time and from place to place, but no business shall be transacted at any adjourned meeting other than the business left unfinished at the meeting from which the adjournment took place.

 

  (2)          When a meeting is adjourned for thirty days or more, notice of the adjourned meeting shall be given as in the case of an original meeting; but otherwise it shall not be necessary to give any notice of an adjournment or of the business to be transacted at an adjourned meeting.

 

  (3)           if within one hour from the time appointed for the meeting a quorum is not present, the meeting if convened upon the requisition of members shall be dissolved, but in any other case, it shall stand adjourned to the same day in the next week, at the same time and place or to such other day and at such other time and place as the chairman and in his absence, the directors may direct.

 

  (4)          If a meeting stands adjourned under subsection (3) of this section, any two or more members present at the place and time to which it so stands adjourned shall form a quorum and their decision shall bind all shareholders, and where only one member is present, he may seek the direction of the court to take a decision.

 

240.     (1)         The chairman, if any, of the board of directors shall preside as chairman at every general meeting of the company, or if there is no such chairman, or if he is not present within one hour after the time appointed for the holding of the meeting or is unwilling to act, the directors present shall elect one of their number to be chairman of the meeting.

 

  (2)          If at any meeting no director is willing to act as chairman or if no director is present within one hour after the time appointed for holding the meeting, the members present shall choose one of their number to be chairman of the meeting.

 

  (3)          The duties and powers of the chairman shall include the duty to -

 

(a)             preserve order and the power to take such measures as are reasonably necessary to do so;

 

(b)             ensure that proceedings are conducted in a regular manner;

 

(c)             ensure that the true intention of the meeting is carried out in resolving any issue that arises before it;

 

(d)             ensure that all questions that arise are promptly decided; and

 

(e)             act bona fide in the interest of the company.

 

  (4)          The chairman shall cast his vote bonafide in the interest of the company as a whole, provided that if he is also a shareholder, he may cast it in his own interest.

 

  (5)          The chairman shall have power to adjourn a meeting in accordance with section 239(1) of this Act.

 

241.  (1)         Every company shall -

 

(a)             cause minutes of all proceedings of general meetings;

 

(b)             all proceedings at meetings of its directors; and

 

(c)             where there are managers, all proceedings at meetings of its managers, to be entered in books kept for that purpose.

 

  (2)          Any such minute of purporting to be signed by the chairman of the meeting at which the proceedings were held, or by the chairman of the next succeeding meeting, shall be prima facie evidence of the proceedings.

 

  (3)          Where minutes have been made, in accordance with the provisions of this section, of the proceedings at any general meeting of the company or meeting of directors or managers, then until the contrary is proved, the meeting shall be deemed to have been duly held and convened, and all proceedings had at the meeting to have been duly had, and all appointment of directors, managers or liquidators shall be deemed to be valid.

 

  (4)          If a company fails to comply with the provisions of subsection (1) of this section, the company and every officer of the company who is in default shall be guilty of an offence and liable to a fine of N500.

 

242.     (1)         The books containing the minutes of proceedings of any general meeting of a company held on or after the commencement of this Act, shall be kept at the registered office of the company, and shall during business hours (subject to such reasonable restrictions as the company may by its articles or in general meeting impose, but so that no less than six hours in each day be allowed for inspection) be open to inspection by members without charge.

 

  (2)          Any member shall be entitled to be furnished within seven days after receipt of his request in that behalf to the company, with a copy of any such minutes certified by the secretary at a charge not exceeding ten kobo for every hundred words.

 

  (3)          If any inspection required under this section is refused or if any copy required under this section is not sent within the proper time, the company and every officer of the company who is in default shall be guilty of an offence and liable in respect of each offence to a fine of N25

 

  (4)          In the case of any such refusal or default, the court may by order compel an immediate inspection of the books in respect of all proceedings of general meetings, or direct that the copies required shall be sent to the persons requiring them.

 

243.         The provisions of the foregoing sections shall apply to any class meeting except where expressly excluded by this Act.

 

 

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