The Corporate Affairs Commission recently issued a circular confirming that incorporated trusts can hold shares in limited liability companies. The circular also contains guidelines regulating the holding and acquisition of such shares by incorporated trusts and not-for-profit entities.
The Corporate Manslaughter Bill 2010 recently passed its second reading at the National Assembly. The bill will penalise public and private organisations and arms of government whose activities cause the death of an individual. It is designed to serve the public interest by ensuring that organisations exercise reasonable care in the way they manage their activities. However, it has attracted a lot of criticism.
The Court of Appeal recently ruled that compliance with a company's memorandum and articles of association is mandatory in order to validate the company's meetings. Actions taken at a convened meeting that fails to comply with these will be declared void and set aside by the court.
The Nigerian Stock Exchange has introduced rules which seek to protect minority shareholder interests by barring interested persons from voting on transactions where they stand to benefit from the proposed transaction. The Securities and Exchange Commission has also published a draft of its version of the rule. The proposed rules demonstrate the regulator's efforts to ensure that minority interests are protected.
The Senate has passed a bill seeking to introduce revisions which may have far-reaching consequences on Nigeria's business, commercial and, to an extent, political landscape. Among other things, it would make the appointment of the chairman of the Corporate Affairs Commission (CAC) subject to confirmation by the Senate and require presentation of the CAC's annual financials to the legislature for approval.
The Code of Corporate Governance for Public Companies 2003 was recently amended and compliance with its provisions is now mandatory. The amendment restates some of the rights of shareholders provided for by the Companies and Allied Matters Act 1990 and introduces new provisions relating to corporate behaviour.
Shareholder groups have demanded that Section 385 of the Companies and Allied Matters Act 1990 be amended or expunged in order to remove the 12-year limitation period within which shareholders may claim for previously declared but unclaimed dividends. The issue continues to raise concerns in many quarters, including among shareholder groups and associations, the regulator and the government.
Recently in Econet Wireless Nigeria Limited v Econet Wireless International Limited the Court of Appeal ruled that a company must seek leave of court before amending its register of members where a dispute exists between it and the member who will be affected by the proposed amendment.
Although the doctrine of separate legal entity of a company is sacrosanct, there are occasions when the law allows lifting of the corporate veil, some of which have been enshrined in the Companies and Allied Matters Act. One such exception is when founders hide under the cloak of a separate corporate entity in perpetuating fraud, as the Supreme Court recently restated in Mezu v CB (Nig) Limited.
In its continued bid to promote enterprise and reform the investment climate, the federal government recently announced a reduction in the cost of business registration. Under the new regulations, capital registration fees for limited liability companies have been reduced across the board. This reduction in fees is a positive development, and it is envisaged that both foreign and local investors will take full advantage of it.
In a bid to ensure that a suitable regulatory framework for the exchange and trade in produce and other related commodities exists, the Warehouse Receipt System Bill was recently introduced. The warehouse receipt system allows farmers or traders to access storage facilities and finance by depositing their produce with a warehousing agent.
The Partnership Law of Lagos State provides for limited liability partnerships. It is essentially a legal vehicle for the association of persons who intend to engage in a joint trade or business for profit, allowing them to enjoy most of the benefits afforded to limited liability companies. While the law still requires some refinement, it has reinvigorated Lagos State's business enterprise landscape.
As part of the Investment Climate Reform Programme, which aims to reduce the cost of doing business in Nigeria and improve Nigeria's competitiveness rating as a foreign direct investment destination, the Corporate Affairs Commission and the Nigeria Investment Promotion Commission have recently made changes that impact on the registration of business entities in Nigeria.
The Nigerian Investment Promotion Commission aims to promote and monitor foreign investments in Nigeria. The commission's one-stop shop was introduced to facilitate the grant of the permits, licences and approvals that foreigners must obtain to conduct business in Nigeria. It is hoped that the provision of transparent and efficient services will lead to a more attractive investment environment.
The Corporate Affairs Commission was established by the Companies and Allied Matters Act to regulate the formation and management of companies in Nigeria. Reforms recently carried out by the commission have introduced a more efficient company registration procedure. The reforms also provide an enabling environment for investors wishing to benefit from Nigeria's abundant investment opportunities.
A recent Court of Appeal decision, upholding a judgment of the Lagos Federal High Court, highlights the important issue of the rights of a company director with regard to the company. The issue is whether, although the company exists as a separate legal entity, its powers may be overshadowed by the rights of one of its directors.
The Securities and Exchange Commission and the Corporate Affairs Commission have adopted a Code of Best Practices for Corporate Governance, which aims to enhance corporate discipline, transparency and accountability within Nigerian companies. The code is directed mainly at directors, but also assigns responsibilities to other stakeholders.
Including: Legal Framework; Importing Capital; Protecting Foreign Investors; Repatriation of Capital