Nigerian Law School : Corporate Law Practice, Wednesday, August 11, 2011 - Part 1 (Question 1 - 3)

READ THE INSTRUCTIONS CAREFULLY:
1.    This paper is divided into 2 Sections and 2 Answer Booklets are provided.
2.    Questions 1 and 4 are compulsory. One other question from each Section should be attempted.
3.    Questions from each section should be answered on a separate Answer Booklet.
4.    Write your EXAMINATION NUMBER ON EACH ANSWER BOOKLET



SECTION 1


QUESTION 1 (COMPULSORY)
Vine fields Limited was incorporated in November 2004 with authorized share capital of  N1 million. It has been having operational challenges due to financial difficulties, and could not obtain life-saving loan from any bank. When it was about to close down its farming activities in May 2011, the Central Bank of Nigeria announced its approval of N50 million interest-free loan as incentives to any Company in Agricultural Sector which meets the following requirements:
(i)    Must be a public Company.
(ii)    Must have  authorized share capital of not less than N5 million
(iii)    Must have at least 2 Directors with a minimum of Bachelors Degree in any agricultural science discipline.


Meanwhile, the Company has only three Directors (Aminu Shehu, Yusuf Oke and Kemi Yaro) who have no qualifications in Agricultural Science. They however own majority shares of the company. The only persons with qualifications are Boyo Usman and Godwin Adams, who are in the employment of the Company as farm Managers. At an Extra-Ordinary General Meeting of the company called to pass certain resolutions to effect the necessary changes that would enable the Company benefit from the loan incentive, three resolutions were proposed, as follows: 
(1)    Convert and re- register the Company as public Company.
(2)    Increase the Share Capital to N5 million
(3)    Appoint Adams and Boyo as Directors on the basis of their qualifications.

The Directors, fearing that effecting these changes in the company would whittle down their control of the Company, vehemently opposed the resolutions. Upon demand of poll, they used their voting powers to defeat the resolutions. Many shareholders and the Farm Managers were aggrieved. Thereafter, some of the shareholders led by Okey Ibe and  Sheni Osun vowed to challenge  the action, and have now consulted you.


a)    (i)        Identify the legal reasons and the appropriate minority protection suits that could be  instituted to revive the resolutions in favor of the Company    
       (ii)        Based on the scenario above, list who should be the plaintiff and defendant in the proposed suit?

       (iii)  Assuming the action was successful, outline out the procedural steps to be taken to re- register the company as a public company    
       (iv)    State the consequential alterations that would need to be made in the Memorandum and Articles of Association of the Company to bring it in line with the status of a public company

(b)    (i)    Assuming the shareholders have resolved to create additional 2 million ordinary shares of N2.00 each in the capital of the company, outline the necessary documents to be submitted to the                       CAC and the documents that would be issued by the CAC after a successful registration of increase in share capital
        (ii)    Detach and complete the attached CAC Form                 
        (iii)    Assuming the suit was not successful and the shareholders were left to explore other options for the survival of the company, advise them on the various corporate restructuring options                   available to the company and recommend any  suitable option to revive the company.


 QUESTION 2

Dubem Plastics Plc (RC: 95959) was incorporated on January 01, 1995. Its head office is at 4, Wharf Road, Apapa, Lagos. It was initially registered with a share capital of N500,000 but subsequently increased its share capital to N10 million on November 01, 2000 . The Directors are Monday Iloh and Dele Akapa who also hold the shares of the company equally. The company has applied to Access bank Plc for a loan of N40,000,000 in order to boost its business. Answer the following questions:
a)    The Bank has asked you to conduct a search on the company prior to granting the facility. Assuming you have finished the search, draft the search report to be submitted to the Bank.
b)    State the steps the company will take to increase its share capital to N40 million
c)    Draft the resolution required to be passed for the increase in share capital
d)    State six statutory books the company is required to keep under CAMA
e)    State six statutory returns the company is required to make and the period for making each of these returns


QUESTION 3

First Capital Airlines Limited was incorporated on October 14, 2005  to operate as domestic passenger airlines in Nigeria. The Company recently granted a license to operate direct flight to the United States. The Company has five Directors, three of whom are Nigerians, namely: Chief Oly Alaye, Mrs. Ola Alaye and their eldest son, Gbenga Alaye. The other Directors are Mark Weisman and Richard Boon both of whom are Britons. As a result of its international operations, the Company now wants to re-register as a public Company. As the Company Secretary, you are requested to carry out the following assignments:
a)    Prepare a detailed application to the CAC for re-registration of the company as a public company
b)    Draft the Memo of Association that will be submitted to the CAC for this purpose
c)    Draft the required resolution for re-registration  of the company as a public company
and the consequential statutory declaration

d)    Outline four consequential alterations to be made in the Memo and Articles upon re-registration as a public company
e)    Outline the procedure for change of name of a registered company




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