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

CORPORATE LAW PRACTICE
AUGUST 10, 2011
MARKING SCHEME


QUESTION 1 (a) (i)
The general rule is that where wrong is done to the company or there is an irregularity in the mgt of the company, only the company can take steps to rectify or ratify the wrongs or irregularity: see the case of Foss v. Harbottle. However there are exceptions to this rule. The aggrieved shareholders can sue under any of the exceptions, which include:
i)    Members Direct action — this may be personal action for any wrong done to a members as a member or representative action on behalf of the company
ii)    Derivative action
iii)    Action/Relief on grounds of unfairly prejudicial and oppressive conduct
iv)    Investigation by CAC
v)    Action for winding up on just and equitable grounds See sections 300 to 314 CAMA

QUESTION 1 (a) (ii)

 PLAINTIFFS:  1. Okey Ibe  2. Sheni Osun  (for and on behalf of the aggrieved shareholders of Vinefields Limited)  DEFENDANTS: 1. Vinefields Limited 2. Aminu Shehu (Director) 3. Yusuf Oke (Director) 4. Kemi Yaro (Director)    QUESTION 1 (a) (iii)
 Procedure for re-registration as public company:
1)    Board resolution to authorize the re-registration as a public company
2)    Convene a general meeting and pass a special resolution to effect the conversion
3)    Send the following documents to CAC within 15 days of the passing the resolution:
(i)    Application in the prescribed Form to CAC, signed by Director and Secretary
(ii)    Copy of Memo & Articles, as altered to reflect the conversion
(iii)    Copy of the special resolution passed to effect conversion
(iv)    Statutory Declaration by Director & Secretary stating that the the special resolution has been passed and that the paid up capital as at the date is not less than 25% of the authorized share capital
(v)    Copy of the balance sheet of the company as at the date of the resolution or the preceding six months, whichever is later
(vi)    Statutory Declaration/statement on oath by Director & Secretary stating that the aggregate asset of the company is not less than paid up capital as at the date and that the special resolution required for the re-registration has been passed
(vii)    Copy of prospectus or statement in lieu of the prospectus delivered within the preceding twelve (12) to SEC
(viii)     Original Certificate of Incorporation
(ix)    Prescribed fees
(x)    Updated annual returns
(xi)    Evidence of payment of FRC annual dues

4)    CAC shall consider the application, and if satisfied will approve and re-register the company as a public company and issue a new certificate of incorporation

QUESTION 1 (a) (iv) 
CHANGES IN THE MEMO after re-registration as a public company:   

( a)    Change in the name clause to change it to PLC  

(b)    Change in the status clause, to change it to public company     

(c)    Change in the share capital clause, to change it to N5 million          

(d)    Removal of the clause providing for written resolution

CHANGES IN THE ARTICLE:  

( b)    Removal of restriction on transfer of shares    

(c)    regulation on appointment of directors with respect to age requirement    

(d)    requirement and special qualification for appointment of secretary of public company


QUESTION 1 (b) (i)
The following documents must be filed with the CAC within 15 days of the increase:
i.    Copy of Special resolution for increase
ii.    Statement of the Increase, duly stamped
iii.    Duly stamped Notice of Increase
iv.    Memo & Articles, as amended to reflect the increase
v.    Updated annual returns
vi.    Updated section 553 where aplicable
vii.    Payment of prescribed fees
viii.    Evidence of payment of FRC annual dues
See Regulation 29 of the Company Regulations, 2012
ix.    Increase shall not take effect unless within six months of filing Notice of increase, the Directors file with CAC a statutory declaration that not less than 25% of the share capital (including the increase) has been issued –Regulation 29 (3) of Company Regulations, 2012

QUESTION 1 (b) (ii)
Filling of Form CAC 2.4 (Notice of Authorized Share capital)


QUESTION 1 (b) (iii)

a)    management buy-in
b)    merger
c)    take-over
d)    arrangement & compromise
e)    Arrangement on Sale
f)    Reduction in share capital
g)    Increase in share capital
h)    Consolidation/subdivision/cancellation of share capital


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