Nigerian Law School : Corporate Law Practice, Wednesday, August 11, 2011 - Part 7 (Answers 4a(i) - 5d)

QUESTION 4 (a) (i)
Take-over bid must be in writing – s. 136 ISA. So acceptance of an oral take-over bid is wrong and so renders everything void

QUESTION 4 (a) (ii)
Section 38 (2) CAMA forbids a company from making gifts or donations to political party/organizations. Action of Spring Bank is therefore illegal. Money so donated must be refunded

QUESTION 4 (a) (iii)
Notice of all general meetings of a company must be given to all the directors of the company, whether or not they own shares in the company. It is also immaterial whether or not they are executive or non-executive directors. Failure to give notice of a general meeting to a person entitled invalidates the meeting at the instance of the person that was not invited except where it is proved that the failure was due to accidental omission. Also, failure to give notice of BOD meeting to directors qualified to receive such notice invalidates the BOD meeting -------------- 263 CAMA. Longe v. First Bank

QUESTION 4 (b) (i)
Section 248 of CAMA will apply in such a case ---- personal representatives of the deceased directors or any one of them may apply to the Court for an order to convene a meeting of all personal reps of the shareholders entitled to attend the meeting, with a view to appointing new directors to manage the company

QUESTION 4 (b) (ii)
(A)    Regulatory bodies include:
        (1)    CBN   
        (2)    SEC
        (3)    CAC
        (4)    Nig Stock Exchange
        (5)    FHC
(B)    Applicable Laws   
       (1)    ISA
       (2)    CAMA
       (3)    CBN Act
       (4)    FHC Act
       (5)    BOFIA
       (6)    AMCON Act
(C)    Areas to conduct due diligence:
      (1)    Ownership of the Bank
      (2)    The directors
      (3)    Date of incorporation
      (4)    Current banking licence
      (5)    Filing of annual reruns   
      (6)    All statutory books
      (7)    Title to properties
      (8)    All indebtedness
      (9)    All claims and litigation
     (10)    Returns to CAC
     (11)    Legal status of all assets and liabilities
     (12)    Collective agreement with workers
     (13)    All agreements relating to all forms of business combinations
     (14)    All claims and litigations
(D)    Contents of merger agreement
     (1)    Parties   
     (2)    Terms of the transaction
     (3)    Representation and warranties   
     (4)    Employee matters   
     (5)    Financial statement
     (6)    Covenants and undertakings

(E)    Role of Solicitor in merger transaction
     (1)    Giving advice   
     (2)    Conducting due diligence
     (3)    Participating in the negotiation process
     (4)    Drafting Memo of Understanding (MOU)
     (5)    Drafting Transaction Implementation Agreement (TIA)
     (6)    Drafting the Merger Agreement (MA)   
     (7)    Securing all necessary approvals

Rules governing rotation of directors at the AGM
Section 259 of CAMA applies. Unless otherwise provided by the Articles, at the first AGM, all the Directors shall retire. At every subsequent AGM, one-third or the number nearest to one-third shall retire. The first directors to be appointed shall retire first. Where all were appointed the same day, those to retire shall be determined by lot.


Under section 254 CAMA, a person who is convicted o an offence in connection with promotion or management of a company is disqualified from being a director of a company. If he is convicted while a director, he shall forthwith lose his position as a director.

An infant is disqualified from being appointed a director. So Sister Obayuwana cannot be appointed director (s. 257 CAMA). Under section 252 (1) CAMA, when a person 70 years of above of age is proposed to be appointed director of a public company, the person or persons nominating him to be director must disclose his age. And he himself has an obligation to disclose his age to the general meeting, before being so appointed. Failure to disclose attract fine.


Though a life director is not subject to retirement by rotation (section 259 CAMA), yet he is subject to removal under section 262 CAMA. So it is wrong assertion to claim only death can remove him from office.

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