Nigerian Law School : Corporate Law Practice, Monday, August 11, 2012 - Part 2 (Question 4 - 6)

SECTION 11
PLEASE USE ANOTHER ANSWER BOOKLET FOR THIS SECTION
QUESTION 4 IS COMPULSORY. One other question from this section should be attempted


QUESTION 4 (COMPULSORY)

Abravet Nigeria Ltd was incorporated in July 1999 with authorized share capital of N200m divided into N200m ordinary shares of N1.00 each, which were fully paid up. It has been a major player in the agricultural sector of the Nigerian economy, having been the sole distributor of the Federal Government subsidized fertilizer for Nigerian Farmers. Unfortunately, following a cabinet reshuffle in 2010, the new Minister of Agriculture terminated its contract with the Federal Government. Since then, the company has been suffering a myriad of operational challenges resulting in financial losses, to the extent that about 50% of its paid up share capital are no longer represented by available assets. Its main financier, Argo Bank Plc, is being owed N50m by the company. The company has not been able to hold a meeting due to boardroom squabbles. However, some concerned shareholders, representing 60% of the company share capital are determined to revamp the company. They have obtained some expert opinion on some measures to undertake, such as:
i.    Rebrand the company by changing its corporate name
ii.    Reduce the bloated share capital of company to accord with the reality of its asset base.
iii.    Propose a restructuring option with its major creditor that would involve payment with equity capital
iv.    Remove the Managing Director and replace him with a vibrant Chief Executive

You have been consulted to carry out the suggested measures to achieve the desired objective of reviving the company. Answer the following questions:-
a)    Outline the procedural steps you will take to effect the change of name of the company
b)    Outline the necessary documents you need to prepare for the change of name of the company
c)    Draft the necessary resolution to change from the name Abravet Nigeria Ltd to Easy Deal Investment Limited
d)    Draft the Notice of requisition of Extra-Ordinary General meeting proposed by Chief Mrs. Kemi Oke and Haruna Idris, for the removal of the Managing Director, Alhaji Bala Shehu as a director, and replacing him with Dr. Okey Ocheja, as causal vacancy.
e)    Advise the shareholders on the procedure to adopt to be able to hold a meeting without depending on the Board of Directors
f)    Assuming the company is to reduce its share capital by cancelling 50% of the paid up share capital which has been lost and unrepresented by available assets, draft the resolution to be passed for the proposed scheme of reduction of the company‚Äôs share capital
g)    Complete the attached form CAC 2.4 (Notice of Change of Authorized Share Capital)
h)    Advise the shareholders on the most suitable restructuring option to propose to its creditors, Agro Bank Plc that would enable it discharge the loan obligation with its equity capital.
i)    What other restructuring options are available under Nigerian Corporate Law Practice, that you would recommend to the company in its circumstances.


QUESTION 5
A recent spate of mishaps in the aviation sector has prompted the Nigerian Aviation Minister to direct all Airline operators in the country to re-register as Public Companies and also shore up their capital base to N50billion before March 31, 2013 or forfeit their operational license. Consequently, Naij Airlines (Nig) Limited with a net worth of N2.5Billion has concluded preliminary talks with Boeing Aviation Services (US) Inc, an aircraft manufacturing company, with a net worth of about $1Billion to sell 52% off its total shares to the American Company. Answer the following questions:
a)    Briefly describe the nature of the relationship between the two companies in the light of section 120 of the Investment and Securities Act 2007
b)    Highlight the appropriate regulatory bodies as well as the relevant laws that must be complied with to achieve their desire
c)    Describe the procedure for the conversion of Naija Airlines (Nig) Ltd to a public company.

QUESTION 6
Data West Limited is a company incorporated under the laws of the Federation of Nigeria on January 2, 2000, with its registered address at No 2, Main Land Street, Warri, Delta State. The share capital of the company is N1 million divided into one million ordinary shares of N1.00 each. Mark Bent and David Hinkel are the directors and shareholders of the company. The shares were held in equal proportion by the two. The company intends to expand its business operations and has applied for a N50 million credit facility from Adeb Bank Plc. Answer the following questions:
a)    As an external solicitor to the bank, you have been briefed to conduct a search on the company to determine its suitability for the facility. Write the search report to the bank.
b)    Outline the procedural steps the company would take to in crease its share capital to N50,000,000.00
c)    Draft the resolution for the increase in share capital for filing at the CAC
d)    Mention the various ways of becoming a member of a company
e)    Enumerate the various options for restructuring under the Nigerian Corporate Law Practice.






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