Nigerian Law School : Corporate Law Practice, Wednesday, August 11, 2010 - Part 2 (Questions 5 - 6 ) (Answers from 1a - 1e)

QUESTION 5:
Salman Nig Ltd was incorporated in Nigeria. Its object is to provide maritime logistics to service oil Firms in the Niger Delta region of Nigeria. The paid capital is N100,000 divided into 100,000 ordinary shares of N1 each. The Company has four Directors: Chief Ogbulafor Olu, Engr. Daniel Ford, Alhaji Ishiaka Dabo, and Mr. Baron Alexander. Owing to devastating economic meltdown, the company has now decided to restructure and also shore up its working capital which has been eroded by the global financial crisis. Part of the far-reaching strategies is to explore the opportunities replete in the capital market. The Company has retained you as its Solicitor, to re-register as a Public Company so that it can access the long term funds available in the capital market. Answer the following questions.

a)    Itemize the pre- and post-registration documentation at the CAC before the Company can achieve the change of status from private to public
b)    Draft the enabling resolution of the Company made at its General Meeting, to convert the company from a PRIVATE to PUBLIC company
c)    As part of the re-strategizing and restructuring, the Company has appointed two additional directors, namely – Isaac Boro Warri of 10, Diobu Street, Port Harcourt and Alhaji Turaki Umar of 10, Diobu         Street, Port Harcourt, Rivers State. Detach and complete the attached CAC Form of Particulars of Directors
d)    Assuming the company is a foreign company invited to Nigeria to execute a Federal Government project on behalf of the Donor agency, draft the Letter of application for exemption from incorporation as a Nigerian Company


QUESTION 6:

Bank of Commerce Plc was established and licensed by the Federal Government of Nigeria to grant credit facilities to companies that engage in the manufacturing sector of the economy. The Bank granted a loan of N500 million to Ankara textiles Nig Limited, repayable in 5 years. The loan was secured by a fixed charge on the company`s head office at 3, Jobi Fele Street, Isolo, Lagos. Despite that the repayment period of the loan has expired, Ankara textiles Nig Limited has not made any substantial repayment to the Bank. Also, the company has not able to pay its workers` salaries for the past six months and the Directors of the company are worried by its dwindling fortunes and the recurrent deficit in the balance sheet of the company. At an Extra-Ordinary General Meeting of the company held at the Company`s head office, the company resolved to increase its authorized share capital from N50 million to N200 million. The Company has also commenced discussions with Kampala Textiles Nig Limited with a view to merging. Answer the following questions.

a)    Give a checklist of the steps the company will take to perfect the fixed charge created on its head office at 3, Jobi Fele Street, Isolo, Lagos.
b)    Assuming you are the Company Secretary to the Bank of Commerce Plc, advise the Bank on the remedies available to it, to recover the loan and interests from Ankara Textiles Plc
c)    Assuming the charge created by Ankara Textiles Nigeria Limited was not registered at the Corporate Affairs Commission, advise the Company on the legal effects of such failure by the Company to         register the charge with CAC
d)    State the procedure involved in increasing the authorized share capital of Ankara Textiles Limited from N50 million to N500 million. Draft the resolution to be filed at the CAC for this purpose.
e)    Assuming Ankara Textiles Ltd finally agrees to merge with Kampala Textiles Ltd, state the merger procedure, assuming the sum total of the share capital of both companies is N1 billion



CORPORATE LAW PRACTICE

AUGUST 11, 2010

MARKING SCHEME


QUESTION 1 (a)
Matters in respect of which you will take incorporation instructions:

(1)    Name of the proposed company
(2)    Registered office address
(3)    Particulars of the subscribers
(4)    Particulars of the first directors
(5)    Share capital, and its division into shares
(6)    Type of company
(7)    Date of incorporation
(8)    Nature of business
(9)    Branches, if any
(10)    Restrictions, if any
(11)    Control of management
(12)    Tax reliefs
(13)    Whether aliens have satisfied conditions or obtained necessary permits
(14)    Instructions required to prepare the articles
(15)    Status of the proposed company (public or private), etc

QUESTION 1 (b)
The instructions I will take in respect of the name of the proposed company. And the steps I will take in respect of those instructions:

I will take a preferred name and an alternative name. Thereafter, I will apply to the CAC using Form CAC 1 (Form of availability & Reservation of name) for search for availability of the names. If the name is available, CAC will reserve it for me for a period of 60 days, within which I must use the reserved name.

QUESTION 1 (c)
Relevant pre-incorporation contracts you will advise your clients to execute.

(1)    Joint venture agreement (JVA)
(2)    Memorandum of understanding
(3)    Shareholders` agreement
(4)    Property acquisition agreement
(5)    Directors` service contract
(6)    Agreement for payment of promoters` expenses
(7)    Confidentiality agreement
(8)    Transfer of Technology agreement
(9)    Etc

QUESTION 1 (d) (i)
Draft of the Commencement clause of memorandum of Understanding:

THIS MEMORANDUM OF UNDERSTANDING (MoU) is made this ………… day of ………………, 20 ……. BETWEEN TOSHIRA (JAPAN) INCORPORATED of …………………………..  (the Japanese company) of the one part; AND ZONIX NIGERIA LIMITED,  a company registered under Part A of CAMA with its registered office at ………………… (the Nigerian Company) of the other part.

QUESTION 1 (d) (ii)

Matters to be included in the MOU:

(1)    Parties
(2)    Commencement
(3)    Recital
(4)    Sphere of operation
(5)    Object
(6)    Capital contribution
(7)    Dispute resolution
(8)    Attestation
(9)    Date of commencement
(10)    Execution
(11)    Applicable law
(12)    Etc

QUESTION 1 (e)
The documents to be submitted to the CAC for incorporation of the Company are (See Regulation 23 of the Company Regulations, 2012):

(1)    Memo & Articles of association (duly stamped)
(2)    Form of Approval and Reservation of proposed Name (CAC 1)
(3)    Statement of Share capital & Return of Allotment, duly stamped (CAC 2)
(4)    Particulars of Persons who are the First Directors of the Company (CAC 7)
(5)    Statutory Declaration of Compliance to be signed by a Legal Practitioner (CAC 4)
(6)    Notice of Situation/Change of Registered Office (CAC 3)
(7)    Particulars of the Person who is Company Secretary of a Company or any Change Therein (CAC 2.1)
(8)    Prescribed (registration) fees for incorporation
(9)    Evidence of Consent Letter, where applicable
(10)    Proficiency certificate, where applicable
(11)    Photocopy of the information page of International Passport or national Identity card for each Director and subscriber
(12)    Residence permit, in the case of foreigners
(13)    Photocopy of duly verified Particulars of Directors, Statement of Share Capital and return of Allotment of Shares together with Memo and Articles of Association for Certification as true copies
(14)    Duly signed and sealed resolution authorizing the subscription where a company subscribes to the Memorandum and Articles of Association
(15)    An Affidavit stating the particulars of cancellation of alteration in the signature on any document or any difference in the name on stamp duty receipt and name on other documents


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