Nigerian Law School : Corporate Law Practice, Wednesday, August 11, 2011 - 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)
The crisis in the Banking sector of the Nigerian economy is not over yet. The CBN’S sack of the chief Executives and executive directors of eight banks and injection of N620 billion convertible loans into the bank only averted the crisis for a few months. The subsequent acquisition of qualifying non-performing loans (NPLS) from all the banks by the Asset Management Corporation of Nigeria (AMCON) and injection of equity into banks could not be said to have ended the crisis. According to reports, the negative asset value of the eight rescued banks as at December 31, 2010 stood at N1.28 trillion despite all the efforts of the CBN-appointed management of the Banks. By April 2011, CBN directed that the rescued Banks must devise a strategy for restructuring and capitalization before 30 September 2011 or face liquidation.

a.    Comment on the validity of the following strategies employed by the following banks:

i.    The General Meeting of Equatorial Trust Bank Limited accepted an oral take-over bid by UBA Plc by a unanimous resolution dated the 14 May 2011 as a result of which the bank was taken over by UBA Plc.
ii.    The management of Spring Bank Plc with the approval of the general meeting donated N50 million to the campaign of a prominent political party with the hope that if it wins in the election of May 2011,the party will use its influence to save the bank from liquidation
iii.    The Executive Directors of Finbank Plc who are also the shareholders of the bank sold 30 of the 42 branches of the bank to GTBank by a resolution passed at a meeting held without notice to the four non-executive directors of the bank because the non-executive directors are not shareholders of the bank and so “had nothing to lose,” to put it in their words.

(b) 

  i.    Assuming all the directors of one of the rescued banks who are the only shareholders of the bank died in a plane crash on their way to meeting with a core- investor in London, what will be your advice to the creditors  of  the bank.

ii.     Access Bank Plc and Intercontinental Bank Plc have decided to merge.

(A)    Mention 3 regulatory authorities that may have roles to play in the business combination.
(B)    State 3 laws that will regulate the business combination.
(C)    As a solicitor to Access Bank Plc, state 5 areas of Intercontinental Bank you may have to conduct due diligence.
(D)    State 5 principal provisions you will include in the merger agreement between the two banks.
(E)    State 5 of your roles as a solicitor engaged for the merger of the two banks.


QUESTION 5
 Mr. Ayew and Mallam Azeez were appointed directors by the subscribers to the Memorandum of Association of Ace (Nig.) Ltd., which was incorporated on 6th February, 2009. At the Company’s Annual General Meeting in March 2010, Mr.Kareem and Messrs Olu Abbey, Nwankwo Chizoba and Adewale Lanre were duly appointed as directors of the Company at the same meeting. On 6th July, 2010, Mr Kareem was convicted by an Enugu High Court for fraudulent misrepresentation to Axe (Nig.) Ltd. The next Annual General Meeting of the Company has been scheduled for 7th February, 2011 at the Confluence Beach Hotel, Lokoja, Kogi State. Mr. Ayew has nominated his 72 year old uncle Chief Kosofe Chukwudi and his 16 year old undergraduate sister Elvisia Obayuwana for appointment as directors at the General meeting. Answer the following questions.


(a)    As the company secretary, state the rules applicable to rotation of directors at the Annual General Meeting of Axe (Nig.) Ltd.
(b)    What is the legal implication of Mr. Kareem’s conviction in his capacity as a director of the Company.
(c)    Examine the possibility of appointing Chief Kosofe Chukwudi and sister Elvisia Obayuwana as directors of Axe (Nig.) Plc.
(d)    Assuming Chief Kosefe Chukwudi has now been appointed a director but he is fond of coming late to meeting and has also recorded a very high level of truancy. The company now seeks to remove him. Chief Kosefe Chukwudi asserted that being a life director, nobody can remove him in any circumstance as long as he lives. Advise the company on the options available to for removing Chief Kosofe Chukwudi.

QUESTION 6

At an Annual General Meeting of Kokobilo Plc, the Chairman, Otunba Koko Kuye arrived 90 (ninety) minutes behind schedule. Chief Obe, a non-executive director was appointed as Chairman by the directors 30 minutes after the meeting was scheduled to commence. Chief Obe was confused about his role as chairman and requested for advice from the company secretary. Gen Theo Adide (Rtd.) appointed his daughter Asabe who is not a member of the company as his proxy because he was away in Canada. Asabe was only told by her father to represent him but wants to be sure of her exact role at the meeting. Greenfields Limited, a shareholder of the company was represented by Binta Gomwalk, a law graduate who is currently on his NYSC programme with the company. The meeting resolved to declare a dividend of 20 kobo per share as recommended by the Board of Directors. It was also resolved that the registered address of the company be changed to No 1, Kokobilo Street, Lekki. Answer the following questions.


a)    (i)    Comment on the validity or otherwise of the appointment of Chief Obe as Chairman for the meeting
(ii)    Assuming Chief Obe was validly appointed, what advice would you give to him on his role as the Chairman
b)    Advise Asabe on her role as a proxy at the meeting
c)    Comment on the representation of Greenfields Plc by Binta Gomwalk at the meeting
d)    Prepare a checklist of the duties of the Company Secretary before, during and after the AGM



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