Company Law Priscilla

Front 1

sec 21

Back 1

1. an incorporated company may be a company

a. having liability of its members limited to the amount of unpaid shares in MOA (company limited by shares)

b. liability limited to the amount which members agree to contribute to company asset in event of winding up (company limited by guarantee) .

c. not having limit on liability of its members.

2. a company of any of these types could be private or public company

Hint 1

a private company is one which is stated in its MOA to be a private company

Front 2

sec 22 (2)

Back 2

a private company may by its AOA restrict transfer of shares

Front 3

sec 24

Back 3

any company other than a private company is a public company and this shall be stated in MOA

Front 4

sec 25

Back 4

an unlimited company shall be registered with a share capital not less than the MISC in sec 27 (2)(a)

Front 5

sec 26 (3)

Back 5

carry out business to make profit

Front 6

Sec 26

Back 6

provides for registration of a company as a company limited by shares?

Front 7

Section 27(1), 2), 3)

Back 7

MOA shall contain

-Name,

-address-that registered office shall be situated in Nigeria,

-nature of object or business,

- restriction if any,

-private or public

-liability

2)

share capital- 100,000 for private2 million for public

3)

subscriber of the memorandum​

Hint 7

List of things that should be in the memo

Front 8

27 4(a)

Back 8

MOA of a company limited by guarantee shall state that income and property of company shall be used for furtherance of object and no part shall be transferred to members except where permitted in the Act

Hint 8

talking about what happens to a company when it's limited by guarantee

Front 9

sec 27 (5)

Back 9

MOA shall be signed by each subscriber in presence of 2 witnesses who would attest his signature

Front 10

sec 28

Back 10

subject to sec 27, the form of Memorandum of a company limited by

a. shares

b. guarantee

c. unlimited shall be in such form as prescribed by regulations issued by CAC

Front 11

Section 30 1, 2, 3, 4

Back 11

How to change your company name and also instances you can change your company name

2)

Punishments for failing section 30(1

3)

You can use special resolution to change PLC to LC

4)

If you're using another person's name or trademark the commission would tell you to change it

Front 12

Section 30(5) (6) (7)

Back 12

-Certification of that changing your name

-Former liability of former name still stands.

-Publication of new name

Front 13

Section 32, 32(2)

Back 13

company shall have articles of association prescribing its regulation

2)

Unless it is a company to which model articles apply by virtue ofsection 34 it shall register articles of association.

Hint 13

Affirms the important of article of association

Front 14

sec 33 (1)

Back 14

Minister may prescribe model article for companies

Front 15

sec 34 (1)

Back 15

on formation of limited company, a. if your articles are unregistered b. if registered are not different from model articles, models articles shall apply

Front 16

Section 35 1

Back 16

Unless the company's memorandum restricts an object the object is unrestricted

Front 17

Section 36(1), (2) (4e)

Back 17

You have to register your memorandum is an incorporated documents.

The memorandum would be delivered so the commission together with

applications to register

Documents required by the section are the

states of share capital and initial share holdings

statement of guarantee as seen in section 38

statements of proposed director as seen in section 39

statement of compliance as seen in section 40

-applicant for registration shall state a. company name b. registered office address & head office c. whether liability is limited d. whether private or public company

-application for registration of company shall contain a copy of proposed AOA as long as they are not model articles

Front 18

Section 41

Back 18

The commission shall be the one that will register the memorandum an article except in the opinion you did not comply with the provisions of the act

Front 19

sec 41 (1)(d)

Back 19

CAC shall register MOA and AOA except where there is failure to comply with other law which stipulate conditions for registration and incorporation of companies

Front 20

sec 42

Back 20

from date of incorporation, subscribers with such other persons as may become members shall be a body corporate capable of exercising of exercising all rights and functions of an incorporated company

Front 21

Secection 43 1

Back 21

Except to the extent that the company’smemorandum or any enactment otherwise provides, every company shall, for thefurtherance of its business or objects, have all the powers of a natural personof full capacity.

Hint 21

Talks about power of a natural person

Front 22

sec 43 (2)

Back 22

a company shall not directly or indirectly make a donation or gift its fund or property to a political party for any political purpose. if there is a breach, the officer involved and those who voted for it shall be jointly and severally liable to refund note: it does not seem to cover corporate independent expenditure

Front 23

Section 44(1) (2) (3)(4)

Back 23

The consequences of restricting the company's power. A company shall not carry out business expressly restricted by the memorandum and shall not exceed the power of the memorandum

If you breach section 44(1) they come before up in the courts for students under section 344- 358 and section 44(4)-they enforce the breach of ultravires

This is saying that not with standing ultravires in subsection 1, all conveyance and transactions of property that exceeded the power of the company will not be invalid.

This kit does full come bring an action for ultravires. They can be members or debenture holders

Front 24

sec 46

Back 24

MEMART shall have effect as a deed from date of registration between company, members and officers and amongst themselves whereby they agree to observe its provisions Note: this makes MEMART binding on officers and they may sue on it

Front 25

Section 46(1-6)

Back 25

1- contract under seal

2-money owed company would become special debt

3-anybody that did article of association of appointed or removed would be enforceable

4-enables You to sue for yourself or for other people in representative capacity

Hint 25

Effects of registering Aoa

Front 26

Section 49

Back 26

Conditions in the memorandum can only be altered case and manner set up in the act

Front 27

sec 49(2)

Back 27

only provisions stated in sec 27 and other specific provisions in the Act to be contained in the MOA are deemed as conditions.

Hint 27

Provisions in section 27 on other provisions are Conditions.

Front 28

sec 49 (1)

Back 28

a company may not alter the CONDITIONS contained in its MOA except to the extent and in the manner stated by the Act

Front 29

Section 50

Back 29

1. name of company shall not be altered except with consent of CAC in line with sec 30 2. business or object may be altered in accordance with provisions of sec 51 3. restriction on powers would be altered in accordance with sec 51 4. share capital may be altered according to sec 128-130 5. subject to sec 54, other provisions in MOA may be altered according to sec 51

Hint 29

Provides how conditions can be altered

Front 30

Section50(3)

Section 50 5

Back 30

-The restriction for altering business name is the same restrictions for altering power.a company cannot carry out any business restricted by the memorandum and shall not accept the power stipulated by the memorandum

-How Other provisions can be altered

Front 31

Section 51 (1-12)

Back 31

Rules for altering business name

1. a company with an object stated in its MOA may alter it by special resolution at a meeting where prior notice has been given anyone dissatisfied may apply to the court to cancel the alteration and the alteration shall not have effect expect confirmed by the court.

2. Application in this section may be made by shareholders not less than a. aggregate of 15% of nominal value of issued shares or 15% of members of company(company not limited by shares) b. 15% of company debentures

3. Application to court must be made within 28 days after resolution altering articles has been passed and may be made on behalf of those entitled to object to the alteration

4. court may make an order confirming the alteration wholly or in part and may adjourn the case in order that arrangement may be made for the purchase of shares of dissenting members

5. debenture entitling debenture holder to object shall be one secured with floating charge

6. notice of meeting to alter object shall be given to both shareholders and debenture holders the same way. failure to comply, company article regulating notice shall apply

7. where a company passes resolution to alter article and a. an application has been made to the court for confirmation, company shall give notice of the application to CAC and there after 15 days from the notice deliver

I. CTC of the order where court refuses the application

ii. CTC of the order in the case of confirmation + a copy altered MOA b. if no application is made for confirmation by court, company shall deliver copy of resolution to CAC within 15days after the period for making such application

8. if CAC is satisfied a. a copy of altered MOA shall be delivered to it b. if it is not satisfied it shall write a notice to the company. An appeal from its decision shall lie to the court

9. the court may extend the time for delivery of document listed in sub sec 7 (a)

Hint 31

1-how you can first alter a business object

2-who are the people that can object to the change of business object

3-what is the deadline for the put I want to object go to court

4-what can the court do when they come subject

5-What's the debenture was talked about in subsection 2

6-You must give notice to the debenture holders about the change of the companies object

7-Things you must deliver to the commission in 15 days after confirmation of the court

8-What's commission would do India satisfied with the court order And what they would do when they are not satisfied.

9 the court can extend the time for delivery of the document

10-It is default that the company must make the deliveries and give the notice

Front 32

Section 52

Back 32

subject to sec 49 and any part of part B, any provision in the company's MOA which may have lawfully been in the AOA may be altered by special resolution but if an application is made to court to cancel it, the alteration does not have effect except confirmed by court

Hint 32

Entrenched provisions

Talks about putting things into memorandum that supposed to be in the article what would happen

Front 33

Section 52(1)

Section 52 (2)

Section 52 (3)

Back 33

-Articles that have been entrenched in the memorandum can be altered by special resolution subject to conditions of the Act, Conditions in the memorandum and Other provisions in the memo.

It must be subject to the provisions of the act and by Special resolution, it needs to be altered like it was like that from the very first start and take effect as such

-sec 52 (1) does not apply where MEMO has provided for how 'other provisions' may be altered or has completely prohibited the alteration, the Special Resolution to alter them would not work.

-Another way of altering "other provisions" (this says If you want to alter the other provisions you can also use section 51(2,3,4,7,8,9,10)

Hint 33

Ethrenched provisions. When the special resolution would not work

Front 34

sec 53

Back 34

1. subject to the Act and conditions and other provisions in MOA a company may alter its articles by special resolution

2. subject to the Act, alteration in AOA shall be valid as if originally contained in the articles

Front 35

Section 54

Back 35

Except a member as already agreed before by writing that that will be bound by a new article and memorandum, normally they will not be bound by anything contrary to the original memo and article.

It will not be bound to the alterations after the dates of alteration

Hint 35

except to the extent a member agrees in writing at any point to be bound, and anything contrary in MEMART , a member will not be bound by any alteration in MEMART requiring him to a. take more shares b. increase his liability c. pay money to the company

Front 36

Features of private company

Back 36

1. may restrict transfer of shares (sec 22.2)

2. maximum of 50 members (excluding bonafide employees of company) sec 22.3 3. shall not except where authorised by law,

invite public to subscribe for shares or debentures and deposit money for fixed periods or payable at call

sec 22.5 4.

MISC must not be less than 100k sec 27 (2)(a) 5.

private company limited by shares shall end with limited sec 29 (1)

Note: sec 23 (1) where company fails to comply with the above, it shall not be treated as a private company in relation to CAMA

Front 37

features of public company

Back 37

1. MISC is 2m sec 27 (2)(a) 2. opposite of the other features of private company

3. name of company limited by shares shall end with plc sec 29 (2)

Front 38

Features of companies limited by guarantee

Back 38

1. formed for promotion of certain objects 2. capital shall be used exclusively to promote its object sec 26 (1) 3. if company carries on business to share profit, all members and officials aware shall be jointly and severally liable for debts incurred in the course of business and shall also be liable to CAC for a penalty prescribed sec 26 (11) 4. MOA shall not be registered without AGF's approval sec 26 (5)

Front 39

Types of companies

Back 39

Definition1. statutory companies

2. registered companies; private and public

3. foreign companies

Front 40

common law position of enforcement of Right

Back 40

in order to sue to enforce rights under articles, such rights must have been conferred on you as a member

Front 41

Hickman v Kent

Back 41

plaintiff applied to be a member of the association and signed an agreement to comply with its rules when he was chosen as a member. art 9 of the kent marsh sheep be reader association stated of there is any dispute they must be referred to arbitration before going to court.

The company wanted to explore the plaintive but is sought a petition from the eye court for an injunction to restraint company from expelling him based on the fact that the article did not form a contract between the company and its member he cited cases held(PEMBB): Cases were in relation to outsiders right articles merely regulate affairs of members and shareholders and only insiders can sue on it in the capacity of insiders. AOA cannot create a right between company and outsiders.

The court actually disagreed and states that the article actually forms a contract between the company and it's members and the company can enforce the term on their members.

Front 42

pritchard's case

Back 42

there was an agreement to purchase mine, then later shares were alloted to vendor which was not enforceable because the articles did not constitute contract between vendor and the company as they were outsiders.

Front 43

Eley v positive Government

Back 43

When previously the article as granted you rights as an outsider but later you become a member you cannot enforce you outsiders right as

An insider(member).

In this case the plansive was the company's solicitor which is an outsider but later became a member. As a member of the company he wanted to enforce his solicitor's right which is an outsider right.

The court held that it was not possible because he was suing in the capacity of a member

Front 44

Melchando's case

Back 44

promoters could not recover preliminary expenses because articles did not create contract between promoters and company

Front 45

beatie v beatie

Back 45

articles provided for referral for dispute to arbitration. plaintiff could not enforce because the dispute was between him and company in capacity of director.

Front 46

Browne v La Trinidad

Back 46

pre-incorporation contract stated that P shall be director for a length of time. company got incorporated and agreement was reflected in AOA. he later became a share holder(member/insider).

Company sought to remove P from office before agreed time.

Court held: that yes they could do so a person cannot sue on terms of the articles in the capacity of an outsider

Front 47

cases cited by plaintiff in Hickman v Kent

Back 47

1. pritchard's case 2. Melchado v Porto alegre 3. Eley v positive Government security 4. Browne v La Trinidad 5. Beatie v Beatie

Hint 47

Pembb

Front 48

cases cited by Ashbury J in Hickman v Kent

Back 48

1. Johnson v Lyttle Iron Agency

2. wood v Odessa

Bradford banking

Welton v saffery

Salmon v quine

Hint 48

Bjwws

Front 49

Johnson v lyttle iron agency

Back 49

irregular forfeiture of shares was set aside by court on grounds that it did not comply strictly with the provision in contract between company and shareholders.

Members of the company and were able to enforce it in their right and capacity as members

Front 50

wood v odessa

Back 50

AOA provided for declaration of dividends, instead directors proposed to give debentures. this was approved in a general meeting. P sued held: majority share holders cannot bind minority to accept another means of payment contrary to AOA

Front 51

salmon v quinn

Back 51

AOA provided that Salmon could veto decisions of board but company ignored his veto. he sued

Court held: ignoring was unconstitutional

And he was able to enforce his outsider right as an insider

Front 52

pulbrook v Richmond

Back 52

directors did not let P sit on the board. however, he had some shares in the company. he sued as an insider to enforce his right as an outsider.

held: he can enforce his outsider right as long as he sues as a qua member

Front 53

London sacks v dixon

Back 53

member could not enforce right in articles because the matter had nothing to do with his membership in the company

Front 54

cases that an insider can enforce his rights as an outsider

Back 54

1. Salmon v Quinn 2. pulbrook v Richmond

Front 55

position after CAMA 1990

Back 55

sec 46 CAMA 2020 Sec 868 CAMA 2020

Front 56

position before CAMA 1990 about rights enforcement by members

Back 56

an insider can sue as an insider. an insider cannot sue to enforce his right as an outsider. an outsider must show a separate contract conferring right on him

Front 57

sec 723(1)

Back 57

a. not withstanding anything contained in MEMART, Act shall have overriding effect b. contrary provisions shall be void to the extent of its inconsistency

Front 58

cases on objective approach to alteration of articles

Back 58

1. Allen v Gold Reefe 2. Brown v British Abrasive wheel 3. Sidebottom v Kershaw 4. Dafen template co v Llanelly

Front 59

Brown v British Abrasive (98% -2% shares)

Back 59

company needed capital. the majority SH owning 98% of the shares was willing to provide the capital if the 2% minority shares were transferred to him. this agreement failed and so a special resolution was passed to compulsorily acquire the shares. court held it was unjust as alteration was not for the benefit of the company but that of the majority share holder. it was not for the benefit of the company as a whole

Front 60

Sidebottom v kershaw

Back 60

company altered articles to include power of director to require a SH competing with company to transfer all his shares to nominees of directors HELD: the alteration was for the benefit of the company as a whole

Front 61

Dafen Tinplate v Llanely (steel business)

Back 61

defendant company manufactured steel, principal SH were steel company and it was intended that they buy their steel from defendant. they however started buying steel else where. company passed a resolution conferring power on majority share holders to compulsorily acquire shares of any member. HELD: alteration conferred unlimited power of expropriation on the majority share holders. this could not be proven to be for the benefit of the company as a whole

Front 62

shuttleworth v cox (termination of director)

Back 62

articles provided that directors would be directors for life except disqualified on 6 certain grounds. Article was altered to include written consensus from directors. plaintiff sued that it was not in the interest of the company. the court held: what was in the interest of company depended on the shareholders. the court would not interfere in alteration unless it is oppressive that a reasonable man would not think it to be in interest of the company

Front 63

cases on subjective approach to alteration of articles (favoured by the court in cases that do not involve expropriation of shares)

Back 63

1. Shuttleworth v Cox 2. Peter American Delicacy v Health 3. Rights & Issues Investment v stylo shoes 4. Greenhalgh v Ardene cinemas 5. Gambotto v EXP 6. Citeo banking v pusser

Front 64

Peter American Delicacy v Health (dividends)

Back 64

articles provided that dividends was to be based on amount of paid up shares. it was altered to be payable on the proportion of partly and fully paid up shares. held: what is for the benefit of company depends on share holders. as long as power to alter was not used fraudulently or for oppression, the court will not interfere. onus of proving oppression is on minority because oppression is not presumed

Front 65

Allen v Gold reefe (died with unpaid shares)

Back 65

AOA provided that the company shall have lien over all shares not fully paid. z died indebted to the company. His asset was not sufficient. company by special resolution altered its articles to have lien on all shares. issues. LindleyMR 1. whether limited company with articles conferring no lien fully paid shares can alter articles to that effect. This was valid as long as it is not done contrary to MOA and act. this power must be exercised subject to principles of law and Act. such much be exercised bonafide for the benefit of company 2. whether such alteration would apply to existing debts? share holders are bound by provisions of AOA as may be altered from time to time. Note: there was confusion as to the interpretation of bonafide for benefit of company. whether company as an independent body or a body of SH This case was decided according to the benefit of the company as a whole. therefore, the alteration was valid

Front 66

Rights & Issues Investment v stylo

Back 66

article were altered that holder of management shares although they did not take up new shares maintained the same voting strength as they did previously. plaintiff argued that it was oppressive. held: not so. members concluded that it was best if management shareholders maintained same control. this was a matter of business policy. alteration must be done in good faith

Front 67

Gambotto v WCP (compulsory acquisition of shares for tax benefit) (Australian case)

Back 67

altered articles giving majority share holders power to acquire shares of minority on grounds that it was for the interest of the company to get tax benefit. trial court: alteration was invalid appeal: valid because of the financial benefit. further appeal: invalid. court distinguished between alteration that concerned expropriation and that which did not . General alteration: special resolution; as long as it is not Ultravires or oppressive. expropriation alteration: 1. done for proper purpose : where minority share holding is detrimental to company 2. does not oppress minority: must be fair procedurally(disclose all relevant fact) and substantially (valuation must not be below market value) Onus: on those supporting expropriation; they must show that it is valid

Front 68

Citeo banking v pusser

Back 68

article was altered to give chairman power to create classB shares which had more value. he moved his shares to classB . Reason: to financially stabilize the company to attract investors. citeo objected that it was for personal interest. Trial: alteration was invalid. appeal: lawful Privy council: lawful Lord Hoffman 1. company can create shares with preferential rights; Andrew v Gas meter 2. company can alter ART subject to Act, MEMO and rules of law and equity 3. test for 'bonafide benefit of company' depends on shareholders; reasonable man test; Shuttleworth v Cox 4. Rights and issues investment v stylo; valid 5. greenhalgh v Ardene cinemas; company as a whole means company as a general body 6. Peter American Delicacy v Health; a person alleging oppression must prove it HELD: alteration was valid

Front 69

reasons for ban on political donations

Back 69

1. using company fund for donation to political party that does not represent the interest of all SH 2. fear of corruption 3. creating an unfair and an uneven playing field

Front 70

Greenhalgh v Ardene cinemas

Back 70

articles gave members pre-emptive rights over shares in case of Sale. MD wanted to sell shares. a resolution was passed to remove the pre-emptive rights. held: alteration was legitimate. objections will only be allowed where it is unfairly discriminatory. each SH votes on what in his opinion is beneficial to a company. company as whole means as a body of corporators

Front 71

Mc Connell v FEC

Back 71

issue was the constitutionality of the bipartisan campaign reform Act which was created to cure the unbridled manner in which political parties raised and spent funds. Features 1. a ban on restricted donation made to political parties and a ban on solicitation of donations by elected officials. 2. restriction on political funds for advertising on behalf of candidates SC affirmed its decision in Austin v Michigan chamber of commerce upholding the provision banning corporate political activism. on grounds that; 1. company would obtain unfair advantage in the market place 2. need to prevent corruption and appearance of it 3. need to protect interest If investors

Front 72

sec 221 CFRN

Back 72

no association other than a political party can canvass for votes or contribute to funds of any political party. Note:This seems directed towards candidates and not political issues. it focused on express advocacy as against issue advocacy courts need to consider if this section violates right to expression (sec 39) and association (sec 40)

Front 73

types of political advocacy

Back 73

1. express : campaigning for a candidate 2. issue: activating against a political issue

Front 74

obasanjo v yusuf

Back 74

court had opportunity but passed on it and held breach of sec 221 could not amount to a political offence which the case was about

Front 75

Austin v Michigan chamber of commerce

Back 75

this held that the Michigan Campaign Finance Act which prohibited corporation from using treasury money to support the election or defeat of a political candidate was valid. the court noted that corporate wealth can unfairly influence election decisions.

Front 76

sec 229 CFRN

Back 76

corporate and non corporate bodies

Front 77

sec 90 of Electoral Act

Back 77

places a limit on the amount of money or asset which an individual or group can contribute towards a political party. note: it implies that donations can be made. this is contrary to sec 43 (2) CAMA & sec 221 CFRN

Front 78

Buckley v Valeo

Back 78

the limit on election spending in the Federal Election Campaign Act was unconstitutional and a violation of the first amendment on freedom of speech. held: limit on contributions to political are constitutional but the limits on expenditure (what you spend overall) are unconstitutional

Front 79

citizens v FEC

Back 79

limits on expenditure were held to violate the first amendment . the issue was the constitutionality of the BRCA which cast a ban on electioneering campaign 30 days before primaries and 60 days before election and making expenditure advocating election or defeat of a candidate. fact: a non profit organisation sought to advertise a film which was a critique of Hilary Clinton a presidential candidate. this was a violation of the BRCA. The court held this was a violation of the first amendment on free speech. the court overturned Austin v Michigan and expressed disapproval on the part of judgement in McConnell v FEC that restricted corporate spending on electioneering campaign.

Front 80

Recommendation for Political donation

Back 80

1. CPA can be permitted only by SH approval (UK approach) 2. companies intending to incur independent corporate expenditure should set an annual limit in articles to give notice to SH 3. companies may have political budget and corporate bodies may be required to defend them in GM. (UK approach) 4. there should be full disclosure to enable public know who contributed what and how government policies are implemented 5. amendment of sec 221 CFRN to set limit for political expenditure​

Front 81

why do we need CPA

Back 81

1. push for governmental protection against global competition 2. press for economic policies that will facilitate conducive investment climate

Front 82

Ashbury railway carriage v Richie

Back 82

power of the company: manufacture and sell railway carriages. company agreed with riche to construct railway but later repudiated it . Richie sort to enforce. held: ultra vires. notes: acts Ultravires the MOA cannot be ratified, acts Ultravires the directors/articles can be ratified

Front 83

continental chemists v ifeakandu

Back 83

company sponsored training of medical doctor on agreement that it'll serve it for 5 years after training. held: running hospital was Ultravires company's power. Bairamain JSC : anything done outside stated object is invalid

Front 84

criticisms of Ultravires rule in the 19th-20th century

Back 84

1. it was harsh 2. used as both sword and shield to escape contractual relationships 3. MOA could barely be changed 4. doctrine of constructive notice worked hardship (now abolished under sec 92 CAMA 2020)

Front 85

devices used to escape the harshness of the Ultravires rule in 19 - 20th century

Back 85

1. several object clause

2. incidental object clause -AG v great eastern railway -continental chemist v ifeakandu

3. Main object rule: court takes first 2-3 objects as the main objects and the rest as ancillary 4. independent object clause : each clause was construed independently - cotman v broughman - Anglo overseas agency v green

5. subjective object rule: allows Directors do that which is incidental or advantageous to the company - bell house v city wall properties

6. Failure of main object; if main object fails, company should be wound up - 're German date coffee

Front 86

AG v great eastern railway

Back 86

company object was to construct railway. entered contract for the supply of rolling stocks. held : not ultra vires rationale: reasonably incidental to company object

Front 87

cotman v broughman

Back 87

company had widely stated object clauses but the last clause required that each object clause shall be construed independently of the other

Front 88

Anglo-overseas agency v green

Back 88

the insertion of independent object clause in memo excluded the application of main object rule

Front 89

Bell house v city wall property

Back 89

object: develop property clause: to do that which in the opinion o the BOD can be advantageously carried out by the company company contracted to introduce a financier to another company for a fee. COA: Intra vires as object enabled it carry out businesses advantageous to the company even though it had no objective connection with stated object

Front 90

re introduction ttd

Back 90

object: provide info to tourist. it had numerous objects (it qas empowered to borrow money) but never expressly stated pig breeding . it had the independent object clause and Bell house clause. held : Ultravires; Bell house would only apply if business wad carried in connection with stated object

Front 91

re German dates

Back 91

object: company formed to work German patent to manufacture coffee substitute with dates. failed to obtain patent and worked Swedish patent held: company deserves to be wound up

Front 92

sections that waterdown the Ultravires rule

Back 92

Ultravires only applies to company and members or creditors. it does not apply to third parties 1. sec 44 (3) 2. sec 44 (4) 3. sec 44 (5) 4. sec 89 (b) 5. sec 92 6. sec 93

Front 93

sec 85

Back 93

a promoter is a person who undertakes to take part in forming a company with reference to a particular project and set it up and running or who with regards to the proposed or newly formed project undertakes a part in raising capital for it provided a professional acting in this capacity is not regarded as a promoter

Front 94

sec 86

Back 94

provides for duty of promoter

1. Fiduciary duty; utmost good faith; compensate for loss as a result of his failure 2. account for property or profit made as a result of his position 3. a transaction btw a company and promoter may be rescinded unless after full disclosure by promoter, company will ratify such by a. BOD independent of promoter b. members c. a company at GM

Duties that can be inferred from sec 86

1. not to make secret profit without consent 2. disclose interest in any transactions

Front 95

sec 87(1)

Back 95

the company shall act through its members in a general meeting or directors or officers so appointed

Directors and members in a general assembly are responsible for the decision making of a company

Front 96

sec 89 (a) (b)

Back 96

company will not be liable for transactions which are Ultravires where the person had actual knowledge or ought to have know it was ultravires

b)

any act of members or BOD in general meeting while carrying put the usual cause of business shall be treated as acts of the company and company shall be civilly or criminally liable as if it were a natural person

Front 97

sec 92

Back 97

deals away with constructive notice

Front 98

sec 93

Back 98

person dealing with or deriving title from company is entitled to make the following assumption and the company and those deriving title are estopped from denying the truth a. company MEMART has been complied witj

Front 99

sec 96 CAMA 2020

Back 99

1. contracts entered into on behalf of a company before its incorporation may be ratified by the company subsequently and it shall be binding on it as if it was in existence at the time. 2. before such ratification, anyone who makes such contract on behalf of the company shall in absence of contrary agreement, be bound by it and entitled to benefits

Front 100

Section 105

Back 100

-subscribers of MOA shall be deemed to have become members of the company

- Every other person who agrees in writing to become a member of acompany,

-In the case of a company having a share capital, each member is ashareholder of the company and shall hold at least one share, except in relationto a company that has only one shareholder.

Front 101

sec 117 (1)

Back 101

a member of a company limited by shares is liable for the debts of the company to the extent of his unpaid shares

Front 102

sec 118

Back 102

if a public company or gtd carries on business without atleast 2 members for 6 months , every director and officers is jointly and several liable. it doesn't include company limited by shares

Front 103

sec 124 (1)

sec 124 (3)

Back 103

Company share capital shall not be less that the minimum issued share capital

3)

existing companies with share capital below the MISC have 6 months from the commencement of this Act to issue out shares and raise their share capital to atleast the MISC

Front 104

sec 125 - alteration by reconfiguration

Back 104

the company may in its general meeting

a. consolidate and divide all or part of its existing share capital into larger amount of shares

b. sub divide all or part of its shares into smaller amount than prescribed in MOA but the difference in its paid and unpaid shares on each reduced share must be maintained

Front 105

sec 127 - increase share capital

Back 105

1. in a general meeting increase its issued share capital by allotment of new shares as it may deem expedient

2. after passing such resolution, notify CAC within 15 days. 8. increase shall be by ordinary resolution and it shall amend MEMART to reflect it

Front 106

sec 130 - reduction in share capital

Back 106

1. a company having share capital shall not reduce its issues share capital except as provided for by the Act.​

Front 107

sec 131 - special resolution for reduction of share capital

Back 107

1. subject to confirmation of the court, a company may reduce its share capital by special resolution if provided for in the articles

2. company may

a. extinguish or reduce liability on any of its shares with respect to share capital not paid up

b. without or with extinguishing or reducing liability on any of its shares cancel any paid up share lost or unrepresented by available asset

c. with or without extinguishing or reducing liability on any of its shares cancel any paid up shares in excess of company want alter its MOA reducing the amount of share capital and its shares

Front 108

sec 132(1)

sec 132 (2)

sec 132 (3)

sec 132 (4)

sec 132 (5)

sec 132 (6)

Back 108

(1) where company has reduced its capital, it may apply to the court to confirm it.

(2)

a. if reduction involves diminution of liabilty of unpaid capital or

b. sub to sub6, the repayment to a shareholder paid up shares or in circumstances as court direct sub 3-5 shall take effect

3)

every creditor which at the date fixed by the court is entitled to a debt or claim which if the date was the commencement of winding up would have been entitled to object can object.

4)

court shall settle list of creditors entitled to object.

court shall

1. ascertain name of creditor and amount owed

2. may publish notice for creditors not listed to apply to be listed or to be excluded from right to object.

5)

a creditor whose name has been entered on the list and whose debt is not discharged who does not consent to the reduction the court may dispense with his consent on the company securing payment by appropriating the following amount if the company a. admits full amount of the debt or tho not admitting is willing to pay full amount b. does not admit and is not willing or if the amount is not ascertained, an amount fixed by the court

with regards to cases in sub 2, if there are special circumstances, the court may direct that sub 3 and 5 shall not apply to any class of creditors

Front 109

sec 133(1)sec 133(2)sec 133(3)

Back 109

A. the court if satisfied that

i. consent of creditors entitled to object has been obtained

ii. his debt has been discharged or determined.

B. and share capital after reduction does not fall below the MISC, may make order for reduction on certain Conditions.

133(2)

a. court may also ask company to add 'as reduced' to it's name for the period the order lasts

b. make order for company to publish reason for reduction

if court orders company to add 'as reduced' it shall be deemed to be part of its name for that period

(3) Where the company is ordered to add to its name the words, “andreduced”, those words shall, until the expiration of the period specified in theorder, be deemed to be part of the company’s name

Front 110

sec 134

Back 110

CAC on receipt of court order and minutes of meeting shall register

1. the amount of the share capital

2. the number of shares into which it has been divided and the amount of each

3. the amount at the date of registration deemed to be paid up on every share

Front 111

sec 141

Back 111

subject to the amount of shares which may be issued according to MOA and to pre-emptive rights in AOA, a company has the power to issue shares

Front 112

sec 145, 145(4)

Back 112

1. shares of a company may be issued at a premium 2. the sum aggregate of the premium shall be transferred to the share premium account

145(4)- capital issued at a premium may be applied to a. paying up unissued shares to be issued to members as fully paid bonus shares b. writing up preliminary expenses of new company c. writing off commission paid on any issues shares d. providing premium payable on redeemable shares

Front 113

sec 146

Back 113

it is unlawful to issue shares at a discount

Front 114

sec 147

Back 114

1. prohibits issuance of irredeemable preference shares by company limited by shares

2. a company may issue redeemable preference shares if authorised by its articles subject to conditions as may be prescribed

Front 115

sec 150 (2)

Back 115

an applicant shall at any point before allotment withdraw his subscription by written notice to the company

Front 116

sec 151

Back 116

allotment of shares signifies acceptance by the company of offer made by the applicant and contract takes effect from date of allotment

Front 117

sec 155

Back 117

1. no company shall apply its shares towards payment of any commission or discount as consideration for subscribing or agreeing to do so

2. nothing in this section shall affect payment of brokerage fee

Front 118

sec 156

Back 118

a company may pay commission to any person for subscribing or agreeing to subscribe to shares if a. payment is authorised by the articles b. commission does not exceed 10% of the price the shares are issued c. the amount of commission is I. in the case of shares offered to the public, disclosed in prospectus ii. in the case of shares not offered to public, disclosed in lieu of the prospectus d. the number of shares agreed for commission to subscribe absolutely is disclosed in a manner specified by this section

Front 119

sec 158

Back 119

subject to the articles and terms of the shares, the directors may call up members in regard to unpaid shares

Front 120

sec 160

Back 120

the shares of a company may be paid in cash or valuable consideration or both as permitted by the articles

Front 121

sec 161(1)

Back 121

shares of the company shall not be deemed to have been paid in cash except to the extent the company has actually received cash for them

Front 122

sec 162 (1)

Back 122

if a company receives payment for shares other than in cash, an independent valuer shall be appointed to access the consideration and submit a report to the company

Front 123

Section 165

Back 123

where members fails to pay call on the day appointed, director may serve a notice demanding payment with interest

notice would require it to be paid on another day and it will state that failure to pay creates liability for forfeiture

Front 124

sec 182 (2)

Back 124

shares are not redeemed unless they are fully paid, redemption shall be made out of

a. profit which would otherwise be available for dividends

b. proceeds of fresh issue of shares made for purpose of redemption

Hint 124

redemption of shares

Front 125

sec 183(1) sec 183 (2) sec 183 (3)

Back 125

defines financial assistance to include gift, guarantee, indemnity, loan or any form of financial assistance given by a company the net asset of which are reduced up to 50% or has no net asset

183(2)a. where a person wants to acquire shares from a company, it shall be unlawful for the company or its subsidiary to give financial assistance directly or indirectly for that purpose

b. where a person has acquired shares in a company and liability has been incurred, it shall be unlawful for the company to give financial assistance directly or indirectly to reduce liability

183(3) nothing in this section shall prohibit

a. lending of money in the ordinary course of business

b. scheme which enabled company to purchase shares to be held for the benefit of employees of the company including the directors

c. giving loans to bonafide employees to purchase shares in the company to be held by way of beneficiary ownership

d. act authorised by law

e. any scheme pursuant to order of court

f. any assistance which purpose is not for reduction of liability

Front 126

sec 184 (1)

Back 126

company may purchase its own shares a. if permitted by its article

b. there must be approval by SH through special resolution

c. only paid up shares can be purchased

d. within 7 days after resolution, publish in 2 newspaper notice of purchase

e. within 15 days after publication, director shall file with CAC declaration of solvency

f. a company may not purchase if after purchase there will no longer be any issued share other than redeemable shares and treasury shares

Front 127

Section 191

Back 127

empowers a company to borrow money for the purpose of its business or object and may mortgage or charge it's undertaking, property or in called capital and issue debentures

Front 128

Section 259

Back 128

Resolution will only be effective when it is passed at the general meeting

Hint 128

How a resolution would be effective

Front 129

sec 271 (1) sec 271 (3)

Back 129

every company not being a small company shall have atleast 2 directors

any member who is aware that number of directors has fallen below 2 and carries on business for 60 days is jointly and severally liable

Front 130

sec 273 (2)

Back 130

Where directors and shareholders are dying, their representatives may convene to appoint new directors. if they don't creditors will

Front 131

stake holders include

Back 131

employees creditors environment consumers supplier

Front 132

Royal bank v turquahd

Back 132

third party dealing with company is entitled to assume that all matters of internal management has been complied with

Front 133

common law principle of PiC

Back 133

1. a company that doesn't exist cannot make a contract

2. you can't be an agent to a non existing company

3. a company cannot ratify a contract made before it was formed

Front 134

how can promoters escape liability

Back 134

1. Novation: fresh contract afte incorporation incorporating terms of PIC 2. promoters merely confirming signature of firm

Front 135

kelner v baxter

Back 135

defendant were promoters for a hotel yet to be incorporated. plaintiff sold wine to them. hotel got incorporation and ratified the PIC. wine was consumed before money was paid. hotel went into liquidation. held: company didn't exist at time of contract. promoters were personally liable stranger cannot take up obligation of a party to a contract. Note: they signed for and on behalf of the company

Front 136

Newborne v sensolid

Back 136

a contract purported to sell goods by a company that did not exist. contract was subscribed by the name of the company and signed by plaintiff. plaintiff attempted to enforce it against defendant. held: he did not sign as an agent or principal. his signature was merely for authenticity and since company didn't exist, it was void

Front 137

Black v Smallwood (Australia)

Back 137

rule: when a man contracts for a non existent entity, the question of liability depends on intent on of parties facts: promoters subscribed the company's name and signed. held: the mere fact that promoters signature appeared on the document was not a proof of intention to be bound

Front 138

phonogram v Lane

Back 138

(eliminated the distinction in Kelner and Sensolid) promoters obtained loan from P for promotion of a pop group. signed for and on behalf of the company issue: whether promoter could be personally liable according to sec 9 (2) European Communities Act which stated that a contract which purports to be made by a company non existent or its agent, subject to contrary agreement, shall be binding on promoter. held: liable

Front 139

Caligara Dario v Giovanni

Back 139

a promoter obtained loan from Plaintiff for company. P sought to recover loan from company. held: pre-incorporation contracts cannot bind a company and a company cannot ratify contracts made on its behalf by promoters

Front 140

Figros v zetters

Back 140

P company supplied goods to D before and after incorporation and sought to recover its money. D argued P was a stranger. held: D had adopted the earlier transactions

Front 141

ways of making PIC binding

Back 141

1. prepare a draft agreement to which company is a party and include in object clause that company shall enter into the terms of contract 2. contract can be made by someone as trustee for the company

Front 142

howard v patent ivory

Back 142

PIC is not binding on a company even if it ratifies it as a ratification is not effective in law where ratifier couldn't have been bound at the time of contract. 2. where MOA contains PIC it is not binding on the company because MOA merely states the powers of a company but does not mandate the company to do it 3. SC referred case back to trial for examination of minutes of meeting to see if new contract was formed from PIC

Front 143

Societe Generale

Back 143

the appellant and 3 others decided to form the respondent. they executed a written agreement to this effect Article 11 provided for referral of dispute to arbitration. relationship turned sour and plaintiff bank sued defendant for mismanagement of its affair. defendant objected on basis of arbitration clause. Court granted stay. plaintiff appealed, it was granted. defendant appealed and plaintiff cross appealed. issue at appeal: whether agreement is binding on company which ratified it after incorporation by virtue of sec 72, 624 and 626. appellant: sec 624 makes 72 apply to existing companies before CAMA 1990. respondent: the agreement was a mere SH contract hence, not binding on it. held: 1. it was a PIC 2. by virtue of sec 72, PIC can be ratified 3.sec 72 applied to pre incorporation contracts already ratified by companies existing before CAMA 1990

Front 144

twyerose v grant

Back 144

plaintiff bought shares in a company promoted by defendant. prospectus was fraudulent and failed to mention that the shares were valueless. held: entitled to recover price

Cockburn J, a promoter is someone who undertakes to form a company with reference to a project and set it going & who takes necessary steps to accomplish that purpose

Front 145

Emma silver Mining v lewis

Back 145

the term promoter involves the idea of exertion for the purpose of getting up and starting a company

Front 146

bagnali v carlton

Back 146

a promoter may be an individual who arranges to be a director and negotiate preliminary agreements .​

Front 147

great wheal polgooth

Back 147

when a solicitor undertakes to perform his normal duties, he is not a promoter. - an agent of a promoter is not to be regarded as promoter himself

Front 148

lydney & wigpool v bird

Back 148

if solicitor undertakes to be a director, he becomes a promoter

Front 149

starcola v adeniji

Back 149

promoter does not have implicit right to be included in shareholders

Front 150

Whaley bridge v Green

Back 150

secret profit) defendant promised to pay company's promoter commission. This was not disclosed to the company. court held company is entitled to recover the unpaid amount from the defendant

Front 151

Elanger v new sombrero

Back 151

disclosure of interest ) E and some others acquired an island. sold it to the company for twice the price and was ratified by BOD. new BOD sought to rescind. held: it could rescind as promoter did not disclose his interest Lord cairns: disclosure must be full and must be to independent BOD

Front 152

remedies for breach of fiduciary duty

Back 152

1. secret profit recovered - gluckstein v Barnes 2. rescission of contract -Lagunas nitrate v lagunas syndicate 3. sue for damages - 're Leeds and Hanly theatre

Front 153

Gluckstein v barnes

Back 153

promoters bought debentures. they bought company. debentures were redeemed at full & they made profit. formed another company & sold first company to new company. made profit which they disclosed in prospectus. they didn't disclose debentures. held: company could redeem secret profit

Front 154

Lagunas Nitrate v Lagunas syndicate

Back 154

sold property to company at overvalue. sort to rescind. held: rescission was impossible as parties had changed positions because company had worked mine for 2 years and syndicate had sold its shares

Front 155

re Leeds and Hanly theatre

Back 155

sold property at overvalued price and didn't disclose profit. held: promoters were liable to pay damages

Front 156

Remuneration of promoters

Back 156

1. Garba v Sheba 2. 're National Motor Mail 3. 're Ambrose Lake Tin 4. 're Cape Breton co 5. ominous electric palace v baines

Front 157

re Ambrose Lake Tin

Back 157

sale of mine by promoters was overvalued, court held no fraud since directors were also vendors so there was full disclosure SH COULD NOT COMPLAIN because they were party to the transaction

Front 158

re Cape Breton co

Back 158

6 partners purchased a mine and mined it. a company was formed and 2 partners became directors. vendor was one of the partners and sold mine at a higher value as trustee for 6 partners . company sought to rescind; it was impossible so it sued the 2 directors for secret profit when director acquired property, he wasn't a trustee for the company

Front 159

ominous electric palace v baines

Back 159

promoter sold lease he was about to acquire to company. it was argued that he was not allowed to keep profit. held: once he discloses, he can keep the profit. as regards profit made on property acquired before promotion, he is not obligated to disclose

Front 160

re National Motor Mail

Back 160

a company is not bound by pre-incorporation contract even when taken for its benefit. promoters were not entitled to recover. promoters paid registration fees and stamp duties. held: they were not entitled to recover. articles gave directors power to pay promoters. this is not a provision promoters can enforce but it's a power that can be exercised in promoters favour since they are usually the first directors

Front 161

garba v sheba

Back 161

company cannot ratify oral contract to pay promoters for money incurred before formation of company on its behalf. There must be formal contract ratified and honoured

Front 162

bagnali v carlton

Back 162

agents of prospective company who made secret profit of the contract made by the company were held to be trustees

Front 163

remuneration may arise in

Back 163

1. buying property and reselling to company at a profit 2. arranging for property to be sold directly to company for a comississon from vendor 3. issuing founder shares to promoters which would be credited as fully paid

Front 164

Marina Nominees v FBIR

Back 164

an accounting company formed a company for secretarial duties. issue: would they pay separate tax. held: yes, company is different from its share holders

Front 165

kano state oil v Kofa trading co

Back 165

a particular company entered into agreement with Kano state. that company assigned its right to Alhaji Kofa kano state sought to enforce it against Kofa trading . held: even if he had majority shares, couldn't be enforced against the company

Front 166

AG Lagos v Eko hotel

Back 166

Eko hotel was jointly owned by LASG and second respondent(Oha). Eko hotel sold some shares to second respondent and LASG set up a tribunal to inquire into the sale and summoned secretary, director, chairman and MD. The company brought an action to challenge this and LASG argued that there was no locus. The government even though were the major stakeholders of a private limited liability company has no power to interfere in the operations of the company. Nor, it’s regulations, but the National Assembly could interfere externally by making legislation on incorporation and regulations on winding up of companies.

Front 167

Foss v Harbottle

Back 167

when a wrong is done to a company the proper claimant is the company itself

Front 168

Joint Stock Company Act 1844 limited Liability Act 1855 introduce

Back 168

incorporation by registration and limited limited

Front 169

Salomon v Salomon

Back 169

Vaughan Williams J at trial held that the company was Aaron Salomon and he just used the company's name as alias. the company was just an agent and had a right of indemnity against Aaron. CA held that Aaron had abused the privilege of incorporation and limited Liability will only avail independent members of the company HOL held that Aaron had complied with requirement 0f of registration and thus members enjoyed limited Liability. the court emphasised separate personality

Front 170

Lord Denning , Little mail order v IRC

Back 170

the court may pull of the veil of corporate personality to see what is behind

Front 171

Lee v Lee's Air farming

Back 171

Lee was employed as a pilot in a company he wa the director and major share holder. while on company's business, he crashed and died. wife sought compensation. held: she was entitled, Lee was a worker and it is possible to make a contract with a company you own

Front 172

Macaura v Northern Alliance

Back 172

insured company's timber in his own name and was not entitled to compensation upon destruction

Front 173

relevant sections for statutory lifting of corporate veil

Back 173

1. sec 118 2. sec 271 (1) 3. sec 271 (3) 4. sec 672 (1) 5. sec 316

Front 174

Adam v cape industries

Back 174

subsidiary of cape in US sold asbestos to a company in Texas and employees got ill. to enforce judgement against cape in UK, it had to be shown it was present in the US. it was argued it was present through its subsidiary. court rejected this argument on basis of separate personality

Front 175

instances for piercing the veil

Back 175

1. fraud, sham, cloak - Gilford motor co v Horne - Jones v Lipman 2. group of company - DHN Food distribution v tower 3. Agency - Firestone tyre & rubber v Lewellin _ smithstone v Brimmgham corp

Front 176

Guilford motor v horne

Back 176

contract not to compete with company after leaving employment. after he left employment, his wife formed a company which directly competed with plaintiff and took it's customers. the court held it was a device

Front 177

Jones v Lipman

Back 177

L agreed to sell land to J. he conveyed the land to the company he owned and claimed not to own the land. court decreed specific performance said the company was a mask, a creature of his own

Front 178

DHN Food distribution v Tower

Back 178

DHN had 2 subsidiaries. it occupied the land of one of it as licensee. Borough acquired the land and went into liquidation. DHN brought action for compensation. held: it and all subsidiaries were one & entitled to compensation. Denning: subsidiaries are hand and foot if DHN and must do what company says criticisms: Adam v Cape industries

Front 179

firestone tyre & rubber v lewellin

Back 179

Amercian company had english subsidiary (traded its own goods and sent profit to parent company). Parent company tried to evade tax. held: England company was its agent through which it traded in England. thus US parent company had to pay tax

Front 180

Smithstone v Brimmgham corp

Back 180

parent company bought business and set up subsidiary to run it. land on which subsidiary ran business was acquired acquired by defendant. Parent claimed compensation. held: it was entitled to compensation as subsidiary was agent

Front 181

in cases of agency, for court to lift veil of subsidiary to see parent company, express agency agreement must exist. true or false

Back 181

true

Front 182

adam v cape industries the court

Back 182

produce in consistency, what is just to one judge will not be just to another

Front 183

VTB capital v Nutritek

Back 183

VTB loaned some money to RAP to purchase some business from Nutritek. RAP defaulted on loan. VTB claimed to have been induced to enter the contract by misrepresentation of Nutritek. when Nutritek owned RAP. VTB argued for piercing the veil as RAP was puppet of Nutritek. Lord Neuberger: rejected the claim 1. piercing the veil will amount to an extension of the rule 2. it was induced by Mr Malofer but it was the company that entered the agreement 3. VTB could bring a different action of fraudulent misrepresentation for redress against Mr Malofeer

Front 184

Prest v Petrodel

Back 184

the high court granted Mrs Prest a divorce and she was entitled to property of Mr Prest by sec 12 (2)(a) Matrimonial causes Act. most of his assets were tired up in the company he soley owned. court pierced the veil of the companies and ordered transfer to Mrs Prest. CA: reversed the judgement that asset belonged to the company SC: entered judgement for Mrs Prest not on grounds of piercing of veil on grounds that assets were held in trust by company for Mr Prest Lord sumpton: piercing of veil does not include cases of trust, agency etc etc but exceptional cases like Salomon veil can only be pierced where a person is under an existing legal obligation which he seeks to escape by interposing a company under his control. veil need not be pierced where other remedies are available Lord neuberger: veil need not be pierced in the cases of concealment as it can be sorted with ordinary principles if law. it can be pierced in case of evasion. He cited Munby J in Benttashem v Al Shayif ; where court has power to pierce veil, it would not do so except where all conventional remedies are useless. He said Guildford case: veil need not have been pierced but it was justified as company was agent of Horne Lipman case: veil need not have been pierced as company could be described as creation of Lipman

Front 185

Lord sumpton in Prest v Petrodel noted that the veil may be pierced in cases of wilful wrongdoings which encompass

Back 185

1. Concealment principle: where company is used to conceal identity of actors. Don't pierce veil, just look behind the veil to discover concealed fact 2. Evasion Principle:a legal right exists against the actors independent of the company & company is used to defeat such right

Front 186

Chandler v Cape

Back 186

Chandler was an employee of cape'ssubsidiary. years after service, he discovered that he had contracted asbestos while working. He sued for compensation but subsidiary had been dissolved. held: cape assumes responsibility and owed him a duty of care which had been breached. duty of care by parent company towards employees of subsidiaries will only arise after passing 3 tests stated in caparo v dickman. the court claimed not to have pierced veil.

Front 187

standard chartered v Pakistan national

Back 187

court had to determine if director could be personally liable for fraudulent statements made on behalf of the company. lower court: No HOL; Lord Hoffman: no one can escape liability for his own fraud. he was held liable not because he was a director because he committed fraud all elements were proven against him

Front 188

Williams v natural health life and food

Back 188

(distinguish this from standard chartered v pakistan) director made negligent statement to plaintiff with drove it to insolvency. sued to make director and major shareholders liable. held: it was made on behalf of company and director did not assume a position of responsibility

Front 189

oyebanji v state

Back 189

the appellant was the MD of a company & was approached by officers of the respondent in a bid to help it import some things. some money was paid to appellant in installment. the goods were never delivered nor was money returned. court held that separate personality will be ignored where the officers commit fraud in the name of the company and this was the case here

Front 190

akinwunmi Alade v alic

Back 190

the director knew the company was in debt and went ahead to enter partnership agreement with defendant without disclosing this fact. held: court would lift veil to discover those behind the fraud

Front 191

Mesu v Corporative & commerce bank

Back 191

mesu secured a loan from the bank using 1 of 3 adjacent plots of land belonging to its CEO. on defaulting the loan, the bank sold all 3 properties. he challenged this on groups that property belonged to him & not the company. court held that Mesu and the company were the same and Mesu hid behind the veil to perpetrate fraud. this case could have been rightly decided under sec 316

Front 192

andrew v gas meter

Back 192

a company which does not have authority to create preference shares in the MEMART may alter its articles to authorize director to issue preference shares by way of increase in capital

Front 193

Re Patent investment Sugar

Back 193

company's article did not permit reduction of capital. passed 2 resolutions on the same day; one to alter articles to empower it reduce capital & the other to reduce capital. held: court could not authorise special resolution to reduce capital until company's regulations had been altered to that effect

Front 194

Re Dexine patent parking

Back 194

authority to reduce company capital must be contained in the AOA and not MOA

Front 195

Poole v National Bank of China

Back 195

where there are no creditors, the points court will consider in reducing share capital includes 1. whether the reduction will be fair with regards to third parties (public) who may be induced to have dealings with the company 2. reduction must affect all share holders equally; applies when company has only one class of shareholders 3. is reduction fair as btw different classes of share holders; ordinary and preference held: where a company has passed a resolution to reduce its capital court has jurisdiction to confirm it. there are no conditions. such petition will be granted if interest of creditors are safeguarded and if it is prudent and not unfair to shareholders or the public

Front 196

Bannatyne v direct Spanish

Back 196

reduction of company capital must affect all SH equally. this applies to SH of the same class

Front 197

Floating dock co of St Thomas

Back 197

reduction of share capital must be fair and equitable between different classes of SH. where capital is lost, the ordinary SH bear the brunt first, then preference SH lose capital to the extent of what is left

Front 198

Re chatterley Whitfield Colleries

Back 198

recognizes the principle that in cases of reduction of capital, the court will require that reduction will be effected by payment off of capital which is entitled to priority in winding up

Front 199

Re old Sikstone colleries

Back 199

company was nationalized. the court refused to sanction reduction holding that it amounted to an unfair variation of class rights in that PSH were promised that they would participate in compensation scheme

Front 200

Re meux brewery

Back 200

creditors can only object to reduction in cases of diminution of liability or repayment of paid up share capital except in special cases

Front 201

cases of reduction that don't need consent of court

Back 201

1. where shares are forfeited for non payment of calls sec 165 2. where shares are surrended to company to avoid forfeiture 3. where redeemable shares are reduced sec 182 (2) 4. where unissued shares are cancelled

Front 202

Ashbury Railway Carriage and Iron Co v Riche

Back 202

A company that acts beyond its articles is acting ultra vires and the contract is void. s39 CA 2006 prevents companies hiding behind this to avoid responsibility. ultra vires doctrine protects creditors

Front 203

Andrews v gas meter

Back 203

special resolution to alter articles and resolution to increase share capital can be done in the same general meeting

Front 204

conditions for reducing share capital

Back 204

1. special resolution 2. authorised by articles 3. confirmed by court 4. done in general meeting 5. notice to CAC

Front 205

conditions to increase share capital

Back 205

1. Ordinary resolution 2. done in general meeting 3. notice of general meeting must be given 4. articles must authorize it 5. notice to CAC

Front 206

rules of maintenance of company capital

Back 206

1. statement of object sec 27 (1)(c) 2. purchase of its own shares sec 184 (1)(a)-(f) 3. financing purchasing of its own shares sec 183 (2)(3) 4. issuing shares at a discount sec 146 5. redeeming redeemable preference shares sec 182 (2) 6. a subsidiary company cannot be a member of its holding company 7. company can't apply its share capital to pay allowances or discount to any person sec 155 8. company can only pay dividend out of profit and not capital Sec 426 (5), 427, 428 9. reduction can only be done pursuant to section 130 and sanctioned by court

Front 207

Trevor v whitmore

Back 207

a company cannot purchase its own shares This is the common law position and the position under CAMA 1990. It does not apply to CAMA 2020

Front 208

African continental seaways v Nigerian dredging roads

Back 208

the company offered to purchase shares from the defendant partly in cash and partly by loan. The trial court held this was Ultravires the company's power and contrary to the rule against financial assistance in statute. SC held this was untenable

Front 209

orji v dorji

Back 209

something done gratuitously is something done freely without reward expected

Front 210

plant v steiner

Back 210

an agreement whereby the amount payable by a company exceeded the value of asser constituted a gift

Front 211

Re hill and tyler v loveday

Back 211

where a company guaranteed a loan obtained by a purchaser of the company's shares, it is unlawful financial assistance

Front 212

Barclays bank v British & commonwealth

Back 212

assistance has to ne financial in nature to contravene statute

Front 213

Keller v williams

Back 213

capital contributions made other than in exchange of shares is treated same way as capital

Front 214

Section 305(3), (4)

Back 214

A Director at all times and ask him what he believes the best interest of the company as a whole to

Preserve it assets

Further its business

And promote the purpose for which company was formed in faithful diligence and careful manner.

An ordinary skillful director would act according to circumstances and in regard to the impacts of the companies operation on the environment in the community where the business operates.

(4)

The director should regard the interest of the companies employees and the interest of its members in performing his function

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Section 314

Back 215

For a new company if authorized by the memo about limited liability of a company can be changed to unlimited lability

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Section 315

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For an existing coming of so authorized by the Aoa You can use special resolution to change the limited liability of a company to unlimited lability

Front 217

sec 316

Back 217

Where a company receives a. loan b. property for project c. intends to defraud and diverts it every director and other official who is in default is liable

Front 218

sec 344 (1)

Back 218

where a member institute an action to enforce a right due to him or in representative capacity of a right due to him and other members, subject to sub 2, he shall be entitled to a. damages for loss incurred on breach of such right b. declaration or injunction against company to restrain it from doing that act

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sec 345

Back 219

member in this section include PR of deceased and any person who shares have been transferred to or transmitted by operation of law

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sec 353 (1)

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sec 354 is applicable to member, director, former director, CAC, creditors and any other person at discretion of court

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sec 354 (1)

Back 221

application may be made on grounds that affairs of company are conducted in an oppressive or illegal manner

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sec 426 (5)

Back 222

dividends is only payable out of distributable profit

Front 223

sec 427(1)

Back 223

a company may only pay dividend out of profit available for that purpose

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sec 428

Back 224

the company shall not declare or pay dividends if after doing so it would be unable to pay its liabilities as they become due

Front 225

sec 672 (1)

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if in the course of winding up, it is discovered that the business was carried on in a reckless manner or to defraud creditors, the official receiver, liquidator or creditor may apply to the declare that those who knowingly carried on the business in this manner have unlimited liability

Front 226

Sec 823

Back 226

what section provides for registration of Registered trustees?

Front 227

Sec 826 (1)

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Infant, unsound mind, undischarged bankrupt & someone convicted of fraud within 5 years of his proposed appointment.

Hint 227

what section disqualifies one from being a trustee?

Front 228

section 830

Back 228

what section provides for incorporation of Registered trustees

Front 229

sec 868

Back 229

sec 868 fixed is capital retained by the company in form of assets and which subscribed capital is expended on to yield profit circulating capital is a portion off subscribed capital intended to be used temporarily by being parted with and circulated in business in form of money, goods etc

Front 230

sec 868 defines share capital

Back 230

as the issued share capital at any given time

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sec 868

Back 231

officers is defined to include directors, managers, secretaries

Front 232

what principle does Nestle v Westminster bank establish?

Back 232

trustees should seek legal advise when in doubt or they'd be liable

Hint 232

.

Front 233

what principle does Re Waterman's will establish?

Back 233

A paid trustee should exercise the knowledge of a specialist in trust administration

Hint 233

.