CORPORATE LAW PRACTICE TASK FORWEEK 3: "AN OVERVIEW OF THE LEGAL FRAMEWORK & REGULATORY BODIES ON"

COUNCIL OF LEGAL EDUCATION

NIGERIAN LAW SCHOOL

LAGOS CAMPUS

CORPORATE LAW PRACTICE

2016/17 SESSION

WEEK 3:

TOPIC: 1. AN OVERVIEW OF THE LEGAL FRAMEWORK & REGULATORY BODIES ON

CORPORATE LAW PRACTICE IN NIGERIA

B. LEARNING OUTCOMES:

1. Identify the various laws and regulatory bodies on corporate law practice in Nigeria.
2. List the Procedure for accreditation with each of the regulatory bodies.
3. Complete the forms required for accreditation with the regulatory bodies.
4. Identify the ethical issues arising in choice of business and non- business organization

C. CONTENTS:

1. Principal laws and regulatory bodies on corporate law practice
2. Features and functions of the regulatory bodies and their relevance to corporate law practice- CAC, SEC, NOTAP, NIPC, etc
3. Procedure for accreditation with CAC and SEC.
4. Completion of forms required for accreditation.
5. Ethical issues involved

Reading List: CAMA, ISA, NIPC Act, NOTAP Act, Companies Regulations 2012, SEC Consolidated Rules 2013; Trade and Investments in Nigeria: Legal and Regulatory Aspects by Kenna Partners; Essentials of Corporate Law by NCS Ogbuanya; and Bhadmus on Corporate Law and Practice

TASK FOR WEEK 3

Instructions:

1.       All Questions are to be attempted. Please submit online in MS Word format on or before midnight on Wednesday to adebiyi@lawschoollagos.org; james@lawschoollagos.org; and kennethokwor@lawschoollagos.org; Hard Copies to be submitted before 9am in class.

2.       All students are to come to class with hard copies of CAC ACCREDITATION FORMS which can be obtained from the Business Centers.

3.      All students should read Stanbic-IBTC v. FRCN & NOTAP (Unreported Suit No: FHC/L/CS/1430/2012).

QUESTION ONE

Touchmate BV is an ICT company incorporated in the Netherlands. It has a Nigerian subsidiary called Touchmate Nigeria Limited, with registered office in Lagos. The parent company has always been keen on having an efficient tax construct for the Nigerian entity and so has ensured that the capitalization of the Nigerian entity is very thin.

To guarantee consistent capital outflow, the parent has a Management and Technical Services Agreement (MTSA) with the Nigerian entity under which the parent company would provide top level managerial staff, technical staff, and even clerical staff. In addition to the remuneration paid to this staff, fees were payable to the parent company by the Nigerian entity under the MTSA. This MTSA, though executed on the 14^th of February 2016 in Nigeria, has not been registered or presented at any regulatory office in Nigeria. It has been at the offices of the Nigerian entity.

The Nigerian entity developed and created a software called “Polycom.” Under a sale and license-back structure, the Nigerian entity sold this software to the parent company and obtained a license from the parent company to use the same software, which it created, in Nigeria. Under the Software Licensing Agreement, huge fees are payable to the parent company for the use of the license in Nigeria.

The Nigerian entity and the parent company jointly own SSE Nigeria Limited. The Nigerian entity provides technical services to SSE Nigeria Limited under a Technical Service Agreement (TSA) and the services are gratuitous.

a)     Are the MTSA, TSA and Software Licensing Agreements Registrable? Justify your answer with judicial precedents?

b)     What is the effect of a failure to register/stamp each of the agreements with the relevant regulator? Discuss the relevant regulator in this regard.

c)      Assuming the relevant regulator had given a directive against the sale and license-back, what would be the effect of that directive on the software licensing agreement?

d)     Does the TSA throw up any regulatory issue? Give reasons for your answer

e)     Assuming the relevant regulator had decided that as a condition for the registration of the MTSA, the agreement should cover only top level management staff and this was done. Would the subsequent amendment of the agreement to include technical or clerical staff have any effect? Substantiate your answer.

QUESTION TWO

Hassan and Alheri are the owners and managers of the 50 bedroom, D & F Hotels Limited which they have been operating in IYANA IPAJA, near Badagry in Lagos for the past ten years. However, business has not been on the bright side for the past five years even though the Hotel has been managing to break even because of its Fisherman Restaurant that has become the toast of the high and mighty because of the delicious and assorted sea food which it serves.

Early this year, the Government announced the establishment of an Export Processing Zone IYANA IPAJA. It is expected that this will boost trade and economic activities in the area and Lagos environs. 

In order to take advantage of the new prospects in IYANA IPAJA, Hassan and Alheri have taken the following steps:

They have signed a Management Services Agreement with Sleepy Hotel Services Inc-a Hotel Management Services company with a recognized international brand, to take over the management of the Hotel. Mr. CHUNG HONG from China is to be the Chief Chef, while the Managing Director and General Manager will be French and Chinese respectively.

The Hotel is to be re-registered as a Public company and its name is to be changed to D & F Sleepy Plc. Sleepy International Investment Limited, a subsidiary of Sleepy Nig Hotel Services Inc. is to invest Four million dollars into the Hotel.  50% of the investment is to be made by the importation of furniture and equipment from Canada and Japan respectively.

It is planned that the company be listed on the Nigerian Stock Exchange within the next two years.

After ceding the day to day management of the company, David & Florence plan to go into the business of Sea Food exportation within the Export Processing Zone. They plan to incorporate D & F Fisherman Limited and brand their products as “Golden Foods.”

Meanwhile, at a Board Meeting of the company held on the November 03, 2015, it was resolved that the Financial year of the company would be changed from April – March to January – December each year. The firm of James & Kenneth (chartered accountants), were also re- appointed as Auditors of the company at the 9th Annual General Meeting held on the same day.

a)           Make a list of the Regulatory Agencies involved in each of the steps to be taken in the scenario.

b)           State the applicable law in each case and justify their applicability.

QUESTION THREE

Donatus Okorobia was called into the Nigerian Bar in October 2015. His girl-friend Sussy Babe who attended the Call to Bar Ceremony has given Donatus a brief to incorporate her Fashion Design Company to be named ‘Ogenimi’ Nig. Plc.

ANSWER THE FOLLOWING QUESTIONS

a)     In numbered paragraphs set out the steps Donatus would take to give effect to his girl-friend’s intention, and in the sequence, indicate the documents you would require for each step.

b)    Would your answer have been different if Sussy Babe had instructed Donatus to register ‘Ogenimi’ Entreprises or the Registered Trustees of Ogenimi? If yes, why and to what extent? If no, why?

c)     Sussy Babe, a first director and subscriber of ‘Ogenimi’ Ltd wants to incorporate the company herself. Advise her.

d)    Suppose you are also interested in Capital market transactions, list the documents you would have to submit to SEC to be registered as a capital market expert or professional.

e)  Mr. Jatau, a Learned Senior Advocate of Nigeria (SAN) was appointed by his Client, Purple Securities ltd, as Solicitor to the Issue, during the initial public offer of the shares of Curit Plc. Unfortunately, the Securities and Exchange Commission (SEC) declined to register the offer, stating that the Solicitor appointed by Purple securities Ltd was not a SEC- accredited Capital Market Consultant. Purple Securities Ltd has consulted you for advice. Advise the company supporting your answer with appropriate authorities.