SALIENT
POINTS FROM CORPORATE LAW PRACTICE 2016/2017
NIGERIA LAW SCHOOL LAGOS CAMPUS
(GOD IS THE KEY TO SUCCESS)
WEEK 3: LEGAL REGIME AND THE REGULATORY BODIES IN
CORPORATE PRACTICE IN NIGERIA
INTRODUCTION: The main focus of this lecture bothers
on the Applicable Laws that governs Corporate Practice in Nigeria and the
Regulatory bodies established by these laws and accreditation Procedure with
CAC and Sec, ethical issues.
For the purpose of Bar Finals one should be able to
identify the various laws that regulate corporate law practice In Nigeria and
their relevance (AUGUST 2013, 3A;
September) this question as two parts, identification and their relevance
The following are laws that regulate corporate law
practice in Nigeria:
1. Companies
and Allied Matters Act, cap C20 LFN 2004 (CAMA)
2. Investment
and Securities Act, 2007 (ISA)
3. Nigerian
Investment Promotion Commission Act
4. National
Office for Technology Acquisition and Promotion Act
5. Immigration
Act
6. Industrial
Inspectorate Act
7. Constitution
of the Federal Republic of Nigeria 1999
8. Federal
High Court Act
9. Companies
Income Tax Act
10.
Stamp Duties Act
11.
Banks and other Financial Institution
Act
12.
Federal inland Revenue Act
13.
Insurance Act
14.
Local Content Act
15.
Partnership Act
16.
Companies winding up Rules 2001
17.
Companies Proceedings Rules 1992
NOTE: MRS JAMES TOLD US
IN CLASS THAT WHEN YOU ASKED THIS KIND OF QUESTION YOU SHOULD AT LEAST LIST 8.
Relevance
of the Laws That Regulate Corporate Law Practice in Nigeria
1. Companies and Allied Matters Act cap C. 20 LFN
2004: The CAMA makes provisions for the incorporation of companies under Part
A, the registration of business names under Part B and the incorporation of
trustees under Part C. It also makes
provisions regarding the officers of a company, the constitution of a company,
its management as well as winding up procedures
2. Investment and
Securities Act 2007: The ISA 2007 repealed the ISA 1999.The provisions of the
ISA were formerly prescribed under Part 17 CAMA prior to 1999. The ISA
established the Securities and Exchange Commission.it regulates the activities
of the Nigerian capital market i.e. it regulates investments and securities
business in Nigeria. The ISA regulates all offers of securities by public
companies as well as registration of securities
3. Nigerian Investment
Promotion Commission Act cap N117 LFN 2004: This Act was enacted to regulate
and promote investment in the Nigerian economy by both Nigerian and non-
Nigerian investors.
4. Foreign Exchange
(monitoring and miscellaneous Provisions) Act cap F34 LFN 2004: This provides
for foreign investment by aliens to be done in convertible currency freely
imported into Nigeria through an authorized dealer.
5: Immigration Act cap
I 2 LFN 2004: This Act requires aliens who wish to set up business in Nigeria
to obtain Business Permit, expatriate Quota and Residence Permit for foreigners
who wish to work in Nigeria.
6. National Office for
Technology Acquisition and Promotion Act cap N62 LFN 2004: This Act provided
that every contract or agreement entered into by any person in Nigeria with any
person outside Nigeria which involves the transfer of foreign technology to
Nigerian partners must be registered with NOTAP not later than 60 days from
execution of the agreement.
7. Industrial
Inspectorate Act cap 1 8 LFN 2004: This Act requires any person proposing to
start a new undertaking or in the case of an existing undertaking,proposing to
incur additional expenditure of not less than N20,000.00 to give notice of his
intention to the director of the industrial Inspectorate Division of the Fed.
Ministry of Industry.
8. Companies Income Tax
Act cap C21 LFN 2004: This Act provides the income tax payable upon the profits
of any company in each year.
9. Constitution of the
Federal Republic of Nigeria 1999 (as Amended) 2011: The constitution under S.
251 (1)(e) confers on the Federal High Court exclusive jurisdiction in civil
cases and matters arising from the operation of the CAMA or any other
enactments regulating the operation of companies incorporated under CAMA.
10. National Insurance Commission
Act cap N54 LFN 2004: This Act regulates all activities in the insurance sector
of the economy.
11. Banks and other
Financial Institutions Act cap B3 LFN 2004: This Act regulates the banking
sector of the economy.
12. Mortgage Institutions
Act cap M 19 LFN 2004: This Act provides that no mortgage business can be
transacted in Nigeria except by a company which is duly incorporated in Nigeria
for that purpose and in possession of a valid license granted by the Minister
of Works and Housing. The minimum paid up share capital for a company to be
licensed or continued as a mortgage institution is N5 million.
13 Federal High Court
Act: By virtue of Section 7 of this Act it provides that the Federal High Court
shall have original jurisdiction over matters stated in S. 251(1)(e) CFRN.
14 Stamp Duties Act Cap
S. 8 LFN 2004: This Act provides that the nominal share capital of any company
registered with limited liability or any increase thereto shall be charged with
ad valorem duty.
15 Partnership Act: This
Act makes provisions for the nature of partnership, the rules for determining
partnership, relations of partners and dissolution of partnership.
Furthermore, you must
be able to identify the regulatory bodies established by the various laws above
or established to govern the various laws above under corporate practice and
most importantly their various functions.(MAY
2015, 1A)
1.
CORPORATE
AFFAIRS COMMISSION
The CAC is
established under S. I CAMA headed by the Registrar-General-S.8 CAMA. Section 7 of CAMA provides
for it functions:
v
To
administer the CAMA in terms of the regulation and supervision of the
formation, incorporation, registration, management and winding up of companies.
v
To
establish and maintain companies’ registry and office in all the states.
v
To
arrange or conduct investigation into the affairs of any company.
v
To
perform such functions as may be specified by any Act or Enactment.
2.
SECURITIES
AND EXCHANGE COMMISSION established by the ISA 2007.
Section 13 ISA provides for it functions:
v To
regulate investment and securities business in Nigeria
v To
register and regulate securities exchanges, capital trade points, futures,
options and derivative exchanges, commodity
v To
regulate and register offers of securities by public companies.
v To
ensure investor protection and maintain a fair and orderly market
v Approve
and regulate mergers acquisitions and all forms of business combinations.
v To
register securities by public companies.
v To
register and regulate corporate and individual capital market operators.
v To
enter and seal up the premises of persons illegally carrying out capital market
operations.
3.
NIGERIAN
INVESTMENT PROMOTION COMMISSION: established by Nigerian Investment Promotion
Commission Act(NIPC ACT) The functions are listed in
Section 4 NIPC ACT:
v
To
encourage, promote and coordinate investment in Nigeria especially by foreigners
through its activities
v
To
enhance investment climate in Nigeria For both Nigeria and alien investors.
v
The NIPC houses a one – stop investment centre/shop.
OSIC (an investment window where most of the critical investment regulatory
bodies can be found)
v
To
register and keep records of all enterprises.
v
Provides
and disseminate up-to-date information on incentives available to investors
v
Advise
the government on policy matters including fiscal measures designed to promote
the industrlisation of Nigeria
4. NATIONAL
OFFICE FOR TECHNOLOGY ACQUISITION AND PROMOTION established by NOTAP Act.Functions-S.3
They register
contracts of transfer of foreign technology between Nigerians and Aliens and issue certificate of
registration. And to promote acquisition of indigenous technological capacity
in Nigeria.
5. PENCOM
This is a
regulatory body which oversees and manages malpractices in the management of
pension funds.It registers Pension fund administrators and monitors their
activities.
6. Investment
and Securities Tribunal
It exercises
exclusive jurisdiction on investment and capital market dispute in Nigeria.
7. NDIC
established under the NDIC Act
This is an
insurer to Banks and financial institutions.In collaboration with CBN, they
monitor the activities of Banks. When a
bank falls into distress, the NDIC manages and assumes responsibility of these
failing banks.The NDIC intervenes through purchase and assumption of the debt
of failed bank.
8. BUREAU
OF PUBLIC ENTERPRISES
Functions of BPE
v It
regulates the privatization and commercialization of government owned
utilities.
v Prepares
public enterprises approved for privatization and commercialization.
v Ensuring
update of accounts of all commercialized enterprises,
v Making
recommendations on the appointment of consultants, advisers, investment
bankers, issuing houses, stock brokers, solicitors, trustees, accountants, and
other professionals required for the purpose of privatization..
9. ASSET
MANAGEMENT CORPORATION OF NIGERIA (AMCON) established under the AMCON Act 2010.
It functions are:
v
To
resolve liquidity problems in the financial sector.
v
To
assist banks in moderating the cost of bank distress.
v
To
manage and dispose toxic assets of Nigerian banks including Non – performing
Loans (NPLs)
v
AMCON
is empowered to apply to court by motion exparte for an order to freeze the
debtors or debtor’s company account in case of default.
v
To
commence debt recovery action against a debtors or debtor’s company whose
account was frozen.
10.
FEDERAL HIGH COURT
v
By
virtue of Section 251 Constitution of the Federal Republic of Nigeria, 1999, it
exercises exclusive jurisdiction on companies proceedings. Also, responsible
for the registration of companies’ resolution and approval/sanctions of certain
shemes. A company may be wound up by the court S. 408 CAMA
v
Court
may appoint or remove a liquidator in any voluntary winding up
v
The
court may cancel the alteration of a company’s objects.
v
May
order the rectification of register of members.
v
May
order a meeting of creditors or class of creditors when necessary amongst
others.
11.
CENTRAL BANK OF NIGERIA: it is the apex regulatory body for banks and other
financial institution.
12.
NIGERIAN
COMMUNICATION COMMISSION : it
is established by Nigerian Communication Commission Act
v
To
create a regulatory environment for the supply of telecommunication services,
facilities and
v
To
promote fair competition and efficient market conduct;
v
To
ensure that licenses or authorized carriers and other providers of
telecommunication services meet their commercial obligations in a manner which
promotes cooperation and fairness.
POSER: 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. What is the first step Sussy Bae would take?
Ans: THE FIRST STEP IS ACCREDITATION
ACCREDITATION AT CAC
Note the
following in regards to accreditation at CAC:
1. The
process of accreditation will authorize a person to be able to deal with the
Corporation as agents on behalf their clients.
2. This
is only compulsory in respect to agents dealing under Part A on the
incorporation of companies.
3. Under
Part A, only
·
Legal Practitioners,
·
chartered Accountants and
·
chartered Secretaries and
·
a firm of any of the above
4. In
respect to registration of business names and incorporated trustees of
Associations under Parts B and C respectively, anybody without an accreditation can deal with the CAC.
So for our Sussy Babe to be accredited she must
follow these procedures:
1. Apply
for accreditation form, which would be given upon the payement of a prescribed
fee which for individual is now #5,000 and #10,000 for firms.
2. She must submit the duly completed
accreditation form with the following documents:
·
Two passport photograph
·
Evidence of payment of practicing fee
for the current year
·
Professional qualifying Certificate i.e
Call to Bar
·
NYSC Discharge Certificate.
After doing the aforementioned, she would be issued
with an accreditation card which will serve as reference code for the
practitioner firm in carrying out corporate transactions at the CAC.
PLEASE NOTE: THE ACCREDITATION NUMBER MUST BE
DISCLOSED ON ALL CAC FORMS BEING USED FOR BOTH PRE-INCORPORATION AND
POST-INCORPORATION TRANSACTIONS REQUIRING AN ACCREDITED PRACTIOTIONERS TO
UNDERTAKE.
MRS
JAMES POSER: Assuming Miss Sussy Babe
misplaced her accreditation card; advise her on the steps to take.
REPLACEMENT
OF LOST ACCREDITATION ID CARD
Sussy Babe will write a letter for replacement
addressing it to the Registrar General of CAC stating that the letter is
accompanied with the following documents;
·
police report
·
affidavit of loss
·
practicing fee receipts
·
copy of qualifying certificate
·
replacement fee
POSER: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.
REGISTRATION WITH SECURITIES AND
EXCHANGE COMMISSION AS CAPITAL MARKET SOLICITOR/OPERATOR
By virtue of Section 38 of INVESTMENT AND SECURITIES
ACT it provides that no person shall operate in the Nigerian Capital Market as
an expert or professional or in any capacity carry out an investment and
securities business unless his registered in accordance with ISA. Section 38(2)
empowers Securities and Exchange Commission to prescribe the conditions for
registration including the level of knowledge required to operate in the
capital maeket.
Furthermore, RULE 178(1) SEC RULES 2013 provides
that the following experts or professional whose opinions impact directly on
capital market transactions are subject to reg. by SEC ;
·
Legal Practitioners
·
Accountants
·
Auditors
·
Engineers
·
Estate Valuers
·
Property Managers
For the purpose of Bar Part II For individual
Partners, they must possess 5 years post-call experience to qualify to be
registered while for sponsored individuals it is 2 years post-call that is
needed.
NOTE THAT: We have two categories of Registration
a) Registration
of Corporate Bodies (COMPANIES) RULE 178(2)A SEC RULES 2013
b) Registration
of Firms and Individuals Carrying on Business in their true names RULE 178(2) B
REQUIREMENTS FOR
FIRMS/PERSONS CARRYING ON BUSINESS IN THEIR TRUE NAMES ARE:
·
Application in FORM SEC 2
·
Certified Certificate of business Name
·
Profiles of the Firm
·
A copy of Partnership deed( if
applicable)
·
Full postal and electronic address of
immediate past employer at sponsored individuals
·
A sworn statement that the requirement
of the act as been complied with
·
Evidence of payment of annual practicing
fee
·
Professional indemnity insurance
REQUIREMENTS FOR CORPORATE BODIES ARE:
·
Application Form SEC 3
·
Two sets of duly completed form SEC 2
and filled by the principal officer and another officer
·
Curriculum vitae of sponsored
individuals including details of activities stated in order of time from
secondary school till date
·
A copy the certificate of incorporation
certified by company secretary or original brought to be sighted
·
Evidence of minimum share capital of 5
million
·
Profile of the company showing past and
relevant activities
·
Two copies of memorandum and articles of
association certified by CAC
·
A signed copy of the audited account
·
Full postal address of sponsored
individuals
·
Sworn undertaking to keep proper records
and render returns as may be specified by SEC from time to time.
For
the purpose of MCQ REGISTRATION to SEC and ACCREDITATION to CAC
One
Stop Investment Commission
In its continuous
effort to encourage Foreign Direct Investment (FDI) in Nigeria, the Federal
Government established the One Stop Investment Centre (OSIC) otherwise known as
One Stop Shop (OSS) on 21st March 2006. Is a concept that is meant
to facilitate and encourage investment whereby relevant government agencies are
brought to one location coordinated and streamlined to provide prompt,
efficient and transparent services to investors.
It was brought to cure
some problems encountered by investors in Nigeria which tends to slow down the
pace of industrialization in Nigeria.
FUNCTIONS OF OSIC;
This includes simplifying and curtailing the
procedures and guidelines for issuing business approvals, permits and
authorizations by eliminating bottlenecks faced by investors in establishing
and running businesses in Nigeria. In addition, OSIC is expected to achieve the
following functions:
- Reduce
the high cost of doing business
- Eliminate
dealing with multiple agencies
- Eradicate
the use of discretion and lack of transparency in granting approvals,
licenses, permits
- Eliminate
over bureaucratization in procedures and processes
- Eradicate
poor service delivery
- Ensure
Foreign Direct Investment and investor tracking
Features of OSIC
- The
participating agencies will maintain their existing mandates and
responsibilities within the structure of OSIC
- Only
statutory provisions will be administered at OSIC and not special
applications
- Agencies
will establish their presence at OSIC in phases
- Approval
time for business entry approvals is 24 hours
- OSIC
covers investments into all sectors of the economy
- It
is mandatory for all foreign investors to register with OSIC to facilitate
foreign direct investment tracking/investor tracking as provided in the
NIPC Act.
ETHICAL ISSUES FOR WEEK
THREE
Engagement
in business - Rule 7(1) of the RPC states that unless
permitted by the General Council of the Bar (hereinafter referred to as the
“Bar Council”), a lawyer shall not practice as a legal practitioner at the same
time as he practices any other profession.
Rule
7(2) states that a lawyer shall not practice as a legal
practitioner while personally engaged in –
(a) The
business of buying and selling commodities;
(b) The
business of a commission agent;
(c) Such
other trade or business which the Bar Council may from time to time declare to
be incompatible with practice as a lawyer or as tending to undermine the high
standing of the profession
Rule
7(3) states that for the purpose of this law, “trade or
business” includes all forms of participation in any trade or business but does
not include –
(a) Membership
of the Board of Directors of a company which does not involve either executive,
administrative or clerical functions;
(b) Being
Secretary of a company; or
(c) Being
a shareholder in a company.
Lawyers
in salaried employment – Rule 8(1) states that a lawyer,
whilst a servant or in a salaried employment of any kind, shall not appear as
advocate in a court or judicial tribunal for his employer except where the
lawyer is employed as a legal officer in a Government department.
Rule
8(2) a lawyer, whilst a servant or in a salaried employment,
shall not prepare, sign, or file pleadings, applications, instruments,
agreements, contracts, deeds, letters, memoranda, reports, legal opinion or
similar instruments or processes or file any such document for his employer.
Rule
8(3) a director of a registered company shall not appear
as an advocate in court or judicial tribunal for his company.
Rule
8(4) a lawyer in a full-time salaried employment may
represent his employer as an officer or agent in cases where the employer is
permitted by law to appear by an officer or agent, and in such cases, the
lawyer shall not wear robes.
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