Nigerian Bar Final Corporate Law Practice common mistakes
Nigerian Bar Final Corporate Law Practice · Understand the traps and how to avoid them.
Answering CAMA 2020 questions from memory of the old CAMA (1990) - for example stating the minimum share capital for a private company is N10,000, or that a company can be formed by two persons, or that there is a separate 'authorised share capital' regime.
Candidates study from older textbooks and past notes, and the 2020 Act changed headline figures (minimum share capital now N100,000 for private and N2,000,000 for public companies), abolished authorised share capital in favour of issued share capital, and permits single-member companies. The old numbers feel familiar and are rarely double-checked.
What to do instead
Build a one-page 'CAMA 2020 change sheet' listing every figure and rule that changed (minimum share capital, single-member companies, company secretary optionality for small companies, electronic meetings, share buy-backs, business rescue), and cite the section number beside each. In the exam, whenever you write a figure, add the section: 'N100,000 - s.27(2)(a) CAMA 2020'.
Confusing the roles and liabilities of promoters, directors and shareholders - e.g. treating a pre-incorporation contract as automatically binding on the company, or holding a director personally liable for every company debt.
The separate legal personality rule (Salomon v Salomon) is learned as a slogan, but candidates do not work through the consequences: a company cannot ratify a pre-incorporation contract (it can only enter a fresh contract of novation under s.96 CAMA), and directors are liable only for breach of duty or where the veil is lifted.
What to do instead
Practise a three-column table: act/transaction | who is bound | statutory provision. Drill pre-incorporation contracts, ultra vires acts, and veil-piercing (fraud, sham, agency, statutory lifting under s.290 CAMA for fraudulent trading) until you can state the outcome and the authority in one sentence each.
Drafting or analysing a resolution without checking the correct type and threshold - passing an ordinary resolution where a special resolution is required (e.g. alteration of the articles, change of company name, reduction of share capital), or miscounting the 75% majority.
Candidates memorise 'special = 75%' but do not map it to the specific transactions. They also forget that the 75% is of votes cast at a general meeting of which 21 days' notice has been given, and that written resolutions must be signed by the requisite majority.
What to do instead
Keep a resolution map: transaction | resolution type | threshold | notice period | filing requirement (e.g. Form CAC 2 for name change, special resolution filed within 15 days). Test yourself by listing ten transactions and assigning the resolution type from memory before checking the Act.
Missing the post-incorporation compliance steps and deadlines - failing to state that the company must hold its statutory meeting, file annual returns, appoint auditors, keep a register of members at the registered office, and display the company name.
Candidates focus on formation and stop there. Deadlines (annual return within 42 days of the AGM, statutory meeting within 6 months of incorporation for public companies) are easy to blur, and the exam often asks 'what next?' rather than 'how do you form?'
What to do instead
Create a compliance timeline from incorporation to first AGM with each filing, form number (CAC 2, CAC 7, CAC 10), deadline and penalty for default. Recite it as a sequence rather than a list, so you can answer both 'what is required' and 'by when'.
Treating corporate insolvency as a single topic - writing about winding-up when the question concerns administration, or describing the old CAMA 1990 Part XV procedure instead of the CAMA 2020 business rescue and insolvency provisions.
Insolvency is taught late in the course and candidates rely on summary notes. CAMA 2020 introduced company voluntary arrangements, administration and netting, and reorganised winding-up provisions, so older summaries are actively misleading.
What to do instead
Build a decision tree: is the company merely unable to pay debts (s.572 test), is rescue viable (CVA/administration), or is liquidation inevitable (members' voluntary, creditors' voluntary, compulsory by court)? For each route, note who initiates, the moratorium effect, the role of the administrator/liquidator, and the priority of claims.
Answering a problem question with a general statement of law instead of applying it to the facts - e.g. writing 'directors owe fiduciary duties' without identifying which director breached which duty, to whom, and what remedy follows.
Candidates under time pressure reproduce lecture notes. Problem questions in corporate law practice reward issue-spotting and application, and a bare statement of law earns few marks even when correct.
What to do instead
Use a fixed structure for every problem answer: (1) identify the parties and the legal issue; (2) state the rule with section/authority; (3) apply to the named facts; (4) state the conclusion and remedy. Practise under timed conditions so the structure becomes automatic.
Confusing the powers and procedures of the Corporate Affairs Commission with those of the court - e.g. saying the CAC can wind up a company, or that the court must approve a change of name rather than the CAC.
The regulator/court divide runs through the whole Act, and candidates mix up administrative approvals (CAC) with judicial approvals (court), and the role of the Nigerian Financial Reporting Council and the Securities and Exchange Commission for public companies.
What to do instead
Make a two-column 'Who decides?' list: matter | CAC | Court | other regulator. Cover name change, reduction of capital, scheme of merger, winding-up, disqualification of directors, extension of time for filing, and rectification of the register. Add the appeal route from CAC decisions to the court.
Ignoring the distinction between private and public companies when answering - applying public company rules (statutory meeting, minimum two directors, prospectus requirements) to a private company, or the reverse.
Candidates learn one set of rules and apply it universally. Small companies and private companies have exemptions and different thresholds that change the answer entirely.
What to do instead
For every answer, first classify the company (private/public, small/large, single-member, foreign). Keep a comparison table of directors, secretary, meeting, audit and filing requirements by company type, and state the classification explicitly in your answer before applying rules.
Misstating the rules on share capital, allotment and transfer - e.g. saying shares can be issued at a discount, that a private company cannot buy back its own shares, or that transfer of shares requires CAC approval.
Share capital rules are technical and were substantially revised in CAMA 2020 (issued share capital, buy-backs, financial assistance). Candidates rely on outdated summaries and general company law intuition.
What to do instead
Learn the share capital chain: allotment (directors' power, s.149), consideration (no discount, s.155), return of allotment filing, transfer (instrument of transfer, board approval, stamping), and buy-back (s.188, solvency test and special resolution). Note exactly which steps require CAC filing and which require court sanction.
Writing answers without citing statutory provisions or case authority, or citing them inaccurately (wrong section numbers, invented case names, or attributing a principle to the wrong case).
Candidates either do not memorise authorities or, under pressure, guess section numbers. Corporate law practice answers are marked on accurate authority, and a confidently wrong citation is worse than none.
What to do instead
Memorise a core set of about 30 provisions and 15 cases with their ratio (e.g. Salomon v Salomon on separate personality, Foss v Harbottle on the proper plaintiff rule and its exceptions, MacDougall v Gardiner). Verify every section against the CAMA 2020 text, and if unsure of a number, state the rule and say 'under CAMA 2020' rather than inventing a section.