Nigerian Bar Final Corporate Law Practice key terms

The two constitutional documents of a Nigerian company: the memorandum states its name, objects, share capital and liability of members, while the articles set out internal management rules binding the company and its members.

The clause in a company's memorandum listing the business purposes it may pursue; acts outside it risked being void at common law, though sections 38 and 39 of CAMA 2020 now permit unrestricted objects unless the memorandum restricts them.

The principle that a company may only act within the powers conferred by its memorandum and by law, so that transactions beyond those powers are void and cannot be ratified even by unanimous shareholder approval.

The deemed knowledge of a company's registered public documents that every person dealing with the company is fixed with, so that a third party cannot plead ignorance of the memorandum, articles or filed charges.

The rule in Royal British Bank v Turquand that an outsider dealing in good faith may assume the company has complied with its internal procedures, such as passing necessary board or shareholder resolutions.

The body of rules governing whether a company has legal power to enter a transaction and whether the directors had authority to bind it, distinguishing lack of capacity from mere excess of authority.

The document issued by the Corporate Affairs Commission evidencing that a company has been registered; under CAMA 2020 it is conclusive proof of incorporation and of compliance with registration requirements.

The statutory body established under CAMA to administer company registration, incorporation, filing of annual returns, registration of charges and other regulatory functions over Nigerian companies and business names.

An agreement purportedly made on behalf of a company not yet formed; at common law it binds the promoter personally, but section 96 of CAMA 2020 allows the company after incorporation to ratify and adopt it.

A person who takes the initiative in forming a company and setting it in motion, owing fiduciary duties to the company and standing to profit from promotion only if fully disclosed to an independent board or existing members.

The principle from Salomon v Salomon that a company is a legal person distinct from its shareholders and directors, owning its own property, contracting in its own name and suing or being sued independently.

The exceptional process by which courts or statute disregard separate legal personality and hold shareholders or directors personally liable, for example for fraud, sham incorporation or statutory liability for unpaid debts.

The protection whereby a member's financial exposure is capped at the amount unpaid on their shares, or at the amount guaranteed, so personal assets are not used to satisfy company debts beyond that contribution.

The total amount raised or to be raised by issuing shares, divided into nominal or par value per share and paid-up value actually received; CAMA 2020 prescribes a minimum issued share capital for private and public companies.

The allocation of previously unissued shares in a company to a person, which under CAMA requires board resolution and, for private companies, must be completed within a prescribed period of the resolution.

The process by which a member passes legal title in shares to another, ordinarily by a duly executed instrument of transfer and registration of the transferee by the directors, subject to any pre-emption rights in the articles.

The statutory record a company must keep of its shareholders, showing names, addresses, shares held and amounts paid; it is prima facie evidence of membership and is open to inspection.

The yearly statutory filing with the Corporate Affairs Commission updating a company's registered particulars, including directors, shareholders, share capital and registered office, made within the period prescribed by CAMA 2020.

The statutory requirement to file particulars of a mortgage or charge created by a company with the Corporate Affairs Commission within a set period, failing which the charge is void against the liquidator and creditors.

A written acknowledgment of indebtedness by a company, often creating a charge over its assets, and typically issued under a trust deed securing repayment of principal and interest to holders.

Security over company assets: a fixed charge attaches to specific identified property, while a floating charge hovers over a shifting class of present and future assets until it crystallises on default, winding up or appointment of a receiver.

The obligations directors owe the company, including acting in good faith in its best interests, exercising powers for proper purposes, avoiding conflicts of interest and exercising reasonable care, skill and diligence.

A duty of loyalty and good faith owed by persons entrusted with power, such as directors and promoters, requiring them to act honestly, not to profit secretly from their position and to disclose conflicts.

The rule that a director or senior officer must not divert to themselves a business opportunity that belongs to, or is reasonably within the scope of, the company's activities without full disclosure and approval.

A situation where a director's personal interest or duty to another party may influence decisions affecting the company, requiring disclosure to the board and, where material, shareholder approval and abstention from voting.

A transaction between a company and its directors, officers or their connected persons, subject to disclosure, fair-value scrutiny and approval requirements under CAMA 2020 and applicable securities regulation.

A standard of judicial review under which directors who act in good faith, on an informed basis and in the honest belief that a decision serves the company are not second-guessed merely because the outcome was poor.

Proceedings brought by a shareholder on behalf of the company to enforce a right of action the company itself has failed to pursue, with the claimant seeking relief for the company rather than personally.

Unfairly prejudicial or discriminatory conduct by those controlling a company toward minority shareholders, for which CAMA 2020 provides a statutory petition to court for appropriate relief.

A claim brought by a shareholder in their own right, alleging infringement of a personal membership right, such as improper refusal to register a transfer or denial of access to company records.

A statutory ground for compulsory winding up where the court considers it just and equitable, historically used by minority shareholders where the company's substratum has failed or trust has broken down.

A solvent liquidation commenced by special resolution of members supported by a declaration of solvency, in which the members appoint the liquidator and the company's assets are distributed to shareholders.

An insolvent liquidation begun by members' resolution where no valid declaration of solvency can be made, so creditors control the process and appoint their own liquidator at a creditors' meeting.

A sworn statement by directors that, having inquired into the company's affairs, they believe it will be able to pay its debts in full within a stated period, permitting a members' voluntary winding up.

The process of collecting a company's assets, paying its liabilities and distributing any surplus to members, ending with dissolution of the company and the striking of its name from the register.

A person appointed, usually by a secured creditor or the court, to take possession of charged assets and manage or realise them for the benefit of the appointing creditor, often under a debenture.

Non-statutory guidance issued by regulators, such as the Nigerian Code of Corporate Governance, setting recommended practices on board composition, independence, risk management and disclosure, applied on a comply-or-explain basis.

A committee that oversees financial reporting, internal controls and the external audit; under CAMA 2020 Nigerian public companies must have a statutory audit committee with shareholder and director representatives.

An officer responsible for statutory records, filings and board administration; CAMA 2020 requires public companies to appoint a qualified secretary and permits private companies to dispense with one in specified circumstances.