ICSAN Corporate Law flashcards

32 cards. Read the term and the definition here. The deck at the top of this page is optional.

Salomon v Salomon

Case establishing that a company is a separate legal person distinct from its shareholders, so members are not liable for company debts beyond their shareholding.

Foss v Harbottle rule

The proper plaintiff for a wrong done to a company is the company itself, and the court will not interfere in internal management matters where the majority acts within the articles.

Pre-incorporation contract

A contract purportedly made on behalf of a company before incorporation; it binds the person who purported to act for the company, not the company, unless adopted after incorporation.

Corporate veil lifting

Disregarding a company's separate legal personality to hold members or directors liable, permitted only on recognised statutory or judicial grounds such as fraud, sham, or agency.

Certificate of incorporation

Document issued by the Corporate Affairs Commission as conclusive evidence that a company is duly registered and that the requirements of CAMA have been complied with.

Company limited by guarantee

A company without share capital whose members' liability is limited to the amount they guarantee; profits are applied to its objects and not distributed to members.

Single-member company

A company permitted under CAMA 2020 to have one member, who may also be the sole director, subject to statutory restrictions on the same person acting as secretary.

Memorandum of association

Constitutional document stating the company's name, registered office, objects, liability of members, share capital, and subscribers' declaration, which governs the company's external relations.

Articles of association

Document regulating the internal management of a company, constituting a contract between the company and its members and between members, subject to alteration by special resolution.

Promoter's fiduciary duty

A promoter must act in good faith, avoid secret profits, and account to the company for benefits received in connection with its formation.

Prospectus

Any notice, circular, or invitation offering shares or debentures to the public, which must contain prescribed particulars and be registered with CAC and approved by SEC.

Private placement exemption

An offer of securities to a limited number of persons or qualified investors that is exempt from the full prospectus requirements but subject to SEC notification rules.

Return of allotment

Statutory filing with the Corporate Affairs Commission within one month of allotting shares, stating the number and nominal value of shares allotted.

Capital maintenance doctrine

Rule prohibiting a company from returning capital to members except through lawful reduction, redemption, or winding up, thereby protecting creditors.

Preference shares

Shares carrying a fixed dividend and priority over ordinary shares on dividends and winding up, usually with restricted voting rights.

Register of members

Statutory record of shareholders kept by the company, which is prima facie evidence of membership and is open to inspection by members.

Duty of care and skill

A director must exercise the care, skill and diligence reasonably expected of a person with their knowledge and experience, measured both objectively and subjectively.

Interested director disclosure

A director with an interest in a transaction must disclose its nature and extent to the board, and is excluded from the quorum and voting on that transaction.

Corporate opportunity doctrine

A director may not divert a business opportunity that the company could have taken, even if the company was unable to exploit it at the time.

Loans to directors

CAMA 2020 restricts loans to directors and connected persons, requiring member approval and imposing stricter rules for public companies.

Special resolution

A resolution passed by not less than 75% of the votes cast at a general meeting, of which notice has been duly given, required for major constitutional changes.

Requisitioned EGM

A general meeting convened on the requisition of members holding at least 10% of paid-up capital, which the board must convene within 21 days.

Derivative action

Proceedings brought by a member on behalf of the company for a wrong done to it, requiring leave of the court and notice to the company.

Unfair prejudice petition

A member's application to court for relief where the company's affairs are conducted in a manner unfairly prejudicial to their interests.

Auditor's report

Statement by the auditor on whether the financial statements give a true and fair view and comply with accounting standards, laid before members at the AGM.

Annual return

Statutory filing with CAC containing particulars of the registered office, directors, secretary, share capital, members, and financial statements, due within 42 days of the AGM.

Scheme of arrangement

Court-supervised compromise between a company and its members or creditors, requiring class approval of 75% in value and court sanction.

Mandatory takeover bid

An offer required when a person acquires 30% or more of the voting shares of a public company, made to all shareholders on equal terms.

Squeeze-out right

The right of a bidder holding 90% or more of a target's shares to compulsorily acquire the remaining shares, subject to dissenters' rights.

Wrongful trading

Personal liability of directors who continued trading when they knew or ought to have known that insolvent liquidation was inevitable.

Declaration of solvency

A statutory statement by directors that the company will be able to pay its debts in full within a specified period, required for a members' voluntary winding up.

SCUML registration

Registration with the Special Control Unit against Money Laundering, required for designated non-financial businesses and professions to comply with AML/CFT obligations.