ICSAN Corporate Law key terms

The legal principle that a registered company is a separate person distinct from its members and directors, with its own rights, property, liabilities and perpetual succession.

The rule from Salomon v Salomon that a company is a distinct legal person even where one individual owns nearly all its shares, so members are not liable for company debts.

The court's exceptional power to disregard a company's separate personality and hold members or directors personally liable, for example where the company is a mere sham or fraud device.

A company treated as the mere instrument or agent of a controlling individual, so that the person and company are regarded as one for liability purposes.

An agreement made in the company's name or on its intended behalf before registration; it binds the promoter personally unless the company later adopts it after incorporation.

A person who takes the initiative in forming a company, raising its initial capital and setting up its structure, owing fiduciary duties to the company and initial investors.

The company's foundational constitutional document stating its name, registered office, objects, share capital and the subscribers' agreement to take shares.

The company's internal rulebook governing management, meetings, share transfers, directors' powers and proceedings, subordinate to the statute and the memorandum.

The provision in the memorandum defining the business purposes the company may pursue; acts outside it may be restrained or, under statute, may still bind the company.

Beyond the powers of the company or its officers. A transaction outside the objects clause or an officer's authority may be unenforceable or give rise to personal liability.

The rule that persons dealing with a company are deemed to know its registered public documents, though statute may protect those dealing in good faith from internal irregularities.

The presumption that outsiders may assume a company has complied with its internal procedures, so they need not inspect the articles before dealing with its officers.

The document issued by the Corporate Affairs Commission evidencing that a company has been registered and has come into existence as a legal person.

The Nigerian statutory regulator responsible for incorporating companies, registering business names and charges, and maintaining the public register of corporate records.

The protection limiting a shareholder's exposure to the amount unpaid on their shares, so personal assets are not used to satisfy company debts.

The total nominal value of shares issued or authorised to be issued by a company, representing the capital contributed or promised by members.

The fixed face value assigned to each share, used to calculate capital and any premium or discount on issue, distinct from its market price.

The amount received on issuing shares above their nominal value, which is treated as a restricted reserve and cannot be distributed as dividend.

Shares issued on terms allowing the company to buy them back at a stated future date or on notice, subject to statutory capital and payment conditions.

The doctrine that a company's capital must not be returned to members except through lawful procedures such as dividends from profits or a permitted reduction.

A person entered in the register of members as holding shares, whose name evidences membership and the rights attached to those shares.

The entitlements of a member, including voting, receiving dividends, inspecting records, receiving notice of meetings and applying for relief against oppression.

A statutory action allowing a member to seek relief where company affairs are conducted in a manner oppressive, unfairly prejudicial or unfairly discriminatory to them.

Proceedings brought by a member on the company's behalf to enforce a right of action the company itself has failed or refused to pursue against wrongdoers.

A person appointed to manage the company's business and affairs, owing fiduciary and statutory duties to act in the company's best interests.

A person whose directions or instructions the board is accustomed to follow, treated as a director for duties and liabilities even without formal appointment.

A person who acts as a director in fact, holding out and exercising board functions, though never validly appointed or registered as one.

The fiduciary and statutory obligations of directors, including good faith, care and skill, avoiding conflicts, not misusing company property and disclosing interests.

A situation where a director's personal interest or duty to another party clashes with the company's interest, requiring disclosure and often abstention from voting.

A contract or arrangement between the company and a director, substantial shareholder or connected person, requiring disclosure and approval safeguards.

A formal disclosure document inviting the public to subscribe for or buy a company's securities, containing prescribed information about the issuer and the offer.

The sale or invitation to subscribe for shares, debentures or other investments, whether by public offer, rights issue or private placement.

An offer of securities to a restricted group of selected investors rather than the public, avoiding the full public offer disclosure regime.

The periodic statutory filing with the Corporate Affairs Commission updating a company's registered particulars, share capital, members and directors.

The company's statutory record of shareholders, showing names, addresses, shares held and amounts paid, which is prima facie evidence of membership.

A shareholder decision passed by the required statutory majority, typically three-quarters of votes cast, used for major changes such as altering the articles.

A shareholder decision passed by a simple majority of votes cast at a properly convened general meeting, used for routine matters such as appointing directors.

A court- or regulator-approved arrangement combining two or more companies into one, transferring assets and liabilities to the surviving or new entity.

A statutory compromise or arrangement between a company and its members or creditors, binding once approved by the requisite majorities and the court.

The acquisition of control of a company by purchasing sufficient shares, usually governed by rules on mandatory offers and fair treatment of shareholders.

The process of ending a company's existence by realising assets, paying creditors and distributing any surplus to members before dissolution.

The condition where a company cannot pay its debts as they fall due or its liabilities exceed the value of its assets.

Statutory or informal measures, such as administration or a compromise, intended to keep a financially distressed company operating as a going concern.

A distribution of profits by a company to its members, lawful only out of distributable profits and not out of capital.