COMPANY PROCEEDINGS, INVESTMENT DISPUTES RESOLUTION, INVESTMENTS AND SECURITIES TRIBUNAL

Question 1

What are the GOVERNING LAWS AND PROCEDURAL RULES?

Answer 1

1. Companies Proceeding Rules 1992.
2. Companies Winding up Rules 2001.
3. Federal High Court Civil Procedures Rules 2009.
4. Securities and Exchange Commission Consolidated Rules 2013.
5. Investment and Securities Tribunal Procedure Rules 2003.

Question 2

What are the modes of commencing company proceedings?

Answer 2

1. Originating Application
2. Originating Motion
3. Originating summons
4. Petition

Question 3

Is the Federal High Court the only court to institute an action arising from the provisions of CAMA?

Answer 3

NO!
SEC 734(1) stipulates that any court where the dispute arose might have jurisdiction where it is a court of competent jurisdiction.

Question 4

What are the applications to be made by originating motion?

Answer 4

1. Application under section 23(2) for an order that the company be relieved from the consequences of default in complying with conditions constituting the company as a private company.
2. Application under section 51(9), 154(3) and 355(5) CAMA. – for an order extending the time for delivery to CAC any document required by these sections
3. Application under section 115(1) CAMA– for the rectification of the register of members of a company.
4. Application under section 358 CAMA – for an order declaring that the affairs of a company ought to be investigated by an inspector appointed by CAC.
5. Application under section 362(3) & (4) CAMA – declaring obstruction of inspectors to be treated as contempt of court.
6. Application under section 691(1) CAMA – for an order declaring a dissolution of a company which has not been wound up to have been void.

Question 5

What are the APPLICATIONS TO BE MADE BY ORIGINATING SUMMONS?

Answer 5

All applications to made to the court must be by Originating Summons, except from:
1. Applications under Rule 5 and Rule 6 of the Companies Proceedings Rules,
2. Applications pertaining to winding up of a company, Rule 2.
3. Where the CAMA provides another means of commencing the application.

Question 6

What are APPLICATION TO BE MADE BY PETITION?

Answer 6

1. To cancel the alteration of the object clause-S 51(1) &(2)
2. To confirm the reduction of the share capital of the company-S 131 CAMA
3. To confirm the reduction of the share premium acc of the company-S 145 CAMA
   4.To cancel any variation or abrogation of the rights attached to any class of shares in a company-S 167(1)
4. Winding up and final dissolution of the company-S 641
5. for relief on the ground that the affairs of a company are being conducted in an illegal or oppressive manner-S 354(1)

Question 7

What is the body responsible for exclusive jurisdiction over investment disputes?

Answer 7

Investments and securities Tribunal(IST)
IT LACKS CRIMINAL JURISDICTION
Any matter arising from SEC goes to the IST.

Question 8

What is the COMPOSITION OF THE INVESTMENT AND SECURITIES TRIBUNAL?

Answer 8

• The Tribunal is composed of ten (10) members appointed by the Minister of Finance.
a. A full-time chairman
b. Four other members who must be full time members, and which three (3) of them must be legal practitioners
c. Five other members, which are part time members who are professionals with in depth knowledge and expertise in securities law and capital market operations.
QUOROM IS 3

Question 9

JURISDICTION OF THE ISA TRIBUNAL?

Answer 9

The tribunal has exclusive jurisdiction on all matters arising from the ISA.

1. A decision of the Commission in the operation and application of this Act, and in particular, relating to any dispute
2. Between Capital market operators
3. Between Capital market operators and their clients
4. Between Capital market operators and self-regulatory organizations
5. Between An investor and a securities exchange or capital trade point or clearing and
   settlement house.
6. The Commission and self-regulatory organizations
7. A Capital market operator and the Commission.

Question 10

What is the Tribunal Appellate jurisdiction?

Answer 10

They can hear appeals coming from the ADMINISTRATIVE PROCEEDINGS COMMITTEE OF SEC

-AN appeal from APC SEC-filed within 30 days of the receipt of the copy of the order sought to be appealed
-Give SEC 14 days’ notice in writing of his intentions to institute an action or appeal against its decision.

Question 11

When must judgement be given by the Tribunal?

Answer 11

Within 90 days and it is enforceable like a court judgement upon the registration of the award in court.

Question 12

Appeals from the IST lies to where?

Answer 12

The COURT OF APPEAL and subsequently the SUPREME COURT

Question 13

What is the composition of APC of CAC?

Answer 13

1. The Registrar General who shall be the chairman
2. Five members, 4 shall be from the operational department and 1 from the compliance department not less than the rank of directors.
3. A rep from the fed min of industry, trade and investment not below grade level of a director
   Total of 7 members-S 851 CAMA

Question 14

WHO ARE PERSONS THAT THE COMMITTEE MAY CO-OPT AT ITS MEETINGS?

Answer 14

1. Association of shareholders
2. Association of Trustees
3. Association of registrars
   They don’t count for determining the quorum.
   THE QUOROM IS 4

Question 15

Qualifications of the APC
SECRETARY OF THE COMMITTEE OF THE APC of CAC?

Answer 15

a. a legal practitioner with at least 10 years post-call experience, and
b. an officer of the Commission

Question 16

Jurisdiction of APC of CAC?

Answer 16

DISPUTES ARISING FROM
1. Names of companies, limited liability partnership, limited partnership, business names and incorporated trustees;
2. Shares in private companies; (If it is shares in a public company, it is the ISA), and
3. Appointment or removal of directors, partners or trustees.

Question 17

What are the sanctions that may be imposed by the committee?

Answer 17

1. Imposition of administrative penalties
2. Suspension or revocation of registration
3. Recommendation for criminal prosecution

Question 18

Appeals from APC of SEC is to?

Answer 18

Upon receipt of the decision, an unsatisfied party may apply to IST within 30 days

Question 19

What is statutory declaration of solvency!l?

Answer 19

It is a statutory declaration made by the directors, to the effect that they have made a full inquiry into the affairs of the company and that, having so done, they have formed the opinion that the company will be able to pay its debts in full within such period, NOT EXCEEDING 12 MONTHS from the commencement of the winding up, as is specified in the declaration

Question 20

procedure for members voluntarily winding up/arrangement on sale?

Answer 20

1. Board resolution that the company be wound up voluntarily
2. statutory declaration of solvency by the directors-simply stating that the company can pay its debt up to 12 months. File this 5 weeks before the proposed date for winding up at CAC
3. Convene a general meeting
4. Special resolution to wind up, signed by two directors
5. Appointment of a liquidator
6. File CAC 14(Notice of statutory declaration of solvency) & CAC 15(Appointment of liquidator) to the CAC within 15 days
7. Publish the voluntarily winding up in the gazette & two daily newspaper
8. Publish the appointment of the liquidator in two daily newspapers within 14 days
   Deliver your original certificate of incorporation to the CAC for cancellation
   The company will be deemed dissolved after the expiration of 3 months from the date the application was made
   SEC 626-633

similar procedure to arrangement on sale, just that the directors will create a scheme of arrangement on sale & that the liquidator will hold meetings with the creditors/shareholders-SEC 714

Question 21

who may bring an action for petition?

Answer 21

1. The company or a director;
2. A creditor, including a contingent or prospective creditor of the company;
3. The official receiver;
4. A contributory;
5. A trustee in bankruptcy to, or a personal representative of a creditor or contributory;
6. The CAC under section 323 of CAMA
7. A receiver if authorized by the instrument under which he was appointed.

Question 22

effect of appointment of a liquidator

Answer 22

Powers of the directors shall cease

Question 23

powers of a liquidator?

Answer 23

-Bring or defend any action in the name and on behalf of the company
• Carry on business of the company
• Appoint legal practitioner or any professional to assist him
• Pay any classes of creditors in full
• Make compromise and arrangement with creditors
• Compromise all calls and liabilities to calls, debts etc
• Power to sell property of the company
• Execute all contracts on behalf of the company

Question 24

Arrangement and compromise procedure?

Answer 24

-proposal of scheme of arrangement by the members, creditors or directors
-apply to the court for a court ordered meeting
-notice of COM will be sent out together with an explanatory circular of the scheme of arrangement
-For the arrangement to be valid, at the COM, a resolution of not less than 3/4 of the members must be passed
-Apply to FHC to sanction the resolution passed
-The FHC will refer the scheme to SEC to investigate its fairness
-Appointment of inspectors
-If the court is satisfied, it shall sanction -Sanctioning of the scheme by the court: If the court is satisfied as to the fairness of the scheme, it shall sanction same. Upon the sanctioning of the scheme as fair by the court, it shall become binding on the members, creditors or classes thereof
-Deliver a CTC of the order to SEC.
SEC 710/711

Question 25

Documents to be prepared for arrangement and compromise?

Answer 25

1. Proposed scheme of arrangement
2. Application to FHC for court ordered meeting
3. Court order
   
   4. Notice of general meeting to pass special resolution
4. Explanatory note
5. Special Resolution Sanctioning Scheme
6. Inspectors Report
7. CAC Notification
8. Application to FHC to sanction scheme of arrangement

Question 26

procedure for takeover offer?

Answer 26

1. The Offeror makes a takeover offer to the Offeree’s company
2. The Offeror must have acquired at least 90% of the shares of the Offeree’s
   company within 4 MONTHS of making the offer.
3. In computing the 90% shares of the Offeree’s company, shares owned by the either the Offeror’s company, its subsidiary company
4. After the expiration of 4 months,
   within two, give 2 months notice to the dissenting members of the intention to acquire their shares
   SEC 712

Question 27

what is a conglomerate merger?

Answer 27

Conglomerate Mergers:
• Conglomerate merger is when it involves the fusion of totally unrelated businesses.
• A conglomerate merger is a combination or fusion of two or more companies that engage
in completely unrelated aspects of business. See Rule 421(1) SEC Rules.