CORPORATE GOVERNANCE III Flashcards
Who is a member of a company?
A person who has subscribed to the memorandum OR agreed in writing to become a member and is entered into the register of members
Section 79(2)
What is the minimum number of members of a company?
2
What is the maximum number of members of a company?
There is no maximum in a public company
A private company cannot exceed 50 members
Who cannot become a member of a company?
- A person of unsound mind
- An undischarged bankrupt
- A corporate body in liquidation
Can an infant become a member of a company?
General Rule: An infant can become a member of a company Section 18 CAMA
HOWEVER
An infant shall not be counted for the purpose of determine the legal minimum number of members Section 80 CAMA
How can you acquire membership of a company?
- Transfer
- Allotment
- Transmission
- Subscription
What is subscription?
Section 79(1) CAMA
Takes place at the time of registering the company when the subscribers agree to take a certain number of shares in the company or agree to indemnify the company’s liabilities to a certain sum of money
What is allotment?
Allotment of a specified number of shares to an applicant by a company
Section 125 CAMA
How long does a company have to respond to a request for allotment of shares by an applicant?
42 days
They must notify the applicant of allotment or send a letter of regret with a refund where the application is denied
What is Transfer?
This involved the purchase of shares from an existing member of a company or a transfer of shares of an existing shareholder by way of gift
After the transaction the name of the new holder of shares is entered into the company’s register of members
Section 151 CAMA
What is transmission?
This occurs where a person succeeds to shares upon death or bankruptcy of a member
After the execution of the relevant instrument transmitting the shares is registered, the name of the new holder/beneficiary of shares is entered into the company’s register of members
Section 155 CAMA
What are some rights of a member of a company?
- right to attend company meetings
- right to vote in company meetings
- right to receive notice of meeting
- right to receive dividend when declared by the board
- right to transfer shares as personal property
- right to demand poll
- right to inspect minutes of meeting
- right to financial reports
What are the different types of general meetings that can be held by a company?
- Statutory meeting
- Annual General meeting
- Extra-ordinary General Meeting
- Court-ordered Meeting
What is a statutory meeting?
A meeting which must be held by public companies within 6 months of the date of incorporation
What is the procedure for holding a statutory meeting?
The directors shall send out a statutory report with notice of the meeting at least 21 days before the meeting
The report shall be certified by at least 2 directors and shall be sent to CAC at the time of sending it to members. The meeting must be held in Nigeria
Section 211 CAMA
What are the contents of a statuary report sent out ahead of a statutory meeting?
- Total number of shares allotted and the consideration for which they have been allotted
- Total amount of cash received in respect of the shares
- Names, addresses and descriptions of directors, auditors, secretary of the company
- Particulars of any pre-incorporation contract
- Any underwriting contract that has not been carried out and the reasons
- The arrears if any due on calls from every director
- The particulars of any commission or brokerage paid or to be paid in connection with the issue or sale of shares or debentures
- An abstract of the receipts of the company and of the payment made from them up to date
Section 211(3)(4) CAMA
What is the penalty for failure to hold a statutory meeting?
It is an offence for which all the officers of the company are liable to a fine
It is also a ground on which the company ay be wound up pursuant to Section 408 CAMA
What is an Annual General Meeting?
A meeting which must be held by all companies in each year
When must the first AGM of a company be held?
Within 18 months of incorporation after which the company need not hold another AGM in that same year or the following year
There can be no extension of time for this
Section 213 CAMA
What is the maximum time that can pass between one AGM and the next?
15 months however CAC may extend the period by not more than 3 months
Where must an AGM be held?
Anywhere in Nigeria
What the of business is transacted at an AGM?
Ordinary business and special business
What is the ordinary business of an AGM?
- Declaration of dividend
- Presentation of financial statements and reports of Directors and Auditors
- Election of directors in place of those retiring
- Appointment of auditors
- Filing of remuneration of auditors
- Appointment of members of the audit committee
Any other business is special business
What can a shareholder do if the Board of Directs has failed to hold the company’s AGM?
Section 213(2) CAMA says he can apply by way of petition to the CAC to issue a directive to the company to hold the AGM
What is an Extra Ordinary General Meeting?
An EGM is a meeting held at any time to transact business that cannot be delated till the next AGM
Where can an Extra-ordinary GM be held?
Anywhere at any time
What sot of business is transacted at an EGM?
Only special business
Who can convene an EGM?
- The Board of directors
- Any director if there are not enough in Nigeria to form a quorum
- Members of a company holding not less than 1/10th of the paid up voting share capital / voting rights by way of Requisition
Section 215 CAMA