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NLS - Corporate Law Practice > CORPORATE GOVERNANCE IV > Flashcards

CORPORATE GOVERNANCE IV Flashcards

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1
Q

What does Section 331(1) CAMA say?

A

Every company is required to keep accounting records

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2
Q

What are accounting records used for?

A

They are used in preparing the company’s financial statements and also for conducting audit of the company’s accounts

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3
Q

How long do accounting records have to be kept for?

A

A minimum of 6 years from the date on which they were made

Section 332(2) CAMA

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4
Q

Where are accounting records meant to be kept?

A 
At the registered office of the company or such other place in Nigeria as the directors think fit
Section 332(1) CAMA
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5
Q

When must the directors determine the date in the year the financial statements shall be made up and what should they do when they decide?

A

They must determine at the first meeting of the Board and shall notify CAC within 14 days of such determination

Section 334(4) CAMA

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6
Q

What constitutes a financial statement of company?

A
  1. Statement of accounting policies*
  2. Statement of source and application of funds*
  3. Value addd statement for the year*
  4. Five-year financial summary*
  5. Balance sheet as at the last day of the year
  6. Profit and loss account or income and expenditure account
  7. Notes on the accounts
  8. Auditor’s Report
  9. Director’s Report
  10. Group financial statement (for holding company only)

*not compulsory for private companies

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7
Q

Who is entitles to receive financial statements?

A
  1. Every member of the company
  2. Debenture holders
  3. Any other person so entitled

Section 344(1) CAMA

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8
Q

What is the consequence of failure to deliver a copy of the financial statement to a person entitled to receive such statement?

A

The person entitles may demand for it and the company is obliged to deliver a copy within 7 days. Failure to deliver will make the company and every officer in default to be guilty of an offence

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9
Q

What is the penalty for delivering a defective financial statement?

A

Every director of the company at the time that the statement was delivered shall be guilty of an offence and liable to a fine

Section 348(1) CAMA

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10
Q

What is an audit?

A

An examination of a company’s accounting records to ascertain if there is compliance with the accounting police of the company and the standard accounting rules

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11
Q

How are the first auditors of a company appointed?

A

They are appointed by the directors at any time before the company commences business.

They continue to hold office until the conclusion of the next AGM

Section 357(5) CAMA

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12
Q

How long do auditors hold office for?

A

From the conclusion of the AGM where they are appointed to the the conclusion of the next AGM

(Can be re-appointed)

Section 357(1) CAMA

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13
Q

Who cannot be appointed as an auditor?

A
  1. An officer or servant of the company
  2. A person who is a partner of or in the employment of an officer or servant of the company
  3. A body corporate

Section 358 CAMA

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14
Q

Who can be appointed an auditor?

A
  1. A firm (provided all partners are qualified)

2. A person who is independent of the company

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15
Q

How can an auditor resign?

A

By depositing a Notice in writing at the company’s registered office

Copy of this notice must be submitted at CAC within 14 days of the deposit

Section 365 CAMA

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16
Q

Can a resigning auditor call for a meeting of the company?

A

YES, he can call for an extra-ordinary general meeting to discuss his notice of resignation

17
Q

How can a company remove an auditor?

A

By ordinary resolution of which special notice has been given

Section 362 CAMA

18
Q

Within what time must a notice of resignation be submitted to CAC?

A

It must be submitted to CAC within 14 days of passing the resolution

19
Q

What are the pre-conditions for an effective notice of resignation from an auditor?

A

Notice must contain either:
1. Statement that there are no circumstances connected with his resignation that need to be brought to the notice of the members/creditors
OR
2. Statement of any circumstances connected with his resignation that should be brought to the notice of the members/creditors

Section 365(2) CAMA

20
Q

When will a retiring auditor not be automatically re-appointed at an AGM?

A
  1. When he is not qualified for re-appointment
  2. A resolution has been passed at the meeting nominating some other person as auditor
  3. He has given the company notice that he does not want to bet e-appointed
21
Q

What happens when no auditors are appointed or re-appointed at an AGM?

A

The directors may appoint a person to fill the vacancy and notify the CAC within a week of making such appointment

22
Q

What is the audit committee?

A

The committee that oversees financial reporting and disclosure of a public company

23
Q

What is the role of the Audit Committee?

A
  1. It examines the auditor’s report and makes recommendations to the AGM
  2. It makes recommendation to the Board in regard to the appointment, removal and remuneration of the external auditors
24
Q

Who makes up the Audit Committee?

A

An equal number of directors and representatives of the shareholders, subject to a maximum of six members

25
Q

Can those on the Audit Committee be remunerated?

A

No

Section 359 CAMA

26
Q

How often must a company file annual returns?

A

At least once every year

Not including the year of its incorporation
Section 370 CAMA

27
Q

What is the time frame for filing annual returns?

A

Within 42 days of holding an AGM

Section 374 CAMA

28
Q

What are necessary forms for filing annual returns?

A

Form CAC 10 Small Company

Form CAC 10A Company with shares other than small company

Form CAC 10B Company listed by guarantee

Form CAC 10 C Exempted foreign company

Form CAC/IT4 Incorporated Trustee

Form CAC/BN/7 Business Name

29
Q

What is a small company?

A
  1. private company having share capital
  2. the amount of turnover/year is not more than N2 million
  3. Its net assets value is not more than N1 million or such amount fixed by CAC
  4. None of its members is an alien
  5. None of its members is a Government, Government Corporation or agency or its nominee
  6. Directors hold not less than 51% of the authorised share capital

Section 351 CAMA

30
Q

What are the consequences of failing to file annual returns?

A
  1. A fine of N1,000 for a public company and N100 for a private company payable by every director/officer of the company
  2. CAC may assume that the company is defunct and proceed to strike off its nam from the Companies Registry
  3. Within 14 days after service of notice to file its annual return, a member, creditor or CAC may approach the FHC to order the company to comply
31
Q

What is the procedure for striking off a defunct company?

A
  1. CAC send letter inquiring whether the company is carrying on business/in operation an requests reply within 1 month
  2. If there is now response within 1 month, CAC shall within 14 days send a second letter referring to the first and giving another month for the company to respond, stating that after 1 month it will publish a Notice in the Gazette with a view to strike off their name from the Companies Registry
  3. If within this 1 month they receive confirmation that the company is not carrying on business OR it fails to respond, CAC may publish in the Gazette and notify the company by post that at the expiration of 3 months from the date of the Notice it shall proceed to strike off the name of the company from the Companies Register and the company shall be dissolved
32
Q

What is the procedure for restoring a defunct company that was struck off?

A
  1. An application is made to the FHC within 20 years of publishing the notice
  2. If the court is convinced, it will make an order restoring the company to the Register of Companies
  3. The court may also make an order providing directions for placing the company in as nearly the same position as if the name had not been struck off at all
  4. The restoration takes effect upon delivery of a CTC of the order to CAC

Section 525 CAMA

NLS - Corporate Law Practice (13 decks)

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