Hi everyone. I am Barr. Amaka Obizolu, the principal partner of Amaka Obizolu & Co., today we continue our discussion on Nigerian Business Law and Tax System.
ALLOTMENT OF SHARES.
Every company shall within 2 months of allotment of shares and 3 months of transfer of shares issue a share certificate to the owner otherwise the person entitled to share certificate may issue a notice to the company requiring it to issue and deliver to him the share certificate, and if after 10days of receiving the notice, the company is still in default, he may apply to the federal high court for an order of delivery thereof.
As a business owner, be informed that at a point, your business may cease to exist, dissolve and or wound up. When such is done, winding up can be by court, could be voluntary, and under the court supervision. A question to be asked at this juncture is whose duty is it to bring an application for winding up of a company by court?
The following persons can bring a petition to court for winding up; the company, a creditor, the official receiver, a contributor, or a personal representative, of creditor, and the commission.
- Read also: Coronavirus Update- Death in UK Pass 30,000; Nigeria Records 195 new cases
- The Ban on Flights to Nigeria Extended by Four weeks with effect from Thursday
Circumstances leading to winding up of a company by the court are as follows;
- Where the company has by special resolution resolved that the company be wound up by the court.
- Default in delivering the statutory report to the commission or in holding the statutory meeting.
- Where the number of members of the company is reduced below 2.
- Where the company is unable to pay its debt 21 days after a notice is served.
- Where the court is of the opinion that it is just and equitable that the company should be wound up.
Voluntary winding up
- When the period fixed for the duration of the company expires.
- If the company resolves by special resolution that the company be wound up voluntarily
Note that voluntary winding up may either be members voluntary winding up and creditor voluntary winding up, and there are specified procedures for both members and creditors winding up which may not be detailed here for the purpose of time.
After a company is wound up, an application by way of petition brought by the company or member(s) or creditor at the date of dissolution of the company or personal representation of a deceased shareholder, the application must be made within 20 years of the notice of dissolution.
If the court is satisfied that at the time of the striking off, the company was carrying on business or in operation or that it is otherwise “just” to restore it to the register, it may order the name of the company to be restored.
- Read more: Barr. Amaka discusses Nigeria’s Business Laws and Tax System: What every Business Owner should Know: Part 1
- Barr. Amaka discusses Nigeria’s Business Laws and Tax System: What every Business Owner should Know: Part 2
Mergers, takeover and acquisition:
Prior to the reforms in the banking industry in Nigeria initiated by the CBN, mergers and acquisition were not popular and they were hardly mentioned.
Merger means any amalgamation of the undertakings or any part of the undertaking or interest of two or more companies and one or more corporate bodies.
Acquisition on the other hand means the takeover by one company of sufficient shares in another company to give the acquiring company control over that other company.
Section 8 and 99 (2) of investment and securities Act (ISA) are vested with the power to review, approve, and regulate mergers, acquisitions and forms of business combination.
Any company so desirous to merge, acquire or combine shall:
- File with the commission a pre-merger notice.
- File with the commission a formal application for approval of the proposed merger.
- Comply with post approval requirements.
Note that there are specified procedure for each of the above steps which cannot be detailed here for the purpose of time.
Where a person or group of persons acquire shares in a target company with the intention of taking over control of that company, a takeover bid been incorporated in a document shall be made by such person.
A takeover bid shall not be made unless an authority to proceed with takeover had been obtained from the commission, and the said authority shall be for a period of 3 months subject to renewal by an applicant.
Application for renewal shall be made within 14 days prior to the expiration of the authority and such renewal shall be for a period of not more than 3 months.
It’s of important to know that the person making a take over bid shall lodge with the commission a copy of the proposed budget for registration before it is dispatched, and the commission has the discretion to accept or refuse to register the bid, and on refusal by the commission, the applicant has a right to appeal to the Investment and Securities Tribunal.
- Read further: Barr. Amaka discusses Nigeria’s Business Laws and Tax System: What every Business Owner should Know: Part 3
- Barr. Amaka discusses Nigeria’s Business Laws and Tax System: What every Business Owner should Know: Part 4
Arrangement and Compromise
This deals on change in the rights and liabilities of members, debenture holders or creditors of a company or a class of them other than a change effected under the provisions of this Act. E.g. arrangement on sale of company’s property during member’s voluntary winding up.
After the company has resolved that the company be put into members voluntary winding up and that the liquidator be authorized to sell the whole or part of its undertakings to another company and to distribute the same in specie among the members of the company in accordance with their rights in liquidation.
Join us for the sixth instalment in the following day to discuss “The Nigerian Tax Systems”.
Amaka C. Obizolu Mrs. (LL.B, BL)
+234 803 5404 780