A member of a company is a
person having constituent proprietary interest in the company and whose name
has been entered in the
Register of Members.
A person may become a member of company in either of
the following ways –
1.
By subscription;
2.
By allotment and registration;
3.
By transfer; or
4.
By transmission.
SUBSCRIPTION
Upon registration, the subscribers of the memorandum
of association shall become members and their names must be inserted in the
register of members. In essence, they shall be deemed to have agreed to become
members. The first members acquire their membership by subscription. They must together subscribe to shares
amounting in value to at least 25 per cent of the authorised
share capital – sections 79(1) and
27(2)(b) of CAMA.
Section 27(3) of CAMA now enables a subscriber of the memorandum
to hold shares as a trustee for another person but he shall disclose in the
memorandum that fact and the name of the beneficiary.
A subscriber must
take and pay for all the shares subscribed by him when calls are duly made – Alexander v. Automatic Telephone Co.
(1900) 2 Ch. 56 CA, and the shares must be taken from the company.
Where a subscriber takes equivalent shares from another member, he is still
liable to pay for all the shares he subscribed for – Migotti’s case (1867) LR 4 Eq. 238.
ALLOTMENT AND REGISTRATION
On an application for shares by an individual, the
company may allot shares to him by notifying him of the acceptance of offer
made in his application. He then becomes a member and entitled to have his name
entered in the Register of Members. Thus, there must be an agreement to become
a member and an entry in the register – Berliet Nigeria Ltd. v. Mordi Francis (1987)
2 NWLR (Pt. 58) 673, per Kutigi JCA.
Where the company accepts the application, the company
is expected to make an allotment to the applicant and within 42 (forty two)
days notify the applicant of the fact of the allotment and the number of shares
allotted to the applicant – sections 124
– 129 of CAMA.
TRANSFER
This is done from one member to another followed by
registration or by transmission from a deceased shareholder to his personal
representatives – sections 115 and 151
of CAMA.
The transfer from an existing member to another may be
by sale, gift or some other transaction which, to all intents and purposes,
must be lawful. Consequently, a holder of shares of a company may validly elect
to transfer those shares; and a person to whom the shares are transferred
becomes the holder of the shares, and a member when his name is entered in the
Register of Members to replace the former holder.
TRANSMISSION
This is an involuntary transfer occurring on the death
or bankruptcy of a member. The owner of the shares on the occurrence of such
events will automatically vest (by operation of law) in the personal
representatives in the case of a dead member, and trustee in bankruptcy in the
case of a bankrupt member respectively, and he shall become a member of the
company upon the registration of his name in the Register of members – section 155 of CAMA.
TYPES OF
COMPANY MEETINGS
Meetings are important organs of company management.
The effective management of the company can be well achieved through the
instrumentality of meetings to enable directors brainstorm and cross fertilise
their ideas in the best interest of the company and its members.
There are 3 (three) types of meetings through which
shareholders may exercise their powers. These are –
1.
Statutory meeting;
2.
Annual General Meeting (AGM);
3.
Extra-ordinary General Meeting; and
4.
Court-ordered meeting.
STATUTORY
MEETING
This is a type of meeting that must be held by every
‘public company’ within a period of six months from the date of incorporation – section 211(1) of CAMA. The directors
are required to forward to every member of the company, statutory reports at
least 21 days before the meeting which must contain the following –
(a)
The total number of shares allotted;
(b)
The total amount of cash received by the company in respect
of the shares allotted;
(c)
The names, addresses and description of directors, auditors,
managers, if any, and secretary of the company;
(d)
The particulars of any pre-incorporation contracts together
with the particulars of any modification thereon;
(e)
Any underwriting contract that has not been carried out and
the reasons therefore;
(f)
Any arrears due on calls from every director; and
(g)
Any particulars of any commission or brokerage paid in
connection with the issuance of shares – section
211(3) of CAMA.
Members at the meeting are free to discuss any matter
relating to the formation of the company and the commencement of its business
or any matter that arises from the statutory report – section 211(8) of CAMA.
The statutory report must be certified by at least 2
directors and delivered to the Corporate Affairs Commission for registration
and copies sent to members – section
211(6) of CAMA. By section 408(b) of
CAMA, a company would be wound up by a Court where the company fails to
deliver its statutory report or to hold its statutory meeting.
It is an offence under the Act not to hold statutory meetings
and if any company is in default, the company and its officers are guilty and
are liable to the payment of a fine of N50 (fifty naira) for every day that the
default continues – section 212 of CAMA.
ANNUAL GENERAL
MEETINGS
Every company (private or public) is required to hold
its annual general meeting every year in addition to any other meeting and a
period of 15 (fifteen) months must not elapse between the date of annual
general meeting of a company and another – section
213(1) of CAMA. Such meeting must be between January to December – Gibson
v. Barton (1975) LR 10 GB 329. But a company which holds its first
annual general meeting within 18 months of its incorporation needs not hold it
in that year or in the following year – section
213(1)(a) of CAMA.
For subsequent annual general meetings, Corporate Affairs
Commission may extend the time for holding the meeting by not
more than 3 (three) months – section 213(1)(b) of CAMA.
Where default
is made in holding annual general meeting, any member may apply to the
Commission, and the Commission may call or direct the calling of a general
meeting and give such ancillary or consequential directions as it thinks
expedient. Such directions may include holding that one member of the company
present in person or by proxy shall constitute a quorum and any decision made
by such company shall bind all the members – section 213(2) of CAMA.
Such meeting done on the direction of the Commission
shall be deemed to be an annual general meeting of the company. But where it is
held after the year in default of holding the meeting, it will not be treated
as that year’s annual general meeting unless at the meeting, the company
resolves that it shall be treated as its annual general meeting. Such copy of
the resolution shall be filed with the Commission within 15 (fifteen) days
after it has been passed – section
213(3) & (4) of CAMA.
Where there is default to hold annual general meeting
or to comply with the Commission’s direction, the company and every officer of
the company who is in default shall be guilty of an offence and be liable to a
fine of N500.00 (five hundred naira); and a fine of N25 (twenty five naira)
where there is failure to deliver a copy of the resolution to the commission as
regards adopting a meeting as its annual general meeting – section 213(5) of CAMA.
The normal business (ordinary business) that are
transacted at the annual general meeting are declaration of dividend, the
presentation of the financial statement and reports of the directors and
auditors, the election of directors, the appointment and fixing of remuneration
of auditors. Any other business aside these shall be considered as special
business – section 214 of CAMA.
EXTRA-ORDINARY
GENERAL MEETING
The meetings of
a company which are not statutory meeting or annual general meeting are called
extra-ordinary general meetings. Such meetings need not be held in Nigeria.
The power to
convene an extra-ordinary meeting is vested on the board of directors or any
other director for that matter, or any member(s) who held, at the date of the
requisition not less than 1/10 (one-tenth) of the paid up
capital or not
less than 1/10 (one-tenth)
of the total voting rights of
members where the company has no share capital – section 215(1) & (2) of CAMA.
If after 21 days of the deposit of the notice of requisition,
the directors fail to call a
meeting, the requisitionists may themselves call the meeting. The meeting shall
not be held after the expiration of 3 months of the deposit
– section 215(4) of CAMA.
All business transacted at an extra-ordinary general
meeting shall be deemed special business – section
215(8) of CAMA.
COURT-ORDERED
MEETINGS
The court may, either of its own motion or on the
application of any director of the company or of any member of the company who
would be entitled to vote at the meeting order the meeting of the company or
board – section 223 of CAMA.
Such meeting that is called and held is deemed to be a
meeting of the company or that of the board of directors duly called, held and
conducted – section 223(3) of CAMA.
The court may order a meeting suo motu when an action has been brought in the name of the company
and the court wishes to ascertain whether the action has the support of the
majority of its members – Hogg v. Cramphorm (1967) Ch. 254; Dipcharima
v. Ali (1974) 1 All NLR 420.
The court also has powers to give ancillary relief and
make consequential orders where it has ordered a meeting in the interest of the
company and the members – Italcomm (Western Nig.) Ltd. v. Scavuzzo
& Anor. (1974) 3 ALR Comm. 73. Such powers must be in respect of
matters to be considered by the court-ordered meeting. In Iro v. Robert Park (1972) 1 All
NLR 474, the Supreme Court set aside the ancillary directions granted
by the lower court on the ground that it exceeded the powers conferred by the
Act to order such meetings – Okeowo v. Migliore (1979) 11 SC 138;
Ige-Edaba v. West African Glass Industries Ltd (1977) 3 F.R.C.R 171.
TYPES OF
RESOLUTIONS
This means the
decisions taken at company meetings arrived at through voting from members who
have voting rights.
There are two
types of resolutions viz:
1.
Ordinary resolution; and
2.
Special resolution.
ORDINARY RESOLUTION
This is defined
as a resolution passed by a simple majority of votes cast by members entitled
to vote in person or by proxy at a general meeting – section 233(1) of CAMA.
Ordinary
resolutions are used for –
1.
Ordinary business of
an annual general meeting;
2.
Increase of capital;
and
3.
Removal of a director.
SPECIAL RESOLUTION
This is a
resolution passed by a majority of 75% or not less than ¾ (three-forth majority) at a general meeting of which not less than 21
(twenty-one) days notice specifying the intention to pass the resolution as a
special resolution has been duly given – section
233(2) of CAMA. However, a majority of those entitled to attend and vote,
holding 95% of the shares giving the right, or 95% of total voting rights (in
cases of a company not having a share capital) may agree to shorter notice – section 233(2) of CAMA.
Situations
where special resolutions are required can be in any of the following –
1.
To alter the objects
clause of the memorandum – section 46 of
CAMA;
2.
To change the name of
the company – section 31(3) of CAMA;
3.
To alter any provision
in the memorandum – section 44(5) of
CAMA;
4.
To reduce capital, on
the authorization of the article of association with the consent of the court –
section 106(1) of CAMA;
5.
To make the liability
of the directors unlimited on the authorization of the articles of association
– section 289 of CAMA;
6.
To effect a winding-up
by the court – section 408(a) of CAMA;
7.
Winding-up voluntarily
– section 457(b) of CAMA;
8.
To re-register a
private company with a share capital as a public company – section 50(1)(a) of CAMA;
9.
To re-register an
unlimited company as a private company limited by shares – section 52(1) of CAMA;
10.
To re-register a
public company as a private company – section
53(1)(a) of CAMA;
11.
To reduce any capital
redemption fund – TABLE ‘A’ Article 6 of
CAMA;
12.
To reduce any share
premium account – TABLE ‘A’ Article 6 of
CAMA;
13.
To create reserve
capital – section 134 of CAMA; and
14.
To alter the articles
of association – section 48(1) of CAMA.
All
resolutions shall be passed at a General Meeting otherwise it shall not be
effective. But for a private company a written resolution signed by all members
is as valid and effective as if passed in a General Meeting – section 234 of CAMA.
Where there is
default, every officer of the company who is in default shall be guilty of an
offence and liable to a fine of N500.00 (five hundred naira) – section 235(7) of CAMA.
A resolution
requiring special notice is also not effective unless notice of the intention
to move it has been given to the company not less than 28 (twenty eight) days
before the meeting which is to be moved and notice of the resolution shall be
given by the company to the members in the same manner – section 236 of CAMA.
Section 237 of CAMA provides that printed copy
of certain resolutions and agreements must be sent to the Corporate Affairs
Commission within
15 days of passing the resolution for registration.
These resolution and agreements are enumerated in section 237(4) of CAMA as follows:
(a) Special resolution
(b) Unanimous resolution, on issue, which requires
special resolution
(c) Unanimous class resolution
(d) Resolution requiring a company to wind up voluntarily passed under section 457(a).
Where a company fails to submit printed copies of certain
resolutions and agreements to the Commission, the company and every officer in
default shall be guilty of an offence and liable to a fine of N5 (five naira)
for each copy in respect of which default is made – section 237(5).
PREPARATION AND PROCEEDINGS
OF MEETINGS
In
Caruth
v. ICI Ltd. (1937) AC 707 at 761, it was stated that the proceedings are
largely regulated by the Act and the articles and the details of the conduct of
the meeting are decided by the meeting itself under the direction of the
chairman.
The
following should be noted –
1. To
maintain effective control over the company and monitor the executive and
management, the board should meet regularly and not less than once in a quarter
with sufficient notices and have formal schedule of matters specifically
reserved for its decision.
2. It
should be conducted in such a manner as to allow free flow of discussions.
There should be enough time allocated to shareholders (members) to allow them
to speak and to enable them to contribute effectively at the meeting.
MINUTES OF MEETING
This is one of
the statutory books to be kept by a company. Thus, every company must keep
minutes of the proceedings at general meetings, board meetings, and manager’s
meetings, if any – section 241(1) of
CAMA.
The minutes, if
signed by the chairman of the meeting or the next succeeding meeting, are
evidence of the proceedings. They are normally only prima facie evidence – section
241(2) of CAMA. Though section 224(2) of CAMA provide for the exception to
the prima facie evidence.
Where minutes
have been made in accordance with the Act, the meeting is deemed duly held and
convened, the proceedings duly had, and appointments of directors, managers, or
liquidators valid, until the contrary is proved – section 241(3) of CAMA.
Failure to keep
minutes of the proceedings will make the company and every officer in default
liable to a fine of N500.00 (five hundred naira) – section 241(4) of CAMA.
The minutes
books of proceedings at general meetings must be kept at the registered office
of the company, and must be open to inspection for at least 6 (six) hours a day
during business hours to any member free – section
242(1) of CAMA. Though, reasonable restrictions may be imposed by the
articles or general meeting.
Any member is
entitled to a copy of the minutes within 7 (seven) days on payment of a small
charge (a charge not exceeding 10 kobo for every hundred words) – section 242(2) of CAMA.
Refusal of
inspection or failure to send a copy within the proper time, the company and
every officer in default will be liable in respect of each offence to a fine of
N25 (twenty five naira) – section 242(3)
of CAMA.
The courts are
empowered to order inspection or the provision of copies if the company fails
to comply – section 242(4) of CAMA.
The provisions
dealing with general meetings of the company shall apply to any class meetings
except excluded by the Act – section 243
of CAMA.
ATTENDANCE
Every person
who is entitled to receive notice of a general meeting of the company as
provided by section 227 of CAMA is entitled to attend a meeting – section 228 of CAMA.
Every member
shall have a right to attend any general meeting of the company in accordance
with the provisions of section 81 of CAMA – section 227(1) of CAMA.
NOTICES
A proper notice
of every general meeting must be given to members unless the articles otherwise
provide – Smyth v. Darley (1849) 2 HL Cas 789; Onwuka v. Taymani (1965) LLR 62;
Young v. Ladies Imperial Club (1920) 2 KB 523.
Such notice
must contain the requisite information, and sufficient time must be allowed and
the notice must be properly served – Imonioro v. Seemuth Electro Eng. (Nigeria)
Ltd, Suit No. FRC/L45/78 of 12th March 1981 (unreported)
Notice of all
types of general meetings is generally fixed at 21 days from the date on which
the notice was sent out – section 217(1)
of CAMA. However, section 217(2) of
CAMA provides for situations where a shorter notice is permissible.
As regards to
the contents of the notice; the notice must specify the place, date and time of
the meeting, and the general nature of the business to be transacted thereat in
sufficient detail to enable those to whom it is given to decide whether to
attend or not, and where the meeting is to consider a special resolution, the
terms of the resolution must be set out – section
218(1).
A resolution
which is not covered by the terms of notice cannot validly be passed and if it
is a special resolution, the exact wording of the resolution must be given. In Re
Moorgate Mercantile Holdings Ltd. (1980) 1 W.L.R 277; (1980) 1 All ER 40, Slade
J. said thus:
“There
must be absolute identity at least in substance between the intended resolution
referred to in the notice and the resolution actually passed.”
No business
must be discussed in the meeting unless notice of it has been duly given – section 218(3) of CAMA. Where a member
is entitled to appoint a proxy, the notice must specifically state so;
otherwise, every officer of the company who is in default shall be guilty of an
offence and liable to a fine not exceeding N500.00 (five hundred naira).
Though, failure to comply with giving of notice will not invalidate the meeting
unless the officer responsible for the error or omission acted in bad faith or
failed to exercise due care and diligence.
Those entitled
to receive notice of a general meeting are –
1.
Every member;
2.
Every person upon whom
the ownership of a share devolves by reason of his being a legal
representative, receiver or a trustee in bankruptcy of a member
3.
Every director of the
company;
4.
Every auditor of the
company for the time being; and
5.
The secretary – section 219(1) of CAMA.
Aside the above
persons, no other person shall be entitled to receive notice – section 219(2).
SERVICE OF NOTICE
Notice may be
served in the following ways –
1.
Personal
service – The notice may be served on the member
personally.
2.
Post
– Notice may be effected through the post and where a notice
is sent by post, service of the notice shall be deemed to be effected (by
properly addressing, prepaying and posting a letter containing the notice) at
the expiration of 7 (seven) days after postage, and in any other case at the
time which the letter would be delivered in the ordinary course of post. Where
notice is sent by post, the day of service, that is, the day of posting, and
the day for which it is given will be excluded – section 220(2) of CAMA.
3.
Registered
address – This might apply to a registered
company which is a member of another company. But section 220(5) also provides
that the definition ‘registered address’ means in the case of a member, any
address supplied by him to the company for the giving of notice to him.
4.
Joint
shareholders – Where there are joint
shareholders, notice is good if it is served on the person whose name appears
first on the register – section 220(3)
of CAMA.
5.
Deceased
and bankrupt members – If the personal
representatives or trustees are not registered, then notice is served by
sending it to any address which they may have supplied. If they have not
supplied an address, notice is good if it is served on the deceased or bankrupt
at the address given in the register of members.
It should be
noted that a public company must at least 21 (twenty-one) days before any
general meeting, advertise a notice of such meeting in at least two daily
newspapers – section 222.
If a meeting is
called for a date 28 (twenty-eight) days or less after the notice has been
given, the notice, though not given within the time required by law, is still
deemed to have been properly given. This is made to defeat directors or
auditors who are deliberately obstructive to such resolutions – section 236 of CAMA.
VOTING
The resolution
is decided by the votes of members. Only members have a right to vote and so,
even directors cannot vote at general meetings unless they are members – Olumody
v. Mohammed (1973) NCLR 452.
Voting must be
decided on a show of hands unless a poll is demanded before or on the
declaration of the result of show of hands – section 224(1) of CAMA.
Unless a poll
is demanded, a declaration by the chairman that a resolution has by a show of
hands been carried or lost, and on entry to that effect in the book containing
the minutes of the proceedings of the company shall be conclusive evidence of
the fact, without proof of the number or proportion of the votes recorded in
favour of or against the resolution – section
224(2)
A poll is
demanded when members elect to vote in accordance with number of shares held in
the company. Any provision in the article excluding the right to demand a poll
at general meeting on any question other than the election of the chairman or
the adjournment of the meeting is void – section
225 of CAMA.
In the case of
a tie (equality) of votes, whether on a show of hands or on a poll, the
chairman shall be entitled to a second or casting vote – section 226(3) of CAMA.
VENUE
All statutory
and annual general meetings must be held in Nigeria – section 216 of CAMA. Since there are no restrictions about other
meetings like extra-ordinary general meeting, they may be held either within or
outside Nigeria.
However, the
Code of Corporate Governance in Nigeria issued jointly by the Securities and
Exchange Commission and the Corporate Affairs Commission in October, 2003
provides in paragraph (c) on Page 10 that:
“The venue of a
general meeting of shareholders should be carefully chosen in such a way as to
make it possible and affordable (in terms of distance and cost) for the
majority of shareholders to attend and vote and not to disenfranchise
shareholders on account of choice of venue, which is unreasonable to reach.”
QUORUM
This is the
total number of those that can be present at a meeting in order for the meeting
to take off effectively – section 232 of
CAMA.
The quorum
shall be 1/3 (one-third) of the total number of members
or 25 members (whichever is lesser) present in person or by proxy unless the
articles provides otherwise – section
232(2). For the purpose of determining a quorum, all members of their
proxies shall be counted – section
232(3) of CAMA.
AGENDA
The agenda is the order of business to
be dealt with at the meeting. Many outlines exist to help inexperienced leaders
get started. Agendas all have common attributes which help ensure that
important items are dealt with, that time is not wasted on trivial matters, and
that decisions are arrived at efficiently. An agenda must be flexible enough to
accommodate changes agreed upon by all members but consistent enough so members
become familiar with the routine.
SAMPLE OF BOARD RESOLUTION TO CALL ANNUAL GENERAL MEETING
(AGM)
SOULBEEZ & GRAM LIMITED
No. 3 Nedu Crescent, Bwari, Abuja
28th January 2010
We,
being all the directors of Soulbeez & Gram Ltd. who are entitled to receive
notice of a meeting of the directors, RESOLVE that an annual general meeting of
the Company shall be convened on the ……………… day of ……………. 20….. for the
following purposes:
1.
Declaration of dividend,
2.
The presentation of the financial statement and reports of
the directors and auditors, and
3.
The election of directors, the appointment and fixing of
remuneration of auditors.
And that the
secretary be instructed to give notice of the meeting to all shareholders (and
obtain consent of all members to the meeting being held on short notice).
Dated this
…………….. day of ………………. 20….
…………………………..
Director’s name
and signature
…………………………..
Director’s name
and signature
…………………………..
Director’s name
and signature
NOTE: Notice of all types
of general meetings is generally fixed at 21 days from the date on which the
notice was sent out – section 217(1) of
CAMA.
Barr. Ezekiel Chigozie has many years experience in providing legal representation and advising clients across exceptional broad range of contentious and non-contentious matters. His main goal is to help clients resolve contentious or non-contentious legal problems they are having rapidly and cost effectively.
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