LEARNING OUTCOMES:

1. Identify various ways of acquisition of membership of company.
2. Identify types of company meetings and resolutions
3. Prepare the relevant documents of company meetings
4. Identify ethical issues in company membership, meetings and resolutions.

CONTENT

1. Overview by tutor on membership, meetings and resolutions.
2. Checklist of becoming a member and the types of meetings and Agenda of meetings.
3. Preparation of meetings and Proceedings of meetings – Notices, Agenda, Venue, voting, quorum, attendance, minutes of meeting and different types of company resolutions.
4. Ethical issues involved in company membership, meetings and resolutions.

 

MEMBERSHIP – S79 (1) & (2) CAMA

 

Subscribers to the Memorandum are deemed to have agreed to become members, and shall be registered in the register of members. – so subscribers are already deemed members before their names are registered on its register of members. Being registered on its register is not a pre-requisite for subscribers to be members.

Every person who agrees in writing to become a member and his name is in the register of members.

 

Capacity to become a member – S.20, s.80

Its not every time that a person who is a member is also a shareholder.  Companies limited by guarantee have members but not shareholders because they don’t have shares.

A minor can be a member but cannot be counted for the purpose of determining the legal minimum number (2) of members of a company – s 80.

S254 talks about the disqualification order for fraudulent persons.

 

How to become a member

• Subscription – s .79, s27 (2)(b): The issue of subscription is a historical fact, it doesn’t change even if the person sells all their shares in the company. They were still a subscriber to the company.
• Allotment - s.125(C), s.129(1): it should be done with 1 month. Note allotted capital , or issued share capital. A person can become a shareholder when the company allocates shares to them. Shares can still allotted after incorporation. Someone that is allotted shares becomes a member when their name is registered in the register of members.
• Transfer – s115, 151:
• Transmission – s 155(1): this has to do with the death of someone, there has to be deceased person and then the beneficiaries

 

Transfers

• Entry in the register of members – s 152(1)(2)
• Refusal to register – s152 (3)(4), s153
• Note- restriction in transfer of shares in the articles (learn how to draft this clause): Precedent articles are in schedule 1, Table A, part II, pg 329
• Can the directors of a public company refuse to transfer shares

 

Transmission – reg.33, s155 CAMA

• Election – s155(2)
• Documents required as evidence – 155 (2),(3): evidence is required – death certificate , probate of the will, letters of administration ( if there is no will) , and a letter saying they elect to become a member of the company, share certificate ( evidence of his membership in that company)
• List other documents
• Restriction – s155(4)
• Status before being registered – s 155(5): the person has an equitable interest before they are registered as a member
• Protection of beneficiaries – s156

 

Onyechi v Ezeonwo – before a person can say they are a member they must have signed and have at least one share. See alsos 79(3)

 

Ways in which a person can cease to be a member

• Transfer
• Forfeiture
• Transmission
• Surrender
• Liquidation
• Repudiation by an infant

 

MEETINGS – S.63 CAMA

 

The articles of a company state the powers of the general meeting.

What are the powers of the general meeting? The General Meeting can only do what the board cannot do, the default powers of management is in the board.

The general meeting will only make decisions by passing resolutions.

 

Types of meetings under CAMA

• Statutory meetings
• Annual General Meeting
• Extra-ordinary general meeting
• Court ordered meeting
• Class meeting
• Board meeting
• Requisition meeting

 

Statutory meeting – s.211

• Public company is obliged to hold statutory meeting within six months of incorporation of the company. At the statutory meeting they give the statutory report but the report should be given 21 days before the meeting.
• Statutory report – s211(3) – 21 days before statutory meeting: it is to let the officer of the company know the status of the company.
• Statutory meeting
• Certification – s. 211(3),(5) :The statutory report, should be certified by the auditors of the company, the venue should be in Nigeria
• Venue – s216 : the directors convene the meeting and determine the venue.

 

Annual General meeting – s213

• 1^st AGM should be within 18 months from date of incorporation
• Subsequent – 15 months
• Extension of time – 3 months
• Who calls the meeting? The board – s63
• When can CAC call AGM ? s 213(2) it can call a meeting on the application of a member but generally it’s the board that calls a meeting.
• What happens when an AGM is not held in the year of default?
• Venue – s216
• When can only one person take a decision in an AGM?

Business of AGM – s214

• There is ordinary and special business and this is different form ordinary resolution and special resolution
• 218(3)
• Note – s 218(2) – reconcile with practice

Particulars of the ordinary business that goes on at a general meeting are (s 214):

1. Declaration ofdividend,
2. The presentations of the financial statements and the reports of the directors and auditors,
3. The election of directors in the place of those retiring = re-election of directors
4. The appointmentof the auditors
5. The fixing of the remuneration of the auditors; and
6. The appointments of the members of the audit committee

 

Statutory and annual general meeting is to be held in Nigeria.

 

RESOLUTIONS  - s233

• Ordinary – s233(1): simple majority is more than half =51%
• Special – S233 (2): 75%
• S234 – written: all the members
• S 236 – resolution requiring special notice: e.g. when appointing a director that is over 70 years of age, when a director is being removed and another one is to be appointed in the same meeting

 

Draft the notice of a meeting

ABC Plc

 

NOTICE OF ANNUAL GENERAL MEETING

NOTICE IS HEREBY GIVEN that the 5^th annual general meeting of the members of ABC plc. will be held at oriental hotel, 12 Ikoyi road, Lagos Island, Lagos on the 10^th day of March, 2018 at 10:00am prompt to transact the following business.

 

AGENDA:

 

Ordinary business

1. The presentations of the financial statements and the reports of the directors and auditors,
2. The election of directors in the place of those retiring
3. The appointmentof the auditors
4. The fixing of the remuneration of the auditors; and
5. The appointments of the members of the audit committee

 

Special business

 

 

 

Dated this 8^th day of February 2018

BY ORDER OF THE BOARD

 

……………………..

Tinuade Oyewole

Company Secretary

 

Note: when drafting resolution you don’t put time of the day in resolution.

 

Extra-ordinary general meeting – s.215

• It is convened by the board of directors, whenever they deem fit. There is no specific time
• A director can convene an extra ordinary general meeting – if there are sufficient directors outside Nigeria capable of forming a quorum
• Members requisition
• Content/service of requisition
• Convening of meeting by directors
• Failure to convene
• S112 – serious loss of capital
• S366 auditors requisition
• Venue – s 216
• Type of business – special s215(8)
• Who may call an AGM?
• Who may requisition an AGM?

 

Notices of meetings

• 217 – length : for board meetings 14 days , for general meetings is 21 days
• s 218 – content
• 219 – those entitled to  notice
• 228 – those entitled to attend
• s220 – service to notice
• s 221 – failure to give notice: it invalidates the meeting unless the failure is an accidental omission. Longe v FBN – only a person who is entitled to the notice can claim for failure. See also Bunmi Oni v Cadbury
• Additional notice – its public companies that give additional notice. It takes the form of advertisement in at least two daily newspaper.

 

COURT ORDERED MEETINGS – s.223

• Who may call-court, director, member
• Impracticability test
• Okeowo v Milgiore 1979 All NLR 282
• One member meeting – s.223(2)
• Note –it may also be a board meeting, its not just members.

 

Voting – S224

It is usually by show of hands

Poll voting

Note- voting is usually by show of hands – s 224(2)

 

Poll voting – s224, 225

• Who may demand a poll – s 224(1)
• When poll will not be allowed – s .225(3)
• 225 – right to demand poll : if there are no people who are qualified to demand a poll, then it cannot be demanded , it would simple be by show of hands. There is a right to demand poll is certain circumstances.
• Articles may restrict right to demand a poll in some circumstances – s 225(3) there is no right to demand a poll on the election of members of the audit committee. This is for corporate governance purpose so the majority shareholders do not have upper hand , so the auditors can serve the company as a whole and not just a certain class

 

Right to attend and vote – s 81, 227 & 228

• S 230 – proxies
• Note – companies not having share capital: If the articles permit it they can , but the default rule is that proxy does not apply to companies not having share capital
• Note – proxies and noticeof meetings: if you’re giving someone notice of meeting, you should also inform the person that they are entitled to attend by proxy. A proxy need not be a member. Note: they can ask you to draft the notice showing the right to attend by proxy, proxy clause.
• S231 – Corporate representation: this applies when a company is a member of another company.

Quorum – s232

• Duration: from the beginning till the end of the meeting. Proxies are counted for the purpose of quorum.
• Quorum & adjournments
• One member - where its one member he must seek the order of the court to make that decision to bind them.

 

• Adjournments – s239: where a meeting is adjourned for 30 days or more notice of meeting has to be given as in an original meeting.
• Chairman – s240: if it’s a small meeting you wait for 5 minutes, if it’s a big meeting you wait for 1 hour. A board resolution is passed to appoint a chairman
• Minutes of meeting – s241
• S550 - Int.Agric v Chika brothers 1990 INWLR (PT 124)

 

S 237

CLASS MEETINGS – S243

There can be a meeting for the different classes in a company

 

Note: There’s a difference between a special notice and a requisition meeting.

Requisition meeting – s215(4)

S 83 (2) doesn’t apply to transfer, because that’s not an agreement with the company. S 90 

 

Rights of a member**

• Member has a right to appoint proxy
• To attend general meeting (s81)
• To dividend, if and when declared
• To inspect and obtain minutes of general meeting
• To access the books of the company
• To make various applications for the protection of minority right
• To return of investment or capital upon winding up, if any or to share in the distribution of assets
• To receive notice of meeting

 

Instances where one member can bind a company

• Where the court orders a meeting s 223 (2)
• Quorum issues s 232(4) &(5)
• When CAC directs holding of a meeting
• AGM (s 213(2)

 

Election of directors in place of retiring directors is different from appointing directors.