Investor Presentaiton
The Country and its
institutions
Business Organisation Labour and Social
and Regulation
Security Regulations
The Nigerian Financial Tax System
Services Industry
Foreign Exchange
Transactions
Investment in Nigeria
Accounting and
Importation of Goods
Exportation of Goods
Auditing Requirements
COVID-19 Economic
and Fiscal Measures
2.5.4
Deferred Ordinary Shares
2.8
Directors and Officers
2.6
2.7
2.5.5
The claims of the holders of deferred ordinary shares rank after preference
shares and ordinary shares. Such shares may, however, be entitled to a
larger portion of distributable profits than the ordinary shares after a certain
amount of dividend has been paid on the ordinary shares. In practice,
deferred ordinary shares are hardly ever created or issued.
Debentures and Bonds
The term "bond" is not used in CAMA. The closest term to it used in
CAMA is "debentures", which denotes instruments issued by a company
acknowledging a loan or other indebtedness and providing for payment of a
specified sum by a given date at a specified rate of interest. A debenture,
if secured, would typically create a charge, either fixed or floating, on the
company's assets. The charge may be contained in the main body of the
debenture or in a separate trust deed. Provision may be made for the
redemption of debentures by means of an invested sinking fund, annual
drawings or by purchase in the open market.
Shareholders' Meetings
The first annual general meeting of a company must be held within 18 months of
incorporation. Subsequent annual general meetings must be held each calendar
year, provided that not more than 15 months shall elapse between one annual
general meeting and another. Twenty-one days' written notice to all shareholders is
required for an annual general meeting, although this requirement may be waived
by agreement of all the shareholders. A copy of the audited financial statements,
the directors' report and the auditor's report must be sent to every shareholder at
least 21 days before the annual general meeting.
At the request of shareholders holding at least 10% of a company's paid-up share
capital, the directors must convene a general meeting known as an extraordinary
general meeting. Twenty-one days' written notice of every extraordinary general
meeting is required, unless shareholders holding not less than 95% of the issued
share capital waive this requirement.
Annual Returns
Every company must file its annual returns with the CAC within 42 days of its
annual general meeting. The annual return is made by completing and filing Form
CAC 10 at the CAC. Documents to be attached to the annual returns form include
a copy of the balance sheet and profit and loss accounts presented to the annual
general meeting, together with a copy each of the auditor's report and directors'
report.
2.9
Every company other than a small company 24 must have a minimum of two
directors. A company must also have a secretary. Unless required by the articles
of association, a director need not own any shares. There is no restriction on the
nationality of directors of Nigerian companies under CAMA. Although corporations
are prohibited from acting as directors, a corporation may nominate a person as
a director to represent its interest on the board. The appointment of directors is
governed by the provisions of the articles of association of a company.
Generally, the articles provide for appointment of the first directors by the
subscribers to the memorandum of association.
The names of all directors (and their nationalities, for non-Nigerians) must be listed
in the Register of Directors kept in the company's registered office and disclosed on
its trade catalogues, trade circulars, show cards and business letters.25
The remuneration of directors is determined by the company in a general meeting.
The directors may also be paid all travelling, hotel and other expenses properly
incurred by them in the course of their duties.
With certain exceptions, a company may not make a loan, directly or indirectly, to a
director unless with the permission of its shareholders. Similarly, companies may
not compensate a director for loss of office without shareholders' approval.
Directors are officers of the company. The secretary of the company and other
officers are appointed by the board of directors. The title of 'chairman' is used in
Nigeria much in the same way as it is used in the United Kingdom and the United
States. However, instead of 'president' as is used in the United States, a Nigerian
company generally uses the title of 'managing director' for its Chief Executive.
There may also be a 'vice-chairman' and/or 'deputy managing director'. The chief
financial officer is usually called chief accountant or finance director (or, occasionally,
controller) and, in most cases, will also carry out the duties of a treasurer.
Dividends
The payment of dividends is not subject to statutory limits in Nigeria, to the extent
that it is supported by profits. Therefore, a company may declare its entire profit
after tax as dividends if it decides not to keep it in retained earnings. Dividend
payments are subject to 10% withholding tax (7.5% for bona fide beneficiaries
based in a country with which Nigeria has a double taxation agreement (DTA),
subject to the satisfaction of the conditions specified in the DTA).
KPMG
24 CAMA 2020 defines a small company as a private company having an annual turnover of N120,000,000 and net assets value of not more
than N60,000,000, with no foreigner as its members and where the company has a share capital, the directors hold at least 51% of the
share capital.
25 CAMA requires the disclosure of the multiple directorship held by a director of a public company. In addition, a person cannot be a director
of more than five public companies.
Investment in Nigeria Guide - 8th Edition
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