WHAT ARE THE POST INCORPORATION MATTERS UNDER THE NEW CAMA 2020
All you should know about the post incorporation matters under the new CAMA 2020.
CHAMAN LAW FIRM
3/1/2022 5 min read
WHAT ARE THE POST INCORPORATION MATTERS UNDER THE NEW CAMA 2020
An important post incorporation responsibility of companies is giving notification and rendering proper returns to regulatory Authorities .i.e. CAC, SEC, CBN, NAICOM, EFCC, DSS etc.
These include but not limited to the following:
1. Annual returns.
2. Return of allotments.
3. Returns on Auditors.
4. Returns during Receivership.
5. Returns on alteration of share capital.
6. Statement by Banks, Insurance, Companies.
7. Registration of certain Resolutions.
8. Registration of charges.
9. Notice of change of Directors and Secretaries.
10. Court orders.
11. Notice of place where Register of members is kept.
12. Filling of special resolution.
13. Notice of increase in share capital.
14. Registration of appointment of a receiver or manager.
15. Statutory report.
16. Copy upon order dissolution of company.
17. Notice of appointment of liquidator.
18. Consummation of merger.
19. Notice of resolution to wind up voluntarily.
20. Notice of statutory declaration of solvency.
21. Notice of resignation of auditor.
ALTERATION OF MEMORANDUM AND ARTICLES
A company may not alter the conditions contained in its memorandum except in the cases and in the matter and to the extent for which express provision is made in the Act.
CHANGE OF NAME BY COMPANY
A registered company may change its name voluntarily or upon the direction of CAC. The CAC does not have an independent power to rename a company and cannot be ordered by court to do so.
COMPILSORY CHANGE OF NAME
1. Where a company is registered with a name which is identical with a name of a registered company or so nearly resemble with that name as to be calculated to deceive, the new company may change such name with the approval of the Commission and if the Commission so directs within six months of the registration of the company the company must change its name within 6 weeks from the date of the direction or any extension of time granted by the Commission.
2. When a name of company is discovered to conflict with an existing trade mark or business name the Commission may compel that the name be change unless there is evidence the owner or the trade mark or business name gave approval to the use of the name.
VOLUNTARY CHANGE OF NAME
In voluntary change of name the provisions of the Act must be complied with and a company cannot go outside the express provision of the Act to change its name. A company may by special resolution and written approval of the commission change its name. The directors of the company must pass a resolution authorizing the change of name and also directing the secretary to take steps to change the name
CONVERSION OF SHARES AND STOCKS
"Shares in a company, as shares, cannot be bought in small fractions of any amount, .ie. #5 worth of shares can only be sold in whole that is #5, bit stock of a company can be bought just in the same way as the stock of the public debt can be bought, split up in as many portions as you like, and subdivide into as small fractions as you please" so a stock is "simply a set of share put together in a bundle.
A company cannot issue stock directly but can only convert paid up shares into stock and any direct issue of stock is ultra vires.
Resolution to converts shares into stock
That the 1,000 shares in the capital of the company which been issued and fully paid up be converted into stock.
That the whole of the preference Shares in the capital of the company be converted into stock, to be called preference stock.
CANCELLATION OF UNISSUED SHARES
A company can cancel shares which have not been taken or agree to be taken by any person. For there to be an agreement to take unissued shares there must be an offer and a valid accepted.
Cancellation of shares which have not been taken but agreed to be taken is termed diminution of capital. Cancellation of shared in pursuance of the Act shall not be deemed to be a reduction of share capital within the meaning of the Act.
INCREASE OF SHARE CAPITAL
A company having a share capital whether or not the shares have been converted into stock, may in a general meeting and not otherwise, increase its shares capital by creating new shares of such amount as it thinks expedient.
The power to increase capital as can be seen in this provision can only be exercised by the general meeting alone and the directors cannot exercise such power. A special resolution is required to effect the increase.
REDUCTION OF CAPITAL
Subject to confirmation by the court, a company having share capital may, if so authorized by its articles, by special resolution reduce its share capital in any way.
Three conditions stand out from this provision:
1. Reduction is subject to the confirmation of court.
2. Reduction must be authorized by the article of the company.
3. Reduction can carried out only by special resolution.
Except as authorized by the act, a company having a share capital shall not reduce its issued capital. Hence unless the 3 conditions which are cumulative are met a company cannot reduce it capital.
ALTERATION OF RESTRICTION ON THE POWERS OF THE COMPANY's CLAUSE.
This clause may be altered in the same manner the business or object clause may be altered.
ALTERATION OF ARTICLES OF ASSOCIATION
The Act gives a company power by special resolution, but "subject to the provisions of the Act and to the provisions contained in its memorandum" to alter its articles, and further expressly provide that "any alteration so made... Shall... be as valid as if originally contained therein, and be subject in like manner to alteration by special resolution.
RE-REGISTRATION OF A PRIVATE COMPANY TO PUBLIC COMPANY
Reregistration of a private company to public company. This type of conversion is the commonest in practice. A private company that has operated successfully may decide to enlarge its operation by inviting the public to contribute to its share capital. Government directive may also raise the minimum capital base for companies. Several banks have for this reason converted from private to public companies.
The private company that desires to convert to public company must pass a special resolution .ie. "THAT the company be and that it is hereby converted into a public Company and that the directors be and they are hereby authorized and directed to take all suchsteps as may be necessary or proper for effectuating such conversion".
RE-REGISTRATION OF PUBLIC COMPANY TO PRIVATE COMPANY
If a public company desires to change its status to that of private company a special resolution must be passed by the general meeting .ie. "THAT the company be converted into a private company, and that the articles of association of the company be altered by inserting immediately the new article namely:
1. Halifax Plc V Halifax Repossessions Ltd (2004) BCC 281.
2. Lord Hartherley in Mortice V Aylmer (1875) L.R. 7HL 717@ pp 724, 725.
3. Re Home and Foreign Investment and Agency Co. Ltd (1912) 1CH. 72.
4. Re Swindon Town Foodbal Co. Ltd (1990) B.C.L.C. 467.