Hello and welcome to another edition of the Digest!
If you are a first time reader, we are happy to have your readership and attention. 1st Fiduciary Limited’s Governance and Compliance Digest is a bi-monthly Publication with focus on the navigation of corporate governance and compliance requirements by corporate organizations within the Nigerian business environment.
Our focus in the first edition of the Digest was Share Capital and Shareholding Compliance Obligations under the provisions of the Companies and Allied Matters Act (CAMA) 2020. We informed you on the new minimum share capital requirement, the prohibition of issuance of shares at a discount, the requirement for the disclosure of significant control and substantial shareholding, and the prohibition of the issuance of irredeemable preference shares by Companies limited by shares (if you missed it, please see the link to the article HERE).
Today’s edition focuses on the compliance requirements for meetings and proceedings of going-concern Companies, covering Statutory Meeting, Annual General Meetings, Extraordinary General Meetings, Board Meetings, length of notice, persons entitled to receive notice and attend, place of the meetings and quorum.
Company meetings are vital and foster the feeling of inclusion, trust and a sense of belonging to a team responsible for the growth of the Company. Company meetings also give Members the opportunity to contribute to the success of their company.
The meeting compliance requirements apply to all categories of Companies – Public, Private, Limited by Shares, Limited by Guarantee or Unlimited – as obtainable under CAMA 2020.
1. Right of Every Member to Attend and Vote at Meetings –
Section 107 of CAMA makes it clear that every Member of a Company has a right to attend the general meetings of the Company, speak and vote on any resolution at the meeting. This right is, however, permitted to be restricted or denied by the Company on the grounds that such Company’s Articles of Association provides that, unless all calls or other sums payable by a Member in respect of the shares held in the Company have been paid, such a Member shall not be entitled to attend and vote at meetings.
2. Statutory Meeting –
Public Companies have a mandatory obligation to hold a general Member s’ meeting within a period of six months from the date of its incorporation (i.e. the date it was registered by the Commission and issued the certificate of incorporation). This meeting is referred to as the statutory meeting. Impliedly, the Statutory Meeting is also required of Private Companies that convert to Public through a re-registration with the Commission.
Additionally, the directors of a Public Company are to forward to every Member of such Company a copy of the Company’s statutory report, which must be certified by not less than two directors or by a director and the secretary of the Company, at least 21 days before the date of the statutory meeting.
3. Contents of a Statutory Report –
In furtherance of the requirement to forward a statutory report, section 235(3) outlines its mandatory content:
- the names, addresses and descriptions of the directors, auditors, managers, if any, and secretary of the Company.
- the particulars of any pre-incorporation contract together with the particulars of any modification or proposed modification.
- any underwriting contract that has not been carried out and the reasons.
- the arrears, if any, due on calls from every director.
- the particulars of any commission or brokerage paid or to be paid in connection with the issue or sale of shares or debentures to any director or to the manager.
- an abstract of the receipts of the Company and the payments made from them up to a date within seven days of the date of the report.
4. Adjournment of a Statutory Meeting –
This is permissible, as provided by CAMA 2020. The law, however, does not state the time within which the adjournment should lapse.
It is recommended that the adjournment should not exceed a reasonable period, bearing in mind that default in delivering the Statutory Report to the Commission or in holding the Statutory Meeting constitutes a ground for winding-up such Company. Also, default holds the Company, and any officer, liable to a fine for each day during which the default continues in such amount as the Commission may specify.
5. Annual General Meetings (AGMs)-
All categories of Companies are required to hold their first Annual General Meeting within 18 (eighteen) months after incorporation. Subsequent Annual General Meetings are to be held within 15 (fifteen) months after the previous general meeting.
Small Companies or Companies having a single shareholder are the only Companies exempt from the compulsory obligation to hold AGMs. This is a shift from the provision of section 213 (1) of CAMA 1990 which required all Companies to hold AGMs.
For context, CAMA defines a small Company as one:
- that is Private.
- with turnover not exceeding ₦120,000,000 (One Hundred and Twenty Million Naira) or such amount as may be fixed by the Commission from time to time.
- with net assets value is not exceeding ₦60,000,000 (Sixty Million Naira) or such amount as may be fixed by the Commission from time to time.
- which has no alien as one of its members.
- which none of its members is a government, government corporation or agency or their nominee.
- which directors hold at least 51% of its equity share capital between themselves, for Companies with a share capital.
The above qualifying conditions must co-exist for a Company to be classified as small.
Default to hold an AGM renders the Company, and every officer, liable to a fine for each day during which the default continues in such amount as the Commission may specify.
6. Place of Meeting
All statutory meetings and AGMs must be held in Nigeria, with the exception of Small Companies and Single Member Companies. This implies that Small Companies and Single Member Companies are free to hold their statutory meetings at a place they may choose.
CAMA 2020 also makes provisions for the conduct of general meetings of Private Companies by virtual means provided that such meetings are conducted in accordance with the Articles of the Company. There is no provision for virtual meetings of Public Companies under CAMA 2020.
Our next edition will bring you the necessary information on Board Meetings, length of notice of meetings, persons entitled to receive notice, quorum, etc. See you next time.
For further discussion and assistance with filing any of your organization’s returns, as well as providing you with Board Evaluation and Nominee services, please contact us below.