In our Governance and Compliance Digest Newsletter of 2nd May 2022, we discussed the “Rights of Shareholders”. In today’s edition of our Governance and Compliance Digest Newsletter, we will take a look at the “Obligations of Shareholders” as prescribed in the Companies and Allied Matters Act (CAMA) 2020.
Shareholders of a Company just as Directors have important obligations to discharge for a Company to remain a going concern. It follows that while some of these obligations have been clearly spelled out under CAMA 2020, it is pertinent to pay attention to the global best practices with respect to Shareholders’ obligations in the application of CAMA 2020. It is trite that shares are Company’s securities that are held by people (individual or corporate entity) and by virtue of becoming a Shareholder of a Company, there are certain obligations such holder of shares must discharge.
OBLIGATIONS OF SHAREHOLDERS
The major obligation of shareholders as to the passing of resolutions at General Meetings by voting in their respective Shareholder capacity cannot be overemphasized. This obligation is particularly important as it allows Shareholders to exercise their ultimate control over the company and how it is managed.
Further to the above, Shareholders of a Company have other obligations which are expected of them for the smooth running of a Company if the same must remain active and a going concern. The obligations of Shareholders include:
5. Obligation to actively participate in General Meetings of the Company.
6. Obligation to keep safe custody and proper records of all documents with regards to shares owned. E.g., share certificates, and copies of share transfer documents.
7. Obligation to pay for shares subscribed to when the Company makes calls for the payment(s) for shares that have not been fully paid.
8. Obligation to contribute towards winding-up purposes by paying any outstanding dues on shares they own.
- Section 20(1) Companies and Allied Matters Act, 2020.
- Section 105 Companies and Allied Matters Act, 2020.
- Section 158 (1) Companies and Allied Matters Act, 2020.
- Section 565 Companies and Allied Matters Act, 2020.
- Section 120 Companies and Allied Matters Act, 2020.
- Section 121 Companies and Allied Matters Act, 2020.
- Section 80 Companies Income Tax Act, 2004 (as Amended).
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