Part B (contd) - COMPANIES AND ALLIED MATTERS ACT, 2019

PART B: INCORPORATION OF COMPANIES AND INCIDENTAL MATTERS

Chapter 24

PROVISIONS APPLICABLE TO EVERY MODE OF WINDING-UP

654. (1) The liquidator shall, within 14 days after his appointment, publish in the Federal Government Gazette or in two daily newspapers and deliver to the Commission for registration a notice of his appointment in such form as the Commission may from time to time approve.

(2) If the liquidator fails to comply with the requirements of subsection (1), he is liable to a penalty as prescribed by the Commission in the regulation.

Liquidator to give notice of appointment.

655. In every winding up (subject, in the case of insolvent companies, to the application in accordance with the provisions of this Act of the law of bankruptcy), all debts payable on a contingency, and all claims against the company, present or future, certain or contingent, ascertained or sounding only in damages, shall be admissible to proof against the company, a just estimate being made, so far as possible, of the value of such debts or claims as may be subject to any contingency or sound only in damages, or for some other reasons do not bear a certain value.

Debts of all descriptions may be proved.

656. In the winding up of an insolvent company registered in Nigeria, the same rules shall prevail and be observed with regard to the respective rights of secured and unsecured creditors and to debts provable and to the valuation of annuities and future and contingent liabilities as are in force for the time being under the law of bankruptcy in Nigeria with respect to the estates of persons adjudged bankrupt, and all persons who in any such case would be entitled to prove for and receive dividends out of the assets of the company may come in under the winding up and make such claims against the company as they respectively are entitled to by virtue of this section:

Provided that nothing in this section shall affect the power of any secured creditor to realise or otherwise deal with his security during the winding up of an insolvent company registered in Nigeria.

Application of bankruptcy rules in certain cases.

Preferential payments.

657. (1) In a winding up, there shall be paid in priority to all other debts —

(a) all local rates and charges due from the company at the relevant date, and having become due and payable within 12 months immediately before that date, and all pay-as-you-earn tax deductions and other assessed taxes, property or income tax assessed on or due from the company up to the annual day of assessment next before the relevant date, and in the case of pay-as-you-earn tax deductions not exceeding deductions made in respect of one year of assessment and, in any other case, not exceeding in one year’s assessment;

(b) deductions made from the remuneration of employees and contributions of the company under the Pension Reform Act;

(d) all wages or salaries of any clerk or servant in respect of services rendered to the company;

(e) all wages of any workman or labourer, whether payable for time or for piece of work, in respect of services rendered to the company; and

(f) all accrued holiday remuneration becoming payable to any clerk, servant, workman or labourer (or in the case of his death to any other person in his rights) on the termination of his employment before or by the effect of the winding up order or resolution.

(2) Where any compensation under the Employees’ Compensation Act is a weekly payment, the amount due in respect thereof shall, for the purpose of subsection (1) (e), be taken to be the amount of the lump sum for which the weekly payment could, if redeemable, be redeemed, if the employer made an application for that purpose under the Act.

(3) Where any payment on account of wages or salaries has been made to any clerk, servant, workman or labourer in the employment of a company out of the money advanced by some persons for that purpose, that person shall in a winding up have a right of priority in respect of the money so advanced and paid up to the amount by which the sum in respect of which that clerk, servant, workman or labourer would have been entitled to priority in the winding up has been diminished by reason of the payment having been made.

(4) The debts shall —

(a) rank equally among themselves after the expenses of the winding up and shall be paid in full, unless the assets are insufficient to meet them, in which case they shall abate in equal proportions; and

(b) if the assets of the company available for payment of general creditors are insufficient to meet them, have priority over the claims of holders of debentures under any floating charge created by the company and be paid accordingly out of any property comprised in or subject to that charge.

(5) Subject to the retention of such sums as may be necessary to discharge the costs and expenses of the winding up, the debts shall be discharged immediately if the assets of the company are sufficient to meet them.

(6) Notwithstanding the foregoing and any other provisions of this Act and any other law applicable in Nigeria where it relates to settlement of claims in the winding up of a company, claims of –

(a) secured creditors, as defined under this Act, shall rank in priority to all other claims, including any preferential payment under this Act or any other debts inclusive of expenses of winding up; and

(b) the equity holders shall rank last.

(7) In this section, “the relevant date” means —

(a) in the case of a company ordered to be wound up compulsorily which had not previously commenced to be wound up voluntarily, the date of the winding-up order; and

(b) in any other case, the date of the commencement of the winding up.

Act No. 4, 2014.

Act No. 13, 2010.

EFFECT OF WINDING UP AND ADMINISTRATION ON ANTECEDENT AND OTHER TRANSACTIONS

658. (1) Where a company at any time within the period defined in subsection (6), does anything or procures anything to be done which has the effect of putting a person, being one of the company’s creditors or a surety or guarantor undue advantage shall be deemed a preference of that person, and be invalid accordingly.

(2) Notwithstanding subsection (1), a preference given to any person is not invalid unless the company which gave the preference was influenced in deciding to give it by a desire to produce in relation to that person the effect mentioned in sub-section (1).

(3) A company which has given a preference to a person connected with the company (otherwise than by reason only of being its employee) at the time the preference was given is presumed, unless the contrary is shown, to have been influenced in deciding to give it by such a desire as is mentioned in subsection (2).

(4) The fact that something has been done in pursuance of the order of a Court does not, without more, prevent the doing or procuring of that thing from constituting the giving of a preference.

(5) Any conveyance or assignment by a company of all its property to trustees in furtherance of the preference for the benefit of all its creditors is void.

(6) In the case of a preference which is given to a person who is connected with the company (otherwise than by reason only of being its employee), the relevant time is the period of years ending with the onset of insolvency (which expression is defined below), and in any other case, the relevant time is the period of three months ending with the onset of insolvency.

(7) For the purpose of this section, the onset of insolvency refers to the time of the presentation of a petition for winding up in the case of a winding up by or subject to the supervision of the Court or, the passing of a resolution for winding up in the case of a voluntary winding up.

(8) This section applies in the case of a company where —

(a) the company enters administration, or

(b) the company goes into liquidation.

Fraudulent preference.

659. (1) This section applies in the case of a company where —

(a) the company enters administration; or

(b) the company goes into liquidation.

(2) Where the company has at a relevant time entered into a transaction with any person at an undervalue, the liquidator or administrator may apply to the Court for an order under this section.

(3) The Court shall, on such an application, make such order as it deems fit for restoring the position to what it would have been if the company had not entered into that transaction.

(4) For the purposes of this section, a company enters into a transaction with a person at an undervalue if the company —

(a) makes a gift to that person or enters into a transaction with that person on terms that provide for the company to receive no consideration, or

(b) enters into a transaction with that person for a consideration the value of which, in money or money’s worth, is significantly less than the value, in money or money’s worth, of the consideration provided by the company.

(5) The Court shall not make an order under this section in respect of a transaction at an undervalue if it is satisfied —

(a) that the company which entered into the transaction did so in good faith and for the purpose of carrying on its business; and

(b) that at the time it did so there were reasonable grounds for believing that the transaction would benefit the company.

(6) Subject to subsection (7), the time at which a company enters into a transaction at an undervalue is a relevant time if the transaction is entered into —

(a) within two years ending with the onset of insolvency as defined in subsection (8);

(b) between the making of an administration application in respect of the company and the making of an administration order on that application; and

(c) between the filing with the Court of a copy of notice of intention to appoint an administrator under sections 456 or 464 of this Act and the making of an appointment under this paragraph.

(7) Where a company enters into a transaction at an undervalue at a time mentioned in subsection (6) (a), that time is not a relevant time for the purposes of this section unless the company —

(a) is at that time unable to pay its debts within the meaning of section 572; or

(b) becomes unable to pay its debts within the meaning of that section in consequence of the transaction or preference,

but the requirements of this subsection are presumed to be satisfied, unless the contrary is shown, in relation to any transaction at an undervalue which is entered into by a company with a person who is connected with the company.

(8) For the purposes of subsection (6), the onset of insolvency is, in a case where this section applies by reason of —

(a) an administrator of a company being appointed by administration order, the date on which the administration application is made;

(b) an administrator of a company being appointed under section 456 or 464 of this Act following filing with the Court of a copy of a notice of intention to appoint under that section, the date on which the copy of the notice is filed;

(c) an administrator of a company being appointed otherwise than as mentioned in paragraph (a) or (b), the date on which the appointment takes effect;

(d) a company going into liquidation either following conversion of administration into winding up or at the time when the appointment of an administrator ceases to have effect, the date on which the company entered administration (or, if relevant, the date on which the application for the administration order was made or a copy of the notice of intention to appoint was filed); and

(e) a company going into liquidation at any other time, the date of the commencement of the winding up.

Transactions at an undervalue.

660. (1) Where anything made or done after the commencement of this Act is void under this Chapter as a fraudulent preference of a person interested in property mortgaged or charged to secure the company’s debt, the person preferred shall, without prejudice to any liabilities or rights arising apart from this provision, be subject to the same liabilities, and have the same rights, as if he had undertaken to be personally liable as surety for the debt, to the extent of the charge on the property or the value of his interest, whichever is the less, and the value of the said person’s interest shall be determined as at the date of the transaction constituting the fraudulent preference, and shall be determined as if the interest were free of all encumbrances other than those to which the charge for the company’s debt was the subject.

(2) Where for the purposes of this section, application is made to the Court with respect to any payment on the ground that the payment was fraudulent preference of a surety or guarantor, the court shall have jurisdiction to determine any questions with respect to the payment arising between the person to whom the payment was made and the surety or guarantor, and to grant relief in respect thereof, though it is not necessary to do so for the purposes of the winding up, and for that purpose may give leave to bring in the surety or guarantor as a third party as in the case of an action for the recovery of the sum paid.

(3|) Subsection (2) applies, with the necessary modifications, in relation to transactions other than the payment of money, as it applies in relation to payments.

Liabilities and rights of certain fraudulently preferred persons.

661. Where a company is being wound up subject to the supervision of the Court, any attachment, sequestration or execution put in force against the estate or effects of the company after the commencement of the winding up, is void.

Avoidance of attachments, on winding-up subject to supervision of the Court.

662. Where a company is being wound up, a floating charge on the undertaking or property of the company created within three months of the commencement of the winding up shall, unless it is proved that the company immediately after the creation of the charge was solvent, be invalid, except to the amount of any cash paid to the company at the time of or subsequently to the creation of, and in consideration for, the charge, together with interest on that amount at the current bank rate.

Effect of floating charge.

663. (1) Where any part of the property of a company which is being wound up consists of –

(a) unprofitable contracts; or

(b) any other property that is unsaleable, or not readily saleable, or is such that it may give rise to the performance of any onerous act or a liability for the payment of any sum of money,

the liquidator, notwithstanding that he has endeavoured to sell it or has taken possession of the property or exercised any act of ownership in relation thereto, may, with the leave of the Court, and subject to the provisions of this section, in writing signed by him, within 12 months after the commencement of the winding up or such extended period as may be allowed by the Court, disclaim the property:

Provided that, where the property has not come to the knowledge of the liquidator within one month after the commencement of the winding up, the power under this section of disclaiming the property may be exercised at any time within 12 months after he has become aware thereof or such extended period as may be allowed by the Court.

(2) A disclaimer under this section shall operate to determine, as from the date of the disclaimer, the rights, interest and liabilities of the company, in or in respect of the property disclaimed, but shall not, except it is necessary for the purpose of releasing the company from any liability, affect the rights or liabilities of any other person.

(3) The Court, before or on granting leave to disclaim under subsection (1), may require such notices to be given to persons interested, and impose such terms as a condition of granting leave, and make such other order in the matter as the Court deems just.

(4) The liquidator is not entitled to disclaim any property under this section in any case where an application in writing has been made to him by any person interested in the property requiring him to decide whether or not he will disclaim, and the liquidator has not, within 28 days after the receipt of the application or such further period as may be allowed by the Court, give notice to the applicant that he intends to apply to the Court for leave to disclaim, and, in the case of a contract, if the liquidator, after such an application, does not within that period or further period disclaim the contract, the company is deemed to have adopted it.

(5) The Court may, on the application of any person who is, as against the liquidator, entitled to the benefit or subject to the burden of a contract on such terms as to payment by or to either party, of damages for the non-performance of the contract, or otherwise as the Court deems just, and any damages payable under the order to that person may be proved by him as a debt in the winding up.

(6) The Court may, on an application by any person who claims any interest in any property disclaimed under this section, or is under any liability not discharged by this Act in respect of any disclaimed property, and on hearing any such persons as it thinks fit, make an order for the vesting of the property in or the delivery of the property to any persons entitled thereto, or to whom it may seem just that the property should be delivered by way of compensation for such liability, or a trustee for him, and on such terms as the Court deems just and on any such vesting order being made, the property comprised therein shall vest in the person therein named in that behalf without any conveyance or assignment for the purpose.

(7) Where the property disclaimed is of a leasehold nature, the Court shall not make a vesting order in favour of any person claiming under the company, whether as an under- lessee or as a mortgagee by demise, a mortgage by way of legal charge or mortgage, as the case may be, except upon the terms of making that person —

(a) object to the same liabilities and obligations as those to which the company was subject under the lease in respect of the property at the commencement of the winding up; or

(b) if the Court deems fit, subject only to the same liabilities and obligations as if the lease had been assigned to that person at that date,

and in either event if the case so requires, as if the lease had comprised only the property comprised in the vesting order, and any mortgagee or under- lessee declining to accept a vesting order upon such terms shall be excluded from all interest in and security upon the property, and if there is no person claiming under the company who is willing to accept an order upon such terms, the Court shall have power to vest the estate and interest of the company in the property in any person liable, either personally or in a representative character, and either alone or jointly with the company, to perform the lessee’s covenants in the lease, freed and discharged from all estates, encumbrances and interests created therein by the company.

Disclaimer of onerous property.

664. Any person injured by the operation of a disclaimer under section 663 is deemed to be a creditor of the company to the amount of the injury, and may accordingly prove the amount as a debt in the winding up.

Persons injured.

665. (1) This section applies in the case of a company where —

(a) the company enters administration;

(b) a company voluntary arrangement approved under Chapter 17 has taken effect;

(d) a provisional liquidator is appointed.

(2) If a request is made by or with the concurrence of the officeholder for the giving, after the effective date, of any of the supplies mentioned in the next subsection, the supplier —

(a) may make it a condition of the giving of the supply that the office-holder personally guarantees the payment of any charges in respect of the supply;

(b) shall not make it a condition of the giving of the supply, or do anything which has the effect of making it a condition of the giving of the supply, that any outstanding charges in respect of a supply given to the company before the effective date are paid.

(3) For the purpose of subsection (2), “the officeholder” means the administrator, the nominee, the supervisor, the liquidator or the provisional liquidator, as the case may be.

(4) The supplies referred to in subsection (2) are a supply of —

(a) gas by a gas supplier within the meaning of legislation regulating the provision of gas, if applicable;

(b) electricity by an electricity supplier within the meaning of legislation dealing with the provision of electricity;

(d) communications services by a provider of a public electronic communications service.

(5) The “effective date” for the purposes of this section, is the date on which the —

(a) company entered administration;

(b) voluntary arrangement took effect;

(d) provisional liquidator was appointed.

(6) In subsection (3), the term, “communications services” does not include electronic communications services to the extent that they are used to broadcast or otherwise transmit programme services within the meaning of the Nigerian Communications Commission Act.

Supplies of gas, water, electricity, etc.

Cap. N97, LFN, 2004.

666. (1) Where a creditor issues execution against any goods or land of a company, or attaches any debt due to the company, and the company is subsequently wound up, the creditor shall not be entitled to retain the benefit of the execution or attachment against the liquidator in the winding up of the company, unless he has completed the execution or attachment before the commencement of the winding up:

Provided that —

(a) where any creditor has had notice of a meeting having been called at which a resolution for voluntary winding up is to be proposed, the date on which the creditor so had notice shall, for the purposes of subsection (1), be substituted for the date of the commencement of the winding up,

(b) if a person purchases in good faith under a sale by the sheriff any goods of a company on which an execution has been levied, he shall acquire a good title to them against the liquidator, and

(c) the rights conferred by this subsection on the liquidator may be set aside by the Court in favour of the creditor to such extent and subject to such terms as the court deems fit.

(2) For the purposes of this section, an execution against goods shall be taken to be completed by seizure and sale, and an attachment of a debt is deemed to be completed by receipt of the debt, and an execution against land is deemed to be completed by seizure and, in the case of an equitable interest, by the appointment of a receiver.

Restriction of rights of creditor as to execution, etc., on winding- up of company.

667. (1) Subject to the provisions of subsection (3), where any goods of a company are taken in execution and before the sale thereof or the completion of the execution by the receipt or recovery of the full amount of the levy, notice is served on the sheriff that a provisional liquidator has been appointed or that a winding-up order has been made or that a resolution for voluntary winding up has been passed, the sheriff shall, on being so required, deliver the goods and any money seized or received in part satisfaction of the execution to the liquidator, but the costs of the execution shall be a first charge on the goods or money so delivered, and the liquidator may sell the goods, or a sufficient part thereof, for the purpose of satisfying that charge.

(2) Subject to the provisions of subsection (3), where under an execution in respect of a judgment for a sum exceeding ₦100,000, the goods of a company are sold or money is paid in order to avoid the sale, the sheriff shall deduct the costs of the execution from the proceeds of the sale or the money paid, and retain the balance for 14 days and if within that time notice is served on him of a petition for the winding up of the company having been presented or of a meeting having been called at which there is to be proposed a resolution for the voluntary winding up of the company and an order is made or a resolution is passed, as the case may be, for the winding up of the company, the sheriff shall pay the balance to the liquidator, who shall be entitled to retain it as against the execution creditor.

(3) The rights conferred by this section on the liquidator may be set aside by the Court in favour of the creditor to such extent and subject to such terms as the Court deems fit.

(4) In this section and section 666 of this Act —

(a) “goods” includes chattels personal; and

(b) “sheriff” includes any officer responsible for the execution of a writ or other process.

Duty of sheriff as to goods taken in execution.

OFFENCES ANTECEDENT TO OR IN COURSE OF WINDING UP

668. (1) If any person, being a past or present officer of a company which at the time of the commission of the alleged offence is being wound up, whether by or under the supervision of the Court or voluntarily, or is subsequently ordered to be wound up by the Court or subsequently passes a resolution for voluntary winding up —

(a) does not, to the best of his knowledge and belief, fully and truly discover or deliver to the liquidator all the property, landed and personal, of the company, and how and to whom, for what consideration and when, the company disposed of any part thereof, except such part as has been disposed of in the ordinary way of the business of the company;

(b) does not deliver up to the liquidator, or as he directs, all such part of the real and personal property of the company as is in his custody or under his control, which he is required by law to deliver up;

(c) does not deliver up to the liquidator, or as he directs, all books and papers in his custody or under his control belonging to the company which he is required by law to deliver up;

(d) within 12 months immediately preceding the commencement of the winding up or at any time thereafter, conceals any part of the property of the company to the value of ₦100,000 or upwards, or conceals any debt due to or from the company;

(e) within 12 months immediately preceding the commencement of the winding up or at any time thereafter, fraudulently removes any part of the property of the company to the value of ₦100,000 or upwards;

(f) makes any material omission in any statement relating to the affairs of the company;

(g) knowing or believing that a false debt has been proved by any person under the winding up, fails for the period of one month to inform the liquidator thereof;

(h) after the commencement of the winding up, prevents the production of any book or paper affecting or relating to the property or affairs of the company;

(i) within 12 months immediately preceding the commencement of the winding up or at any time thereafter;

(j) conceals, destroys, mutilates or falsifies, or is privy to the concealment, destruction, mutilation or falsification of the book or paper affecting or relating to the property or affairs of the company –

(i) makes or is privy to the making of any false entry in any book or paper affecting or relating to the property or affairs of the company,

(ii) fraudulently parts with, alters or makes any omission in, or is privy to the fraudulently parting with, altering or making any omission in any document affecting or relating to the property or affairs of the company,

(iii) at any meeting of the creditors of the company, attempts to account for any part of the property of the company by fictitious losses or expenses,

(iv) makes false representation or other fraud, obtained any property for or on behalf of the company on credit which the company does not subsequently pay for,

(v) under the false pretence that the company is carrying on its business, obtains on credit, for or on behalf of the company any property which the company does not subsequently pay for, or

(vi) pawns, pledges or disposes of any property of the company which has been obtained on credit and has not been paid for, unless such pawning, pledging, or disposing is in the ordinary way of the business of the company; or

(k) makes any false representation or other fraud for the purpose of obtaining the consent of the creditors of the company or any of them to an agreement with reference to the affairs of the company or to the winding up,

commits an offence and is –

(i) in the case of the offences mentioned respectively in sub-paragraphs (iv), (v) and (vi), liable on conviction to imprisonment for a term of 12 months, and

(ii) in the case of any other offence under this subsection, is liable on conviction to imprisonment for a term of two years:

Provided it is a good defence to a charge under any of paragraphs (a), (b), (c), (d), (f) and (i) (v) and (vi) of this subsection, if the accused proves that he had no intent to defraud, and to a charge under any of paragraphs (h), (i) and (j), if he proves he had no intention to conceal the state of affairs of the company or to defeat the law.

(2) Where any person pawns, pledges or disposes of any property in circumstances which amount to an offence under subsection (1) (j) (i) and (vi), every person who takes in pawn or pledge, or otherwise receives the property knowing it to be pawned, pledged or disposed of in such circumstances, commits an offence and is liable on conviction to be punished in the same way as if he had received the property knowing it to have been obtained in circumstances amounting to an offence.

(3) For the purposes of this section, “officer” includes any person in accordance with whose directions or instructions the directors of a company have been accustomed to act.

Offences by officers of company in liquidation.

669. An officer or contributory of any company being wound up who destroys, mutilates, alters or falsifies books, papers or securities, or makes or is privy to the making of any false or fraudulent entry in any register, book of account or document belonging to the company with intent to defraud or deceive any person, commits an offence and is liable on conviction to imprisonment for a term of two years or a fine as the Court deems fit.

Falsification of books.

670. A person who, being at the time of the commission of the alleged offence is an officer, of a company which is subsequently ordered to be wound up by the Court, or subsequently passes a resolution for voluntary winding up —

(a) has by false pretence or by means of any other fraud induced any person to give credit to the company;

(b) with intent to defraud creditors of the company, made or caused to be made any gift or transfer of or charge on, or has cause or connive at the levying of any execution against the property of the company; or

(c) with intent to defraud creditors of the company, has concealed or removed any part of the property of the company, or within two months before the date of any unsatisfied judgment or order for payment of money obtained against the company,

he commits an offence and is liable on conviction to imprisonment for a term of two years.

Fraud by officers of companies in liquidation.

671. (1) If, where a company is wound up, it is shown that proper books of account were not kept by the company throughout the period of two years immediately preceding the commencement of the winding up or the period between the incorporation of this company and commencement of the winding up, whichever is the shorter, each officer of the company who is in default, unless he shows that he acted honestly and that in the circumstances in which the business of the company was carried on the default was excusable, commits an offence and is liable on conviction to a fine as prescribed by the Commission in the regulation.

(2) For the purposes of this section, proper books of account shall be deemed not to have been kept in the case of any company if there have not been kept such books of accounts as are necessary to exhibit and explain the transactions and financial position of the trade or business of the company, including books containing entries from day to day in sufficient detail of all cash received and cash paid and, where the trade or business has involved dealing in goods, statements of the annual stock takings and (except in case of goods sold by way of ordinary retail trade) of all goods sold and purchased, showing the goods and the buyers and sellers in sufficient details to enable those goods and those buyers and sellers to be identified.

Liability where proper accounts not kept.

672. (1) If, in the course of the winding up of a company, it appears that any business of the company has been carried on in a reckless manner or with intent to defraud creditors of the company or creditors of any other person, or for any fraudulent purpose, the Court, on the application of the official receiver, or the liquidator or any creditor or contributory of the company, may, if it deems proper to do so, declare that persons who were knowingly parties to the carrying on of the business in that manner, is personally responsible, without any limitation of liability for all or any of the debts or other liabilities of the company as the Court may direct.

(2) Where the Court makes a declaration as to responsibility for debts or liabilities under subsection (1), it may give any direction it deems proper for the purpose of giving effect to that declaration, and in particular the Court may make provision for making the liability of any such person under the declaration a charge on any debt or obligation due from the company to him, or on any mortgage, charge or interest in any mortgage, or charge or assets of the company held by or vested in him, or any company or person on his behalf, or any person claiming as assignee from or through the person liable or any company or person acting on his behalf, and may make any further order necessary for enforcing any charge imposed under this subsection.

(3) Where any business of a company is carried on with such intent or for such purpose as is mentioned in subsection (1) (other than recklessly), every person who was knowingly a party to the carrying on of the business in that manner, commits an offence, and is liable on conviction to a fine as the Court deems fit or to imprisonment for a term of two years or both.

(4) In its operation, this section shall have effect, so that —

(a) a declaration may be made notwithstanding that the person concerned may be criminally liable in respect of matters which are grounds for the declaration and a declaration, if made, is deemed to be a final judgment of the Court;

(b) the official receiver or the liquidator, as the case may be, on the hearing of an application to the Court, may himself give evidence or call witnesses;

(c) the expression “assignee” includes any person to whom or in whose favour by the direction of the person liable, the debt, obligation, mortgage, or charge was created, issued or transferred, or the interest created, other than any person being an assignee for valuable consideration given in good faith and without notice of any of the matters on the ground of which the declaration is made; and

(d) “valuable consideration” shall not include consideration by way of marriage.

Responsibility for fraudulent trading.

673. (1) Subject to subsection (3), if, in the course of the winding up of a company, it appears that subsection (2) applies in relation to a person who is or has been a director of the company, the Court, on the application of the liquidator, may declare that that person is to be liable to make such contribution (if any) to the company’s assets as the Court deems proper.

(2) This subsection applies in relation to a person if —

(a) the company has gone into insolvent liquidation,

(b) at some time before the commencement of the winding up of the company, that person knew or ought to have concluded that there was no reasonable prospect that the company would avoid going into insolvent liquidation, and

(3) The Court shall not make a declaration under this section with respect to any person if it is satisfied that after the condition specified in subsection (2) (b) was first satisfied in relation to him, that person took every step with a view to minimising the potential loss to the company’s creditors as (assuming him to have known that there was no reasonable prospect that the company would avoid going into insolvent liquidation) he ought to have taken.

(4) For the purposes of subsections (2) and (3), the facts which a director of a company ought to know or ascertain, the conclusions which he ought to reach and the steps which he ought to take are those which would be known or ascertained, or reached or taken, by a reasonably diligent person having both —

(a) the general knowledge, skill and experience that may reasonably be expected of a person carrying out the same functions as are carried out by that director in relation to the company; and

(b) the general knowledge, skill and experience that that director has.

(5) The reference in subsection (4) to the functions performed in relation to a company by a director of the company includes any function which he does not perform but which has been entrusted to him.

(6) For the purposes of this section, a company goes into insolvent liquidation if it goes into liquidation at a time when its assets are insufficient for the payment of its debts and other liabilities and the expenses of the winding up.

Wrongful trading.

674. (1) If, in the course of winding up a company, it appears that any person who has taken part in the formation or promotion of the company, or any past or present director, manager or liquidator, or any officer of the company, has misapplied or retained or become liable or accountable for any money or property of the company, or been guilty of any misfeasance or breach of duty in relation to the company which would involve civil liability at the suit of the company, the Court may, on the application of the official receiver, liquidator, creditor or contributory, examine into the conduct of the promoter, director, liquidator or officer, and compel him to repay or restore the money or property or any part thereof respectively with interest at such rates as the Court deems just, or to contribute such sum to the assets of the company by way of compensation in respect of the misapplication, retainer, misfeasance or breach of trust as the Court deems just.

(2) The provisions of this section extend to any receiver of the property of a company, and, shall, in any case, have effect notwithstanding that the offence is one for which the offender may be criminally liable.

(3) Where an order for payment of money is made under this section, the order is deemed to be a final judgment of the Court.

Power of court to assess damages against delinquent directors.

PROSECUTION OF DELINQUENT OFFICERS AND MEMBERS OF A COMPANY

675. (1) If it appears to the Court, in the course of winding up by, or subject to the supervision of the Court, that any past or present officer, or any member of the company has been guilty of any offence in relation to the company for which he is criminally liable, the Court may, either on the application of any person interested in the winding up or of its own motion, direct the liquidator to refer the matter to the Attorney-General of the Federation.

(2) If it appears to the liquidator, in the course of a voluntary winding up, that any past or present officer, or any member of the company has been guilty of any offence in relation to the company for which he is criminally liable, he shall report the matter to the Attorney-General of the Federation and shall furnish him such information and give to him such access to and facilities for inspecting and taking copies of any document, being information or document in the possession or under the control of the liquidator and relating to the matter in question, as he may require.

(3) Where any report is made under subsection (2) to the Attorney-General of the Federation, he may, if he thinks fit, apply to the Court for –

(a) an order conferring on him or any person designated by him for the purpose with respect to the company concerned;

(b) all such powers of investigating the affairs of the company as are provided by this Act in the case of a winding up by the Court.

(4) If it appears to the Court, in the course of a voluntary winding up, that any past or present officer, or any member of the company has been guilty, and that no report with respect to the matter has been made by the liquidator to the Attorney-General of the Federation under subsection (2), the Court may, on the application of any person interested in the winding up or of its own motion, direct the liquidator to make such a report, and on a report being made accordingly, the provisions of this section shall have effect as though the report had been made under subsection (2).

(5) If, any matter is reported or referred to the Attorney-General of the Federation under this section, and he considers that the case is one in which a prosecution ought to be instituted, the Attorney-General of the Federation shall institute proceedings accordingly, and it is the duty of the liquidator and of every other officer and agent of the company past and present (other than the defendant in the proceedings) to give him all assistance in connection with the prosecution which he is reasonably able to give.

(6) For the purposes of subsection (5), the word, “agent” in relation to a company includes any –

(a) banker or solicitor of the company; and

(b) person employed by the company as auditor, whether that person is or is not an officer of the company.

(7) If a person fails or neglects to give assistance in the manner required by subsection (5), the Court may, on the application of the Attorney-General of the Federation, direct that person to comply with the requirements of the subsection (5), and where any such application is made with respect to a liquidator, the Court, may, unless it appears that the failure or neglect to comply was due to the liquidator not having in his hands sufficient assets of the company to enable him to do so, direct that the costs of the application shall be borne by the liquidator personally.

Prosecution of delinquent officers and members of a company.

SUPPLEMENTARY PROVISIONS AS TO WINDING UP

676. (1) The following persons shall not be competent to be appointed or to act as liquidator of a company, whether in a winding up by, or under the supervision of the Court, or in a voluntary winding up-

(a) an infant;

(b) anyone found by the Court to be of unsound mind;

(d) an undischarged bankrupt;

(e) any director of the company under liquidation;

(f) any person convicted of any offence involving fraud, dishonesty, official corruption or moral turpitude and in respect of whom there is a subsisting order under section 672 and 280 of this Act.

(2) Any appointment made that is contrary to subsection (1) is void and if any of the persons named in subsection (1) (c) – (f) act as a liquidator of the company, he commits an offence and is liable to a fine as prescribed by the Commission in the Regulations in the case of a body corporate or, in the case of an individual, to imprisonment for a term not exceeding six months or to a fine as the Court deems fit or both.

Disqualifications for appointment as liquidator.

677. Any person who gives, agrees or offers to give to any member or creditor of a company any valuable consideration with a view to securing his own appointment or nomination, or to securing or preventing the appointment or nomination of a person other than himself as the company’s liquidator, commits an offence and is liable to a fine as the Court deems fit.

Corrupt inducement affecting appointment as liquidator.

678. (1) If a liquidator makes default in filing, delivering or making any return, account or other document, or in giving any notice which he is by law required to file, deliver, make or give, and fails to make good the default within 14 days after the service on him of a notice requiring him to do so, the Court may, on an application made to the Court by any contributory or creditor of the company or by the Commission, make an order directing the liquidator to make good the default within such time as is specified in the order.

(2) Any order under this section may provide that the costs of any expenses incidental to the application shall be borne by the liquidator, and nothing in this section shall be taken to prejudice the operation of any enactment imposing penalties on a liquidator in respect of any such default.

Enforcement of duty of liquidator to make returns.

679. (1) Where a company is being wound up, whether by, or under the supervision of, the Court or voluntarily, every invoice, order for goods or business letter issued by, or on behalf of, the company or a liquidator of the company, or a receiver or manager of the property of the company, being a document on or in which the name of the company appears, shall contain a statement that the company is being wound up.

(2) If default is made in complying with the provisions of this section –

(a) the company,

(b) any officer of the company,

(d) any receiver or manager,

are liable to a penalty as prescribed by the Commission in the regulations.

Notification that a company is in liquidation.

680. (1) In the case of a winding up by the Court or a creditors’ voluntary winding up —

(a) every assurance relating to any property of the company, or to any mortgage, charge or other encumbrance or any right or interest in any property, in any event forming part of the assets of the company and which, after the execution of the assurance, either at law or in equity is, or remains part of the assets of the company; and

(b) every power of attorney, proxy paper, writ, order, certificate, affidavit, bond or other instrument or writing relating solely to the property of any company which is being so wound up, or to any proceeding under any such winding up, shall be exempted from duties chargeable under any law or enactment relating to stamp duties.

(2) In this section, “assurance” includes any deed, conveyance, instrument, discharge, assignment or surrender.

Exemption from stamp duty.

681. Where a company is being wound up, all books and papers of the company and of the liquidators shall, as between the contributories of the company, be prima facie evidence of the truth of all matters purported to be recorded.

Books of company to be evidence.

682. (1) Where a company is being wound up and is about to be dissolved, the books and papers of the company and of the liquidators may be disposed of in the following manner –

(a) in the case of a winding up by, or under the supervision of, the Court in such way as the Court directs;

(b) in the case of a members’ voluntary winding up, in such a way as the company by special resolution directs;

(c) in the case of a creditors’ voluntary winding up, in such way as the Committee of Inspection or, if there is no such committee, as the creditors of the company, may direct.

(2) After five years from the dissolution of the company no responsibility shall rest on the company, the liquidators, or any person to whom the custody of the books and papers has been committed, by reason of any book or paper not being forthcoming to any person claiming to be interested therein.

(3) Provisions may be made by general rules for enabling the Commission to prevent, for such period (not exceeding five years from the dissolution of the company) as it may consider proper, the destruction of the books and papers of a company which has been wound up, and for enabling any creditor or contributory of the company to make representations to it and to appeal to the Court from any direction which may be given by it in the matter.

(4) A person who acts in contravention of any general rule made for the purposes of this section or any direction of the Commission, is liable to a penalty as prescribed by the Commission in the Regulations.

Disposal of books and other papers of company.

683. (1) Where a company is being wound up, and the winding up is not concluded within one year after its commencement, the liquidator shall, at such intervals as may be prescribed until the winding up is concluded, send to the Commission a statement in the prescribed form containing the prescribed particulars with respect to the proceedings in, and position of, the liquidation.

(2) Any person stating himself in writing to be a creditor or contributory of the company is entitled, by himself or his agent, at all reasonable times and on payment of the prescribed fee, to inspect the statement, and receive a copy or extract of the statement, but a person who falsely states himself to be creditor or contributory is liable to contempt of Court, and is punishable on the application of the liquidator or official receiver.

(3) If a liquidator fails to comply with the requirements of this section, he is liable to a penalty as prescribed by the Commission in the Regulations.

(4) If it appears from any such statement or otherwise that a liquidator has in his custody or under his control any money representing unclaimed or undistributed assets of the company which have remained unclaimed or undistributed for six months after the date of their receipt, the liquidator shall immediately pay the same to the companies liquidation account mentioned in section 591 of this Act and is entitled to a certificate of receipt in the prescribed form for the money so paid, which is an effectual discharge to him.

(5) For the purposes of ascertaining and getting in any money payable into the companies liquidation account under this section —

(a) the Commission may at any time order any such liquidator to submit to it an account verified by affidavit of the sums received and paid by him under or in pursuance of the liquidation, and may direct and enforce an audit of the account and if the liquidator fails to submit the account within such reasonable time as the Commission directs, he shall be liable to contempt of Court and may, on the application of the Commission to the Court made for the purpose, be punished accordingly; and

(b) the Court may, if default is made in submitting the account referred to under this section —

(i) by warrant addressed to any police officer, cause the liquidator to be arrested, and all books, papers and money or goods, relating to the liquidation in his possession to be seized and him and them to be safely kept until such time as the Court may order,

(ii) at any time by order addressed to the Postmaster-General of the Nigerian Postal Service require that, for a period of not more than three months, letters addressed to the liquidator and sent through the post, be in course of post, redirected, sent or delivered to or at any place or places mentioned in the order,

(iii) summon the liquidator or his wife, or any person known or suspected to have in his possession any book or paper relating to the liquidation, and any money or goods belonging to the liquidator or representing any unclaimed or undistributed assets of the company, or summon any person whom the Court deems capable of giving information respecting any book, paper, money, goods or other asset, and require any person summoned under this paragraph to produce documents in his custody or under his control relating to the liquidator’s dealings with the property of the company,

(iv) where any person on examination before it admits that he is indebted to the company, by order made on the application of the official receiver or liquidator, direct payment to the official receiver or liquidator, as the case may be, of the amount admitted, or any part, either in full discharge of the whole amount in question or not at such time and in such manner as the Court deems fit, with or without costs of the examination,

(v) examine on oath, either by word of mouth or written interrogatories, any person so brought before it concerning the liquidator and his dealings with the property of the company, and

(vi) if any person on examination before the Court admits that he has in his possession any money properly payable into the company’s liquidation account under this section, order him to pay any such money into that account.

(6) A person claiming to be entitled to money paid into the company’s liquidation account under this section may apply to the Commission for payment, and the Commission, if the liquidator certifies the claim, may make an order for payment accordingly.

(7) An appeal shall lie to the Court by any person claiming to be dissatisfied with the decision of the Commission in respect of any claim made under this section.

Information as to pending liquidations and disposal of unclaimed assets.

684. Where a resolution is passed at an adjourned meeting of creditors or contributories of a company, the resolution shall, for all purposes, be treated as having been passed on the date on which it was in fact passed, and is not deemed to have been passed on any earlier date.

Resolutions passed at adjourned meetings of creditors.

685. (1) On the winding up of a company, whether by the Court or voluntarily, the liquidator may, subject to subsections (2) –(4), make any payment which the company has, before the commencement of the winding up, decided to make under section 745 of this Act.

(2) The power which a company may exercise by virtue of section 745 of this Act may be exercised by the liquidator after the winding up has commenced if, after the company’s liabilities have been fully satisfied and provision has been made for the costs of the winding up, the exercise of that power has been sanctioned by such resolution of the company as would be required of the company itself by section 745 (3) of this Act before that commencement, as if paragraph (b) of that subsection were omitted and any other requirement applicable to its exercise by the company had been met.

(3) Any payment which may be made by a company under this section may be made out of the company’s assets which are available to the members on the winding up.

(4) On a winding up by the Court, the exercise by the liquidator of his powers under this section shall be subject to the Court’s control and any creditor or contributory may apply to the Court with respect to any exercise or proposed exercise of the power.

(5) Subsections (1) and (2) shall have effect notwithstanding any other rule or law.

Power to make over assets to employees.

SUPPLEMENTARY POWERS OF COURT

686. (1) The Court may, as to all matters relating to the winding up of a company, have regard to the wishes of the creditors or contributories of the company, as proved to it by any sufficient evidence, and may, if it deems fit, for the purposes of ascertaining those wishes, direct meetings of the creditors or contributories to be called, held and conducted in such manner as the Court directs and may appoint a person to act as chairman of any such meeting and to report the result to the Court.

(2) In the case of creditors, regard shall be had to the value of each creditor’s debt.

(3) In the case of contributories, regard shall be had to the number of votes conferred on each contributory by this Act or the articles.

Meetings to ascertain wishes of creditors and others.

687. In all proceedings under this Part of this Act, all Courts, Judges, and persons judicially acting, and all officers, judicial or ministerial, of any Court or employed in enforcing the process of any Court, shall take judicial notice of the signature of any officer of Court and also of the official seal or stamp of a Court appended to or impressed on any document made, issued or signed under this Part of this Act, or on any official copy of any such document.

Judicial notice of signatures of officers of Court.

688. (1) Documents purporting to be orders or certificates made or issued by the Attorney-General of the Federation or the Commission for the purposes of this Act and to be signed by the Attorney-General of the Federation or the Accountant-General of the Federation, or under the seal of the Commission or signed by any person authorised in that behalf by them, and, in proper case, to be sealed where necessary, shall be received in evidence and deemed to be such orders, or certificates without further proof, unless the contrary is shown.

(2) A certificate signed by the Attorney-General for the Federation, Accountant-General of the Federation or under the seal of the Commission that any order made, certificate issued, or act done, is the order, certificate or act of the Attorney-General of the Federation, Accountant-General of the Federation or the Commission, as the case may be, shall be conclusive of the fact so certified.

Judicial notice of signatures of certain government officials.

689. (1) Where a company is in course of being wound up, all magistrates shall be commissioners for the purpose of taking evidence under this Act and the Court may refer the whole or any part of the examination of any witnesses under this Act to any person appointed commissioner.

(2) Every commissioner shall, in addition to any power which he might lawfully exercise as a magistrate, have in the matter so referred to him the same powers as the Court, of –

(a) summoning and examining witnesses;

(b) requiring the production or delivery of documents;

(d) allowing costs and expenses to witnesses.

(3) The examination so taken shall be returned or reported to the Court in such manner as that Court directs.

Special commissioners for receiving evidence.

690. An affidavit required to be sworn under the provisions or for the purposes of this Part of this Act may be sworn in Nigeria or elsewhere in accordance with the provisions of the Oaths Act or under any other enactment or law providing for the administration of oaths and all Courts, Judges, commissioners, and persons acting judicially shall take judicial notice of the seal or stamp or signatures, as the case may be, of any Court, Judge, person, consul, or vice-consul, attached, appended, or subscribed to any such affidavit, or to any other document to be used for the purposes of this Part of this Act.

Affidavits in Nigeria and elsewhere.

Cap. N1, LFN, 2004.

PROVISIONS AS TO DISSOLUTION

691. (1) Where a company has been dissolved, the Court may, at any time within two years of the date of the dissolution, on an application being made for the purpose by the liquidator of the company or by any other person who appears to the Court to be interested, make an order, upon such terms as the Court may deem fit, declaring the dissolution to have been void, and thereupon such proceedings may be taken as might have been taken if the company had not been dissolved.

(2) A person on whose application the order was made, shall, within seven days after the making of the order or such further time as the Court may allow, deliver to the Commission for registration an office copy of the order, and if that person fails to do so he is liable to a penalty as prescribed by the Commission in the regulations.

Power of Court to void dissolution of company.

692. (1) The Commission may strike off the name of a company from the register of companies if —

(a) a special resolution has been passed by the company that the name of the company be struck off the register;

(b) an application has been made to the Commission that the name of the company be struck off the register;

(c) advertisement has been made in three national daily newspapers within 28 days of passing the resolution, calling for objections, if any, to the application; and

(d) the Commission is satisfied that —

(i) the reasons given for the application are sufficient to justify the striking off,

(ii) the company has not commenced business and has no undischarged obligations, and

(iii) no reasonable objection has been received within 28 days of the publication of the advertisement mentioned in subsection (1) (c).

(2) Any person aggrieved by the striking off of the name of the company under this subsection may apply to the Court, at any time before the expiration of two years from the date of the striking off, and if the Court is satisfied that it is just to restore it to the register, the Court may order the name of the company to be so restored.

(3) Where the Commission observes or has reasonable cause to believe that a company is not carrying on business or has not been in operation for 10 years or has not complied with provisions of this Act for a consecutive period of 10 years, the Commission may cause to be published, in at least three national daily newspapers, a notice of its intention to strike off the company from the register.

(4) Where the Commission does not, within 90 days of the last publication, receive any response from the company that it is carrying on business or in operation, it may strike off the name of the company.

(5) Where a company has been struck off in accordance with the provisions of this section, the Commission shall cause to be published in at least three national daily newspapers, the name and date of the striking off of the company, provided that —

(a) the liability, if any, of every director, managing officer and member of the company shall continue and may be enforced as if the company has not been struck off; and

(b) nothing in this subsection shall affect the power of the Court to wind up a company the name of which has been struck off the register.

(6) Any company, member or creditor aggrieved by the striking off from the register under subsection (4) may apply to the Court, at any time before the expiration of 10 years from the publication of the notice under subsection (5), for an order restoring the company to the register, and if the Court is satisfied that, at the time of the striking off, the company was carrying on business or in operation, or that otherwise it is just to restore it to the register, the Court may order the name of the company to be restored to the register, and an order under this subsection may include any directions, the Court deems fit, and provision may be made therein for placing the company and all other persons in the same position, as nearly as may be, as if the name of the company had not been struck off the register, and upon delivery of an office copy to the Commission for registration, the order shall have effect according to its tenor, and may be registered accordingly.

(7) Any notice to a liquidator to be sent under this section may be addressed to the liquidator at his last known place of business, and any letter or notice to be sent under this section to a company may be addressed to the company at its registered or head office.

Power of Commission to strike off defunct company.

693. Where a company is dissolved, all property and rights whatsoever vested in or held on trust for the company immediately before its dissolution, including leasehold property (but not including property held by the company on trust for any other person) shall, subject and without prejudice to any order which may at any time be made by the Court under section 691 or 692 of this Act, be deemed to be vested in the State without further assurance, as bona vacantia.

Property of dissolved company to be declared as bona vacantia.

CENTRAL ACCOUNTS

694. (1) There shall continue to be an account called the Companies Liquidation Account, kept on behalf of the Commission by the Accountant-General of the Federation, into which shall be paid all money received by the Commission in respect of proceedings under this Act in connection with the winding up of companies.

(2) All payments out of money standing to the credit of the Commission in the Companies Liquidation Account shall be made by the Accountant-General in the prescribed manner.

Companies liquidation account defined.

695. (1) If the cash balance standing to the credit of the Companies Liquidation Account is in excess of the amount which in the opinion of the Commission is required for the time being to answer demands in respect of companies’ estates, the Commission shall notify the excess to the Accountant-General of the Federation and the Accountant-General of the Federation, may invest the excess or any part thereof, in Government securities, to be placed to the credit of such account as he may deem fit in the circumstances.

(2) If any part of the money so invested is, in the opinion of the Commission, required to answer any demand in respect of companies’ estates, the Commission shall notify the Accountant-General of the Federation the amount so required, and the Accountant-General of the Federation shall thereupon repay to the Commission such sum as may be required to the credit of the Companies Liquidation Account, and for that purpose may direct the sale of such part of the securities as may be necessary.

(3) The dividends on investments under this section shall be paid to such account as the Accountant-General of the Federation may direct, and regard shall be had to the amount thus derived in fixing the fees payable in respect of proceedings in the winding up of companies.

Investment of surplus funds in Government securities.

696. (1) The Commission shall keep an account of the receipts and payments in the winding up of each company, and, when the cash balance standing to the credit of the account of any company is in excess of the amount which, in the opinion of the Committee of Inspection, is required for the time being to answer demands in respect of that company’s estate, the Commission shall, on the request of the committee, invest the amount not so required in Government securities, to be placed to the credit of the said account for the benefit of the company.

(2) If any part of the money so invested is, in the opinion of the Committee of Inspection, required to answer any demands in respect of the estate of the company, the Commission shall, on the request of that committee, raise such sum as may be required by the sale of such part of the said securities as may be necessary.

(3) The dividends on investments under this section shall be paid to the credit of the company.

(4) Where the balance at the credit of any company’s account in the hands of the Commission exceeds ₦1,000,000 and the liquidator gives notice to the Commission that the excess is not required for the purposes of the liquidation, the company is entitled to interest on the excess at the current bank rate.

Separate accounts of particular estates.

RETURNS BY OFFICERS OF COURT

697. The officers of the Courts acting in the winding up of companies shall make to the Commission such returns of the business of their respective Courts and offices, at such times, and in such manner and form as may be prescribed, and from those returns the Commission shall cause books to be prepared which shall be opened for public information and searches.

Returns by officers in winding-up.

ACCOUNTS TO BE PREPARED ANNUALLY

698. (1) The Commission and every officer by whom fees are taken under this Act in relation to the winding up of companies, shall make returns and give information to the Accountant- General of the Federation in such form as he may require and the accounts of the Commission relating to the winding up of companies shall be audited at the end of each year in the manner prescribed by the Constitution.

(2) The Accountant-General of the Federation shall, before the end of each year in which the audit is made, prepare for submission to the President an account of the winding up of companies, as audited by the Accountant-General for the Federation, showing in respect of such winding up, the receipts and expenditure during the previous year, and any other matter which the President or the Minister, as the case may be, may require.

Annual accounts of company winding-up and disposal.

Cap. C23, LFN, 2004.

Chapter 25

WINDING UP OF UNREGISTERED COMPANIES

699. Subject to the provisions of this Part of this Act, an unregistered company may be wound up under this Act and all the provisions of this Act, with respect to winding up shall apply to an unregistered company, with the following exceptions —

(a) the principal place of business of an unregistered company shall, for all the purposes of the winding up, be deemed to be the registered office of the company;

(b) an unregistered company shall not be wound up under this Act voluntarily or subject to supervision;

(i) the company is dissolved, or has ceased to carry on business or is carrying on business only for the purpose of winding up its affairs,

(ii) the company is unable to pay its debts, or

(iii) the Court is of opinion that it is just and equitable that the company should be wound up; or

(d) an unregistered company shall, for purposes of this Act, be deemed to be unable to pay its debts if —

(i) a creditor, by assignment or otherwise, to whom the company is indebted in a sum exceeding ₦100,000 then due, has served on the company, by leaving at its principal place of business, or by delivering to the secretary or some director, manager, or principal officer of the company, or by otherwise serving in such manner as the Court may approve or direct, a demand under his hand requiring the company to pay the sum so due, and the company has for 21 days after the service of the demand neglected to pay the sum, or to secure or compound for it to the satisfaction of the creditor,

(ii) any action or other proceedings has been instituted against any member for any debt or demand due from the company, or from him in his capacity as a member, and notice in writing of the institution of the action or proceeding having been served on the company by leaving it at its principal place of business, or by delivering it to the secretary, or some director, manager, or principal officer of the company, or by otherwise serving the notice in such manner as the court may approve or direct, the company has not within 28 days after service of the notice secured or compounded for the debt or demand or procured the action or proceeding to be stayed, or within that period has not indemnified the defendant to his reasonable satisfaction against the action or proceeding, and against all costs, damages and expenses to be incurred by him by reason of the same, or

(iii) execution or other process issued on a judgment, act or order obtained in any Court in favour of a creditor against the company, or any of its members or any person authorised to be sued as nominal defendant on behalf of the company, is returned unsatisfied and it is otherwise proved to the satisfaction of the Court that the company is unable to pay its debts.

Winding-up of unregistered company.

700. (1) In the event of an unregistered company being wound up –

(a) every person is deemed to be a contributory, who is liable to pay or contribute to the payment of –

(i) any debt or liability of the company

(ii) any sum for the adjustment of the rights of the members among themselves,

(iii) the costs and expenses of winding up the company, and

(b) every contributory is liable to contribute to the assets of the company all sums due from him in respect of any such liability.

(2) In the event of the death, bankruptcy, or insolvency of any contributory, the provisions of this Act with respect to the personal representatives, heirs, and devisees of deceased contributories, and the trustees of bankrupt or insolvent contributories, as the case may be, shall apply.

Contributories in winding-up unregistered company.

701. The provisions of this Act with respect to staying and restraining actions and proceedings against a company at any time after the presentation of a petition for winding up and before the making of a winding-up order shall, in the case of an unregistered company, where the application to stay or restrain is by a creditor, extend to actions and proceedings against any contributory of the company.

Power of Court to stay or restrain proceedings.

702. Where an order has been made for winding up an unregistered company, no action or proceeding shall be proceeded with or commenced against any contributory of the company in respect of any debt of the company except by leave of the Court, and subject to such terms as the Court may impose.

Action stayed on winding-up order.

703. The provisions of this Chapter of this Act with respect to unregistered companies shall be in addition to and not in restriction of any provision under this Act, contained with respect to winding up companies by the Court, and the Court or liquidator may exercise any power to do any act in the case of unregistered companies which might be exercised or done by it or him in winding up companies formed and registered under this Act, but an unregistered company shall not, except in the event of its being wound up, be deemed to be a company under this Act, and then only to the extent provided by this Chapter of this Act.

Provisions of this Part to be cumulative.

Chapter 26

MISCELLANEOUS PROVISIONS APPLYING TO COMPANIES WHICH ARE INSOLVENT

704. A person acts as an insolvency practitioner in relation to a company by acting as its —

(a) liquidator, provisional liquidator or official receiver;

(b) administrator or administrative receiver; or

Acting as insolvency practitioner.

705. (1) A person is only qualified to act as an insolvency practitioner where he —

(a) has obtained a degree in law, accountancy or such other relevant discipline from any recognised University or Polytechnic;

(b) has a minimum of five years post qualification experience in matters relating to insolvency;

(c) is authorised to so act by virtue of a certificate of membership issued by Business Recovery and Insolvency Practitioners Association of Nigeria (BRIPAN), or his membership of any other professional body recognised by the Commission, being permitted to act by or under the rules of that body; and

(d) holds an authorisation granted by the Commission.

(2) The Commission may prescribe in its regulations such other additional qualifications as may be considered necessary.

Qualification of insolvency practitioner.

706. (1) The Commission may, by an instrument or order, declare a body which appears to it to fall within subsection (2), to be a recognised professional body for the purposes of this section.

(2) A body may be recognised if it regulates the practice of a profession and maintains and enforces rules for securing that its members –

(a) are permitted by or under the rules to act as insolvency practitioners;

(b) are fit and proper persons to act; and

(3) References to members of a recognised professional body are to persons who, whether members of that body or not, are subject to its rules in the practice of the profession in question.

(4) An instrument or order made under subsection (1) in relation to a professional body may be revoked by a further order if it appears to the Commission that the body no longer falls within subsection (2).

Recognition of professional body by the Commission.

707. (1) Application may be made to the Commission for authorisation to act as an insolvency practitioner, and the application shall —

(a) be made in such manner as the Commission may specify;

(b) contain or be accompanied with a certificate of membership issued by BRIPAN or any other professional body approved by the Commission and such information as the Commission may reasonably require for the purpose of determining the application; and

(2) At any time after receiving the application and before determining it, the Commission may require the applicant to furnish additional information.

(3) An application may be withdrawn before it is granted or refused.

Application for authorisation to act as insolvency practitioner.

708. (1) The Commission may, on an application duly made and after being furnished with all such information as it may require, grant or refuse the application.

(2) The Commission shall grant the application if it appears to it from the information furnished by the Applicant and having regard to such other information, if any, that the Applicant —

(a) is a fit and proper person to act as an insolvency practitioner, and

(b) meets the prescribed requirements with respect to education and practical training and experience.

(3) An authorisation granted pursuant to the application shall take effect from the date of grant by the Commission.

(4) Authorisation granted may be withdrawn by the Commission if it appears to it that the holder of the authorisation is no longer a fit and proper person to act as an insolvency practitioner.

(5) An authorisation granted may be withdrawn by the Commission at the request or with the consent of the holder of the authorisation.

Commission to notify the party of the refusal or withdrawal of authorisation.

709. (1) Where the Commission refuses an application or withdraws an authorisation it shall within seven days notify the party in writing stating the reasons for the refusal or withdrawal of the authorisation, and the party affected within 21 days of the receipt of the notification may apply by summons on notice to the Court having jurisdiction in insolvency matter, for a review of the decision of the Commission and the Court, upon hearing the summons, may refuse or grant the summons on such terms as it deems fit.

(2) An appeal from the decision of the Court shall lie to the Court of Appeal and the decision of the Court of Appeal is final.

Review of Commission’s decision.

Chapter 27

ARRANGEMENTS AND COMPROMISE

710. In this Chapter, the word “arrangement” means any change in the rights or liabilities of members, debenture holders or creditors of a company or any class of them or in the regulation of a company, other than a change effected under any other provision of this Act or by the unanimous agreement of all parties affected.

711. (1) Where under a scheme proposed for a compromise, arrangement or reconstruction between two or more companies or the merger of any two or more companies, the whole or any part of the undertaking or the property of any company concerned in the scheme (in this section referred to as “the transfer of company”) is to be transferred to another company, the Court may, on the application in summary of any of the companies to be affected, order separate meetings of the companies to be summoned in such manner as the Court may direct.

(2) If a majority representing at least three-quarter in value of the share of members being present and voting either in person or by proxy at each of the separate meetings, agree to the scheme, an application may be made to the Court by one or more of the companies, and the Court shall sanction the scheme.

(3) When the scheme is sanctioned by the Court, it becomes binding on the companies, and the Court may, by the order sanctioning the scheme or by any subsequent order, make provision for —

(a) the transfer to the transferee company of the whole or any part of the undertaking and of the property or liabilities of any transferor company;

(b) the allotting or appropriation by the transferee company of shares, debentures, policies or other like interests in that company which under the compromise or arrangement are to be allotted or appropriated by that company to or for any person;

(c) the continuation by or against the transferee company of legal proceedings pending by or against any transferor company;

(d) the dissolution, without winding up, of any transferor company;

(e) the provision to be made for any persons who in such manner as the court may direct, dissent from the compromise or arrangement; and

(f) such incidental, consequential and supplemental matters as are necessary to secure that the reconstruction or merger shall be fully and effectively carried out.

(4) An order under subsection (3) (d) shall not be made unless —

(a) the whole of the undertaking and the property, assets and liabilities of the transferor company are being transferred into the transferee company; and

(b) the Court is satisfied that adequate provision by way of compensation or otherwise have been made with respect to the employees of the company to be dissolved.

(5) Where an order under this section provides for the transfer of property or liabilities, that property or liabilities shall, by virtue of the order, be transferred to and become the property or liabilities of the transferee company, and in the case of any property, if the order so directs, freed from any charge which is by virtue of the compromise or arrangement to cease to have effect.

(6) Where an order is made under this section, every company in relation to which the order is made shall cause an office copy of the order to be delivered to the Commission for registration within seven days after the making of the order, and a notice of the order shall be published in the Federal Government Gazette and in at least one national newspaper and if in default shall be liable to a fine in such amount as may be prescribed by the Commission in its regulations.

(7) In this section —

(a) “property” includes property rights and powers of every description;

(b) “liabilities” includes rights, powers and duties of every description notwithstanding that such rights, powers and duties are of a personal character which could not generally be assigned or performed vicariously; and

(c)”company” where used in this section does not include any company other than a company within the meaning of this Act.

712. (1) Where a scheme or contract, not being a take-over bid under the Investment and Securities Act involving the transfer of shares or any class of shares in a company (in this section referred to as “the transfer of company”) to another company, whether a company within the meaning of this Act or not (in this section referred to as ‘the transferee company’) has, within four months after the making of the offer in that behalf by the transferee company been approved by the holders of at least nine-tenth in value of the shares of the company (other than shares already held at the date of the offer by a nominee for the transferee company, or its subsidiary), the transferee company may at any time within two months after the expiration of the said four months give notice in the prescribed manner to any dissenting shareholder that it desires to acquire his shares.

(2) When a notice under subsection (1) is given, the transferee company is, unless on an application made by the dissenting shareholder within one month from the date on which the notice was given, unless the Court deems fit to order otherwise, entitled and bound to acquire those shares on the terms on which, under the scheme or contract, the shares of the approving shareholders are to be transferred to the transferee company.

(3) Where shares in the transferor company of the said class or classes as the shares whose transfer is involved are already held as specified in subsection (1) to a value greater than one-tenth of the aggregate of their value and that of the share (other than those already held as specified in that subsection) whose transfer is involved, the provisions of this section do not apply unless —

(a) the transferee company offers the same terms to all holders of the shares (other than those already held) whose transfer is involved, or where those shares include shares of different classes, of each class of them; and

(b) the holders who approve the scheme or contracts besides holding at least nine-tenth in value of the shares (other than those already held as aforesaid) whose transfer is involved, shall be at least three- quarters in number of the holders of those shares.

(4) Where a notice has been given by the transferee company under subsection (1) and the Court has not, on an application made by the dissenting shareholder, ordered to the contrary, the transferee company shall —

(a) on the expiration of one month from the date on which the notice has been given or if an application to the Court by the dissenting shareholder is then pending after that application has been disposed of, transmit a copy of the notice to the transferor company together with an instrument of transfer executed on behalf of the shareholder by any person appointed by the transferee company and on its behalf by the transferee company; and

(b) pay or transfer to the transferor company the amount or other consideration representing the price payable by the transferee company for the shares which by virtue of this section that company is entitled to acquire, and the transferor company shall thereupon register the transferee company as the holder of those shares.

(5) Any sum received by the transferor company under this section shall be paid into a separate bank account, and such sums and any other consideration so received shall be held by that company on trust for the several persons entitled to the shares in respect of which the said sums or other consideration, were respectively received.

(6) In this section, “dissenting shareholder” includes a shareholder who has not assented to the scheme or contract and any shareholder who has failed or refused to transfer to the transferee company in accordance with the scheme or contract.

713. (1) This section applies where, in pursuance of any such scheme or contract, shares in a company are transferred to another company or its nominee, and those shares together with any other shares in the first mentioned company held by, or by a nominee for the transferee company or its subsidiary at the date of the transfer comprise or include nine-tenth in value of the shares in the first mentioned company or of a class of those shares.

(2) The transferee company shall, within one month from the date of the transfer (unless on a previous transfer in pursuance of the scheme or contract it has already complied with this requirement), give notice of that fact in the prescribed manner to the holder of the remaining shares or of the remaining shares of that class, as the case may be, who have not assented to the scheme or contract.

(3) A holder may, within three months from the giving of the notice to him, require the transferee company to acquire the shares in question.

(4) If a shareholder gives notice under subsection (3) with respect to any share, the transferee company is entitled and bound to acquire those shares on the terms on which under the scheme or contract the shares of the approving shareholders were transferred to it, or on such other terms as may be agreed on as the Court hearing the application of either the transferee company or the shareholder deems fit.

714. (1) With a view to effecting any arrangement, a company may by special resolution resolve that the company be put into members’ voluntary winding up and that the liquidator be authorised to sell the whole or part of its undertaking or assets to another body corporate, whether a company within the meaning of this Act or not (in this section called “the transferee company”) in consideration or part consideration of fully paid shares, and to distribute the same in specie among the members of the company in accordance with their rights in the liquidation.

(2) Any sale or distribution in pursuance of a special resolution under this section is binding on the company and all its members and each member shall be deemed to have agreed with the transferee company to accept the fully paid shares, debentures, policies, cash or other like interests to which he is entitled under such distribution:

Provided that if —

(a) within one year from the date of the passing of any special resolution as is referred to in subsection (1), an order is made under sections 353 – 355 of this Act dealing with relief on the grounds of unfairly prejudicial and oppressive conduct or for the winding up of the company under a creditors’ voluntary winding up, the arrangement for the sale and distribution shall not be valid unless sanctioned by the Court; or

(b) any member of the company, by writing addressed to the liquidator and left at the registered office or head office of the company, within 30 days after the passing of the resolution, dissents in respect of any of the shares held by him, the liquidator shall either abstain from carrying the resolution into effect or shall purchase such shares at a price to be determined in the manner provided by subsection (4).

(3) Any member who fails to signify his dissent in accordance with subsection (2) is deemed to have accepted the resolution.

(3) If the liquidator elects to purchase the shares of any member who has expressed his dissent in accordance with subsection (2), the price payable shall be determined by agreement in the case of a private company in which aliens do not participate, and in the case of a public company or a private company in which aliens participate, by the Securities and Exchange Commission:

Provided that in the case of a private company in which no aliens participate —

(a) such price is determined by estimating what the member concerned would have received had the whole of the undertaking of the company been sold as a going concern for cash to a willing buyer and the proceeds, less the cost of winding up, been divided amongst the members in accordance with their rights; and

(b) the purchase money is paid by the company before the company is dissolved and be raised by the liquidator or, in default of any direction in the special resolution, in such manner as he may think fit as part of the expenses of the winding up.

(5) Nothing contained in this section authorises any variation or abrogation of the rights of any creditor of the company.

(6) If any company, otherwise than under this section, sells or resolves to sell the whole or part of its undertaking or assets to another body corporate in consideration or part consideration of any shares, debentures, policies or other like interest in that body corporate, and resolves to distribute the same in specie among members of the company (whether in liquidation or by way of dividend), any member of the company may by notice in writing addressed to the company and left at the registered office or head office of the company within 30 days after the passing of the resolution authorising such distribution, require the company either to abstain from carrying the resolution into effect or to purchase any of his shares at a price to be determined in the manner provided by subsection (4).

(7) Nothing contained in subsection (6) authorises any company to purchase its own shares or make any distributions to its shareholders except in accordance with the provisions of this Act.

715. (1) Where a compromise or arrangement is proposed between a company and its creditors or any class of them, the Court may, on the application, in a summary way, of the company or any of its creditors or members or, in the case of a company being wound up, of the liquidator, order a meeting of the creditors or class of creditors, or of the members of the company, or class of members, as the case may be, to be summoned in such a manner as the Court directs.

(2) If a majority representing at least three quarters in value of the shares of members or class of members, or of the interest of creditors or class of creditors, as the case may be, being present and voting either in person or by proxy at the meeting, agree to any compromise or arrangement, the compromise or arrangement may be referred by the Court to the Securities and Exchange Commission which shall appoint one or more inspectors to investigate the fairness of the compromise or arrangement and to make a written report on it to the Court within a time specified by the Court.

(3) If the Court is satisfied as to the fairness of the compromise or arrangement, it shall sanction the same and the compromise or arrangement shall be binding on all the creditors or the class of creditors or on the members or the class of members as the case may be, and also the company or in the case of a company in the course of being wound up, on the liquidator and contributories of the company.

(4) An order made under subsection (3) shall have no effect until a certified true copy of the order has been delivered by the company to the Commission for registration and a copy of every order shall be annexed to every copy of the memorandum of the company issued after the order has been made.

(5) If a company defaults in complying with subsection (4), the company and each officer of the company is liable to a penalty as prescribed by the Commission in the regulations.

(6) In this section and section 716 of this Act, “company” means any company liable to be wound up under this Act.

716. (1) Where a meeting of creditors or any class of creditors or of members or any class of members is summoned under section 715 of this Act, there shall —

(a) with every notice summoning the meeting which is sent to a creditor or member, be sent also a statement explaining the effect of the compromise or arrangement and in particular stating any material interests of the directors of the company, whether as directors or as members or as creditors of the company or otherwise, and the effect of the compromise or arrangement in so far as it is different from the effect on the like interest of other persons; and

(b) in every notice summoning the meeting which is given by advertisement, be included such a statement, or a notification of the place at which and the manner in which creditors or members entitled to attend the meeting may obtain copies of such a statement.

(2) Where the compromise or arrangement affects the rights of debenture holders of the company, the statement shall give the like explanation as respects the trustees of any deed for securing the issue of the debenture as it is required to give as respects the company’s directors.

(3) Where a notice given by advertisement includes a notification that copies of a statement explaining the effects of the compromise or arrangement proposed can be obtained by creditors or members entitled to attend the meeting, every such creditor or member shall, on making application in the manner indicated by the notice, be furnished by the company free of charge with a copy of the statement.

(4) Where a company makes default in complying with any requirement of this section, the company and every officer of the company are liable to a penalty as prescribed by the Commission in the regulations and for the purpose of this subsection any liquidator of the company and any trustee of a deed for securing the issue of debentures of the company shall be deemed to be an officer of the company:

Provided that a person is not liable under this subsection, if that person shows that the default was due to refusal of any other person, being a director or trustee for debenture holders, to supply the necessary particulars as to his interests.

(5) A director of the company and any trustee for debenture holders of the company shall give notice to the company of such matters relating to himself as may be necessary for the purpose of this section, and any person who defaults in complying with this subsection is liable to a penalty as prescribed by the Commission in the regulations.

717. (1) No winding up petition or enforcement action by a creditor (secured or unsecured) shall be entertained against any company or its assets that has commenced a process of arrangement and compromise with its creditors for six months from the time that the company by way of affidavit provides the following documents to the Court:

(a) a document setting out the terms intended to be proposed to the creditors in an arrangement or compromise;

(b) a statement of the company’s affairs containing the particulars of the company’s creditors and its debts and other liabilities and of its assets;

(d) a statement that the company desires a protection from a winding up process pending the completion of the arrangement or compromise.

(2) Notwithstanding the provisions of subsection (1), a secured creditor may, by application to the Court filed within 30 days of notice of the arrangement and compromise, discharge the six months moratorium period provided in subsection (1) if –

(a) the asset of the company sought to be enforced by the creditor does not form part of the company’s pool of assets to be considered under the arrangement and compromise proceeding;

(b) the asset sought to be enforced by the creditor is a perishable goods or commodities which may depreciate or dissipate before expiration of the six months moratorium period;

(c) the secured creditor enforces its security over the assets before receiving notice of the company’s proposed arrangement and compromise; or

(d) the company consents in writing for a secured creditor to enforce its right over the company’s asset within the six months moratorium period:

Provided that the company, upon the approval or consent shall file a further affidavit updating the Court of the dissipation of the said asset.

Chapter 28

NETTING

718. In this Chapter –

“financial regulatory authority” means –

(a) the Central Bank of Nigeria;

(b) the Securities and Exchange Commission;

(d) the National Pension Commission; and

(e) any other financial regulatory authority established by an Act of the National Assembly;

“cash” means money credited to an account in any currency or a similar claim for repayment of money, such as a money market deposit;

“collateral” means any –

(a) cash in any currency;

(b) securities of any kind, including debt and equity securities;

(d) any asset commonly used as collateral in Nigeria;

“collateral arrangement” means any margin, collateral, security arrangement or other credit enhancement related to or forming part of a netting agreement or one or more qualified financial contracts entered into thereunder, including –

(a) a pledge, charge or any other form of security interest in collateral, whether possessory or non-possessory;

(b) a title transfer collateral arrangement;

(d) any guarantee, letter of credit or reimbursement obligation by or to a party to one or more qualified financial contracts, in respect of those qualified financial contracts;

“insolvent party” means the party in relation to which an insolvency proceeding under the laws of Nigeria has been instituted;

“liquidator” means the liquidator, administrator, nominee, supervisor, receiver, trustee, conservator or other individual, person or entity which administers the affairs of an insolvent party during an insolvency proceeding under the laws of Nigeria;

“netting” means the occurrence of the following –

(a) termination, liquidation or acceleration of any payment or delivery obligation or entitlement under one or more qualified financial contracts entered into under a netting agreement;

(b) calculation or estimation of a close-out value, market value, liquidation value or replacement value in respect of each obligation or entitlement or group of obligations or entitlements terminated, liquidated or accelerated under paragraph (a):

(a) paragraph conversion of any values calculated or estimated under paragraph (b) into a single currency; and

(d) determination of the net balance of the values calculated under paragraph (b), as converted under paragraph (c), whether by operation of set-off or otherwise;

“netting agreement” means any –

(a) agreement between two parties that provides for netting of present or future payment or delivery obligations or entitlements arising under or in connection with one or more qualified financial contracts entered into under the agreement by the parties to the agreement (a “master netting agreement”);

(b) master agreement between two parties that provides for netting of the amounts due under two or more master netting agreements (a “master-master netting agreement”); and

“non-insolvent party” means the party other than the insolvent party;

“party” means a person constituting one of the parties to a netting agreement;

“person” includes partnerships, companies, regulated entities such as banks, insurance companies and pension fund administrators, or any other body corporate (including statutory corporations or statutory bodies) whether organised under the laws of Nigeria or under the laws of any other jurisdiction, and any international or regional development bank or other international or regional organisation;

“qualified financial contract” means any financial agreement, contract or transaction, including any terms and conditions incorporated by reference in any financial agreement, contract or transaction, pursuant to which payment or delivery obligations are due to be performed at a certain time or within a certain period of time and whether or not subject to any condition or contingency and includes –

(a) a currency, cross-currency or interest rate swap;

(b) a basis swap;

(d) a cap, collar or floor transaction;

(e) a commodity swap;

(f) a forward rate agreement;

(g) a currency or interest rate future;

(h) a currency or interest rate option;

(i) an equity derivative, such as an equity or equity index swap, equity forward, equity option or equity index option;

(j) a derivative relating to bonds or other debt securities or to a bond or debt security index, such as a total return swap, index swap, forward, option or index option;

(k) a credit derivative, such as a credit default swap, credit default basket swap, total return swap or credit default option;

(l) an energy derivative, such as an electricity derivative, oil derivative, coal derivative or gas derivative;

(m) a weather derivative, such as a weather swap or weather option;

(n) a bandwidth derivative;

(o) a freight derivative;

(p) an emissions derivative, such as an emissions allowance or emissions reduction transaction;

(q) an economic statistics derivative, such as an inflation derivative;

(r) a property index derivative;

(s) a spot, future, forward or other securities or commodities transaction;

(t) a securities contract, including a margin loan and an agreement to buy, sell, borrow or lend securities, such as a securities repurchase or reverse repurchase agreement, a securities lending agreement or a securities buy or sell back agreement, including any such contract or agreement relating to mortgage loans, interests in mortgage loans or mortgage-related securities;

(u) a commodities contract, including an agreement to buy, sell, borrow or lend commodities, such as a commodities repurchase or reverse repurchase agreement, a commodities lending agreement or a commodities buy or sell back agreement;

(v) a collateral arrangement;

(w) an agreement to clear or settle securities transactions or to act as a depository for securities;

(x) any other agreement, contract or transaction similar to any agreement, contract or transaction referred to in paragraphs (a) – (w) with respect to one or more reference items or indices relating to interest rates, currencies, commodities, energy products, electricity, equities, weather, bonds and other debt instruments, precious metals, quantitative measures associated with an occurrence, extent of an occurrence, or contingency associated with a financial, commercial or economic consequence, or economic or financial indices or measures of economic or financial risk or value;

(y) any swap, forward, option, contract for differences or other derivative in respect of, or combination of, one or more agreements or contracts referred to in paragraphs (a) – (x); and

(z) any agreement, contract or transaction designated as such by the financial regulatory authority under this Act;

“security interest collateral arrangement” means “security financial collateral arrangement” as defined in Chapter 9 (Debentures) of this Act and includes charges; and

“title transfer collateral arrangement” means a margin, collateral or security arrangement related to a netting agreement based on the transfer of title to collateral, whether by outright sale or by way of security, including a sale and repurchase agreement, securities lending agreement, or securities buy or sell-back agreement.

Definition of applicable concepts.

719. A financial regulatory authority may, in relation to the relevant sector it regulates, by notice issued under this section, designate as “qualified financial contracts” any agreement, contract or transaction, or type of agreement, contract or transaction, in addition to those listed in this section.

Powers of a financial regulatory authority.

720. A qualified financial contract shall not be and shall be deemed never to have been void or unenforceable by reason of the Gaming Machines (Prohibition) Act or any other laws relating to games, gaming, gambling, wagering or lotteries.

Enforceability of a qualified financial contract.

Cap. G1 LFN, 2004.

721. (1) The provisions of a netting agreement is enforceable in accordance with their terms, including against an insolvent party, and, where applicable, against a guarantor or other person providing security for a party and shall not be stayed, avoided or otherwise limited by –

(a) any action of the liquidator;

(b) any other provision of law relating to bankruptcy, reorganisation, composition with creditors, receivership or any other insolvency proceeding an insolvent party may be subject to; or

(c) any other provision of law that may be applicable to an insolvent party, subject to the conditions contained in the applicable netting agreement.

(2) After commencement of insolvency proceedings in relation to a party, the only obligation, if any, of either party to make payment or delivery under a netting agreement shall be equal to its net obligation to the other party as determined in accordance with the terms of the applicable netting agreement.

(3) After commencement of insolvency proceedings in relation to a party, the only right, if any, of either party to receive payment or delivery under a netting agreement shall be equal to its net entitlement with respect to the other party as determined in accordance with the terms of the applicable netting agreement.

(4) Any power of the liquidator to assume or repudiate individual contracts or transactions will not prevent the termination, liquidation or acceleration of all payment or delivery obligations or entitlements under one or more qualified financial contracts entered into under or in connection with a netting agreement, and applies, if at all, only to the net amount due in respect of all of such qualified financial contracts in accordance with the terms of such netting agreement.

(5) The provisions of a netting agreement which provide for the determination of a net balance of the close-out values, market values, liquidation values or replacement values calculated in respect of accelerated or terminated payment or delivery obligations or entitlements under one or more qualified financial contracts entered into is not affected by any applicable insolvency law limiting the rights to set off, offset or net out obligations, payment amounts or termination values owed between an insolvent party and another party.

(6) The liquidator of an insolvent party may not avoid –

(a) any transfer, substitution or exchange of cash, collateral or any other interests under or in connection with a netting agreement from the insolvent party to the non-insolvent party; or

(b) any payment or delivery obligation incurred by the insolvent party and owing to the non-insolvent party under or in connection with a netting agreement on the grounds of it constituting a preference by the insolvent party to the non-insolvent party,

unless there is clear and convincing evidence that the non-insolvent party –

(i) made such transfer,

(ii) incurred such obligation with actual intent to hinder, delay, or defraud any entity to which the insolvent party was indebted or became indebted, on or after the date that such transfer was made or such obligation was incurred.

(5) Reasonable notice to interested parties, individuals, persons or entities shall be required for the realisation, appropriation or liquidation of collateral under a collateral arrangement unless otherwise agreed by the parties:

Provided that this subsection is without prejudice to any applicable provision of law requiring that realisation, appropriation or liquidation of collateral is conducted in a commercially reasonable manner.

(8) For the purposes of this section —

(a) a netting agreement is deemed to be a netting agreement notwithstanding the fact that the netting agreement may contain provisions relating to agreements, contracts or transactions that are not qualified financial contracts defined in section 718, provided, however, that, for the purposes of this section, such netting agreement shall be deemed to be a netting agreement only with respect to those agreements , contracts or transactions that fall within the definition of “qualified financial contract” in this Chapter;

(b) a collateral arrangement is deemed to be a collateral arrangement notwithstanding the fact that such collateral arrangement may contain provisions relating to agreements, contracts or transactions that are not a netting agreement or qualified financial contracts as defined in section 718 of this Act, provided, however, that, for the purposes of this section, such collateral arrangement shall be deemed to be a collateral arrangement only with respect to those agreements, contracts or transactions that fall within the definition of “netting agreement” or “qualified financial contract” as defined in section 718 of this Act; and

Enforceability of netting agreements.

Chapter 29

MISCELLANEOUS AND SUPPLEMENTAL

APPLICATION OF THIS PART

722. (1) Except as otherwise provided, Part B of this Act, applies to —

(a) all companies formed and registered under this Act;

(b) all existing companies;

(d) unregistered companies.

(2) This Act does not apply to unions of workers or of employers.

Application of this Part.

723. (1) Except as otherwise expressly provided in this Act —

(a) the provisions of this Act shall have effect notwithstanding anything to the contrary contained in the memorandum or articles of a company, or in any agreement executed, by it, or in any resolution passed by the company in general meeting or by its board of directors whether the same be registered, executed or passed, as the case may be, before or after the commencement of this Act; and

(b) any provision contained in the memorandum or articles, agreement or resolution as in paragraph (a) shall, to the extent to which it is repugnant to the provisions of this Act, become or be void, as the case may be.

(2) Any provision of this Act overriding or interpreting a company’s articles shall, except as provided by this Act, apply in relation to articles in force at the commencement of this Act, as well as to articles coming into force thereafter, and shall apply also in relation to a company’s memorandum as it applies in relation to its articles.

Act to override memorandum and articles.

724. In its application to existing companies, this Act shall apply in the same manner —

(a) in the case of a limited company, other than a company limited by guarantee, as if the company had been formed and registered under this Act as a company limited by shares;

(b) in the case of a company limited by guarantee, as if the company has been formed and registered under this Act as a company limited by guarantee; and

(c) in the case of a company, other than a limited company, as if the company had been formed and registered under this Act as an unlimited company:

Provided that reference, express or implied, to the date of registration shall be construed as a reference to the date at which the company was registered under the Companies Act, 1912 as the first Nigerian enactment in respect of companies, or as the case may be, any enactment relating to companies thereafter in force in Nigeria before the commencement of this Act.

Application of Act to companies registered under former enactments.

725. This Act applies to every company registered but not formed under the Companies Act, 1912 referred to in section 724 of this Act or, as the case may be, any enactment relating to companies in force in Nigeria before the commencement of this Act:

Provided that reference, express or implied, to the date of registration shall be construed as a reference to the date at which the company was registered under the enactment in force in Nigeria at the date when it was registered.

Application of Act to companies registered but not formed.

Cap. C20, LFN, 2004.

726. This Act applies to every unlimited company registered as a limited company under section 52 of the Companies and Allied Matters Act, 1990 or of any enactment replaced by that section, as the case may be, in the same manner as it applies to an unlimited company registered under this Act as a limited company:

Provided that reference, express or implied, to the date of registration shall be construed as a reference to the date at which the company was registered as a limited company under section 52 of the 1990 Act or any enactment replaced by that section, as the case may be.

Application of Act to unlimited companies registered under former enactments.

Cap. C20, LFN, 2004.

727. (1) The provisions of this Act specified in the Second Column of the Thirteenth Schedule to this Act (which respectively related to all bodies corporate, incorporated in and having a principal place of business in Nigeria, other than those mentioned in subsection (2) as if they were companies registered under this Act, but subject to any limitations mentioned in relation to those provisions respectively in the Third Column of that Schedule and to such adaptation and modifications (if any) as may be specified by order made by the Minister and published in the Federal Government Gazette.

(2) The provisions of subsection (1) shall not apply by virtue of this section to any body —

(a) incorporated under any enactment other than this Act;

(b) not formed for the purpose of carrying on a business which has for its objects the acquisition of gain by the body or by the individual members thereof; and

(3) This section does not repeal or revoke in whole or in part any enactment or other instrument constituting or regulating any body in relation to which the said provisions are applied by virtue of this section, but in relation to any such body, the operation of any such enactment or instrument shall be suspended in so far as it is inconsistent with any of the said provisions as they apply for the time being to that body.

Restricted in this Schedule application of Act to unregistered companies.

Thirteenth Schedule.

ADMINISTRATION

728. (1) The address of the registered or head office of a company given to the Commission in accordance with section 36 (2) (b) of this Act or any change in the address made in accordance with the provisions of this section, shall be the office to which all communications and notices to the company may be addressed.

(2) Notice of any change in the address of the registered or head office of the company shall be given within 14 days of the change to the Commission which shall record the same:

Provided that a postal box address or a private mailbag address shall not be accepted by the Commission as the registered or head office.

(3) If a company carries on business without complying with subsection (2), the company and each officer of the company shall be liable to a penalty prescribed in the regulations every day during which the company so carries on business.

(4) The fact that a change in the address of a company is included in its annual return shall not be taken to satisfy the obligation imposed by this section.

(5) Where a company incorporated before the commencement of this Act has provided an address not in accordance with this section or section 36 of this Act, as the case may be, it shall within 14 days after such commencement comply with the requirements of this section and the failure shall be an offence liable to a penalty as prescribed in the regulations.

Registered and head office of company.

729. (1) Every company, after incorporation, shall —

(a) paint or affix, and keep painted or affixed, its name and registration number on the outside of every office or place in which its business is carried on, in a conspicuous position, in letters easily legible;

(b) have its name engraved in legible characters on its seal, where the company has a seal; and

(c) have its name and registration number mentioned in legible characters in all business letters of the company and in all notices, advertisements, and other official publications of the company, and in all bills of exchange, promissory notes, endorsements, cheques, and orders for money or goods purporting to be signed by or on behalf of the company, and in all bills or parcels, invoices, receipts, and letters of credit of the company.

(2) If a company makes default in complying with subsection (1), it is liable to a penalty prescribed in the Regulations for everyday during which the default continues and every director and manager of the company are liable to the like penalty.

(3) If an officer of a company or any person on its behalf —

(a) uses or authorises the use of any seal purporting to be a seal of the company where on its name is not so engraved,

(b) issues or authorises the issue of any business letter of the company or any notice, or other official publication of the company, or signs or authorises to be signed on behalf of the company any bill of exchange, promissory note, endorsement, cheque or order for money or goods wherein its name is not mentioned in that manner, or

(a) or issues or authorises to be issued any bill or parcel, invoice, receipt, or letter of credit of the company, wherein its name is not mentioned in the manner,

he is liable to a penalty prescribed in the Regulations and shall further be personally liable to the holder of any such bill of exchange, promissory note, cheque, or order for money or goods, for the amount thereof, unless it is duly paid by the company.

Publication of name by company.

730. (1) Any fee paid to the Commission before the commencement of this Act, is deemed to have been validly paid under this Act.

(2) All fees paid to the Commission, and not otherwise directed by this Act for payment into a particular account, shall be paid into the Consolidated Revenue Fund of the Federation.

Fees.

731. (1) Any register, record, index, minute book or book of account required by this Act to be made and kept by a company may be made by making entries in bound books or in loose leaves, whether pasted or not, or in a photographic film form, or may be entered or recorded by any information storage device that is capable of reproducing the required information in intelligible written form within a reasonable time, or by recording the matters in question in any other manner in accordance with accepted commercial usage.

(2) Where any such register, record, index, minute book or book of account is not kept by making entries in a bound book, but by some other means including electronic means, adequate precautions shall be taken for guarding against falsification and for facilitating its discovery and where default is made in complying with the provisions of this subsection, the company and each officer of the company is liable to a penalty prescribed in the regulations and where the offence is a continuing one, it shall, in addition be liable to a fine to be prescribed in the regulations for every day during which the default continues.

(3) The power conferred on a company by subsection (1) to keep a register, or other record by recording the matters in question otherwise than by making entries in bound books, includes power to keep the register or other record by recording those matters otherwise than in legible form, so long as the recording is capable of being reproduced in a legible form.

(4) If any such register or other record of a company as is mentioned in subsection (2) or a register of holders of a company’s debentures, is kept by the company by recording the matters in question otherwise than in a legible form, the duty imposed on the company by this Act to allow inspection of or to furnish a copy of the register or other record or any part of it, shall be treated as a duty to allow inspection of, or to furnish a reproduction of the recording or of the relevant part of it in a legible form.

Form of register.

732. (1) The Chief Judge of the Federal High Court or of any Court designated by an Act of the National Assembly as being vested with the jurisdiction to hear cases arising out of this Act may make rules of court for carrying into effect the objects of this Act so far as they relate to the winding up of companies or generally in respect of other applications to a court under this Act.

(2) For the purpose of this section, rules made for the purpose of any enactment passed or made on or before, or to have effect on or after, the commencement of this Act shall, on its commencement, ensure and have effect where they are not inconsistent with rules of court made or deemed to have been made, under this section.

Rules of Court for winding-up of companies.

733. (1) Every banking company, insurance company or a deposit, provident or benefit society shall, before it commences business, and also on the first Monday in February and the first Tuesday in August in every year during which it carries on business, submit to the Commission a statement in the form in the Fourteenth Schedule to this Act or as near thereto as circumstances may admit.

(2) A copy of the statement shall be put up in a conspicuous place in the registered office of the company, and in every branch office or place where the business of the company is carried on.

(3) Every member or creditor of the company is entitled to a copy of the statement, on payment of a sum prescribed in the regulation.

(4) If default, is made in complying with this section, the company and every director and manager of the company is liable to a penalty prescribed in the regulation for everyday during which the default continues.

(5) For the purposes of this Act, a company that carries on the business of insurance in common with any other business or businesses is deemed to be an insurance company.

Certain companies to publish statement in prescribed form.

Fourteenth Schedule.

LEGAL PROCEEDINGS, ETC

734. (1) All offences under this Act may be tried by a court of competent jurisdiction in the place where the offence is alleged to have been committed.

(2) Where provision is made in this Act for a criminal sanction to be imposed in case of an act, omission or default without reference to the default being an offence, or without reference to conviction in a court, as the case may be, the –

(a) reference to the act, omission or default shall be construed as referable to an offence; and

(b) expression “offences” as used in this section shall have effect in relation to any such act, omission or default.

Prosecution of offences.

735. (1) If, on application made to a Judge of the Federal High Court in Chambers by the Attorney-General of the Federation, there is shown to be reasonable cause to believe that a person has, while an officer of a company, committed an offence in connection with the management of the company’s affairs and that evidence of the commission of the offence is to be found in any document in the possession or under the control of the company, an order may be made —

(a) authorising any person named in the order to inspect the documents or any of them for the purpose of investigating and obtaining evidence of the offence; or

(b) requiring the secretary or any other officer of the company as may be named in the order to produce the said documents, to a person and at a place named in the order.

(2) The provisions of subsection (1) shall apply also in relation to any document of a person carrying on the business of banking if they relate to the company’s affairs, as it applies to any document in the possession or under the control of the company, except that no such order as is referred to in subsection (1) (b) shall be made by virtue of this subsection.

(3) In this section, “document” includes an instrument on which information is recorded by means of letters, figures or marks.

Production of documents where offences suspected.

736. Where a limited company is the plaintiff in an action or other legal proceedings, a judge having jurisdiction in the matter may, if it appears by credible testimony that there is reason to believe that the company may be unable to pay the costs of the defendant if successful in his defence, require sufficient security to be given for those costs and may stay all proceedings until the security is given.

Costs in actions by certain limited companies.

737. Where proceedings are instituted under this Act against any person by the Attorney-General of the Federation, nothing in this Act shall be taken to require any person who has acted as legal practitioner for the defendant to disclose any privileged communication made to him in that capacity.

Saving for privileged communications.

738. (1) If in any proceeding for negligence, default or breach of duty or trust against an officer of a company or a person employed by a company as auditor, it appears to the Court hearing the case that the officer or person is or may be liable but that he has acted honestly and reasonably and that, having regard to all the circumstances of the case, including those connected with his appointment he ought fairly to be excused, the Court may relieve him, either wholly or partly, from liability on such terms as it may deem fit.

(2) When any such officer or person has reasonable apprehension that a claim may be made against him in respect of any negligence, default, breach of duty or trust, he may apply to the Court for relief, and the Court on the application shall have the same power to relieve him as under this section it would have had if it had been a court before which proceedings against that person for negligence, default, breach of duty or breach of trust had been brought.

Power of Court to grant relief in certain cases.

739. Where a person trades or carries on business under any name or title of which the last word or words are “Unlimited”, “Limited”, “Public Limited Company” or “Limited by Guarantee” or their abbreviations, he is, unless duly incorporated as an unlimited company, a private company limited by shares, a public company limited by shares, or a company limited by guarantee, respectively, liable to a penalty prescribed in the Regulation for every day during which the name or title is used.

Penalty for improper use of certain words.

740. The provisions of section 672 (3) of this Act which imposes a penalty for certain offences connected with fraudulent trading discovered on the winding up of a company shall extend and apply to cases where fraudulent trading is discovered in circumstances other than on the winding up of a company.

Extended effect of penalty for offence of fraudulent trading.

741. A court imposing a fine under this Act may direct that the whole or any part thereof be applied in or towards payment of the costs of the proceedings, or in or towards rewarding the person on whose information or at whose suit the fine is recovered and subject to the direction, all fines under this Act shall, notwithstanding anything in any other enactment, be paid into the Consolidated Revenue Fund.

Application of fines.

742. (1) The Commission may apply to the Court for directions in respect of any matter concerning its duties, powers and functions under this Act and, on any such application, the Court may give directions and make further order as it deems fit in the circumstances.

(2) Notwithstanding the provision of subsection (1), the Commission may conduct enquiries with respect to the compliance with the provisions of this Act by any person or company.

Application by the Commission to the Court for directions.

MISCELLANEOUS

743. (1) The Commission may, with the approval of the Minister, by regulation or order, published in the Federal Government Gazette, add to, delete from or otherwise alter the whole or any part of any of the Schedules, Tables or Forms prescribed or under this Act.

(2) Until regulations, rules or orders are made under, and for the purpose of this Act prescribing forms for use, the forms in force at the commencement of this Act shall be deemed to have been made under it and shall have effect accordingly.

Alteration and application of Schedules, tables and forms.

744. (1) If a company, having made default in complying with any provision of this Act requiring it to file with, deliver or send to the Commission any return, account or other document, or to give notice to it of any matter, fails to make good the default within 14 days after the service of a notice on the company requiring it to do so, the Court may, on the application of any member or creditor of the company or of the Commission, order the company and any officer to make good the default within the time as may be specified in the order.

(2) Any order under this section may provide that all costs of or incidental to the application shall be borne by the company or by any officer of the company responsible for the default.

(3) Nothing in this section shall be taken to prejudice the operation of any enactment imposing penalties on a company or its officers in respect of any such default.

Enforcement of duty of company to make returns to Commission.

745. (1) The powers of a company include if they would not otherwise do so apart from this section power to make for the benefit of persons employed or formerly employed by the company or any of its subsidiaries provision in connection with the cessation or the transfer to any person of the whole or part of the undertaking of the company or subsidiary.

(2) The power conferred under subsection (1) is exercisable even if its exercise is not in the best interest of the company.

(3) The power which a company may exercise under subsection (1) is exercised by the company if sanctioned-

(a) in a case not falling within paragraph (b) or (c), by a resolution of the company;

(b) if so authorised by the memorandum or articles, a resolution of the directors; or

(c) if the memorandum or articles require the exercise of the power to be sanctioned by a resolution other than a simple resolution of the company, with the sanction of that other resolution.

(4) Any payment which may be made by a company under this section may, if made before the commencement of any winding up of the company, be made out of profits of the company which are available for dividend.

Power of company to provide for employees on cessation or transfer of business.

Chap 1 - 23

CAMA 2020

Companies and Allied Matters Act, 2020

PART B: INCORPORATION OF COMPANIES AND INCIDENTAL MATTERS

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