The Memorandum and Articles of Association are two documents in one. They are the most critical charter documents of the company, the preparation of which demands the skills and experience of a corporate lawyer. Section 27 of CAMA states the requirements with respect to the Memorandum of a company. It provides (S.27(1) that the Memorandum of every company shall state: (a) the name of the company; (b) that the registered office of the company shall be situated in Nigeria; (c) the nature of the business or businesses which the company is authorised to carry on; (d) the restriction, if any, on the powers of the company; (e) that the company is a private or public company, as the case may be; (f) that the liability of its members is limited by shares. The Memorandum shall also state the amount of authorised share capital, not being less than N10,000 (approximately US$120) in the case of a private company and N500,000 (approximately US$6,000) in the case of a public company, with which the company proposes to be registered, and the division thereof into shares of a fixed amount (S.27(2)(a).
A company is not permitted under Nigerian company law to carry on any other business which was not included in its Memorandum. Such other business is considered ultra vires the powers of the company, until it goes through a prescribed process of alteration of its Memorandum. There are restrictions on alteration of the Memorandum. A company may not alter the conditions contained in its Memorandum except in the cases and in the manner and to the extent for which express provision is made in the Act (Section 44(1). Only those provisions which are required by section 27 (reproduced above) or by any other specific provision of the Act to be stated in the memorandum of the company concerned shall be deemed to be conditions contained in its Memorandum.
The name of the company shall not be altered except with the consent of the Corporate Affairs Commission ("the Commission") in accordance with section 31 of the Act. The business which the company is authorised to carry on may be altered or added to only by special resolution passed at a meeting of which notice in writing has been duly given to all the shareholders (whether or not otherwise entitled thereto). Any restriction on the powers of the company may be altered only in the same way as the business or object of the company. The share capital of the company may be altered only in accordance with the provisions of the Act but not otherwise. Any other provision of the Memorandum may be altered only in accordance with the provisions of the Act. (Section 45).
A skilled, experienced and visionary corporate lawyer can produce a Memorandum that will be flexible and adaptable to the needs of a changing and dynamic business environment like Nigeria. For this reason, an investor needs to chose his lawyer carefully.
Articles of Association are required under section 33 of CAMA to be registered with the Memorandum of Association. The form and contents of the Articles depend on whether the company is a public company having a share capital, a private company having a share capital, a company limited by guarantee or an unlimited company. Parts I, II, III and IV respectively of Table A in the First Schedule to the Act are specimens of Articles of Association which can be adopted, with such additions, omissions or alterations as may be required in the circumstances. The specimens are extremely sketchy, especially when compared with the detailed provisions of their predecessors in the Companies Act of 1968. The reason for the scantiness is that most of the previous provisions have been made substantive law under the CAMA. To simplify matters for the easy understanding of the shareholders and directors who are not lawyers, it is advisable to extract from the Act and reproduce in the Articles the relevant rules which regulate the administration of the Company. This again requires the skills of an experienced corporate lawyer.
OTHER DOCUMENTS REQUIRED FOR INCORPORATION
The law requires that in addition to the Memorandum and Articles of Association, the following documents shall be filed for incorporation:
- Notice of the address of the registered office of the company and head office if different from the registered office;
- A statement in the prescribed form containing the list and particulars together with the consent of the persons who are to be the first directors of the company;
- A statement of the authorised share capital signed by at least one director; and
- if an alien is named as subscriber or director, the Business Permit obtained from the relevant Government agency.
This article is intended to provide a general guide to the subject matter and should NOT be treated as legal advice. Specific legal advice should be sought by you about your particular case and special circumstances.
For further information/enquiries, please contact Patrick Abuka on Tel: (234)1-263 4656, 1-263 3024, 1-263 1708, 1-263 3512, 1-263 5115, 1-263 4553 or Fax No: (234) 1-263 1687, 1-263 5189
You may also wish to read through related material on 'Legal Aspects of Investing in Nigeria' provided by Abuka, Ajegbo, Ilogu & Nwaogu. You can view the entire archive via the Internet on Business Monitor Online (http://www.mondaq.com), or via your online provider by entering "Abuka, Ajegbo, Ilogu & Nwaogu" and "Business Monitor" as a free text search.
