UDOFA, KINGSLEY DAVIDUJ/2005/LW/0096

COMPANY LAWCONTINUOUS ASSESSMENT

QUESTIONS

1. State the steps leading to formation of a company with relevant provision of the law and judicial

authorities2. State the differences between limited liability and public liability company with relevant provision of the

law and judicial authorities.

JANUARY 2011

Table of content

A: FORMATION OF COMPANY1.Introduction

a. What is a company - - - - - - - - 3b. Types of company - - - - - - - - - 4

2.Formation of companya. Preliminary issues - - - - - - - - 4

i. Right to form company - - - - - - - 4ii. Capacity to form company - - - - - - 5iii. Types of company to be incorporated - - - - 5

b. Procedure of incorporation - - - - - - - 5i. Particulars of proposed company - - - - - 6ii. Preparation of incorporation documents - - - - 6

1. Memorandum and articles of association- - - 72. Notice of address and registered office - - - 93. Statement of authorized share capital - - - 94. Particulars of directors - - - - -105. Other necessary documents - - - - -10

iii. Filing of incorporation documents - - - - -11iv. Registration and incorporation - - - - -11

1. Certificate of incorporation - - - - -122. Corporate personality - - - - - -123. Effects of incorporation - - - - -134. Foreign companies - - - - - - -13

v. Conclusion - - - - - - - - -13

B: LIABILITY OF COMPANY1.Introduction - - - - - - - - - -132.Limited liability - - - - - - - - -14

a. Limited by shares - - - - - - - -14b. Limited by guarantee - - - - - - -14

3.PLC & LTD distinguished - - - - - - - -154.Conclusion - - - - - - - - - -17

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A: FORMATION OF A COMPANY

The corporate/commercial sector of any economy is always so vital to the growth of such economy. It is for this reason that the potential role to be played by companies becomes imperative. In discussing the several methods and steps before a company can be set up, we must first and foremost attempt a description of a company and the implications of such definition or description.

The concept of ‘company’ can easily be termed as an ‘association with business concerns.’ Prof L.C.B. Gower1 while conceding that the word company has no strictly legal meaning nonetheless conceived same as an association of a number of people for some common object i.e. for profit or gain. The important aspects of this definition are its recognition of company being;

1. an association of people2. For some common objects, and3. For profit or economic purposes

This definition implies that all companies must be for the absolute objective of making profit. However, a company could also be for charitable purpose without any profit motive. This indeed captures the inadequacies involved with the art of definition especially of legal concepts.

However, just like other legal concepts, the definition of company in law always seems to elude permanence and complete acceptability. In law, a reference to company is a reference to company as defined by statutory law. The Companies and Allied Matters Act (CAMA)2 is the current statute that regulates the operation of companies and business concerns in Nigeria. In accordance with the Companies and Allied Matters Act, a company may be best described as being;

1. A legal framework whereby at least two persons agree to float a business concern3

2. With some specified objective be it profit or charitable4

1 A renowned English author on company law2 LAWS OF THE FEDERATION 2004, CAP C203 Section 18 CAMA: “as from the commencement of this Act, any two or more persons may form and incorporate a company by complying with the requirements of this Act in respect of registration of such company.

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3. But having complied with provisions of through procumbent of the certificate of incorporation which gives companies its legal personality.

Basically, there are three varieties of company i.e. a registered company, a chartered company as well as a statutory company. However, a reference to company law is a reference to a registered company sometimes referred to as an incorporated company.

A chartered company is one which was granted Royal charter by the crown before registration of companies was allowed. The word company was first used as a legal term in connection with the great companies chartered by European nations in the 17th and 18th centuries. These companies grew out of the voyages of discovery and the desire of these nations for monopolies over the newly opened trade routes. The companies were given royal charters authorizing them to acquire and administer territory as well as to direct trade.5 When a company is duly registered and incorporated under the model companies’ legislation, then such company is regarded as a registered company. On the other hand, statutory companies are formed under any particular Act of parliament. Under company law, a reference to the concept of company covers all three types as described above.

FORMATION OF THE COMPANYBefore any company is registered and is indeed made a distinct legal person with all

the incidental powers and duties, certain questions need to be answered. These questions would be those to provide answers as to who has a right to form a company, capacity to form a company, and the type of company that can be incorporated.

i. Right to form a companySection 18 of the Company and Allied Matters Act provides that “as from the

commencement of this Act, any two or more persons may form and incorporate a company by complying with the requirements of this Act in respect of registration of such company. The implication of this is to the effect that any person has the right to commence the process of formation of a company. Being a right also means that no one except a court of law can deny this right to form a company.

On the other hand, section 19(1) provides that no company, association or partnership consisting of more than 20 persons shall be formed for the purpose of carrying on any business for profit or gain, unless it is registered as a company under the Act, or is formed in pursuance of some other enactments in Nigeria. However, there are

4 Section 27(1) c: Before any company is incorporated, the nature of business must be specified in its Memorandum of Association. 5 ‘Chartered Companies,’ Microsoft Encarta 2009 [DVD]. Redmond, WA: Microsoft Corporation, 2008.

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some exceptions6, for instance corporative societies registered under the provisions of law, and partnerships for the purpose of carrying on practice as legal practitioners or as accountants by duly qualified persons.7

ii. Capacity to form a companyAccording to section 18, any person has the right to incorporate a company.

However, only persons not otherwise disqualified under the Act may join in forming a company. Section 20(1) therefore provides instances where any person would be disqualified. It provides thus:

a. He is less than 18 years of ageb. He is of unsound mind and has been so found by a court in Nigeria or

elsewherec. He is an undercharged bankrupt; ord. He is disqualified under section 2548 from being a director of a company.

The only exception is provided in section 20(2) which provides that “a person shall not be disqualified under the paragraph (a) if two other persons not disqualified under the subsection have subscribed to the memorandum.9

iii. The types of companyCompanies that can be registered under the Act may be broadly classified into two10

main categories i.e. either private company11 or public company12. The company may be:

a. Private company limited by sharesb. Private company limited by guaranteec. Unlimited private companyd. Public company limited by sharese. Public company limited by guarantee orf. An unlimited public company

PROCEDURE FOR FORMATION OF A COMPANYThere are several steps which any person seeking to incorporate a company in

Nigeria would have to comply with. These are as follows:-

6 Section 19(2) Companies and Allied Matters Act7 Orojo, Olakunle, COMPANY LAW AND PRACTICE IN NIGERIA, 1992, LAGOS, Mbeyi & Associates (Nig) pg.298 Provides for the restraint of fraudulent persons9 constitution and charter of a company10 Section 22(2) CAMA11 company which is stated in its memorandum to be a private company12 A company other than a private company, such a company is required to state in its memorandum that it is a public company.

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a. Ascertaining the particulars of the proposed company/ enquiry into the availability of proposed name

b. The preparation of the incorporation documentsc. The filing of incorporation documentsd. The registration of the company.

Particulars of Proposed CompanyAny person who intends to incorporate a company under the Companies and

Allied Matters Act would have to determine the particulars of such company. This is because particulars such as the type of company to be brought into existence, its structure, its objective etc have a huge implication and determines a large chuck of how the company is going to be classed.

Such particulars are absolutely necessary to furnish both the Memorandum of Association and the Articles of Association with the required content as required by the Company and Allied Matters Act.13 These particulars would include:-

1. The name of the company2. The objects of the company3. The capital4. The registered office address5. Limitation of liability6. The subscribers to the memorandum7. Issues around borrowing and credit8. Meetings9. Directors10. Secretary11. Accounts and audits12. Dividends and others.

Preparation of Incorporation DocumentsThere are several documents that must be prepared for the purpose of

incorporation. Section 35(2) provides for the following incorporation documents:-1. The memorandum and articles of association2. The notice of the address of the registered office3. Statement of the authorized share capital4. List, particulars and consent of the first directors5. Any other necessary document.

13 Sections 27-34 of the CAMA

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The Memorandum and the Articles of AssociationThe memorandum is the fundamental document which sets out the structure and

conditions of the company. The memorandum primarily governs the relationship between the company and the outside world. In particular it defines the capacity of the company. The memorandum must state out the matters specified in section 27. These would include the name of the company, registered office of the company, the nature of the business, the capital, limitation and subscribers to the memorandum etc.

1. The name of the companyThe proposed name of the company is an important requirement. This is because

it is not just any name that can be used. In addition, the Act14; lays down certain rules which must be followed in ascertaining the name of the company. It provides thus; the name of a private company limited by shares shall end with the words “Limited” while the name of a public company limited by shares shall end with the words “Public Limited Company” and the name of a company limited by guarantee shall end with the words (“Limited By Guarantee)” in brackets. All such companies are allowed to use the abbreviations “Ltd”, “PLC”, “(Ltd/Gte)” and “Ultd”.15 According to section 30 of the Act, certain names are prohibited from being used. The following names are prohibited:-

a. A name which is identical with one already in existence or resembles that name as to be calculated to deceive except the company in existence is in the process of being dissolved and gives its consent. In Niger Chemist v. Nigerian Chemist16, there was a company registered as Niger Chemist under the Companies Decree and another later registered as Nigerian Chemist. It was held that the names so resembles the other as to deceive. Any person aggrieved by the incorporation of a company with a name which is likely to cause confusion in relation to his goods may be able to bring proceedings for an injunction to prevent the tort of passing off. It is not necessary to prove an intention to deceive, at least to obtain an injunction. The courts may infer such intent.17

b. Names containing the words Chamber of Commerce unless it’s a company limited by guarantee.

c. Names which, in the opinion of the Corporate Affairs Commission violates any existing trade mark or business names registered in Nigeria unless with consent of the owner.

14 Section 29(1),(2),(3) CAMA15 Section 29(5) CAMA16 [1961] 1 ALL NLR 17117 Ewing V. Buttercup Margarine Co Ltd [1917] 2 Ch 1, CA

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d. Use of such words as federal, National, Regional, State, Government or any name which suggests government patronage or containing Municipal, Chartered, Cooperative or Building Society, group or holding are excluded except with consent of Corporate Affairs Commission.

The importance of the name of the company is illustrated by the provisions of section 631 of the Act to the effect that once incorporated, it is required to place its affix in a conspicuous position outside its offices, its names and must be mentioned in all the company’s letters, official publications, promissory notes etc. in the English case of Penrose v. Martyn18, it was held that an omission of an essential part of the name was a contravention of the provision. Thus, the omission of the word “limited” when part of the company’s name, will come within the provision.

In order to avoid the inconvenience of a business name becoming unavailable during the process of the formation of the company, section 32 provides for the reservation of a name for a maximum of 60 days. A written application is made to the Corporate Affairs Commission, accompanied with the prescribed fees to be paid; the Commission may reserve a name for that company, pending registration of that name or change of name by the company. Reservation has the effect of preventing any other company from being registered under that name, or any other name close in resemblance to that which has been reserved, during the period of reservation.

As a matter of practice, the CAC usually requires that a name search be conducted just before incorporation in order to ascertain the availability of the proposed business name.

2. The objects of the companyObject has never been defined in legislature but precedents seem to imply some

notion of purpose or the description of the nature of the company’s trade or business. The objects are therefore the purposes for which it is formed. The statement of the objects determines the extent of the powers conferred on the company. Section 27(1)c requires the memorandum to state the nature of the business which the company is authorized to carry on. In view of the wide powers given to the company under section 3819 and the limitation imposed under section 3920, the person forming the company should have careful and detailed instructions and knowledge of the business or objects or the proposed company. In addition to this, section 27(1)c requires the nature of the business or the object to be stated in the memorandum. In

18 [1858] E.B. & E. 49919 The provision grants the status of legal personality on such incorporated company. It provides that except to the extent that the company’s memorandum or any enactment otherwise provides, every company shall…have all the powers of a natural person of full capacity.20 Limits the powers of any company to the extent of its memorandum

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Edokpolor & Co. Ltd. v. Sem-Edo Wire Ind. Ltd21, the Supreme Court held that the memorandum of association of a company is an indication of the strong desire by the contracting shareholders that the proposed company after its incorporation should execute the terms of the agreement so included but that the company is under the obligation to execute the agreements. It must also be noted that the object of the company must be legal. The question of object of the company is a very hot one. This is because it borders on the matter of exercise of powers and the doctrine of ultra vires.22 This therefore underlies the importance of the object of the company and the necessity of it being included in the memorandum. It provides a ready guide to the outside world as to the powers, boundaries and limits of the company.

3. The capitalThis is the sum with which the company is registered. The Act usually requires a

minimum share capital which is dependent on the nature and type of business to be carried out. The Act requires23 a minimum share capital. This is ₦10,000 in the case of a private company and ₦500,000 for a public company and of these sums, not less than 25% must be taken by subscribers.

4. the registered address of the business5. the liability of the company/the type of company6. list and signatures of the subscribers7. an attestation clause

This is usually a declaration by a legal practitioner stating that the memorandum of association complies with all the statutory requirements.

The article of association is the domestic regulations of the company and governs its internal administration. They determine how the powers conferred on the company by the memorandum shall be exercised. The matter was put succinctly by Lord Cairns LC in Ashbury Railway Carriage and Iron Co. Ltd v. Riche24 when he said: “the memorandum is, as it were, the area beyond which the actions of the company cannot go; inside that area the shareholders may make such regulations for their own government as they think fit” the articles are subordinate to the memorandum in the sense that they cannot confer wider powers than the memorandum. The articles are usually regarded as commercial documents by courts and usually attract liberal interpretations. Thus it cannot be rectified by a court. The Act provides four specimen articles for a public company limited by shares, a private company limited by shares, a company limited by guarantee and an unlimited

21 [1984] 7 S.C. 19922 Meaning an action beyond the legal capacity of a person or company23 Section 27(2) CAMA24 [1875] L.R. 7 HL 653 at 671

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company in Table A,. Section 33 requires that articles must be registered with the memorandum. All articles are required to conform to section 34 as to its form and contents.

Notice of address and registered officeSection 27(1)b requires the memorandum to state that the registered office of the

company will be situated in Nigeria and to provide the address. In addition to the above statement, section 35(2)b provides that one of the documents to be delivered to the Commission for the purpose of incorporation is the notice of the address of the registered office of the company and of the head office, if different from the registered office, but a postal box or private mail bag address in not acceptable for this purpose.

Statement of authorized share capitalThere is a printed form for this and it is obtainable in various stationery stores.

The statement must show the authorized share capital divided into shares of a fixed amount. For instance, ₦10,000.00 divided into 10,000 shares of ₦1 each, and must be signed by a director.

Particulars of directorsSection 35(2)c provides that there shall be delivered to the commission 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.

Other necessary documentsSection 35(2)e provides that any other document may be delivered to the

commission if it is necessary to satisfy the requirements of any law relating to the formation of a company. Therefore in practice, the commission usually requires some other documents to be produced and filled. Examples of these documents are;

a. The Tax Clearance Certificate for the preceding three years for each subscriber and each director. This is required under section 33(4)r of the Income Tax Management Act 1961. This certificate is obtained from the Inland Revenue Board of each state and in the case of a company the Federal Inland Revenue Board.

b. The CAC’s letter or a copy thereof approving the use of the proposed name. This is done mostly after an enquiry into the availability of the business name has been completed.

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After the production of these important documents to the CAC, there must be a statutory declaration of compliance25 in a prescribed form made by a legal practitioner that the requirements for registration have been complied with. The CAC may accept or decline the declaration. In a case where it does the latter, it must within 30 days of receipt of the declaration inform the person applying to register of such refusal and the ground for the refusal.

To render the documents acceptable by the CAC, especially the memorandum and articles of association, certain fees must be paid to the Commission.

Filing of Incorporation Documents The requisite documents are usually submitted to the commission for assessment

and stamping. When the document has been prepared and duly stamped, they are submitted to the commission for filing and the appropriate fees paid. The amounts payable to the CAC are statutorily provided in the ACT.26 The amounts include as follows;

Certified true copy of memorandum & articles of association….₦1,500 Certified true copy of other documents…………………………......₦ 500 Certified true copy of forms C.O.127, C.O.628 and C.O.729………….₦ 100 All other documents………………………………………………....₦ 100

In addition to the filling fees required, another set of payments are payable to the commission. These are the registration fees. These are as follows;

1. Registration of public company having share capital:-a. Not exceeding ₦1,000,000……………………...…………..₦15,000b. Exceeding ₦1,000,000…………………………………..…..₦15,000c. For every ₦1,000,000 after the first………………………₦10,000

2. Registration of private company having share capital:-a. Not exceeding ₦1,000,000…………………………………...₦5,000b. Exceeding ₦1,000,000………………………………………..₦5,000c. For every ₦1,000,000 after the first………………………. ₦1,000

3. Registration of a company not having a share capital………………₦2,000

25 Section 35(3) CAMA26 FIFTEENTH SCHEDULE: Fees to be paid for matters under part A of the Act.27 Form C.O.1 : declaration of compliance with requirements of CAMA28 Form C.O.6 : notice of situation of registered office29 Form C.O.7 : particulars of directors

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Registration and incorporationSection 35(2) provides that the incorporation documents listed above shall be

delivered to the commission and 36(1) provides that the commission shall register the memorandum and articles unless in its opinion:

a. They do not comply with the provisions of the Act; orb. The business which the company is to carry on, or the objects for which it

is formed, or any of them, are illegal ; orc. Any of the subscribers to the memorandum is incompetent or disqualified

in accordance with section 20 of this Act; ord. There is non-compliance with the requirement of any other law as to the

registration and incorporation of a companye. The proposed name conflicts with or is likely to conflict with an existing

trade mark or business name registered in Nigeria.30

In situations where the commission refuses to register a company for any of the reasons stated above, any person aggrieved by the refusal may give notice to it requiring it to apply to the court for directions and the commission must within 21 days of receiving the notice so apply.31 In a case of a company to be limited by guarantee, the memorandum must not be registered without the authority of the Attorney-General of the Federation.32 On registering the memorandum and articles, the commission shall amongst other things certify under its seal that the company is incorporated.

The certificate of incorporation is prima facie evidence that all the requirements of the Act in respect of registration and all other matters have been complied with.33 The general effect of incorporation is that from the date of incorporation mentioned in the certificate of incorporation, the subscribers of the memorandum together with such other persons as my from time to time become members of the company become a body corporate by the name contained in the memorandum capable forthwith of exercising all the functions of an incorporated company and having perpetual succession and a common seal. The implication of this is that such company would have continued existence regardless of whether the promoters and owners of the company are alive or dead. The rational behind this principle was very well captured in the speech of Lord Diplock in Dimbleby & Sons Ltd v. National Union of Journalists34 where he said:

30 Lasisi v. Registrar of Companies [1976] 7S.C. 7331 Section 36(2) CAMA32 Section 262 CAMA33 Section 36(6) CAMA34 [1984] 1 WLR 427 at 435 B-G, HL

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“my lords, the reason why English statutory laws, and that of all other trading countries, has long permitted the creation of corporations as artificial persons distinct from their individual shareholders and from that of any other corporation…is to enable business to be undertaken with limited financial liability in the event of the business proving to be a failure…”

In outline form, the consequences of incorporation include;1. Its corporate personality2. Its liability3. Its power to sue and be sued4. Perpetual succession35

5. Power to contract6. Power to borrow7. Power to transfer shares8. Ability to own property

This is simply the hugest implication of the whole process of incorporation of companies. The individual corporate personality plus the huge benefits that companies and their activities provide within the any economy cannot be done away with in the organization and governance of modern societies. The importance is therefore the main rational justifying the massive government regulation of the management and running of companies through institutional and legislative frameworks.

Foreign companiesFor foreign companies seeking to do business in Nigeria, the Act is very specific

in providing the need for such foreign corporate bodies to first be registered or incorporated in Nigeria, as of necessity, before it can legally carry out business transactions in the country. Section 54 (1), provides that subject to ss. 56 – 59 of the Act, every foreign company which before, or after the commencement of the Act, was incorporated outside Nigeria, shall take all steps necessary to obtain incorporation as a separate entity in Nigeria for that purpose, but until so incorporated, the foreign company shall not carry on business in Nigeria or exercise any of its powers of a registered company.

35 According to section 37, once incorporated, a company acquires continued existence and cannot thus become incapacitated by illness, mental or physical and it need not have an allotted life span.

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B: LIABILITY OF A COMPANY

Indeed it has been established that when a reference is made to the concept of company under the law, it is a reference to an incorporated company otherwise known as a registered company which has been so registered in compliance with the relevant laws or statute. The Companies and Allied Maters Act36 (CAMA) is the current statute that provides for companies, registration of business names and the incorporation of trustees. The objective of this statute has been identified as evolving a comprehensive body of legal principles and rules governing companies. The liability of a company especially where limited is a direct consequence of the incorporation of a company and its corporate personality.

According to the CAMA,37 companies registered under it may be either public or private. Whether it is private or public, every company is either a company that is limited or that is unlimited. A company may be limited by shares or by guarantee.

The liability of a company simply means the liabilities of the members of such company to the company itself. For instance, in a limited liability company, the creditors cannot lay claim to the personal assets of the members or shareholders but only to the assets of the company. This Thereby places the shareholder under no obligation to the company or to its creditors beyond their obligations on the per value of their shares.

Limited Liability of a CompanyThe term limited liability is a broad term which reflects the extent of liability of

the members of a company (whether private or public) to the company itself. The limitation of the liability of a company is an important ingredient to the determination of the class or type of the company. The limitation of liability of members of a company transfers the ultimate risks of business failures to their creditors. Private and public companies may have limited liability. Such liability may either be limited by shares or by guarantee.38

i. Limitation by sharesThis is where a member’s liability is limited to the amount remaining unpaid on

the shares held by him. If a person subscribes and is issued shares, such person usually has no further liability to the company or its creditors so long as the full price

36 LAWS OF THE FEDERATION 2004, CAP C2037 Section 21(2)38 Section 21(1) CAMA

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of the shares was paid for. However, a shareholder who did not pay the full subscription price for newly issued shares is liable for the balance due.

ii. Limitation by guaranteeWhen a company is formed for the purpose of promoting arts, science, religion,

sports, culture, education, research, charity etc and the income and property of the company are to be applied solely towards the promotion of its objects and no portion is to be paid directly or indirectly to its members except as permitted by the decree, the company shall not be registered as a company limited by shares but as a company limited by guarantee. A company is limited by guarantee where the liability of its members is only limited to amounts as the member may respectively undertake to contribute to the assets of the company in the event of its being wound up.39

Both public and private companies may be registered as being limited by shares or by guarantee. Basically a private company is one which is stated in its memorandum to be a private company while a public company is any other than a private company. However, there are some differences between private companies and public companies that are limited (either by shares of by guarantee).

Private Limited Company (LTD) and Public Limited Companies (PLC) distinguished

1. The name of the Company contained in the memorandum: The Act40 requires that the name of the company be stated in the memorandum

of association. Section 29 specifically provides how the companies limited, whether public or private, must be named. Usually, the memorandum of a Private company with limited liability must state specifically that it is one, i.e. the name of the company must end with the words “Limited Liability Company”. While this is so, the name of a public company on the other hand, must end with the words “Public Liability Company.”

2. Authorized Share Capital:The authorized share capital is the share capital of a company at any given

time.41According to section 27(2)a of the Act; the authorized share capital for a private company is a minimum of ₦10,000. This Section also provides that of a public company as being not less than ₦500,000.

39 Section 21(b)40 Section 2741 Section 650

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3. Transferring Shares: Section 22(2) of the Act provides that every private company shall by its

Articles restrict the transfer of its shares, and this it may do in two ways, either bya. a pre-emption clause (these restrict the right of a shareholder to transfer

his shares to an outsider unless and until the existing shareholder has first been given the right to take up those shares at fair prices) they are valid once stated in the Articles,

b. The Director’s power to control transferability of shares, usually drafted like this “Directors may in their absolute discretion and without giving any reason refuse to register any transfer of any share, whether or not it is a fully paid share.”

Public liability companies are not restricted from transferring their shares like limited liability companies are, thus they can very well do so without being in breach of any statutory violation.

4. Statutory Meetings:Public companies are required by law, in accordance with Section 211, to hold

Statutory Meetings. This must be held within six months from the date of its incorporation. The directors are required to forward to every member of the company, Statutory Reports at least 21 days before the meeting. Failure by a public company to comply with Section 211 of the Act shall make both the company and any officer guilty of the default liable to a fine of ₦50.00 for every day during which the default continues.

A private company is not required by law to hold statutory meetings at any point in time, except it chooses so to do. Private companies can only hold Annual General Meetings or Extra-Ordinary General Meeting.

5. Company prospectus:Section 559(1) states that; “where a company allots or agrees to allot any

securities in the company with a view to all or any of those securities being offered for sale to the public, any document by which the offer for sale to the public is made shall for all purposes be deemed to be prospectus issued by the company.” However the proviso to S. 545 (1) is to the effect that;

a. invitation is not made to the public if it is the ‘domestic concern’ of those making and receiving it,

b. In the case of private companies, an invitation shall not be regarded as one made to the public, rather as one of DOMESTIC CONCERN.

6. Issuing paid up Shares on the Stock Market: The Nigerian Enterprises Promotion Decree 34 of 1987which came into force on

4th November 1987, and now referred to as CAP 304 Laws of the Federation of

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Nigeria 1990, in its Section 116 allows Public companies quoted on the Nigerian Stock Exchange to issue, through the Exchange, non-voting paid up shares for the subscription of persons which shares are to be paid for in foreign currency. The Act only makes provision for this to be done by public companies, thus private or limited liability companies cannot issue non-voting paid up shares for public subscription on the stock market.

CONCLUSION

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