By Peter Eboch Ibe Esq
It is a well-known fact that Nigeria is currently struggling
with a global pandemic known as the novel corona virus. This
pandemic, which is also referred to as the covid19 virus is of such
a colossal scale that businesses, schools and industries have been
forced to close so as to reduce or eliminate human contact which is
the virus’s primary mode of transmission. The scale of economic
downturn is widespread and unavoidable especially in a society like
ours that thrives on human contact.
The government’s effort to contain the virus by issuing
widespread lockdown orders on cities and communities, closure of
international borders, grounding of domestic and international
flights, bar on interstate travel, prohibition of gathering of
people, closure of worship centres, and introduction and
encouragement of social distancing amongst others have brought into
view unique challenges especially in company management which were
neither envisaged by the Companies and Allied Matters Act or the
Articles and Memorandum of Association of most, if not all
companies.
The prohibition of social contact has generally brought to the
fore an era of virtual meetings and conferences. The Federal
Executive Council since the death of Mr. Abba Kyari, former Chief
of Staff to the Nigerian President, Major General Muhamadu Buhari
(rtd) of covid19 complications, has held all it Federal Executive
Council meetings through virtual means. Business organizations have
also employed virtual means to hold business meetings. The Nigerian
Bar Association is set to hold its Annual General Conference online
for the first time since its inception and even our traditionally
conservative courts are exploring virtual means to have court
sittings. I am therefore curious whether it is legally permissible
to hold company meetings by virtual means.
While there are plethora of virtual means through which a
company may hold its company meeting, the legality of such meeting
may depend on the type of company meeting and the type of company
itself.
A company meeting is the general meeting of shareholders or
members of the company as well as other persons who may be
authorised or entitled to attend such as directors, auditors and
debenture holders. As a fora, the company meeting is the highest
decision making body of the company and is empowered among others,
to elect or remove the directors of the company. The company
meeting also sets the tone and gives bearing to the company for the
year in view. Section 63(1) of the Companies and Allied Matters Act
provides that “A company shall act through its members in
General meeting or its board of directors or through officers or
agents, appointed by or under the authority derived from the
members in general meeting or the board of directors”.
The importance of company meetings is indubitable. Asides being
compulsory, decisions apropos the composition, designation and
remuneration of the company’s management, ratification of the ultra
vires actions of the board of directors, alteration and amendment
of the memorandum and articles of association amongst others can
only be taken at the company meeting.
Under the Companies and Allied Matters Act (CAMA), there are
basically four types of company meetings, namely: statutory
meetings, annual general meeting, extra ordinary general meeting
and court ordered meeting. Each of these company meetings are
occasioned by different circumstances and therefore subject to
diverse rubrics.
STATUTORY MEETING: Section 211(1) of the CAMA
provides that “every public company shall, within a period of
six months of its incorporation, hold a general meeting of the
members of the company”. Thus, a statutory meeting is a
company meeting that is compulsorily scheduled to hold within six
months of the incorporation of the company and has its specific
agenda. This meeting is only applicable to a public companies and
the CAMA in section 216 specifically provides that it must be held
within Nigeria. Though there is no specific provision in the CAMA
which expressly or impliedly prohibits a virtual company meeting
however the express provision of section 216 of the CAMA as well as
the marginal notes thereto (which are interpretation aids) suggest
that the statutory meeting ought to be in a physical venue which
thus may constitute an impediment to the legality of a virtual
statutory meeting. It is therefore my submission that a statutory
meeting of the company cannot be held by virtual means as this was
not envisaged nor can it be justified by any provision of the
CAMA.
ANNUAL GENERAL MEETING: By section 213 of the
Companies and Allied Matters Act, an annual general meeting of a
company so termed, is a general meeting of a company which must be
held every year in addition to any other general meetings in that
year, and which is specified as such in the notice calling it. Not
more than 15 months may elapse between the date of one annual
general meeting of the company and the next. An annual general
meeting must be held within eighteen months of its incorporation
and the company, upon holding its first annual general meeting is
exempted from compulsorily holding another annual general meeting
in the subsequent year. Both ordinary and special businesses may be
transacted at an annual general meeting of the company. The
Corporate Affairs Commission has the power to upon application
extend the time within which the company may hold its annual
general meeting. The annual general meeting of the company is
applicable to all types of companies.
By section 216 of the Companies and Allied Matters Act, the
annual general meeting a company must be held in Nigeria. While the
CAMA is silent as to whether the physical presence of members is
required, the marginal notes to section 216 of the CAMA is explicit
as it refers to a ‘place of meeting’. It may therefore be concluded
that the Annual general meeting of the company cannot be held by
virtual means.
EXTRA-ORDINARY GENERAL MEETING: Section 215 of
the Companies and Allied Matters Act provides for an extra-ordinary
general meeting of the company. This meeting is held at any time to
conduct business and take decisions within the “special business”
category which cannot wait for the next annual general meeting.
Unlike the statutory and annual general meetings of a company, the
extra-ordinary general meeting of the company need not compulsorily
hold in Nigeria as it is excluded by section 216 of the CAMA. I
believe that the intention of the draftsmen by exempting the
extra-ordinary general meeting of the company from being
compulsorily held in Nigeria is to make accommodation for instances
where it is impossible or difficult for shareholders and members of
the company to meet especially within Nigeria. This may happen when
the shareholders or director are foreigners and or based abroad.
However, just like in the previously discussed meetings, there is
no way to justify an online extraordinary meeting of the company
under the CAMA.
COURT ORDERED MEETINGS: A court ordered meeting
of a company is a general meeting ordered by the Federal High Court
upon an application by relevant interested parties. Section 223(1)
of the CAMA provides as follows:
“if for any reason it is impracticable to call a meeting of
the company or of the board of directors in a manner in which
meetings of the company or the board may be called, or to conduct
the meeting of the company or board in the manner prescribed
by the articles or this Act, the court may, either of its own
motion or on the application of any director of the company or of
any member of the company who would be entitled to vote at the
meeting , in the case of the meeting of the board, order a meeting
of the company or board , as the case may be, to be called , held
or conducted in such manner as the court thinks fit, and where an
such order is made may give such ancillary directions as it thinks
expedient”.
By virtue of the above section, where it is impracticable for
any reason whatsoever for a company to call a meeting of its
members in the manner prescribe by the CAMA or the Articles of the
company, the Federal High Court may suo motu or upon application by
a specified class of people so order the meeting in the manner it
thinks fit.
It is my submission that the safest means to stay within the
boundaries of the CAMA in conducting a meeting of the company by
virtual means is through a court ordered meeting. Note that by
section 223(1) is general in nature as to the type of meeting that
the court may order. Also, either special or ordinary businesses of
the company may be transacted if so ordered by the court.
The application to the court may be made by the board of
directors, any director if other directors are not within Nigeria
and a quorum may be affected, members holding not less than one
tenth of the paid up voting share capital (or in the case of a
company without a share capital, members holding one tenth of the
voting rights) who have complied with the rules of procedure for
members requisitioned extraordinary general meeting, and
auditors.
The application should state the manner in which the applicants
require the company meeting to be held and should of course put
cogent reasons (covid19) before the court to enable it grant the
application on the terms sought. The Federal High Court is
empowered to make orders that may deviate from the articles of
association or the CAMA which if followed would make it impossible
to hold the meeting. Such orders could be as to venue and
businesses to be transacted.
Technology available for conducting such a meeting include zoom,
google hangout, Facebook among others. These apps can be installed
on all smart phones and computers. They do however require mobile
data connection and may be affected by network or weather issues.
Their installation requires minimal technological knowhow and they
are all freely downloadable from respective app stores
Where there is no exigency in holding an annual general meeting,
and the time within which the company ought to hold its annual
general meeting is about to elapse, section 213(1)b of the CAMA
empowers the Corporate Affairs Commission to extend the time within
which an annual general meeting of the company shall be held. The
power of the commission is however limited as the commission may
not extend such time beyond 3 months. The company may therefore
apply for an extension while hoping that before it elapses, the
lockdown would have been eased.
Also, members of a private company may also take decisions
without necessarily holding a company meeting. Section 234 of the
CAMA provides that:
“All resolution shall be passed at general meeting meetings
and shall not be effective unless so passed: Provided that in the
case of a private company a written resolution signed by all the
members entitled to attend and vote shall be as valid and effective
as if passed in a general meeting.” Although this is not the
focal point of this paper, it provides another avenue through which
critical decisions may be taken within the provisions of CAMA
during this pandemic without necessary risking the lives of members
or contravening local restrictions.
Peter Eboch Ibe Esq., the author of this paper is an associate
with the law firm of J. N. Okezie & Associates and practices law in
Jalingo, Taraba State.
Speak with the author, ask questions or make enquiries via
peteribe89@yahoo.com[1] or
08031584636.
This publication is the writer’s view and not legal advice. It
does not create any form of legal relationship. You may reach the
writer for more information.
By Peter Eboch Ibe Esq
It is a well-known fact that Nigeria is currently struggling
with a global pandemic known as the novel corona virus. This
pandemic, which is also referred to as the covid19 virus is of such
a colossal scale that businesses, schools and industries have been
forced to close so as to reduce or eliminate human contact which is
the virus’s primary mode of transmission. The scale of economic
downturn is widespread and unavoidable especially in a society like
ours that thrives on human contact.
The government’s effort to contain the virus by issuing
widespread lockdown orders on cities and communities, closure of
international borders, grounding of domestic and international
flights, bar on interstate travel, prohibition of gathering of
people, closure of worship centres, and introduction and
encouragement of social distancing amongst others have brought into
view unique challenges especially in company management which were
neither envisaged by the Companies and Allied Matters Act or the
Articles and Memorandum of Association of most, if not all
companies.
The prohibition of social contact has generally brought to the
fore an era of virtual meetings and conferences. The Federal
Executive Council since the death of Mr. Abba Kyari, former Chief
of Staff to the Nigerian President, Major General Muhamadu Buhari
(rtd) of covid19 complications, has held all it Federal Executive
Council meetings through virtual means. Business organizations have
also employed virtual means to hold business meetings. The Nigerian
Bar Association is set to hold its Annual General Conference online
for the first time since its inception and even our traditionally
conservative courts are exploring virtual means to have court
sittings. I am therefore curious whether it is legally permissible
to hold company meetings by virtual means.
While there are plethora of virtual means through which a
company may hold its company meeting, the legality of such meeting
may depend on the type of company meeting and the type of company
itself.
A company meeting is the general meeting of shareholders or
members of the company as well as other persons who may be
authorised or entitled to attend such as directors, auditors and
debenture holders. As a fora, the company meeting is the highest
decision making body of the company and is empowered among others,
to elect or remove the directors of the company. The company
meeting also sets the tone and gives bearing to the company for the
year in view. Section 63(1) of the Companies and Allied Matters Act
provides that “A company shall act through its members in
General meeting or its board of directors or through officers or
agents, appointed by or under the authority derived from the
members in general meeting or the board of directors”.
The importance of company meetings is indubitable. Asides being
compulsory, decisions apropos the composition, designation and
remuneration of the company’s management, ratification of the ultra
vires actions of the board of directors, alteration and amendment
of the memorandum and articles of association amongst others can
only be taken at the company meeting.
Under the Companies and Allied Matters Act (CAMA), there are
basically four types of company meetings, namely: statutory
meetings, annual general meeting, extra ordinary general meeting
and court ordered meeting. Each of these company meetings are
occasioned by different circumstances and therefore subject to
diverse rubrics.
STATUTORY MEETING: Section 211(1) of the CAMA
provides that “every public company shall, within a period of
six months of its incorporation, hold a general meeting of the
members of the company”. Thus, a statutory meeting is a
company meeting that is compulsorily scheduled to hold within six
months of the incorporation of the company and has its specific
agenda. This meeting is only applicable to a public companies and
the CAMA in section 216 specifically provides that it must be held
within Nigeria. Though there is no specific provision in the CAMA
which expressly or impliedly prohibits a virtual company meeting
however the express provision of section 216 of the CAMA as well as
the marginal notes thereto (which are interpretation aids) suggest
that the statutory meeting ought to be in a physical venue which
thus may constitute an impediment to the legality of a virtual
statutory meeting. It is therefore my submission that a statutory
meeting of the company cannot be held by virtual means as this was
not envisaged nor can it be justified by any provision of the
CAMA.
ANNUAL GENERAL MEETING: By section 213 of the
Companies and Allied Matters Act, an annual general meeting of a
company so termed, is a general meeting of a company which must be
held every year in addition to any other general meetings in that
year, and which is specified as such in the notice calling it. Not
more than 15 months may elapse between the date of one annual
general meeting of the company and the next. An annual general
meeting must be held within eighteen months of its incorporation
and the company, upon holding its first annual general meeting is
exempted from compulsorily holding another annual general meeting
in the subsequent year. Both ordinary and special businesses may be
transacted at an annual general meeting of the company. The
Corporate Affairs Commission has the power to upon application
extend the time within which the company may hold its annual
general meeting. The annual general meeting of the company is
applicable to all types of companies.
By section 216 of the Companies and Allied Matters Act, the
annual general meeting a company must be held in Nigeria. While the
CAMA is silent as to whether the physical presence of members is
required, the marginal notes to section 216 of the CAMA is explicit
as it refers to a ‘place of meeting’. It may therefore be concluded
that the Annual general meeting of the company cannot be held by
virtual means.
EXTRA-ORDINARY GENERAL MEETING: Section 215 of
the Companies and Allied Matters Act provides for an extra-ordinary
general meeting of the company. This meeting is held at any time to
conduct business and take decisions within the “special business”
category which cannot wait for the next annual general meeting.
Unlike the statutory and annual general meetings of a company, the
extra-ordinary general meeting of the company need not compulsorily
hold in Nigeria as it is excluded by section 216 of the CAMA. I
believe that the intention of the draftsmen by exempting the
extra-ordinary general meeting of the company from being
compulsorily held in Nigeria is to make accommodation for instances
where it is impossible or difficult for shareholders and members of
the company to meet especially within Nigeria. This may happen when
the shareholders or director are foreigners and or based abroad.
However, just like in the previously discussed meetings, there is
no way to justify an online extraordinary meeting of the company
under the CAMA.
COURT ORDERED MEETINGS: A court ordered meeting
of a company is a general meeting ordered by the Federal High Court
upon an application by relevant interested parties. Section 223(1)
of the CAMA provides as follows:
“if for any reason it is impracticable to call a meeting of
the company or of the board of directors in a manner in which
meetings of the company or the board may be called, or to conduct
the meeting of the company or board in the manner prescribed
by the articles or this Act, the court may, either of its own
motion or on the application of any director of the company or of
any member of the company who would be entitled to vote at the
meeting , in the case of the meeting of the board, order a meeting
of the company or board , as the case may be, to be called , held
or conducted in such manner as the court thinks fit, and where an
such order is made may give such ancillary directions as it thinks
expedient”.
By virtue of the above section, where it is impracticable for
any reason whatsoever for a company to call a meeting of its
members in the manner prescribe by the CAMA or the Articles of the
company, the Federal High Court may suo motu or upon application by
a specified class of people so order the meeting in the manner it
thinks fit.
It is my submission that the safest means to stay within the
boundaries of the CAMA in conducting a meeting of the company by
virtual means is through a court ordered meeting. Note that by
section 223(1) is general in nature as to the type of meeting that
the court may order. Also, either special or ordinary businesses of
the company may be transacted if so ordered by the court.
The application to the court may be made by the board of
directors, any director if other directors are not within Nigeria
and a quorum may be affected, members holding not less than one
tenth of the paid up voting share capital (or in the case of a
company without a share capital, members holding one tenth of the
voting rights) who have complied with the rules of procedure for
members requisitioned extraordinary general meeting, and
auditors.
The application should state the manner in which the applicants
require the company meeting to be held and should of course put
cogent reasons (covid19) before the court to enable it grant the
application on the terms sought. The Federal High Court is
empowered to make orders that may deviate from the articles of
association or the CAMA which if followed would make it impossible
to hold the meeting. Such orders could be as to venue and
businesses to be transacted.
Technology available for conducting such a meeting include zoom,
google hangout, Facebook among others. These apps can be installed
on all smart phones and computers. They do however require mobile
data connection and may be affected by network or weather issues.
Their installation requires minimal technological knowhow and they
are all freely downloadable from respective app stores
Where there is no exigency in holding an annual general meeting,
and the time within which the company ought to hold its annual
general meeting is about to elapse, section 213(1)b of the CAMA
empowers the Corporate Affairs Commission to extend the time within
which an annual general meeting of the company shall be held. The
power of the commission is however limited as the commission may
not extend such time beyond 3 months. The company may therefore
apply for an extension while hoping that before it elapses, the
lockdown would have been eased.
Also, members of a private company may also take decisions
without necessarily holding a company meeting. Section 234 of the
CAMA provides that:
“All resolution shall be passed at general meeting meetings
and shall not be effective unless so passed: Provided that in the
case of a private company a written resolution signed by all the
members entitled to attend and vote shall be as valid and effective
as if passed in a general meeting.” Although this is not the
focal point of this paper, it provides another avenue through which
critical decisions may be taken within the provisions of CAMA
during this pandemic without necessary risking the lives of members
or contravening local restrictions.
Peter Eboch Ibe Esq., the author of this paper is an associate
with the law firm of J. N. Okezie & Associates and practices law in
Jalingo, Taraba State.
Speak with the author, ask questions or make enquiries via
peteribe89@yahoo.com[1] or
08031584636.
This publication is the writer’s view and not legal advice. It
does not create any form of legal relationship. You may reach the
writer for more information.