membership, meetings & resolutions

The various ways by which a person may become a member of a company are:

• a. By subscription: By subscribing the memorandum of the company on its formation. The subscribers are persons who sign the memorandum and articles of association of a company. They must together subscribe to shares amounting in value to the minimum share capital stated in the memorandum to be registered. Section 27(2) and Section 124 CAMA, 2020. On the registration of the company, the subscribers are deemed to have agreed to become members and their names must be put on the register of members.
• b. By share qualification: There is no statutory obligation on a company to impose on its directors to be shareholders. The articles may however provide that each director should own a certain number of shares to qualify to be a director.
• c. By allotment: This is the allotment of a specified number of shares of a company to an applicant. Upon receipt of an application, a company shall where it wholly or partially accepts the application, make an allotment to the applicant and within 42 days notify the applicant of the fact of the allotment and the number of shares allotted to him. Section 150 (c) CAMA, 2020.
• d. By transfer: This occurs where a person has the shares of a company transferred to him by the holder of those shares. Section 175 CAMA, 2020.
• e. By transmission: By succeeding to shares on the death or bankruptcy of a member. On the death of a member of a company, the survivor, where the deceased was a joint shareholder or the personal representative of the deceased or where he was a sole holder, are the only persons recognized by the company as having any title to the interest in the shares. Section 179 (1) CAMA, 2020.
• f. Estoppel: This occurs where any person has his name in the register of members with his knowledge. Such a person cannot afterwards deny his membership, and in such an instance becomes a member by estoppel.
• g. By conversion of debentures to shares: Conversion of debentures into shares in lieu of redemption by a debenture holder occurs where he exercises the option by writing to the company intimating them of his intention to become a member. The conversion of a debenture holder’ debentures into shares can also be at the instance of the company. Section 197 CAMA, 2020.

The following are the persons who can become members of a company:

• a. A natural person who has attained the age of 18 years and who is not of unsound mind and not a bankrupt who has not been discharged.
• b. An infant can be a member of a company but he will not be counted for the purpose of determining the legal minimum.
• c. An alien after satisfying all condition precedents.
• d. A corporate body which is not in liquidation.
• e. A personal representative after fulfilling necessary condition precedents.

According to Section 106 CAMA, 2020, the following persons cannot become members of a company:

• a. A person of unsound mind who has been found to be so by a court in Nigeria or elsewhere.
• b. An undischarged bankrupt.
• c. A corporate body in liquidation.

The rights of members in a company include the following:

• a. Right to attend, speak and vote at every company meeting.
• b. Entitlement to notice of meeting.
• c. Right to transfer shares as a personal property.
• d. Right to receive dividend once it is declared.
• e. Right to demand voting by poll.
• f. Right to appoint proxy in a company limited by shares.
• g. Right to requisition an Extra ordinary General Meeting.
• h. Right to remain a member with no extra liability if shares are fully paid up.
• i. Right to take up minority protection actions against the company
• j. Right to participate in the appointment and removal of directors, auditors.
• k. Right to return of capital on reduction of capital or upon winding up if there is available surplus.
• l. Right to inspect the minutes book.
• m. Right to petition for winding up.
• n. Right to petition for investigation by the Corporate Affairs Commission.
• o. Right to a share in the surplus or reserve upon winding up.

The instances where a person may cease to the member of a company are as follows:

• a. By transmission of his shares.
• b. By transfer of all his shares to another person. Where a person transfers all his shares to another person, he ceases to be a member of the company immediately the name of the transferee is entered in the register of members. Section 176 CAMA, 2020.
• c. By forfeiture of shares. Section 165 CAMA, 2020.
• d. The company sells the shares of a member in the enforcement of its right of lien and the buyer’s name is entered on the register of members. Section 164 CAMA, 2020.
• e. By a valid surrender of his shares. See Trevor v. Whitworth.

The type of meetings held by a company are the following:

• a. Statutory Meeting: This type of meeting is prescribed for public companies. This meeting is to be held within six months from the date of incorporation of the company. The meeting is held to principally consider the statutory report of the company which must be sent to the members of the company at least 21 days before the date of the meeting. Section 235 (2) CAMA, 2020.
• b. Annual general Meeting: Except in the case of a small company or any company having a single shareholder, every company is required to hold an annual general meeting. A company must hold its first annual general meeting within 18 months of its incorporation and subsequently, not more than 15 months should elapse between the date of one annual general meeting and the next. Section 237 CAMA, 2020.
• c. Extra ordinary General Meeting: This type of meeting can be held any time. It is meant to deal with any matter that is so important that it cannot wait until the next annual general meeting. Section 239 CAMA, 2020.
• d. Court ordered Meeting: The Federal High Court may suo moto or on application of any director or member of a company order a meeting of the company or of the board where for any reason, it is impracticable to call a meeting of the company or the board of directors, where all directors or shareholders of the company are dead, where there is a proposal of a scheme of arrangement, merger or compromise and where a company has reached a compromise with its members or creditors.
• e. Class meetings: This is a meeting held by classes of shareholders where a company has different classes of shares. Section 268 CAMA, 2020. Provisions of the Act relating to meetings apply to any class meeting except if expressly excluded by the Act itself.

If a company fails to call an annual general meeting, a member of the company can apply to the Corporate Affairs Commission to call or direct the calling of a general meeting of the company. The Corporate Affairs Commission will gives such directives as it deems fit which will include the power for one member to apply to court to make an order that such member shall take decisions that will bind members of the company.

According to Section 238 CAMA, 2020, the type of businesses transacted at an Annual General Meeting are the following:

• a. Ordinary business which are:

• 1. The declaration of dividend.
• 2. Presentation of the financial statement of the company.
• 3. Directors’ Report.
• 4. Auditors’ Report.
• 5. Election of directors to replace those retiring.
• 6. Appointment and remuneration of auditors.
• 7. Appointment of members of the Audit Committee.
• 8. Disclosure of remuneration of managers of the company.

• b. Special business which includes any other business transacted at the Annual General Meeting.

The persons who can requisition an Extra Ordinary General Meeting of a company are the following:

• a. The Board of Directors: The board of directors may or any director of the company, if there are no other directors within Nigeria to form a quorum, whenever they or he deems fit convene an extra ordinary general meeting. Section 239 (1) CAMA, 2020.
• b. Resigning Auditor: A resigning auditor can requisition an Extra Ordinary General Meeting to discuss the reasons contained in his Notice of Resignation which he believes would be of interest to the members and creditors of the company. Section 413 CAMA, 2020.
• c. Members: The member or members must be holding, at the date of the requisition, not less than one-tenth (10%) of the paid of the company carrying voting rights at general meeting; or If it is a company not having a share capital, the members must hold not less than one-tenth (10%) of the total voting rights of all members having at the said date a right to vote at general meeting.

The procedure for members requisitioned Extra ordinary General meeting is as follows:

• a. The member or members must hold at the date of the requisition, not less than one-tenth of the paid up capital of the company carrying voting rights at general meeting; or if it is a company not having a share capital, the members must hold not less than one-tenth of the total voting rights of all members having at the said date a right to vote at general meeting. Where they fail to satisfy this condition, the directors will reject the requisition and it will not be debated or put to vote. Pedley v. Inland Waterways Association Ltd.
• b. The member or members requisitioning the meeting must deposit a signed requisition at the registered office of the company stating the objects of the meeting and the resolutions which they intend to propose. The requisition must be signed by all the requisitioning the meeting. Section 239 (3) CAMA, 2020.
• c. Within twenty-one (21) days from the date of deposit of the requisition, the directors are to convene the Extraordinary General Meeting. Where the directors refuse to convene the meeting within 21 days from the date of deposit of requisition, the members who requisitioned the meeting or any one or more of them representing more than half of the total voting rights of all of them (51%) may themselves convene a meeting within 3 months from the deposit of the requisition to transact the business so described. Section 239(4) CAMA, 2020.
• d. Quorum issue: If no quorum is present at the requisitioned meeting of the members within one hour from the time appointed for the meeting, it is dissolved. Section 264 CAMA, 2020.

According to Section 247 of the Companies and Allied Matters Act, where it is impracticable for any reasons to call or conduct a meeting of a company, the court may on its own motion, or on the application of directors or person entitled to vote at such meeting order a meeting to be called. Okeowo v. Migliore (1979) 11 SC 138.

According to Section 240 (1) CAMA, 2020, with the exception of small companies and companies having a single shareholder, all statutory and annual general meetings of a company shall be held in Nigeria. A private company may hold its general meetings electronically provided that such meetings are conducted in accordance with the articles of the company. Section 240 (2) CAMA, 2020.

Notice of meetings are important because they are necessary to adequately inform the member of a company of the kind of meeting he is called to attend, the venue, the business or items to be discussed so as to prepare either to participate in the discussion or even to understand what is going to be discussed.

To achieve its aim and purpose, a notice must be clear in its contents. It must not be misleading or ambiguous and must have some important information contained in it. According to Section 242 (1) CAMA, 2020, a notice must contain the place, date, time and general nature of the business to be transacted in detail to enable members decide whether the issue to be discussed are of interest to them and whether to attend the meeting in person or through a proxy.

Notices can be served through the following ways:

• a. Personally – hand delivery.
• b. By sending it by post to him or to his registered address. If such member does not have registered address in Nigeria, such notice is to be sent to the address if any, supplied by him to the company for the giving of notice to him.
• c. Electronic mail to any member who has provided the company an electronic mail address. Section 244(1) (3) CAMA, 2020.

According to Section 243(1) of the Companies and Allied Matters Act, the persons entitled to receive notice of meeting are:

• a. Every member of the company
• b. Every person upon whom the ownership of a share devolves by reason of his being a legal representative, receiver or a trustee in bankruptcy of a member of the company
• c. Every director of the company
• d. Every auditor for the time being of the company
• e. The company secretary
• f. The Corporate Affairs Commission in the case of public companies.

The service of the notice of a meeting is deemed to be effected after 7 days of posting the letter. Notice, aside from being given personally or by post, can also be given by electronic mail to any member who has provided the company an electronic mail address.

According to Section 245(1) of the Companies and Allied Matters Act, the effect of failure to give notice of any meeting to a person entitled to receive it that the meeting is invalidated unless failure to give such notice is an accidental omission on the part of the person giving the notice.

The type of company required to give additional notice of meeting is a public company. The additional notice required is advertisement of the notice n two daily newspapers at least 21 days before the meeting. Section 246 CAMA, 2020.

Quorum refers to the minimum number of members that must be present at a meeting to enable it to start. The quorum of a meeting is usually set out in the articles of association of a company. However, where the articles of association of a company is silent as to quorum for its meetings, the provision of the Companies and Allied Matters Act applies which is that 1/3 of the members or 25 members (whichever is less) present in person or by proxy make a quorum for the meeting of a company except it is a company with one member. Section 256(1) CAMA, 2020.

The resolutions of a company are passed by voting which is either by the show of hands or by a poll. Section 248(1) CAMA, 2020.

Voting by show of hands which is the default method of voting, unless poll is demanded, does not depend on the number of shares held by a member, but on numerical strength, either personally or by proxy. It is determined by the numerical strength of the members supporting or opposing the resolution while voting by poll depends on the number of shares held by the members, and not on numerical strength. Section 248(1) CAMA, 2020.

According to Section 248(1) CAMA, 2020, the persons who can demand a poll at the meeting of a company are:

• a. The Chairman, where he is a shareholder or a proxy.
• b. At least three members present in person or by proxy.
• c. A member or members present in person or by proxy and, representing at least one tenth of the total voting rights of all the members having the right to vote at the meeting.
• d. Any member or members holding shares in the company conferring a right to vote at the meeting being shares on which an aggregate sum has been paid up equal to at least one-tenth of the total sum paid up on all the shares conferring that right.

According to Section 248 (2) of the Companies and Allied Matters Act, unless a poll is demanded, a declaration by the chairman that a resolution has on the show of hands been carried unanimously or by a particular majority, or lost, an entry to that effect in the book containing the minutes of the meeting of the company, is a conclusive evidence of the fact, without proof of the number or proportion of the votes recorded in favor of, or against, the resolution.

The right to demand a poll cannot be taken away by the articles of association except on the issue of election of election of a chairman or adjournment of the meeting. Section 249 CAMA, 2020.

A proxy is a person mandated by a member of a company to represent him at the company’s meeting which he will not attend. He may or may not be a member of the company. A proxy has the same right to speak and vote at the meeting as the member appointing him. Section 253 CAMA, 2020.

The procedure for the appointment of a proxy is as follows:

• a. There must be an instrument in writing appointing the Mr. Chinda Wildfire as proxy under the hand of Mr. Taiwo Rhodes or his attorney duly authorized in writing. Section 254(6) CAMA 2020.
• b. The proxy instrument and Certified True Copy of Power of Attorney (where relevant) are to be deposited at the registered office or head office of the company or at such other place specified within Nigeria (for the meeting) not less than 48 hours before the time of holding of the meeting or adjourned meeting. Section 254(3) CAMA 2020. If voting is by poll, not less than 24 hours before the time appointed for the taking of the poll.

The revocation of proxy is only valid where intimation in writing of such revocation by the appointer or his attorney has been received by the company before commencement of the meeting or adjourned meeting at which the proxy is used. Section 254 (5) CAMA 2020.

This is when a company which is a member of another company, by resolution of its directors or other governing council or body authorizes any person to act as its representative at any meeting of the company of which it is a member. The person so authorized can exercise on behalf of the company, any power the company might exercise were it an individual shareholder of the company. Section 255(1) (2) CAMA, 2020.

A company makes its decisions by resolutions.

The following are the types of resolutions of a company:

• a. Written resolutions: Section 259 of the Companies and Allied Matters Act provides that all resolutions shall be passed at general meetings and shall not be effective unless so passed but 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. In written resolution, no meeting is held.
• b. Ordinary resolutions: This type of resolution is one which is passed by a simple majority of votes cast by members in person or by proxy. Ordinary resolution is ordinary resolution is presumed when the Companies and Allied Matters Act simply requires the passing of a resolution by a company without stating whether it should be by ordinary resolution or special resolution. Section 285(1) CAMA, 2020.
• c. Special resolutions: A special resolution is a resolution passed by at least three fourth majority of members voting in person or by proxy at a general meeting of which not less than 21 days’ notice of intention to propose the resolution has been given. Shorter notice may however be given if agreed to by majority holding not less than 95% of the nominal value of the shares or by the members representing not less than 95% of the total voting rights in case of company not having share capital. Section 285 (2) CAMA, 2020.
• d. Unanimous resolutions.

Requisition of resolution occurs when holders of 1/20th of total voting right requisition a notice of their resolution to be circulated to members entitled to receive notice of the meeting to which the requisition relates. Section 260(1) CAMA, 2020.

The resolutions and agreements required to be registered with the Corporate Affairs Commission according to Section 362 of the Companies and Allied Matters Act are as follows:

• a. Special resolution.
• b. Unanimous resolution, on an issue which requires special resolution.
• c. Unanimous class resolution.
• d. Resolution requiring a company to wind up voluntarily passed under Section 620 (a) CAMA, 2020.

According to Section 266(1) of the Companies and Allied Matters Act, with the exception of a small company having a single member, every company must cause minutes of proceedings of its general meetings, board of directors of directors’ meetings to be kept at its registered office.

The minutes of a company must be entered in books kept for the purpose. International Agricultural Industries (Nig.) Ltd. v. Chika Brothers Ltd. (1990) 1 NWLR 70.

In Section 105(1) and (2) of the Companies and Allied matters Act, membership of a company is defined to include:

• a. The subscribers of the memorandum of the company who are deemed to have agreed to become members of the company and on its registration shall be entered as members in its register of members,
• b. Every other person who agrees in writing to become a member and whose name is entered in its register of members.