by Vernia Legal Practitioners | Dec 8, 2022 | Commercial Law, Litigation, Society & Law
Introduction
A Contract is simply an agreement between two or more parties that is legally binding. Simply put, it is an agreement that the law will enforce.
A Memorandum of Understanding on the other hand, is a preliminary to a Contract. It is an agreement that a contract will be entered between parties in future. Perfectly put by the Court of Appeal in Aburime & Anor v. Osunbor [2022] Lpelr-57590 [Ca]:
” Memorandum of Understanding is not the real agreement but a document guiding the future agreement. Its status is something less than a complete contract.……The implication is that its content cannot be enforced. Be that as it may, it remains a document which the parties can refer to for the purpose of reminding them of the content therein.” Per Bola, J.C.A. [PP 11 – 12]
Also, in B.P.S Construction & Engineering Co. Ltd V. Fcda [2017] Lpelr-42516 [Sc], the Supreme Court held per Kekere-Ekun, J.s.c (Pp 20 – 21 Paras B – B):
“…it is clear that a memorandum of understanding or letter of intent, merely sets down in writing what the parties intend will eventually form the basis of a formal contract between them. It speaks to the future happening of a more formal relationship between the parties and the steps each party needs to take to bring that intention to reality.
Therefore, it is clear as crystal that an MOU is not to be enforced. It is a preliminary to a future Agreement to be entered into by contracting parties. An MOU is for the future.
However, for every law, there is an exception. There is a way whereby an MOU can still be deemed an agreement which the Courts would recognize as binding on the parties. Where the parties to an MOU agree to be bound by the terms and conditions, none of them is permitted to later aver that the MOU is not binding. The rules of Estoppel forbid such party. The Court of Appeal in Tower Securities & Investment Co. Ltd. v. Coronation Merchant Bank Ltd (2020) Lpelr -51415 (Ca) per Aliyu, J.c.a (Pp 34 – 36 Paras A – E) explained:
“There is no doubt that an MOU’s status is less than a complete contract. But in the peculiar facts and circumstances of this case under which the MOU was executed, I am confident to hold that the parties intended to be bound by the terms thereof. ……………In the case of B. P. S. Construction Company & Engineering Ltd Vs. FCDA (2017) 10 NWLR (Pt. 1572) 1 or (2017) LPELR-42516 (SC)..………… both this Court and the Supreme Court held in that case, that the parties did not intend to be bound by the MOU, since it only represented a preliminary understanding of the parties’ plan to enter into a contract in the future. But in the case leading to this appeal, the parties did not make the MOU subject to the execution of any further agreement. They intended that it should be binding on them and indeed commenced the execution of the terms therein as noted supra. In this circumstance, the Appellant cannot be allowed to renege from it.”
Also, the Supreme Court held in Adedeji v. Obajimi [2018] 16 Nwlr Part 1644 Page 146 that an MOU was enforceable because the parties intended to be bound, they had intentions to create a legal relationship. The Appellant signed the MOU to pay the sum of N5,000,000 to buy a company [at a particular date] and also a statutory deposit of N500,000 to the Central Bank of Nigeria. It was agreed that in the event of an inconclusive sale, the Appellant would be reimbursed the money incurred for expenses. But the Appellant did not pay the N5,000,000 and he sued for reimbursement. The Apex Court held that he had breached the terms of the MOU as he failed to perform his contractual obligations. There was an intention to be bound and he breached the agreement. Therefore, the MOU was enforceable.
From the above decisions, there is an emphasis to intention to create legal relationships. This element is usually what differentiates contracts from mere agreements. Offer, Acceptance, Consideration and Capacity might all be present but no agreement will receive the force of law if it lacks an intention.
Conclusion
Memorandums of Understanding are generally unenforceable. There are usually preliminaries to future agreements. However, where parties intend to be bound, then they are placed on the same pedestal as Contracts and consequently receive the stamp of enforceability, in which case a Memorandum of Understanding is a binding obligation. Where there is intention, it is no longer a preliminary; it is a debt to be paid. An MOU is thus, an IOU.
TEAM VERNIA
52B, Adeyemo Akapo Street,Omole Phase I Estate,
Off Agidingbi Road, Ikeja, Lagos.
+234 813 830 6975
[email protected]
by Vernia Legal Practitioners | Sep 26, 2022 | Commercial Law, Society & Law, Tax
Tax Appeal Tribunal [hereinafter referred to as the “TAT” or “Tribunal”] is established pursuant to SECTION 59 (1), FEDERAL INLAND REVENUE SERVICE [ESTABLISHMENT] ACT, 2007 [hereinafter referred to as the “FIRS Act”]. The TAT replaces the former Body of Appeal Commissioners [BAC] and Value Added Tax [VAT] Tribunals. The TAT is not a Court, but rather an administrative body saddled with responsibilities of handling disputes on taxation; to be specific, taxes accruable to the Federal Government of Nigeria.
Jurisdiction
The 5th Schedule of the FIRS Act states that the TAT has jurisdiction over all matters contained in the 5th Schedule [to the FIRS Act]. These includes: disputes arising from the Companies Income Tax Act [CITA], Petroleum Profit Tax Act [PPTA], Personal Income Tax Act [PITA], Capital Gains Tax Act [CGT], Stamp Duties Act [SDT], Value Added Tax Act [VAT], Taxes and Levies [Approved list for collection] Act as well as other laws, Regulations, Proclamations, Government notices or Rules related to these Acts. Furthermore, it is instructive to note that the Tribunal also adjudicates tax disputes arising from the actions and decisions of state tax authorities provided the disputes relate to any of the Acts listed in the First Schedule to the FIRS Act. There used to be a debate as to which is the appropriate forum to bring federal taxation matters to, whether it is the TAT or the Federal High Court [hereinafter referred to as “FHC”]. Section 251(a) – (c), 1999 Constitution confers upon the FHC exclusive jurisdiction to entertain and adjudicate upon matters related to taxation of the Federal Government or its agencies. Section 59 (2), Establishment Act saddles the TAT with the responsibility of handling disputes relating to taxes due to the Federal Government through the FIRS. Therefore, it begged the question that when there is a grievance, which of the two judicial bodies is the appropriate point of call? Can a complainant bypass the TAT and go straight to the FHC or he must go through the former first? After series of decisions, the Court of Appeal finally put an end to this. In Federal Inland Revenue Service v. TSKJ [Construcoes Internacional Sociadade Unipersoal], [2017] LCN/10279 CA, the Court held that a party must approach the TAT before escalating a grievance to the Federal High Court where a statute prescribes a line of action in resolution of a dispute, all available remedies must be exhausted first before resorting to the halls of a Courtroom. This however, as properly and firmly noted by the same Court of Appeal in the later decision of Skye Bank Plc v. K.S.I.R.S [2021] 12 Nwlr [Part 1789] Page 27], the TAT is not a Court and does not ousts the jurisdiction of a Court.
The TAT Zones
A Tax Appeal Tribunal is located in the Federal Capital Territory, Lagos State and in each of the six geo-political zones of Nigeria.
Initiation of Action
The Tax Appeal Tribunal as defined by the Court of Appeal in Skye Bank Plc v. K.S.I.R.S [supra] is an administrative tribunal set up to determine the correctness of assessment of tax without fixation of formality. When a tax has been imposed on a party, he is free to object to it and lay a complaint to the imposing authority. Upon failure to reach an amicable resolution, such complainant [aggrieved party] has the right to escalate it further by approaching the TAT. The procedures of filing an action under the TAT, like a usual Court, is regulated by procedure and hence the Tax Appeal Tribunal [Procedure] Rules 2021.
According to the FIRS Act and Order 3 Rule 1, TAT [Procedure] Rules 2021, both the taxpayer and relevant tax authority can initiate the appeal process. Rule 2 provides that such complainant shall file the action within a period of 30 days from the date on which the cause of complaint [action, decision, assessment or demand notice] which is being appealed against, was made by the FIRS. However, the Tribunal may still entertain an appeal after the expiration of the said period of 30 days if it is satisfied that there was a reasonable cause for the delay. Going further, Rule 3 says that if the complainant is the FIRS or any relevant tax authority, aggrieved by non-compliance by any person in respect of any provisions of the tax laws referred to in Paragraph 11 of the 5th Schedule to the Act under its administration, it may as in Rule 2 above, file an appeal at the appropriate zone of the Tribunal.
If a party is still dissatisfied with the decision of the Tribunal, Order 1, Rule 1, Federal High Court [Tax Appeal] Rules, 2022 provides that such party can file a Notice of Appeal to the Federal High Court within 30 days after the decision of the Tribunal was given.
Structure
According to Section 2, 5th Schedule, Establishment Act, the TAT has a total of 50 Tax Appeal Commissioners. A Tribunal consists of 5 members appointed by the Honorable Minister of Finance. The Chairman for each zone must be a legal practitioner who has been so qualified to practice for a period of not less than 15 years with experience in tax legislation and tax matters. The Chairman presides at every sitting of the Tribunal and in his absence the members shall appoint one of them to be the Chairman. The quorum at any sitting of the Tribunal is 3 members. Section 4 provides that a Tax Appeal Commissioner is to hold office for a term of 3 years, which is renewable for another term of three years only, from the date on which he assumes his office or until he attains the age of 70 years whichever is earlier.
Responsibilities of The TAT
The Tribunal is responsible for entertaining, determining and adjudicating on all the cases filed before it. The Tax Appeal Commissioners sit on the tribunals to perform these duties. Also, where the cases also have elements of crime, it can refer them to the office of the Attorney General of the States or Federation [as the case may be]; or other law enforcement agencies so the matters can be prosecuted. The decision of the Tribunal [Award or Judgement] will be registered at the Federal High Court and enforced as if it was a Judgment of the Court.
Bottlenecks of Dispute Resolution
As gleaned earlier, appeals from the TAT lie to the Federal High Court. Order 1, Rule 1 Federal High Court Tax Appeal [Procedural] Rules, 2022 is instructive on this. However, this can only be done on points of law. The Act provides that appeal against the decision of the Tribunal lies to the Federal High Court “on points of law” and further appeal lies to the Court of Appeal. No room for an appeal on points of facts is made here. This may appear unconstitutional and could be challenged. However, it would also seem that the approach as universal appeal in matters of tax appeal. In addition, the Rules require a deposit of Judgement Sum. Order 5 Rule 1 mandates a tax debtor who is challenging the decision of the Tribunal [“the Tribunal”] to deposit the judgement debt in an interest yielding amount maintained by the Chief Registrar of the Court. Otherwise, the appeal will not be heard. This is a precondition that must be satisfied. In our opinion, it seems unfair to a party being asked to deposit the same amount of money which he is appealing against, before he can make that appeal. It is nothing but a representation of the popular phrase associated with the military which is “obey before complain”. The essence of appealing is to overrule the lower court and prevent that “obedience” from taking place. However, on the flip side, it is argued that this payment to the Government is imperative for the funding of developmental projects. Failure of parties to pay hinders the tasks the Government intends to carry out. Besides, Paragraph 17, 5th Schedule of the FIRS Act mandates this payment to be made as a condition precedent to further appeal. It should be noted that this approach is not unique to Nigeria. It could be found in other tax jurisdictions to a varying degree.
Furthermore, at the TAT, the commissioners who adjudicate the disputes are experts who have experience in taxation. However, the Judges at the Federal High Court where appeals from the TAT will lie to, might not be vast in the realm of taxation and this undoubtedly can scupper the Court from reaching a sound and robust decision. There have been calls for the establishment of a proper Revenue Court manned by Judges appointed from legal practitioners with verse knowledge of and wealth of experience in tax matters and tax dispute resolution.
Conclusion
The TAT has always been a proper forum to ventilate taxation related grievances. Parties do not need to go to Court and endure all the stressful procedure required just before they can seek redress. The Tribunal saves them that long and tedious process. The aim, like any other body tasked with judicial and adjudicatory powers is to determine rights and liabilities and ultimately grant redress being sought by parties who come before it.
However, the system is not perfect as it is fraught with its own shortcomings. The restriction on appeals only on points of law is a not in the interests of litigants as the very Justice they seek before the Federal High Court is already limited. We strongly opine that a balance be struck in the payment of the Judgement Sum as a pre-condition for appeal, which would reflect equity and fairness. Yes, it looks harsh on parties but also, the Government needs the money too. The Law needs an amendment. Then, to ensure well-grounded decisions, forged from solid jurisprudence are reached, devoid of all the stressful procedure and legalese of the regular Courts, we suggest that there should be the establishment of Revenue Courts in line with the prescription of the revised National Tax Policy Document. In fact, the TATs can be transformed into these proposed Revenue Courts while the Chairmen be elevated to the position of Judges.
TEAM VERNIA
52B, Adeyemo Akapo Street,Omole Phase I Estate,
Off Agidingbi Road, Ikeja, Lagos.
+234 813 830 6975
[email protected]
by Vernia Legal Practitioners | Sep 8, 2022 | Commercial Law, Litigation, Society & Law
The recent Money Laundering Act [hereinafter referred to as “MLA”] was enacted in May 2022 to repeal the previous Act of 2011. This latest law like its predecessor is to ensure transparency and disclosure by shining the torchlight on financial transactions, combat money laundering and other related crimes. Penalties as usual, have been prescribed to act as deterrent for anyone, whether natural or corporate, who flouts these provisions.
The Law
Section 2(1) provides that no person or body corporate shall except through a financial institution, make or accept a cash transaction exceeding the sum of N5 Million Naira or its equivalent [in the case of an individual] or N10 Million Naira [in the case of a body corporate].
Section 3(1) imposes a duty to report in writing, a transfer to or from a foreign nation, funds or securities by any person including a money service business, of any sum exceeding $10,000, to the Special Control Unit against Money Laundering [hereinafter referred to as “SCUML”], a unit under the Economic and Financial Crimes Commission, Central Bank of Nigeria and Securities and Exchange Commission, within one day from the date of the transaction.
Section 4 (1) – (12) creates a responsibility on financial institutions and designated non-financial business and profession [hereinafter referred to as “DNBP”] to identify the identities of customers, take reasonable measures to verify anyone acting on their behalf, carry out due diligence while establishing business relationships and transactions, scrutinize transactions, gather sufficient information about customer and their business, etc.
Section 6 (1) says that financial institutions and DNBPs whose profession involves cash transactions shall in the case of a new business, before its commencement and an existing business, within 3 months after the enactment of the Act, submit to the SCUML, a declaration of its activities.
Section 7 also imposes a duty to report any suspicious transaction involving a frequency which is unjustifiable or unreasonable, surrounded by conditions of unusual or unjustified complexity, appears to have no economic justification or lawful objective, is inconsistent with the known transaction pattern of the account or business relationship, or is in the opinion of the financial institution or non-financial business and profession involves the proceeds of a criminal activity, unlawful act, money laundering or terrorist financing, and so on.
Section 11 (1) further goes on to say that notwithstanding anything to the contrary in any other law or regulation, a financial institution or DBNPs should report to the Nigerian Financial Intelligence Unite [hereinafter referred to as the “Unit”] in the case of a financial institution and to the SCUML in the case of a designated non-financial business and profession in writing within 7 days, any single transaction, lodgment or transfer of funds in excess of N5 Million Naira or its equivalent [in the case of an individual] or N10 Million Naira [in the case of a body corporate].
In addition, the law has gone a step further to place a burden on society; everyone has a reasonable man’s test to undergo. According to Section 20 (a) and (b), any person who:
“(a) conceals, removes from jurisdiction, transfers to nominees or otherwise retains the proceeds of an unlawful act on behalf of another person, where he knows or reasonably ought to have known or suspected that other person to be engaged in an unlawful act or has benefited from an unlawful act, or
(b) knows or reasonably ought to have known or suspected that any property either in whole or in part directly or indirectly represents another person’s proceeds of an unlawful act, acquires or uses that property or takes possession of it, commits an offence under this Act and is liable on conviction to a fine of at least five times the value of the proceeds of the unlawful act or imprisonment for a term of at least four years but not more than 14 years or both.”
The implication is that no one can feign ignorance about the unlawful nature of a transaction. You are expected to exercise reasonable care when dealing with third parties and a certain level of diligence is expected of you.
The Law and Lawyers
Section 11 (4) expressly states that legal professional privilege and the invocation of client confidentiality shall not apply in connection with:
- the purchase or sale of property;
- the purchase or sale of any business;
- the managing of client money, securities or other assets;
- the opening or management of bank, savings or securities accounts;
- the creation, operation or management of trusts, companies or similar structures.
One of the basic tenets of the legal profession is confidentiality. Like Religious Priests with congregation members, and Medical Practitioners with patients, the law in jurisdictions worldwide regard the relationship of a lawyer and his client as sacred. Such relationship is built and sustained on the concept of trust. According to Rule 19, Rules of Professional Conduct 2007, a Lawyer and Client communication is privileged. Without consent from the latter, it cannot be disclosed. To do so is a disbarrable offence on the part of the lawyer. The communication between both parties is privileged and generally cannot be used in evidence. Section 192 (1), Evidence Act 2011 provides that the communication between a lawyer and client is privileged. Except with the Client’s consent, the lawyer CANNOT disclose such information. The exceptions are:
a. Where such communication is made in furtherance of a crime;
b. Any observation made by the lawyer that since his employment, the Client has committed a crime.
Client-Attorney Privilege is so sacred that in 192 (3), this privilege still exists even if the Lawyer is no longer in the employ of the client. It is important. Thus, a law compelling a lawyer to disclose the transaction of his client is invalid. Therefore, the above provisions of Section 11 (4) MLA 2022 lifting such privilege is an aberration of established rules and principles of law. The Court of Appeal held in Mekwunye v. Carnation Registrars Limited [2021] 15 NWLR Part 1798 Page 1 that even the Court CANNOT compel a lawyer to break confidentiality. Espousing the importance of the concept, Pemu J.C.A @ Pages 40, Paras C – D held:
“The Counsel-Client relationship is fraught and clothed with privilege. Privilege for communication in relation to litigation based on the oath and honour of the lawyer who is duty bound to guard his client’s secrets.”
Privilege is not for fun. It is a duty. Keeping it short yet firm, the words of Daudu, SAN in the proceedings of Nigerian Bar Association v. Moses [2016] 10 NWLR, Page 366 @ 391 Paras F – C:
“The legal practitioner must accept that every privilege comes with a huge baggage of responsibilities.”
When the Old Act was enacted in 2011, the Nigerian Bar Association filed a suit against the Central Bank of Nigeria and the Attorney General, arguing that the provisions compelling disclosure cannot and should not be applied to lawyers because of Client-Attorney privilege. The Court of Appeal in Central Bank of Nigeria v. Registered Trustees of the Nigerian Bar Association & Anor. [2021] 5 Nwlr Part 1769 Page 268 held that although the law did not expressly mention, indeed lawyers were to be exempted from the application of such rule. The National Assembly in its own wisdom then choose to repeal the existing law and enact a new one in its stead and then expressly lift the privilege lawyers enjoy, therefore it would be said to be “what the law now says”. This is a disregard for Rule of Law. The act of the National Assembly in this regard is nothing short of legislative rascality. Client-Attorney Privilege is sacred! It must not be touched. In Agetu v. Commissioner of Police [2020] 13 NWLR Part 1741 Page 245, the Court held that a lawyer CANNOT be compelled to disclose information of his client except where he is a witness and even at that the Court can only permit him to do so if deemed necessary.
The provisions of Section 20 (a) and (b), MLA 2022 in our opinion should definitely not apply to lawyers. A lawyer should not be saddled with the responsibility of investigating the source of his client’s funds or wealth. That is within the remit and responsibility of law enforcement agencies. What he is owed is the perfection of his brief; the payment of his professional fees by the said client. The Court of Appeal, Lagos Judicial Division on May 14th, 2021 dismissed the appeal filed by the Economic and Financial Crimes Commission who froze the accounts of renowned learned silk, Mike Ozekhome S.A.N on the grounds that his professional fees being paid to him by his client were unlawfully acquired. Lawyers enjoy this privilege and it must not be tampered with except in accordance with the due procedure of the law.
Conclusion
Without a shred of doubt, the MLA 2022 is anchored on transparency and disclosure, as the foundations to build the machinery for combating money laundering. The public has a sense of responsibility to be bloodhounds; to sniff around suspicious transactions and persons and then report to the relevant authorities. This would therefore keep everyone on their toes knowing fully well that lack of diligence is now penalized.
On the other side of the coin, it is our considered view that the Act can be deemed unconstitutional. Section 37, 1999 Constitution guarantees the Right to Privacy. The Act seemingly infringes on this. Except a person is subject of an investigation, or where it is extremely important, he should not be forced to disclose details of his financial dealings. Private transactions should be made private. Except if such matters are part of public records [which they are not], law enforcement agencies should not easily have access to them as they like. Court orders should be sought and obtained first.
Furthermore, the sacrosanctity and sacredness of Client-Attorney privilege must also be put into consideration. No matter how desirable it is, lawyers cannot and should not be compelled to disclose details of their Clients’ affairs. It goes against the very ethos of the legal profession. The provisions of the MLA 2022 therefore are nothing but an attack on the legal profession. Lawyers help in drafting the law. Help in interpreting the law. Help in defending the law. But this time, the law is a weapon being brandished against us. The law here in our opinion, is “unlawful”.
It is an attack on lawyers.
TEAM VERNIA
52B, Adeyemo Akapo Street,Omole Phase I Estate,
Off Agidingbi Road, Ikeja, Lagos.
+234 813 830 6975
[email protected]
by Vernia Legal Practitioners | Aug 19, 2022 | Commercial Law, Society & Law
Under the recent CAMA 2020, there have been the several inclusions of innovative provisions that would help in shaping the modern corporate world. Merger and Acquisitions [hereinafter referred to as “M & As”] remain an important aspect of business and the law has introduced new rules which would affect M & As going forward. A few of them are:
1. Disclosure and Transparency
The new CAMA contains new provisions that promote transparency provisions with regards to the ownership in companies. Section 119 says that every person with significant control over a company shall, within seven days of becoming such an owner, inform the company in writing the particulars of such control and must also disclose this in all subsequent annual returns filed with the Corporate Affairs Commission [hereinafter referred to as “CAC”]. CAC is also compelled to maintain a register of persons with significant control. According to Section 120, a person who is a substantial shareholder in a public company must disclose such substantial shareholding to the company within 14 days of becoming aware of such substantial shareholding. He must also disclose whether or not he holds the shares as a beneficial owner or as a nominee of an interested person. After being notified of such disclosure or becoming aware of such substantial shareholding, the company in question has a duty notify the CAC of this. Furthermore, in Section 121 where a person stops being a substantial shareholder in a public company, within 14 days, he must disclose this to the company in writing stating the particulars of the change in his status. Again, upon being notified of or becoming aware of this, the company must notify the CAC within 14 days.
2. Court Sanctioning of Merger Schemes
Section 711 (1) and (2) provide that 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 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. If a majority representing at least ¾ (three –quarter) 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. Financial Assistance to Shareholders
Under the old dispensation, a company was barred from rendering financial assistance to a shareholder or an intended shareholder who sought to acquire shares in the company. However, the new CAMA of 2020 has come to make a way; Section 183(3)(e) and (f) permits companies to render such assistance in the acquisition or proposed acquisition of their shares where:
- It is done pursuant to a court-sanctioned scheme of arrangement, merger, or restructuring of the company; or
- The man reason purpose in giving the assistance is not to reduce or discharge any liability incurred by a person acquiring shares in the company or its holding company but is merely incidental to a larger purpose of the company, and the assistance is given in good faith in the interests of the company.
In addition, Section 183(4) provides that a private company may offer such financial aids for the acquisition of its shares, or that of its holding company if it is a subsidiary, where it is approved by a special resolution, the net assets of the company are not reduced or, if they are reduced, the assistance is provided from distributable profits; and the directors of the company make a statutory declaration in the prescribed form before the financial assistance is provided.
4. Repurchase of Shares
Under the old CAMA, companies were generally prohibited from acquiring their own shares. However, CAMA 2020 has now lifted such restrictions. Sections 184 permits a company may only purchase its own shares:
- if so permitted by its Articles;
- the shareholders shall, by special resolution, approve the acquisition by the company of the shares that it intends to purchase;
- only fully paid up shares of a company may be purchased by the company, and the terms of purchase shall provide for payment for the purchase;
- within seven days after the passing of the special resolution referred to in paragraph(b), the company shall cause to be published in two national newspapers, a notice of the proposed purchase by the company of its own shares;
- within 15 days after the publication in two national newspapers, the directors of the company shall make and file with the Commission, a statutory declaration of solvency, to the effect that the company is solvent and can pay its debts as they fall due, and that after the purchase of its shares, the company shall remain solvent and can pay its debts as they fall due.
However, paragraph (f) say that a company may not purchase its shares if, as a result of the purchase, there would no longer be any issued shares of the company other than redeemable shares or shares held as treasury shares.
5. Restriction of Shares
Under the old CAMA, private companies were compelled to restrict the transfer of their shares. But, under the new Act, it is no longer mandatory; private companies are at liberty to restrict or not. However, Section 22 (2) says they can do so, subject to the provisions of the Articles of Association, and still provide that:
- the company shall not, without consent of all its members, sell assets having a value more than 50% of the total value of the company’s assets;
- a member shall not sell that member’s shares in the company to a non-member, without first offering those shares to existing members; and
- a member, or a group of members acting together, shall not sell or agree to sell more than 50% of the shares in the company to a person who is not then a member, unless that non-member has offered to buy all the existing members’ interests on the same terms.
The underlying benefit of this provision in M & As is that, before private companies were forced to restrict transfer of their shares, therefore limiting M & A transactions. But now, there such shackles have been loosened. Private companies are no longer forced to restrict such transfers and as such M & As can be expanded as much as the contracting parties desire.
Conclusion
The CAMA 2020 has come to offer a new outlook for M & As in Nigeria. The recent provisions help in ensuring transparency, creates avenue for financial assistance to companies, repurchase and transfer of shares, etc. amongst other new innovations. These in general have helped in reducing bottlenecks which under the old dispensation would hinder the smooth operation of different transactions for companies especially for the ones involved in M&As. The new CAMA therefore helps companies who either want to merge or acquire shares in other companies. Thanks to it, M & As look much brighter and a safer form of investments.
TEAM VERNIA
52B, Adeyemo Akapo Street,Omole Phase I Estate,
Off Agidingbi Road, Ikeja, Lagos.
+234 813 830 6975
[email protected]
by Vernia Legal Practitioners | May 11, 2022 | Commercial Law, Intellectual Property
The idea of Intellectual Property [hereinafter referred to as “I.P”] as a legal concept is to protect the person who has expended energy and resources into a work; to protect the expression and execution of an idea, so that he can exploit it and prevent others from doing so unlawfully. Copyright is unique, unlike other IP rights such as patents, trademarks etc., the owner of a work does not need to register it; he/she becomes conferred with copyright in respect of the subject matter immediately. Hence, it is quite important and cannot be taken for levity.
An author has the right to enjoy his work. The right to reap the fruits of his labour, to benefit from the publication, performance, and other forms of exploitation must not be infringed upon by anyone. Belgore J, in Oladipo Yemitan v. The Daily Times Nig. Limited [1980] F.C.H.R 186 @ 190 held that the right of a man to that which he had originally made must be protected. According to the learned Jurist, “it must be stated that the legal position is that copyright belongs to the author who is the one that actually expended the work, labour, knowledge and skill.” If a man has expended energy and resources in making up a thing, the exploitation is his entitlement. The Court’s view in Mazer v. Stein 347 U.S 201 [1954] was that sacrificial days are devoted to creative activities which deserve rewards commensurate with the activities rendered. Section 6, Copy Right Act confers upon the owner the right to control the exploitation of his work.
Not all works are copyrightable. Alphabets, numbers, names, general phrases and idiomatic expressions, idea of a product, etc. cannot enjoy protection. Section 1 itemizes the categories of work eligible for copyright protection. They are: literary works, musical works, artistic works, cinematograph films, sound recordings and broadcasts.
Infringement
To the meat of the matter at hand, from time to time, there are always cases of copyright breaches especially in the entertainment industry, the music sector to be precise. It is very common to see artistes accusing one another of “song theft”. However, it goes beyond that. People may be unaware, but certain uploads on social media, unauthorized use of images amongst other actions constitute infringements. Section 15 draws up a large list of activities that constitute such. Nigerians are slowly waking up to the loss from infringements, however those who have lost a lot of money know the gravity of injustice it brings.
Who Can Sue?
Now, not just anyone can file an action in court alleging an infringement. You have to have locus i.e. a relevant interest in the matter. Section 16(1) provides that the owner, assignee or an exclusive licensee of a work are the persons that can bring an action for copyright infringement. Section 39 also provides for a “Collecting Society” [which may be formed in respect of anyone or more rights of copyright owners for the benefit of such owners] Hence, not every Tom, Dick and Harry can wake up one morning to proceed to the halls of a courtroom agitating a breach, he/she must fall under any of these categories. Mtn Nig. Communications Limited v. Musical Copyright Society of Nigeria Limited/GTE [2017] Lpelr – 50121 [CA].
Furthermore, while people casually think it is a matter that can be easily settled out of court, they fail to realize that it also attracts penal consequences. Section 20 provides that a person found guilty of infringement is liable to pay a fine of N1000 for every copy of every infringed work or faces a prison sentence of 5 years. Copyright infringement is criminal in nature. Section 39 (4), (5) and (6) also establishes punishments for breach of rights owned by collective societies. So, there is no doubt, copyright infringement is a criminal offence. This was the stance of the Supreme Court in Musical Copyright Society of Nigeria Limited/Gte v. Compact Disc Technology Limited [2018] Lpelr – 46353 [SC]. The Court in Mtn Nig. Communications Limited v. Musical Copyright Society of Nigeria Limited/GTE [Supra] explained that the general purpose of the Copyright Act is to make provisions for the definition of copyright, framework for its protection, transfer, what constitute infringement and the procedure to obtain remedy.
Enforcement
A victim of infringement has the right to seek redress. There are quite a handful of remedies available to anyone whose copyright has been breached. As gleaned from the preceding paragraphs, copyright infringement is criminal in nature and that automatically translates the availability of penal sanctions as a remedy. Apart from criminal liability, there are also civil ways to stop an infringement. They are:
Conversion rights
Section 18 states that:
“all infringing copies of the works copyright subsists, or of any substantial part thereof, and all plates, master tapes, machines, equipment or contrivances uses or, intended to be used for the production of such infringing copies shall be deemed to be the property of the owner, assignee or exclusive licensee or as the case may be, of the copyright……….”
What this provision is basically saying is, every material used in the infringement process, the owner/assignee/exclusive licensee can lay claim to it.
Section 19(1) provides that the breach of Sections 10 and 12 [which deal with first ownership of copyright and right to claim authorship respectively] is actionable i.e., the matter can be resolved by litigation. 19(2) further goes on to provide that anyone whose right has been breached is entitled to an award of damages, injunctions and any other remedies as the Court may deem fit to award in the circumstances.
2. Damages
This means monetary compensation. This could either be Special or General Damages. In the latter case, the plaintiff [aggrieved person] does not need to prove that he has suffered any damage in particular. The mere fact that that there is an infringement suffices. While in the former, the plaintiff must prove that the acts of infringements have caused him certain harm.
3. Injunctions
This can be:
Here the defendant [person who is alleged to have committed the infringement] will be restrained by the Court from the continuation of the act complained against. This order lasts temporarily and it is granted in situations of emergencies.
This is granted until the case itself has been fully determined. The essence, just like interim injunctions are usually to preserve the subject matter of infringement, so that there will be no further exploitation until the case in court is over.
This is also known as the permanent injunction. It is a final relief as it ensures that the infringer never interferes or infringes with the subject matter again.
4. Anton Pillar Order [Inspection and seizure order]
Section 25 provides that the Court can grant an order which allows the owner [accompanied by a Police Officer not below the rank of an Assistant Superintendent] to enter into the premises of the infringer to inspect the infringing items or works. The owner applies to the Court via a Motion Ex-parte [without notifying the infringer] and if the Court grants the application, it makes an order that enables the owner to go into the premises of the infringer, inspect and seize any material found there, which was used in the process of infringement.
The concept of Intellectual Property as stated above, is to allow a person who has worked hard to conceive and execute an idea, reap the benefits of his work. Therefore, anyone who is caught committing any act(s) that constitute infringement will face both criminal sanctions and civil liabilities. Hence, copyright simply means unless permission is given, you have no right to copy!
TEAM VERNIA
52B, Adeyemo Akapo Street,Omole Phase I Estate,
Off Agidingbi Road, Ikeja, Lagos.
+234 813 830 6975
[email protected]
by Vernia Legal Practitioners | Apr 19, 2022 | Commercial Law
Over the past few years, the mainstream of social media has been awashed with news of divorces, sex scandals of married persons, paternity frauds, controversial/shocking court decisions on division of properties and other matters in the sphere of family life. When there is a divorce, properties are automatically meant to be settled and in most scenarios, it is the husband that pays alimony. Alimony refers to the money ordered by a court to be paid by a former spouse to a former wife or husband after divorce. Under SECTION 70 of the MATRIMONIAL CAUSES ACT, 1986, the word alimony is replaced with “maintenance”
It has been a long standing rule at common law that a man has the duty to maintain his wife.[1] However, there is no rule that says a wife cannot maintain her husband. According to the Court of Appeal in Nakanda v. Nakanda[2] on the issue of maintenance, both “man and wife are on the same pedestal”. This duty applies to both of them.[3] Tobi J.C.A in Makanaya v. Makanaya[4] held that the essence of maintenance is to take care of the anticipated needs of a wife. This payment should be based on catering for her necessaries and not be based on the wealth of the husband. Unlike the Western climes, in the Nigerian jurisprudence, there is no rule on how properties are to be shared [especially for marriages contracted under the Marriage Act]. This is left to the Courts to decide that. Section 70(2), MCA provides that the court can make such awards of maintenance as it thinks proper having regards to the means, earnings, conduct of the parties to the marriage and other relevant circumstances. The powers of the courts, which they themselves have recognized and admitted, are wide and discretionary and are to be exercised in such manner in the spirit of equity and justice.[5] In Tabansi v. Tabansi[6], the Supreme Court also affirmed that the Court must consider the means, earning capacity, conduct of the parties in the marriage and other relevant circumstances before making such award. The issue of adultery falls under the ambit of “Conduct”.
Adultery
Adultery is the voluntary sexual relationship engaged in by a married person with another person other than his or her spouse. In the hallowed words of Lord Denning the eminent jurist, in the decision of Watchel v. Watchel[7]:
“It is no longer appropriate to talk about an innocent or guilty spouse, that is the conduct of the parties should not affect award of maintenance except for those which are obvious and gross so much that to order one party to support another whose conduct falls under such category is repugnant to one’s sense of justice.”
Adultery as a misconduct plays a major role as a determining factor in the award of maintenance. A spouse guilty of infidelity can be denied such benefits or even asked to pay more to the other spouse who was injured as a result of such misdeed. In Onyia v. Onyia[8] the court held that a spouse seeking any financial relief in a marriage must show that he or she was not the guilty party responsible for the breakdown of the marriage. The courts have constantly frowned at such an act and condemned it whenever it arose. In Williams v. Oladapo[9], the Supreme Court held that adultery attracted damages because it caused to the injured party, injury to his feelings, loss of partner, hurt to family life and loss of honour. In Lafun v. Lafun,[10] an adulterous wife was denied custody of her child because the court wanted to prevent the shame of the mother’s act from rubbing off on her daughter and also to avoid her being negatively influenced by her mother’s behavior. Even Section 15(2), MCA recognizes adultery as a misconduct such that under this provision, it is listed as one of the grounds for dissolution of marriage so long as it is intolerable to the other spouse. The Common Law Courts earlier had similar views on adultery vis-à-vis maintenance. In the case of Cunningham v. Cunningham[11], a wife committed adultery with a visitor that came to her house for the weekend. The court refused to award her maintenance as she was held to be responsible for the breakup of the marriage. This rationale was also upheld in Dison v. Dison,[12] where a husband slept with his daughter in-law.
It is firmly established that to every general rule, there is an exception. Therefore, there are instances where adultery can be committed and still, it would not affect the award of maintenance.
- Condonation.
The Latin maxim “volenti non fit injuria” i.e. “no injury is done to one who consents”. Thus, a husband that allows or consents to his wife sleeping with another man CANNOT plead adultery as a factor in refusing to maintain his wife. Lord Esher M.R in Wilson v. Glossop[13] stated it with utmost clarity that generally a husband is not supposed to maintain an adulterous wife except he connived with her to do so. Section 31(2), MCA provides that where adultery has been condoned, the injured party cannot be awarded damages.[14] Adultery must be intolerable. Section 15(2), MCA states it expressly that for it to be a ground for the dissolution of marriage, it must be intolerable. The courts have done enough justice to this principle in so many decisions.[15] According to Megwalu v. Megwalu[16] intolerability has to be a consequence of adultery. However, the court seemed to change its tune in Alabi v. Alabi[17]. The wife admitted to condoning her husband’s adulterous acts, yet the court awarded her damages because she had suffered loss of love from her husband, stigma of a failed marriage, death blow to her honour, shattering of her feelings and family life all because of her husband’s infidelity. The court reasoned that even though the Respondent condoned, she still suffered loss and injury on her own part. Therefore, strict application of the law would be harsh and unfair towards her and like the Court in Adeyemi v. Adeyemi[18] held, the award of maintenance should be done in an “equitable and just manner”
2. Contribution
Where an adulterous spouse has contributed to the acquisition of property in the marriage, it has been held fair and just for such party to be awarded maintenance. It is only right that a person who advanced money or any other property in the marriage should at least be entitled to some recovery. In Okala v. Okala[19] the wife committed adultery. However, she has contributed money for a building project carried on by her husband. Agbokoba J. at the High Court of East Central State awarded her maintenance. According to his words, “she has put something in the marriage, she should be entitled to take out of it”.
In submission to the foregoing, both genders can be maintained under the law. The Court will consider several factors before making an award. Adultery being a misconduct is a serious question that would influence the decision of a Court. Litigants who are victims of infidelity can leverage on this fact to prevent a cheating spouse from walking away with huge maintenance or plead it before the Court in order to get proper and adequate compensation for the emotional trauma suffered. However, it is important to note as enunciated in the preceding paragraphs that there are also instances where adultery would not affect the award of maintenance.
TEAM VERNIA
52B, Adeyemo Akapo Street,Omole Phase I Estate,
Off Agidingbi Road, Ikeja, Lagos.
+234 813 830 6975
[email protected]
[1] Erhahon v. Erhahon [1997] 6 Nwlr [Part 510] Pages 667 at 713
[2] Suit No CA/L/99/81, Delivered on 17th June 1988
[3] Calderbank v. Calderbank [1975] 3 Wlr, Page 586
[4] [1996] 9 Nwlr [Part 472] Pages 256 at 302 – 303
[5] Kafi v. Kafi [1986] 3 Nwlr [Part 27] Page 175; Ifeabuchi v. Ifeabuchi [2016] Lpelr – 41268 ca per Abiru J.c.a; Fakayode, j. advocated same in Adeyemi v. Adeyemi Suit No 1/198/70 Delivered on 29th October 1971.
[6] [2018] 18 Nwlr [Part 1651] Page 279 Per Aka’ahs, J.s.c. @Page 299, Para G
[7] [1973] Fam 72.
[8] [1985] Monthly Court Reports of Nigeria [Part 11] Page 15
[9] [1974] Lpelr-3940 Sc
[10] [1967] NWLR 401
[11] [1965] queensland lr 210
[12] [1974] Fam 58
[13] [1888] 2 Qbd Page 354
[14]Lambo, J. in Irinoye v. Irinoye [1972] Suit HD/60/71
[15] Odesanya, J. in Labode v. Labode [1972] 2 Uilr; Anyah, J. in Agu v. Agu [1972] 2 Ecslr Page 452; Odemero v. Odemero Suit No W/62/72 Delivered on 31st day of January 1974;
[16] [1994] 7 Nwlr [Part 359] Page 719
[17][2007] Lpeler-8203 Ca
[18][1971] Suit No 1/998/70 Delivered on 29th day of October, 1971
[19] [1973] Ecslr 67
