While being defined as Legal persons by virtue of having juristic personality, companies in Nigeria are still not natural persons, which means that every single decision of a company must be made in such a way as to be easily confirmed as emanating from its Central nervous system , otherwise known as its board of directors.
Company resolutions will be the focus on this article, which will place a heavy emphasis on the topics of :-
– What company resolutions are.
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– The legal framework governing company resolutions in Nigeria.
– The types of company resolutions under Nigerian law.
– When certain types of resolutions are required.
– When a company resolution can be deemed invalid.
What is a company resolution?
A company resolution is simply the authorization of any transaction or action of a company voted and agreed upon by its members and/or board of directors at a company meeting .
What are the components of the regulatory framework governing company resolutions in Nigeria?
Company resolutions in Nigeria are governed by the Companies and Allied Matters Act CAMA 2020 through the Corporate Affairs Commission CAC.
It should noted that certain types of company resolutions must be registered with the Corporate Affairs Commission.
What are the types of company resolutions available under Nigerian law?
A company resolution can be one of the following :-
– A special resolution :- This is a type of resolution that requires voting approval by 75% of the members of a company present in person or via proxy at a company meeting of which adequate notice was given by the Company’s secretary.
– An ordinary resolution :- These are resolutions that are not special resolutions which can be passed by a simple majority of the company’s members or board of directors.
– A written resolution :- This is a resolution given in private companies limited by shares and which is usually in writing signed by all members of a company entitled to vote.
What are the types of resolutions that must be registered with the Corporate Affairs Commission?
The following resolutions must be registered with the CAC :-
– Special resolutions
– Unanimous resolutions on issues requiring special resolutions
– Winding up resolutions of a company
– Unanimous resolutions in meetings of a class of shareholders
When exactly are special resolutions required?
Special resolutions are required under CAMA in the following cases :-
– Appointing a person over 70 years of age as the director in a public company
– Reduction of a company’s share capital
– The change of a company’s name
– The alteration of a company’s articles of association
– The winding up of a company
– The appointment of a company auditor who is a person other than a retiring auditor
– The alteration of the objects clause in the memorandum of a company
When is a company resolution deemed invalid?
A company resolution can be deemed invalid when :-
– It is not signed
– It was passed without the quorum vote required under CAMA
– It was passed by a director acting without any actual authorization form the company’s board of directors or members. This can be remedied by the board ratifying the act of a director after the fact
– It is an improper resolution or a resolution not passed in the proper manner as prescribed under CAMA, best exemplified by the act of passing an ordinary resolution for an act of the company that actually requires a special resolution.
What exactly is a company board quorum?
A quorum is the minimum required voting number for a resolution proposal to be successful, which is 2 directors.
Where the number of directors are above 6 in number, a quorum shall be 1/3rd of the number of directors and where the number of directors is not a multiple of 3 , a valid quorum will be 1/3rd to the nearest number.