9. Electronic Signature
Where a document or proceeding is required to be authenticated by a company, the proposed CAMA provides that electronic signature on such document or proceeding shall suffice. The proposed CAMA states: “A document or proceeding requiring authentication by a company may be signed by a director, secretary, or other authorised officer of the company, and need not be signed as a deed unless otherwise so required in this Part of this Act, provided that an electronic signature shall be deemed to satisfy the requirement for signing under this section[3].”
10. Beneficial Ownership
To ensure transparency in knowing who controls or have a say in a company, section 120 mandates every person who holds shares in the company which entitles him to exercise at least five per cent of the unrestricted voting rights at any general meeting of the company but who is not the beneficial owner of company shares held by him, to indicate to the company in writing the particulars of the identity of the person(s) interested in the shares in question within seven days (or such other period as the Commission may by regulation prescribe from time to time) of becoming a holder of the shares. The beneficial owner should also disclose whether persons interested in the same shares are parties to any agreement or arrangement relating to the exercise of any rights conferred by the holding of the shares. If default is made by any such holder, or where he makes any statement which he knows to be false in a material particular or recklessly makes any statement which is false in a material particular, he shall be liable to such fines as the Commission may prescribe by regulation.
Upon this disclosure, the company is to, within 7 days, inscribe against the name of every member in the register of members the information received and at the filing of its next annual return, notify the Commission of that information. If the company defaults, the company and every officer of the company shall be liable to such fines as the Commission may prescribe by regulation for every day during which the default continues.
11. Ease of reduction of share capital
When a private limited company desirous of reducing its share capital passes a special resolution to that effect, a copy of the minutes of the meeting showing the amount of the share capital, the number of shares into which it is to be divided, and the amount of each share; and the amount (if any) at the date of the registration deemed to be paid up on each share, shall be delivered to the Commission. The Commission will in turn register such minutes and the resolution for reducing share capital shall take effect. The minutes, when registered, shall be deemed to be substituted for the corresponding part of the company’s memorandum, and valid and alterable as if it had been originally contained in it[4]. This dispenses with the extra burden of seeking Court’s confirmation Order as contained in the 1990 CAMA.
- Prohibition of Bearer Shares
Section 175 of the proposed CAMA has expressly prohibited bearer shares. According to the Section, no company has the power to issue bearer shares. The section further explains what a bearer share is to mean “a share which is represented by a certificate, warrant or other document (in any form or by whatever name called) which states or otherwise indicates that the bearer of the certificate is the owner of the shares.
- Company’s Acquisition of Its Own Shares (Share buyback)
Prior to now, a company could only acquire its own shares for some specified purposes[5]. Now however, by virtue of Section 185 of the proposed CAMA, Limited Liability Company may purchase its own shares including redeemable shares if so permitted by its articles and approved by the shareholders by special resolution. Forthwith, the purpose of the acquisition need not be any of those listed out in Section 160 (2) of the 1990 CAMA. However, a company is precluded from purchasing 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[6]. From the coming into force of the proposed CAMA, the procedure for a private company to acquire its own shares is that within 7 days after the passing of the special resolution by the members of the company, the company will cause to be published in two national newspapers, a notice of the proposed purchase by the company of its own shares and within 15 days after such publication, the directors of the company will make and file with the Corporate Affairs 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. Within six weeks of the publication in two national newspapers, any of the company’s creditors or a dissenting shareholder who did not vote in favour of the share buyback may make an application to the court for an order cancelling the resolution. Once that application is made, the ability of the company to proceed with the share buy back shall depend on the order of the court.
Where a company succeeds at acquiring its own shares, section 186 of the proposed CAMA states that payment for the share buy back can only be made from the distributable profits of the company.
A company may buy back its shares from the existing shareholders or security holders on a proportionate basis, from the existing shareholders in a manner permitted pursuant to a scheme of arrangement sanctioned by the court, from the open market; and by purchasing the securities issued to employees of the company pursuant to a scheme of stock option or any other such similar schemes.
Whereas company’s acquisition of its own shares under the 1990 CAMA appears to relate to companies generally, the proposed CAMA expressly states that it relates to a Limited Liability Company alone.
SOURCE: http://lawpavilion.com/blog/companies-and-allied-matters-act-2018-whats-new/
