Supervisory Role Of General Meeting Over Board Of Directors In Nigeria

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RESEARCH PROJECT TOPIC ON SUPERVISORY ROLE OF GENERAL MEETING OVER BOARD OF DIRECTORS IN NIGERIA 

CHAPTER ONE

GENERAL INTRODUCTION

                 1.1.        Background of the Study

A company is “a union or association of persons for carrying on a commercial or industrial enterprise.”[1] Burke defines company as: “An association of persons formed for the purpose of some business or undertaking carried on in the name of the association, each member having the right of assigning his shares to any other person, subject to the regulations of the company”.2 It follows from the above definitions that a company has a separate legal personality. This personality is not automatic on formation of the company, but it is conferred on the company upon registration or incorporation.3

On incorporation, a company is vested with legal status which enables it to be treated as a person, though, an artificial person in the eyes of law.4 A company is a juristic person capable of bearing rights and duties equivalent to those of human beings. It can hold property, sue and be sued, and have perpetual succession.5 Thus, having been cloaked with legal personality, it is deemed a separate and distinct entity from its operators, whose liability is limited in the manner provided by the Companies and Allied Matters Act, 2004 (hereafter CAMA).6

The concept of the legal entity of a company distinct from its members became finally established at common law in the case of Salomon v. Salomon & Co. Ltd.,where Lord Macnaughten stated the position as follows:

…the company is at law a different person altogether from the subscribers to the memorandum, and although it may be that after incorporation, the business is precisely the same person as it was before, and the same persons are managers, and the same hands receive the profits, the company is not in law the agent of the subscribers or trustee for them. Nor are the subscribers as members pliable, in any shape or form, except to the extent and in the manner provided by the Act.

[1] M. A. Black, Black’s Law Dictionary (6th edn., St. Paul Minn: Ust. Pub. Co., 1990), p. 281. See also Merriam Webster’s Dictionary of Law (1996), p. 89. 2  J. Burke, Osborn’s Concise Law Dictionary, (6th edn., London: Sweet & Maxwell, 1996), p. 83. 3 NDIC v. Obende [2002] FWLR (Pt. 116) 921 at 938 C-A.  4

  1. Olajide, Companies and Allied Matters Act: Synoptic Guide, (2nd edn., Lagos: Law Lords

Publications, 2007), p. 15; CAMA, s. 37, CBDI v. COBEC (Nig.)Ltd. [2004] 13 NWLR (Pt. 890) 376 at 394-395 paras. H-C 5  Companies and Allied Matters Act. 2004 Laws of the Federation, CAMA, s. 37;Okatta v. The Regd. Trustees, DSC[2008] 13 NWLR (Pt. 1105) 632 at 634 at 645 paras B-C; F.  6  SeeTrenco Nigeria Ltd v. African Real Estate Ltd.[1978] I LRN 146 at 153.

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