Under Nigerian company as is the case with company law universally, a company when incorporated or registered with the Corporate Affairs Commission becomes a legal person separate from those who incorporated it. The company in law is a person just as any human being is a person. The company can therefore own property, enter into contracts, sue and be sued in its name.
Upon incorporation, the company has to raise money to finance its business. It can do this in two ways; first it may issue shares for sale to the public or to private persons if it is a private company. The proceeds realized is the share capital with this money, it could finance its business. Secondly the company may borrow money. It could do this by issuing certificates to its creditors evidencing the indebtedness, with undertaking to pay back at the agreed date and interest rate. The certificate of indebtedness issued by the company is called debentures. The shares and debentures are called company securities.
Company affairs and business generally is managed by a group of people called the Board of Directors. They manage the company until either their tenure expires or they are removed. There are other business organizations under which business may be carried on. There is the sole trader and the partnership. The sole trader is a one man business. It is only the partnership and the incorporated company that are businesses carried on by two or more persons. The major difference between the partnership and the incorporated company is their legal status. While the company is regarded in law as a separate legal person different from its owners, the partnership is not.
The owners of the partnership are regarded as one and the 4 same with the partnership. Thus, while partners are liable for the partnership debts, the company shareholders are not liable for the company’s debts unless it is an unlimited company. A company is intended to live for as long as possible or forever if possible. However, the company could be wound up by court order or voluntarily if the members (shareholders) so wish.
This course deals mainly with how companies are financed and managed. It also deals with the formation, management and dissolution of partnerships. At the end of the course, the learners will be able to understand the difference between a company and a partnership from the way both are financed, managed and wound up.
This course provides basic knowledge of company securities, management and winding up procedure. The course will also educate the students about partnerships as a business organization.
After the successful completion of this course, the learner should be able to know:
- how companies are financed
- how people become members of a company,
- how directors and company secretaries are appointed, their duties and how they are removed,
- the different company meetings and how they are convened,
- the measures put in place to protect minority shareholders and how they could enforce any breach of director’s duties if the majority fail to do so,
- the different methods to wind up or dissolve a company,
- and many more.
SECTION 1: SHARES AS COMPANY SECURITIES
Definition of a Share
Shares are securities which companies issue to members of the pubic in order to raise money to finance their operations. Shares are securities because they represent the financial interest which a person has in the share capital of the company. So long as the company is still in business, the financial interest (shares) of a shareholder is protected by law and cannot be taken away except by lawful means such as by court order or by nationalization provided fair and adequate compensation is paid.