UNIT 1

HISTORY OF COMPANY LAW UNTIL 1720

The origins of company law can be traced back to ancient times when trade and commerce began to flourish. However, the most significant developments started in medieval Europe, particularly in England. During the medieval period, the first form of collective business organizations were guilds and partnerships. These were groups of artisans and merchants who banded together to protect their interests and conduct business.
The concept of joint stock companies began to emerge in the 16th century. These were businesses owned by shareholders who invested capital and shared profits and losses. One of the earliest examples was the Muscovy Company, chartered in 1555. The East India Company, established in 1600, was another significant joint stock company. It played a crucial role in trade between Britain and Asia, and its success highlighted the potential of joint stock companies.
The rapid proliferation of joint stock companies led to speculative bubbles, the most infamous being the South Sea Bubble of 1720. The South Sea Company was granted a monopoly on trade with South America, but speculative investments led to a financial collapse.
In response, the British Parliament passed the Bubble Act in 1720, which restricted the formation of joint stock companies. This act marked a significant intervention in the development of company law.

HISTORY OF ENGLISH COMPANIES FROM 1720 UNTIL THE REPEAL OF THE BUBBLE ACT IN 1825

The Bubble Act made it illegal to create joint stock companies without a royal charter or an Act of Parliament. This period saw limited formation of new companies due to these restrictions. Despite the restrictive nature of the Bubble Act, some companies continued to operate, often finding ways to circumvent the regulations.
The Industrial Revolution in the late 18th and early 19th centuries increased the demand for capital and highlighted the limitations of the Bubble Act. The need for large-scale investments in infrastructure projects, such as canals and railways, underscored the necessity for corporate reforms.
The Bubble Act was finally repealed in 1825, allowing for a more liberal approach to the formation of companies. This repeal marked the beginning of a new era in company law, paving the way for further developments in corporate legislation.

HISTORY OF COMPANY LAW FROM 1825 TO THE PRESENT DAY

The Companies Act of 1844 was a landmark legislation that allowed companies to be formed through a process of registration. This act introduced the concept of incorporation by registration, making it easier to create new companies. The Limited Liability Act of 1855 was another significant development, introducing the principle of limited liability. This meant that shareholders were only liable for the amount they invested in the company, reducing their financial risk.
The Companies Act of 1862 consolidated previous legislation and provided a comprehensive framework for company law. It established the foundation for modern company law, including provisions for the formation, management, and dissolution of companies. Over the 20th and 21st centuries, company law has continued to evolve, with numerous amendments and new legislation addressing issues such as corporate governance, shareholder rights, and regulatory compliance. Notable developments include the Companies Act 2006 in the UK, which streamlined and modernized company law.

DEVELOPMENT OF COMPANY LAW IN NIGERIA

Nigerian company law has its roots in British colonial rule. The first significant legislation was the Companies Ordinance of 1912, modeled after British company law. After gaining independence in 1960, Nigeria began to develop its own corporate legal framework. The Companies Act of 1968 was one of the first major legislations in this regard, providing a comprehensive framework for the formation and management of companies.

COMPANIES AND ALLIED MATTERS ACT (CAMA) 1990

The Companies and Allied Matters Act (CAMA) of 1990 is the cornerstone of Nigerian company law. It consolidated previous laws and introduced significant reforms to promote business and protect investors. See the case of Ojukwu v. Governor of Lagos State which highlighted issues related to corporate governance and the powers of company directors and the case of Savannah Bank v. Ajilo which dealt with the rights of shareholders and the obligations of companies in protecting those rights. Key provisions include the following:

1. Incorporation of Companies: CAMA outlines the procedures for incorporating different types of companies, including private and public companies. See section 18 which provides for the Incorporation of companies.
2. Corporate Governance: The act includes provisions on the roles and responsibilities of company directors and officers, promoting good corporate governance practices. See section 290 which provides for the Duties of directors.
3. Shareholder Rights: CAMA protects the rights of shareholders, ensuring transparency and accountability in corporate management. See section 42 which provides for the Rights and obligations of shareholders.

AMENDMENTS AND RECENT DEVELOPMENTS OF CAMA

CAMA has undergone several amendments to address emerging issues and align with global best practices. The most recent significant amendment was in 2020, introducing several key changes includes the following:

1. Introduction of Single Shareholder Companies: This allows a single individual to incorporate and run a company, promoting entrepreneurship.
2. Electronic Filing and Virtual Meetings: This is where the amendment facilitated the use of technology in corporate processes, allowing for electronic filing of documents and virtual meetings.
3. Corporate Governance Reforms: This is where the amendment strengthened corporate governance requirements, promoting transparency and accountability. See section 351 which provides for the Corporate governance requirements.