UNIT 7

MEMBERSHIP

In corporate law, membership refers to individuals or entities that own shares in a company and are recognized as its members. See section 79 of the companies and allied matters act (CAMA) 2020 which defines a member as every person who agrees to become a member of a company and whose name is entered in its register of members and the case of Adeyemi v. Lan & Baker (Nig.) Ltd. (1979) 3 FRCR 135 where the court held that a person whose name is not entered in the register of members is not recognized as a member of the company, even if they have been allotted shares. Members of a company have both rights and obligations where the rights include attending and voting at meetings, receiving dividends, and inspecting company documents and the liabilities are usually limited to the unpaid amount on the shares held. A person can become a member of a company in several ways including the following:

1. Subscription to the memorandum of association at the company's incorporation.
2. Allotment of shares post-incorporation.
3. Transfer of shares from an existing member.
4. By transmission of shares by operation of law (e.g., inheritance).

TERMINATION OF MEMBERSHIP

Membership can end through the following ways:

1. Transfer or sale of shares.
2. Forfeiture of shares due to non-payment.
3. Death (in the case of individuals).
4. Dissolution (in the case of companies).
5. Expulsion by court order under certain circumstances (e.g., fraudulent activities).

MEETINGS

A meeting in corporate governance refers to a formal gathering of the members or directors of a company to discuss and make decisions on its affairs. Meetings must follow specific rules laid out in CAMA 2020, ensuring transparency and accountability. The types of meetings includes the following:

1. Statutory meeting: Public companies are required to hold a statutory meeting within six months of incorporation. See section 235 of CAMA which mandates that the meeting discuss a statutory report, which includes matters such as shares allotted and cash received.
2. Annual general meeting (AGM): See section 237 of CAMA which requires all companies to hold an AGM within 18 months of incorporation, and thereafter, once every calendar year. The AGM is an opportunity to discuss annual accounts, dividends, the election of directors, and auditors' reports.
3. Extraordinary general meeting (EGM): These are meetings held outside the regular schedule, typically when urgent issues arise. See section 240 of CAMA which allows directors or members holding at least 10% of voting shares to convene an EGM.
4. Board meetings: These involve the company's directors and are typically more frequent. See section 266 of CAMA which requires that board meetings be held at least once every quarter.

NOTICE OF MEETINGS

Notice of a general meeting must be sent to all members, directors, and auditors at least 21 days before the meeting date. See section 243 of CAMA. The notice must specify the time, venue, and agenda of the meeting. Failure to give proper notice renders the meeting void. See also the case of Re: West African Lighterage Co. (1978) LPELR-3482(SC) where the court emphasized that failure to issue proper notice of meetings invalidates any resolutions passed during such meetings.

QUORUM

A quorum is the minimum number of members or directors required to hold a valid meeting. See section 249 of CAMA which prescribes that for general meetings, at least two members must be present in person or by proxy.

RESOLUTIONS

A resolution is a formal decision made by members or directors at a meeting. Resolutions are categorized into ordinary and special resolutions based on the level of approval required.

1. Ordinary resolution: This requires a simple majority, that is, more than 50% of votes cast by members or directors. Ordinary resolutions are used for routine matters such as the declaration of dividends, approval of financial statements, or the election of directors. See section 283 of CAMA.
2. Special resolution: Special resolutions require at least 75% approval of votes cast. These are necessary for significant decisions like altering the company's memorandum or articles of association, changing the company's name, or winding up the company. See section 284 of CAMA. Special resolutions must be filed with the CAC within 15 days of their passage. See section 291 of CAMA and failure to file can result in penalties and invalidate the resolution.
3. Written resolutions: Private companies may pass written resolutions instead of holding meetings. See section 289 of CAMA which allows resolutions to be passed if all eligible members sign the document.

VOTING

Members can vote in person or by proxy, and the outcome is determined by counting the votes. Voting can be conducted via a show of hands for simplicity or a poll for a more detailed vote. See section 245 of CAMA which grants members the right to demand a poll if necessary and the case of Woolf v. East African Airlines (1983) 1 All NLR 247 where the court upheld that resolutions passed without a proper quorum and voting procedures could be declared invalid.

CONCLUSION

Corporate governance relies heavily on the rules regarding membership, meetings, and resolutions, which ensure that companies operate transparently and with accountability. Nigerian corporate law, particularly under CAMA, provides clear guidelines to prevent disputes and ensure smooth operations, supported by case law that clarifies legal interpretations.