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Summary LAW (BUSINESS AND COMPANY LAW)
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LECTURE NOTEON
INTRODUCTION TO
BUSINESS LAW
AND COMPANY
LAW
LAW 205
1
,Evolution of Commercial Activities in Nigeria
It is important for you to know that prior to the amalgamation of Northern
and Southern Nigeria in 1914, the preoccupation of the indigenous
communities was principally agriculture, hunting and trading by barter.
The scope of trading was basically situated in the rural peasant setting.
However, with the advent of cross border trading first between the North
African in Northern Nigeria and subsequently with the arrival of Europeans
firstly by Portugal and later the British, international trade began to be
built up. The articles of trade included raw materials from Nigeria and
manufactured goods from Europe. In the 19th century, the British
established some form of administrative authority over Nigeria. As the
contact between Europe and Nigeria increased, trade and other business
transactions also increased. Therefore, there was the dire need to
regulate the fast growing business environment. Consequently, the first
companies’ statute, the Companies Ordinance 1912 was promulgated. We
shall elaborate much more on the issue of ordinances later on in the unit.
According to J. Olakunle Orojo, after the end of the Second World War, a
comprehensive development programme was formulated in Nigeria and a
10 Year development, 1945-1955 was launched. The essence of the plan
was to reorganize the handling and marketing of agricultural primary
produce and to improve social and economic activities. Another primary
consideration was to enhance industrial and commercial activities in the
country. This effort stimulated the formation of public corporations and
marketing boards in no small measure. There were also other incentives
from the government which increased the tempo of economic activities
resulting in the incorporation or registration of many companies. As time
went on, there was the dire need to encourage indigenous participation in
the economic activities of the country. Consequently, the Nigerian
Enterprises Promotion Act was promulgated. An Act is a law passed by the
National Assembly and signed by the President. The Act sought to reserve
certain aspect of economic activities for Nigerians. This led to
nationalization of certain businesses which were hitherto owned by aliens.
This nationalization process gave Nigerians opportunity to buy into these
enterprises. This led to change in the legal status of many of these
businesses as new owners emerged with diverse membership who would
want to come up with new companies.
Development of Company Law In Nigeria
2
,In the previous sub-topic, we looked at the evolution of commercial
activities in Nigeria. We learnt that the preoccupation of the indigenous
communities were principally agriculture, hunting and trading by barter.
We studied how increased business activities led to a process whereby
formal and more forms of organised commercial activities/businesses
began to take shape. In this section, we will study how companies began
to acquire legal status leading to the development of company law in
Nigeria. From the studies above you must have noticed that company law
is alien to Nigeria. It was not originally part of Nigerian customary law or
the indigenous legal system. Company law in Nigeria can be considered as
part of the received English law. Two phases have been identified as
periods of development of company law in Nigeria. These periods are the
period before 1912 and the period from 1921 to date.
Period before 1912
The year 1876, marked the beginning of legal regulation of legal issues
including the regulation of company activities in the territory known today
as Nigeria. Prior to this time, there were no local laws governing the
operation of companies in Nigeria and the companies operating in Nigeria
which were, in any case all foreign, carried their foreign status with them.
They were corporations and enjoyed those rights and privileges of their
status as were available here. In 1876, Lagos was ceded to the British
Crown and in 1876; the Supreme Court Ordinance was promulgated for
the Lagos colony. The ordinance provided for the establishment of legal
system and the reception of some English laws into the system. Section
14 of the then ordinance provided as follows: “the common law, the
doctrines of equity, and the statutes of general application which were in
force in England on the 24th day of July, 1874, shall be in force within the
jurisdiction of the court.’’ Thereafter, the Supreme Court Proclamation
1900 which covered Southern Nigeria and the Supreme Court
Proclamation 1902 which covered Northern Nigeria was introduced to
create a Supreme Court for each of the protectorates. Each of the
Proclamations contained a provision applicable to ``the common law, and
the doctrines of equity as well as the statues of general application which
were in force in England on the 1st January 1900” applicable to the
protectorates. The two protectorates were amalgamated in 1914 and a
proclamation was then promulgated to cover the whole country and a
supreme court was established for the whole country. Section 14 of the
ordinance provided that: ``subject to the terms of this or any other
ordinance, the common law, the doctrines of equity, and the statutes of
general application in England on the 1st day of January, 1900 shall be in
force within the jurisdiction of the court.’’ And so, with particular reference
to company law, the English common law and the doctrines of equity in so
3
, far as they applied to company law in England were made applicable in
Nigeria and have since formed part of Nigerian company law subject to
any later relevant local statutes. It is to be noted that the statutes of
general application, which regulated company law in England then was
the Companies Act of 1862 which now became part of the received
English Law in 1900. Since 1900, four principal companies’ statutes were
brought into force. These were the Companies’ Ordinance 1912, the
Companies’ Ordinance 1922, the Companies Act 1968 and the Companies
and Allied Matters Act, 1900 now revised and known as the Companies
and Allied Matters Act 2004. We shall deal with the four principal
companies statutes brought into force since 1912.
The Companies Ordinance 1912
This was the first companies’ statute in Nigeria. It was first applied to the
colony of Lagos and later, in 1917, to the rest of the country. The
Companies Ordinance 1912 provided for the first time in Nigeria, a
procedure for incorporating a company by registration. The objects and
reasons for the Ordinance were stated as follows: ``to provide for the
formation of limited companies within the colony and protectorate. It is
hoped thereby to foster the principles of cooperative trading and effort in
the country.
The Companies Ordinance 1922
After the end of world war in 1918, another companies ordinance came
into force by 1922. This ordinance was first applied to the colony of Lagos
and later extended to the rest of the country. In 1963, the 1922 ordinance
was designated Companies Act and it continued to regulate companies
until its repeal in 1968 by the Companies Act 1968.
Companies Act 1968 The Companies Decree No: 51 of 1968 were
promulgated during the military regime. It was re-designated in 1980 as
the Companies Act. Before the promulgation of the Act, there had been an
urgent need for a modern companies’ legislation because the Companies
Act, 1922 had become, for the most part, inadequate to cope with growth
of the economic activities in a developing country like Nigeria.
The Companies and Allied Matters Act, 2004
This Act has made some revolutionary and landmark provisions not only
for companies, but also for the registration of business names and for the
incorporation of trustees. This was done in order to take care of emerging
global trend in the conduct of business transactions. The Act is divided
into four parts, namely, part A deals with registration of companies, part B
deals with the registration of business names, part C deals with the
4
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