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  • Practicing Corporate Governance at Annual General Meetings (AGMs) in Nigeria

    Practicing Corporate Governance at Annual General Meetings (AGMs) in Nigeria

    Annual general meetings (AGMs) are integral components of corporate governance in Nigeria. Words like resolutions, proxies, votes, shares, directors and investors though synonymous with the Annual General Meeting (AGM) have their unique meanings and importance in the Corporate Governance world.

     

    The general meeting is a regulatory tool which seeks to ensure that the interests of the directors of the company are aligned with those of the shareholders. A first time attendee at an AGM may be disappointed because the proceedings are shorter and less ceremonious than anticipated. In spite of the seeming conciseness of the deliberations at the sitting, the AGM is an important meeting of the shareholders.

     

    It has been described by company directors as a dreaded but necessary evil. It is one of the few times within the year that shareholders, who constitute the ownership of the company interact with the officers who run the firm. The General Meeting, whether annual or extra-ordinary is an important mechanism for ensuring directors’ accountability. No matter how unceremonious an AGM may seem to a first time attendee, a lot of work has taken place behind the scene.

     

    A successful outing therefore is a product of hardwork and co-operation between the Registrars (in the case of a publicly quoted company), the legal advisers cum office of the company secretary, the board which has the Chairman at the head, the auditors in addition to shareholders. The writer has however chosen to focus on the roles of the Chairman, Company Secretary and shareholders.

     

    The Chairman being the first among equals, takes charge at company meetings. His principal role is to co-ordinate and provide leadership to the directors. He guides the board, sets its agenda and ensures it is an effective working group. He must promote a culture of openness and debate and is responsible for effective communication wtih shareholders, while ensuring that the highest standards of integrity, probity and corporate governance are upheld.

     

    The Chairman is expected to maintain some degree of independence hence the universally acceptable corporate governance practice which advocates for the separation of the office of the chairman from that of the Chief Executive Officer. In jurisdictions which operate a voluntary system of corporate governance, companies are expected to comply with relevant codes or explain their reasons for non-compliance. Marks & Spencer, a notable public company in the United Kingdom once opted to have the positions of the Chairman and Chief Executive Officer fused, with reason.

     

    In justifying this action, the Conglomerate sought to persuade shareholders that the right checks and balances had been put in place. The dominance of Sir Stuart Rose, The Chief Executive who was handed the Chairman’s job was counterbalanced by the Senior Independent Director, who was given special responsibility for governance issues. In spite of the M & S example, these roles are best separated.

     

    The Chairman is expected to be a broad-minded and knowledgeable person. In certain specialized businesses such as the banking and insurance sectors, emphasis may be placed on relevant industry experience. It has been noted that of the three United Kingdom banks that failed in 2007-2008, namely RBS, HBOs and Northern Rock, none had a chair with a banking background. In comparison, the Chairmen of HSBC, and Standard Chartered which emerged relatively unscathed from the crises that rocked the industry were lifetime bankers. Where a company Chair does not possess relevant industry experience, he should benefit from the expertise of his fellow board members and consultants when necessary.

     

    At the AGM, the Chairman’s role is to ensure the effectiveness of the meeting process, counting proxy votes, allowing attendees to be heard, ensuring votes are taken on a poll rather than on a show of hands where the need arises, as well as facilitating communication between the board and its shareholders. In so doing, he must remain impartial. A Chairman’s reputation for impartiality can be said to be undermined if he does from the chair, any of the things that should be done from the floor.

     

    The Chairman has a casting vote, which he is expected to use to the benefit of the company. He liases with the Company Secretary to ensure that the company complies with relevant corporate governance codes. It is imperative to commend the efforts made by the Financial Reporting Council of Nigeria to synchronize the various industry codes by producing a uniform corporate governance code. The Chairman’s role is made easier with the assistance of an efficient Company Secretary.

     

    The provisions of the Companies and Allied Matters Act LFN 2004 (CAMA) equally help to bring order to meetings by determining what constitutes the ordinary and special business of shareholder gatherings. The distinction made between an ordinary and a special resolution further go a long way in ensuring that the will of the largest number is upheld in effecting fundamental changes to the form and structure of an entity.

     

    Unlike the position of the Chairman, Nigerian law provides for a minimum qualification for the company secretary of a public corporation. According to Section 295 of CAMA members of the Institute of Chartered Accountants, Nigeria Bar Association, Institute of Chartered Secretaries, any person who has held the office of the secretary of a public company for at least three years of the five years immediately preceding his appointment in a public company as well as a firm or body corporate consisting of persons who are qualified.

     

    In recent times, the role of the company secretary has become more attractive, having evolved from a merely clerical job description to an interface between the directors and outsiders. This professional is described as one who acts as an intermediary between the company and external agencies. He or she assists with corporate acquisitions and disposals, takes custody and ensures proper use of the company seal, while maintaining the registers and records required by law.

     

    Further, he or she attends board and committee meetings, as well as Annual General Meetings and takes minutes of the same. The duties of a Company Secretary may broadly be divided into responsibilities to the board, the company and shareowners in addition to relevant stakeholders. The office is now better protected by law, in the case of public companies.

     

    The AGM is the Company Secretary’s baby and therefore he or she must work hard to ensure the success of the outing. Firstly, the company secretary has a duty to ensure that the notice of the AGM is sent timeously and that the annual report and accounts are made available to the shareholders. This officer must provide directors with guidance in their duties and powers, by making them aware of all relevant laws and regulations. He or she prepares the board agenda and it is important to keep the Chairman informed of any changes.

     

    It is the responsibility of the company secretary to ensure that the organisation complies with all relevant legislations and responsibilities while keeping board members informed of their responsibilities. He or she deals with correspondence between the company and the shareholders and makes arrangement for the payment of dividends declared within the prescribed period as provided by the law. Importantly, the Company Secretary must carry out these functions with the highest degree of expertise and professionalism.

     

    The recent launch of the Corporate Governance Rating System by the Nigerian Stock Exchange though a laudable initiative, increases the burden on company secretaries to ensure that their companies comply with applicable corporate governance rules. A system whereby ratings are ascribed to publicly quoted companies based on uniform criteria will on the long run promote corporate accountability.

     

    The existence of various corporate governance codes including the one produced by the Securities and Exchange Commission as well as the banking and insurance and communications industry specific codes has been an impediment to compliance enforcement. However efforts are being made to reduce the confusion created by the existence of several industry specific corporate governance codes, by harmonizing the contents. The Financial Reporting Council is advocating for a unified code in this field of law.

     

    In conclusion, the general meeting of shareholders (AGM) serves as a corporate forum to obtain the consent of the shareholders for decisions that do not lie within the managerial discretion of the board of directors. The general meeting can be described as a platform for shareholder democracy and provides a system of checks and balances to minimize agency costs.

     

    It is therefore important that shareholders exercise their voting rights by supporting proposals that enhance shareholder rights and increase the value of their claims on the corporation, as well as oppose management proposals that reduce their rights and the value of their claims. Companies should be encouraged to circulate a record of the AGM to all shareholders as soon as practicable afterwards, at a minimal cost.

     

    A resume of discussions at the meeting (but not a full and detailed record), together with voting figures on any poll, or a proxy count where no poll was called, should be made available to the shareholders on request. Further, the law protects the interest of shareholders in a number of ways. Rules are laid down for the delivery and content of notices, the right to attend general meetings and the mode of regulating entitlement to dividend.

     

    Further, the interest of shareholders is served in the provisions stipulating how an independent Auditor can be removed. All relevant statutes must continually be reviewed in line with practical developments, if the meeting of shareholders is to remain relevant and effective.

     

     

     

    Written By:

    Dr. Olisa Agbakoba

    Dr. Agbakoba is the Senior Partner and Head of the Arbitration & ADR practice group in Olisa Agbakoba Legal (OAL). He’s one of Nigeria’s leading experts in arbitration and has presided over several complex cases.

  • Addressing the Problems of Credit Administration in Nigeria

    Addressing the Problems of Credit Administration in Nigeria

    Fostering effective credit administration in Nigeria to encourage proper credit management development was one of the reasons for the establishment of the General Assembly of Banks’ Chief Executives (GABCE) in Nigeria.

     

    Among the other factors that may have motivated the emergence of this body, one distinct concern must be the need to enhance the legal processes and institutions that create a conducive environment for credit activities. This is because the supply of credit facilities remains a crucial function of banks, and an economic environment in which many banks face the threat of “going under” due to the phenomenon of loan defaults and its attendant pressures on banks’ liquidity positions, gives considerable room for concern.

     

     

    Addressing the Challenges of Credit and Security Administration in Nigeria

    To stem the tide, GABCE must lend support to two major projects aimed at improving the credit environment:

    1. Firstly, there is the need to establish a regime of ancillary credit sup-port services to reduce the incidence of loan defaults, and
    2. Secondly, when loan defaults do occur, there should be efficient le-gal processes (institutions and procedures) for recovering such debts.

     

    Efforts have been put in place to address these concerns. At least, the basic framework was set with the recent activities of the Association of Banks’ Lawyers (ABL) centred on the question of loan defaults and debt recovery mechanisms. The ABL organized a seminar on November 24, 1992, on the theme: “Debt Recovery Problems and Solutions – The Nigerian Experience.” The seminar was followed up by Committee meetings, and these have produced a communiqué that not only recognizes the concerns expressed above, but also outlines possible solutions.

    Ancillary Credit Support Functions: Credit Reference, Credit Analysis, Etc.

    Banks require the services of ancillary credit support institutions to enable them, (among other things) have adequate information about customers’ integrity, repayment capacity, etc., and to enable them spread the risk of loss in the event of loans defaults. The ABL communiqué confirms that the in-house credit analysis method presently operating, whereby latest audited accounts (plus projections and forecasts) are obtained from the Borrowers, is insufficient, as it does not go beyond peripheral inquiries into the Borrower’s repayment capacity.

     

    Credit referencing and analysis ought to be encouraged as an independent financial function alongside banks, finance houses, mortgage institutions and discount houses, with appropriate statutory controls to ensure the integrity and efficacy of credit reference institutions and their operators. Such institutions could also undertake other ancillary credit support functions that have the capacity to reduce or spread the risk of loss in the event of loan defaults, such as credit brokerage, debt adjusting, debt counselling,
    debt collecting, and factoring.

     

    The need for ancillary functions to support the credit activities of banks is well recognized in other countries. In the United Kingdom, for example, ancillary credit functions such as credit brokerage, debt adjusting, debt counselling, debt collecting, and the operation of Credit Reference Agencies are subjects of statutory controls under the CONSUMER CREDIT ACT of 1974.

     

     

    Enhancing the Legal Processes (Institutions and Procedures) For Debt Recoveries

    Judicial institutions ought, ideally, to play a crucial role in the debt recovery endeavours of banks and other financial institutions. Between March and June 1992, we conducted a tentative inquiry into the workings of the Lagos State High Court with a view to ascertaining its efficacy (or otherwise) vis-à-vis the debt recovery endeavours of banks. Our findings confirmed our apprehensions that the judicial system has fallen considerably behind what is required to meet the volume of modern day litigation requirements
    of the financial sector.

     

    These findings are published in an interim report: “Debt Recoveries and the Judicial Process”, which was presented before a joint meeting of Banks’ representatives and debt recovery lawyers held on July 31, 1992. The report also outlines a few tentative
    proposals for reform, including the establishment of special commercial courts and the operation of special rules of procedure in debt recovery cases to facilitate expeditious hearings. The ABL communiqué, also, identifies slow court process and court congestion among the problems encountered in the process of debt recoveries.

     

    Furthermore, there is the need to open up alternative channels in order to ease the pressure on conventional debt recovery methods. Insolvency proceedings (Bankruptcy against individuals and Winding up against corporate debtors) are possible options that have not been fully explored.

     

    The legal regime governing bankruptcy proceedings relegate the procedure to a purely ancillary process in the debt recovery endeavours of banks and financial institutions. There is an urgent need to elevate the bankruptcy process into a substantive debt recovery mechanism through a radical overhaul of the Bankruptcy Act 1979. The winding up process under the Companies and Allied Matters Act, 1990 also requires legislative review to make the procedure more effective.

     

     

    A Comprehensive Credit and Security Code

    The phenomenon of loan defaults is, to a large extent, a function of a more structural problem, viz.: the absence of a statute that comprehensively sets the legal framework for credit and security transactions. Virtually all forms of secured credit arrangements are operated within a laissez-faire framework in which the parties are left to their bargaining powers even in respect of such crucial matters as enforcement of securities.

     

    The law does not adequately assist the security enforcement endeavours of Banks and Financial institutions. Take for example, the Equipment Lease, which is becoming an increasingly important mechanism for financing the fixed asset requirements of major business ventures. The legal regime governing equipment lease transactions gives very little protection to the creditor. It often turns out in practice that the repossession rights included in lease agreements in favour of the creditor are illusory, as law enforcement agents are reluctant to assist creditor’s repossession endeavours in the event of default by the debt-or.

     

    Legislative intervention is required to elevate repossession rights into something analogous to the formal judgement of the court of law in respect of which execution can issue against the debtor in the event of default, and with the assistance of law enforcement agencies, after requirements as to registration of repossession rights have been complied with. Similar problems afflicting other forms of secured credit arrangements can be addressed by a comprehensive code on credit and security. Such a code may also set the legal framework for the establishment and regulation of ancillary credit services such as those mentioned above.

     

     

    Conclusion

    The central message of this presentation is that the time has come to effect a radical overhaul of the legal regime governing the credit activities of banks and other financial institutions. The birth of GABCE is timely, and it is hoped that GABCE will catalyse the process of reform.

     

    Our law firm has been involved in studying and proposing reforms in respect of the legal structures and institutions of the credit and security administration process. In 1991, we proposed the formation of a Forum for Commercial Court Users (FOCCUS) to act as a pressure group to catalyse the process of reform. We have also been working with the Association of Banks Lawyers (ABL) that has largely addressed concerns identical with those that motivated the conceptualization of FOCCUS. We have also liaised with the Equipment Leasing Association of Nigeria (ELAN) and the Money Market Association of Nigeria.

     

    Furthermore, we have conducted various researches and contributed to various seminars on sub-jects related to credit and security administration (Please see attached Bibliography). Having thus been involved in efforts to reform the credit administration process we would be glad to provide such further assistance as GABCE may require in respect of the concerns noted in this presentation.

     

     

     

    Written By:

    Dr. Olisa Agbakoba

    Dr. Agbakoba is the Senior Partner and Head of the Arbitration & ADR practice group in Olisa Agbakoba Legal (OAL). He’s one of Nigeria’s leading experts in arbitration and has presided over several complex cases.

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  • Reasons Why We Need a Startup Act in Nigeria

    Reasons Why We Need a Startup Act in Nigeria

    Startup Acts are Africa’s next frontier of policy innovation. If implemented in Nigeria, Startup Acts could catalyze positive change in the broader business environment by increasing local support for entrepreneurs and signaling to global venture capital investors that the country is open for business, thereby spurring innovation, creating jobs, and building trust between the governments and entrepreneurs.

     

    African entrepreneurs have long been harmed by adverse regulatory conditions that make it more difficult to launch, build, and scale an innovative enterprise. For many businesses — particularly in nations like Nigeria, where elderly politicians reign over a young populace — the government often appears out of touch with their needs. Changing this view, which is a critical first step, requires new policy creation that prioritizes the interests of entrepreneurs, investors, and other stakeholders.

     

    Startup Acts may be able to assist. Startup Acts are a collection of regulations intended to boost the incentives for young people to start businesses, investors to invest in potential enterprises, and other ecosystem actors to offer help where it is needed. Tunisia and Senegal, the two early adopters in this space, are implementing these rules as part of broader government initiatives to position their nations as innovation hubs by capitalizing on a developing technology scene to boost economic development.

     

     

    What is a Startup?

    Startups are young companies founded to develop a unique product or service, bring it to market and make it irresistible and irreplaceable for customers. Startups are rooted in innovation, addressing the deficiencies of existing products or creating entirely new categories of goods and services, thereby disrupting entrenched ways of thinking and doing business for entire industries. 

     

    The word ‘Startup’ has now become a popular buzzword , given the growth of the entrepreneurial culture globally yet it is surprising that there are still only a few countries which have passed legislation that actually supports the Startup ecosystem. They create more jobs which means more employment, and more employment means an improved economy. Not only that, startups also contribute to diversifying the economy by stirring innovation and injecting competition.

     

    What is a Startup Act?

    Startup Acts establish rules, policies, and in some cases, unique institutions that strengthen a country’s or jurisdiction’s entrepreneurial ecosystem.

     

    Startup Acts provide financial and tax benefits to start-ups. For example, the incentive covers startup expenses, regulatory impediments, the establishment of organisations and funds that support entrepreneurship, and the establishment of an expedited process for intellectual property registration.

     

    In 2012, Italy became the first country to pass the Startup Act followed by Tunisia in 2018 becoming the first African country to pass a startup Act. Senegal followed suit in 2019, making them the second African country. 

     

     

    The Tunisian Startup Act

    There are three features of the Tunisian Start up Act. These features have enabled significant increase in the Tunisian economic hemisphere.  

     

    Firstly, the Act implemented a legal framework which makes the start-up launching process simpler , ease of doing business. 

    Secondly, the creation of a 200m (Two Hundred Million) Euro Fund of Funds, for disbursement to specific Small and Medium Enterprises (SMEs) sectors. 

    Thirdly, the creation of an operational strategy to consolidate the ecosystem and hubs in Tunisia. The Startup Act, which is in Arabic, has brought about impressive innovation, which has benefited the Tunisian economic sector. Some of these are:

    1. Founders can benefit from an allowance given to them alongside the shareholder to cover living expenses for one year
    2. The provision of state support for start-up patent registration procedures and fees at both national and international levels.
    3. Leave allowance support such that a member of staff of a company can go on leave for up to a year to dedicate themself to the launch and development of their start-up. If such a startup fails, he can revert to working in the company he took leave from.
    4. Tax exemptions for startups for up to eight years.
    5. Exemption from Capital Gains Tax on investment made in these startups.

     

    As at December 2019, 169 of more than 279 companies which applied under the Tunisia Startup Act were granted the startup recognition. 37 (21.9%) of the 169 startups were run by female founders. About $18.5 million funding has been raised by all the startups so far.

     

    Data from the official website of Entrepreneurs of Tunisia (EOT) reveals that startup coworking spaces in Tunisia increased by 61.2% from 38 in 2018 to 62 in 2019. There was also a significant increase in the number of startup founders across the country plus increased funding from investors, due to the business-friendly terms the Startup Act offers.

     

     

    The Senegalese Startup Act

    The Act, written in French makes some provisions as to the incentives and benefits a startup can partake of as a result of the Act.

    The incentives are, but not limited to the following:

    1. Three-year tax holiday for startups and SMEs.
    2. Direct granting of private or public funding to registered startups
    3. The implementation of capacity building measures for the startup.
    4. The implementation of support, facilitation and development measures for the startup.

     

    Why Do We Need a Startup Act in Nigeria?

    In Nigeria, the laws that govern Startups and SMEs are found in different legislations, which makes for proliferation of taxes to be paid to numerous agencies. The legislations also provide for the payment of tax to different regulatory agencies. Some of these legislations are:

    1. The Companies and Allied Matters Act, 2020.
    2. The Investment and Securities Act 
    3. The Companies Income Tax Act.
    4. The Personal Income Tax Act.
    5. The Standard Organisation of Nigeria Act.
    6. The Financial Reporting Council Act, No.6 2011.

     

    Using Tunisia and Senegal as case studies, and noting the economic developments the Act has brought about in Tunisia, having a Startup Act would be the next way forward. 

     

    The private sector accounts for up to 80percent of employment in the country and drilling further down, majority of the companies in this bracket are classified as micro and small businesses. 

     

    With major economic decline and a tough operating environment, the average Nigerian business owner becomes highly resourceful, however they are unable to lift themselves out of their income bracket. 

     

    A start up bill which will acknowledge the potential of start ups and provide assistance is long overdue. Fortunately, there is talk of the first draft of the startup bill being put before the National Assembly by August.

     

    These are the major reasons why we need a Startup Act in Nigeria:

    1. There will be a diversification of the economy. A Startup Act in Nigeria will create means of employment in other sectors asides oil and gas, banking, etc. 
    2. Creation of employment opportunities. Having a Startup Act in Nigeria will cause more employment, thereby reducing it from 33%. A Startup Act will create a friendly environment for startups to thrive, thereby encouraging people to get involved. This would indirectly create employment opportunities for people as human capital would be utilised.
    3. There will be ease of doing business. Currently, your average startup is taxed by no less than 4 regulatory agencies. The regulatory burden on startups in Nigerian is one of the highest in Africa. People don’t get involved in startups because of this. However, having a Startup Act in Nigeria will change that. Using the example of Tunisia, a startup having a tax holiday of up to eight years will have a tremendous positive impact on the startups. They get to become the best versions of themselves.
    4. Active governmental participation. The Nigerian government would become involved in the affairs of SMEs making it easier for them to get funding, either from them or from venture capitalists. They would help to build capacity of the citizens, facilitate seminars and trainings for individuals.

     

    Nigeria has all to gain considering we are one of the economic giants in the African continent. 

     

     

     

    Written By:

    Opeyemi Oyedele

    Associate Intern, Olisa Agbakoba Legal (OAL)

  • Understanding Investment Treaty Arbitration in Nigeria

    Understanding Investment Treaty Arbitration in Nigeria

    Investment treaty arbitration in Nigeria involves the settlement of the claim of a foreign investor against Nigeria for alleged breaches of investor protections contained in a bilateral (concluded between two states) or multilateral (concluded amongst a group of states) investment treaty, pursuant to an arbitration agreement contained within the investor-state dispute settlement provisions of the relevant treaty.

     

    A standard bilateral or multilateral treaty provides for arbitration as a means of dispute resolution in the event of a dispute. It is this arbitration that is called Investment Treaty Arbitration.

     

    Let me give a scenario where Nigeria signs a treaty with the United Kingdom, allowing for members of the British society to come invest in Nigeria. What is signed by both nations is called an Investment Treaty. As a result of the treaty, a British national decides to come and invest in in the Nigerian economy. She signs agreements with certain governmental parastatals in order to get started. An issue arises from the execution of one of the agreements and she seeks legal redress.

     

    Ordinarily, she is to go to the Nigerian courts to get justice, however, what is to say the court won’t side with the Nigerian government? This is how Investment Treaty Arbitration came about. Using the scenario above, if the host state adjudicates, it goes against the principle of nemo judex incausa sua, which loosely translates You cannot be a judge in your own case. How will the dispute be resolved amicably between parties?

     

    In recent times, the development of international investment law has been based on investment treaties. Majority of the treaties signed by nations of the world have clauses providing for so-called “investor-state arbitration,” also referred to as investment treaty arbitration.

     

    This means that bilateral and multilateral treaties allow for investors to commence arbitration against the host state, even though the investor is not a party to the treaty. For example, a bilateral treaty is entered between two States in question. By operation of the treaty, the investor obtains a derivative right to initiate arbitration

     

    The most frequently used arbitration regime is the International Centre for Settlement of Investment Disputes (ICSID) Convention and the ICSID Arbitration Rules. Other frequently used arbitration rules include the United Nations Commission on International Trade Law (UNCITRAL) Arbitration Rules and the Arbitration Rules of the Stockholm Chamber of Commerce.

     

    In addition to the main guarantee of being able to resort to arbitration instead of going to the national courts of Nigeria, there are other advantages of investment treaty arbitration in Nigeria. They are:

    1. Protection against expropriation.
    2. Impartial and fair treatment.
    3. Equal treatment as Host States.
    4. Freedom to repatriate funds.
    5. Total protection.

    These guarantees are developed in International Law.

     

    Naturally, the investment treaty programme in Nigeria is governed by the Nigerian Investment Promotion Commission of which their main objective is to encourage, promote and co-ordinate investments in the Nigerian economy. The Ministry of Justice, headed by the Attorney General of the Federation manages investment treaty arbitrations on behalf of the country.

     

    This goes to show that investors are hugely protected under international investment law when it comes to investing in other countries.

     

     

     

    Written By:

    Opeyemi Oyedele

    (Associate Intern, OAL)

  • Business-to-Business (B2b) Debt Recovery Strategies in Nigeria

    Business-to-Business (B2b) Debt Recovery Strategies in Nigeria

    In most B2B transactions in Nigeria, there is always the possibility that certain clients will not pay their bills on time, and as a business owner, you can reduce the amount of unpaid invoices by implementing business to business (B2B) debt recovery strategies.

     

    The essence of running a business is to make profit. Businesses render services in exchange for money from which the profit is actualised. Where a business is unable to make profit, it suffers. There are many factors that may affect a business’s profit making capability, one of which is credit.

     

    Credit as envisaged here is very common among businesses and refers to the rendering of services to a client with a promise to pay at a future date. When the future date is reached then the business may then proceed to recover the debt.

     

    The “Business to Business (B2B)” debt recovery strategy is critical to the growth and expansion of every business. However, countless businesses in Nigeria are failing due to the lack of competencies in the business-to-business (B2B) debt collection strategies.

     

     

    What is Business-to-Business (B2B) Debt Recovery?

    A B2B debt recovery is a specific type of debt recovery and differs from the Business to Customer (B2C) debt recovery in that, in a B2B recovery, debt is recovered from a client which is another business, whereas in a B2C recovery, debt is against an individual customer.

     

     

    What is the Importance of Business-to-Business (B2B) Debt Recovery Strategy?

    When you earn, the majority, if not all, of your revenue from B2B services, you may occasionally provide services prior to receiving payment from your clients. While this model is widespread, it is fundamentally dangerous because when a client fails to pay their invoice on time, they create a cash flow gap in your business. As a result, you’ll have less cash on hand to pay your bills. A great debt collection plan minimizes the occurrence of these gaps.

     

    Moreover, a great debt collection strategy facilitates communication between you and your customers. This is because collection strategies entail thoroughly outlining the methods clients can use to pay you and when they are required to do so, they also simplify your client’s life. For this reason, as well as cash flow considerations, you should frequently review your collection strategy – you cannot solve problems unless they are identified, and certain issues may not be visible at first.

     

     

    What are the Business-to-Business (B2B) Debt Recovery Strategies in Nigeria?

    The existence of debts when running a business in Nigeria is unavoidable; hence, it is important for a business to have effective strategies which it can recover debts.

     

    Below, we discuss a few strategies which businesses may adopt to make the process of debt recovery less cumbersome:

     

    1. Collect and Store Accurate Information and Transaction Records.

    This is the most practical and simple yet effective strategy to recover debt. The importance of a detailed record of transactions cannot be overstated. It has become very relevant to keep track of all transactions entered into by a business so that where any of them which are on credit goes into default, the business can have a pool of information to rely on.

     

    Some information which should be collected by the business includes;

    • Name and address of the Client
    • Name and addresses of all its principal officers and next of kin information
    • Date of the execution of the obligation or debt
    • Date when demand must be made

    Thus information can be collected in the form of Know your Customer (KYC) forms, invoices, transaction registers etc.

     

    Asides from just collecting this information, it is important to also store them in a safe space so that in the event of default on the payment, the relevant information to go after the business can be easily found.

     

    1. Have A Proper Reminder System

    Majority of businesses have had credits go into forgotten debts due to a lack of proper reminder systems. It is not sufficient to have accurate information and store them, if at the due date of demand, the business owner forgets about the status of these debts.

     

    Thankfully, the advent of new forms of technology has made it very easy for business owners to properly categorise and store records as well as create reminders for when it is necessary or due. It is advisable that business owners take advantage of these forms of technology such as Microsoft To-Do, Google Keep etc.

     

    1. Maintain Communication with The Debtors

    Maintaining a line of communication with a business’s debtors is a very simple and effective strategy and this strategy must be affected from the moment a credit transaction is created and until it goes into default. It is a practical tip to keep the existence of the debt on the minds of the debtor businesses and once the line of communication is closed, the likelihood of the debtor defaulting on the debt is higher.

     

    It is also very beneficial that this communication is maintained over messages and emails as opposed to phone calls. The rationale behind this is that it safe for the business to have physical evidence of exchanges between the business and its debtor in case of any escalations to a Court of Law.

     

    1. Make a Formal Demand

    This is the first step to take immediately a debt goes into default. After the stated date of payment and the debtor business fails to pay, the business must write, through its principal officer, a Letter of Demand.

     

    This letter should contain the following;

    • The name and address of the debtor business
    • The transaction from the which the indebtedness arose
    • The amount in default
    • A period within which the debtor is expected to pay up its debt.

     

    1. Engage The Services of Debt Recovery Lawyer

    In the event that a debtor business remains in default even after a formal demand has been sent and the time given lapses, the next best strategy is to engage the services of a debt recovery lawyer or an agent. Debt collection lawyers employ different mechanisms to achieve the aim of recovering the debt. A lawyer would usually undertake the recovery instructions in exchange for a one off payment agreed before commencing the process or for a percentage commission on the debt recovered.

     

    It is important however to engage debt recovery lawyer who would employ legal strategies in the process of their recovery so as not to err on the side of illegality while recovering the loan. These lawyers employ a wide range of legal tools such as bankruptcy, winding up, receivership etc. to fulfil client’s instruction and get the work done.

     

     

    Reasons Why You Need a Business-to-Business (B2B) Debt Recovery Lawyer in Nigeria

    Businesses having troubles collecting money from late-paying or non-paying business clients may choose to consider employing a B2B debt collection law firm to manage their past due bills.

     

    It is possible to spend an inordinate amount of time attempting to recover bad debt accounts.  Failure to effectively manage or monitor these delinquent accounts can have a detrimental effect on the growth of your business, especially if you are just getting started.

     

    Fortunately, you have a simple solution: To employ the services of an experienced debt collection lawyer. If you are short on time or uncomfortable chasing past-due accounts, hiring someone to do so will not only free up your time to focus on other critical business tasks, but will also enhance your cash flow, allowing you to develop your business.

     

    There are numerous reasons why small businesses use the services of a collection agency. Here are a few instances:

     

     

    1. To Avoid Wasting Valuable Resources

    Nowadays, the majority of small enterprises operate on a shoestring budget, which includes the hiring of administrative staff. Each business owner/employee typically has many processes to execute in addition to their daily, weekly, or monthly responsibilities.

     

    If someone spends the majority of their time pursuing past-due debtors, other critical duties may suffer, affecting other aspects of your business. Your business’s primary objective should be growth and profitability, and a team of expert debt collectors can assist you.

     

     

    1. You Never Know What Type of Financial Difficulty Your Client May Be Facing.

    Failure to engage debtors early in the collection process can expose your small business to bad debts. In general, the sooner your organization reports a past due account to a debt collection lawyer, the more likely the debt recovery lawyer will successfully assist you.

     

    The issue is that your customer may suddenly be facing significant financial difficulties or may be trading while insolvent. If this is the case, there is a very significant possibility that you will receive no compensation and that this past-due bill will become a bad debt.

     

    Engaging a debt recovery lawyer at early stage provides the best possibility for your organization to recover an overdue amount. Due to the fact that debt collection firms have built-in knowledge in debt recovery and are also well-versed on the legal side of the difficulty, they prefer to assist small businesses like yours in recovering debts more quickly by prioritizing your small business on the payment list.

     

     

    1. Debt Collection Lawyers Expedite the Collection Process and Instil a Sense of Urgency.

    Receiving a collection letter or phone call is a significant wake-up call for the majority of people. Additionally, receiving communication from a respected collection firm displays your commitment to recouping the balance. In short, it’s a strong motivator, and as a result, debts are paid more quickly when a debt collection firm is engaged.

     

     

    1. Using A Debt Recovery Lawyer Can Significantly Reduce the Time and Effort Required to Run Your Business

    Time management is critical for any form of business. It is extremely probable that a small firm will stagnate for an extended period of time if they spend considerable effort chasing down and attempting to locate delinquent debtors.

     

    When a customer discontinues all communication with you — disconnected phone, no forwarding address — collection lawyers will assist in locating them.

     

     

    1. Using A Debt Collecting Firm Consistently Minimizes the Level of Your Bad Debts.

    Additionally, there are numerous advantages to using a debt collecting firm for an extended length of time. The longer you retain a debt collection service, the more your small business’s bad debts will be reduced. Fewer bad debts are a major indicator of a healthy business. Additionally, it might convey to your clients the impression that you are a respectable organization that does not tolerate late payments or evasive clientele.

     

     

    Is Your Business Having a Hard Time Recovering Debt?

    Our B2B debt recovery lawyers at Olisa Agbakoba Legal (OAL) are prepared to assist you with experienced debt recovery advice and legal support services, while you focus on running your business more successfully.

     

     

     

    Written By:

    Ginika Ikechukwu

    Ginika is an Associate and a member of the firm’s Alternative Dispute Resolution, Maritime and Sports, Entertainment and Technology Practice groups. She is a smart, result-driven and efficient lawyer with professionalism that makes her a great asset to the team.

    View Ginika’s Profile >>

     

  • Cybercrimes and Cyber Laws in Nigeria: All You Need To know

    Cybercrimes and Cyber Laws in Nigeria: All You Need To know

    Nigerians have become cyber-creatures, spending a significant amount of time online. As the digital world expands, so does cybercrime in Nigeria. The necessity to combat these seemingly uncontrollable phenomena gave rise to Cyber Laws in Nigeria.

    Cyber law acts as a shield over cyberspace, preventing cybercrime from occurring. The government is committed to developing and enforcing regulations to combat illicit online activities.

     

    The “Cybercrimes (Prohibition and Prevention) Act, 2015” has a significant impact on cyber law in Nigeria. This Act creates a comprehensive legal, regulatory, and institutional framework in Nigeria to prohibit, prevent, detect, prosecute, and punish cybercrime.

    The Act also encourages cybersecurity and protection of computer systems and networks, electronic communications, data and computer programs, intellectual property, and privacy rights, as well as the protection of important national information infrastructure.

     

     

    What is a Cybercrime?

    Cybercrime is a type of crime that takes place in cyberspace, or in the realm of computers and the Internet. Because our society is evolving towards an information society where communication occurs in cyberspace, cybercrime is now a global phenomenon. Cybercrime has the potential to significantly influence our lives, society, and economy.

     

     

    What is Cyber Law? 

    Any law that deals with the internet and similar technology is known as cyber law. Cyber Law is frequently referred to as “Law of the Internet” or “IT Law.” It’s a legal framework for dealing with issues relating to the Internet, computing, Cyberspace, and other associated matters.

     

    One of the newest aspects of the legal system is cyber law. This is due to the rapid advancement of internet technology. People who use the internet have legal safeguards under cyber law. This applies to both business and common citizens. Anyone who uses the internet should be familiar with cyber laws.

     

    Intellectual property, contract, jurisdiction, data protection laws, privacy, and freedom of expression are all covered by cyber law. It oversees the distribution of software, information, online security, and e-commerce via the internet. E-documents are given legal validity in the field of Cyber Law. It also establishes a framework for e-commerce and e-filling.

     

    To put it another way, Cyber law is a legal framework for dealing with cybercrime. Due to the increased use of E-commerce, it is critical that suitable regulatory practices are in place to ensure that no malpractices occur.

     

    Cybersecurity laws vary a lot from country to country and jurisdiction to jurisdiction. Penalties depend on the nature of offence, and will range from a fine to imprisonment. It is critical for citizens to understand their particular countries’ cyber laws in order to ensure that they are fully informed about all cybersecurity issues.

      

     

    Categories of Cybercrime in Nigeria:

    1. Cybercrimes against People:

    Cybercrimes against people include cyber harassment and stalking, e-mail phishing, the dissemination of child pornography, various sorts of spoofing, credit card fraud, human trafficking, identity theft, and online connected libel or slander.

     

    One of the most serious Cybercrimes nowadays is the trafficking, distribution, publishing, and dissemination of obscene material, such as pornography and indecent exposure. The potential harm to humanity from such a crime cannot be overstated. If not managed, this is one cybercrime that threatens to impair the progress of the younger generation as well as leave irreparable scars and injuries.

     

    Correspondingly, in Nigeria prior to the gruesome murder of Cynthia Osokogu in July 2012, as reported by an online news magazine, people had suffered a similar fate. For example, Uzondu, an undergraduate student at a private Christian university in Ogun State, allegedly contracted the dreaded Human Immune Virus, HIV, from a man she thought was her boyfriend.

     

    The victim met the con man on the famous social networking platform, Facebook, and before she knew it, she was whisked away to a fantasy holiday where she was lavished with expensive presents such as an iPad and the latest BlackBerry phone, among other things. During these amorous outings, the young girl became pregnant, but her partner was nowhere to be found. Unfortunately, she has no idea who the man was, no contact information, and no place of employment. Worse still, she tested positive for HIV.

     

     

    1. Cybercrime against property

    The second type of cybercrime is cybercrime against all types of property. Distributed Denial of Service (DDoS) attacks, hacking, virus transmission, cyber and typosquatting, computer vandalism, copyright infringement, and Intellectual Property Right (IPR) breaches are examples of these crimes.

     

     

    1. Cybercrime against the Government:

    The third category of cybercrime is cybercrime against the government. When a cybercrime is committed against the government, it is considered an attack on the sovereignty of a nation and an act of war. Hacking, gaining access to confidential information, cyber warfare, cyber terrorism, and the use of pirated software are all examples of cybercrime against the Government.

     

     The expansion of the Internet has revealed that the channel of Cyberspace is being used by people and groups to threaten foreign governments as well as intimidate a country’s citizens. When an individual hacks into a government or military-run website, the offense becomes terrorism.

     

    Most of these types of cybercrimes have been addressed by the Cybercrimes Act of 2015.

     

     

    Cybercrimes (Prohibition and Prevention) Act, 2015

    The Act provides an effective, unified and comprehensive legal, regulatory and institutional framework for the prohibition, prevention, detection, prosecution and punishment of cybercrimes in Nigeria.

     

    Cybercrimes highlighted under this ACT include:

    •     Offences against critical national information infrastructure
    •     Hacking Computer Systems and Data Alteration
    •     Unauthorized Access of Protected Systems
    •     Illegal Registration of Cybercafé or Usage of Unregistered Cybercafé
    •     System Interference
    •     Interception of electronic messages, email, electronic money transfers
    •     Tampering with critical infrastructure
    •     Willful misdirection of electronic messages
    •     Unlawful interceptions
    •     Computer related forgery
    •     Computer related fraud
    •     Theft of Electronic Devices
    •     Unauthorised modification of computer systems, network data and system interference
    •     Publishing False Digital Signature and Certificates
    •     Cyber terrorism
    •     Exceptions to financial institutions posting and authorised options
    •     Fraudulent issuance of e­‐instructions
    •     Tampering with Computer Source Documents
    •     Identity theft and impersonation
    •     Child pornography and related offences
    •     Cyberstalking
    •     Cybersquatting
    •     Racist and xenophobic offences
    •     Attempt, conspiracy, aiding and abetting
    •     Importation and fabrication of e-­tools
    •     Breach of Confidentiality and Privacy
    •     Manipulation of ATM/POS Terminals
    •     Phishing, spamming, spreading of computer virus
    •     Electronic cards related fraud
    •     Use of fraudulent device or attached e­‐mails and websites

     

     

    Administration and Enforcement Cyber Law in Nigeria

    Under the 2015 Cybercrime Act, the National Security Adviser’s office serves as the coordinating body for the security and enforcement authorities. The Attorney-General of the Federation reinforces and improves Nigeria’s existing legal frameworks regarding cybercrime.

     

    All law enforcement, security, and intelligence agencies develop the institutional capacity necessary for the effective implementation of the provisions of the 2015 Cybercrime Act, and in collaboration with the Office of the National Security Adviser, initiate, develop, or organize training programs for officers charged with cybercrime on a national or international level.

     

     

    Establishment of the Cybercrime Advisory Council

    To Coordinate Cybercrime Act 2015, there was established a Cybercrime Advisory Council (in this Act referred to as “the Council”) incharge of handling issues relating to the prevention and combating of cybercrimes, cyberthreat, computer-related cases and the promotion of cybersecurity in Nigeria.

     

    The Cybercrime Advisory Council comprises of a representative each of the following Ministries, Departments and Agencies­ –

    (a)  Federal Ministry of Justice;

    (b)  Federal Ministry of Finance;

    (c)    Ministry of Foreign Affairs;

    (d)  Federal Ministry of Trade and Investment;

    (e)  Central Bank of Nigeria;

    (f)    Office of the National Security Adviser;

    (g)  Department of State Services;

    (h)  Nigeria Police Force;

    (i)    Economic and Financial Crimes Commission;

    (j)    Independent Corrupt Practices Commission;

    (k)   National Intelligence Agency;

    (l)    Nigeria Security and Civil Defence Corps;

    (m) Defence intelligence Agency;

    (n)   Defence Headquarters;

    (o)  National Agency for the Prohibition of Traffic in Persons;

    (p)  Nigeria Customs Service;

    (q)  Nigeria Immigration Service;

    (r)   National Space Management Agency;

    (s)   Nigerian Information Technology Development Agency;

    (t)    Nigerian Communications Commission;

    (u)  Galaxy backbone;

    (v)   National Identity Management Commission;

    (w)  Nigeria Prisons Service;

    (x)    One representative each from the following:

    (i) Association of Telecommunications Companies of Nigeria;

    (ii) Internet Service Providers Association of Nigeria;

    (iii) Nigeria Bankers Committee;

    (iv) Nigeria Insurance Association;

    (v) Nigerian Stock Exchange;

    (vi) Non-Governmental Organization with Focus on Cyber Security.

     

     

    What is the Importance of Cyber Laws in Nigeria?

    Cyber law is important for organizations that are exposed to risk as a result of an inefficient cybersecurity system. These laws apply to all forms of corporate organizations and digital systems that do business on a daily basis. Each organization adheres to unique cybersecurity guidelines, cybersecurity legislation, cybersecurity policies, and legal issues regulations.

     

    The following points demonstrate the significant importance of cyber law in Nigeria:

    •     It establishes the parameters for all acts and reactions in Cyberspace.
    •     All online transactions are guaranteed to be safe and protected.
    •     Cyber law enforcement officials monitor all internet activity.
    •     Protection for all data and property of individuals, organizations, and Government
    •     Contributes to the elimination of unlawful cyber activity through due diligence
    •     All activities and reactions carried out in any cyberspace have a legal component.
    •     Maintains a database of all electronic records
    •     Contributes to the establishment of electronic governance

     

    The main reasons why cyber laws are essential to Nigeria Businesses are:

    1. Employees Safety: When a business is protected by cyber laws, its employees are safeguarded from potential cyberattacks.

     

    1. Business protection: When it comes to protecting a business, cyber laws are important. This ensures that employees of an organization can browse the internet without fear of being attacked. Due to cyber laws, a company can send and receive important and vital data between networks.

     

    1. Personal Data Protection: Cyber laws protect a user’s personal information. Numerous threats exist in the digital world; cyber laws aid in the confidentiality and protection of personal and sensitive information communicated over the internet.

     

     

    The Notable Areas of Cyber Law in Nigeria

    Cyber laws serve a lot of purposes. Some laws safeguard people from becoming victims of crime as a result of unethical internet activities. Other laws establish guidelines for how individuals and businesses may use computers and the internet. These laws cover a diverse range of issues and activities, but they all fall under the umbrella of cyber law. The following are the primary areas of cyber law:

     

    1. Fraud

    Cyber laws are relied on by consumers to safeguard them against online fraud. There are laws in place to protect against identity theft, credit card theft, and other financial crimes committed online. A person who steals someone else’s identity may face federal or state criminal penalties. A victim may also file a legal suit against them. Cyber lawyers work to prosecute and defend against charges of internet fraud.

     

    1. Copyright

    The internet has made it easier to violate intellectual property rights. Copyright infringement was as simple as clicking a button on a file-sharing website in the early days of online communication. Individuals and businesses both require attorneys to pursue actions to enforce copyright protections. Copyright infringement is a branch of cyber law that protects individuals’ and businesses’ rights to benefit from their creative works.

     

    1. Defamation

    Many people use the internet to express themselves. When people use the internet to spread false information, it can cross the line into defamation. Defamation laws are civil laws that protect individuals from false public remarks that can harm a company’s or an individual’s reputation. When people use the internet to express statements that contravene civil laws, this is considered cyber law.

     

    1. Stalking and Harassment

    Online statements can sometimes breach criminal statutes that ban harassment and stalking. When someone posts frequent or threatening claims about another individual online, they may be breaking both civil and criminal laws. When stalking occurs via the internet or other kinds of electronic contact, cyber lawyers both prosecute and defend the victim.

     

    1. Freedom of Expression

    Freedom of expression is an important aspect of cyber law. Even while cyber laws restrict certain online acts, freedom of speech rules allow people to express themselves. Cyber lawyers must advise their clients on the boundaries of free expression, especially laws prohibiting obscenity. Furthermore, cyber lawyers may defend their clients if there is a disagreement over whether their conduct constitute permissible free speech.

     

    1. Trade Secrets

    Companies that conduct business online frequently rely on cyber law to safeguard their trade secrets. Google and other internet search engines, for example, spend a significant amount of effort building the algorithms that provide search results. They also devote a significant amount of work to developing other features such as maps, intelligent assistance, and airline search services, to mention a few. Cyber lawyers assist their clients in taking legal action as needed to preserve their trade secrets.

     

    1. Employment and Contract Law

    You have violated cyber law every time you click a button that states you agree to the terms and conditions of using a website. Contracts safeguard individuals and businesses when they utilize technology and conduct business online. Non-compete clauses in employment contracts, for example, used to affect only a small, local geographic area. As more businesses conduct their operations online, the method lawyers design these agreements and courts enforce them may alter. Lawyers must try to represent their clients’ best interests in areas of law that may still be unresolved.

     

    1. Patents.

    In most cases, patents are utilized to protect an invention. These are commonly used on the internet for two reasons. The first category is for new software. The second category is for novel online business methods.

     

    1. Trademarks and Service Marks

    Trademarks and service marks are used in the same way in the online and offline worlds. Websites will be protected by trademarks. Service marks are provided for websites that offer services.

     

    1. Domain Name Disputes

    Domain disputes are specifically about who owns a web address. For example, the person in charge of a website may not be the person who owns it. Furthermore, because domains are inexpensive, some people purchase multiple domains in the hopes of making a large profit.

     

    1. Contracts

    Most people believe that contracts do not apply online. This is not true. When you sign up for a website, for example, you normally have to agree to terms of service. This is actually a contract.

     

    1. Privacy

    Online businesses must protect their customers’ privacy. The specific law may differ depending on your industry. As more information is exchanged via the internet, these laws become more crucial.

     

    1. Data Retention

    In the internet age, data handling is a top priority. Litigation is one area where this has become a major issue. It is becoming typical in litigation to obtain both electronic and physical records. However, there are no current regulations that mandate electronic records to be kept forever. This is not the case with physical records.

     

     

    Trends in Cyber Law

    Topics and questions relating to cyber law are constantly evolving. Lawmakers and business leaders are still debating how individuals and businesses should be allowed to use the internet.

     

    Every year, the importance of cyber law grows. This is because cybercrime is growing in popularity. To combat these crimes, significant trends in cyber law have emerged. Among these trends are the following:

    •     Regulations that are new and more rigorous.
    •     Retaining and enforcing existing laws.
    •     Enhanced knowledge of privacy concerns.
    •     Cloud Computing
    •     How virtual currency may be a target for cyber criminals.
    •     Usage of data analytics.

     

    Governments and cyber law enforcement organizations will prioritize raising awareness of these issues in the near future. Cyber lawyers may advocate for their clients by approaching legislators to explain their position and request laws that benefit them. Cyber lawyers are involved in the continuous debate about what laws should be enacted in this area of law.

     

     

    Why You Need a Cyber Lawyer in Nigeria?

    Cyber lawyers practice in a wide range of areas and expertise. They work in small, medium, and large businesses. They both work in private practice and for the federal government.

     

    Cyber Lawyers may practice criminal law or work for an organization that develops and enforces civil laws. They can also work for organizations that enforce cyber laws and assist the public in using the internet safely.

     

    If a client has a dispute over a cyber contract or domain use, they can turn to their cyber lawyer to help them resolve the issue or navigate related litigation. Because of the jurisdictional issues that may arise in cyber law, lawyers who assist their clients with cyber lawsuits may need to work carefully to develop their case.

     

    Another crucial role of cyber lawyers is to assist clients to develop best practices for conducting business and personal affairs. For example, a cyber lawyer representing a hospital may assist them in implementing measures to comply with privacy rules while still protecting personal information. Cyber lawyers also assist organizations in maintaining client confidentiality in accordance with federal, state, and local laws.

     

     

    Where To Get a Cyber Lawyer in Nigeria?

    At Olisa Agbakoba Legal (OAL), we have skilled and experienced cyber lawyers that can support and provide legal and advisory services.

     

    Our Cyber lawyers deal with issues of cybercrimes against individuals, companies or the government, and handle cases related to e-commerce, e-contracts and digital signatures, intellectual property rights, cybersecurity, etc.

     

    Feel free to Contact OAL’s Cyber Lawyers to discuss issues relating to internet technologies and cybercrime in Nigeria.

     

     

     

    Written By: 

    Josephine Uba (Lead Digital Strategist, Olisa Agbakoba Legal)

  • The Importance of Good Corporate Governance in Nigeria

    The Importance of Good Corporate Governance in Nigeria

    The Evolution of Corporate Governance in Nigeria.

    The Nigerian corporate sector has undergone different phases in its effort to develop and redefine the corporate landscape so as to inculcate good corporate governance in Nigeria. In 2003, the Code of Best Practices on Corporate Governance in Nigeria (the 2003 SEC Code) issued by the Securities and Exchange Commission, was the first corporate governance code to be issued by any regulator in Nigeria, and its application was extended to all public companies registered in Nigeria. 

     

    In 2011, the SEC issued the Code of Corporate Governance in Nigeria 2011 (the 2011 SEC Code) to address the weaknesses of the 2003 SEC Code, and to improve the mechanism for its enforceability. In furtherance of the powers under the Financial Reporting Council of Nigeria (FRCN) Act that the FRCN issued the three-tiered National Code of Corporate Governance in 2016. 

     

    Most recently, the FRCN issued the Nigerian Code of Corporate Governance (NCCG) in 2018, replacing all existing sectoral codes of corporate governance in the country, and is currently applicable to all sectors of the economy. 

    The intention presumably behind these iterations is to stay in line with global best practice where corporate governance is concerned. 

     

     

    What is Corporate Governance as a Concept?

    According to the Oxford University Press, Business English Dictionary ‘Corporate Governance’ is defined as the way in which directors and managers control a company and make decisions, especially decisions that have an important effect on the shareholders. 

     

    The term corporate governance first appeared as a business concept in 1976, in the US Federal Register . In 1976, the term “corporate, parks and commercial real estate. but it was not until nearly 25 years later in the wake of major corporate failings and scandals such as Enron, Satyam, Cadbury, Arthur Andersen which revealed just how significant corporate governance is for business. 

     

    The fallout demonstrated that bad governance, which can manifest in several ways e.g. poor monitoring and oversight, lackadaisical corporate culture, widespread unethical business practices, lack of integrity at leadership level, etc. can be disastrous for any business regardless of how long or well established, thereby disproving the term ‘ too big to fail’.

     

     

    Model Theory and Application of Good Corporate Governance 

    ‘Good Governance’ can be considered to be a systemic approach to managing and supervising organisations properly which can positively impact their sustainability and profitability. 

     

    Good corporate governance, being the opposite of ‘bad governance’ is concerned with proper running management and supervision of a company by the board. A practical example of good governance is conducting regular board meetings, audits etc. 

     

    Theoretically, corporate governance, concerns itself with people, competencies (performance), processes and policies. These are known collectively as the 4 P’s of corporate governance. 

     

     

    Holistic approach to Good Corporate Governance in Nigeria 

    A holistic approach to governance is the most effective way to achieve good corporate governance to avoid it becoming a tickbox exercise. It requires looking at the organisation from a 360 degree perspective , from the implementation of  robust policies and procedures, hiring the right people with the relevant skills and competencies, implementing the right systems e.g regulatory technology to make reporting and supervision more effective, etc. 

     

    The four P’s when combined, create a conducive working culture and environment in which organisations and companies can thrive from day one. Even for early stage companies and startups, it is never too soon to begin to implement good governance. 

     

    For instance, if a board fails to meet regularly, this could consequently lead to inadequate supervision of the operations of the organisation, making it more likely that corporate failings will arise and go unnoticed. Moreover, an absence of policies and procedures to catch and report operational breaches or bad conduct e.g. whistleblowing, escalation, etc. could lead to higher probability of corporate failure. 

     

    The responsibility for implementing good governance ultimately rests with the Executive Management or in the case of smaller companies , the business owner or founder. This is where the ‘tone from the top’ expression comes from. For good governance to become embedded into the culture of an organisation, it has to be championed by topline management. Where the Executive Management, Board and Chairman or founder as the case maybe fail to take responsibility for establishing good governance, it becomes more likely that the organisation will be poorly governed and run into issues. 

     

    Benefits of Good Corporate Governance 

    According to a report written by the OECD, it indicated that organisations which invest more resources in Good Corporate governance practices, systems and policies ‘produce substantially better market results, can help companies weather the storm of an economic downturn’. 

    Additionally, good corporate governance has been found to improve the top level decision making process, create better control environments and reduce wastage. 

     

    The implementation and  practice of good governance could be said to enhance the value proposition of organisations because companies which take governance and due process more seriously tend to be less likely to run into trouble . In practice, this translates to  greater financial management  and supervision, and incidents such as internal corruption, financial leakages, ‘cooking the books’ etc, become less of an occurrence. 

     

    Companies and organisations which continually invest in strengthening its corporate governance mechanisms could, by doing so,  increase stakeholder confidence in the process, which can reflect positively on the balance sheet in the long term. 

     

    When there is commitment to good corporate governance in an industry, it can have a positive knock on effect on the market collectively which helps with market confidence and encourages stable, long-term international investment flows into the country. 

     

     

    In Conclusion

    It is evident that there is a cost of good governance because it requires investing in competent and skilled people, processes and policies however notwithstanding in the long run it is still a worthwhile investment.

    Building companies and organisations is a form of economic and social activity that should be done with a long term view and so it is important to remind all companies and stakeholders that, no matter how small or large a company may be, we must never take corporate governance for granted. Invest in good corporate governance not just for profitability but also for sustainability.

     

     

     

    Written By:

    Beverley Agbakoba-Onyejianya

    Beverley is an  Associate Partner and the Head of Sports, Entertainment & Technology (SET) group at OAL. She is a regulatory and compliance professional and a lawyer with over fourteen years professional experience in the banking and capital markets sectors…

    View Beverley’s Profile >>

  • Understanding Garnishee Proceedings in Nigeria

    Understanding Garnishee Proceedings in Nigeria

    To understand Garnishee Proceedings in Nigeria, you need to bear in mind that there must be a judgment of a “Court of competent jurisdiction” which enables a successful judgment creditor to enforce the Court’s judgment.

    The law provide for other ways of enforcing judgment but Garnishee proceedings is unique, and about the only procedure in law through which an “innocent” third party ( the garnishee) is made a party in a judicial proceeding regardless of the fact that he is not a party in the suit wherein judgment was pronounced.

     

     

    What is a Garnishee Proceeding?

    As defined by the Free Legal Dictionary:

    Garnishee proceedings is simply a judicial process of execution or enforcement of monetary judgment by the seizure or attachment of the debts due or accruing to the judgment debtor which form part of his property available in execution. 

     

    By this process, the court has power to order a third party to pay direct on the judgment creditor the debt due or accruing due from him to the judgment debtor, as much of it as may be sufficient to satisfy the amount of the judgment and the cost of the garnishee proceedings

     

    Garnishee proceeding is can also be defined as a judicial process of execution or enforcement of monetary judgment whereby money belonging to a judgment debtor, in the hands or possession of a third party known as the ‘Garnishee’ (usually a bank), is attached or seized by a judgment creditor, in satisfaction of a judgment sum or debt.

     

    One of the ways of enforcing judgment is the garnishee proceedings which prescribed in Sections 83 to 92 of the Sheriffs and Civil Process Act. See Azubuike v. Diamond Bank (2014) 3 NWLR (Pt.1394) 116 @ 127 Para. C – E, Ratio 2

     

    By its nature, Garnishee proceeding is “sui generis”, and different from other Court proceedings, although it flows from the judgment that pronounced the debt.

     

     

    Parties Involved in Garnishee Proceeding in Nigeria

    1. The Garnishor or Judgment Creditor

    A garnishor is a Creditor who initiates garnishment for the purpose of reaching property or credits of a debtor held or owned by a third person who is the garnishee usually banks.

     

    2. The Judgment Debtor

    A judgment debtor is a person or entity against whom a judgment ordering him to pay a sum of money has been obtained and remains unsatisfied.

     

    3. The Garnishee

    A person or entity that is garnisheed; a garnishee is a third party (banks, employer, employer etc.) who, while not involved in a court case between a debtor and creditor or a defendant and a plaintiff (the garnisher), is required by a court order (garnishee order) to seize, in part or in full, the money (account balance, payment, wages) belonging to the debtor or defendant, and transfer it to the creditor or plaintiff until a debt or claim is satisfied.

     

     

    Orders Made in Garnishee Proceeding in Nigeria

    Garnishee proceedings are done in two different stages with two court orders made. The first stage is for the garnishee order nisi, whilst the second stage is for the garnishee order absolute.

     

    1. Garnishee Order Nisi

    Garnishee order nisi directs the Garnishee to appear in court on a specified date to show cause why an order should not be made upon him for the payment to the judgment creditor of the amount of debt owed by the judgment debtor. The extant laws regulating Garnishee proceedings are the Rules of Courts, case laws and also the Sheriff and Civil Process Act (SCPA).

     

    2. Garnishee Order Absolute

    The name given to a final and conclusive court order after the condition of an interim or intervening order (decree nisi) is met. In a garnishee proceeding, the order absolute is made at the second stage on the return date hitherto given at the first stage if the Garnishee fails to attend Court, or does not dispute the debt due or claimed to be due from him to the judgment debtor.

     

    The Court may subject to certain limitations, make an order absolute under which the garnishee will be ordered to pay to the judgment creditor, the amount of debt due from him to the judgment debtor, or so much of it as is sufficient to satisfy the judgment debt together with the cost of the garnishee.

     

     

    In Conclusion

    Garnishee proceeding is otherwise another means by which judgment is enforced. Garnishee proceeding denotes that the judgment debtor is himself a creditor to another; and that the judgment creditor has to obtain an order of court that the debtor pays the judgment creditor by the instrumentality of attaching the debt.

     

    Where the judgment creditor has garnisheed the debt standing to the credit of the judgment debtor in the hands of the garnishee, upon the service of the order nisi from the court, the garnishee becomes a custodian of the whole of the judgment debtor’s fund attached.

     

     

     

    Written By:

    Frank Ihedoro

    Frank is an Associate and a Litigation lawyer with keen interest in Human Rights Advocacy and Public interest Litigation. His advocacy practice includes judicial reforms and review, insolvency disputes and real estate litigation

    View Frank’s Profile >

     

  • How to Write a Will in Nigeria

    How to Write a Will in Nigeria

    When someone is requested to write a will in Nigeria, there is always a misperception. In reality, the issue of writing a will in Nigeria does not indicate that death is imminent. It is only reasonable that one regulates his or her family’s or loved ones’ affairs in order to avoid problems that may emerge in the event of death.

     

    Writing a will in Nigeria is subject to three main laws:

    1. Statutory laws
    2. Customary laws
    3. Islamic law

     

     

    What is a Will?

    A will is a testamentary document that expresses a person’s last wishes as to how his or her property is to be distributed after death and as to who manages the property until its final distribution. With a will, a person gives instruction on how his or her property should be managed, distributed or disposed of after his demise. 

     

     

    Why You Should Write a Will

    Death comes unannounced, usually. It is very painful to see the lifetime efforts of one get frittered away by those not deserving. It is possible the legacy left behind is shattered if succession and inheritance plans are not well put in place. 

     

    Therefore, the importance of writing a will cannot be overemphasized. Making a will displaces the rules of intestacy, satisfies the wishes of the testator, protects the children and provides for them wilful guardians, reduces litigation and inheritance taxation.

     

     

    Who Can Make a Will in Nigeria?

    In writing a valid will, the testator (the person making the will) must meet the following requirements:

    • AGE: Only an adult can make a will. Such an adult must have attained the age of 21 years under the Wills Act or the age of 18 years under the Wills Law of Lagos State. Anyone that falls below the age of 18 or 21, as the case may be, lacks the capacity to make a valid will in Nigeria.

     

    • MENTAL CAPACITY: A person making a will must possess a sound mind. The testator must have a sound disposing mind at the time he gives instructions and at the time the will is executed. There must be no infirmity or lunacy of any sort, no matter how slight. Therefore, in making a valid will, the testator must understand the nature of the acts of making a will, the extent of his property, the objects of his bounty and the manner of distribution.

     

     

    How to Make a Valid Will in Nigeria

    There are conditions which must be met in making a valid Will under the Wills Act. Making of Wills under customary laws and the Islamic law have their own systems, which are different from the statutory provisions.

     

    To be valid under Nigerian Law, a Will must:

    1. Be in writing. The most preferred format is one typing it and printing as there can be mistakes with writing by hand. For it to be binding, the testator must put it into writing
    2. Be written by a testator above the age of 18 and with sound mind at the point of writing. The testator must be 18 years of age and above and must show that he is sane at the moment of making the Will and that he understands the action he is taking. Section 7 of the Wills Act
    3. Be made voluntarily, without any expression of duress, undue influence, and/or fraud.
    4. Ensure the testator acknowledges his signature in the presence of two (2) witnesses who must be present at the same time.
    5. The witnesses must sign the Will in the presence of the testator. It is important to note that a witness cannot be a beneficiary to a Will, and any gift given to a witness will be a nullity. Section 15 of the Wills Act.
    6. The Will must identify properly the beneficiaries and the properties bequeathed.

     

     

    Contents of a Valid Will

    1. The full name (including former name and alias), address and occupation of the testator.
    2. The name(s) and address(es) of the executor(s) who will be in charge of the testator’s assets.
    3. The full names and addresses of the beneficiaries in the will, and where the beneficiaries are minors, the particulars of the guardian appointed for them.
    4. A full list and particulars of the testator’s assets, debts inclusive.
    5. The names and addresses of witnesses to the will.

     

     

    Who Can Benefit From a Will?

    Anyone can benefit from a will. A testator reserves the right to gift his property to whosoever he wishes after his death. So, a relative, friend, acquaintance or total ‘stranger’ can benefit from a will if so properly named by the testator. 

    Generally, however, a witness attesting a will shall not benefit under the will. The spouse of the witness attesting to a will can equally not benefit under the will. So, anyone making a will must ensure that witnesses or their spouses are not beneficiaries of that will. 

    Also, the solicitor employed to draft the will shall not benefit from it except in circumstances when the bequest is small and reasonable.

     

     

    Where Can You Keep a Will?

    • In the Probate Registry;
    • In a Personal safe deposit box;
    • With a trusted friend or relation; and
    • With the Executor(s) named in a will.
    • Bank safety deposit box

     

     

    Consequences of Not Writing a Will in Nigeria

    A person that dies without a will is said to have died intestate. Whereas, a person who makes a will dictates how his or her estate will be managed, administered or distributed, a person that dies intestate will have his estate administered by the authorities in accordance with the rules of intestacy. It means that the law determines who gets what. 

    Dying without a will is, thus, capable of breeding conflict and disharmony within the family left behind; has the potential of incurring more legal costs and the testator’s wishes and best interest are not protected.

     

    Do You Need a Lawyer To Make a Will in Nigeria?

    Most people with simple estates can write their own wills without the assistance of a lawyer. However, there are several circumstances in which using an estate lawyer to write your will may be advantageous. This could apply if you:

    • Have complex family dynamics, 
    • Are a business owner with huge assets,
    • Possess a large number of assets in multiple states,

    So, if you decide that your situation is too intricate to make your own will, you’ll need the assistance of a lawyer.

    The lawyer will guide you to understand the Wills’ laws in Nigeria, prepare your documents in accordance with your wishes and follow up the entire process to ensure that your will gets implemented the right way.

     

    Ready to make your will? Feel free to Contact Us For Your Legal Assistance.

     

     

    Written By:

    Opeyemi Oyedele – Associate Intern, Olisa Agbakoba Legal (OAL)

     

  • How to Plan Inheritance in Nigeria

    How to Plan Inheritance in Nigeria

    To plan inheritance in Nigeria, you need to critically think about who you want to leave the inheritance for, what inheritance you want to leave, and how you want to leave the said inheritance as well as how you expect them to use the inheritance.

    In Nigeria, inheritance planning is the way you prepare your family and yourself for what happens after your death. This is the spelling out of the who, the what and the how.

     

    A common misconception is the assumption that inheritance planning is in fact the same thing as estate planning. However, this is not the case, rather inheritance planning falls under estate planning. Estate planning is the preparation of tasks for the purpose of managing individuals’ assets portfolio in the events of their death.

     

     

    Benefits of Inheritance Planning in Nigeria:

    The importance of inheritance planning in Nigeria cannot be overstated and some of them are highlighted as follows:

    1. You are rest assured that your properties are in the specific hands that you desire them to be upon your demise.
    2. You can pre-determine the ownership, utility and to some extent, the functionality of the properties you leave behind upon your demise.
    3. You will be able to appoint the executors of the estate. i.e. those that will ensure your express wishes in the will are actualized.
    4. You reduce the likelihood of conflict over your properties between beneficiaries and non-beneficiaries alike upon your death.
    5. Where legacy is important to you, you can leverage the preparation of a will to preserve your legacy through deliberate expression of your wishes in this light.

     

     

    The Process of Inheritance Planning in Nigeria

    When it comes to inheritance planning in Nigeria, it is important to plan towards covering your lifetime expenses first and determine what will be left over to gift after your passing away. This way, you can be rest assured that you are not leaving liabilities behind, but rather assets.

     

    The first step is to get organized. This Involves sitting down to settle one’s finances. This can be done with the aid of a financial planner, real estate lawyer, a tax professional, stockbroker and other professionals as the case may be.  This inheritance plan will maximize the inheritance left to your heirs. It is at this stage that the creator of the inheritance plan would sit down, take note of family values, and make a plan which would establish and protect his legacy.

     

    In a situation where most of your children or beneficiaries are minors, one can leverage the use of Trust via a trust deed. This gives survivors control over your properties for the benefit of your minors until they come of age. It is advisable to use a trustworthy person who shares the same values with you and who understands the legacy you intend to protect.

     

    Additionally, although often overlooked by many, inculcating your beneficiaries with sound financial knowledge and management skills is something that is critical to inheritance planning. This is especially important where there is an entity that is beyond you i.e. that affects others. For example, as a company owner who has members of staff and customers, your inheritance planning should anticipate prudence, and this can be done through the deliberate training of your heirs.

     

    Finally, the documentation of your inheritance plan can be done using a trust as mentioned above or a will. A Will is a ‘testamentary document’ made by a person referred to as the “testator”.

    It is done by persons seeking to document their inheritance plans so as to create tasks and instructions for the executors when organizing the deceased’ estate.  In this document, such person disposes their properties (real or personal) to persons (beneficiaries) which will take effect after their death.

    A Will being testamentary in nature implies that it comes to effect upon the death of the testator. A will and a trust under a trust deed helps to prevent ambiguity and they form the instrument parts of inheritance planning.

     

     

    In Conclusion:

    Inheritance planning is an important and everlasting gift you can ever give to your family and loved ones. Setting up inheritance planning in Nigeria is not as difficult as most people think. You only need to get the right information and the right persons to help you plan and implement it.

    However, Inheritance planning in Nigeria can be messy if not done well or guided by a good family lawyer. So it is highly recommendable you seek legal assistance while planning an inheritance.

    Therefore, if you have any questions in regard to inheritance planning in Nigeria, always feel free to Contact our family lawyers at OAL for legal assistance.

     

     

     

    Co-written By:

    Nosa John Garrick – (Associate, OAL)

    Opeyemi Oyedele  – (Graduate Intern, OAL).