Category: Corporate & Business Advisory Services

Generally, Intellectual Property (“IP”) covers products of intellectual creations. However, it can also mean a generic term that describes creations of the intellect concerning which the law ascribes the exclusive right of appropriation to the designated owners. Intellectual Property law is a body of laws that governs all the relevant aspects (i.e. ownership, registration, protection, licensing, assignment, lifespan, etc.) of IP rights.

 

In Nigeria, several laws have a bearing on the protection and administration of the different rights that make up intellectual property. However, the three main statutes governing the intellectual property law in Nigeria are the Copyrights Act, the Patents and Designs Act, and the Trademarks Act.

 

These laws govern the protection and administration of the predominant Intellectual property protected in Nigeria as follows:

 

1. Copyright:

Copyright in an intellectual work is that exclusive right of the author of the original work to control or enable the doing of certain expressly stated acts in respect of the whole or substantial part of the work either in its original form or in any other recognisably derived from the original form but subject to certain statutory exceptions.

 

Therefore, the copyright laws refer to the bundle of law that seeks to protect the rights of authors of such works that have been expressed in specific forms for the transformation or reproduction by persons who are neither authorised nor licensed by the copyright owner.

 

Copyright is governed by the Copyright Act Cap 68, Laws of the Federation of Nigeria, 2004. Section 1(1) (a-f) of the Copyright Act provides for works protected by copyright which include;

• Literary works
• Musical works
• Artistic works
• Cinematograph films
• Sound recordings
• Broadcasts

 

Overall, there are two criteria by which a work is adjudged to be eligible for copyright protection in Nigeria: originality and fixation. Thus, all copyright works must be original and expressed in a definite medium to be protected under the law. This is because copyright does not protect ideas but rather how ideas are expressed. By the provisions of section 1(2) of the Copyright Act, a literary, musical or artistic work must satisfy the twin requirements of “originality and fixation.”

 

Finally, it is crucial to note that works that satisfy the above conditions enjoy automatic copyright protection without registration or compliance with any formal rules. Nonetheless, the Nigerian Copyright Commission (NCC) provides owners of copyrights the option to deposit a copy of their works with the NCC and receive a certificate that serves as notification of the existence of the work to the general public.

 

 

2. Trademarks:

A Trademark is any mark, sign, or combination thereof that the owners’ design to identify their product and differentiate it from other manufacturers’ products, especially competitors. There is a peculiar measure of identity associated with your goods. Section 67 of the Trademarks Act Cap T3, Laws of the Federation of Nigeria 2004, defines a trademark as:

A word, letter, label, numeral, colour, signature, device or any combinations of words, letters, labels, signatures that identify and distinguish the source of the goods or services of one manufacturer from those of others in the course of trade.

 

Trademark distinctiveness is an essential concept in the law governing trademarks and service marks. A trademark may be eligible for registration if it performs the critical trademark function indicated above and is distinctive. An essential role of any brand is to point the consumer to the origin of the marked goods and services; to do this, a trademark must distinguish the said goods or be capable of doing so.

 

Distinctiveness is critical for a trademark’s registration. Distinctiveness connotes uniqueness, speciality, peculiarity and a distinguishable feature of a particular mark from another. Distinctiveness impacts everything from the registrability of a mark to its scope of protection, enforceability and continuing validity once registered. Trademark distinctiveness is essential when assessing how strong the trademark protection is against other competitors who may try to use trademarks as an instrument of deception, misdirection or deceit on the buyers or consumers of goods.

 

Notwithstanding, one must note that distinctiveness is not an automatic pass for registration as the Registrar of Trademark has the discretion to refuse, albeit in line with the Trademarks Act. The Act provides that a mark can be rejected for being deceptive, scandalous, contrary to public policy.

 

 

3. Patents:

Patents law is channelled towards protecting inventions that extend to things like machines, devices, chemical compositions, and manufacturing processes. Essentially, the law protects the owner against the independent development of the patented subject matter. It is a grant from a government that confers upon an inventor the right to exclude others from making, using, selling, importing or offering an invention for sale for a fixed period. This invention may be a new product or process. The patent protects the inventor from others who may attempt to make, use, distribute or sell the invention without the patent owner’s consent.

 

Patentable inventions are inventions in respect of which the law will grant a patent. The Patent & Designs Act Cap P2, Laws of the Federation of Nigeria 1988, outlines conditions for an invention to be deemed patentable. According to section 1(1) of the Patent & Designs Act, an invention is considered patentable if it meets the following conditions;

• It must be new
• It must be the result of an inventive step; and
• It must be capable of industrial application.

 

In Nigeria, Patents cannot be validly obtained in respect of:

(a)  plant or animal varieties, or essentially biological processes for the production of plants or animals (other than microbiological processes and their products); or

(b)  inventions the publication or exploitation of which would be contrary to public order or morality (it being understood for this paragraph that the exploitation of an invention is not contrary to public order or morality merely because its exploitation is prohibited by law).

 

Furthermore, the provisions of section 1(3) of the Patent & Designs Act states that any publication made available to the public by oral disclosure, a document or a prior use will destroy the requirement of novelty and ultimately make an invention non-patentable. Provided that, however, an invention is not deemed to have been made available to the public merely because, within six months preceding the filing of a patent application in respect of the invention, the inventor or his successor in title has exhibited it in an official or officially recognised international exhibition.

 

Again, the rights conferred on a patentee are not automatic. They require the statutory formality of registration as provided in section 2 of the Act to bring them into effect. This is done through the office of the Registrar of Patents in the Federal Ministry of Industry, Trade and Investment. The Registrar has a duty under the Patents & Designs Act to examine all patent applications to ensure that they conform with the provisions of the Act.

 

However, it is essential to note that the examination here does not amount to an analysis in substance but rather form. Mainly, in making an application, it is crucial for an applicant to adequately state the specifications and claims of his invention, which he desires to protect in the patent application. The reason for this is that the specification and claims are the heart of patent law. Claims define the boundaries of the patent’s property right that the patent confers. They clearly define a patent owner’s property right.

 

Overall, once an application satisfies all the Patents & Designs Act requirements, the Registrar will grant the application without any further examination of the fact of patentability or non-patentability of the subject matter of the application. The patent grant gives an inventor monopoly rights for a limited period to make, use or apply the process or product of his inventive ingenuity. A patentee is entitled to the sole ownership and profits arising from his invention during the patent’s lifetime, usually twenty years (20 years) in Nigeria.

 

 

4. Industrial Designs:

Industrial designs are those elements incorporated into mass-produced items that tend to enhance attractiveness by their appearance. Industrial design protection covers designs that are original and novel. It is called industrial design because for it to qualify for protection, the design must be capable of application for mass or industrial reproduction.

 

According to section 12 of the Patents & Designs Act, industrial designs are created as models or patterns to be multiplied by an industrial process and not intended to achieve a technical result, i.e. relate to or improve on the functional feature of a product without which the product cannot perform its functions.

 

Hence, if a design relates to a functional element or enhances the functionality of a product, it will not be registrable as an industrial design and is more suitable for patent protection. The net effect of this section is that a design need not be functional nor add value to the ability or substance of the article. It suffices if all the design does is to attract attention or that it is eye-catching to influence consumers.

 

There are two fundamental conditions an industrial design must fulfil before it can be registrable;

• Newness
• Not contrary to public order or morality

 

The right to protection of a registrable industrial design is based on the priority of registration, i.e. a party who registers first receives priority. Section 14 of the Patent & Designs Act vests the right to register the design in the statutory creator. A registered design protects the shape of the product, i.e. lines, colours or any three-dimensional form.

 

The idea is to prevent others from reproducing the product’s exterior design for industrial use. The owner of a registered design can prevent others from copying, importing, illicitly profiting, selling or utilizing for commercial purposes by reproducing the design. A registered design is protected for five years from the date of the application for the registration.

 

 

In Conclusion

Businesses require competent legal advisors to assist them in navigating the ever-changing world of intellectual property (IP) law in order to remain relevant in today’s global marketplace. IP is a valuable asset that must be safeguarded if your company is to thrive because you spent a lot of time and effort developing ideas, technologies, and designs that set you apart from other competitors or businesses.  However, in order to preserve your intellectual property asset, it is essential that you consult with an intellectual property lawyer.

 

IP lawyers can assist you in ensuring that no one else profited or misappropriated their works without obtaining legal authorization or paying fair royalties.  Talking with the best intellectual property lawyers in Nigeria can undoubtedly put your mind at ease regarding the security of your intellectual property.

 

Having an IP lawyer on your team is a smart strategic decision for your company. This will allow you to collaborate with your lawyer to ensure that your intellectual property is properly safeguarded and utilized to its greatest potential.

 

Olisa Agbakoba Legal is a full-service law firm with a team of intellectual property lawyers who work exclusively in the intellectual property sector. We provide strategic advise to clients on all aspects of intellectual property. Because we are aware of worldwide market trends, we assist both small enterprises and multinational corporations in understanding and using their intellectual property rights. Additionally, with a global network of partners in a variety of technical specialties, we are able to support our clients regardless of where they conduct business.

 

Our team collaborates directly with clients to safeguard the security of their ideas and technology, allowing them to focus on their core competencies—business growth and development. We prosecute patent applications and trademark registrations in Nigeria on a regular basis, in addition to litigating IP disputes across a variety of platforms.

 

 

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Written By:

Nosa John Garrick

According to recent findings, businesses with less than 200 employees lose an average of $2.5 million each due to cyber threats and Nigerian SMEs are currently highly subjected to cyber-attack. This necessitates an understanding of the most serious cyber security threats facing businesses in Nigeria, as well as strategies for mitigating them.

 

Most Nigerian businesses have less severe technical defenses, are less aware of risks, and have fewer time and resources to dedicate to cybersecurity. Certain industries, such as banking and the financial organizations, are frequently targeted by cyber attackers, necessitating high security standards. Cybercriminals frequently target small businesses in Nigeria because they are always unprepared for the threat even when they are aware of their vulnerabilities.

 

Less than a quarter of Nigerian businesses have a dedicated IT security staff member or provider, and despite facing as many threats as the larger companies, do not have the resources or training to address and mitigate the risks adequately. However, these businesses are not any less lucrative targets for cybercriminals. Even the smallest businesses in Nigeria might deal with huge sums of money or have access to massive amounts of customer data that they must safeguard. Small businesses in Nigeria frequently collaborate with larger companies, thus they may be exploited by hackers to target such companies.

 

Nigeria SMEs, perhaps, stand to lose the most if they are subjected to a severe cyber-attack. Losing so much money in a cyber-breach is catastrophic for small businesses, not to mention the reputational harm caused by a cyber-attack. For these reasons, Nigerian businesses must be aware of the dangers and know how to counteract them.

 

 

What is Cyber Threat?

A cyber security threat is any harmful attack that attempts to gain unauthorized access to data, disrupt digital activities, or damage data. Corporate spies, hacktivists, terrorist groups, hostile nation-states, criminal organizations, lone hackers, and disgruntled employees are all examples of cyber threats.

 

Several high-profile cyber-attacks have resulted in the exposure of sensitive data in recent years. The 2017 Equifax data breach, for example, exposed the personal information of around 143 million people, including birth dates, addresses, and Social Security numbers. Marriott International revealed in 2018 that hackers gained access to its servers and stole the personal information of nearly 500 million clients. The inability to develop, test, and retest technical measures such as encryption, authentication, and firewalls facilitated the cyber security threat in both cases.

 

Cyber attackers can utilize sensitive data to steal information or get access to a person’s or company’s bank accounts, among other potentially devastating acts, which is why cyber security professionals are so important for keeping private data safe.

 

 

What is Cybersecurity?

Cybersecurity ensures that your company’s data is protected from both internal and external threats. It can refer to a collection of technologies, processes, structures, and procedures for safeguarding networks, computers, programs, and data against unwanted access or damage. Any cybersecurity strategy should aim to secure data confidentiality, integrity, and availability.

 

There are a number of ways that cybersecurity vulnerabilities can harm (or even destroy) an organization’s reputation. A hacker could potentially get sensitive information such as bank account or credit card numbers. On the “dark web,” there are open markets for such information. If outsiders have access to such sensitive information, the organization’s banking or credit card services may be revoked, or it may be found in violation of privacy regulations. Every month, high-profile data breaches affecting individual data are revealed around the world.

 

A second, but related risk is that if a hacker acquires sensitive information about the company, the company’s reputation could be harmed. Only few Nigeria businesses can afford the reputational damage that losing data can create. The harm to one’s reputation and goodwill may be more devastating than the data loss itself. The loss of client data could result in legal or regulatory action being taken against the company.

 

Ransomware is the most recent and worrying part of cybersecurity that is causing significant problems for businesses. Reports of ransomware attacks using commercially driven business strategies date back to 2012.

 

In many circumstances, malware is disguised and inserted within another sort of document, waiting for the target user to execute it. Upon execution, the virus may encrypt the data of the organization with a secret 2,048-bit encryption key or interact with a centralized command and control server to await the adversary’s instructions.

 

Once attacked, the data of the organization is encrypted using the attacker’s encryption key, making it unavailable. Once all accessible data has been encrypted, including backup data and systems in many cases, the business will be given instructions on how to pay a ransom within days, otherwise the adversary will remove the encryption key and the data will be lost. The enemy literally holds the data hostage—hence, ransomware. The encryption key is so strong that cracking it rather than paying the ransom is uneconomic—some estimate that decrypting the data without the key would take five quadrillion years on an average desktop computer.

 

In other circumstances, the target business may be able to hope that some researchers have identified a means to decrypt the data via a design defect. Otherwise, the firm will have to restore the systems and data from a secure backup or pay the ransom. Keep in mind that even restoring data does not preclude the possibility that the ransomware will not be re-enabled or returned due to the compromised environment’s integrity.

 

 

The Top Cyber Security Threats Facing Nigerian Businesses and How to Stop Them

1. Phishing Attacks

Phishing attacks are the most dangerous, damaging, and prevalent threat to small businesses. Phishing is responsible for 90 percent of all data breaches, has increased by 65 percent in the last year, and has cost businesses more than $12 billion. Phishing attacks occur when an attacker poses as a trusted contact and persuades a victim to click on a malicious link, download a malicious file, or provide sensitive information, account details, or credentials.

 

In recent years, phishing attacks have become much more sophisticated, with attackers becoming more convincing in their impersonation of actual business contacts. There has also been an increase in Corporate Email Compromise, which involves bad actors utilizing phishing campaigns to acquire business email account passwords from high-ranking executives, then falsely requesting money from staff using these accounts.

 

Part of what makes phishing assaults so dangerous is how difficult they are to stop. Rather than addressing technological flaws, they utilize social engineering to target humans within a company. There are, however, technological countermeasures against phishing assaults.

 

Phishing emails cannot reach your employees’ inboxes if you have a powerful Email Security Gateway in place, such as Proofpoint Essentials or Mimecast. Post-delivery protection, such as IRONSCALES, is also critical for phishing attacks to be avoided. Users can report phishing emails, and administrators can then erase them from all users’ inboxes.

 

Security Awareness Training is the final layer of defense against phishing attacks in emails. These solutions enable you to protect your staff by testing and teaching them to recognize and report phishing attempts.

 

 

2. Malware Attacks

Malware is the second most significant hazard to small businesses. It covers a wide range of cyber threats, including trojans and viruses. It’s a catch-all phrase for malicious malware written by hackers to gain access to networks, steal data, or destroy data from computers. Malware is usually spread by malicious website downloads, spam emails, or connecting to infected computers or gadgets.

 

Small businesses are particularly vulnerable to these attacks because they can cripple gadgets, necessitating costly repairs or replacements. They can also provide attackers with a backdoor into data, putting customers and employees at danger. Small businesses are more inclined to hire people who work from home since it saves them time and money. This, on the other hand, raises their chances of being the victim of a malware assault, as personal devices are far more vulnerable to harmful downloads.

 

Having robust technology defenses in place can help businesses avoid malware attacks in Nigeria. Endpoint Protection systems safeguard devices from malware downloads and provide administrators with a central control panel via which they can manage devices and guarantee that all users’ security is up to date. Web security is also crucial, as it prevents people from accessing harmful websites and downloading hazardous software.

 

 

3. Ransomware

Every year, hundreds of businesses are affected by ransomware, which is one of the most popular cyber-attacks. They’ve become more popular in recent years because they’re one of the most profitable types of attacks. Ransomware encrypts company data, preventing it from being used or accessed, and then demands that the organization pay a ransom to unlock the data. Businesses are faced with a difficult decision: pay the ransom and risk losing a large sum of money, or risk having their services crippled due to data loss.

 

Small businesses are particularly vulnerable to such attacks. Ransomware attacks targeted small firms 71% of the time in 2018, with an average ransom demand of $116,000 in 2018. Smaller businesses are more likely to pay a ransom since their data is frequently not backed up and they need to get back up and running as quickly as possible. Locking patient medical information and appointment times can damage a business to the point where it has no choice but to close unless a ransom is paid, and the healthcare sector is particularly hard struck by this type of attack.

 

Businesses must have effective Endpoint Protection in place across all corporate devices to prevent these threats. These will aid in preventing ransomware attacks from successfully encrypting data. SentinelOne, an endpoint protection solution, even has a ‘ransomware rollback’ feature that helps businesses to quickly detect and neutralize ransomware attacks.

 

Businesses should also consider implementing a reliable cloud backup solution. These systems securely back up company data on the cloud, reducing the risk of data loss. Organizations can use a variety of data backup strategies, so it’s crucial to figure out which one will work best for you.

 

The advantage of instituting data backup and recovery is that in the case of a ransomware attack, businesses may quickly recover their data without paying ransoms or losing productivity. This is a significant step forward in enhancing cyber-resilience.

 

 

4. Insecure Passwords

Employees that use weak or readily guessed passwords are another major hazard to small businesses. Many small businesses use a variety of cloud-based services, each of which requires a separate account. Sensitive data and financial information are frequently stored in these platforms. This data can be compromised if you use passwords that are easily guessed or the same password for many accounts.

 

Due to a general lack of awareness about the damage that weak passwords can cause, small businesses are frequently vulnerable to hacks caused by employees using them. According to a recent study, 19 percent of industry professionals utilize readily guessed passwords or share passwords across accounts.

 

Users should investigate Business Password Management systems to ensure that staff utilize strong passwords. These services assist employees in managing passwords for all of their accounts by recommending strong passwords that are difficult to decipher. Multi-factor authentication systems should also be considered by businesses. These ensure that access to corporate accounts requires more than just a password. Multiple verification procedures, such as a passcode delivered to a mobile device, are part of this. Even if an attacker guesses a password properly, these security rules help to prevent them from accessing corporate accounts.

 

 

 

5. Insider Threats

 

The insider threat is the final big issue that small businesses face. An insider threat is a risk to a company that is brought about by the actions of current or former employees, business contractors, or associates. These actors have access to sensitive information about your organization and can cause harm through greed, malice, or just ignorance and negligence. According to a Verizon analysis from 2017, insider threats were responsible for 25% of all breaches in 2017.

 

This is a rising issue that can endanger employees and customers, as well as bring financial harm to the organization. Insider attacks are becoming more prevalent in small businesses as more employees have access to multiple accounts containing more data. According to research, 62 percent of employees have access to accounts they don’t require.

 

Small businesses must ensure that they have a strong culture of security awareness within their organization to prevent insider threats. This will assist employees in detecting early on whether an attacker has penetrated, or is attempting to breach, business data, and will help to prevent insider threats caused by ignorance.

 

 

The impact of a Cyber-Attack on Your Company

A successful cyber-attack can be devastating to your company. It can have an impact on your financial line, as well as your company’s reputation and consumer trust.

 

A security breach can be classified into three types of consequences: financial, reputational, and legal.

 

1. The Financial Loss:

Cyber-attacks often result in substantial financial loss arising from:

• theft of corporate information
• theft of financial information (eg bank details or payment card details)
• theft of money
• disruption to trading (eg inability to carry out transactions online)
• loss of business or contract

Businesses that have faced a cyber-breach will always have to pay to fix the compromised systems, networks, and devices.

 

2. Reputational Damage

Customer relationships require a high level of trust. Cyber attacks can harm your company’s brand and diminish your clients’ trust in you. As a result, potentially leading to:

• loss of customers
• loss of sales
• reduction in profits

Reputational harm can have an influence on your suppliers, as well as your relationships with partners, investors, and other stakeholders in your company.

 

3. Legal Consequences Due to Data Leak

Data protection and privacy laws require you to keep track of the security of any personal data you have on your employees or customers. You could face fines and regulatory sanctions if sensitive data is unintentionally or intentionally compromised, and you failed to implement proper security measures.

 

 

Legal Protections Against Cyber Security Threats in Nigeria

Government and industry have recently pushed to develop policies and regulatory standards that ensure a baseline of security across the Nigerian business landscape. Cyber Laws in Nigeria arose as a result of the need to combat these cyber threats.

 

Cyber law serves as a shield over cyberspace, preventing cybercrime. The government is committed to developing and enforcing laws to combat illegal online activity. The “Cybercrimes (Prohibition and Prevention) Act, 2015” has had a significant impact on Nigerian cyber law. This Act establishes a comprehensive legal, regulatory, and institutional framework for prohibiting, preventing, detecting, prosecuting, and punishing cybercrimes in Nigeria.

 

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

 

To read the Legal Actions against Cyber threats in Nigeria, please visit Our Article on, “Cyber Crimes and Cyber Laws in Nigeria”.>>

 

 

Tips To Prepare Your Organization for Cyber-Threats in Nigeria

Even the most resilient businesses can be destroyed by a security breach. It is critical to manage the risks appropriately.

• Create a security strategy to evaluate and categorize the data you handle, as well as the types of security your organization requires. Conduct security audits on a regular basis.
• Make cybersecurity awareness a top priority. Inform and educate your employees about the importance of data security and security protocols.
• Create encryption for critical data as well as two-factor authentication for system access.
• Invest in, install, and update cybersecurity tools such as antivirus software, firewalls, and additional privacy tools on a regular basis.
• Have a backup for sensitive data to save yourself from ransomware.
• Hire cybersecurity engineers who can identify and manage vulnerabilities in your system.

 

 

In Conclusion:

Digitization and globalization have given rise to cybercriminals who are constantly on the lookout for new ways to defraud and harm organizations and institutions in Nigeria. Businesses must be cautious and aware of the risks posed by these cybersecurity threats.

 

The best method for businesses to protect themselves against these threats is to have a comprehensive set of security measures in place, as well as to use Security Awareness Training to ensure that people are aware of security threats and how to avoid them. Proactive measures will inform you of potential hazards and strategies to limit their impact.

 

At Olisa Agbakoba Legal (OAL), we have skilled and experienced cyber lawyers that can support and provide legal and advisory cybersecurity services. Our Cyber lawyers handle cybercrime matters against individuals, businesses, and the government, as well as cases involving e-commerce, e-contracts and digital signatures, intellectual property rights, cybersecurity, and other topics.

 

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

 

 

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Written By:

Josephine Uba

Lead Digital Strategist, OAL.

Due diligence is the level of care or judgment exercised prior to establishing a commercial relationship. It is a process that involves collecting, understanding and assessing all legal risk, associated with a target company.

 

The main purpose of due diligence is to investigate all the possible financial and legal risks in relation to a company’s assets, corporate status, intellectual property, contracts, land transactions, and company’s employment. This is done to ensure that any investment or purchase is beneficial to the investors.

 

It is important for investors to conduct legal due diligence on a company before engaging in any mergers, acquisitions, takeovers or other transactions with any company.

 

 

Why Conduct Due Diligence

Due diligence is a necessary step for an investor to take because if  issues or risks are found to be associated with the target company, then depending on the number and kind of risk involved, it could result in one of the following:

1. A substantial decrease in the consideration involved in the transaction, or
2. An increase in representations and warranties taken by the acquirer, or
3. It can dissuade the acquirer from going ahead with the transaction.

 

Investors need to carry out:

• Financial due diligence
• Legal due diligence

 

Financial due diligence is managed by the Investor’s accountants and management team, and is expected to reveal the following;

1. The accounting and financial control system of the company;
2. The value of assets and liabilities to be acquired;
3. The product’s development and competitors; and
4. The company’s ability to raise short and long-term capital and the cost of such capital in relation to general industrial indications.

 

Legal due diligence is conducted by the investor’s solicitor and identifies the potential legal issues that may impede transactions, such as Intellectual Property (IP) and technological problems and those relating to transactional documents and agreements, business profiles or employees.

 

Legal Due Diligence involves but is not limited to the following steps:

• Reviewing documents of a target company.
• Carrying out interviews of individuals with knowledge of the company.
• Carrying out necessary searches at the appropriate venues. For instance corporate search at the Corporate Affairs Commission.
• Direct visitation
• Scrutinizing public records of the targeted entity
• Conducting media and internet search on the targeted entity
• Evaluating any ongoing lawsuit against the company etc.

 

It is important for investors to undertake both financial and legal due diligence before any scheme arrangement or investment in a target company.

 

 

How to Conduct Due Diligence

The method of due diligence requires investors to thoroughly examine the target company’s financial and legal records. Financial statements, Audit Reports, Annual or Quarterly Tax Returns are the key documents often scrutinized by most investors. Having an expert can greatly help with assessing the legal and financial picture of a company.

 

Once the investor has chosen the company it wants to conduct due diligence on, he should hire the services of experts to conduct due diligence on the target company. Hiring the right person for this job is an integral step and the expert would know what questions are to be asked and what information is to be sought from the target company for a holistic assessment.

 

Planning sets the basis for a successful due diligence transaction. The expert would plan and strategize the whole due diligence process.

The investor must engage in Industry Research. This entails the type of information that needs to be sought from the target company. Industry research however varies from one company to the other, depending (among other factors) upon the nature of the industry that the target company belongs to, as the rules, regulations, licenses and approvals required for every industry differs. However, the documents generally in focus for due diligence include and are not limited to company registration, shareholding pattern, financial statements, income tax returns, tax payment receipts, bank statements, operational records, employee records, statutory registers, property documents, IP registrations etc.

 

The next step would be to prepare a questionnaire or a checklist pertaining to all the documents and information you would require in the exercise of due diligence process. This checklist or questionnaire is given to the representatives of the target company so that they can provide the necessary documents and information.

 

Once the documents and information asked for in the checklist or questionnaire is received by the team conducting the due diligence, the next step is noting all the relevant information from the documents, in the form of separate annexures to the main Due Diligence Report.

 

It might be possible that all the information and documents sought in the checklist or the questionnaire is not given by the representatives of the target company in the last step. Furthermore, it might so happen that the documents provided by the representatives of the target company in the last step might include mention of certain other documents or information.

 

Such pending or additional documents or information is sought from the target company by the team conducting the due diligence, in the form of a requisition list, so as to aid the representatives of the target company in providing the same.

 

 

Elements of a Due Diligence Report

Once the process of reviewing the documents received from the representatives of the target company and noting of information in the form of annexures is completed (as mentioned in the last step), the process of writing the chapters of the Due Diligence Report begins.

 

Chapters that usually form part of the Due Diligence Report are: Executive Summary, Corporate Matters, Loans & Finances, Consents and Approvals, Material Contracts, Litigations, Human Resource (HR), Insurance, Intellectual Property Rights (IPR).

 

Once all the chapters of the Due Diligence Report have been drafted, the final step in preparing the Due Diligence Report involves preparing an Executive Summary.

 

An executive summary is usually presented in the beginning of the Due Diligence Report, and it contains the gist of the entire key findings of Due Diligence transaction, presented in a very concise manner. It also lists the impact of the risk (if any) on the proposed investor transaction, and its possible way-out.

 

 

Benefits of Due Diligence for Investors

Due diligence is important because it can lower risk later on in the investment process, including structural risks to the company’s capitalization and its early-stage investors. It can also ensure a strong, sustainable relationship between an investor and a company or entrepreneur, one established on transparency, trust and respect.

 

Therefore, some of the primary reasons for conducting due diligence is outlined below:

1. Better Understanding of the Organization: Due diligence is necessary to give the buyer/investor the information that they need to know about their target company in order to structure its purchase.
2. Helps to Value the Target Company: Due diligence will inform the investor of some of the following: contingent liabilities, restriction on businesses, pending litigations, insurance policies, employee benefits, intellectual property rights etc.
3. Informs the drafting of Relevant Documentation:The information obtained during a legal due diligence process will be helpful for both parties to a transaction in drafting and negotiating any agreement. The information is particularly helpful in allocating risk when drafting representations and warranties, pre-closing and post-closing indemnification rights of both parties.
4. Identify Impediments to Closing a Transaction: During the due diligence process, parties are able to identify and sometimes address impediments that might delay or hinder the success of the transaction. Some of the actions a legal due diligence expert will focus on are:

• The Company’s corporate documents, to determine the shareholders/Board of Directors of the company;
• The requisite corporate approvals required to complete the transaction;
• Contract documents, including assignment clauses, permits and licenses, to determine whether the transaction is contractually prohibited or whether specific consents are required etc.

5. Legal due diligence provides alternatives or solutions to reduce the legal risks identified during the due diligence process.

 

 

Conclusion:

The importance of due diligence cannot be over-emphasized. Properly conducted due diligence by experts in the jurisdiction of the acquired entity with particular knowledge of and insight into the business environment of the jurisdiction can minimize the various risks associated with investing in an existing business.

 

 

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Written By:

Yvonne Ezekiel

Yvonne is the Managing Partner of OAL, setting the strategic goals and objectives of the firm, managing the operations and driving business growth. She is leading the International Trade Practice group focusing on Trade control matters..

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For far too long, you’ve already heard of people forming foreign companies in Nigeria to take advantage of tax benefits. The process of setting up an offshore company in Nigeria is much less complicated than most people believe. It is actually simple and straightforward, and can be completed in a matter of weeks.

This post will walk you through the process of forming an offshore company in Nigeria, from selection to incorporation to Tax Identification to bank account opening & setting up an office, in order to dispel the myth that company formation is a complex and difficult process.

Below are few questions that you must ask yourself when you decide to form your offshore company in Nigeria, the type of company to set up and how you would go about it.

 

What is an Offshore Company?

An offshore company is one that is formed in a jurisdiction other than the one where the beneficial owner resides. To put it another way, an offshore company is one that is formed in a foreign country.

The concept of an offshore corporation, on the other hand, is not set in stone and will differ depending on the circumstances. Many people are perplexed by the word “offshore,” which is used in contrast to conventional “onshore” businesses.

An onshore business is one that is organized and operates within the boundaries of a country, while an offshore company is one that performs all of its operations outside the borders of the country where it is incorporated. It is not subject to municipal taxes since it is owned and operates as a non-resident corporation, with all of its financial activities taking place outside of the jurisdiction’s borders.

 

Why Would Anyone Want to Set Up a Company That is Based Anywhere Other Than Their Home?

Most people establish an offshore company in a foreign jurisdiction to take advantage of local laws that provide low or no tax benefits to non-resident businesses.

 

Offshore jurisdictions tend to draw foreign capital by providing low-tax and pro-business laws to foreign companies and individuals that profit from asset security, anonymity, legal protections, and simple corporate policies, in addition to tax advantages.

 

 

How Do Offshore Companies Operate?

An offshore company is a legal entity that is permitted to trade, retain properties, and engage in normal business practices outside of the jurisdiction in which it was formed.

Companies that migrate to or are established in an offshore jurisdiction can avoid paying taxes if their transactions and dealings are limited to outside the country’s borders.

Non-resident companies are incorporated in such jurisdictions because they do not perform financial transactions within its boundaries and are operated by non-residents.

 

 

What’s The Intent of an Offshore Company?

Forming an offshore company outside of one’s home country provides extra-security that can only be found when a company is formed under a different legal framework. Malicious people would have a much tougher time breaking into your accounts and properties if you have a separate legal and judicial system.

Offshore corporations act as a separate legal entity from their shareholders or directors and they are regarded as such. The shareholders and the corporation are separated by this division of powers. The company’s activities, debts, and liabilities are not passed on to its directors or members.

All of the company’s debts and financial obligations are separated from its owners, which protects the assets of the company’s owners and directors. Although there is no single standard by which all offshore jurisdictions can be judged, there are a range of characteristics and distinctions that are unique to particular financial centers that are considered offshore.

 

What Would I Do with an Offshore Company?

An offshore company can be used for the same things as a domestic company, such as opening and managing bank accounts, entering into legal agreements, holding digital or physical assets, conducting transactions, and starting and operating a corporation. Because offshore company differs from a conventional domestic company, such businesses are also known as International Business Companies (IBCs), non-resident companies or foreign entities, since they all refer to the same form of organization.

 

If you’re looking for asset security, anonymity, or tax avoidance, forming an offshore company offers numerous benefits. Using an offshore framework, you can relocate your company from a high-tax, high-regulation jurisdiction to a place where you can take advantage of local corporate laws and regulations.

 

Benefits of Setting Up an Offshore Company

Individuals and businesses choose to establish an offshore company for a variety of reasons. Although each offshore jurisdiction has its own unique characteristics, they all share the following characteristics:

• Privacy:

One of the most compelling reasons to use an offshore corporate structure is that it allows you to isolate yourself from your company, properties, and liabilities. It acquires a distinct legal identity from those who own it as an individual.

Financial transactions and corporate deals will then be conducted under the company’s name rather than under the name of a single person.

 

• High Confidentiality:

The majority of offshore financial centers have closed company registries, which ensures that directors and shareholders remain anonymous.

When there is a criminal investigation, no information about the organization or its finances is available to the media. While each nation has its own degree of accountability, keeping your assets and company structure at arm’s length allows you to remain anonymous (depending on the country and your tax responsibilities with the country where you live).

 

• Tax Reductions

Most countries that operate as offshore financial centers grant non-resident companies that incorporate in the country a special tax status.

These offshore business structures have a special status that exempts them from paying taxes on their worldwide revenue, capital gains, or income tax in their home country. Depending on the country where you live and its CFC rules, the offshore creation structure, and the country where you incorporate, the tax obligations can be more complicated.

Since tax obligations differ significantly from country to country, it’s crucial to know what you owe before deciding on a jurisdiction. Tax responsibilities are typically determined by the country in which you have permanent residency, and as a beneficial owner of a corporation, you will be subject to taxation in your home country. Although foreign corporations are tax-free, you, as a beneficial owner, will be subject to taxation.

 

• Asset Protection

Separating your properties from yourself as a person adds an extra layer of defense in the event of a lawsuit. It’s much more difficult to link you to your assets when you use an offshore structure, whether it’s an LLC, Trust, or Foundation.

When you have an investment or properties, it’s important that they stay separate from you; this means that they won’t be held responsible for any debts you incur as an entity. This is made possible by the structure’s legal right to incur debts/liabilities in the same way as a legal individual does.

 

• Legal Protection

Since the offshore structure is situated in a foreign jurisdiction, there is a different legal framework and set of laws that cover the company if it is targeted in any asset search or litigation.

In order to break into properties of an offshore structure, most international offshore countries do not obey local court orders unless there is a criminal investigation with significant proof of wrongdoing. Countries with an offshore financial centre erect major barriers to entry, allowing only the most determined creditors to break into the system.

 

 

Are Offshore Companies Right for Me?

Offshore incorporation has a range of benefits that enable companies to gain global values while taking advantage of local conditions.

 

As borders expand and people’s access to different countries and their markets becomes more open due to the reduction of barriers brought about by increased global connectivity, offshore incorporation is becoming easier and more profitable.

 

So, the question is: Are You Prepared to Take Advantage of Global Opportunities? If Yes, then learn how to set up an offshore company…

 

How Do I Set Up an Offshore Company in Nigeria?

As a foreign entrepreneur, you can set up a limited liability company in Nigeria. You have to follow the corporate rules of the new jurisdiction to ensure a smooth and easy launch of the business in Nigeria, including the setup of a foreign-owned corporation in Nigeria.

 

Before we get into the procedures, it’s important to note that the Nigerian National Parliament has passed many laws governing business in Nigeria, as well as laws governing a fully owned foreign company with foreign shareholders; a few examples are the Company & Allied Matters Act, Immigration Act, Foreign Exchange Laws, and Capital Import Law of the Central Bank of Nigeria.

 

 

The Best Steps to Start a New Offshore Company in Nigeria Are as Follows:

 

1st Step: Company Registration & Getting Your Tax ID Number

The first legal prerequisite for an aspiring foreign business owner or organisation is to hire a competent business lawyer to form a Registered Limited Liability Company (LLC)).

 

Be informed that an offshore company must have a minimum share capital of ₦10,000,000 and above in order to secure Business Permits and Expatriate Quota permissions from the Ministry of Interior and the Nigeria Investment Promotion Commission.

Actually, you are not paying ten million naira for the registration; they are only figures that reflect the size of the company and also imply that the company’s obligations are limited to the share capital.

For a new company registration in Nigeria, you’ll need the following information and documents:

• Proposed name of the company to be reserved at the Corporate Affairs Commission.
• Share Capital of the Company.
• Division of the Share Capital in percentage ratio.
• Name of the Directors, minimum of 2 and maximum of 50 for a Private company including shareholding.
• Nigeria office address.
• Directors & shareholders’ residential addresses overseas.
• Data page of shareholders and Directors international passport or Government issued means of Identification, or a valid Driver’s License.
• Signing of all the incorporation documents by the directors and shareholders. (Electronic Signatures are submitted for this purpose)

 

As soon as you supply these information, the lawyer proceeds with document filing & its CAC registration process. Your company registered certificate of incorporation could be ready within 14days except there are queries on the Application by the Corporate Affairs Commission (CAC).

Tax Registration:

It is mandatory to receive a Tax Identification Number (TIN) from the Federal Inland Revenue Service, also known as Value Added Tax Registration (VAT). The good news is that the Nigeria Corporate Commission, in cooperation with the Federal Inland Revenue Service, now instantly issues Tax Numbers automatically along with your Registered Company (RC) number on your Certificate of Incorporation.

 

2nd Step: Bank Account Opening

With the Tax Identification Number (TIN) in hand, you should open a corporate account for Capital Importation to kick-start the venture. Also ensure that you comply with the laws about the importation of capital or funds into Nigeria as stipulated by the Central Bank of Nigeria Circulars and Regulations.

 

3rd Step: Company Office Address

It would be critical for you to establish a physical office or at the very least a contact office address in Nigeria at this stage, as it would be needed for Business Permit and Expatriate Quota approvals at the Ministry of Interior.

 

 

4th Step: Application for A Business Permit And Expatriate Quota, As Well As NIPC Registration

As part of the Federal Government’s recent Ease of Doing Business in Nigeria initiative, the commercial law firm managing your applications will now route the three applications for a Business Permit, Expatriate Quota, and NIPC registration of your offshore company via the NIPC Desk office in the Ministry of Interior directly to the Minister through the Citizenship and Business Department.

 

Required Documents:

1. Certificate of Incorporation
2. Memorandum and Articles of Association
3. Current Tax Clearance Certificate;
4. Evidence of Acquisition of Business/Factory Building;
5. Receipt to Operate in the Oil Industry i.e. DPR Permit (for Oil Service Companies)
6. Evidence of Capital Importation e.g. a Certificate of Capital Importation, if Available;
7. Partnership/Joint Venture Agreement, the Responsibility Structure;
8. Feasibility Study Report (for joint venture companies)
9. Evidence of Acquisition of Operating Equipment and Machinery, such as Equipment, Vehicles, Business Machines, etc
10. Project Implementation Programme
11. Profile of Expatriate Personnel Detailing their Qualifications and Experience, Positions to be held by them in the Company and the duration of each Quota Position.
12. For construction companies and Letter awarding construction contract.

 

If all the relevant documents and statutory fees are paid, the Approvals could be secured within 2 months except there are queries.

 

 

Last Step: Residence Permit

This is the final stage of the processes needed for establishing a company in Nigeria; the Directors and Expatriates Employees, including their family members, must obtain a Resident Permit to live and work in Nigeria. The application will be processed by the Controller General of Immigration Service and released under the authority of the Minister of Interior, as specified in the Immigration Act of 2015 and the Immigration Regulations of 2017.

Often, the Nigeria Immigration Service will grant a Resident Permit, also known as a CERPAC passport, to an employee of a foreign-owned firm (Combined Expatriate Resident Permit and Alien Card). Take note that this Resident Permit is only valid for two years and can be renewed after that, and it can only be issued after the overseas owned corporation has obtained a Business Permit and Expatriate Quota Approvals. For CERPAC approval, a statutory fee in the sum of US dollars prescribed by the government must be charged.

We may specify that the law requires special approvals and licenses for a foreign or overseas owned company to operate in certain significant sectors of the Nigerian economy, such as the oil and gas industry, telecom, pharmaceuticals, banking and insurance, and the stock market, which will be authorised by other relevant Government controlled agencies.

As a result, if you want to learn more about the simple and effective ways to establish a foreign-owned company in Nigeria, we always aim to work with business owners to decide the right company to fit their business goals and needs in Nigeria.

 

Taxation of an Offshore Company in Nigeria

The Companies Income Tax Act (CITA) is the primary law that regulates the taxation of companies in Nigeria, with the Federal Inland Revenue Services (FIRS) in charge of its administration (FIRS). A Nigerian corporation is taxed on its worldwide revenue, while a foreign company is only taxed in Nigeria on profits due to its Nigerian operations. There are legal concerns about what a foreign company can and cannot do in Nigeria without first forming a Nigerian corporation.

 

Some scholars believe that there is a conflict between Section 54 of the Companies and Allied Matters Act, which states that any foreign company (except those exempted by Section 56 of the CAMA) intending to carry on business in Nigeria must register a company in Nigeria, and the provision of the CITA, which states that it is not necessary to register a company in Nigeria.

 

Non-resident entities, also known as foreign companies, can earn income in Nigeria in two ways, which will be briefly discussed below.

 

1. Passive/Investment Income

This strategy allows international companies to raise money from dividends, interest, royalties, and rent, among other things. The CITA imposes tax in this case by withholding tax deducted at source by the Nigerian payer as the final tax. Foreign companies that make money through this channel do not need to have a physical presence in Nigeria and therefore do not have to worry about tax filing requirements. However, they must file and receive a Tax Identification Number (TIN), without which the Nigerian payer would be unable to remit the withholding tax deducted.

 

2. Active/Business Income

Foreign companies that receive money through this method must register for tax and file full tax returns in the same way that Nigerian companies do. Because of the difficulties associated with the legal obligation of filing full tax returns, offshore companies doing business in Nigeria used the considered benefit basis to prepare and pay their income taxes before July 2014.

 

International companies were only expected to apply the deemed profit tax calculations along with a statement of the turnover generated from Nigeria when filing returns under the deemed profit regime. Section 30 of the CITA requires that a schedule of withholding tax withheld on income, be given to support a claim for tax credit.

 

In 2014, the Federal Inland Revenue Service (FIRS)’s Transfer Pricing Division released a regulation requiring foreign companies with income from Nigeria to provide audited financial statements, tax computations, and other related details in their tax returns beginning January 1, 2015, in accordance with Section 55 of the Companies Income Tax Act (CITA).

Finally, the legal obligation of filing full tax returns is not without its difficulties, the most significant of which is determining actual expenses incurred abroad and capital allowances related to the Nigerian activity in order to determine the actual profit to be charged.

 

This latest guideline from the Federal Inland Revenue Service has posed a slew of concerns, including questions about feasibility, and has left a lot of questions unanswered. In light of the above, it has become important for the Federal Inland Revenue Service to resolve certain issues concerning foreign company taxation in order to avoid ambiguity and uncertainty, especially on the part of foreign companies.

 

In Conclusion:

Offshore refers to the management, registration, conduct, or operation of a business in a foreign country, often with financial, legal, and tax advantages.

 

For clients who choose to participate in international financial exchange and investment activities, an offshore company has a range of benefits, depending on the offshore jurisdiction: Ease of incorporation, low fees, no foreign exchange controls, high confidentiality, and tax advantages are all advantages.

 

As a business owner, one of your greatest fears is that since you are not present at all times, your offshore company will get into serious trouble and you may not be able to save it on time. So if you want to start & securely manage an offshore company in Nigeria, you’ll need to find a law firm who can assist you.

 

At Olisa Agbakoba Legal (OAL), we will walk you through the whole process and show you how to set up your own offshore company while keeping it fully secure. We can assure you that if you take your offshore company seriously and devote enough time to it while taking advantage of our legal assistance, you will be able to grow your company, increase your sales, and become a true tycoon in Nigeria.

 

OAL Firm assists international companies and individuals with company registration and business setup in Nigeria on a regular basis. In addition, the firm provides capital importation and bank account opening guidance.

 

 

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Written By:

Josephine Uba

Lead Digital Strategist, Olisa Agbakoba Legal

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.

 

 

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Written By:

Dr. Olisa Agbakoba

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.

 

 

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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 >>

Whistleblowing is a very effective but still under utilised as a corporate governance tool in Nigeria. Whistleblowing serves many purposes, the most commonplace being that it allows the general public to report malpractice in workplaces, organisations and even government bodies. 

 

Apart from not only exposing illegal and unethical practices , a properly implemented whistleblowing mechanism can give corporate employers an opportunity to expose irregularities that occur in the workplace and to rectify them before they cause deep and irreversible systemic and reputational damage. 

 

 

Whistleblowing Regulations in Nigeria. 

Although there is no specific legislation on whistleblowing in Nigeria, however, there are several whistleblowing guidelines which have been successfully implemented by various government parastatals and bodies across different sectors from civil service ; public departments, to private sector banking and capital markets, pensions industry etc. which will be discussed in turn below: 

 

The Whistleblowing Guidelines for Pensions 2008 (‘the PENCOM Guidelines’) were issued, on 1 June 2008, by the National Pension Commission (‘PENCOM’), which is the body responsible for the regulation of the pension industry in Nigeria. 

 

The PENCOM Guidelines outline the methods for reporting violations of the Pension Reform Act, 2014 (‘the Pension Reform Act’) and other laws applicable to pension fund custodians, pension fund administrators and closed pension fund administrators (collectively referred to as ‘the Pension Institutions’), as well as the penalties for such violations. 

 

Directors, management, employees and any other person(s) dealing with the Pension Institutions are required to report any violation of the Pension Reform Act or any other applicable laws or regulations, to PENCOM. 

 

The PENCOM Guidelines provide for the protection of whistleblowers and mandates of Pension Institutions to ensure that its members of staff are aware of their responsibilities with regard to whistleblowing and that they are conversant with reporting procedures. 

 

 

The Code of Corporate Governance for Banks and Discount Houses in Nigeria and Guidelines for Whistleblowing in the Nigerian Banking Industry 2014 consists of:

 

1. The Code of Corporate Governance for Banks and Discount Houses in Nigeria (‘the Corporate Governance Code’), which, under Section 5.3 requires banks and discount houses to have a whistleblowing policy, which must be made known to employees and other stakeholders.

The policy must contain a whistleblowing mechanism which includes an assurance of confidentiality that encourages all stakeholders to report any unethical activity to the bank and/or the Central Bank of Nigeria (‘CBN’). 

Failure to comply with this provision will attract a fine of NGN 5,000 (approx. €12) for each day during which the failure occurs. Persistent failure to comply with this provision may be a ground for the revocation of the bank/discount houses’ licence. 

 

2. The Guidelines for Whistleblowing in the Nigerian Banking Industry (‘the CBN Guidelines’). The CBN Guidelines became mandatory and effective from 1 October 2014, providing a minimum standard to be observed by all financial institutions under the supervisory purview of the CBN in relation to whistleblowing. 

The CBN Guidelines provide for the reporting of alleged unethical conduct of employees, management, directors and other stakeholders of a bank or any other financial institution. Banks and other financial institutions are required to have a whistleblowing policy which should be made known to employees, management, directors and other stakeholders such as contractors, shareholders, job applicants and the general public. 

 

 

Rulebook of the Nigerian Stock Exchange 2015 (‘the NSE Rulebook’). 

Rule 26.19 of the investors’ protection fund rules, under Chapter 10, provides that the board of trustees of the Nigerian Stock Exchange (‘NSE’) Investors’ Protection Fund (‘the Board’) shall establish and maintain a system to receive disclosures in respect of contraventions as required in the ISA and acts on them, where appropriate. 

 

In 2014, the NSE launched X-Whistle, a whistleblowing portal for secure and effective submission of information relating to violations of rules and regulations in the Nigerian capital 

 

market. The NSE whistleblowing portal allows any person (an employee, an investor, a compliance officer, an issuer, a stockbroker or any member of the public), on an anonymous basis, to raise genuine concerns about unethical or unlawful conduct by market participants with the objective of protecting market integrity. 

 

 

Economic and Financial Crimes Commission Act, Laws of the Federation of Nigeria 2004 (‘the EFCC Act’). 

Under its Section 38, which grants the Economic and Financial Crimes Commission (‘EFCC’) the power to ‘seek and receive information from any person, authority, corporation or company without let or hindrance in respect of offences it is empowered to enforce under the Act.’ Additionally, Section 39 of the EFCC Act states that the EFCC officers ‘cannot be compelled to disclose the source of information or identity of the informants except by the order of the court. 

 

 

Nigerian Data Protection Regulation 2019 (‘the Data Protection Regulation’) 

Section 3.1.5(i) of the regulation requires all organisations that deal with the collection or processing of personal data to conduct an audit of their privacy and data protection practices within the first half of every year stating the policies audit of their privacy and data protection practices, within the first half of the year, stating the policies and procedures of the organisation for monitoring and reporting violations of privacy and data protection policies. 

 

 

Corrupt Practices and Other Related Offences Act 2000 (‘the Corrupt Practices Act’) 

Section 26(1) of the Act provides that any public officer to whom any gratification is given, promised, or offered, in contravention of any provision of the Corrupt Practices Act, shall report such gift, promise or offer together with the name, if known, of the person who gave, promised or offered such gratification to him to the nearest officer of the Independent Corrupt Practices And Other Related Offences Commission (‘ICPC’) or police officer. 

 

Section 26(2) of the Corrupt Practices Act further provides that any person from whom gratification has been solicited or obtained, or from whom an attempt has been made to obtain such gratification, in contravention of any provision of the Corrupt Practices Act, shall, at the earliest opportunity thereafter, report such soliciting or obtaining, or attempt to obtain the gratification together with the name if known or a true and full description attempt to obtain the gratification together with the name, if known, or a true and full description of the person who solicited, or obtained, or attempted to obtain the gratification from him, to the nearest officer of the ICPC or police officer. 

 

Any person who fails without reasonable excuse to comply with Sections 26(1) and (2) of the Corrupt Practices Act shall be guilty of an offence and shall on conviction be liable to a fine not less than NGN 100,000 (approx. €245) or to imprisonment for a term not exceeding two years or to both fine and imprisonment. 

 

 

Categories of Whistleblowers Afforded Protection 

• NSE Rulebook: Employees and directors of listed companies, employees and directors of capital market operators, auditors and reporting accountants, staff of regulatory bodies, media professionals, members of shareholder’s associations and members of the public. 
• PENCOM Guidelines: The compliance officer of the Pension Institution, the directors, management, employees and any other person that has dealings with the Pension Institution. 
• CBN Guidelines: Employees, management, directors and other stakeholders of banks and other financial institutions such as contractors, shareholders, job applicants, and the general public. 
• Federal Ministry of Finance Whistleblowing Programme: Any person who voluntarily discloses to the Federal Government of Nigeria a possible misconduct or violation that has occurred, is ongoing or is about to occur with specific concerns which are in the public interest. 
• EFCC Act and Corrupt Practices Act: Any informant. 
• ISA: The employee of a capital market operator or public company 

 

 

Whistleblowing and Corporate Governance in Nigeria 

At this juncture it is necessary to remind the reader of the main objectives of whistleblowing which are as follows:

i. Boost the disclosure of financial related crimes.

ii. Maintain the combat against financial crimes and corruption, and improve the extent of public trust in government.

iii. Increase accountability and transparency in the administration of public finance, which could improve Nigeria’s open government ranking and ease of doing business indicators.

iv. Lastly, to recover stolen public finances and assets.

 

 

Following the launch of the Whistle-Blowing Policy by the Federal Government of Nigeria, recovery of looted fund increased with the personnel of Economic and Financial Crime Commission (EFCC), Independent Corrupt Practices (ICPC) and Other Related Offence Commission, Department of State Security, and other security agencies, on alert with available information. 

 

Daily Trust on April 18, 2017 reported that, this laudable initiative has resulted in the discovery of $9.8 million cash in a Kaduna slum residence in Sabon-Tasha and over $30 million cash in an apartment in Ikoyi, Lagos State. At an exchange rate of N350 to $1, the cash recovered so far will be over N14,000,000,000 (fourteen trillion naira in cash), just to name a few. 

 

News Agency of Nigeria reported on February 12, 2017 that, Minister of Information and Culture, Lai Mohammed indicated that the Federal Government’s Whistle blowing policy had yielded $151million and N8 billion in looted funds. 

 

In a statement signed by Segun Adeyemi, the Special Assistant to the Minister, Alhaji Mohammed stated that the looted funds were recovered via the clues provided by three whistleblowers who gave actionable information to the office of the Minister of Justice and Attorney-General of the Federation. The largest amount recovered was a total of $136,676,600.51 allegedly under a fake account name. 

 

Pursuant to the formal activation of the whistle blowing policy in Nigeria, a few cases of corruption have been reported in the banking sector. One notable instance is that of a Justice who opened a corporate account with Diamond Bank PLC with a fake address. A witness (a staff of the bank) told the Court that all other requirements for opening an account were satisfied except the address and the bank waived this because the Justice was ‘their customer’. 

 

In spite of the CBN Guidelines on whistle blowing and the recent introduction of whistle blowing policy, the banking sector reportedly experiences cases of breach of security protocols particularly by famous or highly respected banking clients. 

 

It is arguable how effective implementation of the whistle blowing policy has been thus far and whether it has increased accountability and transparency in the management of public funds. More needs to be done to promote the active use of whistleblowing in both the public and private sectors, in order to change the tide and promote higher degrees of transparency and accountability. 

 

The onus is on us the citizens and inhabitants of the Federal Republic of Nigeria at large, all residents and citizens should be willing to expose corruption without fear of reprisal, and the law enforcement agencies should be sincere and vigorous in prosecuting those involved in alleged corruption. 

 

 

How Whistleblowing can help Create Safer Workplaces 

Whistle blowing in the workplace is the act of reporting a serious issue, crime or unethical act that has been seen or suspected inside an organisation. 

Whistleblowers in a workplace usually report criminal activities like the mistreatment of an employee, sexual harassment, bullying, environmental damage or fraud, bribery and corruption. In an effort to sanitise the sports industry, it would certainly not go amiss to introduce whistleblowing to curb corrupt practices that have ravaged the state of African sports for instance. 

 

Use of whistleblowing in the customs and immigration, various departments of the public sector e.g. procurement, the film and music industry etc will definitely help to manage the menace of bad practices, corruption and unethical practices. 

 

Whistleblowing could also be described as a tool for minimising or mitigation of risks. It helps to reduce the kind of crises and resulting risks that are caused by employees, directors, board etc on behalf of stakeholders. 

 

A well defined and holistic Whistleblowing system i.e. secure and confidential hotline, policies and procedures will preserve transparency and promote good governance in any organisation. Whistleblowing is an effective tool in the workplace as it ensures that the management team of an organisation creates an environment, a structure and a culture that reduces risk and enhances transparency. 

 

Whistleblowers present a significant checkpoint in the Nigerian workforce. Without whistleblowers unscrupulous actors and operators in various industries would continue to mistreat workers, cheat consumers, endanger lives and put the health and safety of the general public in jeopardy. 

 

We should celebrate and reward those brave present or former employees or even a member of the public who exposes financial scandals, mismanagement of public funds or serious violation of health and safety guidelines whilst putting their own lives on the line. 

 

Conclusively, exposure of wrong doing in private or public organisations in the public interest to the authorities in charge is very important as it promotes the concept of good governance in the various sectors in the society. 

 

 

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Co-written By:

Beverley Agbakoba-Onyejianya –  Associate Partner, OAL.

Ebunoluwa Bayode-Ojo – Associate Intern, OAL

 

In Nigeria, where at least six out of ten persons own a business or a product, the importance of registering a trademark cannot be overstated. A trademark is simply a symbol, word, or words legally registered or established by use as representing a business or product.

 

A trademark is the identity of a business or product, hence why it is important to register it. It protects the identity of the business or product from use by other businesses or persons.

 

Trademarks in Nigeria are registrable under the Trademarks Act by the Trademarks, Patents and Designs Registry, Commercial Law Department of the Federal Ministry of Industry, Trade and Investment with an exclusive license to use for a period.

 

 

How to Register a Trademark

The next question to be asked would be how one can register a trademark in Nigeria. Below are the simple steps to be followed in registering a trademark in Nigeria:

 

 

Who Does Trademark Registration in Nigeria?

It is noteworthy that not all persons can commence the process of trademarks registration. For such person to assist in the registration, he must be an accredited agent/attorney with the Registry.

 

 

1. Search

Like the procedure for company registrations under the Corporate Affairs Commission, an applicant for a trademark must, through his attorney/agent, conduct an availability search for the proposed trademark. This is necessary to ensure that the proposed mark is still open for registration and has not already been registered by another person.

 

 

2. Formal Application and Examination

After a search is conducted and the proposed mark is cleared as available and open for registration, the attorney/agent may file the application through the procedure as provided on the registration portal. It is noteworthy that before an attorney can successfully complete the formal application, he must upload a power of attorney, which is simply a document signed by the applicant, authorising to the agent to act on his behalf with regards to the application.

 

The attorney/agent must also indicate the class under which the mark is to be registered. There are currently 45 classes under which a trademark in Nigeria can be registered. The choice of class is generally determined by the proposed use/ service for which the mark would be used.

 

Once all relevant documents are uploaded, all relevant information filled and payment is made, the Registrar issues an Acknowledgement Form confirming the receipt of the application by the Registry and a temporary number is allocated to the trademark, pending registration and allocation of a permanent registration number.

 

After the application is submitted, the registrar carries out an examination to determine if the mark is registrable as allowed under the Trademarks Act, whether the mark is distinctive, deceptive, and scandalous or in any way disallowed. Where the Registrar is satisfied that the mark can be registered, an Acceptance form is issued.

 

 

3. Publication and Opposition

Following the issuance of an acceptance form, the accepted mark is published in the Trademarks Journal. This publication is done to notify the public of the mark and members of the public are allowed to oppose the registration. Note however that the opposition period is two months and after this period, persons are precluded from opposing to the registration.

 

 

4. Certification

Where there are no oppositions to the registration or all oppositions have been settled in favour of the applicant, a certificate of registration is issued. This certificate signifies proper registration and completion of all processes.

 

 

Conclusion

As previously stated, registration of a trademark is the only legal means of precluding another from using a mark which uniquely identifies a business or product in Nigeria and confers on the holder, exclusive use within Nigeria for an initial period of 7 years, subject to renewal.

 

What the next step?

If you would like to process your trademark registration in Nigeria, OAL as an accredited agent can assist you with the service. Please contact us to learn more.

 

 

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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 any team.

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