July 6, 2020
EVALUATING THE LEGALITY OF VIRTUAL MEETINGS UNDER THE COMPANIES AND ALLIED MATTERS ACT OF NIGERIA
BY Akorede Folarin (Associate)
The movement restrictions and social distancing directives issued in many jurisdictions across the world as a result of the COVID-19 pandemic have disrupted social and commercial interactions necessitating emergency lifestyle adjustments globally. One of the prominent issues that has consequently arisen from this is the issue of the legality/propriety of companies holding their statutory and annual general meetings (AGMs) virtually in order to balance the imperatives of corporate governance and observance of the relevant company law and regulations on the one hand and compliance with the government’s COVID-19 directives on the other hand. To do this, however, Nigerian companies have been confronted with uncertainties as regards the position of Nigerian corporate law on virtual company meetings.
This article will explore the uncertainties surrounding remote meetings in the above context and also highlight the true position of Nigerian law on virtual meetings by private and public companies, whilst proffering suggestions to ameliorate the uncertainties that exist and to bring Nigerian corporate law in tune with modern realities.
2.0 Significance of Company Meetings
Company meetings are the lifeblood of a company. Whether of a company’s shareholders/members, Board of Directors (BoD), or their committees, meetings are an essential aspect of companies’ decision making process, with firm roots in corporate governance. Even more so, with annual general meetings, members’ active participation is important and desirable because it provides attendees with the opportunity to make enquiries, provide inputs and objective criticism, receive clarifications, and be generally informed about the company’s activities and wellbeing, to guide decision making. As such, companies’ AGMs afford the shareholders the opportunity to consider the progress and development of the company and to take necessary actions to safeguard their interest and promote those of the company.
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June 9, 2020
FINANCE ACT AND THE NEW STAMP DUTY PAYMENT REGULATION DURING COVID-19 PANDEMIC
by Felix Ayem (Associate)
Conceptualizing Stamp Duty
Stamp duty is a tax that is levied on documents. Historically, this included the majority of legal documents such as cheques, receipts, military commissions, marriage licenses and land transactions. A physical stamp (a revenue stamp) had to be attached to or impressed upon the document to denote that stamp duty had been paid before the document was legally effective.
Previously, under the Stamp Duties Act, the word “stamp” was defined to mean a stamp impressed by means of a die as an adhesive stamp for denoting any duty or fee. Similarly, the Act states that the word “Stamped”with reference to instruments and materials, applies as well to instruments and materials impressed with stamps by means of a die as to instruments and materials having adhesive stamps affixed thereto.
Going by the above definitions, the Stamp Duties Act clearly excluded electronically generated instruments, materials, receipts or money electronically generated and other transactions duly completed electronically between corporate bodies or between corporate bodies and individuals. This was a serious defect and a loophole in that Act as there was no legal basis to charge duties on such electronic documents.
Download full newsletter here nEWSLETTER – STAMP DUTIES PDF(1) (3) as a pdf document.
June 1, 2020
THE NEED FOR BUSINESS INTERRUPTION INSURANCE COVERAGE IN NIGERIA IN THE FACE OF THE RECENT COVID-19 PANDEMIC
BY Chibueze Muobuikwu (Senior Associate)
The outbreak of corona virus (COVID-19) pandemic has no doubt, occasioned an unprecedented human and economic crisis across the globe. The resultant lockdown and abrupt shutdown of major economic activities in the world has apparently given rise to several business disruptions and economic losses across nations including Nigeria.1 According to Kristalina Georgieva, Managing Director of International Monetary Fund (IMF), the economic effect of the pandemic would result in “a recession at least as bad as during the Global Financial Crisis or worse”, and this is because the world is currently experiencing the most difficult economic situation since World War-II.2
The consequence of the foregoing crisis is that many organizations would be seeking for ways to ameliorate the effect of the pandemic on their businesses. One of the options open to some businesses is to have recourse to their insurance policies, and the most significant insurance coverage which business owners would resort to is the business interruption insurance coverage. This write up briefly examines the concept of business interruption coverage; the extent to which such insurance claims may be potent for the insured business owners in the face of the recent pandemic, and the need to broaden the Nigerian insurance legal framework to include business interruption insurance.
BUSINESS INTERRUPTION INSURANCE COVERAGE:
Business interruption insurance has been defined by Black’s Law Dictionary as an agreement to protect against one or more kinds of loss from the interruption of an ongoing business, such as loss of profits while the business is shut down to repair fire damage.
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May 23, 2020
DEBT RELIEF/FORGIVENESS: A STEP TOWARDS FINANCIAL HEALTH AMIDST COVID-19 PANDEMIC.
BY Latifat Moradeyo (Associate)
The outbreak of COVID-19 pandemic has exposed the world to an economic upheaval. Declared a pandemic by the World Health Organization (WHO) on 11 March 2020, COVID-19 has become a global emergency, given its impact on the entire world population and the economy. It has no doubt resulted in closure of countries borders, shut down of businesses and self– quarantine globally.
Economic impacts of the COVID-19 pandemic became more visible in the world economy by the 20th of February, 2020 with the stock market crash.On 14 April 2020, the International Monetary Fund (IMF) reported that all G7 nations had entered or were entering into what was called “deep recession” alongside most of the western world with significant slowdown of growth across developing and emerging economies. The IMF has stated that the economic decline is “far worse” than that of the Great Recession in 2009.
It is worthy of note that the pandemic has so far affected companies particularly on the supply and demand sides. On the supply side, companies experienced a reduction in the supply of labour, as workers were unwell or needed to look after their children or other dependents and in many cases, there was outright downsizing due to paucity of income to meet such commitments.The recession has seen unusually high and rapid increase in unemployment rates in many countries. For instance, some of the world biggest airlines including Virgin Australia, Air Mauritius and four subsidiaries of Norwegian airline filed for bankruptcy. Pursuant to this, an estimated 1, 571 pilots and 3, 134 cabin crew employed by these companies and their subsidiaries stand the risk of losing their jobs.
Download full newsletter here debt relief or forgiveness …(1) as a PDF document.
May 9, 2020
EXECUTION OF CONTRACTS IN THE FACE OF MOVEMENT RESTRICTIONS AND PHYSICAL DISTANCING: THE POSITION OF NIGERIAN LAW
By Sylva Ogwemoh, SAN, FCIArb (Senior Partner) and Akorede Folarin (Associate).
It is no longer news that the current COVID-19 pandemic ravaging the world has created a “new normal” in doing business in Nigeria and indeed the whole world, following the enactment of new laws and executive orders for the enforcement of movement restriction, lockdown and social/physical distancing in order to curb the continued spread of the dreaded pandemic. In light of the current realities in the world and in Nigeria, and to ensure continuity of commercial activities, business owners, private and public enterprises and government agencies have resorted to the use of technology in conducting business meetings and even in the execution of contractual documents.
However, the question that agitates the minds of all and sundry is whether there exists adequate protection under Nigerian law for contracts and documents, and other businesses negotiated and executed with the aid of modern technology and/or electronically without the parties meeting physically to negotiate and ultimately execute those contracts. This article will attempt to discuss the various issues that have been thrown up by what is now termed the “new normal” vis-à-vis the current position of Nigerian law.
2.0 Formation/Formalities of an Electronic Contract
Generally, under Nigerian law, a contract may be created electronically by online communications and electronic data interchange, and the electronic record of that transaction satisfies any legal requirement that a contract be “in writing.” As the Court succinctly puts it in U.B.N. Plc. v. Ogunsiji; “It is elementary law that a contract may be demonstrated by the conduct of the parties as well as by their words and deeds or by the documents that have passed between them.”
Download full Newsletter here EXECUTION OF CONTRACTS IN THE FACE OF MOVEMENT RESTRICTION AND PHYSICAL DISTANCING – THE POSITION OF NIGERIAN LAW as a PDF document.
April 24, 2020
AN APPRAISAL OF THE PRACTICE DIRECTION FOR REMOTE HEARING OF CASES IN THE LAGOS STATE JUDICIARY – BY FELIX AYEM (ASSOCIATE)
Faced with COVID-19 pandemic and its attendant devastating effects on economic, religious and social activities across the world, businesses, institutions and governments have been left with no choice than to temporarily shut down.
On the 23rd of March, 2020, the Chief Justice of Nigeria issued a circular to all Heads of Courts directing the suspension of all court sittings for an initial period of two weeks with effect from the 24th March, 2020. The directive on the lockdown of courts in the country was extended indefinitely on the 6th of April, 2020. This has brought the court system and its administration in the country to a standstill, causing enormous damage to the justice delivery system in the country.
The foregoing has necessitated the use of alternative measures in order to maintain the existence of a functional judicial system and the administration of justice in the country. Thus, online platforms such as Skype, Zoom, WhatsApp, etc are being embraced as alternative means for court proceedings instead of the hitherto physical appearances in courts due to the upsurge in the pandemic.
At the forefront of this novel idea is the Lagos State Judiciary which recently announced its readiness to issue a Practice Direction for the Remote Hearing of Cases in Lagos (Practice Direction). When this Practice Direction comes into effect, it will help in the promotion and speedy delivery of justice in Lagos State as some selected cases would be remotely heard using suitable electronic platforms.
Download full Newsletter here REMOTE HEARING IN LAGOS STATE as a pdf document.
April 17, 2020
IS DEBT FACTORING A SOLUTION TO CREDIT IN THE FACE OF COVID 19 PANDEMIC – FELIX AYEM (ASSOCIATE)
The entire world has been greeted with a rude health shock occasioned by the outbreak of the coronavirus (COVID-19) pandemic which started in Wuhan China in November 2019 with increasing number of infections across the globe on a daily basis. This has brought all aspects of human endeavors to a standstill, resulting to a near total collapse of economic, social and to some extent, political activities. According to the International Monetary Fund (IMF), the coronavirus pandemic will turn global economic growth “sharply negative” in 2020, triggering the worst fall-out since the 1930s Great Depression, with only a partial recovery seen in 20211 . In Nigeria, the Minister for Finance, Budget and Planning, Mrs. Zainab Ahmed earlier warned that if the coronavirus pandemic continues for the next couple of months, Nigeria will definitely go into another recession. There is no gain saying the fact that COVID-19 has become a major concern to businesses and governments across the world. In view of the apparent complex and hazardous economic situation, it is necessary for businesses and most especially those in the financial sector to look inward for possible solutions to cushion the negative effects of the pandemic on businesses and the ability of debtors to meet their debt obligations to creditors. One of the veritable ways of managing credit at this critical stage of dwindling economic activities in the face of COVID-19 is by way of “Debt Factoring”.
What is debt factoring?
Factoring is a financial transaction and a type of debtor finance in which a business sells its accounts receivable (i.e., invoices) to a third party (called a factor) at a discount. Factoring could be in the form of accounts receivable factoring, invoice factoring, and sometimes accounts receivable financing.
Download full newsletter here Is Debt Factoring a Solution to Credit in the Face of COVID-19 Pandemic as a pdf document.
April 9, 2020
Apart from the high infection and mortality rate that the coronavirus pandemic has left on its wake, several economies and businesses are also feeling the pains. The outbreak is triggering “an economic crisis whose violence is set to exceed anything we have previously witnessed.”1 Aside the disruptive energy crisis it has also caused, the consequent social distancing and work-from-home directives have led to a virtual collapse of all economic activity across the globe, with the world now in yet another recession.2
Businesses are seeing their revenue streams thin out. The primary concerns for most companies at this point are their cash flow and liquidity, and how to weather the storm, which are now leading corporations to save cash, cut costs, suspend capital investments and, if things get out of hand, – as they sometimes inevitably do – lay off staffs. All over, there is a certain air of inevitability that a lot of businesses will slip into bankruptcy and that even others that are able to scale through (at least in the short term) may do so only by deferring or defaulting on payments.
These unsettling economic effects of the pandemic are already giving businesses serious concern, particularly those relying on credit financing with regards to their ability to meet their debt obligations. Financial institutions are also becoming worried about their own potential to make good their advancements and ensure that non-performing loans stay within manageable thresholds.
Against this backdrop, lenders and borrowers alike will do well to become proactive about protecting and preserving their respective positions in light of the economic downturn and in a bid to ensure liquidity and provide cash flow for companies even if only as far as staying afloat or clearing a path toward viable future operations. One of those options available to both parties and which promises the most convenient and beneficial returns in light of the current economic climate is debt restructuring.
What is Debt Restructuring?
Debt restructuring is a process that allows a company or a sovereign entity facing cash flow problems and financial distress to renegotiate and reduce its delinquent/distressed debts in order to improve or restore liquidity so that it can continue its operations.
Download full Newsletter here : KMO Legal Insights 2nd as pdf document.