Books
“A void of knowledge will be filled as the book draws real-life examples from businesses that have benefitted from private equity, highlighting private equity as a significant option for startups, as well as businesses that cannot afford debt financing, arising from the inability to meet the requirements.”
– Professor Enase Okonedo
Dean, Lagos Business School
Entrepreneurs rarely have the capital to see ideas to fruition and must rely on outside financiers or external funding options. It might be thought that the entrepreneur would turn to traditional financing sources such as bank loans and issuance of public stock to meet their needs. However, varieties of factors are likely to lead to some of the most potentially profitable and exciting firms not being able to access these traditional financing sources. Private equity investors are almost invariably attracted to firms that find traditional financing difficult to arrange. Private equity investors are looking for companies that have the potential to evolve in ways that create value. Consequently, private equity deals and transactions have emerged strongly as a financing options in emerging markets, especially in the area of infrastructure development.
Private Equity is, therefore, one of the main alternatives necessary for bridging the funding gap in many of these developing countries in Africa due to the lack of access to capital or lack of adequately developed routes to obtaining capital. The book examines the practice of Private Equity extensively as it provides this much needed alternative funding to businesses as well as contributing to the country’s Gross Domestic Product (GDP). Private Equity has been defined variously by scholars and researchers leading to some sort of misconception as what Private Equity means. Despite this many competing definitions, it has to be noted that Private Equity is a major subsection of a much larger, multifarious part of the financial landscape known as the private markets and private equity investors are looking for companies that have the potential to evolve in ways that create value.
This book, therefore, examines the concept of Private Equity as undertaking investments in Equity and quasi-equity mainly (though not exclusively) in non-listed companies in order to generate high risk adjusted returns over a specific period of time, by backing entrepreneurs. The book highlights the significance of Private Equity as an alternative financing model that helps to bridge the funding gaps for businesses and companies. The book presents The Law and Practice of Private Equitya practical approach to private equity investing and deal-making so that the interest of stakeholders to the deal will be protected and profit returned to investors. At all material times and relevant chapters, applicable legal framework is examined to ensure that those engaging in Private Equity deals do so within the provisions of the law and regulatory requirements and regulatory provisions.
The book has eleven chapters, with appendices and a comprehensive bibliography. The chapters are interrelated with some form of overlap where necessary. Chapter One is the introductory chapter which laid the foundation for the discussion in the rest of the chapters of the book. This chapter examines the Concept of Financing Types, Sources of Financing, History and Basis for Private Equity, Evolving Practices. It is in this chapter the meaning of Private Equity is unpacked. Chapter Two analyses Private Equity in Capital Funding with specific emphasis on Capital Raising, Debts and Hybrid Financing. Chapter three examines Private Equity Funds which include Venture Capital and Managed Funds.
The Fourth Chapter took a more practical approach in discussing Deal Making and Deal Structuring in Private Equity under the following sub-heads: Matching the Portfolio Company and Private Equity Fund; Steps to Deal Making, Preliminary Stage (Term Sheets and Head of Agreement); The Deal State; Completion and Post Completion Issues. Due diligence is a very important aspect of Private Equity Deal. This is examined in Chapter Five with practical steps and issues to watch out during due diligence in structuring private equity deals. Chapter Six looks at Investment Arrangement in Private Equity which covers the Investment decision, Basic Terms and Conditions, Exits and Dispute Resolution.
The Seventh Chapter is dedicated to Tax Aspects of Private Equity which covers a critical analysis of the applicable Tax legal framework. Chapter Eight Examines Management and Ownership of Investee Companies in Private Equity. Fiduciary issues in Private Equity formed the major discussion in Chapter Nine, while Chapter Ten discussed extensively Corporate Governance in Private Equity Portfolio Companies. The last chapter offers an assessment of the Impact of Private Equity in National Development and Preface the State of Nigeria Private Equity Market with recommendations on the Regulatory outlook and reforms.
The book rightly points out that although Private Equity is still at infancy stage in a number of emerging markets, for instance, Nigeria, there is a positive impact of private equity deals in economies with potential to add to the Gross Domestic Product (GDP) and Foreign Direct Investments (FDI) and that Private Equity is more suitable for Small and Medium Enterprises (SMEs) to raise funds relative to obtaining debt capital. All of these have brought depth and meaning to this book. This book ‘The Law and Practiceof Private Equity’ lays no claim to perfection, and I, therefore, take full responsibility for errors of omission and commission that may be found herein.
Professor Fabian Ajogwu, SAN
Lagos Business School
June 23, 2020
I am pleased to write the foreword to this book, ‘The Law and Practice of Private Equity’ that discusses conceptual and practical issues relating to Private Equity in emerging markets.
For a long time now, different sources of funding have been available to companies and businesses as a means of raising capital to achieve the set objectives of the companies and return profit to the investors. Due to the peculiar nature or characteristic of each company, not all sources of funding might be available, appropriate or appealing to a particular company in that specific circumstance. It, therefore, behoves on the business to identify the particular funding option that is most suitable for it. This can only be done through an informed choice of what type of financing will be suitable for a particular purpose, which aligns with the vision of the company as well as serves the overall interests of the business. The book presents a practical approach for adopting Private Equity as a funding option for businesses drawing examples from businesses that have benefited through private equity. The book shows that Private Equity is an effective funding option for start-up businesses as well as businesses that cannot afford debt financing arising from the inability to meet the requirements of debt financing like lack of collateral.
This is a very unique book that deals with practical issues that are very important to emerging markets. This is because of the rise in Private Equity transactions in emerging markets as part of much needed Foreign Direct Investments (FDI). Many years ago, Private Equity was not as relevant as it is today. However, with the increasing need for infrastructure development, and the shift towards Private Equity deals and transactions particularly in Sub-Saharan Africa, this book ‘The Law and Practice of Private Equity’ provides the much needed practical information on Private Equity as a potent funding option that can fill the funding gap for some businesses and deliver profitability for the investors and owners of businesses.
As noted in the book, Private Equity is a major subsection of a much larger, multifarious part of the financial landscape known as the private markets.
The Law and Practice of Private Equity The concept refers to a form of financing where capital is invested in a company, typically mature businesses in conventional industries, in return for equity. However, Private Equity is often confused with other funding options that may be available to businesses. The author, Professor Fabian Ajogwu SAN, skillfully deals with the concept of financing models, expertly dispelling any confusion or misunderstanding between Private Equity and other financing options and other sources of finance that may be available to businesses.
It is pertinent to note that the author showcases the other financing options available to business and the peculiarity of each financing option. The author is right to espouse Private Equity as undertaking investments in equity and quasi-equity mainly (though not exclusively) in non-listed companies in order to generate high risk-adjusted returns over a specific period of time, by backing entrepreneurs. The purpose of such investments is to provide financial stability for the portfolio companies and improve company management.
The book can be described as a “magnum opus” by the Learned Professor in the field of Investment and Financing Sources with in-depth research and analysis of concepts, legal principles, relevant laws and legislation. The author does not limit himself to local laws and scenarios alone, he examines and analyses Private Equity transactions and deals in other developed and developing countries and jurisdictions. The author should be commended for his insightful analysis of the making of Private Equity deals and by providing practical instances of Private Equity deals within and outside Nigeria. It is indeed a show of hard work and pursuit of excellence in this masterpiece.
The Law and Practice of Private Equity is worthy of commendation for its insightful analysis of deal-making in private equity and corporate governance issues arising from private equity transactions. The Learned Author provides a practical step by step guide to successful deal-making applying private equity, including due diligence which is at the soul of private equity transactions. The book not only answers the question of what Private Equity is, but also deals exhaustively with the question of “how”
Foreword to structure successful private equity deals from the negotiation to the exit stage. The book can best be described as years of practical experience reduced to a book. With close to thirty years of legal practice experience (including structuring private equity deals and legal advisory services in private equity transactions) as well as teaching and research experience, it is not surprising to see that this book portrays practical principles and recommendations that will assist the practitioner in private equity deals and transactions.
The Learned Author, Professor Fabian Ajogwu, SAN, has produced a reference book for the Private sector, public sector, banking sector, technology companies, government and regulators, judicial officers, legal practitioners, academics, students, the media and all who wish to see the continued growth of private equity transactions in emerging markets and indeed Sub-Saharan Africa. I must commend this practice guide – The Law and Practice of Private Equity and this invaluable addition to the body of literature on Private Equity in such an area where little or no research exists in Nigeria.
Derrick Roper
Chief Executive Officer
Novare Equity Partners (Pty) Ltd
Cape Town, South Africa
June 23, 2020
5B, Lawani Oduloye Street,
Oniru, Victoria Island, Lagos
Brief Insights: A Selection of Milestone Cases is a careful selection of cases which celebrate the progressive matters brought by litigants before our Courts, the persuasive arguments of Counsel and the well-reasoned (and in some cases) landmark decisions that have enriched legal practice and modern legal history in recent times. My colleagues and I take special pride in sharing the very enlightening cases in this book.
Decades of experience in legal practice, has given us the opportunity to conduct several cases touching on various areas of law. It was in the aftermath of the excitement of concluding one of such cases, which ended in a landmark decision at the Court of Appeal, that this book was conceived. In this particular case – National Oil Spill Detection and Response Agency (NOSDRA) v Mobil Producing Nigeria Unlimited, the Court of Appeal decided that it was unconstitutional and a violation of the right to fair hearing for administrative and regulatory bodies to act as both judge and complainant in the same case and impose fines on persons without any judicial decision as to the guilt of such defendant. This decision of the Federal High Court per Ojukwu J. was indeed a bold and progressive one which asserted the powers and authority of the judiciary and the supremacy of the Constitution. It is no doubt that the Court of Appeal affirmed that decision.
The milestone cases selected for a good reading and learning experience touch on the practice and procedure of the Courts relating to matters of service and abuse of court process, company law, landlord-tenant relationship, fundamental human rights and maritime amongst others.
One of the first cases discussed in the book is with respect to service of court processes as a matter that could prove fatal to a suit. The service of court processes on corporations has been a subject of debate and in Dickson Atim & Another. V Mobil Producing Nigeria Unlimited, where the Court pronounced on the appropriate mode of service of originating processes on corporations – whether at the registered address or on a principal officer at the registered address.
Another area of procedural law to which many are susceptible to error and which is often a subject of much controversy in legal practice is Garnishee proceedings. Where the Garnishee is a public person, certain pre-conditions must be satisfied for the proceedings to be valid. The Court in Innoson Nigeria Limited v Nigerian Customs Board explained the rationale behind this condition precedent and the options available to a judgement creditor wo was unable to satisfy same.
Corporate law practice remains a vibrant field of law and the Court have pronounced on several disputes between shareholders and the management of companies. The cases of Otunba Ojora V. Agip Nigeria Plc. & Another was a matter commenced by a shareholder seeking to right a wrong committed against him by a company. Unfortunately, the Appellant’s failure to commence this minority action by the appropriate means proved fatal to his suit. In that case, the Court clarified the statutory avenues for ventilation of grievances by an individual member of a company whose personal rights have been infringed.
One of the cases we have discussed in this book touches on the ubiquitous landlord-tenant relationship in Nigeria as in the Essential Logistics Ltd. v Chief Victor Odili (OON) & Another which clarified various issues with respect to the valid determination of tenancies vis-à-vis statutory provisions and the agreements between parties. Other cases are reminders to Counsel of the need to simplify, clearly and unambiguously reflect the intentions of their clients when drafting agreements. The reason being that the Courts, as in Patrick Chidolue & Another v. Cyberspace Limited, give contracts their simple, plain meaning and no matter the outcome of such interpretation, cannot rewrite a contract for the parties.
Worthy of mention as the cases provided on burden of proof, and the concept of ‘substantial irregularity’ in election petition matters as in the Supreme Court case of congress for Progressive Change v. Independent National Electoral Commission & Others.; and the determination of what amounts to seaworthiness in maritime and admiralty sector as taken from the landmark Court of Appeal decision in Nigerian Maritime Administration and Safety Agency v Hensmor Nigeria Limited. The question of who has the locus standi to bring a fundamental human rights action on behalf of another was decided by the Economic Community of West African States (ECOWAS) Court of Justice in the case of The Registered Trustees of the SERAP v Federal Republic of Nigeria & Another.
The diplomatic immunity from legal proceedings enjoyed by executive officer holders during their tenure in such positions has also been the subject of judicial interpretation. One of such cases was Shuaibu Lili & Anor. V Goodluck Jonathan where the Court was invited to interpret section 308 of 1999 Constitution (as amended) to distinguish actions where such immunity would not apply to the Defendant.
In selecting the cases for this book, the celebrated case of Mallam Sanusi Lamido Sanusi v President, FRN. & Ors. was one of the first cases that came to mind. The Federal High Court had to decide whether by the reliefs sought by the Plaintiff with respect to his suspension as the Governor of the Central Bank of Nigeria, the National Industrial Court was the appropriate court with jurisdiction to hear and determine the suit.
The book also discussed the milestone decision in Industrial Training Fund Governing Council & Anor. v. The Incorporated Trustees Pan-Atlantic University Foundation where the Federal High Court per Saidu J. had to determine whether not-for-profit organisations incorporated under Part C of the Companies and Allied Matters Act qualified as organisations under the Industrial Training Fund Act, liable to make contributions to the Fund. Private Universities in Nigeria showed significant interest in this decision based on the argument canvassed for the Pan-Atlantic University.
Undoubtedly, these cases portray how our lives and legal system have evolved over the years. It was Lord Denning LJ in Parker v Parker [1954] that aptly captured the importance of the evolution of law to accommodate the ever changing society in and for which it exists.
What is the argument on the other side? Only this, that no case has been found in which it has been done before. That argument does not appeal to me in the least. If we never do anything which has not been done before, we shall never get anywhere. The law will stand still whilst the rest of the world goes on: and that will be bad for both.
The words of the legendary Jurist depict the beauty of the law, and its reliance on the bar and the bench. The law represents a paradox of sorts – it must be stable and enduring, yet it cannot be static; and it is the duty of the Bar and the Bench to challenge the status quo and continue to push the boundaries of the law so that justice is done in deserving cases in an ever evolving society.
Work on this book was arduous and intense. Counsel sowed time (long hours and late nights), great industry and many review sessions, which turned out to be intellectually stimulating. The cases in this book have been carefully selected to underscore the evolution of law and advocacy in contemporary Nigerian society. The idea is to use them as reference for the bold arguments canvassed by Counsel, and the well-written and reasoned judgements from the Bench to provide a guide for lawyers looking to improve their written advocacy skills. We hope that we were able to achieve these objectives.
My colleagues and I at Kenna Partners cherish this unique opportunity to present this book as an addition to legal scholarship and professional knowledge. We hope that you find the book useful, and that it will find a place on the reading desks and bookshelves of all who have one thing or the other to do with the law, including legal practitioners, members of the bench, students and members of the public.
Professor Fabian Ajogwu, SAN, FCIArb
Principal
Kenna Partners
November 5, 2018
I am delighted to have been asked to write the foreword to the third edition of this book, “Commercial Arbitration in Nigeria: Law & Practice.” There is no doubt that Professor Ajogwu, SAN, has, in putting together this book, shared his wealth of knowledge and expertise on arbitration which has acquired over the years.
It is well-known that alternative dispute resolution (ADR) mechanisms gained prominence as a result of the inefficiencies that characterise litigation – cost of protracted litigation, possibility of appeal with its attendant costs and uncertainty about the outcome of litigation. ADR thus developed as a dispute resolution mechanism aimed at resolving commercial disputes in a timely and resource saving manner. Arbitration has fast developed into a popular ADR mechanism such that one can locate an arbitration clause in almost every serious commercial agreement.
Parties to commercial agreement now prefer to refer disputes to arbitral panels rather than pursue litigation and this has led to an increase in the amount of commercial arbitrations conducted in Nigeria yearly. Given the popularity of arbitration in our time, a book of this nature is quite useful and important because it provides a guide to parties involved in arbitral proceedings on various aspects of an arbitration, from the point of commencement to the delivery of the award.
Having provided a background and contextual analysis of commercial arbitration in Nigeria in the first two editions, the third edition of this book amongst other things, addresses the current negative trend of ‘appealing’ against arbitral awards by way of applications to set aside arbitral awards. The author takes a critical look at this development and sets out recommendations on measures that need to be put in place to curb this trend. This edition also considers the rising use of guerilla tactics, that is, unconventional and disruptive behavior in international arbitrations; and the author proffers solutions that help to stem the evolving deviation from the intendment and spirit of arbitration.
In all, I congratulate the learned Senior Advocate for putting together this well-researched book on the law and practice of commercial arbitration in Nigeria. I therefore commend this book to all persons who seek a comprehensive text on the subject of commercial arbitration in Nigeria.
HON JUSTICE AMINA ADAMU AUGIE, CON
Justice of the Supreme Court of Nigeria, Abuja
August 30 2019
Lorem ipsum dolor sit amet, consectetur adipiscing elit. Ut elit tellus, luctus nec ullamcorper mattis, pulvinar dapibus leo.
I am pleased to be invited to write a foreword to this insightful piece written by the law firm of Kenna Partners. Having been at helm of the Ministry of Industry, Trade and Investment (MITI) for the past four years, I understand the challenges of many foreign and local investors who have either invested in Nigeria or are intending to invest in Nigeria.
Over the years, Nigeria has put in place several incentives for local and foreign investors. We realize that there is a need to always clarify the legal requirements to enjoy these incentives, so as to further encourage investments. Nigeria is among the top ten fastest growing economies in the world and the underpinning objective that runs through the pages of this work, I believe, is the consolidation of Nigeria’s position as a nation and indeed the surpassing our previous achievements.
This is more so in view of the fact that the world has become a global community. One of the challenges of this obvious reality is that there is a paradigm shift from the traditional approach to commerce as we used to know. Global commerce, as amplified by information technology leaves no one in doubt of the need for a rich guide-book of this nature in Nigeria. The need to position Africa as a business-friendly continent so as to maximize the benefits of Foreign Direct Investments (FDI) is a collective responsibility. This book, Trade & Investments In Nigeria: Legal & Regulatory Aspects, provides an insight into many legal and regulatory issues in business such as legislative requirements for doing business in Nigeria, tax management and efficiency, immigration, labour relations, banking and financial services, corporate governance, oil and gas, maritime and incentives for doing business in Nigeria. The reader is provided with an insight into the regulatory issues which a prospective investor must take into cognizance before embarking upon a commercial venture.
This work which covers many areas of the technical aspect of business law has been written in a logical manner, using simple language, thus making it easily understandable even for non-legal minds. It has outlined solutions to the many challenges associated with legal and regulatory frameworks in the field of commerce and investing in the Nigerian economy.
It is in the light of the above that the importance of this piece written by Kenna Partners cannot be overstated. Kenna Partners, as one of the long standing and top-ranking commercial law firms in Nigeria, has brought its wide experience to bear on this book. The Book speaks eloquently of the sheer breadth of the informed understanding of Nigeria’s business terrain by the authors. It is filled with proactive and reliable legal reference materials in the field of commerce. I salute the industry and ingenuity of Kenna Partners in giving us this master piece.
I sincerely recommend this book to captains of industry, business executives, intending foreign and local investors, members of the Bar and Bench, all persons in the corporate world and indeed, the general public. It is a “must read”.
Olusegun Olutoyin Aganga
Minister of Industry, Trade and Investment, Federal Republic of Nigeria May, 2015
I often wonder what motivates an individual to start collecting art. But perhaps more intriguing is, what sustains the collector’s interest in this endeavour? It is fascinating that some people do not stop after purchasing maybe ten or twenty works but continue accumulating until they have several hundred artworks. I wish I could conduct in-depth research into this aspect of human behaviour. Today, a “Handbook on Collecting Art” can be seen as a modern day “Do it yourself” manual. Personally, I have never been guided by such a book; neither did I come across any handbook on collecting art. So when I was asked to write this Foreword, I was excited although a little uncertain, as I put my thoughts together.
“I love this work,” “This is a remarkable piece,” “Lovely,” “Oh that painting speaks to me”- these are some of the common expressions one often hears from collectors as they go through exhibition halls or at various artists’ studios. These comments are from the heart, triggered by the eyes, processed in the context of our brain and tamed by the depth of our pockets. These are feelings which cannot be expressed in a “Handbook on Collecting Art.” What then are the psychological factors which affect the decision making process of an Art Collector? How do you analyse or measure the consistency or the intensity which drive one to actually purchase and continuously acquire art? How does one understand or evaluate the buying pattern of a collector?
Many studies have shown how much our childhood activities, hobbies and upbringing, impact our adult lives. Could this be applicable to our behaviour as art collectors? For example, many people began collecting various items as children – stamps, marbles, dolls, cards featuring footballers, and country flags. I vividly recall the keen competition between my childhood friends on the type and colour of marbles in our collections. The same applied to friends who collected stamps, dolls and cards. It did not matter the socio economic background of the children. Those who could not afford stamps or marbles collected “ikoto” (tops made from metal strips) which they played with in the sand. Could those childhood behaviours have created the foundation for collecting later in life? Could there be a correlation between these two phases of life? Could our early childhood competitiveness for the best marbles, stamps, dolls or card collections, have shaped our perception about art or other collectibles? Did out childhood visits to museums and galleries with our parents or on school excursion, have an impact in developing our appreciation of collectibles?
Until a formal study is done, your guesses are as good as mine!
1970’s AND 80’S
I would like to make a few observations about this era which probably may not apply to more recent or younger collectors, but may resonate with older ones. In trying to understand how it all began for me personally, I think there are four main milestones:
I believe that most of today’s major collectors were part of this scene of the 70’s and 80’s and many started collecting at that time.
In those days, we would often ask ourselves. “Do you have an Olaku; a Barber, or Ovrati or Akande, or Dale or an Oshinowo, or a Bruce, or an Ewonwu?” These were some of the artists that were talked about among my circle of art friends. These kinds of questions also shaped one’s acquisition pattern.
POST 2000
A lot has changed in the art scene and the collecting of art, since the turn of the century. The advent of local and international auctions conducted by various auction houses including Arthouse, Bonhams and more recently, Sotheby’s, has had a major impact on the art sector in Nigeria. The following significant changes have been resulted:
Today, collectors are now trying to maximize the value of their collections, by buying contemporary works, thereby, hedging their bets for the future. They are focusing on works that command big ticket value at auctions. They are, in essence, refreshing their collections in order to strike a balance and enhance the overall value of their collections.
It is only a question of time- sooner rather than later before the Nigerian art scene becomes a multi-million-dollar market like the European, Indian, and Chinese art markets.
(iv)These changing times have thrown up a new breed of collectors:
To conclude, it is an absolute privilege for me to write this foreword and to be a part of this new endeavor of a friend and fellow collector, Jess and his co-author, Fabian. I believe that this book will further stimulate discussion within the art scene in Nigeria and abroad.
Olayinka Fisher
The practice of art collecting has a long history and the ways of collecting art are as varied as the backgrounds, social environments and personal histories of the collectors. There is no single “right” way of collecting art, but there are many practices that will not help creating an art collection of quality.
There are many ways of collecting art and there are many reasons for doing it. For some, it is simply a hobby; for others, it becomes a passion to which they devote considerable time, effort and resources. For a few, it is just a way of diversifying their investments. Whatever their reasons for acquiring artworks, whether enjoyment, vanity, investment or a mixture of all, for many collectors, art is among the most valuable assets they own. Learning how to appreciate them, to manage and care for them is of capital importance.
There are thousands of books devoted to art. This one focuses on the collectors and their practice. This book does not aim at providing a history of art collecting or a sociological study of the motives for doing. We do not offer specific advice on what or where to collect. We do not enter on whether art is a genuine, profitable asset class for investment or not. Though we refer to these issues, they are outside the scope of the book; its goal is less ambitious. Art Collecting: A Handbook aims at offering the novice and experienced collector a better understanding and some practical advice on some of the main issues involved in this practice. Besides collectors, this book will be of use to many other players in the art world: dealers, critics, scholars, journalists, art enthusiasts. Sometimes, professionals advising collectors on issues of taxation, insurance, wealth investment, estate planning, legal matters, etc. are not well acquainted with even the basic features of the practice of art collecting. We hope this book will also be of use to them in the eight chapters it is divided into.
Chapter One is devoted to the collectors; to their motivations and approaches to collecting. We look at the main characteristics of an “educated, serious collector”. For some decades, the practice of collecting has been considered from the point of view of its value as an investment. We consider this trend in this first chapter. Though collecting is intensely personal, it can become so absorbing as to have an effect on the family of the collector. In this first chapter we also look at this aspect of collecting.
Chapter Two looks at the development of an art collection. Serious art collections do not happen by chance. Whether properly articulated or not, sound planning and strategy differentiate ordinary accumulations of artworks from great collections. We also look at the role of art advisors and the process of commissioning art.
Chapter Three looks at the process of buying art. Whether the collector acquires works from the primary or secondary markets, knowing about different channels work is a necessity. Due diligence is at the core of good practices in art collecting. We also consider it in the chapter.
Chapter Four looks at the legal framework within which art collection operates. These issues might not be the most attractive to the collector, but a good understanding of the rights and duties of collectors, artists and dealers is necessary for any serious collector. Unfortunately, collectors are not always well informed about copyright, moral rights and artist resale rights; we look at them in this chapter. Finally, a long section is devoted to Art Fraud, a threat always present in art collecting.
Chapter Five provides tips and suggestions on the transfer of an art collection and particularly, to estate planning. Planning for the future of the collection once the collector is gone is frequently postponed by collectors. This section offers suggestions on possible options open to the collector.
Chapter Six offers advice on documentation and management of the collection. Keeping proper inventories is an indispensable task for the development of a collection and for its transmission to future generations. Insurance and taxation are not the most glamourous and appealing aspects of art collecting, but the educated collector will always take them into consideration.
Chapter Seven is devoted to the care required by an art collection. Art collections are always at risk of being damaged by environmental, physical, chemical or biological agents. Knowing how to prevent or counteract these causes of damage is an essential skill for any serious collector.
Finally, Chapter Eight offers a glossary of terms collectors come across frequently.
In the process of writing this book, we have learned not only about the technicalities associated with putting together, managing and transferring an art collection, but above all, we have learnt about collectors: people, who passionately devote some of their best energies and resources, to collecting art. There are wonderful stories of big and small, affluent and ordinary collectors who, sometimes obsessively, follow this interest in life.
To own works of art is not the same as collecting art. Although owning art is a necessary condition for collecting art, accumulating and collecting are different practices. From the first to the second, there is a substantial difference in the intentionality of possessing these artworks. A gallery owner with a large number of works in his stores can also be a collector, but generally, is not. An investor with a good portfolio of art is not necessarily a collector. Neither is a corporation that owns a large number of pieces in their buildings. Great collections are always linked to great collectors. Collections are always unequal because collectors are always different. As Baudrillard famously said: “It is inevitably oneself that one collects”. We hope this book will help them continue doing it in a more systematic, knowledgeable and organised way.
As a crucial tool for expanding the operations of a company with a view to achieving long term growth, and increased revenue or profitability, the subject of mergers and acquisitions is no doubt an important one. The concept of mergers and acquisitions (M&A) only had minimal actual significance in Nigeria starting from the year 1982. This situation changed significantly after the Securities and Exchange Commission (SEC) began its operations in 1982, marking the beginning of regulated business combinations in Nigeria. Between 1982 and 1988, the SEC supervised thirteen mergers, including the mergers of Lever Brothers Nigeria and Lipton Nigeria, and John Holt and John Holt Investment. The prospects of mergers and acquisitions in Nigeria have continued to evolve since then.
M&A is an area that is as dynamic as the market itself, and and allows for deal and process innovations that spur new regulations. In dreaming up the shareholders rights plan, or the poison pill, in 1982 to give boards of a target company a chance to “level the playing field” and have time to weigh offers, renowned M&A lawyer, Martin Lipton explained that they “…had reached a whole new plateau of hostile takeovers, and there was really very little in the way of defense to them”. Lipton’s innovation did not come into popular use until after the Delaware Supreme Court cleared the path with a 1985 decision.
Different legislation have been passed to regulate business combinations, including the companies and allied Matters Act of 1990 and the investment and Securities Act of 2007, as well as some sector-specific Acts, such as the Banking and other Financial Institutions Act of 1991, the Insurance Act of 2003 and the Electric Power Sector Reform Act of 2005. In 2002, there was a merger of two important petroleum companies; Agip Nigeria Plc and Unipetrol Plc to form Oando Plc. However the most striking activities in M&A in Nigeria were undoubtedly the 2005 mergers that took place in the banking sector. These mergers were driven by the Central Bank of Nigeria’s 2004 directives to all Nigeria banks to increase their shareholders’ fund to a minimum of NGN25 Billion (US$208 million), from NGN2 Billion.
In eighteen chapters, I have tried to look at the meaning of mergers and acquisitions, the commercial background of M&A, issues of due diligence, principal legal documentation, as well as tax considerations against the background of Nigerian laws. Issues of valuation, intellectual property rights, and employee relations are critically examined from a Nigerian law and practice perspective. Takeovers, and takeover bids, private equity arrangements and collective investment schemes are given in-depth considerations as would governance, corporate control & pursuit of profits, and protection of shareholders, and ends with useful Nigerian case studies, court forms and templates, which are intended to serve as a guide-thread to the extensive literature on the transactional aspect of M&A. Recent trends in M&A as well as the implications of the International Financial Reporting Standards (IFRS) on mergers and acquisitions have been discussed in this edition.
In writing Mergers and Acquisition in Nigeria: Law & Practice, it was not my intention to provide a comparative survey of all elements of the subject. Rather my aim was to provide a practical guide on the law and practice of M&A starting from preliminary considerations through to the deal. There appeared to be a need for a source-book and practice-book, as opposed to a text book, so as to deal with the substansive law as well as give insights into the practice of M&A in Nigeria, deriving mainly from the investment and securities Act, 2007. All of this have brought dept and meaning to this book on M&A in Nigeria. This book lays no claim to perfection, and I therefore take full responsibility for any errors of omission or commission that may be found herein.
Fabian Ajogwu, SAN, Phd (Law) (Aberdeen) Lagos, June, 2014
It is a pleasure to be asked to write the foreword to this important practice book on mergers and acquisitions. The book’s importance and usefulness lie in the way in which Mr. Fabian Ajogwu, SAN has selected a combination of practical texts and cases to present a comprehensive piece on the law and practice of mergers and acquisitions in Nigeria.
Mergers and acquisitions (M&As) have no doubt become a veritable engine of economic growth. They are attractive because they create commercial synergies and economies of scale by expanding operations and markets and contribute to eliminating inefficiencies and increase productivity and profitability of companies. The author captures the usefulness of mergers as “vital tools used by companies for the purpose of expanding their business operations with objectives ranging from increasing their size, long term profitability or relevance within a particular market’’.
The introduction lays out the meaning of mergers and acquisitions and presents the history of mergers and acquisitions in Nigeria from AG Leventis and Leventis stores merger in 1983, to very recent ones, with the most striking m&a activities being in the banking and financial services sector consolidations that occurred from 2005. These mergers were largely driven by the central bank of Nigeria’s 2004 directives to increase the shareholders’ funds of banks to a minimum of N25 billion.
The author presents the law and practice of M&A in Nigeria, followed by crucial issues such as legal and commercial setting of m&a, due diligence, preliminary documentation, the valuation question, tax aspects of M&A, implications on labour relations, and good references to successful mergers and acquisitions in Nigeria.
There is an attempt to critically evaluate some of the successful cases of mergers from the reasons and benefits of the merger, to the content of the scheme of merger, court ordered meetings of merging entities, and the court sanction of the mergers. At whatever level the law and practice of mergers and acquisitions in nigeria is studied and reviewed, there can be no doubt regarding the value of Mr. Ajogwu’s book in clarifying the mechanics, strategies and processes of mergers, the essence of due diligence, the impact of private equity, the strong question of valuation and other implications of M&A both from stakeholders and regulatory perspectives.
For students of the subject it is a one-stop-shop, which sets M&A in its practical context. For practitioners, investment bankers, lawyers, executives, board members and policy-makers it should be good reference and compulsory reading.
Mr Ajogwu’s book constitutes a bold initiative at stating the law and practice of M&A in Nigeria is the form of a practitioner’s book for the benefit of all who are interested in the subject. I must
commend the learned senior advocate for this pioneering step in writing this book, and therefore regard ‘mergers and acquisitions in Nigeria: law and practice’ as an authoritative text on the subject.
I recommend the book to all practitioners and persons interested in Mergers and Acquisitions in Nigeria.
Mr Atedo N A Peterside, OON
Chairman, Stanbic IBTC Bank Plc
It is the view that petroleum, a natural resource of value accruing to a people should be a blessing to them, but that presupposes that among other things it does not end up impairing the ability of future generations to live minimum standards of life that recognise the importance of the nexus between people, economy, environment and enterprise (described as the Es). It is a disconnect between Petroleum exploration, production and management on the one hand, and the sustainability of the three Es that has led to the coined expression – “the oil curse”. Therefore the concept of sustainable development emerged as the link between petroleum development activities on one hand and ensuring the ability of present and future generations to meet their socio economic and environmental needs on the other hand.
In the last two dacades, the concept of sustainable development has emerged strongly in national policies and international law in recognition of the fact that human development activities are the major concern of sustainability. Almost every policy document in the developed economies of the world contains sustainable development agenda. Various corporate organisations have also developed some kind of sustainable development strategy. Whether it is a government agenda on sustainable development or corporate strategy on sustainable development, common features are that human development activities are at the centre of sustainability concerns and that actions needs to be taken to ensure development that is sustainable. The Rio Declaration on Environmental and Development rightly noted that in order to achieve sustainable development and a higher quality of life for all people, states should reduce and eliminate unsustainable patterns of production and consumption.
Upstream oil and gas exploration and production are human development activities that raise major sustainability concerns particularly in the oil producing areas of Nigeria. This book examines the concept of sustainable development in relation to the Nigeria oil and gas industry as it poses considerable sustainability issues. The concept of sustainable development has been defined variously but the often most cited definition is that preferred by the Report of the Brundtland Commission that is: “development that meets the need of the present without compromising the ability of future generation is given restricted interpretation as referring to environmental protection alone. This book shows that sustainable development can be understood properly in the real sense of the words – ‘sustainable’ and ‘development’ and that it is much more than environmental protection.
This book therefore examines sustainable development as an umbrella concept that embodies various principles that could be operationalized in the Nigerian petroleum industry. The book highlights the relevance of the various principles to the petroleum industry and shows greater understanding that sustainable development is based on a set of principles that would profoundly affect national and international governance. The book presents a balanced understanding of sustainable development which is intended to protect and restore the environment without compromising the benefits of traditional development which is centered on economic and social development. In essence, upstream oil and gas development activities in Nigeria can be carried out in a sustainable manner whereby ecological carrying capacity of the environment can be maintained, economic development and social progress are promoted.
The book has eleven chapters, three apprendices and a comprehensive bibliography. It is divided into four interrelated parts. Part 1 examines generally the Nigerian oil and gas starting from the discovery of oil and gas, ownership of oil and gas in Nigeria, participants in the Nigeria oil and gas ownership. Part II analysis the concept and principles of sustainable development with special emphasis on the oil and gas industry. Part III examines the legal framework for sustainable development in the Nigeria oil and gas industry. The major factor in the assessment of the international oil and regime and the domestic oil and gas legal framework is to ascertain the extent to which they embody the various principles of sustainable development as regulatory tools and strategies. It is important to note that international oil and gas regime is not designed to deal with economic, social and environmental issues that arise from upstreams oil and gas development activities in the oil producing areas of Nigeria. Therefore Nigeria through its domestic legal framework has the responsibility of ensuring sustainable oil and gas exploration and production.
Part IV makes assessment of progress towards sustainable development in the Nigerian oil and gas industry and offers recommendations that will promote sustainable development in the industry. The recommendations are based on the following: better regulatory or legal regime that is backed by effective and efficient enforcement mechanisms, cooperation of the oil companies through the use of corporate social responsibility, clean development mechanisms and commitment to sustainable development. The book recommends that the local communities should be law abiding and play participatory roles in this journey towards sustainable oil and gas exploration and production. The input of civil society group is not left out in the recommendation.
The need for the application of the concept of sustainable development in the Nigerian upstream oil and gas industry is therefore predicated on the fact that the concept is all encompassing and seeks to promote better environmental protection, encourage economic development and promote social wellbeing. Positive impact of sustainable oil and gas exploration and production in the Nigerian oil and gas industry will have a positive multiplier effect on the larger national society: be it economic development, social progress or environmental protection.
All of these have brought depth and meaning to this book on petroleum Law and Sustainable Development. The book lays no claim to perfection, and we therefore take full responsibility for errors of omission and commission that may be found herein.
Dr Fabian Ajogwu, SAN
Dr Oscar Nliam
Victoria Island, Lagos
June 1, 2014
The importance of the environmental issues has for the last three decades at least, been central to the development of the global oil and gas industry ,as we continue to witness the clash of perspectives between protagonists for and against the further development of the world’s still vast hydrocarbon resources. The global community is certainly heavily dependent on oil and gas supplies and will remain so for the foreseeable future. Indeed modern civilization remains significantly beholden to this resource and its countless derivatives.
The exploitations of hydrocarbons unfortunately also inevitably comes with an environmental toll: Oil spills, well blowouts, fires and consequent ecological damage to land, vegetation and to aquatic life from direct pollution through oil on land, in water or from flared associated gas. This is all apart from social dislocation within host communities and the social upheavels that have been caused by the industry. The challenge therefore has been with what the anti oil and gas development lobby, vocally highlights as the untold adverse ecological, economic and social impact of oil and gas exploration and production.
This book sets out a most balanced account of this challenge from the authors perspective and conviction of a need and alternate way to integrate the development of oil and gas with best environmental practices to ensure the sustainability of both. The authors have eloquently argued the case that an appropriate focus on sustainable development is the necessary and effective measure, to address the negative issues associated with oil and gas exploration and production. This is especially so, having regard to the serious environmental problems that made the Niger Delta a hotbed of resistance to oil and gas production, drawing also on the experiences and practices of other oil and gas provinces around the world.
“Petroleum Law and Sustainable Development” thus seeks to dissect this conflict from the point of view of sustainability – from fifty years ago when oil was first discovered in Nigeria with scant attention to any environmental impact assessment, through the increasing awareness of its deterious effect on host communities lives and livelihoods especially, to the authors advocated balanced recipe of embedding best environmental management practices within the activities involved in the exploration, production and evacuation of oil and gas to prevent or minimize any and all such adverse impacts.
The concept of sustainable development has been comprehensively dealt with by the authors Dr Fabian Ajogwu SAN and Dr Oscar Nliam who have carefully and clearly distilled the principles, theories, law and practice in the Nigerian oil and gas industry. They have also linked the relevance of each concept or principle to the industry and to international law and convention, while highlighting the other important sustainable development pillars. The authors state
emphatically that these are economic development and social cohesion and progress in addition to the more familiar environmental protection issues.
Finally the authors conclude with the trend typified by international conventions and treaties on the subject of oil and gas particularly, which now seem to point toward the notion of sustainability, just as domestic courts and local; dispute settlement mechanisms provide a corollary legal framework for the settlement of oil and gas exploration and production disputes in the Nigeria.
Dr. Ajogwu and Dr Nliam must also be applauded for their insightful analysis of the Nigerian Oil and Gas Industry Content Development Act of 2010 that examined the social and economic aspects of sustainability in the Nigerian oil and gas industry. “Petroleum Law and Sustainable Development” is especially commendable for its insightful recommendation for a paradigm shift to sustainable oil and gas exploration and production in Nigeria. There is no doubt that amongst the many obstacles that constitute, in the words of William C. Clark, “a powerful impediment to moving toward more sustainable development”, is “our ignorance about how to do so”.
This book has convincingly dealt with this powerful impediment by recommending measures through which the goal of sustainable oil and gas exploration and production could be realised in Nigeria. The discussion on the need for a paradigm shift for a sustainable oil and gas exploration and production is undoubtedly an outstanding contribution to the Nigerian oil and gas industry and entire country which has often struggled with negative economic, social and environmental impacts of the petroleum industry. With more than thirty combined years of experience of legal practice and research between the authors, it is not surprising to see that this book combines theory and practice in a seamless practical way as it offers solutions that will engender sustainability.
The learned authors, Dr Fabian Ajogwu SAN and Dr Oscar Nliam have produced a marvellous reference book for the oil and gas industry, government and regulators, judicial officers, legal practioners, academics, students, civil society groups, the media and all who wish to see the Nigerian oil and gas industry move in a more sustainable direction. I must commend the authors of an excellent book and for this critical addition to the body of literature in such an area of national importance.
H. Odein Ajumogobia San, Ofr, Llm (Harvard)
Law is defined as the regime that orders human activities and relations through systematic application of the force of politically organised society, or through social pressure, backed by force, in such a society. It is also defined as the aggregate of legislation, judicial precedents and accepted legal principles. It is the legal system; the set of rules that prescribe acceptable behaviour in a society. In some cases, the laws prescribe punishments that will be imposed on persons who are guilty of infraction of the law. There is a third sense in which law is used in which law is used. In that sense, law defines as the set of rules dealing with a specific area of the legal system. An example of this is criminal law, which is the set of laws that define crimes and prescribe punishment for breach thereof.
In Nigeria, the major laws on crimes and offences are the criminal procedure Code, which regulates offences in the South and the Penal Code, which regulates offences in the North. In addition to these, there are many other legislation and regulations that relate to crimes. Society is a community of people with common history, religion, culture or traditions. Such community of persons may be a nation, state, locality, town or village. The peoples that constitute the society must however possess one or more element(s) common to them. It has been established that there is a relationship between law and society. Nigerian authors of legal literature have rarely addressed the relationship between law and society. With respect to criminal law, there are sociological questions of what the basis for punishment is.
It is reorientation and transformation? Is it merely a means to torture and shame? Or is it a means of putting criminals away from decent living for a very long time? This work will agree with pats-Acholonu, JCA that:
It must be stated here that the purpose of law in any society claiming to be civilized is to bring order, stability and interdependent consciousness in a given society. To that end, the Courts through the well oriented reasoned and seasoned legal activism and society engineering will by their liberal interpretative powers focus on the egalitarian aspects of the life of the society and make the society responsive to the norms and demands of some philosophical tenets which guarantee the well-being and orderliness of the community.
Candidates for political offices in Nigeria in the quest for electoral votes often promise a social contract with the people. This book sets out to ascertain the meaning of social contract and to what extent it exists in Nigeria. It further suggests how its benefits, if any, can be realised. A major challenge to Nigeria’s democracy and the government is the fact of the non-involvement of the people in making the most important law – the Constitution – that will govern them. This has the effect of making them feel left-out and to see the laws as impositions by the government. It is ironical that the 1999 Constitution, which was enacted without any involvement of the people by the military, opens with the words ‘’ we the people of the Federal Republic of Nigeria….. Do hereby make, enact and give to ourselves the following Constitution”:’’ No wonder then that since 1999, there has been a clamour for a sovereign national conference and constitutional; amendment. All these underscore the need for the law to be made for the people and, directly or indirectly, by the people.
This raises the challenge of how that can be achieved. Since 1999 Nigeria’s attempt to amend the Constitution has been made difficult by the lack of consensus on several of the issues and the submission of numerous difference demands by too many interest groups and members of the society. Part A of this book deals with the interconnection between law and society. The few texts on ethics in the legal profession were written by lecturers at the Nigeria Law School essentially for students of that vocational institution. Chief Olanipekun SAN takes the view that a lawyer who was trained at the Nigerian Law School ought to be familiar with the ethics of the profession. It is one thing to be familiar with a concept and quite another to be guided by it. It is important to take a detailed look at the lawyer’s two attributes of professionalism and ethics from the practitioner’s perspective. It is this void that part 2 of this Book seeks to fill.
The incidents of professional misconducts among lawyers call into question the extent to which lawyers are aware of, or have on a personal level imbibed the core values of the profession. The reasons for this include the early stage formation of the individual in terms of character building, greed, a growing culture of impunity on the part of offenders, declining enforcement of the rules guiding the profession, the state of the economy and corruption in the wider society. Of equal concern are the widespread allegation of corruption and bias against judges and the question of whether a segment of lawyers in the private and public sectors of the economy understand their professional duties, the profession and the society.
Having chosen the noble profession of the law however, the lawyers and the judge must aim to lives of integrity and dignity, accompanies by a competent and professional approach to the delivery of legal services and discharge of the judicial function. The legal practitioner must aim for excellence and to hold his own among his peers anywhere in the world. Today’s lawyer and judge must, to paraphrase Achebe, dance the dance that is prevalent in his time. This time, it must not be the dance of corruption, but of high ethical conduct, not of regressive, unorthodox approach to the practice of law, but of progressive, technology driven style of legal practice dictated by the finest traditions of the profession and by ‘the good that happens elsewhere’.
The principles of ethics and professionalism are contained in some written documents such as the Legal practitioners Act and the Rules of professional conduct. Unsurprisingly, these are not exhaustive in their contents. This book brings new perspectives to issues of ethics and professionalism for lawyers and examines compliances with the principles in a fast changing world, bearing in mind that lawyers are the custodians of the law, with its immense relevancies to the society.
The book lays no claim to perfection, and I therefore take full responsibility of any error of omission or commission that may be found herein.
It gives me tremendous pleasure to accept the invitation of my learned friend of the Silk – Dr Fabian Ajogwu SAN to write the foreword to his scholarly book on: ‘’Law and society’’. The book articulates extremely important and fundamental issues which affect the society at large.
The scope of the book is huge as it analyzes the relationship of the law with many societal topics encompassing ‘’Inter alia’’ the history of the Nigerian society, sources of law, evolution of the Nigerian legal system, the Nigeria Constitution, Ethics in the legal profession and many more topics besides. Indeed, the learned Senior Advocate of Nigeria splendidly demonstrates an impressive holistic approach to the title and essence of the book: ‘’Law and Society’’. As we say in the law ‘’ he covers the field’’.
Although professional ethics in the legal, medical, engineering or any other profession is a topic many scholars and authors are not comfortable to discuss, yet, the author deftly and boldly articulates ethics in all its ramifications by his own originality and wise application of the Rules of Professional Conduct in the legal profession. The discussion on professionalism and ethics of in-house and public services counsel is a superb explosion of an important part of the ethics of the learned profession. The author should be loudly applauded for his discourse on this important aspect of the legal profession.
The author eloquently enunciates the lawyer’s noble and professional role to uphold and facilitate the development of the society. It is trite to state that every aspect of human society revolves around law and the lawyer. The lawyer is involved in drafting and constructing documents, and findings solutions to many of the societal problems, particularly legal problems. In his book: “In the Eyes of the Law’’, the Honourables Justices Chukwudifu Oputa said at pages 213 declared:-
‘’The ordinary citizen may not and perhaps cannot protect himself against those concentrations of power which by their weight or their natures conduces to the oppression of the individual namely, the power of prosecution, the power of parliament, the power of the executive, the power of wealth and status, the power of monopoly and restrictive association, and the biggest problems of all, the power of numbers. it is the duty of the advocates, a duty he owes to the community to ensure that the individual is properly protected from power to see that there is a fair, equitable and just balance between those who have power and those who are subjected to such power’’.
Undoubtedly, lawyers will encounter many obstacles and challenges which may impede the effective discharge of the duty imposed on them as lawyers. Such obstacles include unethical conduct of some colleagues, unjust laws, disobedience of court orders, particularly by government officials and delay in the adjudicatory system. Dr. Ajogwu SAN Presents the book as a clarion call to lawyers to observe the highest ethical principles of their learned profession in order to discharges the enormous responsibility placed on them by the law.
In the author’s elucidation of the famous (or is it infamous?) chapter II of the Constitution on Fundamental Objectives and Directive Principles of State policy, the author vehemently address the mischief in S. (6) of the Constitution which renders all the sanctimonious pronouncement on the good life in Chapter II worthless. The negation of justiciability in Section 6(6) leaves the Chapter in a prostrate state.
My learned friend is insightful in his treatment of customary law which he has placed on its proper pedestal thus:-
“Customary law has got to be recognized as an important vehicle regulating the conduct and lives of the vast majority of Nigeria’’.
The Hon. Justice Nnaemeka-Agu JSC in Ugo v Obiekwe declared thus:-
‘’Our customary law is still bogged down this annoying vestige of colonialism…. The result is that our customary law is still treated like foreign law in our own country (more than three decades) after our independences from colonial rule. This is far from satisfactory… it is to be regretted however, that whereas the authorities concerned are taking the commendable step of riding our statue and received English law of anachronism, nothing appears to be happening in the area of customary law which forms the essential backbone of our ‘’corpus juris Nigerianae’’.
I believe that the Nigerian Institute of Advanced Legal Studies das a programmed on research on customary law. The country and the legal system should benefit substantially from such an academic exercise.
As a former student of classics, I make bold to congratulate Dr. Ajogwu SAN for the dexterous employment of Latin ‘’, (with their English translation), to upgrade the scholarly reach of the book and enhance its prose.
Dr. Ajogwu’s admirable professional high standard is vividly manifested in this brilliant book. His laudable and ethical approach to the practice of law and his commitment to high quality professionalism should encourage every lawyer who reads the book to go and do likewise. The book is outstanding for many reasons including: the author’s lucidity of though, clarity of language, profundity of research and compelling intellectual discourse. The splendid characteristics of this book are a testament to the learned mind of a learned Senior Advocate of Nigeria.
I congratulate the author for his valuable contribution to legal scholarship. My learned friend has written a provocative book which is germane to the current state of our country as we struggle to find ways through which the law can be the true agent towards solving the myriads of problems confronting us as nation and in fulfilling our roles as lawyers.
I hereby recommend the book, without any reservation whatsoever, to judicial officers, legal practitioners, academicians, law-students, civil society, the media, all who enjoy reading and all
persons who are interested in making the Nigerian society better for all of us by upholding the Rule of Law.
This Book is a masterpiece which will adorn any library, particularly a law library.
Dated this 30th day of October 2013
Chief ‘Folake Solanke, SAN,
CON Legal Practitioner,
Alabukun Law-Chambers ANCE Building (2nd Floor)’
Magazine Road, Jericho, Ibadan.
The notion of corporate governance can simply be put to effective governance of the corporation in the real sense of the words – ‘corporate’ and ‘governance’. It has been argued that shareholders have an incentive to invest resources in curbing both managerial and owner opportunism, however the recent experiences in the banking and financial services sector in Nigeria show that the significant shareholders that are most capable of curbing board and management excesses (for example the institutional shareholders and majority shareholders) have showed an apparent unwillingness to oppose the management and the boards of the companies.
This situation is more prevalent in companies operating within group structures (companies having parent – subsidiary relationships). With the five banks that emerged as having corporate governance challenges in July 2009 all operating group structures. The banking and financial services crisis in Nigeria has raised serious questions about the adequacy of corporate governance arrangements especially for companies operating within the group structure. In the group structure, the duty on the part of the board to be accountable to the shareholders, creditors, and other stakeholders become even more pronounced. Consideration of recent concrete examples in Nigeria reveals that not only must existing corporate governance arrangements be questioned in terms of their ability to cope with managerial problems raised by the complexities of the group structures. This issue, which is the theme of this book, has hardly ever been addressed.
This book examines the existing models of corporate governance in Nigeria to see if they are indeed adequate to cope with the complexities of group structures especially in the banking and financial service sector: it concludes with the finding that corporate governance within group is better observed when the respective boards of the parents as well as the subsidiaries are accountable to their respective shareholders and stakeholders, and take responsibility for the direction of the specific enterprise that they are by law responsible for. The book further recommends that it is this specific responsibility of each board that could ensure proper disclosures, integrity in financial reporting and a duty of accountability of management to the shareholders. It is a twelve-chapter book that deals with issues ranging from theories and standard Models of Corporate Governance to the Roles of Professionals in Corporate Governance, International Financial Reporting Standard and the Relationship between Risk Management and Corporate Governance.
All of these have brought depth and meaning to this book on corporate governance and group dynamics. The book lays no claim to perfection, and I therefore take full responsibility for any errors of omission and commission that may be found herein.
Dr Fabian Ajogwu, SAN Balgowan
June 23, 2013
I am pleased to be asked to write the foreword to Dr. Fabian Ajogwu’s book, Corporate Governance & Group Dynamics.
It is generally agreed that the leadership provided by the board will always be a significant factor in the successful running of the enterprise. For many years, the discussion has focused mainly on the need for the corporate to be governed by an efficient Board, and the emphasis has been on adhering to the principles of corporate governance especially in relation to globally accepted best practice. However, it is becoming increasingly clear that some attention should be given to the more complex relationships that exist between companies operating within a group structure, for the simple reason that the actions of the parents often affect the subsidiary and vice versa. This book, turning the searchlight on this complex area of company administration, is indeed a welcome addition to the literature on corporate governance and enterprise development, especially because it raises questions about the suitability of existing models of corporate governance in Nigeria for dealing with the complexities of group structures, particularly in the banking and financial services sector.
The Author makes the point clearly that ‘corporate governance within groups is better observed when the respective boards of the parents as well as the subsidiaries are accountable to their respective shareholders and stakeholders, and take responsibility for the direction of the specific enterprise that they are by law responsible for’. He believes that it is precisely the lack of this accountability and responsibility that led to the corporate maladministration and failures of recent times. The Author goes further to recommend that ‘it is specific responsibility of each board that could ensure proper disclosures, integrity in financial reporting and a duty of accountability of management to the shareholders’. I cannot agree more.
Dr. Fabian Ajogwu, SAN has been a great advocate of good corporate governance practice in Nigeria since it became a discipline of interest to practitioners in the country. He has taught it, preached it and written on it consistently, bringing his understanding and expertise on the subject to bear on his interactions with his audiences over the years. For me, this book offers additional confirmation of his scholarly commitment, which is evident in the scope and depth of discussions, the propositions as well as the analysis of the principles of corporate governance as they apply to groups. I must commend the Learned Senior Advocate for making this significant contribution to the jurisprudence of corporate governance. I therefore have no hesitation in recommending this book as an authoritative text on the subject for the benefit of companies, boards, shareholders, regulators, directors, managers, stakeholders and indeed all who are interested in seeing that our corporations become increasingly well governed.
Dr Christopher Kolade, CON Pro-Chancellor, Pan-Atlantic University Formerly,
Nigerian High Commissioner to the United Kingdom Formerly,
President, Society for Corporate Governance Nigeria Lagos.
June 2013
The concept of a free-market economy presents opportunities for disputes in the pursuit of economic gains. In seeking the determination of their rights and liabilities, or the amicable settlement of their disputes, parties can have recourse to the court system or to alternative dispute resolution (ADR) methods. Although ADR includes other methods and mechanisms such as mediation, conciliation, and negotiated settlement, arbitration has however become the main alternative to resolving or determining commercial disputes. Generally speaking, ADR has gained widespread acceptance in trade and commercial disputes, to the extent that in some jurisdictions, the Court Civil Procedure Rules now require some parties to resort to some type of ADR, usually in the form of mediation, before permitting the parties’ cases to be tried.
In the second edition of the book, I tried to lay out the framework for arbitration and conciliation, the agreement to arbitration and the practice and procedure of commercial arbitration. In so doing, I tried to bring to the fore the practical situations and issues that parties, counsel, arbitrators and all that are involved in this system of dispute resolution face. It is therefore intended to be a practice handbook. The jurisprudence and recent case law discussed in the book provided the basis of academic research, and form a practical resource in the field of commercial arbitration in Nigeria. The principles underlying the law and practice of arbitration are applicable not only to Nigeria, but to a number of Common Law countries, including signatories to the New York Convention. I have tried to present the law and practice as they exist today.
In eighteen chapters, I have attempted to look at the general principles and legal framework of arbitration, including the law and procedure applicable to arbitration. The nature of the arbitration agreement is examined, with emphasis on the essential elements of an arbitration clause, common defects in arbitration clauses, jurisdictional and enforcement issues. Forum of arbitration, capacity to arbitrate, place and language of arbitration are also discussed. The practical aspects of commencement of arbitration as well as difficulties with commencement are discussed in chapter four. The constant challenge of forum of dispute resolution (litigation or arbitration) is treated in Chapter six dealing with ‘stay of proceedings’.
The discussions cover resource to court for preservative orders, as well as case law on when a party is deemed to have taken a step in the proceedings. The later chapters deal with arbitration proceedings and preliminary issues such as admissibility of evidence, adherence to rules of evidence, methods of presenting evidence, and the standard as well as the burden of proof is arbitration. Arbitration proceedings and awards are treated in chapters eight and nine respectively. I have attempted to deal with the pressing issues of enforcement of awards, and challenge of arbitral awards. A new chapter focuses on the challenge and enforcement of maritime arbitral awards. Another chapter is dedicated in mediation and conciliation and another, to the techniques for settling of disputes.
This edition considers some of the emerging trends in international and domestic arbitration. A chapter on Dealing with Guerilla Tactics is International Arbitration and Arbitrators; and another on The Permissible Scope of Challenging Arbitral Awards, is included.
All of these have brought depth and meaning into this book on the law and practice of commercial arbitration in Nigeria. This book, lays no claims to perfection and I therefore take full responsibility for any errors of omission or commission that may be found herein.
Professor Fabian Ajogwu, SAN, FCIArb
Nsukka
August 30, 2019
The concept of fair hearing is an integral part of the administration of Justice, and derives from the principles of natural justices and fairness. The principles belie the whole jurisprudence of law abased justice. The rule of fair hearing requires that in all disputes between two or more parties, judgment should not be based on a one-sided testimony. It was the Right Hon Lord Temple man, MBE, Lord of Appeal in Ordinary, who once said-‘… the lawyer is a manipulator of words: this is an assertion and not a criticism. Language is the means of disclosing facts, expressing ideas and applying principles.’ The ultimate solution in any legal problem is to be found in the application of basic principles to ascertained facts. This application however must be done in such a way and manner that all parties to the dispute are given and equal opportunity to so present their facts, in order that they may be ascertained by a neutral and fair minded person.
In writing Fair Hearing, it was not my intention to provide a comprehensive survey of all instances of fair hearing in both the judicial and administrative processes. Rather my aim was to provide a practical evaluation of the substantive as well procedural approach to the concept and principles of fair hearing, which is crucial to the administration of justice in any legal system. There appeared to be a need for a textbook, as well as give insights book, as opposed to a source-book, so as to deal with the substantive law a as give insights into the attitudes of Nigeria courts on the subjects, deriving mainly from the 1999 Constitution of the Federal Republic of Nigeria.
I have started with a discussion on the meaning of fair hearing by looking at the twin principles of natural justice, with emphasis on definitions from case law on the basis of the 1999 constitution as well as similar provisions in the 1979 Constitution, as well as the ratified African Charter on Human and Peoples’ Right. In the second chapter, I have attempted to look at the development of the audi altem rule (let the other side be heard), with emphasis on the scope and limitation. More specifically, I have examined the instances where the rule is excluded, and the specific circumstances that must occur to warrant such. Ex parte situations are discussed. I have also looked at the nemo judex in causa sua rule (not to be a judge in one’s own cause), and the attitude of the courts where this issue is raised.
The subject of remedies is so often ignore, yet it is an internal part of the legal process. In the concluding chapter, I have attempted to provide a practical guide to the remedies available under the Fundamental Rights (Enforcement Procedures) Rules of 2009.
All of these have brought dept and meaning to this book on Fair Hearing. This book lays no claim to perfection, and I therefore take full responsibility for any errors of omission or commission that may be found herein.
Fabian Ikenna Ajogwu, SAN, FCIArb
Lagos
October 10, 2010
Do judges make laws? What is the stare decisis and what is judicial precedent? How do the concepts operate in the judicial system? These are important jurisprudential and legal questions that always deserve consideration. Studying the judgements of courts will provide answers to these and other important questions. Some legal philosophers like HLA Hart opine that judges make laws. Ronald Dworkin said that certain cases: … must be decided by some official, like a judge, ‘exercising his discretion,’ which means reaching beyond the law for some other sort of standard to guide him in manufacturing a fresh legal rule or supplementing an old one. It was Lord Denning M.R who stated in Gouriet vs. Union of Post Office Workers (1982) AC 435 that: Whenever a new situation arises which has not been considered before, the judges have to say what the law is. In doing so, we do not change the law, we declare it. We consider it on principle and then pronounce upon it. As the old writers quaintly put it, the law is in the breast of judges.
The Nigerian legal system is modeled after the British common law regime that thrives on judicial precedents. Judgements of the Court are the flesh and blood that give life to the skeletal bones of the statutes and laws that govern the lives and activities of the nation. Therefore, judges may not sit within the walls of Parliament to pass bills by two-thirds majority into law but in the hallowed chambers of the temple of justice, they ‘make’ laws that influence jurisprudence and the course of history. Other thinkers posit that judges do not make laws but merely declare them.
Whatever the opinion any interested observer has, there is a consensus that judges make important contributions to the development of the law and legal system. They do this through their judgements, which drip with wisdom, knowledge and experience and commendable ability to consider all relevant issues. This is a compendium of some judgements that have made significant contributions to jurisprudence. Topics covered in the judgement include election petition, landlords and tenants, recovery of judgements are drawn from decisions of various courts of records in Nigeria, including the Federal and State High Courts, National Industrial Court, Court of Appeal, the Supreme Court and the ECOWAS Court.
While we provided annotations to ease reading and understanding, we restrain ourselves from saying much in this publication as our preference has been to bring the judgements to the reader in the exact words used by their Lordships. In the judgments, their Lordship laid down important principles of law, which will facilitate easy resolution of disputes on similar issues which are presented before the Courts in future.
In this compilation of fourteen (14) cases decided at supreme courts of record in Nigeria, and the ECOWAS Court of Human Rights, we have attempted to present a robust vision of aspects of the law ranging from commercial law and the murky waters of merger transactions, to that ever-controversial election petitions. Furthermore, we have captured in this compilation cases touching among others on fundamental human rights, decided at the ECOWAS Court, detention of ships in Nigerian maritime law and the case on the suspension of the erstwhile Governor of the Central Bank of Nigeria.
We hope that this work sits proudly on the library shelf of every jurist and lawyer and fuels the passion to see the law does not remain static, but lives and moves to adapt to the needs and expectations of society and in the end, lead to promotion of justice everywhere. We therefore give to you, these Brief Insights. Happy reading!
Charles Nwabulu
Associate Partner/Editor-in-Chief
Kenna Partners
November 5, 2018
Lagos, Nigeria
It is a pleasure to be asked to contribute a preface to this magisterial work. Its importance and usefulness lie in the way in which Fabian Ajogwu has selected his material and conducted his research, to present a comprehensive piece on the Law and Practice of corporate governance in Nigeria. He has done this by laying out the fundamentals of corporate governance, carrying out a well reasoned comparative analysis and study of corporate governance practices in Nigeria. More than anything, his excellent Introduction explains the origins of corporate governance and different governance models. There was no attempt on the part of the author to compare apples and oranges. This book compares Nigeria with other emerging markets of relatively similar size and stages of economic development. It looks at best practices in those jurisdictions and proffers guidance on best practices, and code implementation from the perspectives of the stakeholders of an enterprise.
The Introduction lays out the principles of corporate governance, and illustrates the difficulty of arriving at any general concept of corporate governance across jurisdictions, given the inherent complexity of the subject, arising from the combination of economic and social roles by companies. The author presents the best practices in Nigeria, followed by an annotation of the Nigeria Code of Corporate Governance issued by the Securities and Exchange Commission. There is an attempt to critically evaluate the legal and ethical perspectives of the prescriptions of the code alongside issues of implementation and enforcement. In the Nigerian market, Governance structures are very important, in the sense that they have to be clear and understood to be effective, but their precise forms are less so understood. What really matters is the way in which companies, directors, officers and auditors put these structures to work, so that the enterprise is governed in a proper way.
The socio-economic and political environment of business, legal framework of business, and access to long-term finance, all together shape the forms of corporate governance within a jurisdiction. This book is a study of systems and processes in a continuous state of dynamism, and the practice of corporate governance has developed dramatically in the last decade, with rapid need for it in Nigeria heightened in the wake of mergers and acquisitions, and intense capital market activities that characterized the years 2004 – 2007.
The rules have been laid down by the Securities and Exchange Commission by the introduction in 2002 of a Code of Corporate Governance, and more recently by the Central Bank of Nigeria in its own code for the banking and other financial institutions sector. These codes were written following consultations with industry stakeholders and practitioners. The author participated actively in drafting the first Code of Corporate Governance in Nigeria, and brings the in-depth knowledge of the key issues, the debates, the feed back from stakeholders and the regulatory authorities’ perspectives in his work on the law and practice of corporate governance in Nigeria.
There is no shortage of codes across jurisdictions, and we certainly do not need a separate code for each sector of the economy. It is hoped that the principles of corporate governance will catch up with practical experience and illuminate it. This may be a high expectation, but this book provides information on the relevant works on corporate governance, against which to compare, analyse, and assess the foundations on which so much has been built so rapidly. In addition to changes in structure and process, the balance of power between the lead players in the corporate field has shifted in the last half-century. Sir Adrian Cadbury puts it succinctly when he said –
“At the start, boards of directors were generally weak, executive management was in charge and shareholders were dispersed. Gathering investor pressure on the directors of under-performing companies, however led to a strengthening of boards at the expense of management. This in turn developed into the present position whereby the concentration of shares in the hands of institutional investors has increased their power in relation to boards and management and, at the same time, drawn attention to their responsibilities in matters of governance”
These changes occurred in jurisdictions where the capital market served as the primary source of raising capital. In jurisdictions where the banks are the primary sources of raising capital, the balance of power is also shifting there. The focus in Nigeria is now on the governance of banks themselves and in turn on their responsibilities for the governance of the companies, which they lend to. The forces driving these changes have been mainly regulatory as well as market-based, a point which is relevant to the issue of convergence internationally.
Following the completion of the consolidation exercise in the banking sector, the Central Bank of Nigeria handed down to bankers, a code of corporate governance that was strengthened to meet the specific challenges facing the industry at the time. This leads on, however, to another question of balance, this time the balance between market forces and forces of regulation. Sarbanes Oxley Act is a clear illustration of a regulatory reaction to serious problem – the Enron collapse. Regulatory reactions often depend on the severity and scale of the need.
Codes of Corporate Governance are intended to regulate the conduct of directors, accountability to shareholders, recognition of the interest of other stakeholders and the need to encourage investment to flow where it could be most productive by raising in this case, the Nigeria corporate governance standards to the best international practices in comparable jurisdictions. This would appear to be the reason and purpose of corporate governance.
At whatever level the law and practice of corporate governance in Nigeria is studied and reviewed, there can be no doubt about the value of Mr Ajogwu’s book in clarifying the principals of corporate governance, the codes of corporate governance, and the supporting law and practice in Nigeria. For students of the subject, it is a one-stop shop, which sets corporate governance squarely in its practical context. For practitioners, executives, board members and policy-makers it should be compulsory reading.
With the benefit of being at the forefront of commercial law practice in Nigeria in a full services firm, the author brings to bear on the subject, originality of thought and clarity of language, in a manner that makes for easy reading by boards, shareholders, institutional investors, managers, investment bankers, and lawyers old and young.
Emmanuel Ibe Kachikwu
LL.M (Harvard) Ph.D (Harvard), FCIArb,
Executive Director and General Counsel
ExxonMobile Nigeria
Lagos, September 1, 2007
My research and publications over the past two decades have somewhat concentrated on corporate governance, mergers and acquisitions, and commercial dispute resolution. It was therefore not an easy task to settle on a topic that would do the justice of covering the field of study, as we say in the legal profession, and also contribute to learning and practice. The choice of a discussion on the theme of company law and corporate governance, stakeholder responsibility and the pursuit of profits, has been made to highlight what in my experience and findings have essentially left the modern corporation at crossroads – the tussle between owners and managers in the pursuit of profits.
The subject has been a constant for the past 20 years, with painstaking work of different aspects of corporate governance. My research initially focused on how to make boards more effective and the emphasis was on the issue of independence of boards and accountability to stakeholders. Understandably, we were coming from a background of failed financial institutions in Nigeria. With reactionary market and regulatory responses to the challenges of corporate governance between the years 2001 and 2005, my works looked at the interplay between control and dispositions of the so-called agents of the principals. The works covered practical ways of enhancing the effectiveness of corporate boards through committees. My publications in this area covered the role of the chairman of the board, as well as the role of the company secretary as a custodian of corporate governance. The imperative of ethics as a pillar of corporate governance was the subject of several lectures, Workshops and papers between 2009 and 2010.
I was interested in the corporate structures of the key players in the telecommunications industry. One of the unique features of this industry was that the players had very high market capitalization, but were private companies with core or dominant shareholders, id est, they each had a majority shareholder that drove the management of the company – MTN, Airtel, Etisalat, Glo, and Visafone. Being private companies, they were not regulated or guided by any of the existing codes of corporate governance before 2014. I took an interest in this area and gave a paper on the need for behavioural governance (beyond technical regulation only) in this very important industry.
The conclusions and reflections from the research aided discussions at conferences and workshops organized by the Nigerian Communications Commission in conjunction with the Society for Corporate Governance Nigeria to examine among other things, the existing and desired practices of governance in the telecommunications sector. My effectiveness in the Nigerian telecommunications sector as well as corporate governance against the background of debt and equity provided insights into the appropriate direction for regulation of that industry.
Part of my research between 2012 and 2013 looked at public institutions especially state-owned enterprises and the governance of those institutions. In discussing with a group of Senators and House committee members, the inextricable link between public governance, public service, ethics and institutional reforms, a modest contribution was made towards dealing with the issue of public finance management and accountability in the public sector in Nigeria. In recent times, the discussion has been on several matters arising from corporate governance and the Financial Reporting Council of Nigeria Act 2011, as well as perspectives on the proposed National Code of Corporate Governance.
To get better insights into the evolving practices of corporate governance, I have in conjunction with others and under the auspices of the Society for Corporate Governance Nigeria published the ‘Nigerian Observatory on Corporate Governance – Disclosure in Annual Reports for Public Quoted Companies in Nigeria’ yearly from 2010 to 2014 inclusive.
Insights from this Observatory publication led to further research work and publications in 2014 of the first comprehensive findings on corporate governance reporting in Nigeria of the top twenty most capitalised companies on the Nigerian Stock Exchange.
In sharing my thoughts on ‘Corporate Governance and Company Law: Decoupling Ownership from Management in the Pursuit of Profits’ in November 2015, the intention was to highlight the delineation of ownership rights, duties, privileges and powers from those of the management of the companies. ‘Decoupling’ as a transitive verb in this context means to separate, sever, disjoin, break-up, disengage, or dissociate ownership from management of a company.
For clarity, the use of language must be precise – what is owned is not the company, but the shares (equity) in the capital of the company. It is intended to highlight the challenges that managers and boards face in having to seek continuously to balance the socio-economics rights and benefit of a range of persons, who have a success or failure stake in the company they run (beyond the obvious stakeholders – the shareholders). It is proposed to recommend how to properly balance these competing rights in the pursuit of profits in a capitalist and free economy.
Fabian Ajogwu, Ph.D., SAN, FCIArb
Professor of Corporate Governance
Lagos Business School
Pan-Atlantic, University
20th November 2015
The term ‘ownership’ has been the subject of much discussion with various definitions emerging over time. Ownership has been defined as the absolute right to alienate a property, the right to enjoy quiet and uninterrupted possession of it, and as I have more adversely expressed, the right to destroy it. I have held the view elsewhere that ownership is one of the highest forms of rights about a particular thing, provided that it is understood. It is my humble postulation that, that right is uniquely (but not exhaustively) distinguished by the ‘right to destroy’. You do not legally own that which you cannot lawfully destroy. That you cannot lawfully destroy, for instance, currency in your possession or your international passport, illustrates the point that you are not the owner in stricto sensu, but merely the ‘holder’. In other words, the litmus test of ownership is whether there exists a right to destroy lawfully, without more.
As illustrated in my book, Law & Society, “Mr. A can take off his jacket and burnt it, and no matter how wasteful we may think of him or unappreciative we may be of his actions, there is nothing anyone can do about it. However, the moment Mr. A asks other persons to contribute to the dry cleaning or re-fitting or improvement of the jacket in any form, he loses the right to destroy, at least without first consulting the persons who have so contributed”
This duty to account to all co-owners is what happens in a joint stock company or when one holds the Commonwealth in trust for others. It is even much more, when Mr. A issues a private placement or a public offering, asking people to contribute to the improvement of an asset that was initially his, exclusively. Then the duty to account to the growing list of stakeholders increases. This duty increases as we hold the asset in trust for others.
These facets of true ownership are reflected in the Latin maxim, nemo dat quod non habet, which simply means that ‘no one can give what he does not have’, and in this context, that one cannot pass a title to a property that is not his to give. I have further extended that truism to include that no one can lawfully destroy what he does not have, just as no one can lawfully give what he does not have.
It is pertinent to state as I had done in previous publications, that although a company has been held and stated to be an artificial entity, with all the rights and powers of a natural person of full capacity conferred on it by law, it was however not the intention of Lord McNaughten in laying out this principle in the locus classicus of corporate personality in company law – the old English case of Salomon v Salomon Ltd, that there should be a total extrication of the importance of human behaviour in the management of these legal entities created by law. It was also not the intention of the various Companies Act and other corporation specific statutes that codified the principle of artificial personality to eliminate the importance of human behavior and accountability in the management of registered companies. It is the socio-economic nexus between managerial behavior and company administration (or maladministration) that has brought about the subject – Corporate Governance. In simple words – Governance of the Corporation!
My preoccupation with corporate governance over the past 15 years culminated in assisting the Securities and Exchange Commission with drafting Nigeria’s pioneer Code of Corporate Governance for Public quoted companies in 2003, after about two years of interviews, debates, workshops, etc. it was to signal to investors and all other stakeholders that Nigeria was serious about adopting the global best practices of corporate governance. Some of the other results include founding a non-profit organization dedicated solely to promoting corporate governance through research, publication and advocacy among others. My research on the subject has also resulted in the publication of articles and some practice texts – Corporate Governance in Nigeria: Law & Practice (2007) and Corporate Governance and Group Dynamics (2013).
In my published works on corporate governance practices, I brought out some of the early day issues Nigerian companies faced as a result of attempts by significant shareholders to control the management and affairs of companies they are involved with. I tried to bring out the challenges of agreeing on a general concept of corporate governance across jurisdictions as a result of the different socio-political and economic environment prevalent in those jurisdictions at the time. In annotating the SEC Code of Corporate Governance among others in published works, I had presented the corporate governance practices in Nigeria and also highlighted the position of the law and attitude of the courts to matters of fiduciary duties, professional and board responsibilities and liabilities.
It has also been useful chairing the Nigerian Communications Commission Working Group that produced the 2014 Code of Corporate Governance for the telecommunications industry. The code of acceptance illustrates the power of stakeholder engagement in the quest for a more efficient and well-governed industry, and the same principle can be applied to a better and well-governed society. Membership of the NCC Committee was drawn from the telecommunications operators, who proffered suggestions that formed the basis and substance of the code.
Membership of the Working group includes MTN Nigeria, Airtel, Etisalat, HIS, Vodacom, NCC Senior Executives and a few Corporate Governance Experts.
My personal preoccupation with corporate governance can be pinpointed to some events within the past 22 years, which aim broadly at aligning stakeholder and management interests in a responsible and fair manner. These events include but are not limited to the corporate failures that adversely affected shareholders, employees, creditors, society, and governments in those jurisdictions. The corporate failures of the early 1990s set the stage to embark proactively on regulations and code that would guide the behavior of managers to forestall the collapse being witnessed. I must acknowledge with deep gratitude, the referral role of the Vice-Chancellor, Professor Juan Elegido in the early advisory work with the Securities and Exchange Commission on the subject in Nigeria at the turn of the millennium.
It is trite that no company can be too big actually to fail if its managers do not observe the practice of good corporate governance, Wilson captured this point when he cited the failures of Enron, Parmalat, World Com, and Barings Bank as illustrations of the point. According to Wilson, “a common thread that ran through these monumental corporate failures was the poor corporate governance culture, to wit, poor management, poor regulation and poor supervision”. The collapse of US giants, Enron Corporation and WorldCom led to the legislation of the principles of corporate governance through the enactment of the Sarbanes-Oxley Act of 2002.
In Nigeria, the pioneering effort of the Securities and Exchange Commission in issuing a Code of Corporate Governance paved the way for other Regulators to issue industry-specific codes, such as the National Insurance Commission Code for the Insurance industry, the PenCom Code of Corporate Governance for the pension administrators, etc. The following codes emerged: – the SEC Code of Corporate Governance for Public Quoted Companies, 2011; PenCom Code of Corporate Governance, and the NCC Code of Corporate Governance, 2014
A few principles emerged from the different events, and codes, namely a recognition of the rights and equitable treatment of shareholders 11, and a recognition of the interests of other stakeholders beyond shareholders (employee, creditors, customers, society, government, etc.) The principles also include the accountability of the board through a clear definition of the roles and responsibilities of the board; the integrity of financial statements, ethical behavior and disclosure and transparency in the presentation of information relating to the company. My publications in this field have more recently been concerned with corporate governance practices where there are significant parent-subsidiary relationships. They sought to examine the difficulties associated with corporate governance in parent-subsidiary relationships and suggested ways through which corporate governance could be enhanced in the Nigerian banking and financial services sector.
I have also been preoccupied with the intricacies of mergers and acquisitions in Nigeria as vital tools used by companies to achieve long-term growth and increased revenue or profitability. Research in that area culminated in my publication of ‘mergers and Acquisition in Nigeria: Law & Practice’ 2nd Edition in the year 2014. The first edition published in the year 2011 had been relied upon by the Court of Appeal in resolving the thorny issue of minority shareholder rights in the landmark case of Otunba Ojora v Agip Nig. It is considered a modest contribution to the development of legal jurisprudence on the subject of mergers and acquisitions, and protection of minority shareholder rights, to be relied upon by their Lordships, Augie JCA (as she then was), Nweze JCA (as he then was) and Iyizoba, JCA, to resolve landmark issues in company law and practice.
Fabian Ajogwu, Ph.D., SAN, FCIArb
Professor of Corporate Governance
Lagos Business School
Pan-Atlantic, University
20th November 2015
Advocacy, be it oral or written, is the professional specialty of advocates, otherwise known as lawyers. When my cerebral and accomplished learned friend of the Silk – Dr. Fabian Ajogwu SAN (as he then was) – wrote to me in 2014 inviting me to be the lead author of this previous book, the word “advocacy” leapt out of the title of the proposed book. It immediately captured my professional interest. The reason was that, in that year, I had already spent fifty-one years of my life in the practice of serious advocacy, with thirty-three years of them, as the first female Senior Advocate of Nigeria. Praise be to God. I very much appreciate the gracious invitation.
I contemplated the fact that the learned SAN, like me, must also possess a tremendous passion for advocacy. Thus, I accepted the invitation to engage in the intellectual and professional leadership challenge. Perhaps, if the title of the book had not included the magical word “advocacy”, I might not have responded in the affirmative. I congratulate Fabian – The Prolific Write – for the brilliant choice of attractive and compelling title to wit: “Oral and Written Advocacy: Law and Practice (Traditional and Modern Trends in Advocacy)”.
Work on this book was enormous and scholarly. The research was intense and the writing and review sessions were numerous. There was tremendous investment of resources in time, energy and unreserved industry. Nonetheless, we are both so enamoured of the law and advocacy, that the sheer grueling labour required in writing the book was a happy professional adventure. The book project has been intellectually stimulating. Our approach was to endeavour to:
advocate very distinctly and powerfully what qualitative legal advocacy entails; and,
contribute to legal and academic scholarship.
I believe, with all due modesty, that we achieved our professional objectives.
Indeed, oral advocacy predated written advocacy. However overtime, the extraordinary amount of time, the huge costs expanded on court trials, the congestion and the abysmal lack of adequate infrastructure in the law – courts, eventually caused a gradual shift towards a preference of written advocacy to oral advocacy, first in the United States of America, thereafter in the United Kingdom, Nigeria and elsewhere, it must be acknowledged that most lawyers, over the centuries, right from the time of ancient Rome till now, have been extremely enamoured of oral advocacy skills in the public theatre of the courtroom. Oratory and rhetorics were special courses of study in ancient Greek and Roman culture. Modern day advocates are better advised to engage in such studies!
However, the courts and the lawyers have now accepted the ascendancy of written advocacy because it saves time and costs of litigation or should! Consequently, now, only a limited time is, with much regret, allowed by the court rules for oral advocacy.
It is trite to state that in Nigeria, English is the language of the court. Consequently, lawyers are professionally obliged to improve their English language and expand their vocabulary in order to be coherent in their limited oral advocacy and to spend the available time most effectively and persuasively. Certainly, there is no luxury of time within the available time for bogus or illogical arguments or sterile and convoluted submissions.
The need to engage in superior advocacy is emphasis in Order 6 Rule 3 of the Supreme Court Rules 1983 which provides:-
Failure on the part of an applicant… to present with accuracy, brevity and precision whatever is essential to the clear and adequate understanding of the questions which require consideration shall be a sufficient reason for refusing the application.
This rule is a definitive affirmation of the professional responsibility of every learned counsel to cultivate lucidity of thought, simplicity and cogency in oral and written advocacy. We make bold to advocate that lawyers must through their brilliant oral and written advocacy, demonstrate that they are truly “learned” to wit: that they know the law.
It is incontrovertible that lawyers are public performers in the public arena of courtroom. Thus, the public perception of lawyers places upon as advocates the professional obligation to perform our duties tenaciously, either as learned counsel for the claimant (plaintiff) or defendant in civil cases or, as learned counsel for the prosecution, or learned counsel for the accused in a criminal case. Indeed, perhaps lawyers have themselves to blame for the partial loss of oral advocacy because of the inept and inordinate submissions of some lawyers.
However, as lawyers, we are expected to encourage the settlement of disputes when the circumstances so dictate. As the 16th President of the United States of America, Abraham Lincoln, once advised:
Discourage litigation: Persuade your neighbors to compromise whenever you can. Point out to them how the nominal winner is often a real loser – in fees, expenses and waste of time. As a peace-maker, the lawyer has a superior opportunity of being a good man. There will still be a business enough.
As the co-authors of this unique book, we cherish the intellectual and literary opportunity to place on record our undiluted commitment to legal advocacy. With all due modesty, we present the book to the legal profession (the Bench and the Bar), the public and posterity. By so doing, we entertain the belief that we are helping to project “the glory of justice and the majesty of the law” as declared by the United States Attorney-General.
I make bold to declare, with all due modesty, that the book is sui generis!
Chief ‘Folake Solanke SAN, CON,
B.A., Dip.Ed., HLR, FNIALS,
LL.D (h.c.), D. Litt (h.c.), D.Lit. (h.c.), D. Litt (h.c.) FiOD, FCIArb,
Lead Author
Alabukun Law Chambers, Ibadan
21st day of March, 2016
The concept of a free-market economy presents opportunities for disputes in the pursuit of economic gains. In seeking the determination of their rights and liabilities, or the amicable settlement of their disputes, parties can have recourse to the court system or to alternative dispute resolution (ADR) methods. Although ADR includes other methods and mechanisms such as meditation, conciliation, and negotiated settlement, arbitration has however become the main alternative to resolving or determining commercial disputes. Generally speaking, ADR has gained widespread acceptance in trade and commercial disputes, to the extent that in some jurisdictions, the Court Civil Procedure Rules now require some parties to resort to some type of ADR, usually in the form of meditation, before permitting the parties’ cases to be tried.
In this book I have tried to lay out the framework for arbitration and conciliation, the agreement to arbitration and the practice and procedure of commercial arbitration. In so doing I have tried to bring to the fore the practical situations and issues that parties, counsel, arbitrators and all that are involved in this system of dispute resolution face. It is therefore intended to be practice handbook. The jurisprudence and recent case law discussed in the book provided the basis of academic research, and form a practical in the field of commercial arbitration in Nigeria. The principles underlying the law and practice of arbitration are applicable not only to Nigerian, but to a number of common law countries, including signatories to the New York convention. I have tried to present the law and practice as they exist today.
In fourteen chapters, I have attempted to look at the general principles and legal framework of arbitration, including the law and procedure applicable to arbitration. The nature of the arbitration agreement is examined, with emphasis on the essential elements of an arbitration clause, common defects in arbitration clauses, jurisdictional and enforcement issues. Forum of arbitration, capacity to arbitrate, place and language of arbitration are also discussed.
The practical aspects of commencement of arbitration, as well as difficulties with commencement are discussed in chapter four. The constant challenge of forum of dispute resolution (litigation or arbitration) is treated in chapter six dealing with ‘stay of proceedings’. The discussions cover recourse to court for preservative orders, as well as case law on when a party is deemed to have taken a step in the proceedings. The later chapters deals with arbitration proceedings and preliminary issues such as admissibility of evidence, adherence to rules of evidence, methods of presenting evidence, and the standard as well as the burden of proof in arbitration. Arbitration proceedings and Award are treated in chapters eight and nine respectively.
I have attempted to deal with the pressing issues of enforcement of awards, and challenge of arbitral awards.
A chapter is dedicated to mediation and conciliation and another, to the techniques for settling of disputes. With the benefit of practice experience, and feedback from teaching at the professional training programmes for arbitrators. I have included templates and precedents that should be of practical value to the practitioner, and a case study to form the basis for moot proceedings.
All of these have brought depth and meaning into this book on the law and practice of commercial arbitration in Nigeria. This book lays no claims to perfection, and I therefore take full responsibility for any errors of omission or commission that may be found herein.
Fabian Ajogwu FCIArb.
Lagos.
March 2, 2009
This book has been made possible by the Almighty God to whom we owe the inspiration and empowerment for writing it.
I must thank the lead author, the very distinguished, first female Learned Senior Advocate of Nigeria, the renowned Chief ‘Folake solanke, SAN, CON, for accepting to co-author this book with me. It has been a very valuable intellectual journey – truly rich in depth and meaning. As the norm of our profession, the learned senior leads.
A number of people have been helpful in the publication of this book. We are grateful to the lead author’s elder sister, Chief (Mrs.) Stella O. Odesanya, MFR, her two daughters, Dr Oluyemisi Solanke-Koya Esq., and Ms. Olubusola Solanke, Mr. Femi Olulowo Esq., Mr Kunle Osibogun Esq., her legal executive/personal assistant, Pastor Alao Gbadamosi, her publishers, Mrs Chris Bankole, Pastor John O.O. Oyewole, and Ms. Olaide Tokunboh-Ekunsumi, SAN in the writing of this book. A huge debt of gratitude is also owed to her entire family, members of her Alabukun Law-Chambers and her home staff for their enormous support and encouragement during the literary pre-occupation.
Much appreciation also goes to the staff of Kenna Partners, my Law Firm, for their invaluable support. In the forefront of people who have in no little way, contributed to the successful completion of this book are, my father, Dr Michael E. Ajogwu, SAN, Mr Charles Nwabulu, Ms. Olubusola Otedola-Olusanya, Ms. Olufunke Cole, Mr. Augustine Okafor, Ms. Chiamaka Okorie, Mrs. Chioma Mordi, Mrs. Ananya Kaul and Mr Thomas Aunde. We are grateful for their immense support and contribution towards the completion of this book. Olubusola and Olufunke deserve special mention for painstakingly assisting with the editing of the book.
Finally, much appreciation goes to my good wife, Mrs. Ifeoma Ajogwu, and our children, Nnaedozie, Kenechukwu, and Chiemedo, for their support during the period of writing this book.
Professor Fabian Ajogwu, SAN, FCIArb,
LL.B (Hons), BL, LL.M, MBA, Ph.D (Law), (Aberdeen)
Co-Author
Kenna Partners,
Kenna Place, Lagos
21st day of March 2016
Alternative dispute resolution of matters, especially, commercial cases, has become a permanent feature of the Nigerian legal system. However, this is one area in which there is a dearth of literature, notwithstanding the statutes and avalanche of case-law that pervade the scene.
The ice had been broken by Orojo and Ajomo in their book, Law and Practice of Arbitration and Conciliation in Nigeria followed by Akpata in his work on arbitration. Now it seems, by the production of this well written work on Commercial Arbitration in Nigeria: Law and Practice, no excuse could any longer be proffered for seeking foreign authors in the field of arbitration in Nigeria.
Mr. Fabian Ajogwu has done a thorough job that would be of delight to practitioners in Arbitration, both as Tribunal or counsel. He has left no stone untouched in achieving the aim of ADR, which he has rightly said, provides “The Mechanism for Dispute Resolution processes and techniques that fall outside of the judicial process, which is provided by the government.” The author is right. He is also right, when he pronounced on the rising popularity of ADR:
“The rising popularity of ADR can be explained by the increasing number of cases being handled by the traditional courts and the attendant delays, the perception that ADR implies lower costs than litigation, a preference for confidentiality and the desire of some parties to have greater control over the selection of the individual or individuals who will settle their dispute on the basis of competence, experience and absence of bias.”
If only for these reasons and the fact of commercial convenience to corporations, thereby ADR would not disrupt the original contact inter se or with others outside their domain, corporations, lawyers and ADR practitioners should have easy access to definitive literature that would enhance the progress before Tribunals.
The case law is heavy and not easily accessible without help. And when comes a book of this depth, which could be relied upon in respect of search and research with the ultimate aim of achieving not only speed but unadulterated justice, justice is assured. For in ADR, as the parties agree to be bound by the decisions of the Tribunal, they should have confidence that the Tribunal is always posited to do justice. And for the Tribunal, the practitioners and the parties, there is necessity for the type of work that has been done by this author in his book. One interesting innovation is the chapter fourteen of this book which deals with Moot Proceedings.
The author has shown that the book has no limitations. Teachers and students of arbitral procedures are supplied with a weapon of pursuit of excellence. And thus, everyone, be he a student, party, counsel and tribunal, has a deep fountain to draw from. I feel highly honoured to have been called upon to write a foreword to this book. It is a book for the shelf of everyone of whatever discipline, who believes in actualizing speed, in the determination of cases, especially commercial cases.
I congratulate the author.
HON JUSTICE KAYODE ESO, CON, LTD, LITT.D
Formerly Justice Supreme Court of Nigeria.
Formerly President Chartered Institution of Arbitrators (Nigeria),
Chancellor Ladoke Akintola University of Technology, Ogbomoso.
The primary duty of boards and managers is the effective use of the company’s resources to create value and achieve the objectives of the company. The realization of those objectives depends to a large extent on how well the company is governed. Efficient use of company assets couples with good governance invariably translates to higher probability of good returns on investments, its economic performance and the ability to attract capital on a sustainable basis.
In this book I have tried to lay out the principles of corporate governance, and in so doing, brought out the challenges of agreeing on a general concept of corporate governance across jurisdictions as a result of the different socio-political and economic environment prevalent in those jurisdictions at the time. I have tried to present the existing Corporate Governance practices in Nigeria, followed by an annotation of the Code of Corporate Governance issued by the Securities and Exchange Commission, Nigeria.
In the fifteen chapters, I have attempted to look at the legal and ethical perspectives of corporate governance, the code as well as implementation and enforcement issues. I have made reference to case law such as Caparo case to illustrate the position of the law or attitude of the judiciary to matters of fiduciary duties, professional and board responsibilities and liabilities. In all, I have attempted a study of dynamic practice of corporate governance in Nigeria, spurred even more by the recent consolidations in the financial services sector, and indeed the capital market within the past five years.
In annotating the Securities and Exchange Commission Code of Corporate Governance, I have, with a sense of familiarity (having drafted same), looked at the key issues from the debate and feed back from stakeholders, including perspectives from regulators on the subject. All of these have brought depth and meaning into this book on the law and practice of corporate governance in Nigeria. This book, a pioneer of sorts on the subject, laying no claims to perfection, and I therefore take full responsibility for any errors of omission or commission that may be found herein.
Fabian Ajogwu
Lagos, Nigeria
September 1, 2007
It is a pleasure to be asked to write the Foreword to this important book. Its importance and usefulness lie in the way in which the learned Senior Advocate, Mr. Fabian Ajogwu has approached the subject of fair hearing with emphasis on the Constitution of the Federal Republic of Nigeria 1999. He has carefully selected his materials and cases in a way that presents the practical issues that come in consideration of fair hearing and fair trial.
Fair hearing is an integral part of justice administration, and derives from the principles of natural justices and fairness. The principles belie the whole jurisprudence of law and justice. They are not only applicable to the courts, but also to any person or persons acting in a judicial capacity. The Author is therefore right in holding the view that the rules of natural justice are ‘the minimum standards of fair decision-making imposed on persons or bodies acting in a judicial capacity’. He goes further to pronounce that-
… Where the relevant person or body is required to determine questions of law or fact in circumstances where its decisions will have a direct impact on the rights, liabilities or legitimate expectations of the parties involved, an implied obligation to observe the principles of natural justice arises.
The learned author takes a careful look at the meaning of fair hearing and fair trial, before analyzing the right to a fair hearing under the Constitution of the Federal Republic of Nigeria 1999, making references to decided case under the Constitution as well as under the equivalent provisions of the 1979 Constitution. The twin principles of audi alteram partem (let the other side be heard) and nemo judex in causa sua (that no one should be a judge in his own case) are discussed comprehensively n the context of constitutionally guaranteed fundamental rights. The author provides a practices guide to the remedies that are available under the Fundamental Rights (Enforcement Procedures) Rules of 2009.
I must commend the learned author for making the bold step to write this book, sharing his wealth first, of experiences, and then of researched in the field. I have no hesitation in recommending the book, Fair Hearing to all students and teachers of law, judicial offices, arbitrators, and all persons interested in fairness and justice in the determination of rights and liabilities of others. I congratulate the Author.
Hon. Justice Salihu Modibbo Alfa Belgore GCON
Formerly, Chief Justice of Nigeria
I am pleased to be invited to write a foreword to this insightful piece written by the law firm of Kenna Partners. Having been at helm of the Ministry of Industry, Trade and Investment (MITI) for the past four years, I understand the challenges of many foreign and local investors who have either invested in Nigeria or are intending to invest in Nigeria.
Over the years, Nigeria has put in place several incentives for local and foreign investors. We realize that there is a need to always clarify the legal requirements to enjoy these incentives, so as to further encourage investments. Nigeria is among the top ten fastest growing economies in the world and the underpinning objective that runs through the pages of this work, I believe, is the consolidation of Nigeria’s position as a nation and indeed the surpassing our previous achievements.
This is more so in view of the fact that the world has become a global community. One of the challenges of this obvious reality is that there is a paradigm shift from the traditional approach to commerce as we used to know. Global commerce, as amplified by information technology leaves no one in doubt of the need for a rich guide-book of this nature in Nigeria. The need to position Africa as a business-friendly continent so as to maximize the benefits of Foreign Direct Investments (FDI) is a collective responsibility. This book, Trade & Investments In Nigeria: Legal & Regulatory Aspects, provides an insight into many legal and regulatory issues in business such as legislative requirements for doing business in Nigeria, tax management and efficiency, immigration, labour relations, banking and financial services, corporate governance, oil and gas, maritime and incentives for doing business in Nigeria. The reader is provided with an insight into the regulatory issues which a prospective investor must take into cognizance before embarking upon a commercial venture.
This work which covers many areas of the technical aspect of business law has been written in a logical manner, using simple language, thus making it easily understandable even for non-legal minds. It has outlined solutions to the many challenges associated with legal and regulatory frameworks in the field of commerce and investing in the Nigerian economy.
It is in the light of the above that the importance of this piece written by Kenna Partners cannot be overstated. Kenna Partners, as one of the long standing and top-ranking commercial law firms in Nigeria, has brought its wide experience to bear on this book. The Book speaks eloquently of the sheer breadth of the informed understanding of Nigeria’s business terrain by the authors. It is filled with proactive and reliable legal reference materials in the field of commerce. I salute the industry and ingenuity of Kenna Partners in giving us this master piece.
I sincerely recommend this book to captains of industry, business executives, intending foreign and local investors, members of the Bar and Bench, all persons in the corporate world and indeed, the general public. It is a “must read”.
Olusegun Olutoyin Aganga
Minister of Industry, Trade and Investment,
Federal Republic of Nigeria
May, 2015
This is an era of emphasis on production and export of non-oil and gas products that will lead to wealth and job creation, poverty reduction and enhanced service delivery. This is expected to stimulate the growth of the domestic economy for self-reliance and export and a lead to a better integration of the Nigerian economy into the global market. It is therefore necessary to continually bring to light the legal aspects of doing trade and investing in the Nigerian market.
This book, Trade & Investments in Nigeria: Legal & Regulatory Aspects, contains procedures and directions on investments in various industries in Nigeria. Some chapters contain discussions of the laws and regulatory bodies guiding various sectors. It is organised in parts headed according to the subject treated in each part. There are 12 (twelve parts – A- L) and from the 22 (twenty two) chapters of the first edition, the book is now made up of 25 (twenty five) chapters. Additional chapters include: Enforcement of Contracts; Applicability of the International Financial Reporting Standards (IFRS); Oil and Gas Business in Nigeria; Power and Solid Minerals; Maritime Industry; Cabotage Act: Compliance Issues; Work Visas, Permits and Tax Registration; Law and Procedure in Real Property Transactions; Capital Market and Securities in Nigeria; Legal Framework for the Establishment of Schools in Nigeria; Legal Education and the Legal Profession; Establishment of Banks and Other Financial Institutions in Nigeria; Manufacturing in Nigeria: Challenges and Prospects for National Development; Health Care in Nigeria; Legal and Policy Developments; Commerce in Developing Countries: A Nigerian Perspective.
These topics have been carefully chosen from a long list of contributions by members of the firm. Their choice is informed by the fact that they are considered as having high likelihood of being of practical value to users of the book. If this occurs, then the objective for collating and publishing these contributions would have been achieved. The contributors are the authors of their respective chapters and are responsible for any imperfection.
Dr Fabian Ajogwu, SAN
Kenna Partners Lagos,
May 12, 2015
The good seaman weathers the storm he cannot avoid, and avoids the storm he cannot weather. This book will help the reader navigate the complexities of international shipping finance in the context of the Nigerian economy. Ship Acquisition and Finance: Law and Practice is an important guide for practitioners in the maritime, banking and financial services sectors.
This book provides useful insights into a range of issues; focusing upon ship ownership, ship sales and purchases, ship registration and financing options for ship acquisition; serving as an invaluable reference on the creation and discharge of ship mortgages, dispute resolution and the required documentation in ship acquisitions.
The usefulness of this book lies not only in the topics covered, but in the way in which Professor Fabian Ajogwu, SAN has carefully selected his materials and conducted his research, to present a comprehensive piece on the law and practice of acquiring and financing the acquisition of ships. The book leverages the practical and previous transactional experience of the learned author’s law firm, Kenna Partners. I particularly laud the efforts of the author in discussing the various laws on shipping – The Merchant Shipping Act, Coastal and Inland Shipping (Cabotage) Act 2003, Nigerian Maritime Administration and Safety Agency (NIMASA) Act 2007, with a view to putting forward a concrete analysis of these laws as they relate to the ownership, mortgage, acquisition and financing of ships.
Ship Acquisition and Finance: Law and Practice is a concise and easy-to-read book, which will be a creditable addition to the literature on the subject. I commend the Learned Senior Advocate of Nigeria, for his passion and commitment in ensuring that the law and practice on the subject are expounded. This book should be of great value to lawyers, bankers, entrepreneurs, policy makers and all professionals involved in the business of shipping.
Mr. Jim Ovia, CON Chairman,
Zenith Bank Plc
June 1, 2017
There is a correlation between increased global trade and the demand for ships to carry goods, support oil and gas exploration, enhance tourism and leisure among other things. The list is endless. Shipping as capital intensive venture, requires financing from a pool of resources in the form of equity, debt or a hybrid of both. The funding needs do not change in principle whether it is for new ships or used ships. In this book, the expression -ships‟ and „–vessels‟ are used interchangeably for ease of discussion of a range of vessels that operate and provide support to -various sectors of the economy.
Despite the age and growth of the maritime sector, shipping companies continue to face challenges of access to financing of ship acquisitions. Prospective owners can hardly provide the fixed-asset-type securities (used in traditional lending transactions) required by local banks and financial institutions. The limitations imposed by insisting on a fixedasset-type traditional securities like land and building is that where they exist, they can hardly cover the costs of acquisition or a sizeable fraction thereof of sophisticated modern vessels. Bankability and comfort for providers of capital should instead come from, and leverage, the expected or projected streams of cash flows derivable from the projects or contracts that the ship would be procured for the existing legal framework requires improvement to provide for the evolving trends in project financing, unique contracts in oil and gas exploration, transportation, leisure and support services across other sectors.
This book draws from practice experience at Kenna Partners, having advised on the bank financed acquisition of a number of vessels including Nigeria’s first ever locally wholly-owned deep offshore vessel. This book is intended to guide investors and ship merchants on the process of acquiring and strategically registering ships. The statute enabled drive towards local participation in inland coastal trade is a desirable thing as long as there is access to finance to realise the objectives. The reality is that users of ships understandably look at other considerations of equal (if not more) importance to them, such as safety, security, and suitability of the vessel. The opportunities provided by the Coastal and Inland Shipping Act No. 5 of 2003 (Cabotage Act) can only be tapped into where there are ships, and the means to acquire them. It takes careful planning and deal structuring to convert the opportunities into a bankable project, which if properly financed enables seamless acquisition of vessels that are commercially self-sustaining.
In twelve chapters, I have tried to lay out the ship registration procedure, ship financing options, pre-deal negotiation, ship mortgages, liens and other securities, which include maritime liens. I have also tried to discuss the procedure for shipping mortgage, discharge of ship mortgage including power of sale, and financing as well as registration risks. Dispute resolution is discussed extensively in chapter nine of the book. The future of ship registration and financing, as well as prospects for growth and development, and accounting and financial standards are also discussed.
More specifically, chapter eleven covers the documentation required in ship acquisition. It discusses Declaration of Pledge, Deed of Appointment of Trustees, Deed of Covenants Accompanying a Deed of Legal Mortgage of the Ship, Ship Mortgage Deed, Loan Agreement, Power of Attorney and Deed of Legal Mortgage among others. The appendices to the book include actual documentation that include the Memorandum of Agreement, some useful transaction templates, sample Declaration of Pledge, Deed of Appointment of Trustees, Deed of Mortgage, Deed of Covenants Accompanying Deed of Legal Mortgage, Loan Agreement, Power of Attorney and the Coastal and Inland Shipping Act 2003. It is prudent to mention that no two transactions are exactly the same, and it would be advisable for readers to adapt the agreements they use to the specific circumstances that they are faced with, while relying on the advice of their professional advisers.
In writing this book, it was not my intention to provide a comparative survey of all elements of the subject. Rather, my aim was to provide a practical guide on the law and practice of ship acquisition starting from pre-deal negotiations through to the deal, and to registration. I have taken an approach that is driven by the need for a practice-text, as
opposed to a textbook, so as to deal with the law and practice on the subject.
All of these have brought depth and meaning to the book. This book lays no claim to perfection as nothing done by a mortal is perfect, and I therefore take full responsibility for any errors of omission or commission that may be found herein.
Professor Fabian Ajogwu, SAN, FCIArb
LL.B (Hons), B.L, LL.M, MBA, Ph.D (Aberdeen)
Lagos Business School
June 1, 2017
I have pleasure in being requested to write a foreword to this book by the law firm of Kenna & Associates for two reasons. First, the question of Africa’s integration into global trade and commerce continues to generate much interest both at governmental and non-governmental levels. The place of Africa and the African in world trade remains marginal and several reasons have been assigned for this phenomenon, including the uncertainty and tedium of the legal and regulatory environment.
Second, I have taken a keen interest in the development of the African business climate, and have accordingly been involved with several inter-governmental and non-governmental initiatives aimed at achieving the development of free market economies within Africa. For me, working with the common wealth business council, the blair commission for Africa, the G8 Business Action for Africa, G8 Business Action in Africa Against Corruption and the new partnership for African development (NEPAD) has provided deep insights into the many challenges with which business in Africa (small and large) are faced from day to day.
Issues of taxation, intellectual property protection, business immigration, labor relations, corporate governance, political stability and institutional framework have remained daunting for the continent of Africa. Every effort therefore to clarify the legal and regulatory environment for the purpose of aiding investor understanding of the markets is more than welcome.
It is in the above light that this work by the law of Kenna & Associates stands out tall. The material has been presented in simple language. The authors have been forthcoming in their approach to the issues discussed and very willing to handhold newcomers to the jurisdiction on key matters affecting doing business in Nigeria. It cannot be gainsaid that Nigeria is right on its way to becoming Africa’s top choice investment destination and therefore requires, for its timely attainment of this noble goal, the expertise and scholarship of a crop of professionals who would be on hand to advise and assist investors and the business community with diverse legal and regulatory issues by which commerce is invariably characterised.
Coming from a full services law firm that has been at the forefront advising international and local clients on all aspects of trade investment, this book provides the needed resource and promises a good read for everyone interested in trade and commerce in Nigeria whether large scale or small scale.
Koosun kalian (Ms.)
Chairman, G8 Action In Africa Against Corruption.
This work is a collection of papers and articles written by kenna & associates lawyers, both incumbents and alumni (although actual authorship had been undertaken during incumbency). Although many of the papers have been delivered at conferences on the cognate subject, a great many of the articles had been written specially for contribution to the legal research notes, which for upwards of five years had been the pre-occupation of the research unit of the firm.
Many of the articles and papers have been given rise by actual experience by counsel advising clients on diverse disciplines of commercial law, as well as litigating and arbitrating disputes arising from commercial transactions. Accordingly as to be expected, many of the articles have been culled from actual considered opinions of counsel on the subjects. The initial idea for the writing of this book had been mooted at our breakfast sessions at which industry leaders have had the opportunity of sharing experiences, challenges, frustrations, opportunities, and friendship on a business-to-business level.
Within the last eight years, commerce in Nigeria, (within the context of the legal and regulatory environment), has been characterized by a continuous policy of activism, leading to major milestones. From the mobile telecommunications licence auctions of the early 2000’s to the pension reforms of 2004, to the bank recapitalization exercise of 2005, to the nascent insurer recapitalization exercise, to the ‘unbundling’ of the defunct National Electric Power Authority (leading to its acquired new name, Power Holding Company Nigeria). This also extended to the merger of the joint Maritime Labour & Industrial Council with the National Maritime Authority (culminating in all-new Nigerian Maritime Administration and safety Agency), and to the adoption of the landlord port model by the Nigerian Ports Authority in the port reforms of 2005. The economy has been awash with activity. It was in this same period that the Cabotage Act was enacted. The same period saw the birth of the Economic and Financial Crimes Commission and the Independent Corrupt Practices Commission; it was during the same epochal times that the Supreme Court of Nigeria handed down its decision in what had become known as the Resource Control Suit.
This particular decision had promised, and did engender, serious consequences for the operators of the respective production sharing contracts and joint operating agreements in the oil and gas sector. In the course of the same period Nigeria exited the Paris and London Clubs of international creditors and strengthened the framework for the sustainable management of domestic debt. During the same period, the Corporate Affairs commission (CAC) introduced the “same-day” incorporation procedure and the Securities and Exchange Commission launched the code of Corporate Governance for Quoted Companies. The “same-day” incorporation procedure had been recommended to the CAC by the firm in a World Bank funded study of legal and regulatory impediments to small business formalization.
On the private sector of the economy, activity levels peaked during the period and the indicators and readings were quite encouraging. Many more enterprises got quoted on the Nigerian Stock Exchange as market capitalization grew in geometric proportions, whilst investor confidence continued to rise with the influx of significant foreign direct and portfolio investments. A couple of Nigerian stocks were listed on overseas bourses as well. Corporate bonds had never been so well promoted and professionally practiced as they have been during the period as the federal government, and several state governments have been frequent callers at the bonds market, for different purposes.
In all of this, we have constantly found our clients in need of legal solutions to novel issues presented to the world of modern commerce by an evolving legal milieu. And the finding of efficient, ethical, and justifiable solutions to these legal and regulatory issues has dominated the Firm’s practice during the period in reference. It is therefore the object of this work to document its responses to the active issues in doing business in Nigeria and to provide supporting information for the benefit of all who are interested in the subject: doing business in Nigeria. This work, it must be admitted, is not one of those be-all-know-all kinds of books. It is a manual on commerce, as it were, with an emphasis on the legal and regulatory aspects. Accordingly, copious references to case law and statute have been carefully avoided, these being provided only where necessary to explain an issue in hand, which may not be otherwise so fully explained. Ofcourse, some of the articles and papers have surrendered their original titles and headings to editorial ‘intrusion’. Perfection continues to pertain to the divine, and therefore remains only a noble aspiration for the world terrestrial. This work would not lay any claim to perfection but one thing is doubtless: the contributors have brought a wealth of research and experiential knowledge to bear on the work, and therefore deserve commendation. We do hope that the material contained herein will be of benefit to their intended audience: commercial and investment lawyers, investment and corporate bankers, lawyers generally, entrepreneurs and investors, business managers and everyone involved in the decision-making process and in the legal risk evaluation and management process.
Nzeakor Atulomah
1 September, 2007
Lorem ipsum dolor sit amet, consectetur adipiscing elit. Ut elit tellus, luctus nec ullamcorper mattis, pulvinar dapibus leo.
