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Shares: What does it mean in a Company? By Teingo Inko-Tariah

Shares: What does it mean in a Company? By Teingo Inko-Tariah

by | Apr 19, 2016 | Uncategorized

Introduction
Profit making ventures are usually registered as
companies limited by shares or unlimited companies. A company is limited by
shares when the liability of shareholders of the company is limited to the
amount, if any, unpaid on the shares held by them. In the case of unlimited
companies, the liability of the shareholders is not limited to any unpaid
amount for shares held by them. Thus
the shareholders of an unlimited company are fully liable for the debts of the
company no matter the amount involved. There are various ways a company can
raise capital for its operations. Issuing shares is one of the ways capital can
be raised.
What
is a share?

A share is a unit of a company
that defines the interest of a shareholder in the company measured by a sum of
money. It represents a portion of a company’s share capital and confers certain
rights and liabilities on the shareholder. The Nigerian Companies and Allied
Matters Act defines shares as’ interests in a company’s share capital of a
member who is entitled to a share in the capital or income of the company’.
Thus a share represents a unit of a bundle of rights and liabilities which a
member or shareholder has in a company as provided in the term of issue i.e.
the articles of association of the company. A share is a chose in action
(intangible property which gives the owner a right of action for possession)
and it is a transferable property subject to any restrictions that may be
provided in the articles of association or under the law.
Rights
and liabilities attached to shares
A shareholder is entitled to vote
in the proceedings of company meetings, receive dividend whenever dividend is
declared, attend meetings and contribute to the affairs of the company, inspect
company’s statutory books, protect proprietary interest in the management of
the company. The Nigerian Companies and Allied Matters Act, 2004 prohibits
issuance of shares with no right to vote or a right to more than one vote
except in the case of preference shares. It is an offence under the law to
issue a share with no vote or more than one vote. On the other hand, a
shareholder is liable to pay for shares held and unpaid for upon winding up of
the company where the company is limited by shares. In the case of unlimited
company, the shareholder is liable for the full debt of the company. A
shareholder is also liable to forfeit shares upon failure to honour a call to
pay up in respect of any unpaid shares and suffer any penalties stipulated in
the articles of association or term of issue.
How
to acquire shares in a company
Shares in a company can be
acquired by any of the following ways: subscription, allotment, transfer or
transmission. Subscription refers to the signing of the memorandum and articles
of association during the incorporation of the company whereby at least one
share is taken up by each member or shareholder signing for a company to be
formed. Upon registration of the company, the subscribers are deemed to have
agreed to become members of the company and their names must be in the register
of members.

Allotment is the allocation of a
specific number of shares in a company to an applicant or prospective
shareholder upon an application for such shares. The company may allot all or
part of the shares applied for by a prospective shareholder. A prospective
shareholder can also withdraw his application by written notice to the company
any time before allotment is done. Upon application, the company shall, where
it wholly or partly accepts the application, allot shares to the applicant and
notify the applicant of the allotment and the number of shares allotted within
forty-two days. The company is not bound to allot the full amount of shares
applied for but it is bound to write a letter of regret enclosing the balance of
money paid for shares not allotted. Where shares have been allotted, the
company is required to file a return on allotment of shares with the Corporate
Affairs Commission within one month of allotment in the prescribed form and
with the necessary supporting documents. If you have ever applied to buy shares
of a public companies through public offer, this is what happens at the close
of the public offer.

Shares of a company can also be
acquired by transfer. Transfer of shares is the process of passing ownership
from one person to another. It is executed by the delivery of a proper
instrument of transfer and the share certificate to the company and the
subsequent registration of the transferee in the company’s register of members.
A company is required to file a notice with the Corporate Affairs commission
indicating transfer of shares. Transfer of shares in a company are subject to
any restrictions by law or the articles of association. Every private company
is required by law to restrict the transferability of its shares in its
articles of association. This is done by including a ‘pre-emptive right’ clause
to the effect that any shareholder who wishes to transfer his shares should
first offer such shares to existing shareholders before any other person who is
not a shareholder.

Transmission of shares is the process
of acquisition whereby a person becomes entitled to the shares of another in
consequence of death or bankruptcy of that other person who was the original
shareholder. In the case of death, the shares could either be transmitted by a
will or where there is no will, letter of administration of estate of the
deceased original shareholder. A person who takes up shares of another by
transmission would be required to communicate same to the directors of the
company showing evidence of such transmission and could either choose to have
the transmitted shares registered in his own name or in the name of a nominated
person. Registration of the name of the person to whom shares have been
transmitted in the register of members after all requisite formalities, grants
such a person full rights as a member of the company.

Classes of shares
There are various classes of shares that could be issued by a
company. These are ordinary shares, preference shares, deferred shares and
founders’ shares. The nature of the shares would depend on the kind of rights
attached to them.Ordinary shares are the
basic shares of a company which have no special rights attached and which bear
the main risk. They are sometimes referred to as ‘equity shares’. Majority
of the shares in most companies are ordinary shares which have the basic rights
attached to a share.
Preference shares are those shares that have
additional rights attached to them and they could take various
forms.  Fixed preference shares entitle
the holder to a fixed amount of dividend every year. Fixed right to participate
in surplus profit entitles the holder of such shares to additional dividend
after the fixed amount of dividend. Thus where there is surplus, they benefit
further with the ordinary shareholders.
Cumulative preference shares entitle the
holder to dividend every year whether or not profits are declared by the
company. Where no profit is declared in a particular year, the dividend
accumulates and adds up to that of the following year such that whenever there
is profit and dividend is declared, this class of shareholders get their
dividend that has accumulated over time in addition to what is currently due
them.
In the case of Non-cumulative preference
shares, where a dividend is not declared and paid in a
particular year, such dividend is lost. 
Deferred shares are shares on which no dividend
is payable until other classes of shares have received a minimum dividend.
Preference shares could be stated as non-voting (holders would not be entitled
to attend meetings or vote) and could also be expressed to be redeemable as a
term of issue. The right of redemption would usually be set out in the articles
of association of the company.
A Redeemable share is
one issued on the terms that the company will or may buy them back at a future
date. Founders’ shares and Management shares are shares
with special rights attached for the benefit of the original subscribers and
management of the company respectively in order to retain some measure of
control over the company. They are not popular in Nigerian corporate practice.

Ed’s Note: Culled from www.tennygee.wordpress.com 
Photo Credit – www.pdco.ca 
                     – www.reporters365.com 

PENALTY FOR KIDNAPPING

PENALTY FOR KIDNAPPING

by | Apr 18, 2016 | Uncategorized

The rate of kidnapping in Nigeria has risen considerably in the last ten
years. Not less than 1,500 people are kidnapped on an annual basis in the
country thus making kidnapping more or less a new “cottage industry”. With the
statistical belief that one out of every 5 Africans is a Nigerian,
it may not be wrong to say with her population and the increase in the wave of
kidnapping, Nigeria has more potential kidnap victims than most of her West
African neighbours.
–                    
The Street Journal, 9th April,
2013, www.thestreetjournal.org
 According to the Black’s Law Dictionary, 10th
Edition, to kidnap is to seize and take away (a person) by force or fraud,
often with a demand for ransom.


A recent statistic released by NYA
International, specialist crisis prevention and response consultancy, indicates
that Nigeria accounted for 26 per cent of kidnap and ransom incidents globally
in the first half of 2013.  Kidnapping is
big business in Nigeria at this time, hardly does any month go by without news
or reports that someone has been kidnapped.

Moreso, as kidnappers seem to be no respecter
of persons, for they kidnap the poor, the rich or family members of the rich. This
is why states like Edo and Delta States have passed the Anti – Kidnapping laws and
imposed the death penalty for convicted kidnappers. I remember my friend’s mum
was kidnapped in Edo State years ago and I observed firsthand how the family
suffered during that period. Thankfully, she was returned unharmed.

The Criminal
Code Act, CAP C38, LFN 2004, also provides a penalty for kidnapping. The law
provides in Section 364 that –
“Any person who –
1.
Unlawfully imprisons any person, and takes him out of Nigeria without his
consent; or
2.
Unlawfully imprisons any person within Nigeria in such a manner as to prevent
him from applying to a court for his release or from discovering to any other
person the place where he is imprisoned, or in such a manner as to prevent any
person entitled to have access to him from discovering the place where he is
imprisoned,
Is guilty of a felony
and is liable to imprisonment for ten years. “
The
rise in kidnappings has been attributed largely to the poor standard of living
and unemployment. However, no reason is ever good enough to commit a crime
especially when it involves putting the lives of others in jeopardy.
Adedunmade
Onibokun, Esq.
@adedunmade
References
–        
The Independent Newspaper
http://independentnig.com/2013/08/nigeria-accounts-for-26-of-kidnap-globally/
–        
The Street Journal

http://thestreetjournal.org/2013/04/kidnapping-nigeria%E2%80%99s-fatest-growing-industry/

– Photo Credit: www.africanspotlight.com 
Can a Director of a private company be appointed by a Will? by Teingo Inko-Tariah

Can a Director of a private company be appointed by a Will? by Teingo Inko-Tariah

by | Apr 15, 2016 | Uncategorized

Mr Arrowhead, a very prominent Nigerian suffered a stroke and was flown abroad where he received medical attention for several months. Unfortunately, he died abroad and his body was flown back to the country for burial which was celebrated in grand style. Although Mr Arrowhead left a will, there was serious contention among family members over the content of the will especially as some of the family members felt disappointed over what was bequeathed to them. Typical of a polygamous family, the will was contested in court. However, that is not the main thrust of this paper. It was discovered that in the will, the testator purportedly appointed his wife as a director of one of his companies. This is a real life situation and raises the question which this paper seeks to address. Can a director of a company be appointed by a will?

Who is a director?
S 244(1) Companies and Allied Matters Act (CAMA) 2004 defines directors as “persons duly appointed by the company to direct and manage the business of the company”. s. 567 CAMA further describes the term director to “include any person occupying the position of director by whatever name he may be called and includes any person in accordance with whose directions or instructions the directors of the company are accustomed to act”. Directors are officers of a company who are appointed to operate the business for the benefit of the shareholders. According to s. 567 CAMA, ‘officer’ in relation to a corporate body includes a director, manager or secretary. There are two broad categories of directors in modern corporate practice and governance. They are executive directors and non-executive directors. Executive directors are those directly engaged in the day to day management of the business on a full time basis while non-executive directors are external board members who act as a check on the executive management. They are usually appointed on part time basis and they have become more prominent with the development of corporate governance. There are various types of directors: shadow, alternate, independent, and life director.
Appointment of directors
The authority to act as a director of a company comes from due appointment. Thus a person who acts without such appointment commits an offence under s. 244(3) & 250 CAMA and he would be personally liable for his actions. Where the company holds out a person not duly appointed as a director to carry out responsibilities in that capacity, the company will also be liable to a fine s. 244(4) CAMA. However, although a director may not have been duly appointed in accordance with the law, his actions in that capacity may still bind the company as if he were a de jure director (i.e. one who was duly appointed) if it is the company that holds him out as a director. Therefore appointment is a fundamental criterion which validates the position and authority of a director of a company.
In Nigeria, the law provides for the manner in which the director of a company may be appointed: who can appoint and how to appoint a director. For the first directors, the law provides that they should be appointed by the subscribers to the memorandum of association of the company, a majority of them or they may be named in the articles of association of the proposed company. For subsequent appointments generally, it is the shareholders in a general meeting who are empowered by law to appoint directors by ordinary resolution. The board of directors of a company could also appoint other directors subject to the approval of the shareholders at the next annual general meeting where a vacancy arises from death, resignation, removal of a director. This is referred to as filling a casual vacancy and where the newly appointed director is not approved by the shareholders in a general meeting, he would cease to be a director. Where all shareholders and directors of a company die, any of the personal representatives may apply to court to convene a meeting of all personal representatives of the shareholders entitled to attend and vote at a general meeting to appoint new directors to manage the company. Where the personal representatives of the deceased shareholders fail to do so, the creditors of the company, if any, shall be able to appoint a director.
What role does the Articles of Association play in appointment prescriptions? Life director, share qualification.
The AOA is the document that makes provision for the internal management of a company. It is a part of the constitution of the company which sets out the rules for running the company. Typically, the article of association should contain provisions relating to share capital, classes of shares, rights and restriction to each class of shares, allotment, transfer and transmission of shares, meetings, resolutions, directors, auditors, company secretary, the seal, winding up. With regards to directors, the articles of association prescribes the appointment, removal, disqualification, remuneration, tenure of office, rotation, filling of casual vacancy of directors and also provides for life director where the company so wishes. Usually, in corporate practice, where the law is silent on an issue, it is the articles of association that would provide direction on such issue thus, for instance, in Nigeria; the CAMA, 2004 is silent on the issue of alternate directors although the practice is recognised in the corporate sector. Therefore, companies that wish to have alternate directors would make such provision in the articles of association as the basis for adopting the practice. Another instance is meetings via conference calls.
What is a will and what kind of bequest can be made by a will?
A will is a voluntary expression of the intention or wishes of a person of sound mind wherein the person states or gives directives of how his property should be disposed of in event of his death. Property given by a person in a will is referred to as legacy and could either be chattels i.e. movable items such as wrist-watch or car; realty i.e. immovable items such as land or buildings; or pecuniary i.e. money.
Conclusion
Directorship in a company is not a type of property and does not fall under the types of properties that can be bequeathed by a will. A person who dies automatically ceases to be a Director of the Company and so loses the power to bind the company which is a separate entity from the owners & Directors. Any subsequent director can only be validly appointed by due procedures laid down by statute. Thus, any purported appointment by a will goes to no issue as it cannot be recognised except due process has been followed. At best, it can serve as an expression of intention of the deceased director as to who he wishes to be on the Board of the company. This intention can only be executed by the living Directors, if any and until so executed, it is invalid.

Photo Credits – rayhansobhan.com

The Top 14 Things Landlords Wish Tenants Knew

The Top 14 Things Landlords Wish Tenants Knew

by | Apr 15, 2016 | Uncategorized

 
 
Editor’s Note: – This article was initially posted on 6th February, 2015, on
Time Magazine via http://time.com/money/3697636/landlord-tenant-renters-tips-advice/
and has been reproduced for the purposes of sharing on the blog.
Pay your bills,
respect your neighbours, and please hide your weed. Please.
Sometimes the landlord/tenant relationship can be a difficult one. But
it does not have to be that way, and it certainly does not have to start out
that way. As landlords, we try to get this relationship off to a good start and
keep it that way by taking care of our properties and tenant concerns.
But some tenants, perhaps due to past experiences, prepare for the worst
and thus approach the relationship ready for a fight. Maybe they have never had
a decent landlord. Maybe some just do not know how to act. Whatever the reason,
here are 14 tips from our 12 years as landlords to tenants everywhere for a
decent landlord/tenant relationship.

1. Pay your bills on time. Seems fairly
obvious, I know, but many tenants believe they can pay every other bill before
they pay the rent. Want to stay on our good side? Please pay your rent on time.
2. Always try to be polite. I will, too.
Being polite and calm really does go a long way. You would not like it if I
left you snarky or angry screaming messages on your voicemail. I know sometimes
issues can seem to linger on and on, but we really are doing our best to get
things resolved.
3. Listen to our instructions. We tell you
things for a reason. If we show you how to trip a breaker or turn a gas valve
off, listen. It may just save your butt. If we tell you there will be a hard
freeze tonight and to please let your faucet drip, don’t call us the next day
and complain that your pipes have frozen and you need to do laundry. I can’t
control the weather, so you will just have to wait until it warms up.
4. Help us. We try to take care of our properties, but we can’t
be everywhere all the time. Is there something we need to know about? Tell us.
Is something broken? Let us know. Help us by being our eyes and ears.
5. Tell the truth. Did you or your kid flush
something down the toilet and stop it up? Then tell us the truth so we can get
the problem resolved as quickly as possible. After a dozen years in this
business, we can almost always determine the culprit anyway.
6. Please just leave me a message. If we do not
answer your call, do not hang up and call over and over again. There are times
we simply cannot take your call. How do you think we are going to feel when we
finally answer you after you have called five times in a row? It had better be
a matter of life or death.
7. Understand that we have a lot going on. Sometimes other tenant’s issues may take priority. We know about your
issue, and we will get to it just as soon as we can. We might for example need
to make sure everyone has heat before taking care of your dripping bathroom
sink.
8. If you get in a bind, talk to us. Communication
is key! Tell us what is going on. Did you lose your job? Has your roommate gone
off the deep end? We have been there before, and we know what it is like. But
if you do not talk to us, there is no way we can help you. Please do not put
your head in the sand and hope whatever problem you are having will go away. It
will not, and things will only get worse.
9. Treat my property and the people who do work for me with respect. You would not believe how many people are just plain rude to the people
we send over to try and fix their problems. Plus, how do you think we are going
to react if we see that your place is a mess or that you are causing damage?
Disrespecting our properties or our help is a sure way to create an adversarial
relationship.
10. Work with me. We know you have a busy schedule.
So do we, and trust us, we want your issue resolved as quickly as possible too
because we have a dozen or so more to deal with. It all goes much easier if you
work with us on times and arrangements. You might have to put up your dog for a
day or allow us into your apartment on your day off. We hate to disturb you,
but we will be done and out of your hair just as soon as we can.
11. Trust me. We are not going to steal your stuff or try and
stiff you. Yes, we know some landlords might, but not us. If we say we need to
get into your home, it is for a legitimate reason.
12. Follow the rules. They are
there for a reason. They were explained to you when you moved in, and you
agreed to follow them. It just makes life harder for all of us if you choose to
ignore them. If you could not live with the rules, then you should not have
moved in.
13. Respect your neighbors. Would you
appreciate a loud party the night before you need to make a major presentation
at work or before your final exams? No, you would not. Remember that you live
in an apartment building, and you have neighbors — sometimes very close
neighbors. Think about how your actions might affect them. I’m not saying do
not have any fun; just try to be considerate.
14. Hide your weed. Just please do this. It is
technically against your lease, and you really never know when there will be an
emergency and who will need to access your place.
A lot of the above is just common courtesy and common sense. But for
those few — and you know who you are — please review and follow the above and
let’s make your stay with us as pleasant as possible.
 
 
Photo Credit – www.time.com
Legal & Commercial Issues in International Project Finance By Adetutu Oluwaseyi

Legal & Commercial Issues in International Project Finance By Adetutu Oluwaseyi

by | Apr 12, 2016 | Uncategorized


Background
International
Project finance typically involves multiple parties from different
jurisdictions with conflicting interests that must be protected and obligations
that must be clearly defined. The structure of project finance loan can be
limited recourse or non-recourse to the project sponsors. The underlying
rationale is to distribute risk among the participants involved. In cross
border transactions, it is important to anticipate and properly analyze the possible
risk the project could be expose to in the host state and identify solutions
that can be used to mitigate or eliminate the impact of the risks. In order to
mitigate or reduce the risks associated with jurisdictional issues, clauses
should be incorporated in the contract agreements between the counter parties
at different phases of the project.  The contracts include- Sponsor
Support Agreement, Loan Agreement, Collateral Security Agreement, Power
Purchase Agreement (PPA), Engineering Procurement and Construction (EPC)
Agreement, Operations and Maintenance Agreement (O & M), Fuel Supply
Agreement, Concession Agreement, Management Agreement, Joint Venture Agreement
and Shareholders’ Agreement. The following issues and questions can be
identified from the above scenario:
1.    
What are the applicable laws and institutional
framework that will govern the project in the host country?
2.    
What structure should the business transaction take?
3.    
What will be the currency of the transaction since the
financier and project will be based in different jurisdictions?
4.    
What is the profitability of the project?
5.    
What is the structure of the project loan?
6.    
What is the political history of the host country?
7.    
What are the other risks to be considered in that
jurisdiction and how can the project be secured from such risks?
Possible
approaches to address these issues are discussed below:

1.    
APPLICABLE LAWS
These are
policies and regulations of the host state designed to regulate cross-border
transactions. It is important to have a comprehensive knowledge of the
underlying legal and institutional framework regulating the establishment of
international projects in the host state as this varies depending on the
particular jurisdiction. It is advisable for parties to take out the services
of a local counsel to get advice on the host state legal and investment
environment. Generally, applicable laws may encompass:
·       
Domestic laws: Information relating to the Commercial laws, Law of Corporate
Governance, Labour Laws, Land Laws, Property Acquisition, Tax Regime,
Environmental Laws, Immigration, Customs and Industry.
·       
Administrative Framework: Information on the relevant governmental organs saddled with the
responsibility of administering international power projects, e. g obtaining
license, approvals, permits, the quality of public administration, transparency
of the system local regulations and system of dispute settlement.
  • International Standards: Applicable laws will also include guarantees provided by the host
    state for protection of foreign investments under any international
    standards. These standards can be provided on the platform of a Bilateral
    Investment Treaty (BITs) or Multilateral Investment Treaty (MITs)
    involving the states of the parties involved in this transaction. For
    instance, under the World Trade Organisation Framework (WTO), the General
    Agreement on Trade in Services (GATS)[2] will apply where services are
    provided by an investor of a member through the establishment of a service
    provider in the territory of another member.
·       
Agreement and Language: It is essential to identify the contracts and the language of the
contracts between the parties. The loan agreement is usually in the language of
the lender, while the collateral security agreement is usually in the language
of the host state as the collaterals are most likely located within the same
jurisdiction as the project.
·       
Choice of Law Clause: It is important that parties mutually choose the law governing the
contracts underlying the project development and incorporate in the contracts
of agreement.[3] The foundation of project finance is originally a joint
venture agreement between two parties which will invariably extend to other
parties in order to spread the risk involved. Therefore, to protect each
parties involved at every stage of the contract will require contracts
agreement designed to cover the choice of law clause governing the transaction,
insurance safeguards and settlement of investment dispute between the parties.
Parties have the flexibility to build protective clauses in the agreement to
secure their rights and interests under the contract.
·       
Dispute Resolution: Due to the fact that many participants from different jurisdictions are
involved in negotiating separate contracts at different phases of the project
that will form a global structure with links, it is essential to safeguard the
whole network of contractual relationship by anticipating dispute among the
parties and incorporating a mechanism of resolving such dispute in event of
occurrence.[4] Parties may first resort to non-binding informal consultation
(mainly, conciliation and mediation) before proceeding to the binding
structured (judicial forums and arbitration) means of dispute resolution.[5]
Non-binding mechanisms traditionally offer the flexibility that international
market participants require to protect future relationships while binding
mechanisms offer the judicial implementation of the rules set forth in
applicable statutory law and in the contracts between the parties. [6] Parties
to international contracts more often than not utilize two types of forums
namely domestic courts and international arbitral tribunals. During
negotiation, it is important that parties agree on the choice of forum and
choice of law to be applied by the forum in the event of dispute and
incorporate in the contracts between the various parties.
2.    
STRUCTURE OF JOINT-VENTURE
Project finance
is a platform on which certain projects are financed off the balance sheets of
companies.[7] It is a specialized funding structure that relies on the future
cash flow of a project as primary source of repayment without recourse to the
project sponsor’s assets for the debts or liabilities of the project.[8] It
holds the project’s assets, rights and interests as collateral security.[9] The
design of the joint venture between the sponsors is established by the joint
venture contract for the purpose of jointly financing the project. The
structure selected by the sponsors is important in project finance because it
has implications on a number of things including ownership, management, roles
and responsibilities of the sponsors, equity contribution, license and permits,
documentation, location, termination and consequently financing.
·       
Special Project Vehicle (SPV): A joint venture does not have legal personality. In order to create a
platform on which the power project can be floated without encumbering the
balance sheet of the two sponsor companies, a Special Purpose Vehicle (SPV)
that will implement the project and raise the funding should be created.[10]
Establishing a SPV mitigates project risks and shields the sponsor from adverse
developments. The nature of the organisation of the SPV depends on many factors
including the laws of the host state.
·       
Incorporation: The SPV should be registered and incorporated to give it a legal
personality and becomes independent from its sponsors. This provides a
safeguard for the project in the event of failing shareholders dragging a
healthy project into distress or vice versa. The sponsors will typically
incorporate the project company in the most attractive jurisdiction from a
regulatory perspective that allows the sponsors to continue to own and operate
the project company or holding company.
  • Management and Control: It is important to determine the concept of ownership and control
    of a company under the laws of the host state in order to determine the
    structure of shareholding of the company. A due diligence on the ownership
    structure to determine what form of organisational structure is prescribed
    and foreign participation in host country’s companies will determine the
    shareholding capacity of the sponsors and their equity contributions. The
    management of the project company and the relationship between the project
    sponsors should be specifically spelt out in the management agreement.
·       
Equity Contribution: The equity contributions of the sponsors should be specifically stated
in the shareholders’ agreement to ascertain the timing and certainty of the
equity funding in order to optimally schedule the timing and dependability of
the injection of funds into the project.
·       
Effective place of Management: The sponsors of the project company have different jurisdictions. It is
important that the place of effective management of the new company be spelt
out in the management agreement to determine its nationality and place of
control.
·       
Insolvency: Insolvency is the most crucial indicator of the attitude of a legal
system in its commercial framework.[11] It has a profound impact on legal
relationships. This signifies the importance of counter-parties having a prior
understanding of their positions in the event the project company goes
insolvent.[12] The divergences always focus on priority, property, contract and
liability. Under the common law jurisdiction, emphasis is on rescue and
re-organisation. In contrast in civil law jurisdictions, the insolvency process
focuses on winding companies up. One way to determine the rights and
liabilities of counterparties is to negotiate the choice of law that will apply
in case the project goes bankrupt and incorporate in the Loan agreements and
Shareholders’ agreement. Parties may consider the adoption of the 2005 UNCITRAL
Model Law on Cross-Border Insolvency.
  • Tax Regime
The tax policy
of the host state has considerable effect on the profitability of Project
finance.[13] It is important to structure the project in such a way that it
will take advantage of tax benefits in the host country. This will include
analysis and use of double taxation treaties, privileges under bilateral and
multilateral trade treaties. The place of effective management and
incorporation is also important for tax purposes.
  • Obtaining Operating Licences and Permits
In many cases,
implementing a project depends on obtaining the appropriate licences, permits
and concession ns from the host state. It is essential that these permits be
made transferable or renewable as the case may dictate in order to maintain the
on-sale value of the project. The government may negotiate certain clauses
which give it the right to revoke the licence or concession. In cases like
this, the lender can seek security through government approval of financing of
the project. Negotiations in respect of operation license, expatriate quotas
and approvals should be covered in the concessionary agreement.
3.    
CURRENCY
International
finance project involves cross border transactions in which, case cost and
revenues on the same project are computed in different currencies (currency of
the financier and the host country). It is therefore instructive for the
parties to agree on the currency of transaction, its convertibility, exchange
rate and repatriation of profit.[14] The transnational and long-term nature of
international project finance makes it almost plausible that the risk of
foreign exchange will arise. Generally, parties could negotiate these terms
with the host government and include same in the concession agreement.
·       
Exchange Rate: After currency has been determined, it is vital to also agree on the
rate at which conversion is to be done from the foreign currency to the host
state currency and include these terms in the loan agreement between the Lender
and Project Company.
·       
Exchange Controls – The parties should examine the foreign exchange position of the host
country and understand the government’s priorities for foreign exchange. This
is because shortage of foreign currency may result in the risk that the project
company may not be able to convert local currency into foreign currency to
repay the loan. This risk may be mitigated by negotiating priority access to
foreign exchange or a guarantee of availability with the host country.[15]
However, clearance or permit for importation and exportation of fund should be
obtained from the Central Bank or board for transfer of fund.
  • Repatriation of profit: The sponsors and lender are particularly interested in ensuring
    inflow and outflow of cash from the project and that profit realised are
    extended to deplete the loan sum. It is therefore central to the
    transaction that the parties are able to transfer fund from the host
    country effectively and at a convertible currency. The right of the
    project company to transfer fund and make loan payment should be included
    in the concessionary agreement. The project company may also open an
    offshore and local account through which payments can be made smoothly.
1.    
Inflation: This risk exists when certain input costs can be subjected to price
inflation. In such cases, the project sponsor must be able to pass on these
price increases to customers. If the project output is a product whose price
levels are fixed by the government, the ability to pass on the cost increase
will be limited. Similar risks exist when the inputs are denominated in one
currency and the project outputs in another. Thus it is important to identify
any such risks and the ability to pass them on to the customers. It is not
always possible to increase tariffs particularly in power projects.
4.    
FEASIBILITY STUDY
This comes at
the conceptualization of the project. A thorough examination of the viability
of the project is carried out first by the sponsors to determine its
sustainability. This will encompass duration of the proposed project, cost
implication, profit, location of facility and suitability, technological
assistance, permits, environmental impact of the project, supply of materials,
market projection, debt service capabilities, etc. An independent feasibility
study is later carried out by the lender to supplement the first study. This is
to ensure the ‘bankability’ of the project.
5.    
LOAN AND SECURITISATION
Generally,
sponsors will want a non-recourse project financing where there is no recourse
to the sponsor’s assets for the debt or liabilities of the project company.
Non-recourse financing therefore depends purely on the merits of a project
rather than the creditworthiness of the project sponsor. The project debt
repayment depends on the cash flow sourcing from the revenue generating
contracts of the project and the assets of the project are used as collateral
for the debt.  In this case, the project sponsor has no direct legal
obligation to repay the project debt or make interest payments. The ability to
take effective security can assume crucial importance in project finance.[16]
In some jurisdictions, laws on the taking and enforcement of security,
especially movable assets, cash flows and contractual rights (such as
receivables) may not always be satisfactory.[17]
In major
international projects, it is highly likely that more than one jurisdiction
will be relevant to the security package given to the lenders. Relevant
jurisdictions may include where the project is located, where the project
company is incorporated, the sponsors and any intermediate holding companies
and where the project company’s bank accounts are located. Security package can
be both onshore and offshore. Security must satisfy any relevant formalities in
each relevant jurisdiction.[18] The structure of the loan and interest rate
should be agreed upon and included in the loan agreement. Collateral security
document should be negotiated separately. Usually, while the language of the
loan agreement is in the lenders language, the collateral security document
should be in the host state language.  It is important to instruct local
counsel in the relevant jurisdictions to confirm that the proposed security
package is appropriate and capable of being validly perfected.
6.    
POLITICAL CLIMATE OF THE HOST
COUNTRY
Political
stability is an important ingredient for cross-border project financing which
contributes to the success of the project. This is because the power project is
more likely to rely on governmental concessions, tax reliefs, licences or
permits.[19] Lenders and sponsors alike are interested in carrying out
background check on the political history and regulatory climate of the host
government to determine its credibility and stability. Political risks may
include the decision by a government to cancel the project or to change the
terms of the contract or not to fulfill its obligations, failure to implement
the tariff reliefs agreed upon in the contract, the risk of expropriation or
nationalization of project assets by the government etc.
Expropriation
or naturalization occurs where a host government acquires the rights or assets
of a project or where a government measure on the aggregate deprives the
sponsors of the equity ownership or value of the investment.[20] The latter is
known as indirect expropriation and it occurs more regularly in modern times
when for instance, government of the host state may use a combination of taxes
and charges to increase its share of profit in the project.[21] However, such
anticipated risks can be mitigated by opening an offshore account, through
political risk insurance or by inserting in the concession agreements
clauses that imposes an obligation on the host state to pay adequate and prompt
compensation in case of expropriation. However, not all political risks are
likely to be borne by the government.
7.    
INSURANCE
Of particular
importance to international project finance is the mitigation of natural and
political risks. Natural risks are force majeure such as floods and
earthquakes, civil disturbances and strikes. Power plants are particularly
susceptible to force majeure.[22] This boils down to the importance of
feasibility study. The project should be assessed in light of such risks to
ensure facility pricing and structure is commensurate with the risk profile of
the project and downside cash flow analyses are undertaken to assess how much
resistance the project structure has to such deviations.[23] Political Risks
Insurance usually covers currency non-convertibility, expropriation and
political violence. This can be obtained from the Multilateral Investment Guarantee
Agency (MIGA), International Financial Corporation (IFC) and Overseas Private
Investment Corporation (OPIC) [24] The lender can also seek guarantee from the
host government to cover risks of expropriation and availability of foreign
exchange.
8.    
DUE DILIGENCE
A cross-border
transaction of this magnitude will require the sponsors and lenders to carry
out a background check on the other participants to determine their credit
worthiness and business credibility– O &M contractor, Fuel supplier,
and Technological support.  Due diligence is carried out by experts
including the local legal representation, technical advisers, market advisers
to determine the robustness of the underlying economics of the project, the
stability and transparency of the host country’s political and legal
environment, and other risks. The representation and warranty section of the
project contracts, including the project loan agreement serve an important role
in the project due diligence process. It basically confirms legally, that certain
conditions enabling the project to commence are in place. 
[1] B.A (Hons);
LL.B (Hons); BL; LL.M (Ife Nigeria); Researcher, University of Pretoria South
Africa.
[2] Under
Article 1 of the GATS framework, member states are obliged to extend Most
Favoured Nation Treatment and National Treatment to investors and investments
from other member states.
[3] J Delmon et
al International Project Finance and PPPs, A  Legal Guide to Key Growth in
Africa (2012) 43
[4] C Dugue
Dispute Resolution in International Project Finance Transactions (2000) 1077
[5] UNCTAD
Dispute Settlement: Investor State (2011) 14
[6] Dugue (n 4
above) 1071
[7] T Merna et
al Financing Infrastructure Projects (2002) 6
[8] A Fight
Introduction to Project Finance (2006) 3-4.
[9] H Switala
Project Finance and Obtaining Sufficient Funding for the Successful Completion
of Your Project SADB 1
[10] Delmon (n
3 above) 15.
[11] P R Wood
Principles of International Insolvency (2007) 3
[12] L Wolff
The Law of Cross Border Business Transactions- Principles Concepts and Skills
(2013) 35
[13] S L
Hoffman The Law and Business of International Project Finance (2008) 50
[14] Hoffman (n
13 above) 41.
[15] ibid
[16] Fight (n 8
above) 58
[17] Ibid
[18] Key
formalities include -requirements as to the form of the security or any
execution formalities, registration requirements other filing requirements,
translation and notarisation requirements and the payment of stamp duties or
other fees.
[19] S Gatti
Project Finance in Theory and Practice Elsevier (2008) 32
[20] A
Stephenson et al Protecting Foreign Investment by Using Bilateral Investment
Treaties (2012) 10.
[21] Hoffman (n
13 above) 48.
[22] Fight (n 8
above) 62.
[23] Ibid
[24] Hoffman (n
13 above) 41
Editor’s note: This article was originally posted by the author on 9th April, 2016 on www.linkedin.com 
Top Tips for Perfecting Your Court Room Craft Part 1 By Stephanie Solomon

Top Tips for Perfecting Your Court Room Craft Part 1 By Stephanie Solomon

by | Apr 11, 2016 | Uncategorized

Since 2014 I have been based at the Royal Courts of Justice (London, UK) and I have had the privilege of seeing and hearing some of the best advocates in the country. I also work with Law students to organise monthly moots/mock trials.
Whenever I speak to a current LLB/GDL student, I always get asked the same question:
“What makes a good Advocate?”
My advice may vary depending on what type of student I am addressing, but here are five simple tips I have learnt from my days in Court:
1.Introductions are everything.
The first person to stand up in Court (Counsel for the Claimant or Counsel for the Prosecution) should always introduce himself or herself to the Court. There is nothing worse than not knowing who is addressing the Court. An introduction should be concise and convey each person’s identity clearly.
An example would be: 
“May it please Your Honour, in this matter I appear on behalf of the Prosecution, with my learned friend Mr Bloggs, alongside Ms Bloggs…”
2. Divide your roles.
This is a tip for law students or anyone participating in mooting or a mock trial. During one of my moots, the Defence seem undecided on who would be doing the closing statement, and two students ended up addressing the Court! 
This is not advisable. When working as part of a team, ensure that each member of the team has a role and there is no overlap. Divide the roles between the team members but do not tell the Court who is doing what – this should be clear from your delivery.
3. Your opponent is ALWAYS your ‘Learned Friend’. (See point one)
Advocacy is intellectual theatre. Remember the formalities involved and do not break from the obligatory phrases.
4. Always have a sit down line.
It can be a little difficult closing your speech after speaking for a long period of time. Whether it is opening submissions or closing submissions, always have a sit down line – something that follows on naturally from your statement but allows you to rest.
An example would be: 
“Unless your honour has something I can assist with, those are my submissions.”
5. Be aware of your volume.
This cannot be emphasised enough. Regardless of which Court you are before, or even if you are doing a moot, the courtroom is going to be quite large. Depending on Courtroom, you may have the luxury of microphones and audio equipment, but always project. You should also be aware of those listening to your submissions. You do not know whether the Judge or any of the parties have hearing impediments, so ensure that you are clear.
Whether you are already in practice, or training to become a Barrister/Solicitor Advocate, you should be constantly perfecting your courtroom craft. Of course there are numerous things you can do to be a better lawyer, but here are just five simple tips which if practiced, will improve your presentation in Court.
Part 2 coming soon!
About the Author:
Stephanie Solomon is a Law Graduate from London, UK. She read her Law (LLB) and a Masters in Law (Criminal Law and Criminal Justice) at the University of Sussex, and currently works for the Ministry of Justice. Her interests include youth studies, crime theories, law reform, and diversity within the law. She writes, teaches and presents legal issues online and in person. For more information, please check out her LinkedIn page: https://uk.linkedin.com/in/stephanie-solomon-52449270
Photo credit – www.bbc.co.uk 
You can jilt a lover but not a child

You can jilt a lover but not a child

by | Apr 11, 2016 | Uncategorized

While dating, many people
have complained of getting dumped by their partners, it simply means they were
jilted by lovers or got their hearts broken in extreme circumstances. While
this may be socially acceptable as a person cannot be forced to love or care
for another person, it’s socially unacceptable for anyone to jilt or dump their
children and the Criminal Code Act of the Federal Republic of Nigeria provides
a penalty for same.

According to Section 372
of the aforementioned law,

“Any person who being
the parent, guardian or other person having the lawful care or charge of a
child under the age of 12 (twelve years) and being able to maintain such child,
wilfully and without lawful or reasonable cause deserts the child and leaves it
without means of support, is guilty of a misdemeanour and is liable to
imprisonment for one year”. 

So next time, you think
about bailing on your kids or wards, remember you may get locked in jail for
it. At that point, all one can say is “don’t drop the soap”. 

Adedunmade Onibokun

@adedunmade

Dunmadeo@yahoo.com

Photo Credit – www.naij.com
When fuel queues and LASTMA Jams You

When fuel queues and LASTMA Jams You

by | Apr 11, 2016 | Uncategorized

If you ever have to travel
on Awolowo Road, in Ikoyi, Lagos during a period of fuel scarcity, you will
understand how much of a mad house it can be. The traffic literally stands
still, carrying a trident and waving its two horns flipping from side to side.
Traffic on those days can be the devil.
It’s not only Ikoyi,
virtually every fuel station in the city will be invaded by mammoth crowds and
mile long queues. It’s always a commuter’s night mare, take my word for
it. 
This is why the Lagos
State Traffic Management Authority (LASTMA) has decided to take strong measures
in curtailing the effect of fuel queues in Lagos State and what better way to
do it than introducing a stiff fine.

It’s no one’s problem that
you are already frustrated and vexed from the physical exercise it takes to buy
fuel, after having to shove everyone else back and forth just so you can have
your meeting with the fuel pump. Or that your car and home generator tanks
are empty while PHCN seems to still be on strike. No, all those instances of
frustrating moments don’t matter because it’s after all this that LASTMA will
come and tow your car.
Yes, you heard right. According
to Chris Olakpe, Chief Executive Officer, Lagos State Traffic Management
Authority (LASTMA), in a comment in the Guardian Newspaper, dated Monday, 11th
April, 2016;
“the
fine for wilful obstruction of traffic while trying to buy fuel at any filling
station ranges from N10,000 to N100,000. The owners of such vehicles will
also pay towing fines, which also ranges from N10,000
to N100,000 as the case may apply.”
 Phew, I don’t want to be
in the position of the motorists when LASTMA comes to jam him or her after
being on a fuel queue for hours. Neither do I envy the LASTMA official who will
be walking on dangerous grounds and may likely bear the brunt of such a
motorist’s fury. I am sure @AmbodeObsarver will have a lot to report to his
unofficial official boss.
AdedunmadeOnibokun
@adedunmade
Photo Credits – sweetcrudereports.com
IF I SLAP YOU

IF I SLAP YOU

by | Apr 8, 2016 | Uncategorized


 
There is this
popular belief that members of the Yoruba tribe in Nigeria are never one to
actually fight but they can spend hours cursing and gesticulating. A popular
comedian once said if you get a Yoruba man angry, he would threaten to hit you
by saying words like “I will slap you” but he may never actually hit you but
the Warri man whom you have gotten angry will actually slap you first and
threaten to slap you later.  Kindly
provoke someone from one of the tribes mentioned above and share your
experience with us. Please I am just kidding, I won’t support or promote street
fights anywhere. 
However, do you
know that slapping someone is an offense?

The Black’s Law
Dictionary defines “assault” as the threat or use of force on another that
causes that person to have a reasonable apprehension of imminent harmful or
offensive contact. Thus if I threaten you with the words “I will slap you” and
you reasonably believe that I will harm you, then I have committed an assault.
Same goes for using sentences like “I will punch you” or “I will shoot you” or
“I go break this bottle for your head”.
The law in Section
351 of the Criminal Code, Chapter C38,
LFN 2004 states that; any person who unlawfully assaults another is guilty
of a misdemeanour, and is liable, if no greater punishment is provided to,
imprisonment for one year.
The law further
provides in Section 355 that; any person who unlawfully assaults another and
thereby does him harm, is guilty of a felony and is liable to imprisonment for
three years.
Therefore, next
time you feel tempted to assault anyone, please remember this blog post and
understand that no one is worth spending one year of your life in prison for.
Adedunmade Onibokun
@adedunmade
Dunmadeo@yahoo.com
 Photo Credits – www.tennandtenn.com