The most significant incident to impact the planet
in the last 6 months has been the outbreak of COVID19 popularly known as the
novel coronavirus. This outbreak has reinforced the need for appropriate legal
and risk management measures and systems. The pandemic which has now spread to
146 countries and counting first emerged in Wuhan, Mainland China and yet the
world would never have imagined the extent to which the outbreak would travel;
becoming classified as a global pandemic by the World Health Organisation. It
has also caused global disruption of mobility and chaos on the lives of
billions around the world as well as had considerable negative impact on macro and
microeconomics.

 The threat the novel coronavirus presents on
various industries and business sectors has been numerous and far reaching;
from significant disruptions to essential services in banking and finance to
disruption to major fixtures in the international sporting calendar from the F1
Australian Grand Prix, cancellation and postponement of a number of high
profile sporting conferences and tournaments including the much awaited Edo
Sports Festival 2020, World Football Summit Africa 2020 and a host of others.
Over 110 showpiece sporting events across Europe and Asia stand cancelled or
postponed due to the COVID-19 outbreak: affecting over 2,000 highly anticipated
match-ups across various sports like football, NBA, Eurobasketball, Mixed
Martial Arts, Golf, Tennis, Formula One and so on[1]. The
progression or otherwise of the virus in the coming days will determine whether
the Olympics event scheduled to take place this summer would go on as planned.
The world of E-sports has also seen its fair share of cancellation and
postponement of events: The Software Association’s 2020 E3 Video Game
Convention and the annual Games Developers Conference have been cancelled due
to covid-19.

Famous sporting personalities have also been
infected by the virus. Danielle Rugani and Blaise Matuidi of Juventus, Rudy
Gobert of Utah Jazz, Ezequiel Garay and five other football players in the
Valencia CF roster to mention a few. The virus has also claimed the life of
Francisco Garcia, a Spanish Football coach after a pre-existing health
condition was exacerbated by the infection- The only casualty in the sporting
world as of today.

 

The entertainment industry has also felt the sting
of the virus as thousands of entertainment events have been called off: Music
concerts, tours and award shows like the GidiFest scheduled for this April in
Lagos, Tribeca Film Festival, Billboard Music Awards, Glastonbury Music
Festival, Coachella, Stormzy’s ‘Heavy is the Head’ album tour, The Kid’s choice
award among others. Movie productions and Premieres of highly anticipated movies
have been put on hold; theme Parks and Amusement parks are fast shutting down
in China, Korea and other hard-hit countries[2]. Top
celebrities like Tom Hanks, Rita Wilson and Idris Elba have also been tested
positive for the virus.

 

Beneath this mess of cancellations and
postponements are complex commercial and sentimental interests arising out of
various entertainment and sports contracts. Performance of contracts has become
near-impossible as at when due. To be specific, Fans who have bought tickets as
well as paid travel costs and made hotel reservations with respect to a certain
concert or movie premiere will definitely be affected by its cancellation or
rescheduling. Sporting clubs would be liable for possibly breaching their
contracts with Season ticket holders who would be robbed of the spectacle paid
for in the event of a cancellation, postponement or a decision to play matches
behind closed doors.

 

Suffice it to say most businesses around the world
big or small will by now be affected in some way by the novel coronavirus and
that being said it is still not too late for business owners , leaders,
etc  to 
take steps to mitigate the impact or prepare to insulate itself from
shocks at best. There will be legal ramifications and risks arising from the
pandemic which all individuals and businesses will now have to seriously
consider. It is highly probable that there will be fall outs and unfortunate
contractual disputes as a consequence of the health crisis the world is
currently facing: Non-Performance being a major fall out, as the ability to
perform contracts will be severely affected and tested in the next few months
considering the stringent regulatory policies now in place. These include
widespread lock downs which has curtailed mobility whether domestically or
internationally as well as the practice of social distancing to flatten the
curve and reduce the transmission rate.

 

As we will come to find out; the inclusion or
otherwise of a Force Majeure Clause in sports and entertainment contracts could
prove instrumental in periods like this. So the question is what exactly is a
force majeure? And what events will give rise to a force majeure or vis major
as it is also known?

 

 

Doctrine
of Force Majeure

 

The doctrine of Force Majeure takes root in English
common law and applies to situations where an external event or occurrence
outside reasonable control prevents parties or a party from performance of
obligations under a contract. It is expressly provided for as a term of the
contract between parties and usually lists out a number of acts, the occurrence
of which would constitute a force majeure with respect to the contract.

 

In the reported Nigerian case of Diamond Bank Ltd V Ugochukwu,[3]
the court held that for a Force Majeure to occur there must be an event which
significantly changes the nature of the contractual rights of the parties that
it would be unjust to expect the parties to perform those rights such as;

 

–      
Where the subject matter of the
contract has been destroyed, or is no longer available.

–      
Death or incapacity of a party to a
contract

–      
The contract has become illegal to
perform as a result of new legislation.

–      
A contract can be frustrated on the
outbreak of war.

–      
Where the commercial purpose of the
contract has failed.

 

The provision of Force Majeure is one that has
strict application and can only be relied on based on the express provision in
the contract and the qualifying events which successfully triggers the
provision.

 

The applicability of Force Majeure can cover any
situation provided that the provision has been made for it.

 

What
type of events can give rise to a Force Majeure?

 

Natural events also known as ‘Act of God’ can give
rise to a Force majeure.  Actus
Dei nemini facit injuriam: interpreted literally, an act of God injures
no one. To further buttress, the maxim simply stresses that no one is
responsible for an act of God and cannot be said to have injured an adverse
party by the occurrence of such. Acts of God can include adverse weather
conditions e.g. hurricanes, thunderstorms, earthquakes. These are unexpected
events which cannot be predicted by contracting parties to a large extent, nor
prevented by them.  

 

As this writer has earlier mentioned, Force majeure
is a term of the contract. This means, that it must be provided for expressly
in the contract. So, it is the practice for parties to include acts or events
which would generally inhibit performance of obligations in a contract or work
hardship in the process of performing same. These events may not be Acts of God
per se, but they are abnormal incidences which are inherently unfavorable to
the terms of the contract. These include, epidemics, pandemics and other man-made
or politically related events such as riots, civil unrest and war due to
instability in a government or national leadership or other ‘Acts of
Government’.

 

All in all these are events that can unduly occur
out of the control of the parties making it difficult or near impossible for
the parties to fulfill a contract. Impossibility in itself is subject to
interpretation given that the circumstances that arise in the event of a
medical pandemic will be quite different from that which arises during a riot.
Whereas during war there is a total shut down of operations and clearly normal
business affairs will be non-existent in the case of a medical pandemic
business operations , meetings, etc  will
be curtailed due to non-movement and not because the parties cannot perform
necessarily

 

An outbreak of highly Infectious diseases such as
Covid-19, H1N1 virus and/or the Ebola virus could fall under the category of
medical pandemic or epidemic in a Force Majeure. However, to qualify as such,
its category must be included in the Force Majeure clause especially where
other acts or events are listed, so as not to be caught up by the ejusdem
generis rule. The necessary Government regulations or directives which
have been promulgated as a result of the outbreak such as social distancing,
ban on large gatherings are strong performance barriers which could bring
Covid-19 under the category of Acts of Government in the ilk of the items
mentioned earlier. Careful construction of Force Majeure clauses therefore
require equally careful consideration and need to be wide enough to accommodate
events that may not be life threatening but clearly advisable to still carry on
normal business operations.

 

Parties
are also at liberty to state the consequences of a Force Majeure. This could
include suspension of Contractual obligations, renegotiation of terms,
non-liability, extension of time to fulfill obligations, mitigation of losses,
and termination of contracts amongst others. Considering the effect of Covid-19
on Sports and Entertainment events, where there is a Force Majeure Clause in
the contract, parties may trigger the same. Broadcasting companies like
Supersports which holds exclusive license to broadcast a wide array of sporting
events in West Africa could reach out to the organisers and reach a favorable
decision on the strength of the Force Majeure clause, Fans who have bought
tickets could demand a refund from organisers and athletes signed up to sports
clubs may rely on the Force Majeure clause to justify why it was impossible for
them to attend trainings or partake in games for their teams which would
ordinarily represent a breach of contract. Recently, Nigeria’s ex-Skipper,
Mikel Obi ended his contract with his former club, Trabzonspor of Turkey by
mutual termination days after he criticised the Turkish FA for allowing games
to go on in the circumstances. While the specific details of termination are
not yet public, one may infer from the situation that he would only have been
able to walk away from his contract without incurring heavy cost for breach if
there were relevant Force Majeure provisions in the player contract to that
effect.

 

However, in the absence of express Force Majeure
provisions in a contract, parties in Common Law jurisdictions have an
alternative which is the reliance on the common law doctrine of Frustration.

 

 

Doctrine
of Frustration

 

The doctrine of Frustration is based on the
English common law doctrine which seeks to set aside the obligation of parties
under a contract due to unforeseen events and it can apply in the following
circumstances where there is no underlying provision for Force Majeure. The
doctrine of frustration was well propagated in the case of Taylor v Caldwell[4]
From the
decision in this case; the following elements of Frustration may be gleaned
where:

 

–      
External events not contemplated by
the parties arise which are beyond their control.

–      
The event was unforeseeable and it
occurred post-formation of the contract.

–      
The unforeseeable events make the
contract impossible to perform

 

Thus where a force majeure clause has not been
included in a contract and no risk has been allocated by such a clause in the
occurrence of stated mishaps, where an unforeseeable event occurs which may
render the contract impossible to perform, parties may rely on the doctrine of
frustration to bring an end to the contract or obtain remedy from the court
where due. An example of such an event would be where the subject matter or the
crux or the main condition of the contract ceases to exist. This was
established in the celebrated case of Henry
v Krell,[5]
where the Coronation event, which was the foundation of the contract between
the parties, was cancelled due to the unexpected sickness of the incoming king;
the Courts deemed the contract as impossible to perform due to the
non-existence of the subject matter of the contract. Thus, parties were
excluded from any future obligations arising from the contract.

 

Also, frustration could also occur where there is
a delay or interruption which duration is indeterminate and was unforeseen by
contracting parties. This was the decision of the Court in The Sea Angel Case.[6]
Thus, when applied to sporting and entertainment events that have been
postponed indefinitely for now, this could constitute an act of frustration of
the contract. Fans could get refunds; Insurance policies for players could be
terminated with future obligations cancelled. Footballers who are in their last
few months of contracts with their clubs – especially clubs in the top five
leagues where the season ends in the summer- could exercise the option of
canceling their contracts to the club where the season is resumed and the
matches drag beyond June 30, the final day of contracts for most players. Event
planners of concerts may have to refund all or a part of the funds received
from artists and their managements due to cancellation of events. The fallouts
are endless.

 

A change of law can also qualify as an
unforeseeable event can also act as an additional layer to another
unforeseeable event such as a medical pandemic, a change of law may be
temporary or long lasting and can be passed such as the temporary imposition of
travel restrictions, self-isolation measures and quarantine to name a few which
can further make the contract impossible to perform; resulting in termination
of the contract.

 

The consequence of invoking the doctrine of
frustration is that it brings the contract automatically to an end and either
maintains the status quo or restores the parties to the status quo ante bellum
as the justice of the case demands.  In
the event a contract is frustrated, one party will be relieved of the
obligation to perform and another who would have relied on service or goods
emanating from the contract will be left disappointed. It is ideal that both
parties reach a mutual agreement and fair conclusion however the law of damages
which is normally applicable in contract will not be applicable under
frustration due to its strict Common law background.

 

CONCLUSIONS

 

The instance of COVID-19 gives rise to a series of
unpredictable and unfortunately dynamic changing events. So far, we have
witnessed industries notably the international aviation and sports industry
take initiatives to secure the health and safety of millions which would
otherwise be compromised through gatherings and continuous mobility. This means
businesses will need to take more care when entering into any contracts from
this point onwards until the threat abates especially whilst other obligations
persist such as payment of wages, medical insurance. Adopting a cautious
approach and obtaining full legal clearance on new contracts will be highly
advisable at this point.

 

It is evident that in one form or another,
individuals and businesses will be affected not only directly by COVID19 but also
by the disruption emanating from it.  Practical
steps  to stem this threat include:

 

1. Carefully
   reviewing all existing contracts. This applies to main and sub contracts
   with third parties to determine the level of risk exposure involved and
   what performance is expected. 

 

2. Review
   the contracts/agreements and check if the relevant force majeure clauses
   are already in place and determine if they are couched properly.

 

3. During
   the intense period of social distancing and travel bans, performance of
   contracts will likely be negatively impacted. It is necessary to ascertain
   to what degree performance is affected and what remedies are available.
   Can the contractual performance be delayed or postponed? Or will it have
   to be cancelled leading to significant reliance on force majeure contracts
   in order to minimise further liabilities or losses. This activity should
   typically be handled by the legal officer within your organisation or the
   company secretary.

 

4.  Prompt communication of non-performance
   must be made as soon as it is clear contractual obligations cannot be
   performed by one party to the other party in the contract. This is
   necessary to mitigate losses as well as seek remedies such as refunds, etc.

 

5. It is
   necessary to correctly ascertain whether the event arising falls under the
   provision of Force Majeure or frustration in order to be released from
   performing obligations under existing contracts.

6. There is
   also the need to explore ADR mechanisms, especially negotiation in case of
   conflicts over performance of contracts. Parties like sports clubs and
   player unions or Sports Organisations could also commence negotiations as
   a pre-emptive measure in order to arrive at solutions for more extreme
   situations. 

The Securities and Exchange Commission’s (SEC)
proposed rules on Crowdfunding have elicited different reactions from
stakeholders, it has rattled the cage of most businesses that leverage on the
internet to access credit to finance their business, businesses that create an
opportunity for other businesses to access credit on their platforms and
operators of financial portals.

There is no gainsaying that the initiative is
laudable and this is because of the three-way regulatory oversight and
protection which the SEC seeks to administer on the issuers, the investors and
the Crowdfunding Intermediary that operates the Crowdfunding Portal, where the
credits/funds are accessed. 

The intendment of the proposed rules is to
solely cater to investment-based/equity crowdfunding thereby alienating other
forms of Crowdfunding, such as debt-based crowdfunding and donation-based
crowdfunding in Nigeria, from its control. However, this is not to say that
debt-based crowdfunding or donation-based crowdfunding are alien to our laws in
Nigeria, as Section 58 (1) of the Banks and other Financial Institutions Act
has put any form of debt-based crowdfunding under the purview of the Central
Bank of Nigeria, as it reads as follows;

1. Without
   prejudice to the provisions of Part I of this Act, no person shall carry
   on other financial business in
   Nigeria other than insurance and stockbroking except it is a company
   duly incorporated in Nigeria and holds a valid license granted under
   section 59 of this Act.

On the other hand, donation-based
crowdfunding which is a vehicle for philanthropic causes is spearheaded by
NGO’s registerable under the Companies and Allied Matters Act, as an
Incorporated Trustee.

The purpose of this article is to
essentially comb through some of the provisions of the Rules, put them through
a viable or non-viability test and then assist the fintech companies in making
informed decisions, as a result of this exposition.

AN
OVERVIEW OF THE RULES

Eligibility to Raise Funds

SEC, through these rules, has set
eligibility parameters for MSMEs (Medium, Small and Micro Enterprises) who seek
to raise funds to finance a project, business or venture on a Crowdfunding
portal, as it posited that any such MSME must present a minimum of two (2)
years’ operating track record to the Crowdfunding Intermediary before it can
utilize the Crowdfunding Portal. The rationale behind this parameter is not
far-fetched, as it ultimately seeks to sift through companies that might be set
up as shell companies for Ponzi schemes, in pursuance of its Anti-Money
Laundering and Combating the Financing of Terrorism (AML/CFT) outlook.

Nature
of the Investment Instruments issued on a Crowdfunding Portal by an Issuer

A point worthy of
deliberation in the Rules is the type of investment instruments that issuers, being
MSMEs and unlisted public companies, can offer to investors in exchange for
funds raised on the portal. The Rules specifies
which instruments are permissible and they are as follows-Ordinary shares, plain
vanilla bonds/debentures and simple investment contracts. However, the
confusion that is likely to arise from these investment instruments takes root
in the features of a private company limited by shares vis-à-vis a public
company limited by shares, as encapsulated in the Companies and Allied Matters
Act; To wit, Section 22 (5) of CAMA prevents
a private company from inviting the public to subscribe for any shares or
debentures of the company while a public company is authorized to issue shares
and other debt securities to the public.

The import of the foregoing is that
a private company limited by shares, cannot issue shares or other debt
securities on a Crowdfunding Portal, but can enter into a simple investment
contract between itself and the investors, insofar as the salient clauses
regulating the investment are properly constituted in the agreement. Investment
contracts are transactions whereby one or more parties, agree to invest or
shell out a specific amount of money, to a particular business or company, with
the expectation of getting returns from the income or profit generated by the
business or company, as and when due.

Certain Exemptions to the Provisions
of the Investment and Securities Act

The Rules also hint at a departure
from the requirement of registration of Securities under the provisions of Section
54 of the Investment and Securities Act, as it stipulates that an
issuer may offer or sell securities or other investment instruments, without
the need for prior registration pursuant to the Act, provided the issuer is an
entity incorporated in Nigeria and has been accredited/approved by the
Crowdfunding Portal to utilize its platform. Furthermore, it states that the
issuer will be exempted from registering its securities or other investment
instruments, if the aggregate amount of shares and investment instruments
offered and sold by the issuer within a twelve (12)-month period, complies with
the following thresholds-

1. The
   maximum amount that a Medium Enterprise may raise will not exceed N100
   Million.
2. The
   maximum amount that a Small Enterprise may raise will not exceed N70
   Million.
3. The maximum amount that a Micro-Enterprise
   may raise will not exceed N50 Million.

However, the above limits do not
apply to Digital Commodities Investment Platform which are companies who
leverage on an online electronic platform to offer agricultural produce,
livestock and its derivative products and all other goods and articles to
investors.

It is noteworthy to state that the
Commission in calculating the maximum amount of shares or investment
instruments offered and sold by an issuer, within the thresholds and time
limit, will take into account entities controlled by or under common control
with the issuer and any predecessors of the issuer. This means that the
Commission will take into account, any Holding Company and its subsidiaries,
any Group Company and its sister companies, as well as companies under new
management as a result of a merger or acquisition, in determining whether an
issuer is keeping or has kept with the conditions set in the Rules for the
utilization of any Crowdfunding Portal.

Crowdfunding Portal Requirement for
Portals located Outside Nigeria

The Rules also makes
provisions for a litmus test to determine when a person is said to be
operating, providing or maintaining a Crowdfunding Portal in Nigeria and the
main point of concern in this test, is the reference to platforms outside
Nigeria, that actively targets Nigerian Investors and mandating that such
platforms will be a crowdfunding portal in Nigeria. The reservation that this
brings to the fore, is the issue of choice of law with respect to an investor
who decides to invest in a platform outside Nigeria, knowing fully well that
the choice of law as evidenced in the terms of use of that platform, will be
the law of the jurisdiction of its area of operation and then proceeds to
submit to the jurisdiction, by subscribing to the services of that platform
outside Nigeria. The decision to make platforms outside Nigeria, that targets
Nigerian Investors, subject to the Rules of the Commission, will not be a
sustainable one because of the rule
of party autonomy—the power enjoyed by litigants to choose the law applicable
to their cross-border legal relationship.

Assuming without conceding that the
decision by the Commission through the Rules, to subject Crowdfunding Portals
outside Nigeria to its Rules is somehow sustained, its metrics for determining
active targeting through direct or indirect promotion of the Portal in Nigeria
fails to take into consideration online/social media marketing and its
borderless nature, which is the modus operandi of most businesses today. The
Rules only makes provision for direct or indirect promotion in Nigeria, which
connotes physicality. It is almost as if the Proposed Rules has refused to give
cognizance to the impetus of online/social media marketing/promotion in this
current day and age.

Registration Requirements for a Crowdfunding
Portal

According to the Rules, a
crowdfunding portal can only be registered and operated by a Crowdfunding
intermediary and the only entities that can be licensed as a Crowdfunding
Intermediary are Exchanges, Dealer, Broker, Broker/Dealer or Alternative
Trading Facility as prescribed under the Act and the SEC Rules and Regulations.

 

The Rules also permits a category
for a Restricted Dealer, which caters for Dealers who are registered by the
Commission for crowdfunding activities simpliciter.

 

Furthermore, certain persons do not
fall under the microscope of the Commission with respect to these rules on
Crowdfunding and they are as follows;

 

1. A
   technology service provider who merely builds an infrastructure, software
   or system for an operator, being a Crowdfunding Intermediary. This
   encompasses tech companies who build solutions to enable Crowdfunding
   Intermediaries leverage on technology to reach a wider audience.
2. An
   operator of a Communication Infrastructure that merely routes an order to
   an approved stock market.
3. An
   operator of a financial portal that merely aggregates content and provides
   links to financial sites of service and information provider. This
   category covers fintech companies that serve as a digital investment
   marketplace, that connects investors to investment opportunities offered
   by Broker/Dealers, who are either a Crowdfunding Intermediary or a
   Restricted Dealer.

 

The Rules also prescribe the minimum
paid-up capital of N100 million for any entity interested in being Crowdfunding
Intermediaries, as well as a Restricted Dealer. Additionally, the Commission
requires such other requirements to satisfy itself that either the Chief
Executive Officer of the Crowdfunding Intermediary, its board of directors or
any of its officers are not unfit to operate the Crowdfunding portal, by reason
of being adjudged dishonest or fraudulent by a Court or other Self-Regulatory
Organization in the Nigerian capital market; among many other requirements.

 

Operation
of a Crowdfunding Portal

The Commission empowers the
Operators of a Crowdfunding Portal, through the Rules, to take appropriate
actions against any person in breach, either the issuer or any investor, by
directing that such person takes the appropriate remedial measures as the
circumstances require. The measures may include but not limited to suspension
or expulsion of such persons after consultation with the Commission. The rules
also provide for an avenue whereby such expelled or suspended persons may
appeal against the decision of the operator to the Commission. This provision
is especially important to ensure that issuers, who misrepresent facts or
information in their offering documents, upon filing with the portal, are
penalized.

Revocation
of Registration

To ensure that no
crowdfunding portal is redundant, the Rules have
set a six (6) months period of inactivity, which will necessitate a revocation
of the registration of any Crowdfunding Portal. Also, the Commission can revoke
the Registration of any Crowdfunding portal on the occasion of non-payment of
prescribed fees, failure to meet any requirements prescribed by the Rules or
where the intermediary contravenes any of the provisions of the Act, the rules
and regulations and the code of conduct for capital market operators.

Operation
of a Trust Account

The Rules specifies that every
crowdfunding portal shall appoint a custodian, who shall establish and maintain
a separate trust account for each funding round on the portal, with a financial
institution registered by the Commission as a Custodian. This presupposes the
existence of a trust deed on the portal, which would essentially simplify how
the funds invested will be disbursed to the issuer and the rights of the trust
beneficiaries (being the investors) to the trust property (being the monies
invested).

Participation
of the Issuer on the Crowdfunding Portal

All issuers seeking to raise funds
on the portal are expected to file a standardized offering document with the
Crowdfunding portal and it will essentially include details relating to the
issuer, such as the use of the proceeds, the issuers business plan, the project
or business to be funded, the minimum amount required, the target amount and
such other salient information about the investment opportunity the issuer is
offering on the portal.

Every issuer shall have its funding
offer live on crowdfunding portal for not more than sixty (60) days which means
at the end of the sixty (60) days, if the issuer does not raise the minimum
amount it requires, it will be required to withdraw the offer and wait until
after ninety (90) days from the date of such withdrawal to list a new offer.

However, in the event that the
amount raised meets the minimum amount required by the issuer but not the
target amount, the issuer will be required to present to the portal and the
investors, a revised business plan, which will show how it intends to maximize
the use of the amount raised, though falling short of its target, without
negatively impacting operations of the issuer.

 

Participation
of the Investor

The Rules provide investors with a
forty-eight (48) hours cooling off period to withdraw their investments on a
Crowdfunding portal, from the date of close of an offer from an issuer. Any
amount which must have been debited to the account of the investor prior to the
withdrawal shall be refunded to the investor within forty-eight (48) hours of
such withdrawal date.

 

Non-permitted Issuers

There are certain entities
that are prohibited from raising funds through a Crowdfunding Portal and they
are as follows;

a.      
Complex
structures-These are companies with no immediate transparency of the beneficial
owners of the company.

b.     
Public
listed companies and their subsidiaries- These are companies whose securities
are listed and trading on the floor of the Nigerian Stock Exchange.

c.      
Companies
with no specific business plan or a blind pool- These are companies with
business plans which are solely for merging with or acquiring unidentified
entities.

d.     
Companies
that propose to use the funds raised to provide loans or invest in other
entities;

e.      
Such
other entity as may be specified by the Commission.

Requirements for Digital Commodities
Investment Platforms (DCIP)

According to the Rules, a DCIP is a
platform that connects investors to specific agricultural or commodities
projects, for the purpose of sponsoring such projects in exchange for a return.
The provisions of Rules 43 (a) of
the Proposed Rules, reveals that such agritech companies shall be permitted to
provide crowdfunding portal services but then Rules 43 (d) contradicts with the provision, namely; DCIP shall
only host commodities investment projects on crowdfunding platforms other than
a platform which it controls whether directly or indirectly. The Commission
with this contradiction is seen to be approbating and reprobating because if it
says they are permitted to render crowdfunding portal services, why then is it
saying they can only host their projects on other crowdfunding platforms that
they do not control, in another breath. This contradiction needs to be resolved
by the Commission.

The
Way forward for Fintech Companies in view of these Rules

It appears from the Rules that
Fintech Companies have only two alternatives open to them;

1. They can
   aggregate content from certified Crowdfunding Intermediaries and provide
   links to their portals on their websites, application or other similar
   modules, thereby making themselves out to simply provide a digital
   investment marketplace that connects investors to curated offerings of
   certain Crowdfunding Intermediaries

2. Register a
   cooperative society under the Cooperative Societies Law of their
   respective states. For instance, the Lagos State Cooperative Federation
   under the Cooperative Societies Law of Lagos State 2014 makes provisions
   for a Cooperative Multipurpose Society (CMS). The CMS is a cooperative
   society that goes beyond just encouraging savings and giving out loans to
   members, it can buy and sell goods, venture into businesses and service
   members and non-members. The Director of the Cooperative Society is saddled
   with the responsibility of ensuring that all cooperative societies run
   their operations in accordance with the cooperative principles, which
   means the SEC does not regulate the activities of the Cooperative Society. 

Suffice to say, that the overall outlook
of the SEC Rules on Crowdfunding is to give adequate protection to investors
who wish to take part in the Crowdfunding Market, as it ensures that the
investors have access to clear information on any investment vehicle offered by
an issuer. This allows them to assess the risk and make informed decisions
based on the information at their disposal. 

Furthermore, the Rule also enjoins
the Crowdfunding Portals to have risks disclosures on their portals as a result
of the volatility of the Nigerian financial market, whilst ensuring that they
operate an orderly, fair and transparent market activity on their platforms.

The feature of MSME’s in the Rules
shows that there is now a recognition of the pivotal role they play in our
economy, as they are the bedrock of Nigeria’s industrialization and inclusive
economic development, as once described by the Vice President, Prof. Yemi
Osinbajo. The import of their inclusion guarantees their access to much-needed
capital which would foster productivity and boost innovation whilst allowing
the economy to tap into the entrepreneurial prowess of our youthful population. 

Sadly, the tenor of the rules
foretells the exclusion of many fintech companies’ and this means that they
either merge with companies with the requisite wherewithal or they reinvent
themselves. The Commission has created a centralized community which would
largely be filled with major players in the finance industry who have the
required capital base to run a crowdfunding portal. They have failed to appreciate
the ingenuity reposed in the fintech companies and their ability to foster
financial inclusion through their people-centric business model.

 

In Nigeria, it is an offence to draw tribal marks on persons
under the age of 18.

PENALTY 

-5,000 or 

-Imprisonment for one (1) month.

These marks are usually created with sharp objects, which
gradually heals, and eventually becomes indelible. 

See Section 24 and 277 of the Child Right Act.

 

Arome Abu is the Principal Partner of TCLP.

CAVEAT: Note that this information is provided for general
 enlightenment purposes and is not intended to be any form of legal
advice.

Obscure Legal Facts is an exclusive daily publication of THE
COUNSEL L-P. 

Plot 108 Idris Gidado 

Way, Wuye, Abuja.

abuarome@gmail.com 

+234 803 262 2359

+234 708 1156 539.

Twitter: @TheCounseLP

Photo Credit – Pulse.ng 

 

Since its outbreak in Wuhan, the
notorious COVID-19 has spread to become a phenomenon that exerts effect on the
world on a grand scale, cutting across every facet of human endeavours and
decisively affecting everything it touches. While nothing else had shaken the
world in a couple of years as the novel pandemic, it is only natural that such
an enormous global event would inspire a lot of responses from a lot of angles.

Interestingly, the outbreak of the
COVID-19heralds an era of landmark litigations, opening a floodgate of lawsuits
brought by activists, nations and other disgruntled forces seeking to hold
China liable for the deaths, untoward economic hardship and global turmoil
caused by the virus. While these suits appear to be manifestly vexatious on
account of lack of a watertight account on the origin of the virus or any
plausible evidence that China did engineer and weaponised or negligently
omitted to contain the virus,I do not want to venture into the nitty-gritty of
these arguments as this is just a commentary on the propriety of the suit filed
by a coalition of lawyers in Nigeria, and other similar suits elsewhere.

The class action is being fronted by
Prof. EpiphanyAzinge, SAN, a revered learned silk and seasoned academic I
greatly respect, claiming a whopping $200 billion as damages for the “loss of
lives, economic strangulation, trauma, hardship, social disorientation, mental
torture and disruption of normal daily existence of people in Nigeria”. This comes
amidst the spate of suits pursuing similar goals in the US, Australia, etc.

These suits, as revolutionary as
they may seem, are specious in light of the unassailable doctrine of sovereign
immunity within the parlance of International Law. It is an elementary
principle of law that sovereign nations are immune from legal proceedings in
another’s own court, and this doctrine is a huge barrier to the liability of
governments to foreign judicial oversight. This doctrine was enunciated from
the time when it appeared to be an affront to national sovereignty for a
sovereign state to be a subject of judicial control of another. The obvious
logic behind this rule is that if allowed, it would open a Pandora’s box
allowing nations, using their courts, to hold one another liable for alleged
misdeeds.

The forces behind the suit before
the Federal High Court of Nigeria ought to have given some thoughts to the fact
that China, being a sovereign state, is shielded with immunity from actions in
the court of any other nation. Even though various laws place substantial
exceptions to this general rule, this case is not a just exception given that
prevention and control of the COVID-19 falls squarely within the sovereign
governmental affairs of China (acts jure
imperri), and not a contractual obligation (acts jure gestions) that would scale the test of immunity.

The nascent argument making a case
for waiver will not stand, as the rule of sovereign immunity is not a favour
nations do for their sovereign equals. It’s based on a shared reciprocal
understanding that we will not allow our people to sue you if you will not
allow yours to sue us.

The immunity doctrine is hinged on
the principle of sovereign equality, often expressed by the maxim “par in parem non habet imperium”, to
wit: equals have no sovereignty over each other. After landmark articulations
of this doctrine in judicial decisions, conscious attempts to provide
legislative flavour to the doctrine followed suit, hence international
instruments such as the European Convention on State Immunity 1972, the United
Nations Convention on the Jurisdictional Immunities of States and their
Property 2004 (the New York Convention) were re-echoed by national legislations
such as the United States’ Foreign Sovereign Immunities Act 1976, Britain’s
State Immunity Act 1979, the Canadian State Immunity Act 1982, among others.

The doctrine is broad; so broad that
the United States’ Supreme Court interpreted the Foreign Sovereign Immunities
Act to rule in favour of Nigeria in Verlinden B.V v. Central Bank of Nigeriathat
foreign countries need not even respond to complaints before US courts.

While it is undisputed that the
sovereign immunity doctrine is not absolute, it follows that the suit filed by the
learned silk should be reconsidered against the weight of the avalanche of
arguments in favour of China’s immunity. Not even the point that the laws in
support of sovereign immunity are foreign laws or international treaties not
binding on Nigeria will stand, as the case for immunity of states has evolved
as a robust, impenetrable principle of customary international law, barring
foreign impairment of state sovereign prerogatives. The most honourable thing
in the circumstance is for the learned silk to withdraw the suit and, if he has
to, explore other remedies through the International Court of Justice.

Atiku M.
Jafar

Atiku is a legal
researcher and a past National President of the Law Students’ Association of
Nigeria. He can be reached on amjafar01@gmail.com

Photo Credit – Bloomberg 

I thought I’ve met brilliant and smart people in my life. Yes, I thought so. But when I met this handsome, young man, though old according to number, I knew I still have lots more to meet.

He introduced himself as Deacon Dele Adesina, someone else told me he’s a Senior Advocate of Nigeria.

His Charisma is superb!
His voice, you could sit and listen forever!

Then the ideas reeled out by him? Fantastic, incredible yet so realistic. I was almost swept off my tender, tiny key legs shaa.

Just then I said to myself, “here stands my NBA President, come what may”.

What am I supposed to do?
I’ve decided to follow DASAN and so, I’m expected to convince many others to follow him. That I do bearing in mind that politics is a game of number.

If we resolve with all our hearts, to preach DASAN to every lawyer we meet and talk with on daily basis, we’ll populate our camp and depopulate the sides.

For the change we desire, we must be committed to this cause.

DASAN all the way!

Ada H.A. Nwafor
YLF Chairman, Okehi R/S

It is no longer news that ESQ Practical Academy organized a virtual conference on the 28th April 2020 and Deacon Dele Adesina SAN who believes the future of the Nigerian Bar lies in Young Lawyers, sponsored several old and young lawyers out of his magnanimity to benefit from this conference, particularly the interesting segment of how lawyers can become virtual and embrace ce the e-lawyering skills in view of the arrival of web-based technologies and the current coronavirus (COVID-19) pandemic ravaging the world economy.

COVID-19 has a ravaging effect on the world economy and its intense and rapid spread forced most countries of the world to enforce a lockdown of every aspect of their economy including the legal profession.

The legal profession is not free from the lockdown and this made it very difficult for many lawyers to operate because the legal practice has been confined to the four walls of the firm (with files and research majorly conducted in the law library filled with avalanche copies of books and law reports) and the court (which obviously has no method of e-filing system).

As a young lawyer who benefitted from this sponsorship by Dele Adesina SAN, the conference was facilitated by senior legal practitioners across the world that are well exposed to the practice of law in Nigeria and other countries, from whom I learnt and understood the following lessons:

E-lawyering method should also developed: lawyers should take the opportunity of the lessons from the Conference and the Covid-19 lockdown not to be confined any longer to the firm’s walls but practice anywhere irrespective of time and distance with the use of web-based databases and software system to interact with clients and prepare required processes.

Another important lesson is that law Libraries should embrace a virtual practice and take a new dimension. It is no longer a case where legal practice depends heavily on library printed information resources but e-lawyering approach that depends on electronic information resources such as e-portals, web-based computing devices, online databases and social media. Virtual libraries, that is, online libraries should be adopted where you practice law without necessary flipping through the pages of physical law reports before a well-researched brief can be written.

*Online clientele*: During this lockdown lawyers have been able to render little or no service at all, there are many clients who are seriously in need of the services of lawyers but due to distance and the lockdown there is no way to get the service required as the four wall lawyer cannot access his bricks. This is where E-lawyering becomes useful. E-lawyering involves rendering legal services online through web based technologies and with this the problems of clients are solved without physical contacts.

The Court is not left out, the E-filing system should also be adopted by the courts so that the courts will not be put on unnecessary hold in times like this. The court finds it uneasy to sit because of the large human resources and the physical contact required put into it for effective running of the judiciary. This calls for E-filling system in our judiciary. I must however acknowledge the fact that we have now began to hear the echo of introduction of e-filing system from the judiciary in the last few days. My hope and prayer is that the Judiciary makes this a permanent feature in our judicial process nationwide.

Deacon has the future of the Bar at heart, the future of the Bar are the Young Lawyers, virtual legal practice is needed more by the young lawyers, this is why DASAN sponsored us to benefit and implement it. This is one of the ways DASAN is coming to secure the future of the Bar.

Do you as a lawyer still doubt if DASAN is truly coming to secure the future of the NIGERIAN BAR? I have pitched my tent with DASAN in order to secure the future of the Bar. Please join me on this noble cause.

Saheed  Abiola
Writes from the Ilorin Bar.

 

”One of the seven was wont to say:
‘That laws (sic) were like cobwebs; where the small flies were caught and the great brake through.”’

An egalitarian society is what oga Adeshina seeks to put in place coupled with senses of belonging and responsibility in order for the bar to retain its place as the pride of the legal profession in Africa.

Deacon Dele Adesina like Prince Otto Von Bismarck believes in the doctrine of the possible and the attainable. Thus, if you are looking for sweet words so as to make you forget your worries in the interim but no action, he might not be your man. He is however the man who acknowledges problems and seeks to tackle them head-on. With Adesina, I concede that good souls still exist.

My affections for Adesina SAN makes me think of joining a remix of the song ‘Bahd, Baddo, Baddest’ but this time with the lyrics, ‘Oga Dele na our man, Dele na our man….’ This I’d have gleefully done alongside legal practice but for the Rules of Professional Conduct on incompatible business. ‘E pain me sha, but wetin man go do.’

Adeboye ‘Seye Thompson writes from the Ilorin bar“`