Ivie Omoregie: Governor’s Consent & Perfecting Title to Your Landed Property

Ivie Omoregie: Governor’s Consent & Perfecting Title to Your Landed Property

light of the recent devaluation of the naira, there has been a lot of emphasis
placed on PROPERTY. Many Nigerian’s in diaspora (living outside of
Nigeria…) have used this opportunity to buy the kind of property they may
have been eyeing for some time but previously unable to afford. 

with the current value of the naira, when compared to this period 3 years ago,
any property which is bought in Nigeria right now, calculated in a foreign
currency, would be half the price that it might have previously been, or as I
like to term it “Buy 1 Get 1 Free’.
from home owners, long term tenants with lease agreements exceeding 3 years
have an obligation to register their interest, thus enabling anyone who might
wish to deal with the property, in any manner, to see their interest. I always
advise friends and relatives who take up commercial properties in which they
conduct significant renovations about the importance of having long term leases
and then registering their interest in same. As we recently saw with the
demolition of property being rented by the Nuli Juice Company in Lagos State
because of a breach perpetrated by the owner of the property, registration of interest
would have created an obligation for the relevant state authorities to notify
the registered lease hold tenants.
lot of people, possibly because of the costs involved and the fact that
fundamentally perfection of title to the property may not affect the status
quo, tend to omit, or rather not appreciate the importance of registering their
importance of property in the development of any country is undeniable; many
believe it is the surest form of security, and if done right often yields
significant returns. I cannot over stress the relevance of proof of title to
property in protecting one’s interest and the degree of control a person has
over said property.
am sure we have all heard of instances where an issue with proving title to a
particular property has surfaced, and there was an urgent need to establish
ownership as two or more people claimed to have conflicting interests.
law in Nigeria tends to support the party who is able to “better prove” title,
thus where 2 or more parties claim to have interest in a property, the law will
tend to side with the party who has the best form of title. 
Land Use Act (The “Act”) vests all title to land in the Governor of the state
in which the land is situate, who in turn holds the land on trust for the
people of that state. The Act disallows any person from claiming unlimited
interests in any land (i.e freehold interest), as all interest is subject to
the superior title of the Governor. The initial grants of statutory rights of
occupancy are for a period of 99 years; it has a striking resemblance to the
concept of lease hold interest operating in the United Kingdom.
a better understanding I would like to highlight the fact that in Nigeria the
first person to occupy a piece of land which has never been occupied by any
other person is entitled to the grant of a Certificate of Occupancy (“CofO”). This
gives that person the right to occupy that piece of land. Where this person
wishes to transfer the entirety of her/his interest or a significant part
thereof to another party, that party must obtain the consent of the Governor
before the interest can be validly transferred, (however in reality the buyer
processes and pays for perfection; aside from this allowing the buyer to
attentively pursue the application, it also forms a reassurance that due
process has indeed been followed).
best form of title an individual can have is the registration of interest in
the property with the respective land registry of the state in which the
property is situated. Registration of title serves as constructive notice to
subsequent dealers in a property that an interest in the property has been
transferred; however, does not only protect the owners’ rights, it facilitates
property purchase transactions and also enables the said piece of property to
be used as collateral for a loan.
perfect your title in land, the following three steps are required: –
1.       Governors
2.      Stamping –
payment of the relevant fee’s;
3.      Registration at
the respective land registry.
power of the Governor to give his/her consent in certain transactions is
provided for in Section 22. of the Act and it states:
“It shall not be lawful for the holder of a statutory
right of occupancy granted by the Governor to alienate his right of occupancy
or any part thereof by assignment, mortgage, and transfer of possession,
sublease or otherwise howsoever without the consent of the Governor first had
and obtained”
power confers on the Governor the right to consent to any of the transactions
stipulated in the Act provided that they are valid. However, if the initial
consent has been obtained fraudulently, the Governor may revoke same
essence, where a property owner has a valid right to occupy a property, making
him/her the equitable interest holder of the property, when such owner decides
to resell, mortgage, grant an interest in the property for long periods of time
(3 years or more) or carry out other transactions prescribed by the Act on the
property, the consent of the Governor must be obtained as the property is held
on trust by the state government. Failure to obtain the required consent
renders the transaction null and void, thus the rights of any third party
is essentially the payment of the applicable government levies for the
transaction. The amount that is to be paid by the purchaser for the transaction
may be a fixed nominal fee or may be ad valorem, which means it would be a
percentage of the cost of the transaction, i.e the purchase price of the
property. In the case of landed property the rate at which the document is
stamped would tend to be ad valorem. Failure to stamp the transaction documents
renders the documents unacceptable for registration at the relevant land
registry as well as meaning the documents would be inadmissible as evidence in
of my uncles is the first born male in his household, thus under Benin Native
Law and Custom automatically inherited his father’s property in Benin; the
family house. He collects rent from some tenants and the family tends to use
the property for various activities; however, being as he has no intentions
what so ever of selling the property or ever residing there he has just left
it. The issue with this is that the property will never yield its full
potential if simply left there. He cannot even develop the property as a
prerequisite for most development permits is a need to attach a copy of the
title documents to the application.
lot of people understandingly avoid the entire process of perfection of title
because of want of not having to deal with government officials, and more
importantly not having to pay the extra costs attached to such perfection.

However, I must stress that
in case of any issues with the premises, said perfection would be for your
benefit and as the perfection of title ensures the completeness and validity of
most transactions. 

Ivie Omoregie is a commercial lawyer, with experience and
keen interest in projects and transactions work within the Sub Saharan African
region. Called to practice in England and Wales and Nigeria.

Ed’s Note – This article was originally posted here.

The Importance Of Registering A Business – Adeolu Adesuyi Esq.

The importance of registering a business
can never be over-emphasized. For one, when it comes to doing serious business,
many agencies will never take you serious if your company is not registered.

Secondly, you might have to discover that people and that includes you and I,
feel more comfortable paying for services and products into a corporate account
with the name of an organization than paying into Individual account. You may
have missed an important sale because when your prospect made up his mind to
buy, the account number you sent him was an individual account in your name. He
thought it too risky because it was a sizable amount involved.

People feel if the account is in a corporate name, the organization can be
traced if the transaction went foul. If you register your company, you can use
the documents to open a corporate account with less stress.
In this post, you’ll be learning simple steps you can take to register your
business name with the corporate affairs commission in less than 21 days.


The steps for incorporating a new company at the nation’s registry, The
Corporate Affairs Commission, can be summarized in the following 10 steps:

i. Submission of the proposed Company Names to the CAC. This is the first step
in the entire process. The promoters of the company must decide on a company
name and submit for approval. The government officials reserve the right to
approve or deny company names submitted for a number of justifiable reasons –
availability, suitability, legality, similarity, etc.

ii. Details of Directors: Long story short, you will be required to provide the
biodata of the Directors of the proposed company. This information include:
Full Names, Residential Address, Nationality, Age, Valid Identification
Document and Signature of the Directors. The minimum number of directors for a
private company is 2 and maximum is 50. There is no maximum for public
companies. There are statutory requirements for being a director, one of which
is that the directors must not be less than 18 years old.

iii. Shareholders/Subscribers. The legal minimum number of shareholders in a
private company in Nigeria is 2 and a maximum of 50. The shareholders subscribe
to the memorandum and articles of association and are allotted shares in the

iv. Appoint a Company Secretary. Every Nigerian company must appoint a Nigerian
Company Secretary, as it has become a legal requirement. The company secretary
of a private limited company needs no formal qualifications. It is the
directors’ responsibility to ensure he/she has the appropriate knowledge and
experience to act as a Secretary of the company.

v. Registered Address of the Proposed Company. The company must have a Nigerian
business address. This requirement needs no much explanation and not debatable

vi. Core Areas of the company’s business activities (Nature/Objects of
company). Nigerians and Non-Nigerians are allowed to carry on all forms of business
provided it’s legal and not in the “Negative List”. If the company will engage
in specialist services (Hospital, Consultancy, Schools, Media &
Advertising, etc), the directors may need to provide an evidence of
professional proficiency. E.g. Certificate of a professional body/trade
association, Academic Certificate, or both.

vii. Valid Identification. Although this requirement has been stated earlier,
it is worthy of mention here again. A photocopy of Identification of all the
directors is required. (E.g. National ID card, Data Page of your National
Passport, Voter’s Card or Driver’s License).

viii. The Company’s Share Capital and Allotment. In simple terms, the share
capital of a company (usually in monetary terms), is the amount of capital the
subscribers have to carry on the business. The minimum share capital of a
private company must not be less than N10, 000:00 (Ten Thousand Naira only)
However, for economic reasons, it is advisable that an average Nigerian company
incorporate a N1, 000,000: 00 (One Million Naira only) share capital company. A
company’s share capital is also industry-dependent. For example, advertising
agencies must have at least N10 million as share capital. The law also
stipulates a minimum of N10 million share capital for a Nigerian company with
foreign ownership. Your regulator or adviser should advice you appropriately. A
minimum of 25% of the authorized share capital must be subscribed and paid for.
Once the issue of share capital has been decided on, then the subscribers must
also decide on allotting the shares. If there are 2 persons that formed the
company, they could share it 50% each.

ix. Draft the Memorandum of Understanding and Articles of Association (MEMART).
This is a legal document that spells out the business objectives and the
framework on which the company intends to run its business within the
acceptance of the law. This legal document also shows the particulars of the
shareholders and their shares allotment.

x. Payment of Stamp Duty and Statutory Filling Fees. The total fees payable to
the Stamp Duty office and the Corporate Affairs Commission is dependent on the
company’s share capital.

These are the basic requirements for incorporating a private limited liability
company in Nigeria.

you need professional service to register a limited liability company, please
contact the writer via the email address or phone number supplied below. If you
have any questions on the content of this article, please do not hesitate to
send a mail.

Adeolu Adesuyi Esq.


Chukwudi Ofili – Perfection of Security Documents and the Practice of Upstamping in Nigeria

Chukwudi Ofili – Perfection of Security Documents and the Practice of Upstamping in Nigeria

In Nigeria, debts are typically secured
through the use of guarantees, mortgages, fixed and floating charges and
pledges of real, personal, tangible and intangible property belonging to the
debtor or a guarantor of the debtor. Security created in favour of a lender for
providing debt financing is documented using different forms of security

In order to perfect security documents,
such documents must be stamped at the stamp duties office and registered at the
Corporate Affairs Commission (CAC). For certain assets such as real property
which require the consent of the Executive Governor of the state where the real
property is situate, such consent must be obtained to perfect the security
created under such document. The statutory obligation to stamp documents that
transfer or create a proprietary interest in assets is provided for under the
Stamp Duties Act (SDA) with specific emphasis on sections 3, 23 (1) and (4) of
the SDA. In addition, a charge created by a company to provide security to a
lender is void against a liquidator and such lender (as a creditor of the
company) unless it is registered with the CAC within 90 days of creation.
However, in large financing
transactions, the stamp duty payable in respect of a security document could be
very high (and in certain cases, prohibitively so).  It is not uncommon
for lenders to a financing to agree that the borrower may pay stamp duty on
only a portion of the secured amount rather than the whole secured amount, with
a further assurance from the borrower that the full stamp duty will be paid on
a future date or upon the occurrence of certain events.  This practice is
known as “upstamping”.  Until the security document is upstamped, any such
lender is only protected up to the amount expressed to be secured and a lender
may lose priority to any subsequent security granted on the charged assets
during the period between the initial stamping and the full upstamping of the
security document.
The Implication of Upstamping on
Neither the SDA nor the Companies and
Allied Matters Act (CAMA), stipulate that a security document that secures a
credit facility must be stamped and registered for the exact amount extended to
a company or person. However, where a security document is stamped for an
amount lower than the facility amount, the lenders will only be permitted to
prove for and realise the security for the secured amount
i.e. the amount
for which that lenders has stamped and registered his securityCAMA
recognises the right of parties to commercially structure their transactions
such that the security documents can be stamped for an initial amount and then
subsequently up stamped for an additional amount.
Pursuant to section 202 of CAMA, any
additional amount for which a security document is up stamped will be valid and
effective to the extent of such increased amount. The lenders would only be
permitted to prove and realize the security for the full facility amount or a
higher amount only upon the security document being up stamped (i.e. payment of
additional stamp duty) to cover the facility amount or the higher amount being
sought to be recovered.
Potential Risk to Lenders in Enforcing
There is a risk that prior to the
lenders up stamping the security document for the full facility amount,
intervening third party interests might have arisen (i.e. under other third
party security), thus raising pertinent priority issues where another creditor
has acquired an intervening proprietary interest. If prior to an up stamping to
secure additional amounts, another creditor advances money to the borrower, and
perfects its security interest over the same assets that form the
subject-matter of the lenders’ security, that creditor will rank ahead of the
lenders’ interest as it relates to the subsequent up stamped additional amount
to be secured but lenders will still have priority in respect of original
amounts for which the security was perfected.
Hardening Period
Another risk lenders face in an
upstamping scenario is that an agreement to upstamp to secure additional
amounts, might be viewed as a fraudulent preference in the event of insolvency
of the borrower. See section 495 of CAMA. This “hardening period” rule,
and the resultant effect is that the additional / up stamped security interest
would be void against the liquidator of the borrower and enable the liquidator
claw-back any such payments or cancel such acts. Arguments can be made whilst
referring to decisions of English courts on the fact that a preference is not
fraudulent by essentially showing that the dominant motive for such preference
is not to prefer certain creditors to the detriment of others. It should
however be noted that such arguments are only persuasive to Nigerian courts as
Nigerian courts are not bound by the decision of English courts; they are only
of persuasive authority.
On the flip side, where the dominant
motive was to carry out a pre-existing obligation, or to keep on good terms
with a creditor, it is likely that Nigerian courts will follow English courts
in holding that in such circumstances the preference is a fraudulent
preference. It is important to note that there are no Nigerian law decisions on
this point, however, Nigerian courts are likely to follow English courts on
this point.
Addressing the Residual Risks of
The risks identified above, while
adopting the upstamping regime, can be mitigated by:
1.     Establishing an
upstamping regime in the relevant loan documentation;
2.     Using a negative
pledge clause restricting the borrower from creating any additional security
over its assets;
3.     Using automatic
crystallization provisions in the security documents for floating charges to
crystalise into a fixed charge when there is an attempt to create security over
the assets in favour of a third party; and
4.     Establishing a stamp
duty escrow account to hold the balance of the perfection costs to enable
lenders upstamp at will.
The options highlighted in (1) to (4)
above are by no means exhaustive as other options have not been discussed in
this paper.
 Chukwudi Ofili is
a Senior Associate in the corporate and commercial, banking and corporate
finance practice group of Bloomfield Law Practice; and advises on matters such
as local and foreign currency syndicated lending, leases
transaction/structured/project finance, structured trade finance, energy and
natural resources, due diligence issues and advisory services, foreign
investment advisory services, taxation and real estate.
Ed”s Note – This article was originally published by the author here