The sections, word for word
Every section on this subject, exactly as printed in the Official Gazette (Act No. 3 of 2020). The explanation follows beneath.
Section 301. Register of directors’ shareholding
(1) Every company shall keep a register showing as respects each director of the company (not being its holding company) the number, description and amount of shares in, debentures of the company or any other body corporate, being the company’s subsidiary, holding company, or a subsidiary of the company’s holding company, which are held by or in trust for him or of which he has any right to become the holder: Provided that the register need not include shares in any body corporate which is the wholly-owned subsidiary of another body corporate, and for this purpose, a body corporate is wholly-owned subsidiary of another if it has no members but that other and that other’s wholly-owned subsidiaries and its or their nominees.
(2) Where any share or debenture fail to be or cease to be recorded in the said register in relation to any director by reason of a transaction entered into after the commencement of this Act and while he is a director, the register shall also show the date of, and price or other consideration for the transaction: Provided that where there is an interval between the agreement for any such transaction and the completion thereof, the date is that of the agreement.
(3) The nature and extent of a director’s interest or right in or over shares or debentures recorded in relation to him in the said register shall, if he so requires, be indicated in the register.
(4) The company shall not by virtue of anything done for the purposes of this section, be affected with notice of, or put upon inquiry as to the rights of any person in relation to shares or debentures.
(5) The said register shall, subject to the provisions of this section, be kept at the company’s registered or head office and be open to inspection during business hours (subject to such reasonable restrictions as the company may by its articles or in general meeting impose, so that at least two hours in each day be allowed for inspection)—
(a) during the period beginning 14 days before the date of the company’s annual general meeting and ending three days after the date of its conclusion, it shall be open to the inspection of any member or holder of debentures of the company ; and
(b) during that or any other period, it shall be open to the inspection of any person acting on behalf of the Commission.
(6) In computing the 14 days and the three days mentioned in subsection (5), any day which is a Saturday, Sunday or a public holiday is disregarded.
(7) Without prejudice to the rights conferred by subsection (5), the Commission may, at any time, request for the production to it of a copy of the register, or any part thereof.
(8) The register shall also be produced at the commencement of the company’s annual general meeting and remain open and accessible during the continuance of the meeting to any person attending the meeting.
(9) If default is made in complying with subsection (1) or (2), or if any inspection required under this section is refused, or any copy required is not sent within a reasonable time, the company and each officer of the company are liable to a penalty in such amount as the Commission shall specify in its regulations, and if default is made in complying with subsection (8), the company and every officer of the company are liable to a penalty in such amount as the Commission shall specify in its regulations.
(10) If any inspection required under this section is refused, the Court may, by order, compel an immediate inspection of the register.
(11) For the purposes of this section—
(a) any person, in accordance with whose directions or instructions the directors of a company are accustomed to act, is deemed to be a director of the company ; and
(b) a director of a company is deemed to hold or to have any interest or right in or over, any share or debenture, if a permanent representative of the body corporate other than the company holds them or has that interest or right in or over them, and either—
(i) that permanent representative is accustomed to act in accordance with his directions or instructions, or
(ii) he is entitled to exercise or control the exercise of one third or more of the voting power at any general meeting of that body corporate.
Section 302. General duty to give notice
(1) It is the duty of any director of a company to give notice to the company of such matters relating to himself as may be necessary for the purposes of sections 301 and 303 of this Act except so far as it relates to loans made by the company or by any other person under a guarantee from or on a security provided by the company, to an officer.
(2) Any notice given for the purposes of this section, shall be in writing and if it is not given at a meeting of the directors, the director giving it shall do all things reasonably necessary to secure that it is brought up and read at the next meeting of directors after it is given.
(3) Subsection (1) shall, to the extent to which it applies in relation to directors, apply to the like extent for the purposes of—
(a) section 303 of this Act in relation to officers other than directors, and
(b) section 303 of this Act in relation to persons who are or have at any time during the preceding five years been officers of the company.
(4) Any person who makes default in complying with the provisions of this section is liable to a penalty in such amount as the Commission shall specify in its regulations.
Section 303. Disclosure by directors of interests in contracts
(1) Subject to the provisions of this section, it is the duty of a director of a company who is in any way, whether directly or indirectly, interested in a transaction or a proposed transaction with the company, to immediately notify the directors of such company in writing, specifying particulars of the director’s interest.
(2) For the purpose of this section, a general notice given to the directors of a company by a director to the effect that he is a member of a specified company or firm and is to be regarded as interested in any transaction which may, after the date of the notice, be made with that company or firm, shall not be deemed to be a sufficient declaration of interest in relation to any transaction so made unless the particulars of the transaction are also disclosed by that director to the board upon being known to that director, and that the director does all things reasonably necessary to be sure that it is brought up and read at the next meeting of the directors after it is given.
(3) Any director who fails to comply with the provisions of this section commits an offence and is liable to a fine in such amount as the Commission shall specify in its regulations.
(4) Nothing in this section shall be taken to prejudice the operation of any rule of law restricting directors of a company from having any interest in contracts with the company.
Section 304. Particulars with respect to directors in trade catalogues
(1) Every company to which this section applies shall, in all trade circulars, show cards and business letters on or in which the company’s name appears and which are issued or sent by the company to any person in Nigeria, state in legible characters with respect to every director—
(a) his present forename or the initials, and present surname ;
(b) any former forename and surname ; and
(c) his nationality, if not a Nigerian: Provided that, if special circumstances exist which the Commission is of the opinion render it expedient that such an exemption should be granted, the Commission may, subject to such conditions as it may prescribe by notice published in the Federal Government Gazette, exempt a company from the obligations imposed by this subsection.
(2) This section applies to every company incorporated under this Act, or any enactment repealed by it.
(3) If a company defaults in complying with this section, every officer of the company is liable to a penalty in such amount as the Commission shall specify in its regulations.
(4) For the purposes of this section—
(a) “initials” includes a recognised abbreviation of a forename ;
(b) references to a former forename or surname in the case of a married woman do not include the name or surname by which she was known previous to the marriage ; and
(c) “show cards” means cards containing or exhibiting articles dealt with, or samples or representations.
What this means
Short answer
A director who is interested in a transaction or proposed transaction with the company must notify the other directors in writing immediately, with particulars of the interest (section 303(1)). A general notice is not enough unless the particulars are also disclosed when known (section 303(2)). The company must also keep a register of directors’ shareholdings (section 301).
Declaring an interest in a transaction
Section 303 requires a director who is in any way, directly or indirectly, interested in a transaction or proposed transaction with the company to notify the directors in writing immediately, giving particulars of the interest. A general notice that he is a member of a named company or firm, and should be regarded as interested in future dealings with it, is not a sufficient declaration unless the particulars of each transaction are also disclosed to the board once the director knows them. He must do what is reasonably necessary to make sure that disclosure is read at the next directors’ meeting. Failure to comply is an offence punishable by a fine set by the Commission (section 303(3)).
The duty to give notice
Section 302 makes it a director’s duty to give the company the information needed for the register under section 301 and for disclosures under section 303. Notice must be in writing. If it is not given at a directors’ meeting, the director must do what is reasonably necessary to have it read at the next meeting after he gives it. Default brings a penalty set by the Commission.
The register of directors’ shareholdings
Section 301 requires every company to keep a register showing, for each director, the number, description and amount of shares and debentures in the company, or in its subsidiary, holding company or fellow subsidiary, that he holds or has a right to hold, including those held in trust for him. Where a transaction takes place while he is a director, the register must also show its date and the price or other consideration.
- The register is kept at the registered or head office.
- Members and debenture holders can inspect it from 14 days before the annual general meeting until three days after it ends, and a person acting for the Commission can inspect it at any time. At least two hours each day must be allowed for inspection.
- The Commission can ask for a copy at any time, and the register must be produced at the start of the annual general meeting and stay available during it.
- A person whose directions the directors are accustomed to act on is treated as a director for this section (section 301(11)).
Directors’ names on business letters
Section 304 requires trade circulars, show cards and business letters showing the company’s name that go to anyone in Nigeria to state, for every director, his present forename or initials and surname, any former forename and surname, and his nationality if not Nigerian. The Commission can grant an exemption in special circumstances, subject to conditions published in the Gazette.
Questions and answers
When must a director declare an interest in a contract?
Immediately, in writing to the other directors, with particulars of the interest, when he is directly or indirectly interested in a transaction or proposed transaction with the company (section 303(1)).
Is a general notice of interest enough?
No, not on its own. The particulars of each transaction must also be disclosed to the board when the director knows them (section 303(2)).
Who can inspect the register of directors’ shareholdings?
Members and debenture holders from 14 days before the annual general meeting until three days after it, and anyone acting for the Commission at any time (section 301(5)).
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