Questions on Company Directors

Prestige Chairs Ltd has 5 directors in the persons of John Paul, Michael Areu, Tolu Adio, Tola Ige and Femi Caps. The latter 2 were part of the first directors of the company while the others were appointed at the last AGM. To usher in its 10th anniversary on the 12th of August Prestige converted to a public company (Prestige Chairs PLC) in January and is launching a massive share offering. Some members believe competence is key and wish to appoint Chike Ndubuisi a skilled businessman as director, Chike has no shares in the company. The prodigal son of Late Chief Prestige – Bala Prestige is also being considered for directorship by Michael Areu for sentimental reasons. The beautiful miss Tola Tush a close friend of Femi Caps is seeking to apply for the position of secretary. She studied business studies education and has been the secretary at her father’s company – Tush Nigeria Ltd for 6 years.

At the AGM held on the 13th of August, the procedure for rotation is ignored; also the company decided to consider the appointment of prospective directors in one resolution to avoid time-wasting.


  1. Comment on the validity of ignoring the rotation procedure
  2. If you feel the procedure is necessary, list a step-by-step guide on how it is effected
  3. Can Miss Tush become a secretary of the company?
  4. List a step by step guide on how Chike Ndubuisi can be elected director
  5. Same for Bala Prestige
  6. Assuming the articles require a director to own at least 1% shares in the company, can Ndubuisi still become director?
  7. Would your answer to no 3 be different if Miss Tush had applied 2 years ago?
  8. Is anything wrong with the resolution? State what is wrong and what should have been done.

Try it out and the answers

You can do it….






I believe in you…











Are you done?












You sure?






















Okay take a look

First I want to talk about the formula for answering questions. I paraphrased this from the indefatigable Barrister Udemezue (my Lagos campus peeps can relate)

L. G.  A

Legal Issues. General Provision of the law plus exceptions if any. Application to the issues at hand

It is kind of like IRAC in the university but more straight to the point because in law school no one has time for lengthy rants.

  1. Rotation is provided for in Section… of the Companies’ and Allied Matters Act, the law provides that the first Annual General Meeting all directors must retire while at subsequent Annual General Meetings, one third of the directors or the nearest number must retire. The company may provide for a different ratio of directors but it is compulsory that at every AGM a number of directors retire. From the foregoing it is obvious that the failure of the company to retire its directors is unlawful. Section 259
  2. Pay attention to the calculation

First determine if there are any directors exempted e.g life directors in the question there are no directors exempted from rotation

Who is left? That leaves all 5 directors

In the absence of any formula from the company’s articles, 1/3 of 5 is approximately 2, therefore 2 directors will retire.

Which 2?  They are Tola Ige and Femi Caps – because they have been in the company longest. Section 259

  1. The CAMA provides that for a person to qualify to be appointed as secretary of a PLC he or she must be either a Chartered Secretary, a chartered Accountant, Legal Practitioner or one who has been the secretary of a PLC for 3 years in the preceding 5 years or a firm of any of the above three. Miss Tush is not seen to have any of the above requirements, therefore it will be in contravention of the law to appoint her as secretary of Prestige Chairs PLC.
  2. Chike Ndubuisi may be nominated as director in the following steps:
  • Chike Ndubuisi gives his written consent and interest in being nominated as director
  • The member(s) interested in nominating Chike Ndubuisi deposit notice of their intention, including Chikes’ consent, at the registered office not later than 3- 21 days before the meeting
  • The board meets and instructs the company secretary to convene a meeting
  • The company secretary disburses notices of meeting along with the notice of Chike’s appointment, 21 days before the date of the meeting
  • At the meeting, the members of the company pass an ordinary resolution
  • If appointed within 14 days the company secretary files Form CAC 7A NOTICE OF CHANGE OF DIRECTORS, OR IN THE NAME, RESIDENTIAL ADDRESS OR
    POSTAL ADDRESS OF DIRECTOR (please in exams try to spell it out like this) along with: the resolution, letter of consent, updated annual returns, evidence of filing fees
     to the CAC
  • All necessary documents and registers are updated to reflect Chike’s appointment
  1. Bala Prestige may be recommended by Michael Areu in the following steps.
  • The board meets passes a resolution to recommend Bala Prestige
  • The board instructs the secretary to convene a meeting
  • The secretary convenes the meeting by sending notices at least 21 days before the meeting
  • At the meeting the board recommends Bala Prestige
  • The members of the company pass an ordinary resolution
    POSTAL ADDRESS OF DIRECTOR along with: the resolution, letter of consent, updated annual returns, evidence of filing fees Regulation 38
  • All necessary registers and documents are updated to reflect Bala’s name.
  1. Shareholding is not provided in the law as a prerequisite to become a director however the CAMA in Section 251 requires that where the articles require a director to have share in a company he must acquire such shares within 2 months of being elected a director; contravention of this attracts vacation of office. Therefore, Chike can still be appointed director however he must acquire the shares within 2 months of his appointment.
  2. 2 years ago, Prestige Chairs was not a PLC but an Ltd, and the CAMA has no specific requirements (except that of knowledge and experience) for the secretary of a private company; therefore considering Miss Tush’s experience and academic discipline she is fit to be a secretary and her nomination would have been lawful.
  3. Since Prestige Chairs is a PLC, the resolution to nominate the directors should have been considered separately, or a UNANIMOUS resolution to consider the elections in one resolution should have first been passed.

The items in bold must be mentioned in some form, but you don’t have to replicate my words. I’m no law school examiner but I think these questions were well answered (yeah I’m both judge and jury and defendant and prosecutor sef).

Notice that where I said state or list, I went to the point; where the question is not direct, I treated every detectable issue in the area in focus.

Let me know how you did. Kisses


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