QUESTION 10 COMPANIES AND ALLIED MATTERS 1990_C RECEIVERS AND MANAGERS

Appointment of Receivers and Managers

(1) The following persons shall not be appointed or act as receivers or managers of any property or undertaking of any company (a) An infant, (b) Any person found by a competent court to be of unsound mind; (c) A body corporate; (d) An undercharged bankrupt, unless he shall have been given leave to act as a receiver or manager of the property or undertaking of the company by the court by which he was adjudged bankrupt; (e) a director or auditor of the company; (f) any person convicted of any offence involving fraud, dishonesty, official corruption or moral turpitude and who is disqualified under section 254 of this Decree.

(2) Any appointment made in contravention of the provisions of subsection (1) of this section shall be void and if any of the persons named in paragraphs (c), (d), (e) and (f) of that subsection shall act s a receiver or manager, he shall be guilty of an offence and liable to a fine not exceeding 2,000 in the case of a body corporate or, in the case of an individual to imprisonment for a term not exceeding 6 months or to a fine not exceeding 500. (3) Where any of the persons mentioned in subsection (1) of this section is at the commencement of this Decree acting as a receiver or manager, he may be removed by the Court on an application by a person interested. (2) A receiver or manager of any property or undertaking of a company appointed by the court shall be deemed to be an officer of the court and not of the company and shall act in accordance with the directions and instructions of the court. (1) A receiver or manager of any property or undertaking of a company appointed out of court under a power contained in any instrument shall, subject to section 393 of this Decree, be deemed to be an agent of the person or persons on whose behalf he is appointed and, if appointed manager of the whole or any part of the undertaking of a company he shall be deemed to stand in a fiduciary relationship to the company and
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observe the utmost good faith towards it in any transaction with it or on its behalf.

Duties, powers and liabilities of receivers and managers

(1) A person appointed a receiver of any property of a company shall subject to the rights of prior incumbrancers, take possession of and protect the property, receive the rents and profits and discharge all out-goings in respect thereof and realise the security for the benefit of those on whose behalf he is appointed, but unless appointed manager he shall not have power to carry on any business or undertaking.

(2) A person appointed manager of the whole or any part of the undertaking of a company shall manage the same with a view to the beneficial realisation of the security of those on whose behalf he is appointed.

(3) Without prejudice to subsection (1) or (2) of this section, where a receiver or manager is appointed for the whole or substantially the whole of a company's property, the powers conferred on him by the debentures by virtue of which he was appointed shall be deemed to include (except in so far as they are inconsistent with

any of the provisions of those debentures) the powers specified in Schedule 11 to this Decree. (4) As from the date of appointment of a receiver or manager, the powers of the directors or liquidators in a members' voluntary winding up to deal with the property or undertaking over which he is appointed shall cease unless and until the receiver or manager is discharged. (5) If, on the appointment of a receiver or manager, the company is being wound up under the provision relating to creditors' voluntary winding up, or the property concerned is in the hands of some other officer of the court, the liquidator or officer shall not be bound to relinquish control of such property to the receiver or manager except under the order of the court. (1) A receiver or manager of any property or undertaking of a company shall be personally liable on any contract entered into by him except in so far as the contract otherwise expressly provides.

(2) As regards contracts entered into by a re ceiver or manager in the proper performance of his functions, such receiver or manager shall, subject to the rights of any prior incumbrancers, be entitled to an indemnity in respect of liability

thereon out of the property over which he has been appointed to act as receiver or manager.

(3) A receiver or manager appointed out of court under a power contained in any instrument shall also be entitled, as regards contracts entered into by him with the express or implied authority of those appointing him, to an indemnity in respect of liability thereon from those appointing him to the extent to which he is unable to recover in accordance with subsection (2) of this section.

Procedure after appointment

(1) Where a receiver or manager of the whole or substantially the whole of the property of a company (hereafter in this section and in section 397 of this Decree referred to as "the receiver") has been appointed on behalf of the holders of any debentures of the company secured by a floating charge, then subject to the provisions of this section and of section 397 of this Decree-

(a) the receiver shall forthwith send notice to the company of his appointment and the terms; and (b) there shall, within 14 days after receipt of the notice, or such longer period as may be allowed by the court or by the receiver, be made out and submitted to the
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receiver in accordance with section 397 of this Decree, a statement in the prescribed form as to the affairs of the company and (c) the receiver shall within 2 months after receipt of the said statement send -

(i) to the Commission or to the court a copy of the statement and of any comments he sees fit to make thereon and in the case of the Commission also a summary of the statement and of his comments if any thereon; (ii) to the company a copy of any such comments as aforesaid or if he does not see fit to make any comment, a notice to that effect; and (iii) to any trustees for the debenture holders on whose behalf he has been appointed and, so far as he is aware of their addresses, to all such debenture holders a copy of the said summary.

Accounts by receiver or manager

(1) Except where section 396 (2) of this Decree applies, every receiver or manager of the property of a company who has been appointed under the powers contained in any instrument shall, within one month or such
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longer periods as the Commission may allow, after the expiration of the period of 6 months from the date of his appointment, and of every subsequent period of 6 months, and within one month after he ceases to act as receiver or manager, deliver to the Commission for registration an abstract in the prescribed form showing his receipts and his payments during that period of 6 months, or where he ceases to act as aforesaid during the period from the end of the period to which the last preceding abstract relate up to the date of his ceasing, and the aggregate amount of his receipts and of his payments during all preceding periods since his appointment. (2) Every receiver or manager who makes default in complying with the provisions of this section shall be guilty of an offence and liable to a fine of 25 for every day during which the default continues.

WINDING UP OF COMPANIES

Preliminary Modes of Winding Up

(1) The winding up of a company may be effected -

(a) By the court; or (b) Voluntarily; or (c) subject to the supervision of the court.

Contributories
In the event of a company being wound up, every present and past member shall be liable to contribute to the assets of the company as provided in section 92 of this Decree. The term "contributory" means every person liable to contribute to the assets of a company in the event of its being wound up and for the purposes of all proceedings for determining and all proceedings prior to the final determination of the persons who are to be deemed contributories, the expression shall include any person alleged to be a contributory.

Winding up by the Court

Jurisdiction
(1) The court having jurisdiction to wind up a company shall be the Federal High Court within whose area of jurisdiction the registered office or head office of the company is situate.
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(2) For the purpose of this section, "registered office or head office" means the place which has longest been the registered office or head office of the company during the 6 months immediately preceding the presentation of the petition for winding up.

Cases in which company may be wound up by Court

A company may be wound up by the court if (a) the company has by special resolution resolved that the company be wound up by the court; (b) default is made in delivering the statutory report to the Commission or in holding the statutory meeting; (c) the number of members is reduced below two; (d) the company is unable to pay its debts; (e) the court is of opinion that it is just and equitable that the company should be wound up. Voluntary Winding- up

Resolutions for and commencement of voluntary winding up

Any company may be wound up voluntarily -

(a) when the period, if any, fixed for the duration of the company by the articles expires, or the event, if any, occurs, on occurrence of which the articles provided that the company is to be dissolved and the co mpany in general meeting has passed a resolution requiring the company to be wound up voluntarily; (b) if the company resolves by special resolution that the company be wound up voluntarily; and references in this Decree to a "resolution for voluntary winding up" means a resolution passed under any of the paragraphs of this section. (1) If a company passes a resolution for voluntary winding up it shall, within 14 days after the passing of the resolution give notice of the resolution by advertisement in t he Gazette or two daily newspapers and to the Commission. (2) If default is made in complying with this section, the company and every officer of the company who is in default shall be liable to a fine of 500 and for the purposes of this subsection the liquidator of the company shall be deemed to be an officer of the company. A voluntary winding up shall be deemed to commence at the time of the passing of the resolution for voluntary winding up.

Consequences of voluntary winding- up

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In case of voluntary winding up, the company shall, from the commencement of the winding up, cease to carry on its business, except so far as may be required for the beneficial winding up thereof: Provided that the corporate state and corporate powers of the company shall, notwithstanding anything to the contrary in its articles, continue until it is dissolved. Any transfer of shares, not being a transfer made to or with the sanction of the liquidator, and any alteration in the status of the members of the company, made after the commencement of a voluntary winding up, shall be void.

ARRANGEMENT AND COMPROMISE In this Part of this Decree, the expression "arrangement" means any change in the rights or liabilities of members, debenture holders or creditors of a company or any class of them or in the regulation of a company, other than a change effected under any other provision of this Decree or by the unanimous agreement of all parties affected thereby.

(1) With a view to effecting any arrangement, a company may by special resolution resolve that the company be put into members' voluntary
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winding up and that the liquidator be authorised to sell the whole or part of its undertaking or assets to another body corporate, whether a company within the meaning of this Decree or not (in this section called "the transferee company") in consideration or part consideration of fully paid shares, and to distribute the same in specie among the members of the company in accordance with their rights in the liquidation. (2) Any sale or distribution in pursuance of a special resolution under this section shall be binding on the company and all members thereof and each member shall be deemed t have agreed with the transferee company to accept the fully paid shares, debentures, policies, cash or other like interests to which he is entitled under such distribution: (3) Any member who fails to signify his dissent in accordance with subsection (2) of this section shall be deemed to have accepted the resolution; (4) If the liquidator elects to purchase the shares of any member who has expressed his dissent in accordance with subsection (2) of this section, the price payable therefor shall be determined by agreement in the case of a private company in which aliens do not participate, and in the case of a public company or a pirate company in which aliens participate, by the Securities and Exchange Commission:
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(5) Nothing contained in this section shall authorise any variation or abrogation of the rights of any creditor of the company.

DEALING WITH COMPANIES SECURITIES (a) the Lagos Stock Exchange Act; (b) the Nigerian Enterprises Promotion Issue of Non-voting Equity Shares Decree 1990; (c) the Securities and Exchange Commission Decree 1988; and (d) Part XVII of the Companies and Allied Matters Decree 1990. (2) The following enactments are amended to the extent provided (a) the Capital Gains Act: section 3(d) is hereby repealed; (b) the Venture Capital (Incentives) Decree 1993, (i) sections 1(2), (3)(a), (4) and (5) and 4(b) are hereby repealed, and (ii) substitute for the words "Risk Fund" in sections 2, 5(1)(2) and 6, the words "Federal In land Revenue Service"; (c) the Nigerian Investment Promotion Commission Decree 1995: section 21(2) is hereby repealed. (3) It is hereby declared that without limiting the provisions of the Interpretation Act, the repeal or amendment of these enactments shall not affect any
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document made or anything whatsoever done or purported to have been done under the enactments so repealed.

(4) Every order, requirement, certificate, notice, direction, or thing decision, authorisation, con sent, application, request or thin g mad e, issued, given or d one under any enactment repealed by this Decree shall, if in force at the commencement of this Decree, continue in force and have effect as if made, issued, given or done under the corresponding provisions of this Decree.

MISCELLANEOUS AND SUPPLEMENTAL

Application of this Part of this Decree

(1) Except as otherwise provided, this Part, that is, Part A of this Decree shall apply to(a) all companies formed and registered under this Decree; (b) all existing companies; (c) all companies incorporated, formed or registered under other enactments; and (d) unregistered companies.
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(2) This Decree shall not apply to unions of workers or of employers; and registration of any such union whether described as such a union or as trade union shall, if effected under the Companies Act, 1968 before its repeal by this Decree, be void.

REFERENCE Olakanmi O and others (2000) Companies and Allied Matter Act 1990, LawLords Publications, Lagos. www.nigerian-law.org

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