SHARES.
INTRODUCTION
In Nigeria
- Securities and Exchange Commission (SEC) Rules and Regulations 2009.
- Companies and Allied Matters Act.
- Investment and Securities Act 2007.
- Investment and Securities Tribunal (procedure) Rules.
To have a proper understanding of this seminar paper on shares I shall be making reference to the above mentioned body, rules and laws as they relate and pertain to shares.
The Securities and Exchange Commission of Nigeria Nigeria
(a) regulates investments and securities business in Nigeria as defined in this Act;
(b) register and regulate securities exchanges, capital trade points, futures, options and derailed exchanges
(c) regulate all offers of securities by public companies and entities.
(d) registers securities of public companies.
The market that deals on shares is known as the financial market. Financial markets are created as a means of providing financial resources for funding projects or businesses.
The financial market is basically segmented into three major areas which are;
1. The money market
2. The capital market
3. The insurance industry
The capital market is a market that lends from medium to long term it is a market where security like corporate stocks, shares, debentures and bond are traded.
In the capital market, the following instruments are usually traded there
- Shares (Equities)
- Debentures, loan stock etc.
- Government and public securities e.g. Bonds (debts)
- Unit in collective investment scheme
- Options
- Futures
- Real Estate Investment .
The capital market provides investments needed for efficient allocation of scarce resources, instrument for socio- economic development and avenue for mobilization of capital from less productive sectors to productive sectors.
We shall be looking at the nature, Classes of shares, lien on shares, forfeitures of shares, different types of shares and other instruments in the capital market. Also i shall be reflecting on the past and current situation in the country on the issue of shares and also considering which option of investment is more reliable or appreciated by people
SHARES
A share has been defined as ‘ the interest of a Shareholder in the Company measured by a sum of money, for the purpose of liability in the first place and of the interest in the second, but also consisting of a series of mutual Covenants entered into by all the share holders inter se in accordance with the companies Act .The contract contained in the articles of association is one of the original incidents of the share. The share is measured by a sum of money, namely, the nominal amount of the share, and also by the rights and obligations belonging to it as defined by the companies Act and by the memorandum and articles of the company. The undivided profits form an integral part of the shares to which they appertain.[1]
Shares is the interests in a company’s share Capital of a member who is entitled to shares in the capital or income of such company; except where a distinction between stock and shares is expressed or implied shares includes stock it is a chose in action and is properly transferable as provided in the articles. See Sec 115 of CAMA.
Section 315 ISA 2007,(interpretation and citation) provides that securities means;
- Debentures, stock or bonds, issued or proposed to be issued by a government.
- Debentures, stocks, shares, bonds, or notes issued or proposed to be issued by a body corporate.
- Any right or option in respect of any such debentures stocks, shares, bonds or notes.
Section 315 ISA 2007, defines Shares as proprietary interest in the share capital of a body corporate and except where a distinction between stock and shares is expressed or implied, shares include stocks.
WHO IS A SHARE HOLDER?
A share holder is one who owns or holds a share or shares in a company a corporate person can also be termed share owner[2]. There are different types of share holders, namely;
- Controlling Shareholder :A shareholder who is in a position to influence the corporation’s activities because the shareholder either owns a majority of outstanding shares or owns a smaller percentage but a significant number of the remaining shares are widely distributed among many others.
- Dummy Share holder: A share holder who owns stock in name only for the benefit of the true owner, whose identity is usually concealed.
- Majority share holder: A share holder who owns or controls more than half the corporation stock.
- Minority share holder: A share holder who owns less than half the total shares outstanding and thus cannot control the corporations management or single-handedly elect directors.
SHARE CAPITAL
The expression ‘capital of a company’ covers all the assets of the company and includes the share capital and borrowed money which is sometimes refereed to as loan capital it also includes fixed and circulation capital. Share capital can be classified into authorized or nominal, issued, paid up, reserved or equity share capital, Authorized share Capital.
RIGHTS AND DUTIES CARRIED BY A SHARE HOLDER
Section 114[3] provides for the rights and liabilities attached to shares and it provides as follows;
Subject to the provisions of this Act, the rights and liabilities attaching to the shares of a company shall.
(a) be dependent on the terms of the issue and at the company’s articles and
(b) Notwithstanding anything to the contrary in terms or the articles, include the right to attend any general meeting of the company and vote at such a meeting.
Although the rights and duties carried by a share are on principle, indivisible, it is often convenient to regard a share as a bundle of several rights and liabilities and to consider these separately.[4] The principal rights which a share may carry are
1. The right to dividend if, while the company is a going concern a dividend is duly declared.
2. The right to vote at the meetings of members; and
3. The right in the winding up of the company, after the payment of the debts to receive a proportionate part of the Capital or otherwise to participate in the distribution of assets of the company.[5]
By the provisions of section 114, the rights and liabilities accruing to shares are stipulated to be dependent on the terms of the issue of the shares as well as the articles of Associations of the company. That being the case, the articles of respective companies can govern the terms of issue as well as the rights and liabilities regulating the handling of such shares. Thus the rights may include, for example, the right to dividend, if any, to vote, to participate in the distribution of assets. In the winding up of the company, to receive a copy of the memorandum and articles and of every balance sheet to be presented before the general meeting ,to inspect the register of members, to inspect and obtain copies of minutes of general meetings and to petition for winding up, or in the alternative to apply for a remedy[6]
Liabilities of a company including paying up what is left as due or outstanding on the share when a call is made for the balance. It must be noted that when a company is a limited liability company, it simply means that the liability of the company is limited to the share amount or value of their shares in the event of winding up.
Examples of ancillary Liabilities of the share holders are;
(a) In the winding up of the company, to be placed.
(b) To be personally and severally liable for certain debts of the company.
(c) If the number of the share holders is reduced below the minimum.
(d) To repay any dividend received which he knew or ought to have known was made in contravention of the rules as to distributable profits.
How ever save to the extent to which a member of a company agrees in writing at any time to be bound thereby; and anything to the contrary in the memorandum or articles notwithstanding, the member should not be bound by any alteration made in the memorandum and articles of the company requiring him on or after the date of the alteration to:
(a) take or subscribe for more shares than he held at the date on which he became a member; or
(b) increase his liability to contribute to the share capital of the company ; or
(c) Pay money by any other means to the company.[7]
SHARES AS TRANFERABLE PROPERTY
Shares can be transferred from one member to another section 115 of CAMA provides that shares or other interests of a member in a company shall be properly transferable in the manner provided in articles of association of the company. What this means is that the law sees shares as objects of property which can be purchased, sold, mortgaged and bequeathed . There is therefore no need to give them any special label as was done under sec 75 of the companies Act, 1968, which provides that shares shall be personal and not real estates and are transferable in the manner provided for by the articles of the company.[8]
In the United Kingdom
CLASSES OF SHARES
Prima facie the rights carried by the shares rank pari passu i.e. the share holders participate in the benefits of membership equally it is only when a company divides its share capital into different classes with different rights attach to them that prima-facie precept of equality of shares may be displaced
Sec 118 CAMA, provides that a company may, were so authorized by its articles issue classes of shares also shares shall not be treated as being of the same class unless they rank equally for all purposes.
From the above mentioned provision the rights attached to shares are to be ascertained from the articles, but it is usual to distinguish three main categories of shares namely;
1. Ordinary shares.
2. Founders (or deferred shares).
3. Preference shares.
Section 119 of CAMA provides that without prejudice to any special rights previously centered on the holders of existing shares or classes of shares, any share in a company may be issued with such preferred or other special rights or such restrictions whether with regard to dividend, return of capital or otherwise, as the company may from time to time determine by ordinary resolution.
ORDINARY SHARES
Ordinary shares in financial terminology sometimes referred to as the “equity” or “risk” capital; normally confer in the holders the residue of rights of the company which have not been referred in other classes. The ordinary shares usually carry the main financial risk if the company is unsuccessful, but they carry the greatest prospects of financial reward if the venture of the company is successful.[10]
On winding up, after paying all liabilities of the company and returning the capital of the other classes, the ordinary shares are attached to all the surplus assets except where preference shares have a right to participate in the distribution of such assets. [11]
PREFERENCE SHARES
Shares or stock in a company which have a priority as to payment of dividends of a fixed amount over the ordinary shares are preference shares. Preference shares comprise any share conferring preference as to income or capital or both over the ordinary share capital of a company.
They usually carry out a right to preference in paying of dividend (if a dividend is declared) at a fixed rate and a right to preference in the repayment of capital in a winding up. There may be several classes of preference shares, first, second and third ranking one after the other.[12]
The rights attached to preference shares are always a question of construction of the memorandum, the articles or the terms of issue of the shares.[13]
DEFERRED SHARES
They are shares with the right to take the whole or a proportion of profits after a fixed dividend has been paid on the ordinary shares. They are also often described as founder’s shares and are associated with the promotion of of the company. They enable the promoters to enjoy a stake in the company whilst leaving equity capital available for subscription by other investors. [14]
REDEEMABLE PREFERENCE SHARES
Every company limited by shares may if authorized by its articles issue preference shares which shall or at the option of the company be liable to be redeemed sec 122. CAMA
ALLOTMENT OF SHARES
The authority to allot shares is vested primarily in the company but sec 124 CAMA permits the company to delegate this power to the directors subject of course to the provisions of the articles and directions from time to time by the company in general . Where shares are allotted the company must within one month of the allotment file what is called a “return of allotment form” or form co2 see Section 129 of CAMA 2004
When shares are allotted they may be paid for in cash or where the articles permit by a valuable consideration other than cash or partly in cash and partly by a valuable consideration other than cash. See Section 135-138. CAMA 2004
TRANSFER OF SHARES
As stated earlier shares can be transferred section 115 CAMA 2004, states that shares are transferable properties subject to the contents and restrictions in the company’s articles as may be applicable any member may transfer all or any of his shares .But it must be noted that shares can only be transferred by means of an instrument of transfer which of course must be in writing. See 151 of CAMA 2004 it states that upon application, the company shall enter the name of the transferee in the register of members but until the name of the transferee is entered in the register the transferee shall be deemed to remain the holder of the shares see152 (1) and (2)of CAMA 2004 All formal certificates together with the instrument of transfer must be delivered to the company to be recognized and registered see157 CAMA 2004.
TRANSMISSION OF SHARES
Transmission is used in CAMA in contradiction to the word transfer whereas transmission is by operation of law and includes devolution by death or bankruptcy of a member a transfer is by the act of a member himself inter vivors see 151 (2)CAMA 2004, which further recognizes the distinction in that it permits a company to register a person entitled by transmission as a shareholder without the delivery of a proper instrument of transfer Re Bent ham Mills Spinning co. A person becoming entitled to a share in consequences of death or bankruptcy of a member may elect to be registered himself as holder of the share or have some person nominated by him registered as the transferee of the share see 155.CAMA 2004
CALLS ON SHARES
when shares are issued a special sum may be paid on allotment and the balance paid subsequently as and when calls are made. The procedure for making calls is regulated by section 133 (1) of CAMA which provides as follows ‘subject to the terms of the issue of the shares and of the articles, the directors may from time to time make calls upon the members in respect of any money unpaid on their shares (whether on account of the normal values of the shares or by way of premium) and not by the conditions of allotment of the shares made payable at fixed times provided that no call shall exceed one fourth of the nominal value of the share or be payable at less than one month from the date fixed for the payment of the last preceding call and each member shall subject to receiving at least 14 days notice specifying the time or times and place of payment. Pay to the company at the time or times and places so specified the amount called on his shares ,so however that a call may be revoked or postponed as the director may determine.
A call shall be deemed to have been made at the time when the resolution of the directors authorizing the call was passed and may be required to be paid by installments. The joint holders of a share shall be jointly and severally liable to pay all calls in respect of the share.
If a sum called in respect of a share is not paid before or on the day appointed for payment, the person from whom the sum is due shall pay interest on the sum from the day appointed for payment to the time of actual payment at such rate not exceeding the current bank rate per annum as the directors may determine, but the directors shall be at liberty to wave payment of such interest wholly or in part see NBCI Vs Balogun[15] in this case a company purportedly made a call on the applicants /shareholders without giving the 21 days notice required by its articles. The company went into liquidation and the liquidators sent letters to applicants demanding payment of the call it was held on appeal that the call made by the company was invalid because proper notice had not been given and that the presence of the representatives of the applicants as directors at the meeting where the call was made did not constitute notice to the applicants it was also held that the letters of the demand served on the applicants by the liquidators were not valid as they did not comply with the relevant winding up rules.
RESERVE LIABILITY ON SHARES
A company limited by shares may by special Resolution determine that any portion of its share capital which has not been already called up shall not be capable of being called up except in the event and for the purposes of the company being wound up, and there upon that portion of its share capital shall not be capable of being called up, see 134 CAMA
PAYMENT OF CALL
Where any contribution has become due and payable by reason of a call validly made by the company, pursuant to its articles, or where under the terms of this agreement with the company a member has undertaken personal liability to make future payments in respect of shares held by him are subsequently transferred or forwarded under a provision to that effect in the articles but his liability will cease if and when the company would have received payment in full of all such money in respect of the shares. See 92 (2)CAMA The joint holders of a share are jointly and severally liable to pay all calls in respect of the share (see 133 CAMA
Payment of calls must be made in cash but if shareholder is entitled to some payment from the company for services, the call may be set off against the amount, provided this is done before winding up.[16]
In Re white star line ltd (1938) ch 458 the court held the specially debt resulting from a call on shares of a company can only be discharged by accord and satisfaction when the company has received money for this purpose the consideration given by way of payment must be something which is regarded by the parties to the transaction as fairly representing the sum to be discharged. This consideration must not be a clear blind or clearly colourable or illusionary.
LIENS ON SHARES
Lien on the share is an equitable charge on shares. Lien is also a security which forbids the making of loans to share holders without security. Section 139 (1) CAMA provides that the company shall have a first and paramount lien on every share not being a fully paid share for all moneys whether payable presently or not called or payable at fixed time in respect of that share and the company shall have first and paramount lien on all shares other than fully paid shares standing registered in the name of a single person for all moneys presently payable by him or his estate to the company but the directors may at any time declare any share to be wholly or in part exempt from the provision of the subsection. The lien extend to all dividends payable on a share see 139(2) CAMA. A share holder may compel the company to assign its lien to a person who is willing to pay off the amount of the lien in Re National Bank of Wales ltd (1899) 2 ch 629 C.A in that case the court held test the lien given by clause15 was a security within the clause 98, and that a loan might be made to a director without any other security than the lien if the board considered his shares to be significant value.
A company has a lien on a member’s shares for money’s owning. lien also extends to moneys paid as directors fees under a mistake of fact see Re Bodega co ltd (1904) 1 ch 276 court held inter alia that W. was not entitled to a quantum meruit for his services as a Director rendered to the company between December 24, 1900 and July 8 1901, but that the company were entitled to receive from him the fees paid him under the mistake of fact that he was a Director and that the company had a lien on his shares for those money.
ENFORCEMENT OF LIEN
A lien is enterable by sale. Section 139 (3) provides that a company may sell , in such manner as the directors may think fit, any shares on which the company has a lien. But no sale may be made unless a sum in respect of which the lien exists in currency payable, nor until the expiration of 14days after notice in writing stating and demanding payment of such part of the amount in respect of which the lien exist, as is currently payable, has been given to the registered holder for the time being of shares, or the person entitled to it by reason of his death or bankruptcy.
For any effect to be given to any sale the directors may authorize some other person to transfer the shares sold to the purchaser of the shares, and the purchaser shall be registered as the holder of the shares comprised in any such transfer. See Section 139(4) CAMA.
The proceeds of the sale is received by the company and applied in payment of the amount in which the lien exists as is due and any residue is paid to the person entitled to the shares of the date of sale. The lien may be enforced against any registered holder even if he is only a trustee[17] but the lien would not prevail if the company had notice of the trust before incurring debt [18] The death of the share holder will not destroy the lien and it may be enforced against the executors[19] Where the share holder sells part only of his shares the buyer may insist that the company must pay itself from the shares not sold.[20]
FORFEITURE OF SHARES
The directors may forfeit the shares of a member and the power can only be exercised for non-payment of a call or an installment otherwise forfeiture will amount to a reduction of capital contrary to section 105 CAMA. section 140 (1)CAMA provides that if a member fails to pay any calls or installment of a call at the day appointed for payment, the directors may at any time while any part of the call or installment remains on paid serve a notice on him requiring him to pay up such sum together with any accrued interest. The notice will give a date within which payment must be made and state that unless that is done, the shares will be forfeited if the request is not complied with, the directors may forfeit the shares by a resolution[21] see Re Bolton, Expert North British Artificial silk (1930) 2 ch 48, see also Trevor V white worth 12 App Cas 409.
Before forfeiture of shares can be enforced, technicalities must be strictly observed. A share holder can resist forfeiture of his shares on the premise that the conditions precedent to forfeiture were not strictly complied with. See Johnson V Little iron Agency (1877) 5ch D 689 the court held that as the notice of the 21st of December claimed interest from the date of the call, instead of from the day fixed for his payment, as provided by clause 6 of Table A, it was a bad notice, and the forfeiture was invalid, and an injunction was granted restraining the company from proceeding further under the resolution of forfeiture.
A forfeiture share may be sold or otherwise disposed off in such terms and in such manner, as the directors think fit, and at any time before a sale or disposition, the forfeiture may be collected on such terms as the directors think it. See section 140 (4) CAMA.
Once a person’s share has been forfeited, he ceases to be a member of the company in respect of those shares, but remains liable to pay outstanding liability on them.
TIME WHEN SHARES FORFEITED
The time when forfeiture is completed is a question of fact depending on the articles. Thus where the article provide that upon non-payment of calls or upon default in doing any act, shares shall become absolutely forfeited to the company, the default does not operate as a forfeiture lpo facto, but only at the option of the directors[22]
EFFECT OF FORFEITURE
A forfeited share may be sold or otherwise disposed of on such terms and in such manner, as the directors think fit, and at any time before a sale or disposition, the forfeiture may be cancelled on such terms as the directors think fit. See Section 140(4) CAMA.
A statutory declaration by a person that he is a director or secretary of the company, and that a share in the company has been duly forfeited on a day stated in the declaration is prima facie evidence of those facts as against all persons claiming to be entitled to the share see 140 (6)CAMA
Where the forfeited share is sold, the company may receive consideration, if any given for the sale or disposition and may execute a transfer of the share in favour of the purchaser. Such a purchaser should be registered and he his not bound to see to the application of the purchase money. Neither will his title be affected by any irregularity or invalidity in the proceedings in reference to the forfeitures sale or disposal of the share 140 (7). CAMA
SHARE CERTIFICATE
Section 146 of CAMA provides that every company must within 2 months after the allotment of any of its shares and within 3 months after the date on which a transfer of any such shares is lodged with the company, complete and have ready for delivery the certificates of all shares so allotted or transferred unless the conditions of issue of the shares provides otherwise. The company may issue one certificate for all shares of a person or several certificates each for one or more of the shares on payment of a fee for every certificate after the first one as the directors shall from time to time determine see section 146 (2) CAMA
Section 315 of ISA 2007 provides that “Shares Certificate” is an instrument of a body corporate certifying that the person named is entitled to certain number of shares and is prime face evidence of his ownership whether electronically expressed or otherwise as may be proved by the commission and kept, lodge or stored with a licensed depository and custodian company in accordance with the provisions of this Act.
A person who is entitled to a certificate may serve a notice on the company to comply with the above, and if the company fails to do so within 10 days after the service of the notice, he may apply for the court for an order directing the company to comply with the request. If this is still not complied with, the company and every officer who is in default is liable to a daily default line.Where shares in a company are quoted in the stock exchange, a member who has sold a part of his holding is entitled to a certificate free of charge.A certificate, under common seal of the company, specifying any shares held by any member, shall be prima facie evidence of the title of the members to the shares.
DIFFERENCE BETWEEN SHARES AND DEBENTURE
A debenture is a document which creates or acknowledges a debt due from a company such document need not be although it usually is under seal it need not give although it usually does gives a charge on the assets of the company by way of security and it may or may not be
{1.} Secured or {2.} Unsecured. There are different types of debentures, we have (1) perpetual debentures, coverable debentures, secured debentures, unsecured debentures.
The major difference between a debenture holder and share holder is that a debenture holder has a claim against the company whereas a share holder has an interest in the company. Debenture can not be called a capital thus the company does not have to follow the rules relating to maintenance of capital as it does not apply to debentures.
What this means in effect is that;
- A company can purchase his own debentures in fact the earlier he does that the better for the company.
- Interest may be paid out of capital e.g. it does not matter whether the company is doing well or not it has to pay.
- Debentures may be issued at a discount.[23]
Real Estate investment companies and shares section 193 of I S A 2007 provides that a body corporate incorporated for the sole purpose of acquiring intermediate or long term invests in real estate or property development may raise funds from the capital market through the issuance of securities.
(a) Under the Act, a trust may also be constituted for the sole purpose of acquiring a property on a trust for sale for the investors see 193(2)
The trust refereed above shall have the following characteristics.
- The inventers shall acquire units in trust through which they shall be entitled to receive periodic distribution of income and participate in any capital appreciation of the property concerned.
- The investors shall also be entitled to retain control over their investment by investing directly in a particular property rather than in a portfolio of invest5ment.
REGULATION OF SECURITIES
All securities of a public company must by registered with the commission under the terms and conditions of the I S A 2007 and as may be supplemented by regulations prescribed by the Exchange and Securities Commission. See section 54 (I S A 2007)The issuer shall file with the Commission a registration Statement which shall be signed by each issuer. A registration Statement shall be deemed effective only as to the securities or investments Specified therein as proposed to be issued. The Commission shall there after issue a certificate of registration in respect of securities and investments registered by it.
All payments for purchase or sale of securities shall be made either by personal cheque or bank draft. However , a purchaser of securities may deposit cash, not exceeding N50,000.00 with a stockbroker on account of transaction and a stockbroker may pay cash, not exceeding N50,000.00 on account of sale of securities. See Rule 99(1) SEC Rules & Regulations 2009.
It must be noted also that no securities of a public company shall be issued transferred, sold or offered for subscription by or sold to the public without the prior registration of the securities with the commission. Anybody who issues shares without the prior registration of the shares /securities with the commission commits an offence and is liable on conviction to a fine of N1, 000,000 or a term of imprisonment of three years or to both of such fine and imprisonment.
The Commission may in lieu of a prosecution under subsection (2) of this to section, impose a penalty of N1,000,000 and a further sum of N500,000 for every day which the violation continues see section 54 (7)
TRADING IN SECURITIES.
The Securities and Exchange commission Rules and Regulations , provides that certain persons must register their securities and file their reports with the commission. Those expected to file and register their securities include:
1.public quoted companies.
2. public unquoted companies.
3.government and government agencies.
4.investment scheme.
Rule 107 further provides that the following securities are subject to registration by the commission.
- Securities issued, that is ordinary shares, bonus shares, debentures, preference shares, rights issue and units of unit/ investment trust scheme, and assts backed securities.
- Issue of securities for the purpose of taking over an existing business or asset.
- Any securities offered to the public.
RULES RELATING TO ACQUSITION OF OWN SHARES BY COMPANY
Every company acquiring its own shares shall file an application with the commission for the approval of such acquisition accompanied with detailed information about the transaction, including the company’s latest audited financial statements.
Every company acquiring its own shares shall comply with the following:
- The Articles of Association of the company shall contain a clause authorizing the acquisition by the company of its own shares.
- The company shall not acquire more than 15% of its issued shares.
- An undertaking that no wrong rights shall be exercised by the company or its nominee of trustee in respect of the acquired shares.
- The company and /or the directors shall details of the directors shareholding before and after the acquisition. See Rule 109B SEC Rules & Regulations 2009.
RULES RELATING TO DUAL LISTING OF SECURITIES.
An issuer may list its securities on one or more exchanges provided it complies with the ,listing requirements of relevant Securities Exchange. see Rule 109C
ELECTRONIC AND OTHER MEANS OF ISSUING AND TRANSFERING SECURITIES
Securities registered by the commission may be issued or transferred electronically or by any other means or system approved by the commission under such terms and conditions as the commission may prescribe through a securities exchange or capital trade point or any other self regulatory organization. See Section 55, I S A 2007
The commission shall also prescribe the documents and instrument to be provided by the issuer, an issuing house, stock broker or any other person authorized by the commission to offer securities for sale or subscription to the public.
Rule 98, of the SEC Rules and Regulations, provides that a company may offer or transfer its securities electronically, provided that where an investor elects to have a share certificate, the company shall issue him or her with a share certificate.
REGISTER AND PARTICULARS OF SECURITIES
Section 56 of ISA 2007 provides that a capital market operator shall keep a register in the prescribed form of the securities in which he has an interest this particulars must be entered in the register within 7 days of the acquisition of the interest notice of any change must also be made within 7 days.
A capital market operator shall also provide to the commissioning particulars relating to the register of securities as may be prescribed holding the location of the register.
CONCLUSION.
The subject matter Shares is very wide and is reflected in almost all our commercial laws as stated above. Special laws like the Investment and Securities Act 2007 were enacted to look into transactions in the financial and capital market. in 2004, Nigeria witnessed the greatest rise in the stock market. The value of share rose like it had never happened in the Stock market. People were investing, this was shortly followed by the announcement on the July 6th 2004, by the Central Bank Of Nigeria of its 13 point Agenda , prescribing to all the banks in Nigeria that on or before the 3oth December of 2005, that the minimum shareholder’s funds must not be less than 25 Billion Naira. This also contributed to boost in the capital market. The number of banks was reduced from 85 Banks to just 25 banks. The joy of the capital market was short lived, by the year 2008, the Nigerians began to witness a gradual, fall in the capital market, and before anyone knew what was happening the Nigerian Stock market had crashed. A lot of investors lost their money. Suits were been filed from all angles, the Investment and securities Tribunal and our courts had their hands full with cases and cries of woe!
Its based on this premise that one begins to wonder how effective is our laws on the issue of shares. Also how effective are the various bodies set up to regulate the finance market. The recent issue of the five banks has not also helped matters, just when a little hope was being restored in the capital market, then the Central Bank exposed the five banks, who were operating below the minimum share capital and were in bad debts. Some of these debts were accrued from bad stock investment. Most of these banks sold their shares to ignorant investors who also fell victims.
It is my opinion that our regulatory bodies still have lots of checks and balances to do before people can regain confidence in them. Investors are currently looking at other forms of investment, aside buying shares. The people need to have confidence in the Nigeria Stock Exchange. Investing in shares is a good source of income for the company and the investor . For most people investing in properties appears to be a better option than investing in shares. This is because, with properties the investor has control over his investments.
ian Capital Market stands events are not too rosy,confidence is still weak owing to the bubble that got burst as a result of the global recession where we experienced capital flight outside the shores of our country,and also the sacking of some bank MD's due to unethical behaviour that almost sank the affected banks...In the same vein,purchasing power is weak for now banks can no longer play the market again or give loans to investors to play the market of wic they contribute 60% of the funds of the market.The politicians hv also not helped the market stabilize becos they hv been selling all along to fund their political aspiration as we all knw politics in Naija is big business,and banks can no longer give them loans again on such issues unlike before...For now anybody going into shares must bear in mind that the market is no more suitable for short or medium term but for long time,cos as it stand the market is still volatile...Though coys are turning in good result but its still not reflecting on the market due to factors hv outlined.Foreign investors are also watching to knw wat will be the policy drive of the new administration...On Land its a fixed asset and its a good one but I think one has to do a critical review on location and potentials that abounds in such environ within 5 to 10 years from now...Property is also not a bad one but I doubt if this is a good time cos like I said purchasing power is low and it cuts across all strata of the economy it now depends on the investor to ascertain wat manner of duration he wants to hv the property so it doesnt becomes a liability and start depreciating in value......I think one must be very critical and one must look into it ver well before going in so u dnt get stucked by tieing down ur fund for God knws hw long.....This is imperative on the premise that time na money lol.....Thank while we look into possible reformation of our existing laws particularly on the issue of the capital market operators, which is not the main discuss here, but it most be mentioned that if the Commission is more flexible on terms and conditions for becoming a capital market operator, I believe it will give room to have an increase in the number of people participating and contributing directing to the development of the capital market.
REFERENCES
- C.M. SCHMITTHOFF; palmer’s company law 24th edition, publishers Stevens and sons ltd 1987.
- Deji sasegbon, Nigerian Companies and Allied matters law and practice, vol2, DSC publishers Limited, 1991.
- Geoffrey Morse, Charles worth’s company law 13th editions Stevens and sons ltd 1987
- Nor they and Leigh’s, introduction to company law 2nd edition, publishers Butter worth
Linden - Olakunle Orijo company law and practice in
Nigeria - Blacks law Dictionary, 7th edition 1999
- Moses Olatunji Sotowora; lntroduction to Capital Market Studies for Secondary Schools publishers Boot-Dee serving 2006.
- Companies and Allied Matters Act cap 20 LFN 2004
- lnvestments and Securities Act 2007.
[1] Charles worth is Company law, 13th edition, 1987, pg264
[2] Black’s law dictionary , 7th Edition, pg 1380.
[3] Companies and Allied Matters Act 1990
[4] Palmer’s Company Law, Vol1, 24th Edition, 1987,pg522
[5]Deji sasegbon, Nigerian Companies and Allied matters law and practice, vol2, DSC publishers Limited, 1991. Pg186
[6] Deji sasegbon, Nigerian Companies and Allied matters law and practice, vol2, DSC publishers Limited, 1991. Pg186
[8] Sasegbon, Nigerian Companies and Allied matters law and practice vol 2, Dsc publication 1991, page 181
[11] Olakunle Orojo company law and practice in Nigeria
[13] Ibid
[14] Sasegbon, Nigerian Companies and Allied matters law and practice vol 2, Dsc publication 1991, page 189
[16] Olakunle Orojo company law and practice in Nigeria
[17] NewLondon& Brazilian BankVS Brocklebank (1882) 21ch 302
[18] Bradford Banking Co ltd Vs Briggs 7co Ltd(1886)12 App CAs29
[19] Allen Vs Goldreef of WA Ltd(1900) I ch 656 CA
[20] Gray Vs Stone &Furnel (1893)69 LT , 282.
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