Articles
(+234-1) 463-7414
(+234) 8033-264-753
This email address is being protected from spambots. You need JavaScript enabled to view it.

Introduction

Estate Planning, as a wealth management and transfer tool, continues to pose a challenge in practice, for many reasons; ranging from changing life circumstances, to adopting the most efficient tax structure for one’s estate.

Recently, more consideration is given to executing a Deed of Gift, when compared to the conventional practice of writing Wills. Parties intending to engage in Gift transactions will however do well to have a more robust understanding of the legal and tax implications of executing a Deed of Gift, in contrast to executing a Will.

Deed of Gift – Definition and Consequences

A Deed of Gift is a gratuitous arrangement that voluntarily transfers and delivers the legal ownership, with the physical control over an existing real or personal property, by its owner (“the Donor”) to another person (“the Donee”) without any compensation, consideration or payment emanating from the Donee to the Donor, for the Gift.

Generally also, a Deed of Gift, once executed and delivered to a Donee, is irreversible and irrevocable. Note also that a Gift that is not delivered to the Donee is invalid in Law.

Although a Deed of Gift is generally said to be irreversible and irrevocable, it could still be set aside on any of the following grounds: - (i) cases where the Gift was given by fraudulent means; (ii) Gifts given under a misrepresentation or mistake of the surrounding circumstances regarding the Gift; (iii) Gifts transferred with the intention to defraud Creditors or evade Tax; (iv) cases where the Donor lacked the legal capacity to make the Gift.

Types of Gifts

There are three (3) common types of Gifts; namely: - (i) Inter Vivos Gifts; (ii) Gifts Mortis Causa; and (iii) Testamentary Gifts.

An Inter Vivos Gift is a gift that is conveyed/transferred during the lifetime of the Donor - not by a Will or in contemplation of the Donor’s imminent death - with the sole intention of irrevocably surrendering the physical control of the Gift to a Donee, who must be alive at the time the Gift is delivered to the Donee.

A Gift Mortis Causa is a Gift made in contemplation of the Donor’s imminent death.

The last type of Gift is a Testamentary Gift which is a Gift convened in a Donor’s Will.

In Nigeria however, there are legal commentaries which hold the view that a Gift of Landed Property, once delivered and registered during the lifetime of the Donor and the Donee, becomes irreversible and irrevocable by the Donor. Where any condition is imposed on such a Gift, such a Gift of real property may be deemed to be a Tenancy and not a Gift.

In the case of Anyaegbunam v. Osaka (2003) 3 SC 1 @ 14, the Supreme Court held that:- “A gift inter-vivos is an act whereby something is voluntarily transferred from the possessor to another person, with the full intention that the thing shall not be returned to the donor, and with the full intention on the part of the receiver to retain the thing entirely as his own without restoring it to the giver … The essential thing to consider is that the Gift is complete when the Donee has accepted it, if that condition is satisfied, the donor has no right to revoke the gift.”

Deeds of Gift and Wills Compared

The first and most obvious advantage that a Deed of Gift has over a Will is that a Deed of Gift comes into effect immediately the Gift is delivered to the Donee, during the lifetime of the Donor. Rules regulating Intestacy and Wills do not therefore apply to Deeds of Gift.

Other advantages that a Deed of Gift have, when compared to a Will, is that a Deed of Gift, especially where it is stamped and registered, is less likely to be challenged by way of a Law Suit on the demise of the Donor. This is as the Donee has already assumed ownership and physical control over the asset or Gift during the lifetime of the Donor.

Registration Requirements

By the provisions of the Land Use Act (“LUA”) and the Lagos State Land Registration of Titles Law 2015 (“LRTL”), any transfer of any interest in Land, by a Donor to a Donee, must be registered at the Lagos State Land Registry, using the Land Information Management System (“LIMS”).

The prior consent of the Governor of the State where the Land is located must however be obtained before any registration is done at the Land Registry.

Failure to register any Deed of Gift which transfers any interest in landed or real property will make such an unregistered land instrument inadmissible in any judicial or arbitration proceedings.

Taxation and Deeds of Gift

In many jurisdictions, both the Donor and the Donee to a Deed of Gift are obligated to file Tax Returns disclosing such a gift.

Although there are no direct statutory provisions relating to Deeds of Gifts, the Second and Third Schedules to the Personal Income Tax Act (as amended) (“PITA”) appear to imply that a Gift from a Donor to a Donee is exempted from personal income tax as no gain or profit from any trade, business, profession or vocation has occurred. Where the Donee of the Gift however earns or gains some income, in the hands of the Donee, such subsequent gain or profit will attract Personal Income Tax; and Capital Gains Tax where the Donee sells the Gift.

The above tax exemption does not however apply to Stamp Duties, Registration and Governor’s Consent Fees provisions which any Deed of Gift, with a real estate component, must bear.

Conclusion

In the past, some Donors have utilised Deeds of Gifts as a vehicle to evade Tax, other Governor’s Consent and Registration fees provisions. The recent economic recession has however compelled some State Governments to become more diligent and vigilant in enforcing existing Land Registration and Tax Compliance provisions regarding Deeds of Gifts.

A discerning Donor, working with a Solicitor experienced in Estate and Tax Laws, must carefully consider how the above legal and tax provisions will impact on his or her intentions regarding his or her estate.

Also, the continuing call for amendments to the existing Tax Laws should take cognisance of the lacuna in the current tax laws especially when it comes to the tax treatment of Deeds of Gifts. An option to consider is the practice in some other jurisdictions where a particular value of a gift is deemed tax-free, with any higher value on the same gift bearing some tax assessment on a graduated basis.

Bibliography/Acknowledgments

Black’s Law Dictionary

Property Law Practice in Nigeria by Y. Y. Dadem, Esq. Ph.D.

Encyclopedia of Forms and Precedents

Disclaimer

This is a free educational material. It does not serve as a source of solicitation, advertisement or the offering of legal services or advice of any kind. No Client/Attorney relationship is therefore created. Readers are strongly advised to always seek from qualified Legal Practitioners, competent legal counselling to their specific factual situation.

Intellectual Property Protected!

This material is protected by International Intellectual Property Laws and Regulations. This material can therefore only be reproduced or re-distributed for non-profit educational purposes under the strict condition that our Authorship of this material is explicitly acknowledged, and our above Disclaimer Notice is prominently displayed.

Introduction

In October 2017, the Mandatory Use of the National Identification Number Regulations, 2017 (“the NIN Regulations 2017”) was published in a Gazette in furtherance of the provisions of Sections 27(1) and 31 of the National Identity Management Commission Act, 2007 (“the NIMC Act, 2007).

Some of the principal objectives for the NIN Regulations 2017, and for all other similar previous Regulations relating to it, include the harmonisation of the existing identity databases; and the creation of a centralised National Identity database. Collateral to achieving these objectives is the institutionalisation of a National Biometric Standards.

A cursory review of the NIN Regulations indicates their far reaching implications, some of which are examined in this Alert.

National Identification Number – Mandatory Use

The NIN Regulations 2017, now makes it mandatory for every person to indicate his or her National Identity Number (“NIN”) on a wide range of transactional documents; from the enjoyment of hospitality services; to the execution of any contract including tenancy and any transfer of any interest in land; to health/medical care services, the purchase of any motorised vehicle, aircraft, ship or boat; the purchase of any travel tickets; insurance transactions; shares or equities; employment contracts; internal and external examinations; admissions into any primary, secondary or tertiary schools; membership of any professional body; registration and post-registration activities at the Corporate Affairs Commission (“CAC”).

Other activities and transactions in which a NIN must be disclosed include the filing of civil, criminal and arbitration processes; import and export activities; the purchase and registration of mobile phones SIM cards, with other communication devices; the issuance of Birth Certificates, Driver’s Licenses, Voter’s Registration, Tax Identification Cards; the operation of Bank accounts, purchase and sale of foreign exchange currencies; loan documentation; probate transactions; etc.

What is NIN?

The Mandatory Use of the National Identification Number Regulations, 2015 describes NIN to be a eleven (11) digit number that is randomly generated by the Automated Biometric Identification System (“ABIS”).

Registrable persons to whom the NIN applies include any person who is a citizen of Nigeria, and non-Nigerians who are lawfully resident in Nigeria for a period of two (2) years or more.

Monitoring and Enforcement Powers

The National Identity Management Commission (“NIMC”) is mandated to ensure strict compliance with all the provisions of the NIMC Act, 2007 and the various NIN Regulations gazetted in pursuance of the former Act of Parliament.

Every Agency of any tier of government, with any statutory function that requires any form of identity management, shall maintain a NIN and Biometric Standards Compliance Register.

In furtherance of its enforcement and compliance powers, NIMC has the legal authority to impose administrative fines on any NIN non-compliant person, institution or entity. NIMC can also, through the office of the Honourable Attorney-General of the Federation, institute civil and criminal proceedings against any NIN non-compliant person, institution or entity.

Lastly, NIMC can apply for, and obtain an Order of a Court of competent jurisdiction to seal-off the premises or place of business, or to shut down the identity database of any defaulting person or entity.

Miscellaneous Offences

Section 30(1)(a) of the NIMC Act, 2007 makes it an offence for a registrable person, entity or institution not to register and obtain a NIN. It is also an offence to willfully destroy or mutilate a NIN Multi-purpose Identity Card issued by NIMC.

Where no specific penalty is prescribed by any Law, some of the penalties for any of the above mentioned offences, on conviction, may  include a fine of not less than N100,000 (One Hundred Thousand Naira) or imprisonment to a term of not less than six (6) months; or both the fine and the term of imprisonment where the infraction is more severe or consistent.

Conclusion

The inability of the Federal Government to provide a reliable Census head count makes the NIN system a very commendable alternate. Unfortunately, after more than a decade, the use of the NIN, both in the formal and informal sectors of the economy, is not very commendable.

Also problematic is the insufficiency of NIMC registration centres. The few that are available are not well known. And for a few people who have registered, obtaining their NIN registration cards remains an uphill task.

Lastly, the under-funding of NIMC will continue to hinder the effective discharge of its statutory responsibilities.

Disclaimer

This is a free educational material. It does not serve as a source of solicitation, advertisement or the offering of legal services or advice of any kind. No Client/Attorney relationship is therefore created. Readers are strongly advised to always seek from qualified Legal Practitioners, competent legal counselling to their specific factual situation.

Intellectual Property Protected!

This material is protected by International Intellectual Property Laws and Regulations. This material can therefore only be reproduced or re-distributed for non-profit educational purposes under the strict condition that our Authorship of this material is explicitly acknowledged, and our above Disclaimer Notice is prominently displayed.

Introduction

It is becoming more common to find civil disputes having Police participation in contravention of the provisions of the existing applicable Laws. Recent legislation on this matter, like the Administration of Criminal Justice Act, 2015 remain blurred in day-to-day activities.

A brief examination of some of the existing Statutes and Case Law regarding Human Rights and the powers of the Police to arrest a person with or without a Warrant are provided in the following paragraphs

Human Rights Protection.

Nigeria is a signatory to both the United Nations Declaration of Human Rights, and the African Charter on Human Rights. Nigeria has also domesticated both Charters in her local Laws.

In recognition of the atrocities that cumulated into the Second World War, the United Nations Declaration of Human Rights compulsorily require Member States, who are signatories to this Charter, to treat every human being with dignity, and fairly at all times. Thus, Article 9 of this Charter provides that “No one shall be subjected to arbitrary arrest, detention or exile.”

The 1999 Constitution of the Federal Republic of Nigeria (as amended) reiterates the above provisions of the United Nations Charter on Human Rights when it guarantees in Section 35 the right of every person to his or her personal liberty except where such liberty is encumbered or restrained or controlled by the due process of the Law; i.e. the execution of a Court Order or Judgment.

The personal liberty of every person is further enshrined in the Administration of Criminal Justice Act, 2015 (“ACJA”) by among other things, guarantee to every person the right to remain silent and not answer any questions until a Lawyer or such other person of the person or suspect’s choice is present.

Protocols of Arrest

Section 4 of the Police Act empowers the Police to detect and prevent the commission of any crime, apprehend any suspected offender, preserve the Law, protect lives and properties, etc.

In the performance of its duties, the Police must ensure that it adheres to various Human Rights Protection Protocols, some of which include mandatorily informing a Suspect of the ground or grounds for an arrest except where the offence was actually committed in the presence of a Police Officer or the Suspect was fleeing the scene of the commission of an offence or escaping prior lawful custody.

A Suspect arrested by the Police also has the constitutional right to remain silent and avoid answering any question until he or she has consulted a Lawyer or any other person of his choice. The Police are also required to inform a Suspect’s next of kin or relative of any arrest, at no costs to the Suspect or the Suspect’s relatives.

The practice of a person being arrested in place of a Suspect is now prohibited by Law. A Suspect shall also not be arrested merely for committing a civil wrong or breaching a contract.

Lastly, Section 8 of the ACJA provides that every suspect shall be accorded humane and dignified treatment whilst in the custody of the Police. And no Suspect shall be subjected to any form of torture, cruel, inhumane or degrading treatment.

Warrants and Release

The commonly accepted practice is for a Suspect to be arrested with a Warrant signed by a Judge or Magistrate. At a preliminary investigative stage, a letter of invitation from the Police may be served on a person of interest.

As discussed above, where the Suspect commits the offence in the presence of a Police Officer, or flees the scene of the commission of the offence, or from lawful custody, such a Warrant of arrest may not be necessary or required.

Where a person is arrested without a Warrant for a non-capital offence, which offence is not punishable by death, and it is impracticable to arraign such a Suspect before a Court of Law with competent jurisdiction over such a matter, such a Suspect must be released on administrative Police Bail within twenty-four (24) hours of such an arrest.

A release on bail must be on reasonable conditions which ensure that the Suspect is produced whenever required in the future.

Where a Suspect, in a non-capital offence is not released with twenty-four (24) hours after arrest, a Court with competent jurisdiction can on a proper application been made on the Suspect’s behalf, order the release of such a Suspect on bail, on such conditions as the Court deems appropriate.

Case Law on Police Arrest and Contracts

Nigerian Courts have consistently held that it is unlawful for the Police to be involved in any way, in the interpretation or enforcement of contracts; and of any other civil dispute. In the case of McLaren v. Jennings, the Court of Appeal held in 2003 that it was unlawful for the Police to arrest and detain the Appellant with regard to the collection of a debt; this is as under the Law, the Police is not a debt collection Agency.

In addition to damages being awarded for any unlawful arrest and detention, an aggrieved person also has a right, under the Law of Tort, to sue both the Police and the Complainant for malicious prosecution and compensatory damages.

Conclusion

As commendable as the Statutes on this subject are, their correct application and enforcement in day-to-day life, continues to be a mirage, for many reasons. Prominent among these reasons is the lack of public enlightenment of the provisions of the Law on the subject; and the enforcement of the punitive deterrent consequences for any breach of the Law.

Disclaimer

This is a free educational material. It does not serve as a source of solicitation, advertisement or the offering of legal services or advice of any kind. No Client/Attorney relationship is therefore created. Readers are strongly advised to always seek from qualified Legal Practitioners, competent legal counselling to their specific factual situation.

Intellectual Property Protected!

This material is protected by International Intellectual Property Laws and Regulations. This material can therefore only be reproduced or re-distributed for non-profit educational purposes under the strict condition that our Authorship of this material is explicitly acknowledged, and our above Disclaimer Notice is prominently displayed.

Introduction

The economic potential that the Tourism Industry holds, both internally and externally, especially in diversifying the economy away from a mono crude oil export economy, continues to be magnified as the economy slowly recovers from a recession.

One of the recent attempts to harness the opportunities in the Tourism Industry is the second reading of the Nigerian Tourism Development Corporation (Repeal & Re-enactment) Bill, 2017 at the National Assembly. This Bill has elicited a lot of concern from various stakeholders in the Tourism and Hospitality Industry such that an appraisal of some of its provisions will make for a better informed opinion.

Tourism Development Bill

The Nigerian Tourism Development Corporation Bill, 2017 (“NTDC Bill”) seeks to repeal the Nigerian Tourism Development Corporation Act (“NTDC Act”), and in its place establish the Nigerian Tourism Corporation (“NTC”) to among other things develop, promote, regulate, accredit, grade, classify and supervise every aspect of the Tourism Industry in Nigeria.

The NTC Bill further contemplates the establishment of a Tour Operating Company (“TOC”), with offices in each of the six (6) geo-political zones. TOC is to establish tour services within and outside of Nigeria.

Some of NTC’s funding options includes the levying of a Tourism Visa Fee on all in-bound International Travellers to Nigeria; a Tourism Departure Levy on all out-bound Travellers; a Tourism Development Contribution Levy of 1% per Hotel room rate or such flat fee as maybe fixed by NTC; and a Corporate Tourism Development Levy to be charged on the revenue of Banks, Telecommunications and other corporate entities.

Constitution, Case Law and Tourism

In 2010, the Federal Government of Nigeria (“FGN”) challenged the constitutionality of the following statues enacted by the Lagos State House of Assembly:- (i) The Hotel Licensing Law; (ii) The Hotel Licensing (Amendment) Law; and (iii) The Hotel Occupancy and Restaurant Consumer Law. FGN contended that these legislations usurped and undermined the provisions of Section 4(2)(d) of the Nigerian Tourism Development Act.

The Lagos State Government, in response to FGN’s above legal challenge, contended that under the 1999 Constitution of the Federal Republic of Nigeria, Hospitality and Tourism Enterprises, not being among the items in the Exclusive and Concurrent Legislative Lists, were residual matters in which the States’ Houses of Assembly can legislate. To the extent that some of the provisions of the NTDC Act are inconsistent with the provisions of the 1999 Constitutional regarding Tourism and Hospitality regulation, such inconsistency should be held by the Supreme Court to be null and void, and of no effect whatsoever.

The Supreme Court dismissed FGN’s claims in this suit, and unanimously upheld the above submissions of the Government of Lagos State. This is especially as Nigeria operates a Federal System of Government, with each State in the Nigerian Federation enjoying its separateness and independence from the Federal Government.

The Supreme Court further held that by virtue of the provisions of Section 4(1-3) and item 60(d) of Part 1 of the Second Schedule of the 1999 Constitution, FGN can only exercise jurisdiction over Tourist Traffic; and Tourist Traffic the Supreme Court described to include only the ingress and egress of International Tourists from other countries, via visa controls.

Conclusion.

Until the provisions of the above referred 1999 Constitution, which provisions were followed by the Supreme Court in the above case of Attorney General of the Federation v. Attorney General of Lagos State (2013) 7SC (Pt.1) 10 @ 88 – 90, are amended or repealed, the provisions in the NTC Bill regarding the regulation of the Tourism Industry, will if passed into law, again be held to be invalid, null and void once such provisions are challenged in a Court of Law.

Also, most of the financial provisions in the NTC Bill are inimical to the Tourism and Hospitality Industry which is already burdened by multiple and double taxes, a recessed economy with dilapidated infrastructure nationally, an unskilled 21st century compliant manpower pool, aggressive foreign tourism competition for other destinations, etc. Examples of such injurious provisions include a Tourist Visa Fee, a Tourist Development Levy, a 1% per room hotel Tourism Development Levy and a Corporate Tourism Development Levy.

The Federal Government will do well to concentrate on more essential National issues, than on Tourism and Hospitality Regulation which are better managed by States and Local Governments.

Lastly, the above cited Supreme Court decision centered solely on who has the Constitutional authority to legislate on the Regulation, Registration, Classification and Grading of Hospitality and Tourism Businesses in Nigeria. Arguments and a final decision on whether or not the Lagos State Hotel Occupancy and Restaurant Consumption Law can be administered concomitantly or at the same time with the Value Added Tax Act in Lagos State were not made in this case.

The continued application of the Value Added Tax Act and the Hotel Occupancy and Restaurant Consumption Law on the Hospitality Industry needs to be determined by a superior Court of Record as the application of both taxes on the same tax base increases the cost of consumption and jeopardises the growth of the Hospitality Industry. A preferred option will be for the 1999 Constitution to be amended and the Value Added Tax Act to be repealed with States and Local Governments allowed to administer any form of consumption tax in their jurisdiction.

Disclaimer

This is a free educational material. It does not serve as a source of solicitation, advertisement or the offering of legal services or advice of any kind. No Client/Attorney relationship is therefore created. Readers are strongly advised to always seek from qualified Legal Practitioners, competent legal counselling to their specific factual situation.

Intellectual Property Protected!

This material is protected by International Intellectual Property Laws and Regulations. This material can therefore only be reproduced or re-distributed for non-profit educational purposes under the strict condition that our Authorship of this material is explicitly acknowledged, and our above Disclaimer Notice is prominently displayed.

Introduction

The Directors of a company play a very important role - especially in performing oversight functions - in the success or failure of a company. A challenge to Good Corporate Governance Practices however, is in ensuring that only individuals that are competent and experienced in the company’s specific industry are appointed, retained and reasonably remunerated for the services that they render to the company.

What constitutes a reasonable, fair and adequate remuneration to pay to the Directors of a company, for the services that they render to the company, remains a challenge.

Directors’ Remuneration – Corporate Law

The Companies and Allied Matters Act (“CAMA”) describes a Director as a person duly appointed by the Shareholders of a company, to assist in directing and managing the affairs of the company. The remuneration for the services that a Director renders, which are usually in the form of sitting allowances for attending Shareholders, Board and Committee Meetings, is determined by the Shareholders of the company at a Shareholders’ General Meeting (“GM”). The remuneration of the Managing Director of any company is required by CAMA to be determined by the Board of Directors of the company.

The Directors of a company are also entitled to be paid travel, hotel and other out-of-pocket expenses that they properly incur in attending and returning from Board, Shareholders and Committee Meetings. It is however unlawful for any incorporated company to pay to its Directors any remuneration, whether in cash or in kind, free from any applicable Income Tax provisions.

Lastly, every incorporated company must keep a register of all the financial interests that its Directors hold in the company. Examples of such financial interests include the number of shares held, debenture or loan interests, emoluments, compensation and any contract or proposed contract of the company in which a Director has a personal interest. These financial interests are also required to be disclosed in the company’s annual audited Financial Statements and Reports.

The Remuneration Committee Option

In 2016, the Financial Reporting Council (“FRC”) published various Codes on Corporate Governance, some of whose provisions were very controversial. The FRC National Code of Corporate Governance 2016, attempted to “…harmonise and unify all the existing sectoral Codes of Corporate Governance in Nigeria”. Examples of such sectoral codes are the ones for the banking and other financial services, telecommunications, stock market, pensions and insurance operators.

Though the FRC National Code of Corporate Governance is still suspended, one of its recommendations regarding Directors’ remuneration is for every company to establish a Remuneration Committee, which Committee should be composed of a majority of the company’s Non-Executive and Independent Directors.

As CAMA is now about three (3) decades in existence, with no robust statutory protective oversight criteria for determining the remuneration that the Directors of a company should be paid; and with multiple codes of corporate governance for different sectors of the economy; voluntarily creating a consultative Remuneration Committee of which non-executive Directors are in the majority, is in line with present day best corporate governance practice.

Conclusion

Numerous studies have remained inconclusive in providing some standard minimum criteria for determining the quantum of the remuneration to be paid to the Directors of a company, for the services that such Directors render to a company. Also, how the returns on such remuneration should be measured in terms of the Directors’ performance of their duties to the company is also inconclusive.

There is however a consensus that the remuneration for the services that the Directors of a company render to the company must be relative to the company’s size or  turnover, affordability and profitability, the company’s industry specific corporate culture on this subject, the complexity of its operations, etc.

Disclaimer

This is a free educational material. It does not serve as a source of solicitation, advertisement or the offering of legal services or advice of any kind. No Client/Attorney relationship is therefore created. Readers are strongly advised to always seek from qualified Legal Practitioners, competent legal counselling to their specific factual situation.

Intellectual Property Protected!

This material is protected by International Intellectual Property Laws and Regulations. This material can therefore only be reproduced or re-distributed for non-profit educational purposes under the strict condition that our Authorship of this material is explicitly acknowledged, and our above Disclaimer Notice is prominently displayed.