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Legal Alert – September 2010 – HIV and AIDS Protection Law
 
In this Issue:-
1. Legal Alert for September, 2010 – Lagos State HIV/AIDS Protection Law
2. Subscribe & Unsubscribe to Legal Alerts.
3. Disclaimer Notice
Introduction
The stigmatisation, segregation and discrimination of people living with HIV and or people afflicted or affected by AIDS remains rampant in Nigeria. Save for some provisions on fundamental human rights in Chapter IV of the 1999 Constitution of the Federal Republic of Nigeria, there are no specific laws on the protection of people living with either HIV or people afflicted with AIDS. That is until the Lagos State Government, in 2007, passed into law "the protection of persons living with HIV and affected by AIDS Law" 2007. This Law came into force on 18th May, 2007.
In spite of the Lagos State HIV and AIDS Protection Law, the menace and cost of this illness, with the response of most members of the society to it remain unabatedly negative.
A recent law suit filed at the Lagos State High Court is currently under the jurisdictional challenge of whether the Lagos State House of Assembly has the constitutional authority to legislate on labour/employment and human rights matters? Despite this law suit, employers and employees are advised to be sensitised to the existence of this law and its application.
Lagos State HIV and AIDS Protection Law
Section 1 of the Lagos State HIV and AIDS Protection Law guarantees the protection of all persons living with HIV and or affected by AIDS by among other things providing these persons with access to health care institutions in Lagos State including access to life prolonging drugs, treatments and therapies. Persons living with HIV or affected by AIDS also have the right to voluntary counseling in all Public Health Institutions established in Lagos State in addition to HIV and anti-body tests in all Public Health Institutions established in the State.
An anti-retroviral drugs trust fund is established to ensure the purchase of anti-retroviral drugs which shall be distributed free of charge to persons living with HIV or persons affected by AIDS. Such persons include pregnant women and children living with HIV or affected by AIDS. Contributors to this Fund include the Federal, State and Local Governments, corporate bodies, philanthropic organisations and individuals, International charitable organisations, non-governmental organisations, other interested persons and other nations of the world.
Unlawful and Discriminatory Actions
The following actions and other similar acts are regarded by this law to be unlawful and discriminatory against persons living with HIV and affected by AIDS:
(a) The refusal of a Landlord to accept as a tenant a person living with HIV and or affected by AIDS.
(b) The stigmatisation and denial of such a person free and easy access to a private or public health Institution
(c) The denial of the right of the affected person to pursue his or her academic career in an educational institution
(d) The discrimination and stigmatisation of such a person in any social, religious or political gathering.
(e) The segregation, discrimination and stigmatisation of the affected person at any place of employment.
(f) The subjection of employees to compulsory and mandatory HIV test.
It is also unlawful for a person living with HIV or affected by AIDS to have his employment terminated by reason of his AIDS or HIV status. To provide some further guarantee for this provision, all corporate organisations are mandatorily required to have an HIV/AIDS policy for the benefit of their employees living with HIV and or affected by AIDS.
Other protections provided by this Law include:-
(i) Persons who die as a result of complications arising from HIV/AIDS infections have the right of admission at any mortuary or hospital, with the further right to a decent burial.
(ii) They also have the right to sue against discrimination or stigmatisation.
Offences
Any organisation that uses the medium of HIV/AIDS to harm, defraud or act in any manner that is morally wrong or criminal shall be liable to closure and blacklisting while its principal officers shall be liable on conviction to a fine of N250,000 with or without the option of a 5 year jail term.
Any person who knowingly or willfully endangers other people by infecting them with the AIDS virus commits an offence and is liable on conviction to a fine not exceeding N200,000 or imprisonment for a term not exceeding 10 years or to both the fine and term of imprisonment.
Any health worker who intentionally reveals the health status of any person living with HIV and infected with AIDS shall be suspended from his or her duties, and may be relieved of his or her duties.
Any person who fails to comply with some of the above mentioned provisions on discrimination, stigmatisation, denial of access to facilities, etc commits an offence and shall be liable on conviction to a fine not exceeding N50,000 or imprisonment for a term not exceeding two years or to both the fine and the term of imprisonment.
Any employer of labour who fails to comply with the provisions of this Law commits an offence and shall be liable on conviction to a fine not exceeding N100,000 or imprisonment for a term not exceeding two years.
Any person or persons, or organisation that lay claim to unsubstantiated remedy or remedies, or proffers cure of HIV with intent to defraud members of the public shall be liable to a fine of N1,000,000 or to a 5 years jail term on conviction.
Conclusion
The constitutionality or otherwise of the HIV and AIDS Protection Law must not inhibit Nigeria from embracing the current global best practices of penalising all forms of discrimination, stigmatisation or discrimination of persons living with HIV/AIDS. The Federal and State Houses of Assemblies must therefore harmonise a common position and pass into Law Federal and State anti-HIV/AIDS discrimination, stigmatisation or segregation law(s).
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DISCLAIMER NOTICE. This Legal Alert is a free educational material, for your general information and enlightenment purposes ONLY. This Alert, by itself, does not create a Client/Attorney relationship between yourself and our Law Firm. Recipients are therefore advised to seek professional legal counselling to their specific situations when they do arise. Questions, comments, criticisms, suggestions, new ideas, contributions, etc are always welcomed with many thanks.
This Legal Alert is protected by Intellectual Property Law and Regulations. It may however be shared with other parties provided that our Authorship is always acknowledged and this Disclaimer Notice is attached.
Legal Alert for August 2010 – New Local Government Approved Taxes Levies Law
 
In this Issue:
1. Legal News
2. Legal Alert for August, 2010 – New Lagos State Local Government Approved Taxes/Levies Law
3. Subscribe & Unsubscribe to Legal Alerts.
4. Disclaimer Notice.
Legal News
Effective 1st September 2010, the Honourable Minister for the Federal Ministry of Commerce and Industry has, in the exercise of his duties as provided for in Section 45(1)(e) of the Trademarks Act, approved an upward review of the fees charged for Trademark, Patent and Design registrations at the Trademark, Patent and Designs Registry.
New Lagos State Local Government Approved Taxes/Levies Law
The controversy over the division of the taxing powers of the three tiers of government with the resulting multiple taxation thereof remains unabated in a Nigerian economy that seeks to improve and encourage existing businesses while attracting new direct foreign investments. Cases of the indiscriminate imposition of taxes and levies particularly by the local government councils, who are left with the least revenue from the federation account, remain abound.
To address the above problem and assist businesses, the Lagos State Government recently passed into law, the Local Government Levies (Approved Collection List) Law to among other things:- (a) prescribe the levies that can be imposed and collected by Local Government Councils in Lagos State and (b) to regulate the administration of such prescribed levies in Lagos State.
The effort of the Lagos State Government, through the above mentioned law, is to address complaints, especially from the private sector, over the unlawful collection of levies with the resulting multiple taxation, and also to address various superior Courts of record decisions that held that the existing local government laws, on levies that were collected by some Local Governments in the country, were unconstitutional, null and void.
This Alert will provide you with a synopsis of one of such Superior Courts of record decisions on this vexed issue with a further synopsis on the provisions of the new Lagos State Local Government Levies (Approved Collection List) Law which took effect from 12th July 2010.
1st Synopsis – Eti-Osa Local Government v. Rufus Jegede & Anor - CA/L/453/2002.
The Respondent in this appeal, at the Lower Court, challenged the competence of the Appellant Local Government Council to make a law imposing taxes and levies that are outside the provisions of the Fourth Schedule to the 1999 Constitution and also outside the provisions of Part 111 of the Taxes and Levies (Approved List for Collection) Act, 1998. The Lower Court held that the Appellant Local Government Council had no legislative powers of its own to impose or determine taxes and levies which are outside the enabling 1998 Taxes and Levies (Approved List for Collection) Law. Where however there exist some residual legislative power to collect certain taxes and levies, such residual legislative power must be exercised in conformity with the provisions of the 1998 Federal law, i.e. the Taxes and Levies (Approved List for Collection) Act, 1998.
The Appellant was dissatisfied with the decision of the Lower State High Court and appealed, as was its right, to the Court of Appeal. The Court of Appeal, in its unanimous decision, upheld the decision of the lower State High Court and held that the inherent power of any tier of government to legislate on and impose any form of tax or levy cannot be left at large, or at the whim and caprice of any tier of government, but according to the existing laws of the Federal Republic of Nigeria. The Court of Appeal also, obiter dictum, reiterated the age long principle that "...... over taxation resulting from lessez-affaire tax doctrine could be counter productive."
2nd Synopsis - Lagos State Local Government Approved Levies for Collection Law, 2010
This Law authorises all Local Government Councils with their Local Government Development Authorities or any other administrative unit established by Law at the local government level of the State to collect any of the following levies which are enumerated in the Schedule to this Law:-
(1) Shops and kiosks rates.
(2) Approved open market levy.
(3) Tenement rates.
(4) Licensing fee for sale of liquor.
(5) Slaughter slab license fee in abattoirs under local government control.
(6) Marriage, birth and death registration fees.
(7) Street naming registration fee.
(8) Motor Park levy (Including Motor cycles and Tri-cycles).
(9) Parking fee on local government streets or roads as may be approved by the State Government.
(10) Domestic animal licence fee (Excluding poultry farmers).
(11) Licence fees for bicycles, trucks, canoes, wheelbarrows and charts (other than a mechanically propelled trucks).
(12) Radio and Television licence fee (excluding radio and television in motor vehicles, transmitters and other communication equipment)
(13) Public convenience, sewage and refuse disposal fees.
(14) Cemetery and burial ground permit fee.
(15) Permit fee for private entertainment and merriment in public places (excluding roads and streets).
(16) Wharf landing fees.
Subject to Section 13 of this law, no levy shall be charged and collected by a Local Government Area or by a Local Government Development Authority save or except for the levies enumerated above.
To ensure that the disparity or differences in the rates of the levies charged by each Local Government Authority in comparison to other Local Government Authorities is minimised, the State Joint Revenue Committee is enjoined to carry out a periodic review of the rates charged and issue directives that will seek to harmonise the rates as closely as possible to each Local Government Authority's area as possible.
To further ensure transparency, which leads to greater tax compliance, each Local Government Revenue Committee is enjoined to publish at a conspicuous place in all revenue offices of the Local Government Authority, a chart of the approved list of levies with the applicable rates, and the expected time of payment of these levies.
To address the controversy over the appointment of private tax consultants, this law requires that private tax consultants can only be engaged by a local authority where such an authority does not have the personnel with appropriate knowledge or skill to optimally administer the levy or where two or more local authorities by mutual agreement, delegate the authority to administer any levy to a common private tax consultant whether or not the position of such a private tax consultant is established by a law of the Lagos State Government. The collection of the scheduled approved levies by any other unauthorised person shall be unlawful and punishable under this Law, as highlighted hereunder.
This Law further seeks to make unlawful the erection of road blocks and road closures by any Local Government official purportedly for the purpose of collecting the approved list of levies.
OFFENCES
Any person who collects or attempts to collect any levy that is not listed in the Schedule to this Law or does so without due authority and identification, or mounts a road block, or causes a road or street to be closed for the purpose of collecting any levy commits an offence and shall be liable on conviction to pay a fine of N500,000.00 (Five Hundred Thousand Naira) only or to imprisonment for a term of three (3) years or to both the fine and the term of imprisonment.
It is equally an offence for any person or agency to demand from any other person an amount in excess of the applicable levy or to fail to remit the revenue collected when due, or who withholds such revenue for his own use, or renders a false return or defrauds any person or embezzles any money or steals or misuses Local Government Authority documents, or compromises on the assessment or collection of any levy, or commits any of these offences which shall on conviction attract a penalty of five hundred percent (500%) of the sum in question and a term of imprisonment for three (3) years.
Where the offending person is armed with an offensive weapon or causes injury to any officer or authorised agent of the Local Government Authority in the performance of their duties, this offence on conviction attracts a term of imprisonment of three (3) years. Where injury results from this felony, the term of imprisonment on conviction is five (5) years. Aiding and abetting the contravention of the provisions of this Law attracts a fine equivalent to 400% (Four Hundred Percent) of the sum in question and imprisonment for a term of two (2) years. The impersonation of the character of an authorised revenue agent shall in addition to any other punishment enumerated herein attract a fine of Two Hundred and Fifty Thousand Naira (N250,000) or a term of imprisonment of three years or to both the fine and the term of imprisonment.
CONCLUSION
There is a rather curious provision at the end of the Lagos State Local Government Levies (Approved Collection List) Law, 2010 and this is Section13. Section 13 of this Law provides as follows: "Nothing in this Law shall be construed as prohibiting a Local Government Authority from enforcing penalties stipulated for breach of its bye-laws or charging fees as may be approved by the State Joint Revenue Committee for the use of the Local Government properties, public utilities established and maintained by the Local Government or Services rendered by the Local Government or its officials to particular individual and organisation.
The commendable effort of this law to bring clarity and certainty to what taxes and levies Local Government Authorities are permitted to collect in Lagos State may be compromised by the above Section 13 of this same Law. Section 13 does not follow the decision in the decision of Eti-Osa Local Government Area v. Rufus Jegede (supra) where the Court of Appeal held that the taxing power of any tier of government cannot be left at large or at the whim and caprice of any tier of Government but according to the provisions of the 1999 Constitution and the 1998 Taxes and Levies (Approved List For Collection) Act. The amendment or outright expunging of Section 13 of this law is highly therefore recommended.
The second comment must be that save for Section 13 of this Law, it is not immediately discernable what new practical mechanism are in place or will be put in place to re-orientate the correct implementation of this Law in Lagos State to serve as an equitable model for other States in the federation, to emulate.
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This Alert and others produced by us are provided without any charge to you. You can always subscribe to it, on behalf of other interested persons from whom you have their permission, by sending to us a one line e-mail with the words "Subscribe – Legal Alerts" followed by the desired email address.
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DISCLAIMER NOTICE. This Legal Alert is a free educational material, for your general information and enlightenment purposes ONLY. This Alert, by itself, does not create a Client/Attorney relationship between yourself and our Law Firm. Recipients are therefore advised to seek professional legal counselling to their specific situations when they do arise. Questions, comments, criticisms, suggestions, new ideas, contributions, etc are always welcomed with many thanks.
This Legal Alert is protected by Intellectual Property Law and Regulations. It may however be shared with other parties provided that our Authorship is always acknowledged and this Disclaimer Notice is attached.
Legal Alert for July 2010 – Money Laundering Law in Nigeria
 
In this Issue:
1. Legal News
2. Legal Alert for July, 2010 – Money Laundering Legislations in Nigeria
3. Subscribe & Unsubscribe to Legal Alerts.
4. Disclaimer Notice.
Legal News
The Lagos State Government has signed into Law a bill for the regulation, standardisation and grading of Hotels and other Tourism businesses in Lagos State. This new law amends the Hotel Licensing Law 2003, and requires that no person, whether corporate or an individual, shall operate a Hotel establishment or practice any form of tourism business in Lagos State without it first obtaining a license from the Lagos State Hotel and Tourism Licensing Authority. Any contravention of this law attracts a fine ranging from N100,000 to N500,000 or a term of imprisonment of two years.
LEGAL ALERT— Money Laundering Legislations in Nigeria
There is no definitive statutory definition of what constitutes a Money Laundering offence. The Anti-Money Laundering/Combating Financing of Terrorism Regulations 2009 however defines Money Laundering as the process whereby criminals attempt to conceal the origin and or ownership of property and other assets that are or were derived from a criminal activity or activities. These regulations go further to acknowledge that money laundering and terrorism financing are now a global phenomena and malaise which pose major threats to international peace and security, national development and progress, if left un-combated.
The combined provisions of the Money Laundering Act, 2004 and the Anti-Money Laundering/Combating Financing of Terrorism Regulations 2009 provide a guide on what financial activity could constitute money laundering. While there is currently before the Nigerian National Assembly the Money Laundering Act (Repeal and Re-enactment) Bill 2010 which Bill seeks to, among other things, increase the cash amount(s) or withdrawal(s) that a financial institution or a non-financial institution must statutorily report to the financial regulators, a consideration of the existing Money Laundering Law is vital to both financial institutions and non-financial institutions and their customers.
Money Laundering (Prohibition) Act, 2004
The Money Laundering (Prohibition) Act, 2004 ("the Money Laundering Act") makes various provisions prohibiting the laundering of the proceeds of a crime or of any criminal or illegal activity, and provides for appropriate penalties for money laundering infringements.
According to the provisions of the Money Laundering Act, no person or corporation or organisation is allowed to make or accept cash payments of a sum in excess of N500,000.00 or its equivalent in the case of an individual, and N2,000,000.00 or its equivalent in the case of a corporation, unless such cash payment or acceptance is undertaken through a financial institution. Also, a transfer of funds or securities to or from a foreign country in excess of US$10,000 or its naira equivalent must be reported to the Central Bank of Nigeria ("CBN") or the Securities and Exchange Commission ("SEC") in the case of a public corporation.
The mandatory reporting of all monetary transfers to or from outside the country must indicate the nature of the transfer, the amount of the transfer, the names and addresses of the sender and the receiver of the funds or securities that were transferred, and the ultimate beneficiary of the transfer if different from the latter persons. The Nigerian Custom Service ("NCS") is also mandatorily required to forward all monetary declarations it collates to the Central Bank of Nigeria.
The Central Bank of Nigeria with the Securities and Exchange Commission are in turn required to forward weekly reports of the above mentioned declarations, submitted to them, to the Economic and Financial Crimes Commission ("EFCC"). Despite this provision, the EFCC is itself empowered to directly demand and receive these reports or declarations directly from the Financial Institutions concerned.
Another money laundering prevention mechanism is the requirement that all financial institutions must verify their customers' identity and physical address before establishing any business relationship with such a customer or customers. The business relationship contemplated by this Act, between the financial institution and the customer, includes the opening of any form of account, safe deposit box and other kinds of fiduciary relationship accounts. The types of a customer identification contemplated by this Act include a valid official document like a Driver's License, an International passport issued in the last three months preceding its submission, utility bills, etc all of which must bear the customer's full names and or photograph. A corporation on the other hand is required to provide proof of its legal existence by presenting its certificate of incorporation and other valid registration documents attesting to its existence as a body corporate recognised by law.
In the event that a financial institution suspects or has reasonable grounds to suspect that the amount involved in a transaction is derived from the proceeds of a crime or from an illegal activity, such financial institution must require from its customer physical evidence attesting to the customer's identification notwithstanding that the amount involved in the transaction is less than US$5,000 or its equivalent. Where the customer is not acting on its own behalf but for a principal, all the information on the identity of the principal must be obtained as if the principal were the customer.
Casino owners, dealers in jewelry, cars, luxury goods, professional consultants including Lawyers, Doctors, Accountants, etc, Hotels, Supermarkets and other designated non-Financial Institutions are required to also obtain and verify the identity of their clients and or customers by keeping a record or register of the particulars of the names of these clients or customers, their addresses and the nature of each transaction. The Federal Ministry of Commerce, to whom these records are forwarded for non-Financial Institutions, is required to in turn forward the reporting records and or declarations to the EFCC. The Register of this information, that is collated or assembled, must be preserved by the non-Financial Institutions for a period of at least five years after the last transaction recorded in the Register.
Where a designated financial institution fails to verify the identity of its customers or does not submit the returns of financial transactions undertaken by its customers with it, within seven days from the date the transaction was undertaken, such a financial institution commits an offence, and if convicted is liable to a fine of N25,000 for each day that the offence continues un-remedied; this is in addition to, and as may be appropriate, such an institution suffering a suspension or revocation or withdrawal of its operating license by the appropriate licensing or regulatory Authority.
Special money laundering surveillance and investigation could occur where a transaction or transactions involves a frequency which is unjustifiable or unreasonable, or is surrounded by conditions of unusual or unjustifiable complexity, or appears to have no economic justification or lawful objective. The financial institution or designated financial institution involved in such a transaction must seek from its customer information or clarification as to the origin and designation of the funds, the objective of the transaction and the ultimate beneficiary. The reporting institution must also draw-up a report which it must forward to the EFCC. Where necessary, the institution should take action to prevent the laundering of the proceeds of a crime or of any illegal financial activity, whether the transaction is completed or not. Such preventive actions include the very short-term freezing of the account of the customer pending when the EFCC is informed and EFCC takes action. Failure to comply with these provisions attracts a fine, on conviction, of N1,000,000 for each day during which the offence continues.
The protective rules on banker/customer confidentiality are not applicable to money laundering investigations and prosecutions especially where an ex-parte order of the Federal High Court is obtained to place a bank account or such other fiduciary account under surveillance, tap every telephone or electronic system of the suspected customer or institution.
Any person who converts or transfers or conceals or disguises or collaborates or aids and abets the concealing or disguising of the genuine nature, origin, location, movement or ownership of a right, asset or property which is derived directly or indirectly from illicit traffic in narcotic drugs or psychotropic substances or from any other criminal or illegal activity is guilty of an offence which on conviction carries a prison sentence of not less than 2 years or more than 3 years. The fact that the various acts constituting the offence were committed in different countries or places shall not be a bar to the prosecution and conviction of such a person neither will the substantive illicit traffic in narcotic drugs or psychotropic substances be exempted from further separate prosecution and conviction.
Also, any person who retains the proceeds of a crime or of any illegal activity on behalf of another person commits an offence and will be liable on conviction to imprisonment for a term of not less than 5 years or to a fine equivalent to five times the value of the proceeds of the criminal conduct or to both such fine and term of imprisonment. Where a corporation is convicted of an offence under the Money Laundering (Prohibition) Act, the Federal High Court may order that the corporation be wound up and its properties forfeited to the Federal Government of Nigeria.
The Federal High Court has the exclusive jurisdiction to try offences under the Money Laundering (Prohibition) Act, 2004. In the trial of offences under this Act, the Federal High Court is authorise to admit collaborating evidence establishing that an accused person is in possession of property for which he or she cannot satisfactorily provide an account and which property is disproportionate to his or her known sources of income.
To facilitate the obtaining of evidence, the Director of investigation or an authorised officer of the Economic and Financial Crime Commission (''EFCC''), duly authorised in that behalf, may demand, obtain and inspect financial records of any financial institution to confirm its compliance with the provisions of this Act. Any willful obstruction of EFCC or its authorised officers in the discharge of their duties under this Act is an offence which on conviction carries a term of imprisonment of not less than two years and not more than three years in the case of an individual. The punishment for a corporation is a fine of One Million Naira (N1,000,000).
Conclusion
The provisions of the Money Laundering (Prohibition) Act remains one of the most effective measures to combating terrorism, narcotic related crimes, embezzlement of public funds, which latter offence is more commonly known in Nigeria as corruption. Unfortunately, the lack of sufficient political will has not provided the minimum enforcement results required. Of equal concern are the human capacity capabilities of the enforcing agencies in Nigeria in the area of modern day sophisticated money laundering technological advances. While continuing amendments to our legislations, including this one, are commended, greater enforcement of the existing legislations is urgently required in order for the minimum levels of development and advancement that Nigeria urgently requires, can be achieved.
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This Alert and others produced by us are provided without any charge to you. You can always subscribe to it, on behalf of other interested persons from whom you have their permission, by sending to us a one line e-mail with the words "Subscribe – Legal Alerts" followed by the desired email address.
You are equally free to terminate your subscription by sending to us a one line email with the words "Unsubscribe - Legal Alerts" and your electronic address would be removed from our list. In the future, you can return to our mailing list by visiting our web site www.oseroghoassociates.com to subscribe for the Legal Alerts.
DISCLAIMER NOTICE. This Legal Alert is a free educational material, for your general information and enlightenment purposes ONLY. This Alert, by itself, does not create a Client/Attorney relationship between yourself and our Law Firm. Recipients are therefore advised to seek professional legal counselling to their specific situations when they do arise. Questions, comments, criticisms, suggestions, new ideas, contributions, etc are always welcomed with many thanks.
This Legal Alert is protected by Intellectual Property Law and Regulations. It may however be shared with other parties provided that our Authorship is always acknowledged and this Disclaimer Notice is attached.
Legal Alert for June 2010 – Directors: Appointment, Duties & Removal
 
In this Issue:
1. Legal Alert for June, 2010 – Directors: Appointments, Duties & Removal
2. Subscribe & Unsubscribe to Legal Alerts.
3. Disclaimer Notice.
LEGAL ALERT—Directors, Appointment, Duties & Removal
The very important roles that the Directors of a company play in a company's success or failure, which in turn affects national development, are often not seriously appreciated, understood or highlighted by both the directors themselves and or by the other parties related to a company. Also, the failure or inability of the board of directors of a company to direct and manage a company in a responsible manner has contributed enormously to corporate governance failures and the current global economic crises.
It is a trite principle of law that a company, even though recognised under the law to be an artificial, separate and distinct legal entity from its owners, cannot manage or direct her own affairs because a company is an "abstract" person. This is the reason why the law requires that every company in Nigeria must have at least, at all times, two directors and two shareholders.
Who is a Director?
The Companies and Allied Matters Act ("CAMA") describes a Director as any person appointed by a company to direct and manage the business affairs of the company. The Companies and Allied Matters Act further describes a Director to include any person on whose instructions and direction the Board of Directors of a company is accustomed to act despite the fact that such a person is not officially appointed or listed as one of the Directors of the company.
Directors have also been described as "the directing mind and will of a company". The role of a Director of a company is therefore a very important one.
Appointment of Directors?
The methods of appointing the Directors of a company are usually dictated by the provisions of the Articles of Association of each company. The specific qualities that a Director must possess, though generally common, are dictated by the peculiarities of the industry in which such a company operates.
The first Directors of a company are appointed by the subscribers to the Memorandum and Articles of Association of the company at the time of its incorporation. Subsequent directorship appointments are undertaken by the Shareholders of the company at the company's annual general meeting(s). The shareholders also undertake the re-election and removal of a Director or Directors at their Annual General Meeting.
Not every person can be appointed as a Director of a company. Persons who are insolvent or bankrupt, persons who are fraudulent, persons under the age of 18 years old, persons of unsound mind, Directors that have been absent from Board of Directors meetings for a consecutive period of six months, and persons of like characteristic, cannot be appointed as a Director of a company. Also, any person that is 70 years old and above can only be appointed or re-appointed as a Director of a public company in Nigeria if he/she informs the shareholders of the company, at an Annual General Meeting of the company of the fact that he or she is now 70 years old or more than 70 years old.
Subject to conflict of interest rules or the internal regulations of each company, a Director of a company could also be an employee of the company. Despite a Director being an employee of a company, he can only be appointed and removed as a Director in accordance with the provisions of the Articles of Association of such a company and the Companies and Allied Matters Act.
A company could also have executive and non-executive directors. In practice, both the executive and non-executive Directors are appointed to bring their wealth of experience, expertise and network to the benefit of the company. The non-executive directors play the critical role of providing strong, balanced and independent counsel to the Board of Directors.
For large corporations, one third of the Directors are required by CAMA to retire and submit themselves for re-election at every company's Annual General Meeting.
Common Duties of a Director?
The primary duty of a Director of a company is to exercise due care, skill and diligence in the discharge of his or her duties as a reasonable and prudent Director would exercise such duties in comparable circumstances. The failure by a Director to exercise reasonable care could be a ground for an action in negligence and breach of fiduciary duty of care owed by such a Director to the company.
Directors of a company also owe the company a duty of utmost good faith, i.e. fiduciary duty of care. This fiduciary duty of care is owed to the company alone. As fiduciaries of the company, Directors must not place themselves in a position where there is a conflict of interest between their duties to the company and their personal interest. Thus, any secret profits made by a Director of a company from the company are accountable to the company. The fact that the company is unable or unwillingly to take the benefit of such profits for itself will not be a defence to such a Director in any legal action for breach of this duty in which the Director did not disclose to the company the secret dealing and profit.
The other statutory duties that a Director of a company owes to a company include attending the board of directors and shareholders' meetings of the company, disclosure of the director's direct or indirect equity interest in the company, giving of Directors particulars on all trade circulars, show cards, business letter headed papers, etc; and providing oversight assistance to the management team of the company.
Removal of Directors
The most common method of removing a Director of a company is either through voluntary resignation or by rotation. Where a company decides to remove one or some of its Directors, whether or not they are employees of the company, the company must serve a special notice of the removal on all the Directors of the company including the Director that is proposed to be removed.
The Director that is proposed to be removed is in turn entitled to make written representations concerning the circumstances of his proposed removal. Such written representation may however not be read at an Annual General Meeting of the company if the company is able to convince a Federal High Court Judge that the Director's written representation is intended to create unnecessary adverse publicity and or are defamatory in nature, and therefore an abuse of the statutory right to be heard conferred on such a Director by Section 262 of the Companies and Allied Matters Act. Where a notice of removal is not served on all the Directors including the Director or Directors proposed to be removed, such removal will be declared by a properly constituted court of law to be null and void.
Bernard Longe v. First Bank of Nigeria Plc
The recent decision by the Supreme Court of Nigeria in the matter of Bernard Longe v. First Bank of Nigeria Plc (2010) 2-3 SC (part III) 67 @ 86 and 94 has brought to the forefront the legal position that a Director, whether also an employee of a company, cannot be removed as a Director of a company at the whim or caprice of his or her company.
The central issue in this matter was whether a Managing Director/Chief Executive Officer could be removed without prior notice of such a removal being first served on the Managing Director/Chief Executive Officer in accordance with Section 262 of the Companies and Allied Matters Act?
The Supreme Court held in this matter that the failure of the Respondent Bank to serve notice of removal on the Appellant Managing Director/Chief Executive Officer invalidated all the resolutions, concerning his alleged removal as a Managing Director, reached by the Respondent company. The Appellant was therefore deemed to still be the Managing Director/Chief Executive Officer of the Respondent Bank with all his entitlements and privileges retrospectively restored eight (8) years after his purported removal.
It is the view of the Supreme Court in this matter that the essence of the notice of removal is to allow the Managing Director of the Respondent company to respond to the grounds under which he is being proposed to be removed. The suspension of the Appellant did not according to the Supreme Court diminish the necessity to serve this notice of removal because once Nigerian law vest a right on a person, a court of law will resolutely resist any attempt, by whatever method employed, to wrestle such a right from such a person.
The Supreme Court also in this matter reiterated that Nigerian law on employment contracts recognised three categorises of contracts of employment namely purely master and servant relationships, servant's contracts which are held at the pleasure of the master or employer and employment with statutory flavour. The first two categories of contracts may only be terminated in accordance with the procedure prescribed under the contract of employment while the third category must only be terminated in accordance with the relevant statutory provisions regulating the operation of the contract.
Conclusion
The roles or duties of the Directors of a company need to be taken more seriously. Some Directors should be encouraged to obtain more education on the significance of their roles as Directors, to both their companies and to national, global development.
Contract of engagement are sacrosanct, and their breach attracts punitive damages. Parties to these contracts should therefore abide by the terms and conditions of the contracts that they have freely and willingly entered into. The perception that employers or principals have the power to hire and fire at will without adherence to the applicable contract attracts punitive damages and costs.
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Legal Alert for May 2010 – Trade Names and Trade Marks Protection in Nigeria
 
In this Issue:
1. Legal Alert for May, 2010 – Trade Names and Trade Mark Protection in Nigeria
2. Subscribe & Unsubscribe to Legal Alerts.
3. Disclaimer Notice.
LEGAL ALERT—Trade Names and Trade Marks Protection in Nigeria
The name by which a business is known, described or associated is a very important aspect of carrying on a business because a business' name indicates what such a business does and what it represents. Some business people however do not pay much attention to the legal rules and regulations governing the use of their Trade Names in Nigeria. This has lead to loss of brand value and in some cases litigation by the registered owner(s) who will not want his/their Trade Name to be associated with another business entity to which he/they have no relationship or control.
Equally significant is the age long fraudulent business practice where non-owners of a registered Trade Mark copy and use such a trade mark without the consent and authority of the owner of the Trade Mark or its registered proprietor or licensor of the registered trade mark.
This Legal Alert is therefore intended to assist you to appreciate in a summary format the rules and regulations that govern and protect Trade Names and Trade Marks in Nigeria.
What is a Trade Name and a Trade Mark?
A Trade Name is the name by which a business distinguishes itself and its trading objects from all other businesses. The Companies and Allied Matters Act ("CAMA") requires that every individual, firm or corporation having a place of business in Nigeria and or carrying on business in Nigeria, whether such a business is carried on in the individual's name or in a corporate name, must be registered at the Corporate Affairs Commission ("CAC") within a period of twenty-eight (28) days of the commencement of such a business.
A Trade Mark on the other hand is any mark, word, phrase, logo or other graphic symbol by which a product or service is specifically identified. Greater legal protection is accorded to persons who register their Trade Mark while a cause of action in tort only lies for persons with unregistered Trade Marks under the legal head of passing off, actionable at the State High Courts.
Trade Name Protection
The underlying purpose of requiring that all Trade Names and or business names must be registered, within twenty-eight (28) days of their commencement of business is to ensure that no trade name is used that might deceive or cause confusion or even possibly mislead members of the public as to the distinctiveness between two separate trading entities. The registration requirement of a trade name is mandatory and not discretionary or optional.
Once a trade name is registered, no other entity can use such a trade name or attempt to register a separate and independent business using the same or a similar trade name. The simple reason for this rule is, barring repetition, this prevents confusion or deceit on innocent members of the public.
There are however restrictions on the use of some kinds of names in the Trade Name of a business in Nigeria. No enterprise in Nigeria can register its business, or brand it with words like "national", "regional", "state", "municipal", "government", "cooperative" (unless so registered under the appropriate law), "chambers of commerce" (unless it is a company limited by guarantee), "building society", "bank", "insurance", "finance" or any such similar word or words which import or suggest that such a business has government ownership or enjoys government patronage or has obtained a special regulatory licence when such a business has not. In the matter of Niger Chemist v. Nigeria Chemist [1961] 1 All NLR 171 the Nigerian Supreme Court held that where the names of two separate companies so nearly resemble each other, such similarity could cause confusion or deceit on members of the public.
The Registrar-General at the Corporate Affairs Commission is equally authorised not to register any name which is undesirable, offensive or otherwise contrary to public interest or public policy. Any trade name, whether registered or not, which violates an existing trade name or trade mark, whether such existing trade name or trade mark is registered or not, will be declared null and void unless in the case of a Trade Mark, the prior express consent of the Trade Mark owner or licensor has been obtained.
It is also instructive to mention that every registered Trade Name must end its name with certain words. For public limited liability companies, their names must end with the abbreviation "Plc". For private limited liability companies, the last word is "Ltd". For companies limited by guarantee, the abbreviation is "Ltd/Gte". For unlimited companies, the last word in its name is "Unlimited" or "Ultd".
Immediately a Trade Name is registered, the corporation with such a Trade Name must affix and keep affixed to its business premises in addition to its corporate seal, all stationary and or correspondence, its registered trade name and number. It is an offence, which on conviction attracts fines, for a company not to publish its trade name as required by law and as already stated herein.
Trade Mark Protection
To receive legal protection, a Trade Mark must be distinctive and affixed to a product (or services). It must also be registered in respect of a particular class or classes of good(s) at the Trade Marks Registry. Trademarks in Nigeria are generally registerable for an initial period of seven (7) years from the date the application for registration is submitted. Afterwards, a Trade Mark is renewable for fourteen (14) years at any one time.
The registration of a Trade Mark confers on the Owner or on its registered user the exclusive right, to the exclusion of all others, to the use of the Trade Mark in relation to the class or classes of goods against which the Trade Mark has been registered. Registration of a Trade Mark does not however interfere with any person's bona fide use of his own name or the name of his place of business which must be registered, or the name or names of any of his predecessors in such a business.
Another implication of registration is that the registration of a Trade Mark is prima facie proof of the validity of the original registration of a Trade Mark and of all subsequent assignment and transmission of any interest in the Trade Mark.
The legal implication of the non-registration of a Trade Mark is that the owner or proprietor of an unregistered Trade Mark cannot institute any legal proceedings at any of the Federal High Courts in Nigeria, under the provisions of the Trade Marks Act, to recover damages for the infringement of the unregistered Trade Mark and for loss of profit, delivery of the infringing product(s) carrying the Trade Mark or to prevent any or further infringement of the Trade Mark. The latter restriction does not however prevent the owner of such an unregistered Trade Mark from bringing a legal action under the equitable doctrine of passing off, in the appropriate State High Court, which should be where the infringing defendant resides or carries on business.
A registered Trade Mark is assignable and transmissible either in connection with the goodwill of the business or not.
Service Marks
Unlike in other jurisdictions, the Trade Marks Act does not include Service Marks in its definition of what constitutes a Trade Mark for registration purposes. See Section 67(1) of the Trademarks Act and the Nigerian Supreme Court decision in Ferodo v. Ibeto [2004] 2 SC (Part 1) 1.
Hitherto, Service Marks were alleged to be protected and registerable under Class 16. The Minister of Commerce in Nigeria has now, in the exercise of the powers vested in him by Sections 42 and 45 of the Trade Marks Act, and by Regulation 5 of the Trade Marks Regulations, incorporated Service Marks into the classification of goods for purposes of registration of service marks in Nigeria. Consequently, Applicants can now apply for registration of service marks in Nigeria in Classes 35 to 41. This extension continues to be opposed in intellectual discussions on the ground that only the National Assembly in Nigeria, as opposed to the Minister of Commerce, have the legal authority to include service marks into the definition of Trade Mark in Nigeria to allow for their registration validly under Nigerian law.
Conclusion
The none automation and the none availability online of the Trade Marks Registry, and the Companies Registry at the Corporate Affairs Commission continues to hamper the speedy, efficient and cost effective way of doing business in Nigeria. Also, the none advancement of further legislation in the form of amendments to the principal legislations on Trade Names and Trade Marks, to meet the twenty-first century requirements remains a matter for concern. Stakeholders will therefore do well to collectively bring about the necessary improvements and amendments to existing legislations.
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DISCLAIMER NOTICE. This Legal Alert is a free educational material, for your general information and enlightenment purposes ONLY. This Alert, by itself, does not create a Client/Attorney relationship between yourself and our Law Firm. Recipients are therefore advised to seek professional legal counselling to their specific situations when they do arise. Questions, comments, criticisms, suggestions, new ideas, contributions, etc are always welcomed with many thanks.
This Legal Alert is protected by Intellectual Property Law and Regulations. It may however be shared with other parties provided that our Authorship is always acknowledged and this Disclaimer Notice is attached.