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Introduction

Short-term credit facilities are for the most part not available to fund otherwise mostly mid to long-term industry financing requirements. With poor basic infrastructure and a weak but developing credit bureau regime, many lending institutions are only willingly to lend to Borrowers who have strong tangible collateral assets which secures credit.

The most tangible Collateral is usually one in the form of a registered title to land. Others are the earnings projections of the Borrower, and the Personal Guarantees of the owners of the Borrower entity.

The most common Lending Security Documents are:

1.    Mortgages

2.    Debentures

3.    Personal Guarantees

The most common taxes applicable to the above Lending Security Documents are:-

A.    Stamp Duties

B.    Capital Gains Tax

C.    Property Tax or Land Use Charge in some States

D.    Value Added Tax ("VAT")

Mortgages

A Mortgage is a legally binding agreement between a Lender/Mortgagee and a Borrower/Mortgagor, where the Borrower temporarily leaves in the custody of the Lender, the title or ownership documents to the Borrower's landed property, as Collateral or security for the Borrower repaying the loaned amount, in accordance with the terms and conditions stated in the Mortgage Agreement.

Where the Borrower is a registered limited liability company or corporation, the Mortgage Agreement must be registered at the Corporate Affairs Commission within ninety (90) days of the Mortgage Agreement coming into effect.

Debentures

For registered limited liability companies, a Debenture is another mode of securing a loan or credit facility. Unlike a Mortgage however, a Debenture is procured based on the business reputation and the future earnings projections of the company or corporation concerned.

And like a Mortgage, a Debenture will be null and void if it is not registered at the Corporate Affairs Commission within ninety (90) days of the Debenture Agreement coming into effect.

Personal Guarantees

A Personal Guarantee is usually an ancillary, continuing written assurance, to a Mortgage and or a Debenture Agreement wherein the Guarantor undertakes to repay a loan should the Principal Borrower fail to do so.

A Personal Guarantee will only be extinguished where the Borrower repays the loan or credit, or the Guarantor repays the loan personally.

Other Lending Security Documents

i.    Shares of Quoted Companies

ii.   Insurance Policies

Enforcement of Lending Instruments

The most common enforcement procedure for Mortgages and Debentures is an application to a Court of Law for the sale of the collateral with which the credit facility was obtained. Prior notice must however be given before any power of sale in the event of a default can be exercised.

The second common enforcement option open to a Lender is the appointment of a Receiver/Manager to take over the secured assets until the debt is repaid or the assets sold to repay the debt.

In the case of a Personal Guarantee, the primary debtor's default in repaying the loan automatically triggers the Guarantor becoming personally liable to repay the debt.

DISCLAIMER NOTICE

This is a free educational material which is not intended to serve as a source of solicitation, advertisement or offering any legal advice. No Client/Attorney relationship is therefore created by this material. Readers are strongly advised to always seek professional legal advice to their specific situations from qualified Legal Practitioners. Questions, comments, observations, suggestions, new ideas, contributions, etc. are always welcomed. You can also visit our website www.oseroghoassociates.com for more legal materials.

INTELLECTUAL PROPERTY PROTECTED.

This material is protected by International Intellectual Property Laws and Regulations. This material can only be re-distributed for non-profit educational purposes only on the strict condition that our authorship is acknowledged, and the Disclaimer Notice is prominently displayed.

 
 
Introduction
The continuing contractions and downturns in the economy, with advancements in technology have heightened the number of job losses. Unfortunately, employers are not mindful of the Laws and Regulations regarding Redundancies before they embark on this exercise.
What Is Redundancy? And How Is It Declared?
Section 20 of the Nigerian Labour Act describes Redundancy as the involuntary and permanent loss of employment which usually arises as a result of excess manpower. Excess manpower can arise from downsizing, rightsizing, restructuring, acquisitions and mergers, or the outright outsourcing of some jobs to an independent third party.
Where a redundancy arises, an employer is required to do the following:-
a. Inform the Trade Union or workers' representative Union of the reason for and the extent of the anticipated redundancy;
b. Subject to factors like relative merit, employees' skill, ability and reliability, employers are expected to adopt the principle of "last in, first out" for each cadre of employees affected by a declared redundancy.
c. Employers are also expected to use their best efforts to negotiate the redundancy payments where the Redundancy Regulations made by the Minister for Employment, Labour and Productivity do not apply to such employees; or no guideline is provided in the employees' contract of employment, or the group of employees' collective agreement.
Unfortunately, no Redundancy Regulations have so far been published by the Minister for Employment, Labour and Productivity. As a result, the general practice is that redundancy/severance pay is usually computed using the employee's length of service, the last remuneration of the employee, among other things, as a guide.
Collective Agreements
Related to Redundancy Regulations are Collective Agreements which are usually written Memoranda of Understanding between an employer or a group of employers and their employees, usually represented by an employees' Trade Union. A Collective Agreement provides guidelines regarding the employees' wages, benefits, hours of work, working conditions, discipline, termination, dismissal, redundancies, etc.
Based on a plethora of decided court cases however, the Law remains that the terms and conditions of a Collective Agreement, which are not expressly incorporated into each employee's contract of employment, are not legally binding in an employment dispute between the employer and the employee.
DISCLAIMER NOTICE
This is a free educational material which is not intended to serve as a source of solicitation, advertisement or offering of any legal advice. No Client/Attorney relationship is therefore created by this material. Readers are strongly advised to always seek professional legal advice to their specific individual situation(s) from qualified Legal Practitioners. Questions, comments, observations, suggestions, new ideas, contributions, etc. are always welcomed. You can also visit our website www.oseroghoassociates.com for more legal materials.
INTELLECTUAL PROPERTY PROTECTED.
This material is protected by International Intellectual Property Laws and Regulations. This material can only be re-distributed for non-profit educational purposes only on the strict condition that our authorship is acknowledged, and the Disclaimer Notice is prominently displayed.

Hon. Dr. J. Olakunle Orojo in his Book, “Company Law and Practice in Nigeria”, Fifth Edition, explained that individuals carry on business under Business Names that may not be in their personal names principally to distinguish and protect such businesses or brand names. Another reason for the common use of Business Names is the protection of members of the public from third-party fraudulent use of such business or brand names.

However, to enjoy the legal protection mentioned above, a Business Name must be registered under Part B of the Companies and Allied Matters Act, 1990.

As Business Names are usually less expensive to register, and also less cumbersome to administer, there are many landed or real property owners who acquire their landed properties or interest in land in their Business Names and not in their personal names. Recent judicial pronouncements have however called into serious question the legal propriety of the latter practice.

Recent Judicial Pronouncements on Business Names and Land Ownership

The Court of Appeal, Abuja Division, in 2014, in the case of Federal Capital Development Authority & Ors v. Unique Future Leaders International Limited, following the decision in Bankole & Ors v. Emi Industries Limited (2012) (C.A.), held that an incorporated body like a registered Business Name is not a Juristic Person and so cannot enter into any contract or transaction, including land or real property transactions, in its Business Name.

The Court of Appeal however further held that a registered Business Name can enter into contracts, including land transactions, through its trustees or in the individual names of the Proprietor or Proprietors of the Business Name.

The Court of Appeal’s rationale for its above decision is that while the Companies & Allied Matters Act expressly vests on incorporated Limited Liability Companies the capacity to enter into contracts in the name of the Limited Liability Company; and the capacity to sue and be sued; such capacity is not statutorily vested in Business Names. See also the case of Nigerian Bar Association v. Fawehinmi (No. 2) (1989) 4 S.C. (PT. 1) Page 120 paragraphs 1 – 3 for more judicial pronouncements on juristic, judicial and juridical entities.

The Supreme Court Decisions on Business Names Capacity

The attention of the Court of Appeal in its above decisions does not appear to have been drawn to the Supreme Court decision in Ataguba & Co. v. Gura Nigeria Limited (2005) 2 S.C. (Pt. 1) Page 101 @ 106-108 where the Supreme Court held that though non-legal entities like Business Names cannot sue or be sued in their Business Names, an exemption exist where a statute expressly or impliedly grants to such non-legal entity the capacity to sue or be sued eo nomine, which means in its own name. Examples of such exemptions are partnerships, trade unions, registered charities and foreign institutions recognised under Nigerian Laws. Cases like Agbomagbe Bank Ltd v. General Manager G.B. Ollivant Limited & Anor (1961) All NLR 116 was referred to in this decision.

Based on the Kaduna State High Court (Civil Procedure) Rules 1987, of which States like Lagos State and the Federal Capital Territory have similar High Court (Civil Procedure) Rules provisions, the Supreme Court held that the Appellant, though not a Juristic Person, was enabled to sue or be sued in its Business Name by virtue of Order 11 Rule 9 and Order 26 of the Kaduna State High Court (Civil Procedure) Rules, 1987.

Business Names and Court Rules

Where a Statute grants to a Non-Juristic Person like a Business Name, the capacity to sue and be sued, the opposite party to the Law Suit can apply to a Judge for the Proprietor or Proprietors of the Business Name to disclose their names and addresses before they can proceed with the hearing of the Law Suit.

Conclusion

It is discernable from the above that Business Names can enter into contracts in their registered names, be sued and sue in such Business Names, where there is a Statute or Law which expressly or impliedly vest on Business Names in that territory, such legal authority or capacity.

Where there is no statute or law expressly or impliedly vesting such legal capacity on Business Names, registered Business Names in such territories can enter into contracts, sue or be sued in their Partners or Proprietors names trading under the name and style of such Business Names.

DISCLAIMER NOTICE

This is a free educational material which is not intended to serve as a source of solicitation, advertisement or offering of any legal advice. No Client/Attorney relationship is therefore created by this material. Readers are strongly advised to always seek professional legal advice to their specific individual situation(s) from qualified Legal Practitioners. Questions, comments, observations, suggestions, new ideas, contributions, etc. are always welcomed. You can also visit our website www.oseroghoassociates.com for more legal materials.

INTELLECTUAL PROPERTY PROTECTED.

This material is protected by International Intellectual Property Laws and Regulations. This material can only be re-distributed for non-profit educational purposes only on the strict condition that our authorship is acknowledged, and the Disclaimer Notice is prominently displayed.

Introduction

Instability of the Nigerian Legal Tender, which is known as the Naira, has led to governments, individuals and Corporations using Foreign Currencies, especially the United States Dollars (“USD$”), as the preferred medium for pricing and paying for goods and services in Nigeria.

As a result of the above inimical business practice on the Nigerian economy, and with dwindling revenues from its crude oil sales, the Central Bank of Nigeria (“CBN”) has issued a Press Release in which the attention of the members of the Public are drawn to the provisions of the Central Bank of Nigeria (Establishment) Act, 2007 (“CBN Act”) which, subject to some exceptions, makes the Naira the only Legal Tender, i.e. the medium of exchange, for goods and services in Nigeria.

Fines and terms of imprisonment apply to the Pricing and Payment for goods and services in any Foreign Currency other than as exempted under the CBN Act.

The Press Release by the CBN has naturally drawn a lot of disquiet as to what the Laws and Regulations in this area are. The following are some legal elucidation on the use of foreign currency as a medium of exchange in Nigeria.

Legal Tender in Nigeria

The Legal Tender or Currency of exchange for goods and services in Nigeria is the Nigerian Naira, which is divided into One Hundred Kobo for each Naira.

By Section 20(5) of the CBN Act, any person who refuses to accept the Naira as a means of payment is guilty of an offence and liable on conviction to a fine of N50,000 (Fifty Thousand Naira) or to Six Months Imprisonment.

Exception to Naira as Legal Tender/Medium of Exchange

The Central Bank of Nigeria is empowered to prescribe the circumstances and the conditions under which Foreign Currencies may be used as a medium of exchange in Nigeria.

It is in furtherance of the above empowerment that the Central Bank of Nigeria issued its Monetary, Credit, Foreign Trade and Exchange Policy Guidelines for each fiscal year (“CBN Fiscal Guidelines”).

The CBN Fiscal Guidelines for the 2014/2015 fiscal years reiterates the general principle that any person who is paying for any goods and services in Nigeria has the absolute discretion of electing whether to pay for such goods and services with Naira or with a Foreign easily convertible Currency.

Where payment with a Foreign Currency is voluntarily undertaken, the person making such payment must source for the Foreign Currency from his or her or its domestic domiciliary account or from his or her or its offshore sources. Sourcing for foreign exchange from the foreign exchange market (“Forex Market”) for ordinary commercial transactions that are not eligible for trade on the foreign exchange market is absolutely prohibited.

Tourists, Hospitality Establishments and Foreign Exchange Regulations

Foreign visitors and tourists to Nigeria are allowed to use their foreign credit or debit cards to pay for goods and services in Nigeria. Foreign visitors and tourists can also exchange their foreign currency notes for their Naira equivalent amount but only from an Authorised Foreign Exchange Dealer.

Also, all Hotels and other Hospitality Establishments in Nigeria are required to obtain Authorised Buyers Licences from the Central Bank of Nigeria before they can charge their Foreign Guests in any Foreign Currency, receive payment for goods and services in Foreign Currency and exchange any Naira originally exchanged for a Foreign Currency back to the same Foreign Currency when the Foreign Guest is departing the Hotel or the Hospitality Establishment.

Conclusion

As commendable as the strict application of the relevant Law and Regulations on the acceptable medium of exchange in Nigeria is, history has shown that a draconian foreign exchange control regime for a country with a very weak Balance of payments and foreign exchange reserve situation, only promotes a clandestine foreign exchange market which further undermines such country’s economy.

DISCLAIMER NOTICE

This is a free educational material which is not intended to serve as a source of solicitation, advertisement or offering of any legal advice. No Client/Attorney relationship is therefore created by this material. Readers are strongly advised to always seek professional legal advice to their specific individual situation(s) from qualified Legal Practitioners. Questions, comments, observations, suggestions, new ideas, contributions, etc. are always welcomed. You can also visit our website www.oseroghoassociates.com for more legal materials.

INTELLECTUAL PROPERTY PROTECTED.

This material is protected by International Intellectual Property Laws and Regulations. This material can only be re-distributed for non-profit educational purposes only on the strict condition that our authorship is acknowledged, and the Disclaimer Notice is prominently displayed.

Introduction

According to BusinessDictionary.com, there is no globally accepted, industry recognised benchmark(s) for the grading, rating or classifying of Hotels and other Hospitality Establishments.

Large Hotel Chains and Hotel Associations in different countries however have some globally recognised Guide which though is/are only enforced within the Hotel Chain or Group.

Presently in Nigeria, one of the Codified legal framework in this area is the Nigerian Tourism Development Corporation Act from which the Hospitality and Tourism Establishments (Registration, Grading and Classification) Regulations were made.

There is also for Lagos State, the Lagos State Hotel Licensing Law which authorises the Lagos State Ministry of Tourism and Intergovernmental Relations, through the Lagos State Hotel Licensing Authority, to classify, regulate, standardise and grade hospitality and other tourism businesses in Lagos State.

Guide to Grading and Classification Criteria

Hospitality and Tourism Establishments are required to be graded and classified based on the minimum operating standards of the facilities and services provided, managed and maintained in each Grade or Class of such establishment.

ONE STAR – A One-Star Hotel has some modest, limited range of facilities, furnishing and refreshment with at least ten (10) ensuite bedrooms. It adheres to a high standard of facilities-wide cleanliness. Such Hotels generally have an accessible location with onsite representatives on a twenty-four (24) hour, seven (7) days a week basis.

TWO STAR – This grade of Hotel offers a higher standard of accommodation, with at least twenty (20) better-equipped ensuite bedrooms than a One Star Hotel. Each Guest Room must have a telephone and coloured television (“TV”). It must also have a minimum parking area for at least 10 cars.

THREE STAR – This grade of Hotel offers more spacious, nicer, better-equipped furnished ensuite rooms when compared to One Star and Two Star Hotels. It has also high-class decorations, coloured television in the ensuite rooms, showers, central air-conditioning, valet and room service, one or more bars and lounges in the Hotel, on-site Restaurant, and a small fitness centre with a standard swimming pool. It must also have a minimum of thirty (30) ensuite rooms in a more high-brow location of the City where it is located.

FOUR STAR – A Four Star Hotel comes with exceptionally well furnished ensuite rooms, with central air-conditioning, room and valet service, excellent restaurant and cuisine, concierge, porterage and luggage handling services, laundry, standard swimming pool and other recreational facilities. The locality and environment where the Hotel is situated should be suitable for a Hotel with international standards. A Four Star Hotel also offers at least Fifty (50) ensuite rooms – 20% of which must be Suites and 25% must be single rooms.

A Four Star Hotel must also have at least one serviced elevator for its Guests, and another service elevator for its staff. Other facilities that it must have include: - fire detection facilities, closed circuit television (CCTV), a dining room, an internationally trained Manager, car park for at least 50 cars, Reception/Information Counter, Conference and Banquets Halls. At least 70% of its employees must be professionally trained.

FIVE STAR – This is usually an internationally recognised branded Hotel, offering the highest standards and luxuries in its premises, some of the finest architecture, ambience, accommodation, amenities, range of guests and services provided. A Five Star Hotel should have a gym, a bigger sized Swimming Pool, Cuisines, more than one Restaurant, Casino, on-site shopping facilities and other in-premises recreational facilities.

A Five Star Hotel also offers at least one serviced lift/elevator for its Guests and another lift for its employees and goods. It must have at least 100 bedrooms; 25% of these rooms must be Suites and 20% must be Single Rooms. It must also have Gardens,  a Lawn or Roof Garden, Reception and Information Centre, 24hours Concierge and Porter Service, a central Air-Conditioning System, CCTV,  Wake-up Call Service, Conference and Banquet Halls, at least 2 Restaurants, Dining Rooms, 24hours coffee shop, a well-equipped Bar and a Car Park for at least 50 cars.

Its Manager must be internationally trained and should speak, where possible, more than one internationally recognised language. At least 80% of its other personnel must be trained in providing the highest quality of hospitality services.

Classification of Restaurants

For Restaurants, their classification or grading is usually in One, Two, Three or Four Crown classification.

Offences

It is an offence for any Owner or Manager of any Hospitality, Leisure or Tourism Establishment to use any Star or Crown other than the one approved by the Hospitality Regulator. Fines and terms of imprisonment apply where such Owner or Manager is found guilty of any grading or classification infraction.

The Hospitality Regulator also has the legal authority to seal any business premises that constantly breaches any of the above Grading or Classification Regulations.

Conclusion

A nationally transparent, buyers and sellers accepted good-faith Criteria and Regulations for the grading and classifying of Hotels and other Hospitality Establishments is very important in building consumer confidence and trust in the Hospitality, Tourism and other leisure sectors of the economy.

DISCLAIMER NOTICE

This is a free educational material which is not intended to serve as a source of solicitation, advertisement or offering any legal advice. No Client/Attorney relationship is therefore created by this material. Readers are strongly advised to always seek professional legal advice to their specific situations from qualified Legal Practitioners. Questions, comments, observations, suggestions, new ideas, contributions, etc. are always welcomed. You can also visit our website www.oseroghoassociates.com for more legal materials.

INTELLECTUAL PROPERTY PROTECTED.

This material is protected by International Intellectual Property Laws and Regulations. This material can only be re-distributed for non-profit educational purposes only on the strict condition that our authorship is acknowledged, and the Disclaimer Notice is prominently displayed.