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Myths About Copyrights

Elementaries of Copyright

Copyright ownership and protection only covers and protects works that are in a fixed form ; it does not cover ideas that have not been reduced to a fixed form.

Unfortunately, the Copyright Act in Nigeria does not sufficiently define what is a copyright as it states, “'copyright' means copyright under this Act”. It however defines ‘copy' as “ … a reproduction in written form, in the form of recording or cinematograph film, or in any other material form, so however that an object shall not be taken to be a copy of an architectural work unless the object is a building or model”.

Brad Templeton in his beautiful article on copyrights defined a copyright as “basically the legal exclusive right of the Author of a creative work to control the copying of that work”. Underlinings are mine. His full article, which I recommend, can be found at .

Copyright has as its principal purposes the right of the Author to derive maximum commercial benefit from his work and to also exercise control over its reproduction in any form or medium.

In Nigeria , unlike in some other countries, there is no formal requirement that a copyright must be registered before ownership right is conferred on its Owner. Also, copyright does not vest in perpetuity as in some cases, ownership rights ceases after 50 years from the year in which for example, the sound recording was first made.

Some of the rights of the copyright Owner include (I) control over the reproduction of the work; (II) publication of the work; (III) performance of the work in all places; (IV) reproduction and distribution of the work; (V) adaptation, translation or communication of the work in any form, etc.

Exceptions To Copyright Owner's Rights

  1. Fair dealing for purposes of research, private use, criticism or review, reporting of current events, etc. An acknowledgement of the Author of the work is however recommended for this and other exceptions.
  2. Imitation by way of parody (satirical imitation), pastiche (a jumble of other works) or a caricature.
  3. Reproduction and distribution of conspicuous works of arts in public places.
  4. Educational use including educational broadcast, etc. It is expected that the Broadcasting Commission would have accredited the program as an educational one before broadcast.
  5. Public recitation.
  6. Use for public interest or under government control or direction.
  7. Judicial reporting; this does not confer copyright of the judicial decision on the Reporter.
  8. Use for blind or disabled persons.

Like other rights, the rights of a copyright Owner can be transferred by assignment, testamentary disposition or other operation of the Law.

Other Copyright Myths

Brad Templeton in his above article mentioned some copyright myths, which are false and can lead to civil and criminal liability in the event of any infringement. They include:

  • “If it does not have a copyright notice, it is not copyrighted”. Notice is no longer required; registration on the other hand is only required in some jurisdiction for purposes of commencing a litigation.
  • “If I do not charge for it, it is not a violation”. This is also false as a charge only affects the amount of damages that will be paid in the case of an infringement.
  • “My posting was just fair use”. Fair use is meant only for the enhancement of certain social values and not for profit/infringement.
  • “If I make my own stories, but base them on another work, my new work belongs to me”. Derivative works, which is what this is, require the permission of the original Owner before use.
  • “Oh, so copyright isn't a crime or anything?”. Section 18 of the Nigerian Copyright Act makes it a criminal offence to infringe an Owner's copyright.

Constraints To Copyright Compliance & Enforcement

Nigeria is a signatory to many Copyright and intellectual property rights, conventions and organisations amongst which are: (1) Universal copyright Convention; (2) the Berne Convention for the protection of literary and artistic works; (3) Rome convention for the protection of performers, producers of photographs and broadcasting organisations; (4) World intellectual Property Organisation, etc.

The enforcement of copyright however remains largely unsuccessful for many reasons amongst which are:

  1. Sophistication in piracy technology so that recognising the difference between the original and the pirated copies is becoming more difficult if not in some cases, impossible.
  2. Low per capita income vis-à-vis the high costs of the original works against the low cost of the pirated works has not assisted compliance and enforcement.
  3. Under funding of the regulatory bodies charged with copyright enforcement and outdated untested Laws are also inhibiting factors. Where support has come from large multinational copyright Owners, the regulatory body has been held to act as agent provocateurs in trying to effect compliance with the Copyright Laws.
  4. Insufficient regulatory offices in areas outside the federal and economic capitals of the country, which in most cases is where most of the pirated works are copied.

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Mergers & Acquisitions

It is a New Year. I say Happy New Year 2004 you and your family!

Greater challenges and business opportunities will come in 2004. I have just concluded reading the popular book, “Straight from the Gut” by Jack Welch. I recommend this book to everyone who aspires to own a global corporation as it teaches, amongst others, the following, for financial success:

  • Boundarylessness. This also entails partnering or merging and or acquiring businesses in which the Owners are guaranteed the Number 1 or Number 2 position in profitability and competitiveness.
  • Engaging the best people with ideas and backing them with the required finance and working environment to achieve results.
  • The world is now a global village and economic intelligence with intellectual capital are key to competitiveness and survival.

In Nigeria , the general belief is that for there to be greater economic growth, there must be an increase in direct foreign investment (“DFI”). The Nigerian government, through legislation, has tried to make this possible as a foreign company/corporation can now acquire a 100% (One Hundred Percent) interest in a Nigerian company, among other benefits.

Unfortunately, in global terms, there are no large corporations in Nigeria, with the required long, tested business cultures and values because most corporations are owned by one man, on whose demise, the corporation also comes to an end. There continues to be a resistance to mergers and acquisitions as most business people do not understand and appreciate its benefits but in its stead, prefer a one-man owned corporation.

What Is A Merger?

Section 590 of the Nigerian Companies & Allied Matters Act 1990 defines a merger of companies as “an amalgamation of the undertakings or any part of the undertakings or interest of two or more companies or the undertakings or part of the undertakings of one or more companies and one or more bodies corporate”.

The Investment & Securities Act, 1999 (“the Investment Act”) gives a very similar definition to mergers. Further, the Securities & Exchange Commission Rules & Regulations (“the SEC Rules”), made pursuant to the Investment Act defines an acquisition under Rules 227 (i) as “ the take-over by one company, of sufficient shares in another company, to give the acquiring company control over that other company”.

Advantages of A Mergers/Acquisitions

  1. Some of the benefits/advantages of a merger or acquisition for a combined company include:
  2. Increased financial resources for the combined company;
  3. Enhanced product capacity;
  4. Expanded and enhanced product lines and brand portfolio;
  5. Elimination and optimisation of overlap in operational activities;
  6. Increased market share;
  7. Increase in technology acquisition;
  8. Enhanced work force as the best people from the combined company will remain;
  9. Flexibility in its timing and implementation to avoid any uncertainty and hostility especially from the tax and other regulatory authorities. On this, see the article by Jay A. Lefton, Esq. in the IBA Lawyer Magazine for December 2003.

Legal Requirements for Mergers & Acquisitions

There are various stages, under Nigerian Law, that a merger or acquisition has to pass through. They include:

  1. The intending companies are required, either alone or together, to apply to a Federal High Court, who in turn orders separate meetings of the intending companies, to approve the proposed merger or acquisition (the scheme);
  2. The members of each company, compromising three quarters in value of the shares of each company, are required to consent by resolution to the scheme;
  3. The above consent is then required to be referred to the Securities and Exchange Commission (SEC) for approval;
  4. On SEC giving its approval, the parties or one of them is required to apply to the Federal High Court who must sanction the scheme;
  5. The sanction of the Federal High Court must then be forwarded to the Corporate Affairs Commission (CAC) within seven (7) days of the Order of the Federal High Court.
  6. Also, a notice of the Order of the Federal High Court must be published in two government gazettes and in at least one National Newspaper.

The above stages are as provided for in Section 591 of the Companies & Allied Matters Act, 1990 (“CAMA”). This section is also very similar to Section 100 of the Investment Act. The main difference though is the penalty for default in obtaining the approvals; under the Investment Act, the fine is not less than N 20,000 (Twenty Thousand Naira) whereas under CAMA, it is only N 1,000 (One Thousand Naira). Under the SEC Rules, the penalty can be as high as N 1,000,000 (One Million Naira) with additional sums for each day of default.

The Role Of Securities & Exchange Commission

Section 99 (2) of the Investment Act and Rule 228 (i) of the SEC Rules requires every company in Nigeria, whether private or public, to submit an application for every merger and acquisition to the Securities and Exchange Commission (“SEC”).

The area of concern amongst private practitioners is whether private companies, who are not members of the capital market and who cannot make share subscription offers to members of the public, should submit their merger or acquisition applications to SEC? This is in spite of Rules 228 to 234 of the SEC Rules. This is because most private corporations in Nigeria have not developed to the stage where they have or would assume monopolistic or dominating stature in the market.

Whilst we await further clarification on this regulatory requirement, I encourage compliance as SEC in Nigeria has just published the name of a large multi national pharmaceutical company for failing to complying with the above provisions. This will surely affect and can undermine the credibility of this corporation.

Mergers & Acquisitions Exceptions To The Sec Approval Rule

Rule 230 of the SEC Rules, in its almost exact words, provides that the following merger or acquisitions transactions do not require SEC approval:

  1. Holding companies acquiring shares solely for the purposes of investment and not for the purpose of voting or to cause substantial restraint of competition or tend to create a monopoly.
  2. Transactions undertaken by an authority given by the Federal Government Agency vested with statutory power to enter into investments.

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Innocuous Letters of Offer


Legal News:

I obtained some favourable decisions at the Courts in the month of February 2004. The lesson to be shared from this is that a closer interaction and conferencing with the Clients assist Legal Counsel to appreciate the facts in dispute the more and accordingly, apply the right portions of the Law to the resolution of the dispute. The Nigerian Supreme Court re-affirmed this practical behaviour in the case of NEKA B.B.B Manufacturing Co. v. ACB International Bank Plc in its judgement delivered on January 16 th 2004 where it held that “evidence, whether oral or documentary, consist of facts, and facts are the fountain head of the Law”.

Also in February 2004, a new Chief Judge was sworn into office in Lagos State on the retirement of the old one. Unfortunately, some Court rooms at the Lagos High Court, Tafawa Balewa Square were gutted by fire.

The proposed amendment to the Economic and Financial Crimes Act passed through the National House of Representatives. Some of the proposed amendments include a restriction on the volume of cash that individuals and corporations can carry at a time and the reporting procedures.

In the United States , the former Chief Executive Officer of ENRON was arraigned for numerous charges of fraud, etc. This again brings for discussion, the issue of corporate governance and the personal liability of Executive Directors of a company for unacceptable executive decisions. I intend to send to you a newsletter on the latter in the coming month.

Tax Aspects to Mergers & Acquisitions in Nigeria

My senior tax colleagues at PriceWaterHouseCoopers, particularly Mr. Azeez Alatoye, drew my attention to my non mention, in my January 2004 Newsletter, of the tax aspects in a Merger and or Acquisition deal particularly to Section 32 of the Capital Gains Tax Act and Section 25 (9) of the Companies Income Tax Act.

Section 32 of the Capital Gains Tax Act provides that “A person shall not be chargeable to tax under this Act, in respect of any gains arising from the acquisition of the share of a company either merged with, or taken over or absorbed by another company as a result of which the acquired company losses its identity as a limited liability company, provided that no cash payment is made in respect of the shares acquired ”. The underlining is mine.

ection 25 (9) of the Companies Income Tax Act on the other hand gives the Federal Board of Inland Revenue (“the Board”) the additional discretion of requiring either company involved in a merger or acquisition to guarantee or give security to the satisfaction of the Board, for the payment in full of all tax due or which may become due by the company selling or transforming such assets or business.

Innocuous Letters of Offer

Businesses continue to receive letters of offer from third parties offering introductory assistance in various areas, from recruitment of staff to products and services. The legal risk arises when the recipient acts on the letter and receives an “offending large invoice”.

The position of most legal Counsel, who represent the party who transmits the innocuous correspondence, is usually that an offer was made to the recipient company, which was accepted by conduct. The latter party is therefore estopped from denying a binding contract.

The Supreme Court in the case of Vulcan Gas Limited v. G.I.V Limited [2001] 5SC (Part 1) 1 @ 12 paras. 15-20 held that an agency relationship could arise in any one or more of the following ways:

  1. By express appointment of the agent by the principal, whether orally or formally;
  2. By ratification of the agent's acts by the principal;
  3. By virtue of the doctrine of estoppel;
  4. By implication of Law in the case of agency of necessity, and
  5. By presumption of Law in the case of cohabitation.


It is recommended that to avoid unwanted liability, each formal or informal offer should be followed by a polite inquiry as to the terms, conditions and consideration of the offer, in the same manner in which it was made or received. Should the response be contrary to the principle of your company or firm, nicely inform the person making the offer and thank him for the attempt.

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Directors Private Liability Under Nigerian Law and Remedies


Corporations & Directors

Incidents of corporate failures have continued to increase in spite of public and private initiatives to reduce them. These initiatives are important because where a corporation fails, it affects not only the shareholders and employees of that corporation but also the clients of the corporation. An example is a pension fund company in the United Kingdom , which is presently under threat of insolvency.

Legislations' have always been available to arrest some of these human problems. Unfortunately, the Directors and Shareholders of most companies, especially the private ones, where inappropriate behaviour, which leads to corporate failure, occurs, are reluctant to seek to enforce their legal rights and investments, against erring Directors.

This Newsletter is a minor contribution to sharing some enlightening literature on the Law regulating Directors, their duties and penalties for breaching those duties.

Directors & Their Duties?

Section 244 of the Companies & Allied Matters Act, 1990 (‘CAMA') provides that the Directors of a company are appointed by the company to direct and manage the business of the company. All underlinings in this paper are made by the Author unless stated otherwise.

Fiduciary Duty

Section 279 of CAMA provides that ‘a Director of a company stands in a fiduciary relationship towards the company and shall observe the utmost good faith towards the company in any transaction with it or on its benefit'.

Section 279 (3) of CAMA provides that “a Director shall act at all times in what he believes to be the best interest of the company as a whole so as to preserve its assets, further its business and promote the purposes for which it was formed, and in such manner as a faithful, diligent, careful and ordinarily skilful Director will act in the circumstances”.

Thus it was held in the case of OKEOWO v. MIGLIORE [1979] NSCC 210 @ 263 that the Directors' fiduciary duty is not for any individual Director's advantage but for the advantage of the company. Also see the Supreme Court decision in ASTRA INDUSTRIES v. NBCI [1998] 3 SC 98 @ 119 where it was held that “ In the case in hand, the Directors of the Defendant Bank therefore alert to their responsibilities, could not have exercised their discretion in favour of the Plaintiff, the proper effect of which would be to further dilute the Defendant's security when the Plaintiff was already in breach of its previous undertaking” .

Section 279 (9) of CAMA makes any duty imposed on a Director under Section 279 enforceable against the Director by the company and not its shareholders. This provision follows the rule in FOSS v. HARBOTTLE [1843] 2. Hare. 461, which states that the proper Plaintiff in an action in respect of a wrong allegedly done to a company is the company itself, and not its shareholders. The exceptions to this rule are stated later on in this Newsletter.

Secret Profits By Directors

Section 280 (1) of CAMA provides that the personal interest of a Director shall not conflict with his duties as a Director in a company. Section 280 (2) goes on to provide that “A Director shall not:

  1. In the course of management of affairs of the company; or
  2. In the utilisation of the company's property make any secret profit or achieve other unnecessary benefits ”.

Section 280 (3) of CAMA goes on to state that where any secret profit is made or unnecessary benefit is derived, the Director shall be accountable to the company and liable for the secret profits. The exception is if he disclosed his interest to the company before entering into such a “secret” transaction.

A Director is also restrained by Law from misusing his company's confidential information upon his ceasing to be a Director of the company. See Section 280 (5) of CAMA. Where a breach occurs, the company has the right to obtain a restraining injunction, against the Director, so that the information is not misused by virtue of the Director's previous position. This rule was followed to the letter in the matter of NASR v. BEIRUT-RIYAD NIGERIA [1968] 5 NSCC 218 where it was held that a Director must not negotiate a contract with his employer company as would put him in a position to profit at the expense of the company. Should he do so, the company can maintain an action for damages and or restitution.

Duty of Care & Skill

It is a known principle that persons who stand in a fiduciary relationship to another must exercise a duty of care when managing that relationship. Section 282 (1) of CAMA therefore provides that “Every Director of a company shall exercise the powers and discharge the duties of his office honestly , in good faith and in the best interest of the company , and shall exercise that degree of care, diligence and skill which a reasonably prudent Director would exercise in comparable circumstances”.

Section 282 (2) goes further to provide that a “failure to take reasonable care in accordance with the provisions of Section 282 of this Act shall be ground for an action for negligence and breach of duty ”.

Subsection 3 of the above Section makes each and every Director of a Board, individually and collectively liable for actions of the Board save where the Director can for example justify his absence at a Board meeting at which the alleged decision was reached.


The Blacks Law Dictionary defines a Trustee as “One who, having legal title to property, holds it in trust for the benefit of another and owes a fiduciary duty to that beneficiary”.

Section 283 of CAMA also makes the Directors of a company, whether a private company or a public company, Trustees of the company. Subsection 1 of Section 283 says “Directors are Trustees of the company's moneys and their powers and as such must account for all moneys over which they exercise control and must refund any moneys improperly paid away, and they must also exercise their powers honestly in the interest of the company and all the shareholders and not in their own or sectional interest”.

Secret Benetifs

The Nigerian government continues to propagate the need to fight incidents of bribery and corruption. The Companies and Allied Matters Act already has this corporate governance problem within its contemplation, as it abhors bribery and corruption in whatever form or guise.

Section 287 of CAMA provides that a “Director shall not accept a bribe , a gift , or a commission either in cash or kind from any person or a share in the profit of that person in respect of any transaction involving his company in order to introduce his company to deal with such a person”.

A breach of this statutory duty entitles the company to recover the actual gift from the Directors, sue him and the giver of the gift, jointly and severally, for damages sustained without any deduction in respect of what the Directors has returned. See Section 287 (2). Also the plea that the company benefited or that the gift was accepted in good faith shall not be a defence. See Section 287 (3).

Loans & Advances With Intent to Defraud

This subject is related to the above on bribery and corruption. The Law does not allow the Directors of a company to obtain loans or other forms of advances with the motive to defraud the company or the giver of the loan or advance. Section 290 of

CAMA provides that if a company receives money by way of an advance payment and with the intent to defraud, fails to apply the money or other property for the purpose for which it was received, every Director or other Officer of the company shall be personally liable to the party from whom the money or property was received.

Other Duties & Liabilities

The Directors of a company can be held personally liable for their executive actions where such actions are not in conformity (i.e. ultra vires) with the company's charter or its objects as set out in its Memorandum and Articles of Association. Also, Directors are personally liable for executive actions aimed at a particular group of shareholders where those actions are fraudulent or illegal.

Traditionally, the liability of Directors and Shareholders of a company are limited. Conversely, a company can by its Memorandum And Articles of Association make the liability of its Directors unlimited from the time of the registration of the company. See Section 288 (1) of CAMA.

Following from the last paragraph above, where a company is already registered, it can by special resolution amend its Articles of Association to make the liability of its Directors unlimited subject to such unlimited liability becoming extinguished on the dissolution of the company.

A Company’s Remedies for Breach of Duty

A Company, and not its Shareholders, have numerous remedies open to it where a Director's breach of duty occurs. They include:

  1. An order of injunction. This is primarily employed against a threatened breach of duty or a continuing breach of statutory duty.
  2. Compensation and or damages. This is appropriate where a breach has occurred and compensation in the form of restitution is made.
  3. Rescission of the contract. This is possible where the company is able to show that the alleged contract was ultra vires its objects and it cannot be ratified to the prior knowledge of the third party.
  4. Restoration of the company's property.
  5. An order for the Director to render an account of the profits made.
  6. Summary dismissal of the Director as has been done in some recent cases in Nigeria; some of these cases are presently in Court.

Who Can Challenge A Breach Of Duty?

The general Company Law rule is that it is only the company itself and not its Directors or Shareholders that can contest a wrong done to the company or ratify an irregular conduct. This is known as the rule in FOSS v. HARBOTTLE, which has found statutory enshrinement in Section 299 of CAMA .

Some exceptions to this rule, which entitles Shareholders to commence an action in a Court of Law, are provided for in Section 300 of CAMA. They include:

  1. Entering into illegal or ultra vires transactions.
  2. Purporting to do by ordinary resolution any act, which by its Articles/Charter or CAMA is required to be done by special resolution.
  3. Any act or omission affecting the Shareholder's individual rights as a member of the company.
  4. Committing fraud on either the company or its minority Shareholders.
  5. Where a company meeting cannot be called on time to be of practical use in redressing a wrong done to the company or to its minority Shareholders.
  6. Where the Directors are likely to derive a profit or benefit, or have profited or benefited from the negligence or from their breach of duty.


Shareholders and Directors must be alert to their statutory and corporate responsibilities by ensuring that their companies have in existence a corporate governance policy, in addition to their Articles/Charter and the due processes stated therein are followed. Where this is not done, challenges must be raised and followed to their conclusion to protect the investment of the Shareholders.

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Foreign Companies Doing Business in Nigeria
Foreign Companies Doing Business in Nigeria
Last Newsletter
My last Newsletter on Directors Private Liability elicited some exciting responses. It is important to add that there are many civil and criminal provisions regulating the duties of Directors. Some of the criminal provisions are contained in Chapter 40 of the Criminal Code, which deals with Directors and officers of corporations or companies fraudulently appropriating property or keeping fraudulent accounts, or falsifying books of accounts". There is also the old common Law rule referred to as criminal breach of trust.
Foreign Companies Doing Business In Nigeria
A major concern of international businessmen is subjecting themselves to the Laws of the foreign country where they intend to trade. Their reluctance stems from a variety of reasons most of which are primarily from their incomprehension or ignorance of the rules, ethic and cultures by which their business would be governed by their host country.
A common inquire I receive from foreign companies intending to come to Nigeria to trade is whether they are obliged to be registered under Nigeria Law and the attendant tax liabilities that they may likely incur from such trade.
Nigerian Law requires that any group of people doing business in Nigeria must register their business venture under Nigerian Law.
Section 54 of the Companies & Allied Matters Act (CAMA) expressly prohibits foreign companies not registered under this Act of parliament, from doing business in Nigeria . Thus, these companies must not carry on any business in Nigeria nor exercise any of the powers of a registered company nor have a place of business or an address for service of documents or processes in Nigeria until they are registered as a corporate entity.
Exceptions To The Registration Rule
The above rule is not an absolute one as there are exceptions to it. Some of them are: -
Foreign companies invited by the Nigerian government or by donor countries or the United Nations, European Union etc to execute projects in Nigeria need no registration under CAMA. However, in some instances, an application is required to be made to the Nigerian National Council of Ministers for approval to carry on business without registration.Any company exempted under any treaty to which Nigeria is a signatory.A foreign company could have an address for receiving documents in Nigeria as a preliminary matter to its registration.Foreign companies carrying on business in the Export Free-Trade zones. These companies, in the free trade zones, also enjoy many tax incentives some of which include exemption from payment of corporate tax, export and import duties, no expatriate quota requirements for the expatriates employed by the companies, etc.
Implication & Penalties for Non-Registration
Section 54 subsection 2 of CAMA provides that any contract, entered into by any foreign company that contravenes the above provision concerning re-registration in Nigeria , shall be void and of no effect.
Also, any foreign company in contravention shall be guilty of an offence and liable on conviction to a fine of not less than N 2,500. Further, every Officer or agent of the foreign company in contravention, who knowingly and willingly authorises or permits the default is also liable to a fine of not less than N 250 and where it is a continuing offence, to a further fine of N 25 for every day during which the default continues.^ Return to top
DISCLAIMER: This Newsletter is a free educational material, for general information ONLY. Recipients are adviced to seek legal counselling to specific situations when they arise. Comments, criticisms, suggestions, ideas, etc are always welcomed. This Newsletter may be shared with other parties (third parties) provided the author is acknowledged as the originator of the article contained herein and the disclaimer notice is attached.
April, 2004.