Introduction

Globalisation and Technological Advancements are encouraging more Nigerian Businesses to diversify their spheres of businesses, into other countries; especially West and South African countries.

As commendable as the expansionist agenda of these Nigerian companies may be, there are Nigerian and the foreign country specific tax obligations that should be carefully considered before valuable human and financial resources are expended, or continue to be expended on such ventures.

Basis of Companies Income Tax Applications

The underlining basis for imposing Companies Income Tax on the profits of a Nigerian incorporated or registered company are as follows; Companies Income Tax is imposed on All the world-wide Profits of a Nigerian Company, from All its Sources of Income or Profits, on such Profits that accrue in, are derived from, or are brought into, or are received in Nigeria.

The Companies Income Tax Rate in Nigeria is Thirty Per Cent (30%); and this corporate tax must be paid in the currency in which the Profit or Income is earned.

Mandatory Filing of Tax Returns

All Companies, whether resident or non-resident, whether tax exempt or not tax-exempt, are mandatorily required to file a Self-Assessment Tax Return disclosing all the sources of their income and profits earned, not later than six (6) months after the end of such a Company’s prior financial year end. Stiff Punitive Fines apply if any company is found guilty of any infraction in failing to file a Self-Assessment Tax Return within the timeline provided.

Minimum Tax Provisions

The Companies Income Tax Act (as amended) (“CITA”) also provides that where any Company, in any year of tax assessment, declares a loss or no taxable income from all its business sources, having carried on business for four (4) or more years, the Tax Authority is empowered to impose on such a Company, a Minimum Tax assessed at the rate of 0.25% of the Company’s turnover where such turnover is less than  N500,000; plus an additional 0.125% of such a Company’s turnover that is in excess of the initial N500,00.00 (Five Hundred Thousand Naira).

Companies that are exempted from the Minimum Tax provisions include those carrying on agricultural trade or business; companies with at least 25% imported equity capital; and companies that have carried on business for less than four (4) years.

Best Judgment – Arm’s Length/Artificial Transactions & Transfer Pricing Regulations

On the sensible assumption that a Company may not likely disclose all its world-wide income, from all sources, in such a Company’s Self-Assessment Tax Returns; or where the declared profits do not match the minimum industry returns for the subject period; the Tax Authority is empowered by CITA to, using its best judgment, impose a fair and reasonable tax assessment on the Company’s turnover for the period under tax assessment.

There are also now Transfer Pricing Regulations (“TPR”), which compliment the provisions of CITA regarding the taxation of arm’s length, fictitious or artificial transactions. Tax and TPR rules empower the Tax Authority to make necessary tax adjustments on income transactions that are reasonably presumed to be artificial, or fictitious, or not at arm’s length basis; i.e. transactions between associated companies devoid of independence or neutrality; or where the control of one or other entities is exerted by another or other entities.

Tax Reliefs for Nigerian Foreign Businesses

The Companies Income Tax Act (as amended) provides that any dividend, interest, rent or royalty derived by a Nigerian Company from any country outside of Nigeria, which income is brought into or received in Nigeria through formal licensed financial institutions, is exempted from Companies Income Tax in Nigeria.

It is envisaged that before the above mentioned tax exemption can apply, the Nigerian company will have disclosed to the Tax Authority via its mandatory Annual Self-Assessment Tax Returns, its undertaking in a foreign company that is outside of Nigeria.

It is also envisaged that as with foreign investments made in Nigeria, whose Investors are required to import their capital and obtain Capital Importation Certificates before they can in future repatriate their earnings through formal financial institutions, Nigerian Companies may also be required to provide necessary paperwork of the export of their capital from Nigeria to the foreign country before any return on such foreign investment can enjoy tax exemption in Nigeria.

Relief from Double Taxation is another tax relief to consider. Where a Nigerian Company earns dividend or other income from outside of Nigeria from which it cannot claim the above mentioned tax exemption, such dividend or other income where it originates from a Commonwealth country with whom Nigeria has a gazetted Double Taxation Treaty (“DTT”), could enjoy a tax relief at the tax rate provided for in the DTT.

Some of the countries with whom Nigeria currently has DTT with include Belgium, Canada, China, Czech Republic, France, Netherlands, Pakistan, Philippines, Romania, Slovakia, South Africa and the United Kingdom.

Though Article 40(5) of the Economic Community of West African States (“ECOWAS”) Revised Treaty enjoins Member States to avoid cases of Double Taxation between Community Citizens of Member States, and to grant assistance in combating International Tax Evasion through the execution of a Double Taxation and Assistance Convention, there is presently no record of such a Convention ratified by ECOWAS Member States.

Conclusion

Though Nigeria is a Member of many international economic organisations, such as ECOWAS, the African Union, the Commonwealth, etc, Nigeria does not have DTTs with very many of these Member countries. This failure has impeded free trade, as well as promoting double taxation and tax evasion in the process.

Disclaimer

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

Intellectual Property Protected!

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

Legal Alert – April 2017 – Contracts – Time is of the essence

Introduction

A very important provision in many contracts is the obligation regarding the time within which each component of each contract must be performed. Unfortunately, this important contractual requirement is held more in disobedience, contempt or abeyance, than in strict compliance.

In some instances, a contract could be silent with regard to the exact time within which the obligations in the contract are to be performed.

An examination of the legal implications of both instances described above, will be provided in the following paragraphs.

Time is of the Essence

Time is said to be of the essence in the performance of the terms and conditions of a contract, where the parties to the contract expressly stipulate that time will be of the essence in the performance of their contractual obligations.

Time will also be held to be of the essence in the performance of the terms and conditions of a contract where the circumstance(s) for its performance, or the nature of the subject matter of the contract, reasonably implies and or inputs a strict adherence to its timely performance. An example is the urgent purchase and need for immediate possession of a property due to the expiration or loss of the possession of a previous property.

Where time is stated to be of the essence in a contract, the parties can by mutual consent, vary or extend the time for the performance of the contract.

Courts of Law and Equity will be very reluctant to enforce a time is of the essence provision in a contract where such a contractual obligation is punitive in nature.

Contract Silent as to Time

Where a contract is silent regarding the time or period within which its terms and conditions are to be performed, the Law Courts have usually applied the equitable principle that all contractual obligations should be performed within a reasonable period of time.

Also, where a contract is silent as to the time for the performance of its terms and conditions, a party who suffers unreasonable delay can serve notice requiring time to be of the essence in the performance of the contract; especially where the delay persist(s) despite repeated entreaties for performance. This does not however restrain the innocent party from terminating the contract in accordance with the terms of the contract.

Breach of Time Obligations

Any failure to adhere to the performance of a contract, within the period agreed, or within a reasonable period of time if no express time frame is provided for in the contract, can amount to a fundamental breach of the contract from which compensatory damages may be awarded in punishment.

Disclaimer

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

Intellectual Property Protected!

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

Legal Alert – February 2017- Annual Minimum Corporate Compliance

Introduction

The Corporate Affairs Commission (“CAC”), usually, at the beginning of every fiscal year, reminds registered entities of their minimum annual statutory compliance obligations under the Companies and Allied Matters Act (“CAMA”).

Some of these minimum compliance obligations include the filing of Annual Returns with the entity’s audited Accounts attached; the affixing of the entity’s name and Registration Number (“RC.NO.”) on all its correspondence and on conspicuous parts of every office or branch where the company carries on business; the display of its Certificate of Incorporation at its reception area or front desk; informing the Corporate Affairs Commission (“CAC”) of any change to its registered office address; etc.

The enforcement of fines for any breach of the provisions of CAMA has commenced. We provide the following review of some of these statutory provisions, in the hope that you will find the information useful to your enterprise’s compliance efforts.

Publication of Registered Name and Rc. No.

Every registered or incorporated company is required by Law to paint or affix in letters that are easily legible, its registered/incorporated name, with its registration number on the outside of every office or place where it has its registered office, and at any other location where it carries on business.

Every registered company is also required by Law to paint or affix its registered name and registered number, in letters that are easily legible, on all its business correspondence like invoices, receipts, advertisements and other public notices, cheque books, promissory notes, other bills of exchange, etc.

The penalty for infringing any of the above provisions is a fine of N100 (One Hundred Naira) for every day that the infringement persists. Also, every Director and Manager of such an infringing company, who knowing and willfully authorises or permits any of the above default to exist and persist, is liable to bear the N100 per day fine until the infringement is remedied or set right.

Annual Returns

Every company must at least once in a year prepare and file at CAC its Annual Returns for the previous financial year end.

An Annual Return filing usually discloses in a summary form the company’s latest information regarding its Registered Address, Debenture Holders, Directors, Shareholders, Company Secretary, authorised, issued and paid-up share capital, etc. for the period that the return filed, applies to.

Accompanying every Annual Return must be the Certified True Copy (“CTC”) of the company’s Audited Financial Statements (“AFS”), with the Directors and Independent Auditors Report annexed to the AFS.

The practical penalty for any failure to comply with any of the above provisions is a late filing fee fine of N5,000 (Five Thousand Naira) for each year that the default persist; with a fixed filing fee of N3,000 (Three Thousand Naira) for each such year.

Registered and Head Office.

At incorporation, every registered entity must disclose where its Registered office will be; and where its Registered office is different from its Head office, the company must also make such disclosure in its CAC filings.

Any changes to the Registered or Head office of a company must be communicated to CAC within fourteen (14) days of such change or changes been effected.

The failure to comply with the above provision attracts a fine, against the company and against all its Senior Officers, in the amount of N50 (fifty naira) for each person and the company, for every day that the infringement remains unremedied.

Disclaimer

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

Intellectual Property Protected!

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

Introduction

Any economy, especially a developing economy, requires credible and stable Data Credit Reporting Systems to encourage businesses, lenders and providers of services to more willingly extend Credit and Services to Consumers. This is especially with reoccurring financial crisis, lack of collateral and the erosion of capital in the global world economy.

According to Investorwords.com and Businessdictionary.com, a Credit Bureau is an independent, neutral and privately owned Financial Data Agency that collects, stores, analyses summarises and dispenses reliable and accurate financial information that is considered relevant, about a person or corporation’s Credit History and worthiness. Financial Data collected is not altered by the Credit Bureau in any way or form.

A Credit Bureau, which is also known in some jurisdictions as a Credit Reporting Agency, or a Consumer Reporting Agency, or a Credit Reference Company, does not proffer any expert opinion about whom any credit should be extended. Its report is only a factual valuable tool to a prospective business or creditor in assessing the risks and taking the decision whether or not to extend to a prospective applicant or borrower any credit or services on credit.

Credit Bureau Guidelines in Nigeria

Section 57 of the Central Bank of Nigeria Act, 2007 authorises the Central Bank of Nigeria (“CBN”) to license and regulate all the Credit Bureaus in Nigeria. In pursuance of this statutory responsibility, the CBN issued its latest Guidelines regarding Credit Bureaus in 2013 for the licensing and regulation of Credit Bureaus and Credit Bureau related transactions in Nigeria.

Thus, no individual or corporation can operate or render Credit Bureau services in Nigeria except where licensed by the CBN.

There are presently three (3) privately owned Credit Bureau Agencies licensed to operate in Nigeria. They are XDS Credit Bureau, CR Services Credit Bureau and CRC Credit Bureau.

Core Function of the Credit Bureau

The core function of a Credit Bureau is the collection and dissemination of Financial Information or data for permissible purposes only. This core function according to the CBN encourages reliance on reputational collateral as opposed to the physical collateral.

Some of the permissible purposes mentioned in the CBN Guidelines include applications for credit by Borrowers and their Guarantors; opening of new accounts and KYC related due diligence; tenancy contracts (for identification and payment ability purposes); Insurance transactions; debt collections, etc.

The consent of the data subject is however required where the Credit Report is requested by a non-statutory institution or person. Also, the CBN Credit Bureau Guidelines encourages Credit Bureaus and Financial Institutions to be upfront, in advance, about the information dissemination roles of the Credit Bureaus and these Financial Institutions.

Using a Credit Bureau

Obtaining a Credit Report, Data or Information from a Credit Bureau can be done either by filing the appropriate Request Form or by registered members of the Credit Bureau who undertake large volumes of Credit Checks on regular basis.

A Credit Report is expected to be delivered to an Applicant who has applied for it, paid the Report fee and provided other required paperwork, within 48-72 hours. Corporate Credit Bureau members however are expected to obtain any requested Credit Report in a matter of minutes on any application been made.

A Credit Report is expected to cover a minimum of five (5) years of a subject’s credit history; while the Credit Bureau archived database is expected to be retained for a minimum period of ten (10) years. All credit information are required to be updated on an on-going basis.

CBN Credit Risk Management System

Related to the Credit Bureau regime is the CBN Credit Risk Management System (“CBN CRCMS”) which commenced in 1998. The CBN CRMS is in contrast with the above privately owned Credit Bureaus, a public Credit Registry administered by the CBN to collate  on a monthly basis all the credit facilities in excess of One Million Naira (N1,000,000) extended by Nigerian Banks to their Customers.

The CRCMS however only applies to formal Banking Credits; while Credit Bureaus Regulations are applicable to non-banking credit services.

Banks, Other Financial Institutions & Credit Bureaus

All Banks and other Financial Institutions are mandatorily required to enter into Data Exchange Agreements with at least two (2) CBN licensed Credit Bureaus. And these financial institutions must obtain Credit Reports from at least two (2) CBN licensed Credit Bureaus before granting any new Credit Facility, reviewing, renewing or restructuring any existing Credit Facility.

Conclusion

Poor enlightenment and awareness about the core benefits of Credit Bureaus, and the invaluable benefits that Credit Reports and Scores provide on a credit subject, remains very prevalent. Dereliction in the corporate responsibility of Banks and other Financial Institutions to enlighten their customers of their statutory responsibilities to share customers’ financial data with Credit Bureaus has not assisted enlightenment and growth of Credit Bureau practices in Nigeria

Private Sector Corporate Nigeria, especially small and medium scale businesses, must therefore be in the forefront of promoting the best Credit Bureau practices if easy access to credit will become the norm in the nearest future.

Disclaimer

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

Intellectual Property Protected!

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

legal-alert-july-2016-tax-deductibles-certificate-of-acceptance-of-capital-expenditure

Introduction

The Companies Income Tax Act recognises that companies will incur expenses/expenditure from which they will earn an income, and the income after expenses will attract taxable profits.

As capital expenditure impacts on a company’s income and the final corporation tax paid, close attention is paid to all verifiable capital expenditure, as it is known that a prudent capital expenditure increases a company’s production capacity and its long-term profitability; in contrast to fictitious or non-related expenditure to a company’s bottom line or net earnings.

With the recession in the economy, and the natural inclination to increase the taxes collected, the requirement for a Certificate of Acceptance of Capital Expenditure or Assets, issued by the Director of the Industrial Inspectorate Division, which Division is in the Federal Ministry of Industries, Trade and Investments, has being resurrected.

Notice of Capital Expenditure

It is the primary function of the Industrial Inspectorate Division (“IID”) in the Federal Ministry of Industries, Trade and Investments to inspect, investigate, verify and certify any capital expenditure incurred on any capital asset or undertaking that is in excess of ₦500,000 (Five Hundred Thousand Naira) in value. Capital Assets and undertakings contemplated under this regime include land, buildings, industrial plants, equipment or machines and other similar capital assets.

The Industrial Inspectorate Act requires that before or after any capital expenditure that is in excess of ₦500,000 is incurred by any company, whether or not desirous of claiming an Investment or Capital Allowance, as a tax deductible expense from the tax authorities, against such a capital expenditure, Notice of the nature of the capital expenditure must be served on the IID Director, who is required to investigate, inspect, verify and certify such a capital expenditure.

IID Certificate of Acceptance

The IID Director shall on his or her satisfactory investigation, inspection and verification of the true value of such a capital expenditure, issue the IID Certificate of Acceptance of such a capital expenditure.

No Capital or Investment Allowance can be claimed on a capital expenditure, as a tax deductible expense, where no IID Certificate of Acceptance is furnished to the Tax Authority. Thus, any Certificate of Acceptance of a capital expenditure issued by the IID Director or arising from a final Arbitrator’s Decision or Award on an IID application shall be accepted by the Tax Authority, which is the Federal Inland Revenue Service (“FIRS”), and any other department of any tier of Government.

In addition to the none admittance of a capital expenditure to any tax relief or allowance, the failure by a company and its key management team to apply for a IID Certificate of Acceptance of a Capital Expenditure without a reasonable explanation is an offence which on conviction attracts a fine. More importantly, no Capital or Investment Allowance will be allowed by the Tax Authority as a business deductible expense where no IID Certificate of Allowance is tendered.

IID Arbitration

Where a company disputes the IID valuation of its capital expenditure or asset, such a company has the right to serve a Notice of Objection to such a valuation for it to be re-assessed by an Independent Sole Arbitrator agreed to by the IID Director and the challenging company. The nominated Sole Arbitrator must however be approved by the Minister for the Federal Ministry of Industries, Trade and Investments.

The Investment Valuation Decision by the Sole Arbitrator shall be final and binding on the parties to the Arbitration.

Conclusion

The revival of this regulatory Certificate of Acceptance of Capital Expenditure, at a time when the economy is in recession, will only further increase the number of permits, licenses and certifications, with their adverse impact on the escalating costs of doing business.

The certification timeline, which is a bureaucratic exercise and the acquisition of the asset timeline, may not align thereby delaying the acquisition of the asset or the forfeiture of the tax relief due to the delayed issuance of the IID Certificate of Acceptance. Where the Certificate of Acceptance is later issued, claiming the tax allowance or deduction or relief from such a capital expenditure, from the Tax Authority, can be another herculean exercise.

Multiple Licenses and Certifications have continued to impede legitimate businesses. The reduction and or harmonisation of these certifications and permits, including the IID Certificate of Acceptance, will likely encourage more investments in the country.

Requiring the Federal Minister for the Federal Ministry of Industries, Trade and Investments to approve a jointly nominated Sole Arbitrator could be prejudicial to the Arbitration exercise as the Federal Ministry of Industries, Trade and Investments, on behalf of the tax collecting government authority, is an interested party to any challenged valuation and the outcome of the Arbitrator’s decision.

Until the applicable legislation is amended, early planning for any capital expenditure, and its notification to the IID is highly recommended.

Disclaimer

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

Intellectual Property Protected!

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

Introduction

It is not uncommon for a Board of Director’s Meeting or any other similar meeting, to be unnecessarily unwieldy and lengthy without the objectives for holding such a Board Meeting been achieved. A common reason for this failing is the lack of sufficient information and training regarding the importance of Board Meetings. Another reason is the lack of an appreciation of the role that the Directors of a company play in the success or failure of a company.

The following material is our contribution to the advancement of holding regular, efficient and productive Board Meetings, and the entrenchment of good corporate governance practices in the process.

Who are Directors?

As a company is an artificial creation of the Law, it’s “.. brain and mind …” is traditionally put to use by its appointed Directors. Thus, the Directors of a company direct and manage the business affairs of a company in a faithful, diligent, careful and skillful manner.

Due to the very important role that the Directors of a company play in a company’s success or failure, only Directors with the requisite industry specific skills and maturity should be appointed as the Directors of a company. Board appointments that are driven by emotional or sentimental reasons will do more harm to a company, than any good. So too must the Directors of a company be rotated or changed every few years to meet the inevitable changes in the market.

As fiduciaries and trustees of a company, the Directors of a company must ensure that at all times, they do what is in the best interest of the company as a whole by among other things preserving the assets of the company, formulating, furthering and promoting the company’s business objectives.

While the Board of Directors of a company directs and manages the business affairs of a company, the day-to-day administration of the company is usually vested in one of the Directors who is called the Managing Director of the company. Where the Managing Director of a company is not also the Chairman of the Board of Directors, an independent outside Director is usually appointed to be the Chairman of the Board of Directors. The Chairman in turn manages the Board Meetings of the company.

Why hold Board Meetings?

The principal function of an effective Board of Directors’ Meeting is the formulation of a profitable Business strategy, which the Board must consistently monitor and realign to meet the demands of the target market whenever the need arises.

It is also a key function of an effective Board of Directors Meeting to monitor the financial performance of a company. This is because it is the financial performance of a company that provides the best indication of the effectiveness of its business strategies.

Where a company’s profitability is in doubt (or irredeemable), the Directors must take a decision on whether the company should remain in that line of business or realign such a business with other businesses or exit entirely from such a business.

A further reason for holding regular Board Meetings is for the Directors to monitor and ensure that all legal and other regulatory compliance issues are met by the company.

Holding Board Meetings

To efficiently perform its role, the Directors of a company are statutorily required to meet as often as they deem fit, to deliberate on the business strategies, and the effectiveness of such strategies to their company. The number of Directors required to constitute a quorum for a Board Meeting to be held is usually stated in the company’s Articles of Association. Where the number is not stated, two (2) Directors present at a Board Meeting can be deemed to constitute a quorum.

It is however not the primary role of the Board of Directors of a company to deliberate on the operational day-to-day activities of their company at their Board Meetings. Such a role is vested in the Managing Director and other senior members of the company’s management team. Where the operational activities of a company take up too much of a Board Meeting’s time, a change in the management team may be necessary.

Barring repetition, it is the role of an effective Board of Directors to at their Meetings deliberate and proffer advice and solutions on core business strategies that will keep the company profitable. Board Meetings should therefore be structured with this primary role in mind.

Checklists for Holding Effective Board Meetings

Early preparation is critical to an efficient Board Meeting. A well-structured Board Meeting should therefore adhere to the following step-by-step protocol:-

Ø Notice – Every Board Meeting should be convened with the circulation of a Notice to the Directors. The Notice usually indicates the name of the company, the Meeting venue, the time, the duration and the agreed Agenda for the Meeting. The Chairman, the Managing Director and the Company Secretary to the company play very important roles in this regard.

Ø Agenda – Embodied in the Notice convening a Board Meeting must be the Agenda for the Meeting. A well prepared and followed Agenda is critical to the success of any Board Meeting.

Ø Board Reports – The early preparation, advance circulation, and the review of all Board Reports before any Board Meeting usually saves valuable time for meaningful deliberations at any effective Board Meeting. A clarification of any unclear item in advance of the Board Meeting also helps. Where the opposite occurs, the real purpose of the Board Meeting will not be sufficiently achieved.

Ø Minutes of the Last Board Meeting – A review of the Minutes of the last Board of Directors’ Meeting, with the matters arising/pending from such a Meeting enables the Directors to be brought up to date regarding the matters deliberated upon at their last Board Meeting, and the resolutions passed at such a Board Meeting. From the updates on the matters arising from the last Board Meeting, the Board is able to make progress on each item head that is outstanding for resolution.

Ø Accounts – Prior to deliberating on business development issues, considerable time should be expended on reviewing the Company’s Management Accounts, its Income Statement, Budget performance and other financial records of the company. This is because it is these financial records that remain the best indicators of how well the existing business strategies of a company are performing.

Ø Management Report – The Management Report is usually presented by the Managing Director of the company. It provides the Board of Directors with information on how well the existing businesses of the company are performing; as well as threats and opportunities; with any other new or prospective business.

Ø Any Other Business – This item allows the Directors to deliberate on any other issue that may not be in the original Agenda for that Board Meeting but which issue can be properly deliberated upon at such a Board Meeting.

Ø Date for Next Board Meeting – It is always important to select a date convenient to most of the Directors present at a Board Meeting, for the next Board of Directors’ Meeting. This enables the Directors not to lose momentum in regularly meeting to consider, review, monitor and advance the business objectives of their company.

The important role of a Chairman

An effective Board of Directors Meeting should always be led by a strong-willed, wise, matured, industry-knowledgeable and patient Chairman who commands the respect of the other members of the Board of Directors, the management team of the company, the industry Regulators in the line of business that such a company is engaged in, and members of the general public.

In addition to moderating concise and courteous deliberation in adherence to the Agenda for each Board of Directors’ Meeting, the Chairman of a Board also ensures that distractions and interruptions are curtailed and excluded during Board Meetings. Examples of such distractions include using electronic gadgets that have no relevance to the Board Meeting; too many side comments or conversation; unnecessary movements into and outside the Board Room; etc.

Disclaimer

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

Intellectual Property Protected!

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

Legal Alert – March 20016 – No Valid ID, No Hotel Accommodation

Introduction

Escalation in criminal activities, especially terrorism, kidnapping and armed robbery, has heightened security concerns and vigilance. This is especially as these criminal activities are carried out in contravention of International Criminal and Money Laundering Laws.

Some States have accordingly instructed all Hotels and other Hospitality Establishments carrying on business in their State to henceforth only admit and render services to Guests and other Customers who present valid National or International Identification Cards, or other forms of publicly verifiable identification documents (“ID”). Unbeknown to many of these States and Federal Authorities, the valid ID Pre-admission requirement is already a legal provision under the Money Laundering (Prohibition) Act (as amended) 2012.

Identification of Customers

Financial Institutions and Designated Non-Financial Institutions, of which Hotels and Casinos are in the latter group, are required by Section 3 of the Money Laundering (Prohibition) Amendment Act 2012, to ensure that they Identify all their Customers, using verifiable public identification documents like a Driver’s License, National Identity Card, International Passport, etc, bearing the Customer’s name and address before rendering any service to the Customer.

Financial Institutions and Designated Non-Financial Institutions are further required to preserve and keep the record of their Customer’s Identification data for a period of at least five (5) years after the closure of the Customer’s accounts, or the cessation or severance of relations with any such customer.

Other Mandatory Disclosures

Every Financial and Designated Non-Financial Institution must submit a Written Report to the Economic and Financial Crimes Commission (“EFCC”), of every single funds transfer, lodgment or payment in excess of ₦5,000,000 (Five Million Naira), in the case of an individual, or ₦10,000,000 (Ten Million Naira) in the case of a corporate body. Punitive fines for each day of not reporting such transactions to EFCC apply to this serious infraction.

Personal Liability of Directors and Managers

Where the identity of a customer is not independently verified, and the funds transferred is/are above the stipulated limit, the Directors and other key management personnel of the offending Institution who are culpable, or who conspired in promoting the infraction, shall be personally liable to submit to criminal prosecution and conviction if found guilty.

Conclusion

Recent Bomb Expulsions and other criminal activities in Hotels around the world can only place on the owners of these establishments a higher duty of care to ensure that their Hotel premises are secure and safe. Pre-obtaining and retaining customers’ verifiable data must be one, among many other security measures, that must be applied to achieve this Security Protective objective.

Disclaimer

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

Intellectual Property Protected!

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