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.

Legal Alert – February 2016- Litigation, Arbitration, Conciliation, Mediation Compared

Introduction

Disputes and disagreements between people are sometime inevitable. For any business concern, having in place well documented Agreements, with an efficient and cost-effective dispute resolution mechanism enshrined, is absolutely essential; particularly as not all disputes can be amicably resolved by the parties themselves.

Litigation or Arbitration?

Historically, most business disputes in the past were resolved by litigation. And most of the time, litigation is an expensive, time consuming dispute resolution mechanism. It is typically hostilely adversarial, with rigid court procedures and rules. Also, during litigation, business secrets and confidences will have to be disclosed to avoid liability or secure a favourable judgement.

Businesses over-time recognised the above-mentioned inimical nature of litigation to smooth enterprise. Arbitration therefore came to assuage the problems associated with litigation.

Essence of Arbitration

Arbitration is a more modern, more cost-effective, more private manner of resolving disagreements. Under the Arbitration process, the parties to a dispute voluntarily pre-agree to submit any dispute that may arise from their transaction to an Independent Arbitration Panel, which Panel may consist of a person or persons, or a body, or some other kind of Tribunal, to hear and deliver a final decision regarding the dispute.

Parties to an Arbitration process are also permitted to pre-agree to the set of rules and procedures that will regulate the Arbitration Proceedings.

Like all contracts, an Arbitration Proceeding and the outcome, which is in the form of an Award or judgement, have a limitation period. So too can the parties to an Arbitration Agreement enter into a new Agreement in the future waiving or amending the Arbitration provision, or its rules, venue, qualifications of the Arbitrator, etc.

An Arbitration Award or decision is usually enforced by a Court of Law where any party to it does not willingly comply with the Arbitration Award.

Setting Aside an Arbitration Award

Any party to an Arbitration Proceeding, who is dissatisfied with the decision of an Arbitration Panel, has a right to apply to a High Court for the decision or Award of the Arbitration Panel to be set aside.

Some of the common grounds for setting aside an Arbitration Award include that the Arbitration Agreement is not valid under Nigerian Law; the Arbitration Award is against Public Policy in Nigeria; the Award contains decisions on matters which are beyond the scope of the dispute submitted to the Arbitration Panel; the composition of the Arbitration Panel or the Proceedings themselves are not in accordance with the Agreement of the Parties or the Nigerian Arbitration and Conciliation Act; a Party or Parties to a Arbitration Proceedings was/were not accorded fair hearing; the Arbitrator does not have the Qualifications pre-agreed by the Parties; there are justified doubts of the Arbitrator’s impartiality or independence; the Arbitrator misconducted himself by not complying with the terms of the Arbitration Agreement; the Arbitration Award was improperly procured; etc.

What is Conciliation?

Conciliation is another legal form of resolving disputes in a less adversarial or hostile, and private manner. Under this medium, the parties to a dispute agree to resolve their dispute through a neutral independent person known as the Conciliator. Unlike Litigation and Arbitration, the appointed independent and neutral Conciliator examines the statements of the Parties setting out the nature of the dispute, hears the parties, after which he submits to the Parties the Terms of Settlement for the parties to approve by consensus.

If the Parties do not approve the Conciliator’s recommended Terms of Settlement, they will be entitled to refer their dispute to Arbitration, where their Agreement provides for Arbitration; or institute a court action for a Court of Law to resolve the dispute.

Mediation

Mediation is a much more informal method of resolving disputes. Unlike Litigation, Arbitration or Conciliation, a Mediator applies unbinding communication techniques, to guide the disputing parties to arrive at a common ground from which an amicable settlement is consummated.

Also, unlike Litigation, Arbitration or Conciliation, a Mediator has no enforcement authority. He instead relies solely on persuading the parties to reach an amicable settlement of their dispute. And where the Mediator cannot amicably settle the dispute, the Parties are entitled to resort to Arbitration or Litigation.

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 – January 2016 -Taxation of Education Institutions

It is a commonly held public opinion that Educational Institutions are not liable to pay, suffer or bear any form of tax on their profits or income.

The decision of the Tax Appeal Tribunal (“TAT”) in Ikeja, Lagos in 2014, in the matter of the American International School of Lagos v. Federal Inland Revenue Service is sometime relied upon as the legal basis for the view that Educational Institutions are not liable to pay any Tax on their profits and or income.

An examination of the TAT’s above decision is necessary to verify the credence of the Public’s Opinion that Educational Institutions income and or profits are not liable to bear any tax obligation.

The TAT Judgment – The American International School of Lagos v. Federal Inland Revenue Service

The contention of the Educational Institution in this case was that it is exempted from paying Companies Income Tax (“CIT”), and Tertiary Education Tax (“TET”), on the grounds that it is an educational institution, Incorporated Limited by Guarantee, engaged solely in educational activities of a public character.

The defence of the Respondent Tax Authority in this case was that the fees charged by the Appellant Educational Institution were not affordable by many Nigerians. The Respondent therefore contended that the Appellant Educational Institution did not qualify as an Educational Institution of a Public Character under Section 23 (1) (c) of the Companies Income Tax Act (as amended).

The final decision of the Tax Appeal Tribunal (“TAT”) in this case was that as the Appellant is a not-for-profit registered company, Limited by Guarantee, with no evidence that its profits or other income were distributed among the Appellant Educational Institution’s Directors or Guarantors, the Appellant is exempted from Companies Income Tax and Tertiary Education Tax obligations. The Appeal Tax Tribunal also held that, the Respondent Tax Authority’s contention that the School Fees charged by the Appellant Educational Institution is only affordable to a select-few, and therefore not of a general public nature or character, was discountenanced as the Tax Authority did not tender any evidence in support of this allegation.

The Tax Appeal Tribunal accordingly ordered the Respondent Tax Authority to issue to the Appellant Educational Institution the necessary Tax Clearance Exemption Certificate.

TAT Judgment – Ratio Decidendi and Obiter Dictum

The legal basis for the Tax Appeal Tribunal decision in the above matter was that because the Appellant Educational Institution was a Not-For-Profit registered Company Limited by Guarantee, whose profits cannot be distributed among the Appellant’s Directors or Guarantors, the Appellant Educational Institution is exempted from corporate tax.

Apparently, the decision of the TAT, in the above referenced case, would have been different if the Appellant Educational Institution was not a Company Limited by Guarantee, with no share capital, whose income, profits or assets are not distributable or transferable among the persons who control the Company, either directly or indirectly.

An Educational Institution that is not Limited by Guarantee or registered as a non-governmental charitable organisation, under Sections 26 and 370 of the Companies and Allied Matters Act respectively will find it very difficult to claim tax exemption under Section 23 (1) (c) of the Companies Income Tax Act. The TAT Passing remarks, which is what Lawyers call Obiter Dictum, that it is not strange that Educational Institutions generated their income from the educational services that they provide, did not form the legal basis for the bottom-line decision of the TAT.

Conclusion

Existing Laws already require all registered legal entities, including tax exempted Limited Liability by Guarantee Companies, and Registered Trustees also known as NGOs, to file at the end of each financial year an Annual Return to which must be annexed a Certified Income Statement containing the particulars of its indebtedness and landed properties held, mortgages and charges, etc. Unfortunately, the enforcement of these statutory requirements by the Tax and Corporate Affairs Commission authorities remains very poor.

Subject to when the existing statutes are amended, some regulatory Guidelines on how the assets, income and the remuneration of the officers who control a tax-exempted entity in Nigeria are administered, is urgently required in order for there to be a fair playing field between tax exempted entities and entities that do not enjoy Tax exemption.

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. 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 only non-profit educational purposes under the strict condition that our Authorship is explicitly acknowledged, and our Disclaimer Notice is prominently displayed.

Legal Alert – December 2015 – Taxation of Interim Dividend

Introduction – What is a Dividend? What is an Interim Dividend?

Dividend is customarily a portion of the after-tax profits of a company, which is distributed among the Shareholders of a company, in the proportion of the Shares that the Shareholders hold in such a company, as a return on their investment in that company.

In practice, Dividend is usually declared and paid at the end of a company’s financial year. The Companies & Allied Matters Act (“CAMA”) however allows the Directors of a company to recommend to its Shareholders the payment of an Interim Dividend, out of the distributable profits of the company, for the financial year in which such distributable profits were made by the company.

Taxation of Interim Dividend

All the profits of a company, accruing in, derived from, brought into or received in Nigeria are liable to bear a Companies Income Tax, at a tax rate of thirty per cent (30%) of the distributable profits of the company.

As already mentioned above, the taxes on the profits of a company are paid to the tax authority in the following financial year, for the previous financial year in which the said profits were made. The Companies Income Tax Act (as amended) (“CITA”) however recognises that a company can declare an Interim Dividend before the end of the financial year in which the distributable profits were made by such a company.

The Nigerian Federal Tax Authority, which is the Federal Inland Revenue Service (“FIRS”), have not before now being insistent on the advance tax arising from an Interim Dividend been paid before the Interim Dividend can be distributed to the Shareholders of a company. This old regulatory attitude has now changed.

In compliance with the provisions of CITA, companies that declare an Interim Dividend must before paying such Interim Dividend to their Shareholders, do the following; firstly, furnish to FIRS the details of the profits from which the Interim Dividend is been declared; with the particulars of the Shareholders and the proportion of their Shareholding in the company declaring the Interim Dividend.

Following from the last paragraph above, the second obligation on the company declaring an Interim Dividend is that such a company must remit to FIRS the advance tax on the Interim Dividend – which is at the corporate tax rate of 30% of the declared profits – before the Interim Dividend can be paid to the company’s Shareholders.

Interim Dividend Tax – An Advance Tax

The advance tax paid on an Interim Dividend however only constitutes a deposit against the final Corporate Tax for the company declaring the Interim Dividend, at the end of the financial year that the distributable profits were declared and paid.

When Not to Pay an Interim Dividend?

A company cannot declare and pay an Interim Dividend from or out of its working capital.

A company cannot also declare and pay an Interim Dividend if there are reasonable grounds for believing that the company is or would after the Interim Dividend is paid, become unable to pay its debts, or fail to remain a going business concern.

Conclusion

Arising from the enforcement of the collection of advance tax on Interim Dividend income is the new reality that tax payers must proactively continue to increase their tax compliance levels, as a sensible way to minimise their tax risks. This is especially as governments would continue to aggressively expand the tax base and tax collection, in order to mitigate governments’ losses arising from the continuing dwindling in crude oil prices.

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. 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 only non-profit educational purposes under the strict condition that our Authorship is explicitly acknowledged, and our Disclaimer Notice is prominently displayed.

Legal Alert – November 2015 – Casual “Contract” Employees

Introduction

The combined reading of the provisions of the Labour Act, the Employee’s Compensation Act 2011, the Pension Reforms Act 2014, the Trade Unions Act 1973, the Industrial Training Fund (Amendment) Act 2011, and other similar legislations on labour or employment Law, describes a worker or employee as any person who is employed in the public or the private sector of the economy, to carry out some function relating to the employer’s business, whether on a temporary or causal or ad-hoc basis, for a period of not less than thirty (30) days.

The Contract of Employment could be oral or in writing; express or implied; continuous or part-time.

A global unrelenting economic recession, with its associated uncertainties, has led to the continuing surge in unemployment; and where employment is available, such employment is more of a casual and sometime undocumented nature. This is because many Employers of labour are under the business “perception” that the expenditure for casual undocumented employees is cheaper than those for documented and permanent employees. Is this business “perception” supported by the existing Labour Laws and Regulations?

Employment Contracts

The Labour Act for example requires that casual or part-time employees, whose employment contracts are for a fixed term, or for a variable term, must like confirmed employees, also be given written employment contracts which enumerate the tenure or duration of the employment, the nature of work, the hours of work and overtime, the rate of wages with the regularity of the payment of such wages, the appropriate notice required to terminate the employment contract, etc.

The Labour Act also reiterates the old Common Law principle which makes employers indirectly or vicariously liable for all their employees’ misfeasance or wrongdoing undertaken in the course of their employment, whether such employees are on full-time or part-time employment.

All employment contracts will be terminated either by the expiration of the term of the employment contract, or the death of either the employee or the employer, or by written notice of termination as contracted.

Other Statutory Rights of Casual Employees

In addition to casual employees having legal rights to be given written contracts of employments, to enjoy breaktime, have regularity in the payment of their wages and take maternity leave, all employees in Nigeria, including casual employees, are also entitled to earn the minimum wage as guaranteed under the National Minimum Wage (Amendment) Act 2011. The National Minimum Wage in Nigeria is N18,000 (Eighteen Thousand Naira) per month.

Under the Pension Reforms Act 2014, all employees, whether on full-time or part-time employment, are entitled to enjoy the benefits of the Contributory Pension Scheme. In addition to Pension benefits, the estate of a deceased employee is also entitled to enjoy the benefits which accrue from the mandatory Group Life Insurance Policy, which the Pension Reform Act 2014 requires all employers to take out on behalf of all their employees.

Casual employees, like their full-time counter-parts, are also entitled, on their own free volition, to join one Trade Union of their choice.

Conclusion

The inability of the government to formulate, drive and enforce policies which create more jobs in the private sector of the economy, with a weak and fragmented Labour Union infrastructure, has led to continuing job losses and more casual unsecured employment remaining the norm, in contrast to full-time permanent employment which prospers the economy.

Also, an educational curriculum without an entrepreneurial youths mindset will not promote permanent secured employment as employers present day business needs are not matched by the employees’ theoretical curriculum and mindset.

Disclaimer Notice

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

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 only non-profit educational purposes with the strict condition that our Authorship is explicitly acknowledged, and our Disclaimer Notice is prominently displayed.

INTRODUCTION

Antitrust, which is also known in some jurisdictions as Competition Regulations, is generally perceived as a technical subject that is not easily understood. In developing countries, there is a paucity of Antitrust Legislation designed to protect the Consumer, promote free trade and commerce, and prevent unwholesome and unethical trade practices.

Antitrust or Competition Laws and Regulations are generally designed to promote and protect a transparent and competitive market from unjust and unfair business practices. Thus, Antitrust Laws and Regulations achieve most of their objectives by discouraging and preventing price or rate fixing, price discrimination, price gouging, restrictive exclusive contracts, abuse of a dominant market position, predatory pricing practices, conspiratorial pricing between some competitors against other competitors, hoarding, institutionalised boycotting of a competitor, supplier or equipment vendor, etc.

Antitrust and Anti-Competitive practices substantially stifle and inhibit healthy competition to the detriment of the Consumer and the larger economy.

BRIEF HISTORY OF ANTITRUST AND COMPETITION LAWS

After the civil war in the United States of America, and its adoption of the free market enterprise policy without an overbearing Government interference in the market, the Sherman Act of 1890 was enacted to curb and criminalise any restraint to free trade and commerce, especially by conspiratorial and monopolistic corporations.

In the United Kingdom (“UK”), the United Kingdom Monopolies and Restrictive Trade Practices Act 1969, metamorphosed into the Competition Act 1998, the Enterprise Act 2002 and then the Enterprise and Regulatory Reform Act, 2013 which established the Competition and Markets Authority. In spite of these legislations, Competition regulations in the United Kingdom have continued to follow the European Union robust jurisprudence on this subject.

Again, the underlying objective of all Antitrust and Competition Laws and Regulations remain the protection of the Consumer with minimum Government interference in the market.

HISTORY OF ANTITRUST AND COMPETITION LAWS IN NIGERIA

Post independence from Colonial Rule, the major sectors of the Nigerian economy – power supply, telecommunications, aviation, petroleum, railway, radio, television, etc were nationalised with monopolistic structures, sole ownership and control residing in the hands of the Government. Unfortunately, these Government monopolies reportedly promoted large scale corruption and inefficiencies which inhibited growth to the detriment of the entire Nigerian economy.

The liberalisation and privatisation of some sectors of the Nigerian economy, especially the telecommunications and broadcasting sectors, starting from the 1990s, ushered in some competition from the private sector against previous public monopolies. The legislations which liberalised some aspects of the Nigerian economy also tried to introduce some minimal Antitrust and Consumer Protection Regulations.

ANTITRUST AND COMPETITION LAWS AND REGULATIONS IN NIGERIA

There is no Legislation or Regulation that is dedicated solely to Antitrust or Competition issues in Nigeria. None of the numerous Bills before the National Assembly on the subject have been passed into Law. In different Legislations however, there are some Antitrust or Competition provisions, with the most far-reaching of these Antitrust Provisions currently being in the Nigerian Communications Act. The latter will be considered in the second part to this short-paper.

Parts II, VI and VII, Sections 26, 80-82 of the Electric Power Sector Reform Act, 2005 has Statutory provisions which seek to provide guidelines regarding consumer service and protection, license performance, with competition and market power provisions. The Nigerian Electricity Regulatory Commission (“NERC”) is expressly required to, on a continuous basis, monitor the Nigerian Electricity market for the potentials that exist to drive additional Competition and the Tariff Regulations in the best interest of the market.

In the Aviation industry, Section 30(4) (i) of the Civil Aviation Act, 2006 authorises the Nigerian Civil Aviation Authority to investigate any case or cases of unfair or deceptive trade practices or methods of competition, including the prices of airline tickets. Where an infringement is found, the Nigerian Civil Aviation Authority is authorised to require the offending party to desist from such antitrust or anti-competition practice.

For capital market transactions, which are mainly publicly quoted and Government quoted securities, the Investment and Securities Act, 2007 has provisions which require the Securities and Exchange Commission (“SEC”) to prohibit market rigging and manipulation, insider rigging and all other forms of unfair and fraudulent trade practices in the Nigerian Stock Market. Where a business practice prevents or lessens competition, SEC is authorised to in the interest of the public, among other things, undertake a Court sanctioned break-up of the infringing company into separate entities, in such a way that its operations do not cause a substantial restraint on competition.

In the liberalised Broadcasting Industry, the National Broadcasting Commission (“NBC”) is the body charged under the National Broadcasting Commission Act to regulate and control all the kinds of broadcasting businesses in Nigeria – i.e. Radio, Television, Cable Television Services, Direct Satellite Broadcast, etc. This is whether such broadcasting business is privately or government owned. Through its licensing regime, NBC seeks to uphold the principles of equity and fairness, with an aberration for unfair and unethical trade practices in the broadcasting industry.

To protect Consumers of stable and essential items, like sugar, salt, milk, flour, matches, petroleum products, motor vehicles, motorcycles and bicycles’ with their spare parts (“Controlled Commodities”), the Price Control Act empowers the Price Control Board to fix the Controlled Price range for these mentioned essential items. It is a criminal offence for any person to sell any of the listed Controlled Commodities above their approved controlled price. Hoarding of Controlled Commodities is also a criminal offence which on conviction carries fines and terms of imprisonment, seizure of the concerned goods, sealing of the premises from where the offence is carried on, etc.

CONCLUSION

Antitrust will only thrive and achieve its objectives if the Consumers are aware of their rights and are willing to make some effort and sacrifice to enforce them. The Regulators must also become more proactive, and not remain docile, in the performance of their statutory duties.

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 http://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.