Life of a Lagos Lawyer – Episode 6

Life of a Lagos Lawyer – Episode 6


After a quick briefing
with my client, I am about to get in my car when I hear someone calling out “Dlaw,
Dlaw” from behind, I turn around and my heart skips a bit, guess who is pacing
towards me? Omalichanwa, the Ibo girl that broke my heart in the University. We
hug for a few seconds and immediately I get a whiff of her beautiful smell, I
am transported to what I would always remember as one of the most beautiful
times of my life.

I had met Oma at the Food
Market on campus and she was the most beautiful girl I had ever seen. The most
beautiful flower paled to the sight of her. Her body was specially forged by
her maker and her smile seemed to shine like the sun. I had chased this girl
all over campus, trying every chivalrous move I knew but all my efforts were
futile. I was however rewarded one day she had come to eat and forgotten her
wallet. I overhead her mention it to one of our mutual friends and immediately
offered her the sole and only 500 Naira note in my wallet.
That single deed turned
out to be magic, as later in the evening Oma would return my calls for the
first time and also accept my BBM Invite. That was the beginning of a beautiful
relationship or so I thought. Spending time with her or just hearing her talk
was my favourite past time and I would always make time to have her be a part
of my day. But all that changed when Oma decided I wasn’t good enough for her
anymore and called it quits. 
According to her, we were
just friends and she never had the intention of dating me. Just friends! I had
screamed. After having married you and had great grand children in my dreams.
After fantasizing about our life together and looking forward to hearing your
voice every morning. How many of your friends send you a good morning message every
morning and chats with you all day? How many of your friends wants to hold and cuddle
you all day? How many of your friends concern themselves with your happiness every
day? Friends! 
It had taken two weeks of
binge drinking to get over her and a promise not to allow myself fall in love
again. Coupled with days of my heart feeling heavy and countless debates with
myself on whether to call her or not.  Last I heard of her, she was dating an old
school mate of mine and somehow hating her had helped me get over her quickly.
All that was however about to be undone. 
“Hi Dlaw, been a while”.
Yes Oma, I responded. Almost stuttering and bringing myself back to reality.
Compliments of the season, I manage to add. How have you been? “I am great and
it’s s nice to see you”, she adds. “Especially as I am sort of in a fix, My
Landlord has sued me and my lawyer is a no-show, I don’t know what to do and
the matter will be mentioned very soon”.
“Oma, don’t worry, I will
offer my services to you pro bono, which court is it” I am quick to add. If I
can’t represent Omalichanwa, then why did I go to law school or even become a
lawyer for that matter. What would be the purpose of my law degree if I could
not use it in a sacrifice of love.  
So I grab my garb and head
back into court, thinking more of Omalichanwa’s waist and the beads that used
to be there than the facts of her matter which she is trying to bring me up to
speed on. Apparently, Oma’s Landlord had served her a 6 month’s notice 3 months
before the expiry of her rent. However, the Landlord had backdated the letter
to accommodate the mandatory 6 month’s period of notice and had tendered the
back- dated letter in court. Luckily, she had written back to the Landlord
informing him of the date she had received the letter and stating she would
consider the Notice to begin to count from the date it was served on her. 
Unfortunately for the
Landlord, his lawyer had also commenced the suit against Oma before the expiry
of the valid 6 month’s Notice. Piece of cake I figured, I could do this with my
eyes closed. Oma’s matter is called and her landlord’s lawyer goes into a
rendition of his case. After his submissions, the judge looks at me and asks if
I have counter arguments. 
“My Lord” I begin. “It is
the position of the Defendant that this matter was improperly instituted as the
Defendant was not served with a valid Notice to Quit…………Due to this position My
Lord, we will be applying that the suit be struck out for lack of jurisdiction
”. I make my submissions and to our luck the judge decided to write a bench
ruling. “Suit struck out” the judge says and I am pleased to chorus “As the
court pleases”. 
Oma jumps into my arms as
we come out of court. Could it be I am now back to being her hero. “Dlaw, you
are so nice, you were awesome in court, I am so proud of you”, Oma goes on and
on. Just hearing her call my name is music to my ears and all my hate for this
girl who broke my heart just seems to thaw, like Her Volcano just erupted in my
Artic region and all the ice was melting away. She was the Tinashe to my Davido,
the Annie to my Tuface, the Bee to my hive. 
Maybe it was the taste of
victory that encouraged me to jump or walk ahead of my time but I felt this
would be a good time to ask Oma out again. “So Oma dear, would you like to have
dinner with me”. The look in her eyes already showed it was a bad idea. “Oh,
Dlaw, I am so sorry but I have to be at my boyfriend’s place in Maryland for
7.30”. What about tomorrow I say. “Oh sorry again Dlaw, I would still be at his
place”. And next week, I try one last time. “I am sorry Dlaw, but I don’t think
I would be free”. That’s the last thing I heard as she got into her car and
drove off. 
Chai, once again,
Omalichanwa just walked over my heart and turned me to mumu. OMG, I should have
charged her a professional fee I think to myself as I prepare to check into
heart break motel once again. I am driving on the 3rd Mainland Bridge
thinking of the favourite Ibo girl I hate to hate when a car runs into me from behind.
I jump out about to rain fire and brimstone on the culprit, when I see three policemen
alighting from the vehicle and one of them saying “Oga why you jam us, or are you
blind?” Me, jam you! How could I have hit you when I was driving forward and you
hit me from behind. “Oga, let’s go, you will explain it at the station…………
Join us next weekend
for another episode of “Life of a Lagos Lawyer”. An exclusive Legalnaija
series. 
PLESE NOTE: This is
a work of fiction. Names, characters, places and incidents either are products
of the author’s imagination or are used fictitiously. Any resemblance to actual
events or locales or persons, living or dead, is entirely coincidental.
Challenges with taxation system in Nigeria

Challenges with taxation system in Nigeria



Introduction
The Nigerian tax system has undergone several
reforms geared at enhancing tax collection and administration with minimal
enforcement cost. The recent reforms include the introduction of TIN, (unique
Taxpayer’s Identification Number), automated tax system that facilitates
tracking of tax positions and issues by individual taxpayers, e-payment system
which enhances smooth payment procedure and reduces the incidence of tax
touts.
The tax authority now has autonomy to assess,
collect and record tax.

This enabling environment which came into being on the
strength of the Act[1][1]
has led to an improvement in tax administration in the country.

However, there are still subsisting challenges in
the Nigerian taxation system, which this brief article seeks to highlight and
recommend possible solutions.
Meaning
of Tax
According to business dictionary, taxation is the
means by which governments finance their expenditure by imposing charges on
citizens and corporate entities[2][2].
Taxation is also the legal demand made by the Federal government or State
government for its citizens to pay money on income, goods and services.
Challenges
Facing Taxation and Possible Solutions
There are so many challenges facing the Nigerian
taxation system, but this paper will be restricted to few of those challenges.
1. Multiplicity
of taxes:
This means paying similar taxes on the same or substantially
similar tax base. Examples of multiple taxes include Companies Income Tax,
Information Technology Tax, Education Tax, Nigerian Content Development Levy,
all of which are based on income or profits. Also, Value Added Tax, Sales Tax
and Hotel Consumption Tax all based on sales. Multiple taxes should be
distinguished from numerous taxes which mean many but different taxes on
different tax bases. To address multiple and numerous taxation, approved list
of taxes should be streamlined and adhered to by all tiers of government.
2.     Separate source of income: Section 25(1) of Companies Income Tax Act (CITA)
states that the profits of any company for each year of assessment from such
sources of profits shall be the profits of the year immediately preceding the
year of assessment from each such source[3][3].
Section 27(2) of the same Act
goes further to restrict the losses that may be relieved in any year to the
assessable profits from the trade or business in which the loss was incurred[4][4].
The combined effect of these sections could be interpreted to mean ring fencing
of different sources of income to the effect that losses from one line of
business cannot be used to offset profits from other lines of business by the
same company.
This practice is not equitable
and it seems to punish genuine businesses for incurring real losses. The
separate taxation of income should be abolished in line with global best
practice as many countries have even gone beyond this level to permit group
consolidated tax returns.
3.     Tax refunds:
Although there are specific provisions in the tax laws especially under the FIRS
Establishment Act, 2007 for tax refunds this is yet to be fully functional.
There should be appropriate funds allocated or retained out of tax collection
to cater for tax refunds both at the federal and state levels[5][5].
The FIRS Act requires the tax
authorities to pay a tax payer’s refund claim within 90 days of the application
subject to appropriate audit. These audits are usually slow and time consuming
sometimes running into several years. Fairness and equity requires that cash
refunds be made promptly to deserving tax payers. Failure to pay refund within
the stipulated timeframe should attract commercial interest.
4.     Tax clearance certificate: Taxpayers are required to obtain a tax clearance
certificate (TCC) annually which is often needed to conduct many business
transactions. Tax officials often use this as a tool to harass taxpayers by
bringing up issues outside the period covered or contrary to the provisions of
the law regarding TCC. For instance, the CITA requires that TCC must be issued
within 2 weeks of application otherwise the tax authority must explain. TCC
should be issued automatically within 2 weeks of every new calendar year
provided a taxpayer has no outstanding undisputed tax liability on the last day
of the previous year of assessment.
Conclusion
Taxation
affects investment decisions but the risk is not whether tax would be paid, it
is the uncertainty of what, when, how and how much. Ironically, what businesses
and investors need, as a matter of priority, is not tax incentives;
it is the removal of tax
disincentives.
Although
Nigeria has made some improvements to the tax system in the recent past, there
is still a long way to go and the status quo is not an option. If taxes are to
be collected effectively and fairly, both in monetary and equitable terms, for
the benefit of all Nigerians, our desired development will appear achievable;
especially with good leaders.

Osiri Ndukwe
Lagos based legal
practitioner


[1] Section 8(q) of FIRS Establishment Act, 2007
[2]http://www.businessdictionary.com/definition/taxation.html accessed on Thursday, December 29, 2016
[3] Section 25(1) of CITA
[4] Section 27(2) of CITA
[5] Section 23 of the FIRS Establishment Act, 2007
Photo Credit – www.savingadvice.com   
Economic Impact of Migration: Benefit or Burden? BY Osiri Ndukwe

Economic Impact of Migration: Benefit or Burden? BY Osiri Ndukwe

Introduction
Migration is a feature of social and economic life across many countries, but the profile of migrant populations varies considerably. In part this is because of the variety of sources of migration. In much of Europe, for example, citizens enjoy extensive rights to free movement. 

In this brief article, I will be looking at the impacts of migration on the economy of a nation. 
Economic Impact of Migration
Migration; benefit or burden, what is the reality? To answer this question, it will be helpful to look at migration’s impact in three areas – the labour market, economic growth and the public purse:
1. Labour markets: Migrants accounted for 47% of the increase in the workforce in the United States and 70% in Europe over the past ten years. They also fill important niches both in fast-growing and declining sectors of the economy. Like the native-born, young migrants are most likely to be better educated than those nearing retirement. Since 2000, immigrants have represented 31% of the increase in the highly educated labour force in Canada, 21% in the United States and 14% in Europe. In Europe, they contribute significantly to labour-market flexibility .
2. Economic growth: Migration boosts the working-age population. Migrants arrive with skills and contribute to human capital development of receiving countries. Migrants also contribute to technological progress . International migration has both direct and indirect effects on economic growth. There is little doubt that where migration expands the workforce, aggregate GDP can be expected to grow. However, the situation is less clear when it comes to per capita GDP growth. First, migration has a demographic impact, not only by increasing the size of the population but also by changing the age pyramid of receiving countries. Migrants tend to be more concentrated in the younger and economically active age groups compared with natives and therefore contribute to reduce dependency ratios .
Second, migrants arrive with skills and abilities, and so supplement the stock of human capital of the host country. More specifically, evidence from the United States suggests that skilled immigrants contribute to boosting research and innovation, as well as technological progress .
3. The public purse: Recent work on the fiscal impact of migration for all Organization for Economic Cooperation and Development (OECD) countries, as well as Australia, Canada and the United States, has provided new and internationally comparative evidence. The study suggests the impact of the cumulative waves of migration that arrived over the past 50 years in OECD countries is on average close to zero, rarely exceeding 0.5% of Gross Domestic Products (GDP) in either positive or negative terms. The impact is highest in Switzerland and Luxembourg, where immigrants provide an estimated net benefit of about 2% of GDP to the public purse. 
Immigrants are thus neither a burden to the public purse nor are they a panacea for addressing fiscal challenges. In most countries, except in those with a large share of older migrants, migrants contribute more in taxes and social contributions than they receive in individual benefits.
This means that they contribute to the financing of public infrastructure, although admittedly to a lesser extent than the native-born. Contrary to widespread public belief, low-educated immigrants have a better fiscal position – the difference between their contributions and the benefits they receive – than their native-born peers. And where immigrants have a less favourable fiscal position, this is not driven by a greater dependence on social benefits but rather by the fact that they often have lower wages and thus tend to contribute less .
Conclusion
It is the belief of many that high-skill emigration causes labour shortages in the country of origin. This however remains unsupported in the academic literature. According to economist Michael Clemens, it has not been shown that restrictions on high-skill emigration reduce shortages in the countries of origin .
Osiri Ndukwe
Lagos based legal practitioner
Photo credit – http://www.caritas.org
Curbing terrorism through Immigration Policies by Osiri Ndukwe

Curbing terrorism through Immigration Policies by Osiri Ndukwe

Introduction
Immigration policies aim to facilitate the entry of
foreigners whose presence is desired, and to identify and deter the entry of
unwanted foreigners. Although immigration policy changes alone cannot prevent
terrorism, they are key ingredients in the effort to combat terrorism.

This brief article outlines the possibility of
curbing terrorism through these immigration policies.
Meaning
of Terrorism
Even though terrorism is not new,
it can be relatively hard to define. Terrorism can be described as both tactic
and strategy; a crime and a holy duty; a justified reaction to oppression and
an inexcusable abomination.
The United States Department of
Defense defines terrorism as “the calculated use of unlawful violence
or threat of unlawful violence to inculcate fear; intended to coerce or to
intimidate governments or societies in the pursuit of goals that are generally
political, religious, or ideological”[1]
.
The Federal Bureau of Investigation (FBI) defines it as: “the
unlawful use of force and violence against persons or property to intimidate or
coerce a government, the civilian population, or any segment thereof, in
furtherance of political or social objectives.”
Within these definitions, there
are three key elements – violence, fear, and intimidation – and each element
produces terror in its victims[2].
Curbing Terrorism
All terrorist acts are motivated
by two major things:
     
Social and political injustice:
People choose terrorism when they are trying to right what they perceive to be
a social or political or historical wrong, when they feel they have been
stripped of their land or rights, or denied these.
     
The
belief that violence or its threat will be effective to usher in change, or
that violent means justify the end.
For a country to be able to curb terrorism,
it has to first identify the things that cause or motivate terrorism, and then
enact laws to curtail it. The US government had in 2002 after the September 11
incident in 2001, sought to implement measures to end the abuse of student
visas and prohibit certain international students from receiving education and
training in sensitive areas. Any study with direct application to the
development and use of weapons of mass destruction was sought to be prohibited
for foreigners. The reason was to prohibit the education and training of
foreign nationals who would use such training to harm the United States or its
Allies.[3]
Government agencies were to
develop a program to accomplish this goal, by identifying sensitive courses of
study and suggest measures whereby the Department of State, the Department of
Justice, and United States academic institutions, working together, can
identify problematic applicants for student visas and deny their applications.
The program was to provide for tracking the status of a foreign student who
received visa – his proposed course of study, his status as a full-time
student, the classes he enrolled for and the source of his educational funds.[4]
In addition, steps should be taken
to strengthen existing immigration policies, so as to be able to catch up with
those that mean harm to the society. A keen look at the birth of Boko Haram in
Nigeria would reveal the existence of weak immigration policies in the country.
The Nigerian Chief of Army Staff,
Lieutenant General Tukur Yusuf Buratai, had on Wednesday, November 16,
2016 said that judging by the current activities of the Boko Haram terrorists,
60 per cent of them are not Nigerians.[5]
This revelation should awaken the call to tighten our borders.
Conclusion
Terrorists
pose a formidable challenge common to all countries. But tackling terrorism is
likely to result in closer cooperation among the industrialized countries,
especially in their immigration policies. It is also advisable that these
countries tighten their borders – track the entries and exits of all foreign
visitors.

Osiri
Ndukwe

Legal practitioner based in Lagos



[1]http://www.terrorism-research.com/, accessed on Friday, December 23, 2016
[2] Ibid
[3] https://fas.org/irp/offdocs/nspd/hspd-2.htm, accessed on
Friday, December 23, 2016
[4] ibid
Photo Credit – Boko Haram; www.premiumtimesng.com 
Rights Of A Tenant In Nigeria By Onyekachi Umah, Esq. ACIArb(Uk)

Rights Of A Tenant In Nigeria By Onyekachi Umah, Esq. ACIArb(Uk)

Just as the human
fingers vary, so do human status, situations and endeavours vary. At different
times, locations and situations in life you are either a tenant or a landlord
or even both. You may be the owner of your residence while you are a tenant in your
office complex. They can never be a tenant without a landlord. For more on
landlords rights and duties, read my article; 
RIGHTS OF A LANDLORD. Due to the African undue attachment
to land and landed property so much attention and superiority is added to the
status of “Landlordship”. This makes up for the ill treatment the so called
landlords do met out to their often poor tenants. 


The Nigerian law is all
encompassing and people-welfare oriented. The law went on to provide an
avalanche of rights, duties and privileges for tenants.  Am set to outline
and dwell in the details on the rights, duties, privileges, powers and remedies
open to tenants in Nigeria, as a whole.

A tenant is declared a
lesser human being against the wishes of the constitution as many times as
his/her rights are trampled on. The law will always lean in favour of a tenant
and to safeguard him properly while he strives to acquire his own premises.
Here are some of the rights open to tenants in Nigeria, today;

1:
RIGHT TO A WRITTEN AGREEMENT.
Agreements generally can
be oral or written. In this century, oral agreements seem awkward especially
when it is executory (yet to be executed) and involves huge considerations from
the parties to it. It is advised that agreements are written, on that note a
Latin maxim says that “Quo scripti scripti”, what is written is written and
another adds that, “quo scripti mante”; what is written remains. For the
avoidance of doubt, ambiguity and misunderstanding of the intentions of the
parties (landlord and tenant) at the time of their agreement, our courts
encourage tenancy agreements to be in writing. This will aid both parties to
outline their terms and conditions expressly. The law makes the writing of
tenancy agreements mandatory for tenancies above three (3) years while tenancy
below three can be orally or written. Generally to be on the safe side parties
are advised to put their agreements in writing even if it is for a week
tenancy.

Tenancy agreements are to
contain in details the names of a landlord and his tenant; as parties to the
tenancy agreement. The land or house to be rented out ought to be described in
details; showing its location and basic features. The duration of the tenancy,
the rent payable and the date at which such rent would become payable should be
stated. The modalities for reviewing rent price (increment in price) should be
included. Above all, the duration for any “Notice to Quit” to be served on the
tenant should not be left out. Other terms, conditions, and covenants that can
be added are; who makes repairs on the house, how and who pays for accruing
bills and expenses (water, electricity and sanitation bills). In making the
tenancy agreement between the landlord and the prospective tenant both parties
are to execute the agreement by signing and dating it before their respective
witnesses (at least one witness for each party). Post office stamp should be affixed
to the agreement to enrich its probative value (make it recognised in law and
acceptable in court as an evidence).  

In reaching a tenancy
agreement a tenant ought to 
be as wise as a serpent since he will extend or
shorten his freedom by the contents of the agreement. Nigerian landlords are
too busy to enter into contracts with all their prospective tenants and equally
too stingy to seek for the services of lawyers. Consequently, most landlords
duplicate a single tenancy agreement and use same for all their tenancy
agreements irrespective of their varying conditions and terms; thereby leaving
some intentions unexpressed. Prospective Tenants like “money borrowers”, are
always desperate to obtain tenancy/accommodation irrespective of any draconic
conditions attached to such. Many tenants even move into property and live for
years before remembering to seek for a written agreement. A tenancy agreement
couched by a lawyer for a landlord might often be confusing and a bit
unfavourable to a prospective tenant. It might take a lawyer to peruse such and
properly advise a prospective tenant on terms and covenants to add or remove
from such tenancy agreement.

Prospective tenants are
advised to seek the services of their solicitors before signing or agreeing to
any unclear terms of any tenancy agreement. Never go into any tenancy agreement
orally; even if it is for the least of property or for the shortest of terms.
Let the friendliness and joy of today not becloud your sense of reasoning else
tomorrow may be sour. 

2:
RIGHT TO ISSUANCE OF RECEIPT OF PAYMENT.
 Payment of rent is a
vital part of tenancy albeit not proof of existence of a tenancy. It is often
one of the covenants of a tenancy agreement. Payment of rent can help a court
in calculating the duration for a valid Notice to Quit, where there is no
agreement. Prove of payment (receipt) is needed in the calculation of a mesne
profit (rent incurred by a tenant after the expiration of a valid “Notice to
Quit” served on him) and even arrears of rent (rent incurred by a tenant while
in a valid tenancy with his landlord). It can equally clear off any allegation
of contravention of a valid rent clause (timely payment of rent). Hence, a
tenant is entitled to the receipts of payment of his rent; for it is a proof of
payment therein.

The receipt of payment is
an acknowledgement from a landlord (or his agent) that he has received rent
from a tenant. It must contain the name of the landlord and the tenant, the
amount paid and the date of such payment. The property for which such payment
is made, the duration that such payment will cover and the signature of the
receiver must also be on the receipt.

It is an actionable
offence to refuse to issue a receipt for rent paid and received. It is your
right as a tenant to be issued a receipt upon payment of rent. Where the
payment is only a part of the whole, it should also be receipted and same
stated. Remember a written agreement endorsed by the landlord before a witness
that he has received a rent from his tenant will suffice. No matter how
familiar, friendly, corporative and caring your landlord is, please always
demand for receipts of your paid rents to safeguard your tomorrow.

3:
RIGHT TO PEACEFUL ENJOYMENT OF PROPERTY.
 A tenant pays his
rent to his landlord for the landlord to grant him a peaceful and serene
enjoyment of the landlord’s property within an agreed period to the exclusion
of all other persons; the landlord inclusive. No tenant pays to be offered an
uninhabitable apartment, dilapidated property, unsecured environment or a
contentious accommodation. Once payment is made and tenancy commence the tenant
has both legal and equitable rights over the said property. Hence the tenant
holds and occupies the property to the exclusion of all other persons and even
against the landlord since he holds a better and higher title than the
landlord.  

Consequently, a tenant has
an absolute right over his paid flat, room, apartment or building. He
determines entrance, usage, safety and can even sue for trespass against any
trespasser; strangers, landlord and his agents. The landlord can supervise and
maintain the property generally, but with the knowledge of the tenant and
within reasonable hours of the day. Once a landlord rents out his property he
has also rented out his supreme powers over the property although he still has
reversionary interest (right to take back property at the expiration of
tenancy). So why should a tenant upon his rent worship and tremble before his
landlord like a semi-god? Why should a tenant tolerate a landlord who breaks
and enters without into the tenant’s premises without consent?  Why should
a tenant be enslaved and turned into a sanitary attendant by his landlord whom
he pays rent as at when due? The above happen when and where the tenant is ignorant
of his rights as a tenant! Let such a man/woman consult a lawyer and report
cases of criminal trespass to the nearest police station.

4:
RIGHT TO A VALID NOTICE TO QUIT.
 Generally, going by
the dictates of our law no landlord can evict his tenant whether he is in debt
or not by throwing him out of his premises.  The legislatures in
consideration of our conservative Land Use Act have enacted series of
tenants-friendly Acts and laws.  A tenant cannot be thrown out of his
apartment unless there is a strict compliance by his landlord with of relevant
Recovery of Premises Law.

Recovery of Premises Law
provides that a valid “Notice to Quit” (Quit Notice) of a landlord’s intention
to terminate/quit the tenancy of the tenant must be written and served on the
tenant. The law went on to provide durations for “Notice to Quit” for varying
tenancies. It provides that a one (1) year or above tenancy will require at
least a six (6) months notice.  Monthly tenancy requires one (1) month
notice while a weekly notice requires one (1) week notice. Note that by tenancy
agreements the landlord and tenant can agree on a different duration for Notice
to Quit. By the agreement of both parties a yearly tenancy for which the law
provides a six (6) months “Notice to Quit” can be reduced to a week or a month
notice. Some tenants can even sign to a tenancy to be evicted without a “Notice
to Quit”. The law honours and respects the agreements of parties and will
implement it to the last of letters.

A diligent tenant before
agreeing and signing to a tenancy agreement should carefully read and
understand in details the provisions of his agreement documents. Better still,
the service of a lawyer can be sought to help in perusing and interpreting the
contents of the agreement. Remember the law does not and will not care to know
that a tenant did not understand or never knew the law before signing his
agreement; “ignorantio legis non excuse” (ignorance of the law is no excuse).
When a tenant signs a lawful agreement that limit his rights he will be bound
by such same agreement; “violentia non fit injuria”. And such party cannot be
allowed to plead that he never signed such agreement (non est factum).

Please, do note that when
a tenant owes his landlord for (3) three consecutive months, the landlord can
dispense with the issuance of a “Notice to Quit” on such tenant. Where tenancy
has expired by time and there is no new and subsisting tenancy, the landlord
can also recover his property without issuing a “Notice to Quit”, although he
is expected to adhere to other conditions.

A valid “Notice to Quit”
must contain the name of the landlord, the name of the tenant, the address of
the property occupied by the tenant, date the notice will commence and date it
will end. It must not end when a tenancy is still running and valid. Such
notice must be calculated in a way that it ends on the eve of the anniversary
of a subsisting tenancy, for yearly tenancies. Where it is a monthly tenancy it
must expire on day of the anniversary of a subsisting tenancy.  A “Notice
to Quit” that those not contain all the above necessary information, can be
vitiated by a court of competent jurisdiction. A tenant who is not clear on the
contents of any Notice served him should see his/her lawyer.

5:
RIGHT TO A COMPULSORY (7) SEVEN DAYS NOTICE TO RECOVER PREMISES.
 “Seven (7) days
Notice of Owner’s Intention to Recover Premises” is a notice from a landlord’s
lawyer notifying a tenant upon whom a “notice to quit” had been served and same
had expired; that the lawyer will after seven (7) days from the date of the
service of the Notice proceed to court to recover the over- held premises on
behalf of the landlord.

In the light of the Law’s
determination to protect the often humiliated tenants in Nigeria, it went on to
provide that aside the service of a valid “Notice to Quit” on the tenant, the
landlord must go on to serve a “(7) Seven days Notice of Owners Intention to
Recover Premises”. The law would not encourage a scene where surprises are
sprang upon tenants; hence a tenant must at all times be accorded adequate time
to quit possession.

A “(7) Seven days Notice
of Owner’s Intention to Recover Premises” can only be served on a tenant after the
expiration of a valid “Notice to Quit”. Where a seven (7) Days Notice is served
before a “Notice to Quit” or during the life span of a “Notice to Quit”, such
is invalid and goes to no issue. A seven (7) days notice is to be calculated
from the day after the service of the notice on the tenant and not from the day
of service. If the notice is short or less by just a day it is a good ground
for the court to reject the legality of such. Let no one threaten you by
serving a defective Notice on you or a court order that you should vacate
premises without all the above statutory notices. Just speak to you lawyer
first.

6:
RIGHT TO A STATUTORY TENANCY.
 A tenant after the
expiration of a valid “Notice to Quit” on him and he still maintains possession
without the revocation of such notice or paying of rent, he is said to be
holding such against the rights of the landlord. Even at this stage the laws
will still frown at a landlord who goes on to throw out his tenant without
proceeding to court for such an order. The law still allows such a tenant to
maintain possession although no longer as a tenant of the landlord rather as a
tenant of the law (statutory tenant). As a statutory tenant he is not mandated
to pay rent to his landlord although a court can order him to pay up all rent
(mesne) he accumulated within such period after determination of a suit on
such. 

7:
RIGHT TO FAIR HEARING.
 The 1999 Constitution
of the federal Republic of Nigeria (as amended in 2011) in its fullness and
supremacy has provided all persons in Nigeria with some inalienable Fundamental
Human Rights of which one of them is a Right to Fair Hearing. No person
(tenant) can be tried in a competent court without his/her own part of the
matter being heard before judgement is passed. So no tenant can be evicted by
court without hearing from the tenant. Some landlords in their wickedness and
criminality do procure strangers to pose as sued tenant to deceive the court
and procure judgement. If a tenant suspects that his landlord has gone to
deceive the court; let him immediately seek the services of a lawyer.

 8:
RIGHT TO SUE LANDLORD FOR TRESPASS.
A tenant has the right to
sue a landlord who pays deaf ears to the provisions of the law and goes on to
throw out him out. The above detailed procedures are not mere academic
literature rather valid and subsisting procedure for the eviction of tenants in
any part of Nigeria. Once a tenant is in occupation of premises then he has all
rights over the premises and the law will not allow his landlord to trespass
against such.

The court will not
hesitate to slam the hammer on a landlord that throws the laws to the winds.
Let a tenant seek remedy in court by consulting a lawyer. He should equally
complain to the Nigerian Police of such trespass, to investigate such and
prosecute the landlord for criminal trespass. All persons are equal before the
law and a landlord is not in any degree a master or lord unto his tenant; not a
“tenant-lord”. For more on rights and duties of a landlord, click on “RIGHTS OF A LANDLORD”. 
Thank you. 
READ THIS AND OTHER
OF MY SIMPLIFIED LAW ARTICLES BY CLICKING ON THE LINK; www.LearnNigerianLaws.com 

Onyekachi Umah, Esq. ACIArb(Uk)
08037665878
Onyekachi.umah@gmail.com



Ed’s Note – This article
was originally published here


NCC, the Data Price Floor and Competition Law – Stephen Oke

NCC, the Data Price Floor and Competition Law – Stephen Oke

Stephen ‘seun Oke
I am sure most, if not
all, of us received notifications (be it from our telecoms operators, the press
or the grapevine) about a directive of the Nigerian Communications Commission
(“
NCC“) requiring the Telcos to increase their data tariffs to
the level of a newly imposed price floor (the “
Directive”) .
Fortunately, the Nigerian Senate mounted enough pressure on NCC to backtrack.
Most of us (myself inclusive) would agree that the Directive was unwelcome,
given the prevailing economic clime. However, harsh economic climes apart, the
following analysis seeks to:


1.    
Give an insight into the legal framework
forming the basis for NCC to issue such a Directive; and
2.    
Articulate why the Directive was, in my
opinion, flawed from a competition law perspective.

Background
For the purpose of the
Directive, NCC identified two distinct markets for (i) GSM/voice
call services; and (ii) internet data services. The Directive
aimed at imposing a price floor (minimum price) of N0.90k/MB for
data services. According to the NCC, industry average market price for big
operators such as MTN, Etisalat, Airtel and Glo wasN0.53k/MB (with
Glo charging as low as N0.21k/MB),
while the average market price for smaller operators/new entrants was N0.71k/MB. [Smile Communications –
0.84k/MB,
Spectranet –
0.58k/MB and NATCOMS (NTEL) – 0.72k/MB].

The decision to impose a
price floor, according to the NCC, was aimed at promoting alevel playing
field for all operators in the industry, and to encouragesmall operators and new
entrants
For this reason, small operators were exempted from
the new price regime. NCC considered “small operators” to be operators with
less than 7.5% market share, and “new entrants” as operators who have operated
in the data market for less than 3 years.

For the benefit of those
who are less conversant with competition law, I’ll start with a brief primer on
some basic assumptions of competition law that serve as my premises for
evaluating the propriety of the NCC Directive.

Assumptions of
Competition Law
  • Consumer welfare is
    the primary/long-term goal of market regulation and competition law.
  • Indicators/fruits of “consumer
    welfare” include, without limitation: (i) low prices; (ii) improved
    quality of goods/services; (iii) innovation; (iv) choice i.e. ability and
    ease of switching from one supplier to the other.
  • Fair competition” is a market
    condition that breeds consumer welfare.
  • There is fair competition in a free
    market
     i.e. many sellers and buyers, homogenous product/service,
    price determination by forces of demand and supply, free flow of
    information, etc.
  • Although a free market is not
    attainable in “real life”, market regulation should aim to bring the
    market as close as practicable to a free market.
  • As a general rule, the market
    regulator should not regulate or interfere with price in the
    market
    . Ideally (and consistent with a free market), price should be
    determined by market forces.
  • If a market regulator must regulate
    price at all, this
(i)  must be
based on sound economic (cost) analysis in the market;
(ii) can only be
justified if it aims to preserve fair competition.
  • Sellers are in business for (and
    compete) for profit – this is a legitimate goal, and one that incentivizes
    supply/investment and innovation. Accordingly, there cannot be “fair
    competition” if one seller sells below cost, i.e. a price at
    which other sellers cannot make 1 kobo of profit (or sufficient profit to
    replenish supply) even if they were to operate efficiently.
Illustration of
“selling below cost”
 – Take for instance,
there are two different markets for Widgets and Blodgets;
  • X, Y and Z are sellers in the market
    for Widgets. However, X also sells in the market for Blodgets.
  • If the minimum cost of raw materials
    for a Widget is N5, the sellers in
    the market for Widget 
    cannot make any profit unless they sell
    above N5.
  • If X decides to sell at N4, he is not competing fairly
    because Y and Z cannot match that price.
  • Typically:
·        X
would only be able to sell at N4 if
he is offsetting the loss he is making up for theN1
loss he is incurring in Widgets, from the profits he is making in the market
for Blodgets or some other market where he is selling above cost / at a profit
– this is known as “cross-subsidization”, an anti-competitive practice;

·        In
the short-run, consumers will be happy to buy Widgets from X
[because, really,who no like awoof?]

·        However, in
the long run
, Y and Z will be forced out of the Widgets market, leaving
only X who becomes a monopolist.

·        X
can then increase his price for Widgets to N15
because he has no competitor to “steal” his customers. [Beyond this, X may then
try to consolidate his monopolistic lead in the Widgets market by unfair
advantages on competitors in the market for Blodgets].
·        By
this time, it is too late for the market regulator to salvage the Widgets
market.
  • Note that illustration above is
    simplistic; in “real life”, the cost analysis to be carried out by a
    market regulator involves more complex cost variables. Also, “cost”
    includes a fair return on investment.
Back to real life…
Is NCC a
Competition Regulator?
Yes. Like other sector
regulators (e.g. NERC, SEC, DPR etc.), sections 90 of the Nigerian
Communications Act 2003 (“NCA”) gives NCC the exclusive competence to
administer and enforce compliance with competition laws, and to sanction
anticompetitive practices, in the telecoms market. The Competition
Practices Regulations 2007 
(“Competition Regulations”) were made
by the NCC pursuant to its powers under the NCA.

Does NCC have the
Powers to Regulate Price?
Yes. Section 108 gives the
NCC powers to regulate and approve tariff rates. Section 108(4)(d) requires the
NCC to structure tariff rates and set levels to attract investments into the
communications industry.

Must Tariffs Have
any Correlation to “Costs”?
Yes. Specifically, section
108(4)(b) of the NCA provides that tariff rates “shall be cost-oriented and,
in general, cross-subsidies shall be eliminated.” Further,
section 108(4)(b)(c) of the NCA provides that tariff rates shall not contain
discounts that unreasonably prejudice the competitive opportunities of other
providers. Regulation 8(f) of the Competition Regulations also precludes Telcos
from “supplying communication services, at prices below long run
average incremental costs or such other cost standard
, as is adopted by the
Commission”

What is NCC’s
approach to defining Market and Market Share?
In identifying markets
(e.g. market for voice calls as distinct from market for data services), NCC
generally considers the services that make up a specific market, the
geographical scope of the market, and demand-side and supply-side
substitutability.

In determining market
share, NCC considers the revenues, numbers of subscribers or volume of sales.

What anti-competitive
practices is the NCC specifically targeting?
Price abuses such as:
under-pricing (and possibly predatory pricing, and exclusionary/downstream
market abuses such as cross-subsidisation.

How Can a Forced
Price Increase Possibly Benefit the Consumer?
A candidate justification
for the Directive would appear to be based on the following “assumptions”:
  • Big operators are pricing data below
    the cost of supplying data service
     (in the data market) at
    acceptable quality levels;
  • Big operators are sustaining their
    below-cost pricing in the secondary market for data by using profits from
    the primary market voice calls) to offset the losses they may be incurring
    in the secondary market for data (this is known as “cross subsidization”),
    with the “grand scheme” of forcing smaller operators out of the data
    market.
  • Smaller operators are not present in
    the primary market for voice calls, and they are generally new entrants in
    the Telco industry. For this reason, they will be at a disadvantage as
    they have no alternative market from which to cross-subsidize in order to
    match the price offered by Big operators for data.
  • Big operators would therefore not be
    competing “fairly”
  • Although customers would in
    the short run 
    enjoy low prices, in the long run
    customer welfare will be jeopardized because:
            i.    underpricing
will inevitably lead to low quality of service; and
            ii.    Big
operators are likely to increase data price after they succeed
in (i) squeezing out smaller competitors from the data market, and (ii)
creating a price barrier to impede the ingress of “new entrants” to the market.

Why was the
Directive Flawed?
The Directive was flawed
for two major reasons: (i) speculative market regulation; (ii) the seeming
assumption that there cannot be fair competition in the data market without
smaller operators.

Speculative market
regulation
Best practices in market
regulation dictate that price regulation should be a last resort and must be
justified, typically by concrete information on the cost-basis for
pricing
 in the relevant market or evidence of anti-competitive
pricing.
 By the Directive, NCC had attempted to introduce the price
floor “pending the finalisation of the study on the determination of
cost-based pricing for retail broadband and data services in Nigeria.”
 Therefore,
NCC admits that it has not determined what the cost basis is, for pricing in
the data market. In other words, the low prices charged by big players like MTN
and Glo may very well be above costs (like NCC, we do not know), in which event
big operators would be competing fairly.

In the absence of such
information, there can hardly be any justification for interfering with price
competition, more so where this amount to the imposition of higher prices on
consumers. Until such cost-bases are determined, any attempt at price
regulation will be pre-mature and misguided, as it amounts to putting the cart
before the horse.
There can be Fair
Competition without Smaller Players provided there are Capable
Contenders

It would appear from NCC’s
move that, should the prevailing market price be technically above cost
(including a fair return on investment), NCC would still think it necessary to
impose a price floor if it does not consider the above-cost margin for return
“attractive” enough to (i) keep smaller operators in the market; or (ii)
attract new entrants. Such a regulatory disposition would be based on the
flawed assumption that there cannot be fair competition or a healthy level of
consumer welfare if the only operators left to compete in the market
are big operators
.

While it is ideal for
there to be many operators, this state of affairs should not be “forced” on the
market as to do so will risk (i) encouraging inefficiency on the part of
smaller operators; (ii) making the consumers “subsidise” the operating cost of
smaller operators, which will be inimical to the ultimate goal – consumer
welfare.

Nigerian consumers enjoy
low prices for data – this is presumably (although not conclusively) an
indicator of consumer welfare. This state of affairs can be preserved even if
only big operators are left to compete in the market, as long as NCC keeps a
close eye on them to prevent a further concentration of the market (e.g. by a
merger) or any collusive behavior (such as price fixing agreements, agreements
to fix conditions of sale and other cartel behavior). The Big Four (MTN,
Etisalat, Airtel and Glo) are near-equal contenders in terms of market share.
Therefore, unless (i) two or more of them later collude to fix high prices or
(ii) one or more of them leaves the market, there is no reason why consumers
will not continue to enjoy low prices resulting from price competition by the
big contenders.

Conclusion
The NCC took the right
step in suspending the Directive. Its responsiveness should be commended.
Although, NCC, no doubt, has powers to regulate tariffs under the NCA, nothing
less than empirically-determined costs for broadband and data services should
justify any further attempt at price regulation in the data market. In all, the
Directive exemplified the need for a coherent and consistent
competition law/market regulation Policy.

Further, and beyond the
telecoms industry, there is need for objective mechanisms for information
gathering. It is only on the basis of credible information that a market
regulator can rightly discharge its regulatory obligations, especially with
regard to a sensitive aspect such as tariff regulation and determination of
market share.

Stephen ‘seun Oke is an Associate at Banwo &
Ighodalo. 


Ed’s Note – This article was originally published here
Enforcement Of Tax Judgments Outside Nigeria – Osiri Ndukwe

Enforcement Of Tax Judgments Outside Nigeria – Osiri Ndukwe


Introduction
In
this era of increased international trade and foreign direct investment,
enforcement of foreign judgments has become very significant in our legal
system. Investors are more comfortable doing business with foreign
partners knowing that if they obtain a judgment from a superior court in their
home country, it can be enforced against the judgment debtor in another
country.

Fortunately, Nigerian courts recognize judgments from superior courts
of commonwealth countries and countries with which she has bilateral
agreements. This has increased the confidence of foreigners and foreign
companies to do business with Nigerians and Nigerian companies. However, the
current legal regime for the enforcement of foreign judgments especially tax
judgments calls for an urgent review.
Legal Framework
There
is an imprecision on the particular statute that regulates the registration of
foreign judgments in Nigeria. For instance, the Foreign Judgment (Reciprocal Enforcement) Act, Cap.
F35, Laws of the Federation of Nigeria, 2004 (“the Act”)

and the Reciprocal
Enforcement of Judgments Ordinance, CAP 175, Laws of the Federation of Nigeria,
1958 (“the Ordinance)
exist side by side and both
legislations are in conflict with each other with regard to the time
within which to register a foreign judgment. Whereas under the Act, the time
within which to register a foreign judgment is 6 years[1], under the Ordinance, the time is 12 months. The
Supreme Court in this regard has not been very helpful, when it held in the
case ofGrosvenor
Casinos Ltd v. Ghassan Halaoui
[2]that
both the Act and the Ordinance are relevant statutes in the enforcement of
foreign judgments in Nigeria.
Ordinarily
the Act would have been the legislation regulating enforcement of foreign
judgments but the Supreme Court in the case of Macaulay v. R.Z.B of Austria[3] held
that the Minister of Justice had not made an order extending the Act to
judgments of the United Kingdom and other countries with bilateral agreements
with Nigeria pursuant to Sections 3 (1) and 9 (1) of the Act, as such the first
part of Act is inapplicable.
Another
unfavourable provision in both the Act and Ordinance is the provision that
foreign judgments in respect of fine, taxes and penalties cannot be enforced in
Nigeria[4]. This defeats the whole essence of the reciprocity in
enforcement of foreign judgments and may afford a safe haven for tax evaders. 
Cross Border Stance
The
requirement in both the Act and the Ordinance is that foreign judgments in
respect of taxes cannot be enforced in Nigeria. This is against the whole
concept of reciprocal treatment of judgment because it may give a safe haven to
tax evaders. With the increase in tax evasion by foreign businesses and
multinational companies, inability of states and government bodies to recover
judgment in respect of taxes in foreign countries would lead to a great loss of
revenue. The role of fines, taxes and penalties is invaluable in the economic
development of states in the 21st Century[5].
In
recent years, the long-standing principle that the courts of one country will
not enforce the penal and revenue laws of another country has been
significantly eroded. A range of international agreements have increased tax
authorities’ powers to exchange information and give mutual assistance to
collect tax debts. This has resulted in a widening of the tax net beyond
domestic borders. However, these powers must be exercised within the confines
of domestic legislation and the provisions of relevant international treaties.
In each case, it must be determined whether the enforcement action is within
the confines of the law.
As
corporations and individuals find themselves in a global environment and tax
authorities look for ways to proactively recover taxes due outside their
jurisdictional borders, spreading the tax net by involving the powers of
another tax authority is becoming increasingly prevalent and co-operation with
other countries has become a strong area of focus.
For
instance, in the United Kingdom (UK), the general principle of non-cooperation
with foreign jurisdictions in the collection of taxes has been significantly
eroded with the introduction of EU
Directive 2010/24/EU
, which imposes an obligation on the UK to
assist any Member State of the European Union in the recovery of tax[6], together with the joint Council of Europe/Organisation for
Economic Co-operation and Development Convention on Mutual Administrative
Assistance in Tax Matters
. However, the lifespan of this
obligation depends on when the UK invokes the Lisbon
Treaty
[7] to practically leave the European Union.
No
doubt, it will be beneficial to Nigeria to accord other states the opportunity
to recover taxes against evading offenders. This it can do by either amending
the extant legislations in this regard or entering into Multilateral and
Bilateral treaties with other states to assist one another in the recovery of
tax judgments.
Conclusion
In
conclusion, there is a need for the lingering crisis on the law regulating
enforcement of foreign judgment in Nigeria to be settled, especially those
relating to recovery of tax judgments. The legal conditions for the enforcement
of foreign judgment have been interpreted too broadly to adequately protect the
interest of foreign judgment creditors. Therefore, the law and rules should be
amended to reflect modern realities. The Courts should be proactive in breaking
new grounds and developing the jurisprudence on enforcement of foreign judgment
in Nigeria in accordance with the essence of reciprocity of judgments. This
will improve the prospects of Nigeria as a business destination and enhance the
growth of her economy.
___________________________________________________________________
[1] Section 4(1) of the Foreign Judgment (Reciprocal
Enforcement) Act, Cap. F35, Laws of the Federation of Nigeria, 2004
[2] (2009) 10 NWLR (Pt. 1149) p. 309
[3] (2003) 18 NWLR (Pt. 852) p. 282
[4]Section 3(2) (b) of the Foreign Judgment (Reciprocal
Enforcement) Act, Cap. F35, Laws of the Federation of Nigeria, 2004
[5]http://www.ng.pathlegal.com/An-Appraisal-Of-Challenges-Of-Enforcing-Foreign-Judgments-In-Nigeria-blog-707,
accessed on Friday, October 7, 2016
 Osiri Ndukwe is an associate at Stark Legal.
 
Ed”s Post – This article
was originally published here
Suspension of FRCN Code of Corporate Governance: Lessons Learnt – Prince Ikechukwu Nwafuru

Suspension of FRCN Code of Corporate Governance: Lessons Learnt – Prince Ikechukwu Nwafuru


Introduction
The Financial Reporting
Council of Nigeria (FRCN) recently issued the National Code of Corporate
Governance, 2016 (“NCCG”). The three-in-one Code provides for sector-wide Code
of corporate governance for Private and Public Sectors as well as Not-for-profit
Organizations. According to information on the FRCN website, the Code of
Corporate Governance for the Private Sector is mandatory, the Code for the
Not-for-profit entities is comply or justify non-compliance while that of the
public sector will not be applicable immediately until an executive directive
is secured from the Federal Government of Nigeria.


The issuance of the NCCG
particularly the National Code of Corporate Governance, 2016 for private sector
in Nigeria (“the Code”) which was meant to take effect from 17 October 2016,
has raised a lot of concerns amongst Industrial players, stakeholders and
professionals in view of its far-reaching effect on management structures of
private entities coupled with the jurisprudential issue relating to its validity.
The Code has therefore been criticized for its stifling provisions which run
foul of existing corporate legislations and sector-based Codes of Corporate
Governance.
It came therefore, as a
big relief when it was reported that the Federal Government has suspended the
implementation of the polemical Code. As reported in 07 November 2016 issue of
Business Day Newspaper and other major Newspapers, the Minister of Industry,
Trade and Investment, Okechukwu E. Enelamah, (a supervisory Minister for the
FRCN) did not only suspend the Code but has gone further to issue a 3-page
query to the FRCN to provide amongst others, the regulatory approach that
undergirds the Code; explain the clear conflict between provisions of the Code
and the FRCN establishing Legislation – Financial Reporting Council of Nigeria
Act, 2011 and provide evidence of the adoption of the Code by the Board of the
Council and the minutes of the meeting at which the Board adopted the Code. The
crux of this piece is therefore to highlight some of the concerns raised in
respect of the Code vis-à-vis the ease-of-doing business policy of the Federal
Government and the lessons to be derived from the suspension.
Functions
and Powers of FRCN
The FRCN is established
under the FRCN Act, 2011 and saddled with the powers and functions to develop
and enforce accounting and financial reporting standards to be observed in the
preparation of financial statement of public interest entities; review, promote
and enforce compliance with the accounting and financial reporting standards
amongst other powers and functions listed in Sections 7 and 8 of the FRCN Act.
The FRCN’s objectives as stated in section 11 of the FRCN Act include
protecting investors and stakeholders’ interest by enhancing the credibility of
financial reporting and ensuring good corporate governance practices in the
public and private sectors of Nigerian economy. From the foregoing, one will
appreciate the core mandate of the FRCN, which is to regulate and enforce
accounting, auditing, and financial reporting standards in Nigeria and coupled
with the objectives of the FRCN under section 11 of the Act which includes
ensuring good corporate governance practices in the public and private sectors
of the Nigerian economy.
As a corollary to its
afore-referenced functions and powers, the FRCN also places much premium on the
issue of Corporate Governance, and this explains the rationale behind the
establishment of the Directorate/Committee on Corporate Governance in section
49 of the FRCN Act with mandate to issue the code of corporate governance and
guidelines. Perhaps, it is in pursuance of this objective and functions that
the FRCN issued the Code to regulate the private sectors.
Section 2.1 (a) – (c) of
the Code provides that it applies to all public companies (whether listed or
not), all private companies that are holding companies or subsidiaries of
public companies, and regulated private companies as defined in section 40.1.14
of the Code. “Regulated private companies” was defined under the Code as those
private companies that file returns to any regulatory authority other than the
Federal Inland Revenue Service and the Corporate Affairs Commission, except
such companies with not more than eight (8) employees. Instructively, section
40.1.15 of the code defines “regulator” or “regulatory authority” to mean the
Financial Reporting Council of Nigeria and other sectoral regulators as may be
appropriate;
As noted above, the Code
is all-encompassing as it cuts across all private sectors and seeks to unify,
harmonize and supersedes all the existing sectoral corporate governance codes
in Nigeria such as those regulating the Licensed Pension Operators, Banking,
Discount Houses and Insurance sectors.[1]
Some salient provisions of
the Code and the attendant defects and criticisms
Board Structure and
Composition:
The Code recognizes in
section 5.1 thereof that the Board shall be of sufficient size relating to the
scale and complexity of the company’s operations but goes further in section
5.4 to provide that the membership of the Board shall not be less than 8
members. The minimum Board Membership for regulated private companies that are
not holding companies or subsidiaries of public companies is however pegged at
5 members. Not done, the Code[2] provides that not more than two members of the
same or extended family shall sit on the Board of the same company at the same
time and goes further to define an extended family member to mean those persons
who may be reasonably expected to influence, or be influenced by, that person
in his dealing with a company. Even for a student of Company law, it is not
difficult to see the conflict between this Code and the section of the
Companies and Allied Matters Act, Cap C20 LFN 2004 (CAMA) which provides that
every company shall have at least two Directors[3]. Therefore, the 5 or 8
minimum Board membership imposed by the FRCN is clearly ultra vires. What it
means, going by the provision of the Code, is that any affected company with
less than 5 or 8-Board membership as the case may be will be flouting the Code
and will need to appoint additional Director(s) to fill up the shortfall.
Officers
of the Board
The Code reserves the
position of the Board Chairman to non-executive Director thereby excluding the
right of an executive Director to chairmanship of a company Board. While this
provision may accord with the general practice in the private sector which is
often encouraged as it is necessary to balance and checkmate the powers and
excesses of the executive directors who are the actual managers of the company
but again how valid is this provision which makes such a practice mandatory
given the express provision of CAMA on the election of Company Chairman[4].
Interestingly, as stated by the Supreme Court in the case of Longe v. First Bank
of Nigeria (2010) LPELR-1793(SC); (2010) 6 NWLR (Pt. 1189) 1, the statutory
definition of directors under section 244 (1) of the CAMA does not recognize
the nomenclature between executive and non-executive directors. Thus, one would
have preferred having this provision reserving the post of company chairmanship
to non-executive director in a substantive legislation and not in the Code.
Again, the Code runs foul
of the CAMA provision on remuneration of the Directors by providing that the
MD/CEO’s remuneration shall be determined by remuneration committee contrary to
the powers vested on the Members of the company under the CAMA[5] to so
determine.
Board Meeting
The Code mandates the
holding of Board meeting at least once in every quarter and goes further to
require every director to attend at least two-thirds of all Board meetings.
This glaring conflicting provision also stares in the face of the CAMA
provisions on holding of Board Meeting.[6]
On the voting powers of
directors at the Board Meeting, the Code provides that where a majority of
Independent directors do not agree with a decision of the board of directors,
such a decision would only stand if it was supported by at least 75 percent of
the entire board. As noted by one of the commentators, what this provision does
is to elevate the positions of the Independent directors above the majority of
the board of directors giving the impression of a fictional two-tier board
system in which the executive directors are subject to the independent
(non-executive) directors. It is not difficult to see the conflict between this
provision and the provisions of CAMA which provide that the decisions of the
Board of Directors are arrived at by a majority of votes of the Directors and
every Director is entitled to a vote.[7]
Appointment of Directors
and Auditor
While the first directors
of the Company are usually determined by the subscribers to the Memorandum and
Articles of the Company[8], the appointment of subsequent directors or
confirmation of those appointed to fill casual vacancy is however reserved for
the members at the General meeting. The Code in vesting the power of
appointment on the Board subject to ratification by relevant industry regulator
merely provides that certain particulars and information of persons to be
appointed as directors shall be submitted to the shareholders without more
thereby technically taking away the powers of the members in respect of appointment
of directors or ratification of such appointment.
Another infraction of the
CAMA is the Code provision[9] on mode of appointment of auditor which is by a
show of hand in an Annual General Meeting. Section 224 (1) of CAMA expressly
provides that resolution at the General Meeting shall be by show of hands
except where a poll is demanded by the chairman where he is a shareholder or by
at least three members present in person or by proxy, etc.
The above referenced
provisions are not exhaustive of the provisions of the Code that have got
stakeholders and professionals talking not only in terms of their conflict with
existing Corporate legislations but also as they affect other existing sectoral
Codes of Corporate Governance. Reading through the provisions of the Code, one
will not help but wonder whether the makers deliberately set out to amend the
existing laws regulating private corporate entities.
Importance of Code of
Corporate Governance
The importance of Code of
Corporate Governance is recognized all over the world as no organization can
operate effectively without laid down processes, customs, policies, standards
affecting the way a corporation is directed, administered or controlled. The
principles that undergird Corporate Governance culture include integrity and
ethical behavior, disclosure and transparency, equitable treatment of
shareholders and efficient discharge of Board responsibilities and functions
which are necessary for building investors’ confidence. The monumental
corporate disasters witnessed in the collapse of Enron, Worldcom, and Lehman
Brothers are enough pointers to the fact that no matter how big a corporation
is, it can come crumbling like a house of cards if there is lacking in place a
strong corporate governance culture. Expectedly, these big corporations failed
because of poor management, insider abuse, fraud, laxity amongst other
corporate governance infractions. Ironically, prior to their collapse, these
big corporations were putting on the toga of healthy and viable entities and
industrial leaders in their respective sectors. In the case of Enron, it was
reported that the company kept huge debts off its balance sheets leading to the
loss of $74 billion by the shareholders and thousands job lost. And this was a
company which was reportedly named as “America’s Most Innovative Company 6
years in a row prior to the scandal. Same with the Lehman Brothers Scandal of
2008 where management hid over $50 billion in loans disguised as sales, the
company was forced into the largest bankruptcy in U.S. history still because of
the malfeasance of the executives and auditors of the company. Again, in 2007,
just months before it went bankrupt, Lehman Brothers was ranked the number one
Most Admired Securities Firm by Fortune Magazine.
In Nigeria, the situation
is not any better as poor corporate governance practices still rear their ugly
heads in the banking and financial sector even after the Central Bank of
Nigeria (CBN) consolidation exercise. This poor corporate governance culture as
evidenced in poor risk management, insider abuses by management, technical
incompetence, Boardroom wars, false returns and concealment of information from
the regulators and examiners, inadequate financial and audit control and other
corporate infractions, is the bane of corporate failures and contributes to
lack of investors’ confidence in Nigeria business environment. Recently the
Executive Vice Chairman/CEO, Nigerian Communications Commission (NCC), Prof.
Umar Garba Danbata, re-echoed this point when he blamed the failure of
companies on weak or complete absence of corporate governance structures.
Nigeria’s corporate space is not new to Corporate Governance prescriptions, the
challenge has always been implementation and adherence to same. To start with,
CAMA has made extensive provisions on duties of Directors of a company which if
strictly adhered to will go a long way to institutionalize the culture of
corporate governance amongst company Board members in Nigeria. Similarly,
several sector regulators have put in place sectoral Codes of Corporate
Governance as can be seen in CBN Code of Corporate Governance for financial
institutions, and Securities and Exchange Commission (SEC) Code of Best
Practices for Public Companies in Nigeria. It is not necessarily the
multiplication of Codes that will do the magic but ensuring that the managers
of our companies imbibe the values of honesty, integrity, selfless service, and
adherence to the existing Codes of Corporate Governance. Relatedly, the
sectoral regulators equally need to beam their searchlight on corporate
managers and company auditors to ensure that they comply with necessary
regulations put in place to boost strong corporate governance culture.
Lessons learnt
Despite the importance of
corporate governance mechanism as highlighted above, the outcry that followed
the introduction of the Code is enough pointer to the fact that adequate
consultations and research were not done prior to its issuance. The writer has
identified the following as some of the lessons to be learnt from the reported
suspension.
1.          Need for more synergy amongst policy
makers and the Stakeholders: Proper consultation is required prior to crafting
of rules and regulations that regulate business conducts, more so in a highly
complex and sophisticated sector as the Code tends to regulate. Research has
shown any law or regulation that is observed in breach is largely attributed to
the failure of the makers to carry out proper consultation or work in synergy
with the relevant stakeholders prior to the making of such law or regulation.
In this case, the outcry that greeted the issuance of the Code is a clear
evidence of lack of consultation and collaboration between policy makers and
stakeholders of the affected sectors. It behoves the rule makers to do proper
consultations and fly a kite before coming up with such rules.
2.          Over Regulation kills Business: As
noted earlier, it is not the multiplicity of regulations that we need but
adherence to and implementation of the existing ones. As noted by one of the
commentators, the FRCN overreached its powers in Sections 51(c) and 77 of the
FRCN Act by issuing a Code which seeks to cover the entire spectrum of
corporate governance in Nigeria without limiting itself to regulating accounting
and financial reporting standards of companies. One would have expected the
FRCN to focus on its core mandate of regulating the accounting and financial
reporting standards of companies rather than biting more than it can chew.
3.  Conflict with the Ease of Doing Business
Policy of the Federal Government: There is need for harmony in government
policies to avoid conflicting situation as this as it has been rightly argued
that the Code is in conflict with the much-touted Federal Government policy on
Ease of doing business. The Doing Business Report is a survey conducted by the
World Bank, which measures the burden imposed by regulation across 190
different countries in the world and looks at 10 sub-indicators which represent
regulatory processes that a typical business will face over its life cycle such
as starting business, enforcing contracts, getting credit, protecting minority
investors, paying taxes, registering properties, getting construction permits,
getting electricity, trading across borders and resolving insolvency. Nigeria
has performed poorly in this regard and is currently not sitting well on the
Index of Ease of Doing Business such that any policy that makes the operating
environment more stringent will not augur well with Government policy in this
regard. In other words, Nigeria has refused to rise a few rungs on the ratings
and has been fluctuating in the ranking over the years. The country is
currently ranked 169 out of 190 countries in the World Bank Ease of Doing Business
Index for 2017 same position it was in 2016 Ranking. This however, is a
one-point upward movement from Nigeria ranking of 170 in 2016 Report but a
further decline from Nigeria’s ranking of 147 in 2014. It follows that
stringent regulations imposed on business environment as this Code seeks to do,
will not achieve the desired result in the area of Ease of Doing Business but
will further contribute to a difficult operating environment for businesses.
4.  Need for conflict-check and more consultation
with independent legal experts in formulating policy guidelines and
regulations: The inherent conflict highlighted in the Code above is a clear
evidence of lack of necessary due diligence and expert advice and scrutiny on
the part of FRCN. The tendency amongst policy and rule makers in Nigeria is to
rely on internal legal team who most of the times do not have the necessary
legal skills and experiences. It is therefore advisable that policy and rule
makers should engage professionals and external solicitor(s) who will conduct a
proper legal due diligence and cross check their policies and regulations with
existing laws to avoid clear conflict as this. It is a common place in Nigeria
to see regulations, rules and Practice Directions that run contrary to the substantive
laws or even superior rules. This writer had earlier raised these concerns over
what appears to be a trend in Nigeria’s rule making processes where the rule
and regulation makers purport to act in ignorance of the existing laws with the
attendant consequence of making rules or regulations that run contrary to the
substantive or parent legislation or even another superior regulations. For
instance, the Chief Judge of one of the Federal Courts issued a Practice
Directions sometime in 2013 which provisions are clearly in conflict with the
superior Rules of Court and that Practice Directions is currently being
challenged in Court. This trend is equally seen even in most government
parastatals and agencies where regulations are made which are clearly contrary
to the provisions of the parent legislations establishing the Agencies or even
entirely different statutes. The Code is undoubtedly a subsidiary legislation
and is akin to a Practice Direction or Rules of Court often made by Heads of
Courts in Nigeria which under normal circumstances should not contain
provisions that are in conflict with Statutes made by Legislatures. And the law
is fairly settled that where there is a conflict between a subsidiary
legislation and a law made by State or Federal legislature, the latter
prevails. Thus, our policy and regulation makers should be guided by the
admonition of Niki Tobi JSC (as he then was) in the case of Buhari v. INEC
(2009) All FWLR Pt 459 p.419 when His Lordship was confronted with a conflict
situation similar to what is being discussed here and the learned jurist had
this to say on the position of subsidiary legislation and practice directions
in the hierarchy of our jurisprudence:
”Practice Directions have
the force of law in the same way as rules of court. Rules of court include
Practice Directions. Practice Directions will however, not have the force of
law if they are in conflict with the Constitution or the statute which enables
them. See Abubakar v. Yar’ Adua 2008 All FWLR pt404 1409. In the hierarchy of
our jurisprudence, Practice Directions come last in terms of authority in the
area of conflict. If there is a conflict between the Constitution and Practice
Directions, the former will prevail. This is too obvious to be mentioned. If
there is a conflict between an enabling statute and Practice Directions, the
former will also prevail. This is also an obvious one. Perhaps the less obvious
one is where there is a conflict between enabling rules of court and Practice
Directions. In my view, even here, the enabling rules of court will prevail.
This is because in certain cases, rules of court empower the head of court to
make Practice Directions. And so in the event of any conflict, the authority of
the mother who gave birth to the child (putting it on the lighter side) should
be recognized first as the first and foremost authority”.
Similarly, the Supreme
Court in the more recent case of NNPC v. FAMFA Oil (2012) LPELR-7812 (SC) (per
Rhodes-Vivour JSC) has also pronounced on effect of conflict between subsidiary
legislation and the principal Act when the apex Court held that the former must
conform with and not derogate from the latter.
In conclusion, it is hoped
that the Federal Government will do the necessary panel-beating and tinkering
on the Code to align it with the existing laws as the Code cannot amend the
provisions of statute made by the National Assembly notwithstanding the good
intention of the makers. It is even difficult when it is realized that CAMA is
a specific legislation and the Code which has wider application cannot derogate
on specific provision of the CAMA or other sectoral legislation. The principle
has always been that where there is a conflict between a general
provision/legislation and a specific provision/legislation, the latter will
prevail.[10] Perhaps the aftermath of this imbroglio will steer relevant
agencies and institutions of government through the right part in their future
rule making process. If a thing is worth doing, it’s worth doing well.
References
[1] Section 38.3 of the
Code equally recognizes the power of sectoral regulator to issue sectoral
supplementary guidelines on sector specific matters relating to corporate
governance without prejudice to overriding provisions of this Code.
[2] Section 5.12 of the
Code
[3] Section 246 (1) of
CAMA
[4] Section 263(4) and (5)
of CAMA
[5] 267(1) of CAMA.
Section 267(3) also provides that where the Article of the Company has provided
for the remuneration, it shall only be alterable by special resolution of
members.
[6] Section 263(1) of CAMA
provides that Directors may meet for the dispatch of business, adjourn and
regulate their meetings as their deem fit provided that the first meeting of
the directors shall be held not later than 6 months after the incorporation of
the company. Section 263(8) of CAMA also provides for written resolution of
directors which shall be as valid as if it has been passed at a physical
meeting.
[7] Section 263(2) and (9)
of CAMA
[8] Section 247 of CAMA
[9] Sections 19.2.2 and
19.2.3 of the Code
[10] ADEDAYO & ORS. v.
PDP & ORS  (2013) LPELR-20342(SC)



Prince Ikechukwu Nwafuru
Prince is an associate at
Paul Usoro & Co. Since joining the firm, he has worked in various complex
matters with particular focus on Energy and Environment, Maritime, Banking,
Solid Minerals, Election Petitions, white-collar crime and Communications, in
most of which he has worked directly with the Firm’s Senior Partner, Mr. Paul
Usoro SAN.


Ed’s Note – This article was originally published here