Twenty-Five Years after Section 72 of Cama Amendments to Pre-Incorporation Contracts Law in Nigeria.

Abstract

With the recent global economic downturn, International Oil Corporations (IOCs) are increasingly focused on exploring business opportunities in regions with significant projected growth opportunities such as Africa and Asia. Several IOCs have recently flocked to Nigeria, a prominent West African country, with the recent stable political climate, immense population (about 170 million), and projected double digit growth rate, and so the country has quickly become a destination of choice for small and large international companies, alike, seeking to take advantage of the perceived business opportunities therein. Thus, this paper evaluates the current state of common law and statutory amendments governing pre-incorporation contracts in Nigeria within the context of similar rules in the commonwealth countries around the world. It seeks to provide protection to the company, the promoters, the shareholders and the third parties who have entered into pre-incorporation contracts with the promoters prior to the formal incorporation of the company. In making recommendations for amending the current Nigerian statutory law on pre-incorporation contracts, the authors propose rules that must balance the privacy of the company’s contracts while making sure fairness and equity are extended to all stakeholders. Most of the recommendations suggested take into consideration the peculiar economic environment that Nigerian businesses operate within, i.e., where there is paucity of information and where official facts are not almost readily available, hence, the recommendation for a notarized copy of the pre-contract stating its value in the objects and memorandum of association of the company, especially where the value of the pre-incorporation contract is equal or greater than the total value of the allotted shares of the company.