Story Highlights
- The Federal High Court has declared Julius Berger Nigeria PLC as the sole shareholder of Prime Design and Engineering Nigeria Limited following a share transfer from Martin Brack.
- The Corporate Affairs Commission (CAC) contested the ruling, arguing that a private company cannot legally have only one shareholder under CAMA 2020, but the court found the CAC’s interpretation incorrect.
- The court ordered CAC to update its records to reflect Julius Berger as the sole shareholder of Prime Design and Engineering Nigeria Limited.
The Federal High Court sitting in Abuja has declared that Julius Berger Nigeria PLC is entitled to be the sole shareholder of Prime Design and Engineering Nigeria Limited.
Justice Obiora Egwuatu delivered the verdict on Tuesday following a suit filed by Prime Design and Engineering Nigeria Limited and Julius Berger (as first and second plaintiffs).
The Corporate Affairs Commission (CAC) was the sole defendant in the suit.
Facts of the case
The plaintiffs’ legal team asserted that Prime Design’s second shareholder, Martin Brack, transferred all of his shares in the company to Julius Berger.
“Thus, the second plaintiff (Julius Berger) became the only member/shareholder of the first plaintiff.
“The aforementioned share transfer instrument was approved by Prime Design and Engineering Nigeria Limited’s Board of Directors as shown in Exhibit B,” they argued.
A shareholder is a person or company that owns a portion of a company’s profits.
The plaintiffs submitted that following the transfer of shares from Martin Brack to Julius Berger, the first plaintiff notified the CAC of the share transfer transaction.
According to court documents reviewed by Nairametrics, the company’s board had transferred twenty units(N20) of Mr. Brack’s ordinary shares (at N1 each) to Julius Berger in 2022 and ratified the transfer.
The share capital of the company was N10,000,000.00 (Ten Million Naira) divided into 10,000,000 (Ten Million) ordinary shares of N1 each at the time of the share transaction.
The plaintiffs’ lawyer, Kigai Zontong, submitted that the CAC was notified to update its Company Registration Portal (CRP) to reflect the share transfer and the fact that Julius Berger was now the sole shareholder of Prime.
“All attempts by the plaintiffs and their solicitors to persuade the CAC to change its position proved abortive.
“Accordingly, the plaintiffs were constrained to institute this action,” he stated.
However, the CAC legal team denied the facts presented by the plaintiffs.
The CAC argued that Julius Berger and Mr. Martin Brack have been the two shareholders of Prime since its formation, making Prime a two-member company.
It stressed that “under CAMA 2020, two or more shareholders or members in companies like the first plaintiff herein cannot reduce their membership to less than two” because the relevant laws do not provide for such a reduction.
CAC also contended that one of the conditions for compulsory winding up of companies is when membership of a company is reduced below two, and that all companies formed and incorporated in Nigeria with more than one shareholder or member prior to the enactment of Companies and Allied Matters Act (CAMA) 2020 cannot subsequently reduce their shareholding to below two.
What the Judge Said
In delivering his judgment on Tuesday, Justice Egwuatu stated that the sections cited by the CAC in CAMA 2020 do not apply to private companies like Prime but only to public companies and companies limited by guarantee.
The judge held that a private company with one member or shareholder is legally permitted to carry on business in Nigeria.
For public companies, the judge noted that when the membership falls below the legal minimum, its business operation becomes essentially a nullity.
He subsequently held that the CAC cannot validly refuse to approve or accept for filing share transfer instruments pursuant to which Julius Berger became the sole shareholder of the first plaintiff (a private company) provided the provisions for effecting the changes, as stipulated in CAMA 2020, were adhered to by the plaintiffs.
“A consequential order directing the CAC to update its records, including the Companies Registration Portal (CRP), to reflect Julius Berger as the sole shareholder in Prime,” the judge ordered in favour of the Plaintiffs.
What You Should Know
- The Federal High Court has the power to preside over disputes between companies and government agencies.
- It is now up to the CAC to test the verdict of the trial court at the Appeal Court, if necessary.
- As noted on Julius Berger’s website, PrimeTech Design and Engineering Nigeria Ltd is its subsidiary.
- PrimeTech came under Julius Berger with the aim of being the design and engineering partner of choice in Nigeria by securing clients’ success through excellence and value.
- Julius Berger Plc, a building construction firm listed on the Nigerian Exchange Group Plc (NGX), reported a significant gain of 30.58% by the close of weekly trading in March 2024, positioning it as the top gainer for that week.
- Nairametrics reported that the development underscored the demand for the shares of the construction giant, which concluded trading in March with a N27.2 billion increase in market capitalization, bringing its market valuation to N116.16 billion at that time.
