All You Need to Know about Company Law in Nigeria
Where there is no law, there is no crime, and where is a law, a violation of the law becomes a crime. As a company owner, you need to understand all there is to know about company law not to fall prey to the law.
Truth is, discussing company law can be a bit overwhelming, but it is worth it as it will help you find your way in the business world. That is why we will start by defining what a company is.
A company can be a body or an entity that acts as an artificial legal person to carry out business or industrial enterprise. It can be formed by one person or a group of persons who are considered legal. If a company is considered a legal entity, there has to be a law guiding it. That law is what is called company law.
Better stated, company law is a body of governing rules that guides the actions and conducts of persons or companies, organizations, or businesses. Also known as corporate law or business law or enterprise law, Company law is the legal practice of law that relates to corporations in governing their rights and relations right from its founding to its administration and control, funding, and the death of the corporation.
Being a branch of law, company law relates to the conservation of autonomy and liberties, governance, and standards for businesses. It also entails how businesses relate with the government and government agencies to maintain order and resolve conflicts both within and without.
This company law varies from country to country. Nigeria has its own set of company rules and regulations, which will be discussed further. Like in every other country, company law plays an important role in the regulation of company operations in Nigeria. This is why you need to understand what company law is all about. Although companies may engage the services of legal personnel or external solicitor, understanding the basics and importance of company law is essential.
The most interesting part about this law is the fact that whether you are a business owner or an employee; company law protects the right of everyone within a corporate organization. Besides the fact that company law provides the solution to a variety of compensation difficulties that a company may have, it also protects and provides for the rights of workers in a company. Hence, both employers and employees need to understand the freedom and benefits that a worker is legally entitled to avoid conflicts. These freedoms and benefits can only be found in company law provisions.
Company law, as it were, is not in isolation. It is a product of the Companies and Allied Matters Act (CAMA). It is upon the provisions of CAMA that company law is built. CAMA remains the main law that governs the establishment of businesses in Nigeria. The Act also regulates the activities of companies and business owners starting from the conception of the business to the birthing and execution. It, however, should be noted that each business has its own body of rules and regulations guiding its operation. The more reason for the body of rules and regulations like company law that will be universal. Thus, company law provides the workers the following rights, among others:
- Right to a good wage
- Right to pension
- Right to be free from discrimination
- Right to having breaks from work
- Right to a fair working environment
- Right to training contracts to advance their skills
By implication, business owners or employers are legally obligated to provide for their employees or workers a conducive working environment that encompasses a healthy and safe atmosphere, provision of safety equipment, as well as remunerations as and at when due.
Both the employee and the employer should be aware of these provisions to avoid facing the wrath of the law as a violation of any of these rights is punishable by the law.
As already stated, company law is not only concerned about the employee. It also has provisions for company owners or directors even though the law seems a little bit hard on company owners. For instance, the law does not allow directors, business owners, or employers to maltreat their workers. Neither does it allow them to live a frivolous life, nor does it allow them to either make choices or operate the company based on their terms or benefits.
However, the law allows business owners to tell their tax rate since the law gives a specification of what percentage of a company’s annual revenue should be paid as tax. In addition, since a lot of paperwork goes into starting a business, every business owner must understand company law as a foundation stone in starting any business.
Moreover, company law protects the rights of a company’s shareholders. Also, it prevents the business owner from making hasty decisions in emergencies that cause injuries against the business owner. As companies now have legal departments to handle legal issues on their behalf, it is also important that the business owner is familiar with the company law.
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Why is this important?
In some cases where the legal person cannot offer practical advice since he is not a part of the business, the business owner can adequately handle the situation by bridging the gap between the law and the structure of the business by experience.
Picture yourself as a business owner who needs to understand the nook and cranny of the corporate world. Don’t you like what you just imagined? Of course, you do, but you will not have safe navigation without understanding the company, as discussed above.
Whether you are a stakeholder, shareholder, or customer, company law applies to you. I am sure you don’t want to wake up one day and find yourself being accused of what you know nothing about. This and many other reasons discussed above are reasons you need to familiarize yourself with the company law. So, I hope it helps!
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Company law is the study of law regulating companies from birth to death. Aside from the CAMA, is there any other statute generally regulating companies in Nigeria?