Month: May 2023

THE ROLES AND RESPONSIBILITIES OF SHAREHOLDERS AND DIRECTORS IN A COMPANY: WHAT SETS THEM APART AND WHAT BRINGS THEM TOGETHER

In any company, shareholders and directors are two key groups of stakeholders, each with a unique set of roles and responsibilities. Although there are some similarities between the two, there are also significant differences that distinguish them from one another. Understanding these differences and similarities is essential for effective corporate governance and the long-term success of the company.

SIMILARITIES

Shareholders and directors both have a vested interest in the company’s success. Shareholders invest their money in the company, while directors oversee its management and make strategic decisions that can impact its performance. Moreover, both groups have legal duties and obligations that they must fulfill. Shareholders must act in the best interests of the company, while directors must act with due care and diligence and in good faith to promote the company’s best interests.

DIFFERENCES

The primary difference between shareholders and directors is their level of involvement in the company’s day-to-day operations. Shareholders do not typically participate in the management of the company and do not have the authority to make decisions on its behalf. Instead, they elect the board of directors, approve major decisions such as mergers or acquisitions, and receive dividends based on their share ownership.

In contrast, directors are responsible for managing the company’s operations and making strategic decisions that can significantly impact the company’s success. They oversee the company’s executives, set corporate policy, and make major business decisions such as approving budgets and investment decisions. Furthermore, directors have a legal duty of care and loyalty to the company, which requires them to act in the company’s best interests.

Another significant difference is in their liability. Shareholders are generally not personally liable for the company’s debts or legal obligations. Directors, however, can be held personally liable for breaches of their legal duties or for decisions that harm the company.

EXAMPLES

One example of shareholder involvement is the recent proxy fight at ExxonMobil. Activist investors sought to replace several members of the company’s board of directors with candidates who would prioritize the company’s transition to clean energy. Although the vote was unsuccessful, it demonstrated the power of shareholders to influence the company’s strategic direction.

On the other hand, a recent example of director involvement is the decision by Netflix’s board of directors to increase the company’s content budget by $1 billion in 2021. This decision aimed to maintain the company’s position as a leader in the streaming industry.

CONCLUSION

In conclusion, shareholders and directors are both important for the success of a company, but they play different roles and have distinct responsibilities. Shareholders have a financial stake in the company and elect the board of directors, while directors are responsible for managing the company’s operations and making strategic decisions. By understanding their roles and obligations, shareholders and directors can work together effectively and ensure the long-term viability of the company.

Regville Associates offers end-to-end legal, secretarial, tax and compliance service for companies. Our services aid companies in achieving and sustaining compliance with regulations.

Feel free to contact us.

Tolulope Oguntade 
Regville Associates 
info@regville.com 
08065111667

TRADE SECRET PROTECTION IN NIGERIA: HOW TO KEEP YOUR BUSINESS SECRETS SAFE

Trade secret protection is a critical aspect of intellectual property law for businesses worldwide. A trade secret is any confidential information that provides a business with a competitive advantage, such as customer lists, formulas, designs, and other valuable data. In Nigeria, trade secret protection is not expressly provided for under any specific legislation. However, there are legal avenues available for business owners to protect their trade secrets, such as common law, contract law, and industrial property law.

Here are some steps business owners can take to keep their trade secrets safe:

  1. IDENTIFY AND CLASSIFY TRADE SECRETS

The first step in protecting trade secrets is to identify and classify the information as confidential. This can be done by determining which information is essential to the business’s operations and competitive edge. Once identified, businesses can take measures to limit access to the information and ensure that it is only disclosed on a need-to-know basis.

  1. IMPLEMENT SECURITY MEASURES

Businesses can implement various security measures to protect their trade secrets, such as access controls, password protection, encryption, and physical security measures. These measures can help prevent unauthorized access to confidential information and reduce the risk of theft or misappropriation.

  1. DRAFT NON-DISCLOSURE AGREEMENTS (NDAS)

An NDA is a legal agreement between two or more parties that outlines the confidential information that will be shared and the conditions under which it will be disclosed. By entering into an NDA, businesses can protect their trade secrets from disclosure or unauthorized use by third parties.

  1. CONDUCT EMPLOYEE TRAINING AND AWARENESS PROGRAMS

Businesses can also conduct employee training and awareness programs to educate employees on the importance of trade secret protection and the consequences of violating NDAs. By doing so, businesses can reduce the risk of trade secret misappropriation by employees.

EXAMPLES OF TRADE SECRET MISAPPROPRIATION CASES

Trade secret misappropriation cases have been reported worldwide, with some of the most high-profile cases occurring in the United States. In one case, a former employee of Google was accused of stealing confidential trade secrets related to self-driving car technology and using them to start a competing company. The case was settled out of court, with Google receiving a payout and an agreement that the former employee would not use any of Google’s trade secrets.

In another case, a former employee of DuPont was accused of stealing trade secrets related to Kevlar, a material used in body armor, and selling the information to a competitor. The employee was found guilty of theft of trade secrets, and DuPont was awarded $920 million in damages.

In a third case, a former employee of Coca-Cola was accused of stealing confidential documents related to a new product launch and attempting to sell them to Pepsi. The employee was sentenced to eight years in prison for trade secret theft and wire fraud.

CONCLUSION

Trade secret protection is a vital aspect of business operations worldwide. By taking steps to identify and classify trade secrets, implementing security measures, drafting NDAs, and conducting employee training and awareness programs, businesses can keep their trade secrets safe. It is crucial to consult with legal professionals such as Regville Associates to ensure that your trade secrets are adequately protected.

Feel free to contact us.

Tolulope Oguntade 
Regville Associates 
info@regville.com 
08065111667

HOW TO NAVIGATE THE LATEST TAX REFORMS BY THE FEDERAL INLAND REVENUE SERVICE (FIRS) AND MINIMIZE YOUR NEW BUSINESS’S TAX BURDEN

As a new business owner in Nigeria, it is crucial to stay abreast of the latest tax reforms introduced by the Federal Inland Revenue Service (FIRS) to minimize your tax burden and maintain compliance. The FIRS is responsible for collecting taxes on behalf of the federal government, including corporate income tax, value-added tax (VAT), and other taxes.

To navigate the latest tax reforms introduced by the FIRS, here are some tips that can help you minimize your business’s tax burden:

  1. UNDERSTAND THE VERIFICATION OF TAXPAYER IDENTIFICATION NUMBERS (TINS)

One of the recent reforms introduced by the FIRS is the verification of Taxpayer Identification Numbers (TINs). This process ensures that TINs are correctly registered and linked to the right taxpayers, helping to prevent tax evasion and improve tax compliance. It is essential to ensure that your TIN is verified and up-to-date to avoid penalties and fines.

  1. KNOW YOUR VAT OBLIGATIONS

Another significant change is the increase in the VAT rate from 5% to 7.5%. However, businesses with an annual turnover of less than 25 million naira are exempt from paying VAT. It is crucial to understand your VAT obligations and to ensure that you are compliant with the regulations to avoid penalties and fines.

  1. ENGAGE A PROFESSIONAL TAX CONSULTING FIRM

Navigating these FIRS tax reforms can be challenging for businesses, but engaging the services of a reputable tax firm can help. A professional firm like Regville Associates provides tax advisory and compliance services to businesses in Nigeria. By engaging their services, businesses can stay up-to-date with the latest FIRS tax reforms and ensure that they remain compliant.

Regville Associates can help businesses verify their TINs, file tax returns, and provide advice on VAT compliance. They can also help businesses identify tax incentives and exemptions they may be eligible for, reducing their tax burden.

In conclusion, staying compliant with the latest FIRS tax reforms is critical for businesses in Nigeria. By understanding the verification of TINs, knowing your VAT obligations, and engaging the services of a reputable tax firm like Regville Associates, you can minimize your business’s tax burden and ensure compliance.

Feel free to contact us.

Tolulope Oguntade 
Regville Associates 
info@regville.com 
08065111667

DOES A CAC CERTIFICATE EXPIRE? HERE’S WHAT YOU NEED TO KNOW.

 

As a business owner or entrepreneur in Nigeria, you are likely familiar with the Corporate Affairs Commission (CAC) and the importance of obtaining a CAC certificate for your business. The CAC certificate is a legal document that indicates the registration status of your business and is required for a variety of business transactions, including opening a bank account, registering for taxes, and bidding on government contracts. However, one question that many business owners have is whether a CAC certificate expires.

The short answer is NO, a CAC certificate does not expire. Once your business is registered with the CAC and you obtain a certificate of incorporation, that certificate is valid indefinitely. However, it is important to note that while the certificate itself does not expire, there are some situations in which your business may need to update or renew its registration with the CAC.

For example, if your business changes its name or address, you will need to update your registration with the CAC to reflect those changes. Similarly, if you want to add or remove directors or shareholders from your business, you will need to update your registration with the CAC. Failure to update your registration in a timely manner can result in penalties or fines, so it is important to stay up-to-date with any changes to your business.

Additionally, while the CAC certificate itself does not expire, there are some circumstances in which your business may be struck off the register of companies. This can happen if your business fails to file annual returns with the CAC or if it is found to be in breach of other statutory requirements. If your business is struck off the register, you will need to take steps to restore it, which may involve paying fines and submitting additional paperwork to the CAC.

In summary, while a CAC certificate itself does not expire, it is important to stay up-to-date with any changes to your business and to ensure that you meet all statutory requirements for maintaining your registration with the CAC. By doing so, you can ensure that your business remains in good standing and that you can continue to take advantage of the many benefits that come with having a registered business in Nigeria.

Regville Associates offers end-to-end legal, secretarial, tax and compliance service for companies. Our services aid companies in achieving and sustaining compliance with regulations.

Feel free to contact us.

Tolulope Oguntade 
Regville Associates 
info@regville.com 
08065111667