Insider Dealings in Nigeria

This research report documents the findings of an empirical study of judicial findings (of superior courts) relating to the duty to prevent insolvent trading. The duty to prevent insolvent trading is the most controversial of the duties imposed upon company directors.

This project focuses on existing problems, importance of efficient the country risk of Nigeria. In this regard we have identified their culture, people, economy, investment, opportunity, some key problems like Corruption, bureaucracy, piracy, Counterfeit, Criminal activities and fraud, legal safeguards etc. This paper also intends to show the regulatory framework issue, micro economic and macroeconomic issue to give a detailed picture of the Nigerian business Risk.

Equitable principles for directors were developed from fiduciary duties applied to trustees through common law. A director has a fiduciary duty to ensure that no conflict of interest exists between him and the company. This common law principle “the no conflict rule” was established in Keech v Sandford.7 Upholding this, Lord Cranworth LC held in Aberdeen Railway Co v Blaikie Bros,8 “And it is a rule….no one....shall be allowed to enter into engagements in which he has, or can have, a personal interest conflicting, or which possibly may conflict, with the interests of those whom he is bound to protect.” This principle was encompassed in the Companies Act 2006:

There is a conflict of interest involved between the two parties. As mentioned in the Business Corporation Act of Ontario which claims that every director and officer of a corporation within his powers act honestly and in good faith and must vote in best interest of the corporation. Also, the director should exercise the care, diligence and skill that a reasonable person would exercise in this situation.

The removal of a director by the board in the FDC case creates legal and ethical issues, which ultimately led to the onset of commercial issues. Despite the legal, ethical and commercial issues, this case is strongly indicated that there are some problems in the mechanism of removal directors stipulated in the Corporations Act 2001 (Cth) (“Corporations Act”) S 203D and S 203E. This indication is underpinned by some cases in the Australian court in which directors are removed also by the board. Therefore, this paper will analyse the legal, ethical and commercial issues regarding with the removal of FDC’s director, discuss the problem in the procedure of removal directors stipulated in the legislation, and compare other regulations in the common law and civil law countries. Finally, drafts of new mechanism of dismissal directors will be provided in this research to reform Section 203D

As directors of Australian companies, there are certain rights and obligations that are attached to the role. Directors are required to act in good faith, not use their position improperly or exploit information gained from their position to their advantage, which may cause detriment to the company. Any breach of these duties, can result in civil or criminal punishment. Director’s duties exist under common law and legislation. The Corporations Act 2001 imposes a number of duties on directors including the duty of good faith (s 181), the duty to not to improperly use their position (s 183) and the duty not to improperly use information obtained (183). Breach of any of above civil obligations may lead to the a fine of up to $200,000 on the director or even disqualification from

Misuse the company funds: Any directors supposed to use the company funds for its legitimate business purpose under a fiduciary duty. Besides, directors have duty to prevent any mixture of the company and private funds. Ralph in this case used the company’s fund to purchase a diamond ring for his fiancée. There is no defense for Ralph as he obtain the company funds for private use.

“When any employee acts contrary to the interests of the stakeholders, particularly the shareholders, she breaches her duty of loyalty.” For example an employee who goes to the news to expose the company’s leaders for fraudulent acts could harm the company and stakeholders ‘interests

Case law has also shown that in situations where the interest of the company and the creditor coincides, it is legitimate for the director to consider the interests of the creditors first . However, with evidence from the fact that the director involved in the Equiticorp case was able to invoke “best interest of the group” claim 17 years after the case law obliging directors to consider creditors interest first shows that the entity model is still applicable in Australian law . Apparently this leads to very harsh rulings for creditors in these insolvency situations. This means that Equiticorp’s ruling diminishes the only hope of applying and enforcing Walker V Wimborne as a standard to obligate directors to put creditors’ needs

Directors are agents of the company that are selected to act in the best interest of the corporation. The duties of director’s under Australia’s Corporation Law will be discussed. The history, evolution and the future of director’s duties will be observed and discussed as well as the consequences they face if the law is infringed.

S.182 states, “a director must not improperly use their position to gain an advantage for themselves or someone else” (slides). In the case of Adler, the courts found there was a breach of s.182 as he improperly used his position as director to buy shares and gain advantage for himself. Similar to this case, Patricia has improperly used her position in advising her sister to buy shares in FPPL to gain profit. Thus, Patricia has breached s.182 of the corporations act by improper use of her position to gain advantage for her sister.

Andrew, a director as defined by section 9 , was the Chief Financial Officer and also an Executive Director, so he owes legal responsibilities to Century Insurance Ltd under common law, fiduciary duties and statute law. These responsibilities include duties to exercise care, skill and diligence, to act in good faith and for a proper purpose, and to avoid conflicts of interest and disclosure. This essay will determine whether Andrew has breached fiduciary and statute duties when he prepared and signed off on the financial reports. This essay will also discuss possible defences and the potential legal responsibilities for Andrew as well as available remedies for Century Insurance Ltd.

3. Define the terms agency relationship and agency problem, and list the three approaches to minimize the conflict of interest resulting from the agency problem. Whenever one party hires someone else to work for him or her that is an agency relationship. An agency problem is when the manager that is hired by the firm to operate the firm spend company money to improve their own lifestyle instead of earning more profits for shareholders (Cornett, Adair, & Nofsinger, 2014). The first approach is to ignore it, of the amount of money involved is small enough relative to the firm’s cash flow. The second approach is to monitor the manager’s actions. The final approach is to make the manager an owner. Making the manager an equity stake in the firm.

There are instances when a director's goal or interest takes precedence, especially when given a position of power. However, with a proper understanding of beliefs and agendas agreed upon the hierarchy of authority final decisions are made. Since directors stay concerned regarding the profit and resource utilisation, it is quite often that sharing of resource within different departments becomes challenging. 80% of the staff in Turner & Townsend are promoted within business appointing "cronies" to positions of authority, regardless of their qualifications. After the acquisition, Thinc director's survival appears to be equated with the ability to play politics. Therefore, this causes director's to be affected and emphasize to others that they are merger

Financial intermediation is an important activity in the economy because it allows funds to be channeled from people who might otherwise not put them to productive use to people who will ultimately put the funds to productive uses. In line with the assumption that banking sector plays an important role in financing the investment projects, successive governments in Nigeria have carried out reforms and institutional innovations in the banking sector. The overall intention of these reforms has been to ensure financial stability so as to influence the growth of the economy and also enhance banks to play a critical role of financial intermediation in Nigeria. However, despite the fact that Nigerian banks have undergone series of