INTRODUCTION

1.1    BACKGROUND TO THE STUDY

The Nigerian economy has passed through a series of phases in its history from the pre and post-colonial stages of boom, recession and depression at various times over the years to present day. At each of these stages, the various sectors of Nigerian economy have had to contend with whatever situation or stage, the over-all national economy might be at that given point in time. During periods of boom, an economy experiences buoyancy, and citizens have high standard of living and an era of merriment while during recession or depression, the situation changes as most sectors of the economy experience a decline and, the populace, a lowering of the standard of living. What this means, both, for the private and public business sectors of the economy, is adjustment and re-adjustment to match the situation. Business operation and strategies change according to the dictates and tempo of the economy. Both short and long term objectives of business are reappraised and re-designed in accordance with any given situation. The word ‘company’ has been defined by various writers and judicial authorities. However, all make a references to group, economic or business interests. Webster’s Dictionary1 describes a ‘company’ as: a number of people united in an industrial or commercial enterprise, for example a firm of partners. 15

According to Collin’s Dictionary2, a company is a group of people organized to buy or sell or provide service which has been legally incorporated and so is a legal entity from its individual members. A ‘company’ according to Osborn’s Concise Law Dictionary3, means an association of persons formed for the purpose of some business or undertaking carried on in the name of the association, each member having the right of assigning his shares to any other person, subject to the regulation of the company. Companies are either incorporated or unincorporated. An incorporated company is an entity distinct from its members. Companies are incorporated either: (1) by Charter; (2) by Special Act of Parliament; or (3) by registration under one of the public general Acts relating to companies. In the case of Smith v. Anderson4, the learned Judge, Pace James L.J said that ‘company’ is the result of an arrangement by which parties intend to form a partnership which is constantly changing,… and with the intention that so far as the partners can by agreement between themselves bring about such a result, the new partners shall succeed to the assets and liabilities of the old partnership. Davies5 states, that, the term is used for people generally associated for economic purposes, even though not in all cases. It is statutorily defined in section 567(1) of Companies and Allied Matters Act 20046 as ‘company’ or ‘existing company’ means “a company formed and registered under this Act or, as the case may be, formed and registered in Nigeria before and in existence on the commencement of this Act”. A company is a legal entity formed for the purpose of conducting business that is separated from its owners, the shareholders. In Salomon v. Salomon & Co. Ltd, Lord McNaghten, held that the company is at law a different person from the subscribers. Aniagolu JSC, in the case of Trenco (Nig) Limited v. African Real Estate Limited8, states inter alia, that, though a company is a legal entity and has an independent legal personality, it is of course, an artificial person or entity and