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VOL. 7, ISSUE 5 (2021)
Company promoters and pre-incorporation contracts: Delimiting the boundaries of liability under section 96 of the Nigerian companies act 2020
Authors
Babajide S Shoroye
Abstract
Section 96 of the Nigerian Companies Act 2020 provides for pre-incorporation contracts and liability under the contract before and after the company is incorporated. This article critically analyses the statutory provisions and identifies the boundaries and the shifting of liability for pre-incorporation contracts. It finds that the boundaries of liability are unfairly constructed around the company promoters as they are personally liable for pre-incorporation contracts to an extent that reflects the common law position which the provisions of the section were meant to reform; liability does not shift away from the promoter to the company except when the company decides to ratify, and there is no remedy provided under the section by which the promoter can compel, in deserving circumstances, a shift of liability to the company. In order to ensure fair and equal protection for all parties to a pre-incorporation contract in Nigeria, this article suggests amendment to section 96 and offers useful recommendations to allow appropriate shifting of liability from the promoters to the company upon incorporation.
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Pages:179-186
How to cite this article:
Babajide S Shoroye "Company promoters and pre-incorporation contracts: Delimiting the boundaries of liability under section 96 of the Nigerian companies act 2020 ". International Journal of Law, Vol 7, Issue 5, 2021, Pages 179-186
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