PAPER SERIES IV(B) – COMPANY’S SECURITIES: DEBENTURE, DEBENTURE TRUST DEED AND REALISATION OF SECURITY

I. Introduction

A company may borrow money for the purpose of its business or objects and may mortgage or charge its undertaking, property and uncalled capital, or any part thereof and issue debentures, debenture stock and other securities whether outright or as security for any debt, liability, or obligation of the company or any third party[1].

As part of its corporate financing strategy, a company may raise capital through debt securities and these could be by mortgage of real property or chattels, debenture, bond[2], promissory notes, and bill of exchange made or accepted on behalf of the company by an authorised person etc.

For purposes of this Paper Series IV(B), emphasis is placed on Company's Debt Securities, particularly on debentures, debenture trust deed and realisation of security.

II. Debentures

A debenture for purpose of the Act is a written acknowledgement of indebtedness by the company, setting out the terms and conditions of the indebtedness and include debenture stock, bonds and any other securities of a company whether constituting a charge on the assets of the company or not.[3] A contract with a company to take up and pay for any debenture of the company maybe enforced by an order for specific performance.[4]

The Act requires that every debenture shall include a statement on the principal amount borrowed; the maximum discount which may be allowed on the issue or reissue of the debenture and the maximum premium at which the debentures may be made redeemable, the rate of and the dates on which interest on the debentures issued shall be paid and the manner in which payment shall be made; the date on which the principal amount shall be repaid or the manner in which redemption shall be effected, whether by the payment of instalments of principal or otherwise; in the case of convertible debentures, the date and term on which the debentures may be converted into shares and the amount which may be credited as paid up on those shares and the date and terms on which the holder may exercise any right to subscribe for shares in respect of the debentures held by them, and the charges securing the debenture and the conditions subject to which the debenture shall take effect.[5]

Statements made in debenture or debenture stock certificates are prima facie evidence of the title to the debentures of the person named therein as the registered holder and of the amount secured thereby. If any person changes his position to his detriment in reliance in good faith on the continued accuracy of any statement made in the debenture or debenture stock certificate, the company shall be estopped in favour of such a person from denying the continued accuracy of such statements and shall compensate such person from any loss suffered by him in reliance thereon, which he would not have suffered had the statement been or continued to be accurate, but nothing in this subsection shall derogate from any right the company may have to be indemnified by any other person.[6]

A. Types of Debentures and Rights and Meeting of Debenture Holders

The Act provides for the following types of debentures -

a) Perpetual Debentures - a company may issue perpetual debentures and a  condition contained in any debenture or in any deed for securing any debentures, shall not be invalid by reason only that the debentures are made irredeemable or redeemable only on the happening of a contingency, however remote or on the expiration of a period, however long, any rule of equity to the contrary notwithstanding.[7]

b) Convertible Debentures - Debenture maybe issued upon the terms that in lieu of redemption or repayment, they may at the option of the holder, or the company be converted into shares in the company upon such terms as may be stated in the debentures.[8]

c) Secured or Unsecured Debentures - Debentures may either be secured by a charge over the company's property or maybe unsecured by any charge. The debenture may be secured by a fixed charge on certain of the company's property or a floating charge over the whole or a specified part of the company's undertaking and assets or by both a fixed charge on certain property and a floating charge.[9]

d) Redeemable Debenture - A company limited by shares may issue debentures which are, or at the option of the company are, liable to be redeemed. The Act also provides that a company has the power to reissue redeemed debenture in certain cases.[10] This is subject to any provision, express or implied, to the contrary is contained in the articles or in any contract entered into by the company; or the company has by passing a resolution to that effect.

Rights of Debenture Holders

The trustee of a debenture trust deed shall hold all contracts, stipulations and undertakings giving to him and all mortgages, charges and securities vested in him in connection with the debentures covered by the deed or some of those debentures, exclusively for the benefit of the debenture holders concerned (except in so far as the deed otherwise provides) and the trustee shall exercise due diligence in respect of the enforcement of those contracts, stipulations, undertakings, mortgages, charges and securities and the fulfilment of his functions generally.[11]

A debenture holder may sue - (a)the company which issued the debenture he holds for payment of any amount payable to him in respect of the debentures; or (b) the trustee of the debenture trust deed covering the debentures he holds for compensation for any breach of the duties which the trustee owes him and in any such action, it shall not be necessary for any other debenture holder of the same class, or if the action is brought against the company, the trustee of the covering trust deed, to be joined as a party.[12] These rights apply notwithstanding anything contained in a debenture or trust deed or other instruments.

A provision in a debenture or trust deed is valid and binding on all the debenture holders of the class concerned in so far as it enables a meeting of the debenture holders by a resolution supported by the votes of the holders of at least three quarters in value of the debentures of that class in respect of which votes are cast on the resolution to -

(a) release any trustee from liability for any breach of his duties to the debenture holders which he has already committed or generally from liability for all such breaches (without necessarily specifying them) upon his ceasing to be a trustee;

(b) consent to the alteration or abrogation of any of the rights, powers or remedies of the debentures holders and the trustee of the debenture trust deed covering their debentures (except the powers and remedies under Section 233; or

(c) consent to the substitution for the debenture of a different class issued by the company or any other company or corporation or the cancellation of the debentures in consideration of the issue to the debenture holder of shares credited as fully paid in the company or any other company.[13]

Meeting of Debenture Holders

The terms of any debenture or trust deed may provide for the convening of general meetings of the debenture holders and for the passing at such meetings of a resolution binding on all the holders of the debentures of the same class.[14]

Whether or not the debenture or trust deed contained such provisions on the meeting of the debenture holders, the Commission may at any time direct a meeting of the debenture holders of any class to be held and conducted in such manner as the Commission deems fit to consider ancillary or consequential direction as it shall deem fit.[15] Section 202(3) of the Act states that notwithstanding anything contained in a debenture trust deed, or in any debenture, contract or instrument, the trustee of a debenture deed shall, on the requisition of persons holding, at the date of the deposit of the acquisition debenture covered by the trust deed, which carries at least one-tenth of the total voting rights attached to all the issued and outstanding debentures of that class, proceed to convene a meeting of that class of debenture holders.

B. Floating and Fixed Charges[16]

A floating charge means an equitable charge over the whole or specified part of the company's undertakings and assets, including cash and uncalled capital of the company both present and future, importantly the charge shall not preclude the company from dealing with such assets until - the security becomes enforceable and the holder thereof, pursuant to a power in that behalf in the debenture or the deed securing the same, appoint a receiver or manager or enters into possession of such assets; or the Court appoints a receiver or manager of such assets on the application of the holder, or the company goes into liquidation.[17]

On the happening of any of the events mentioned in subsection (1), Section 203(2) of the Act states that the charge shall be deemed to crystallise and become a fixed equitable charge on such of the company's assets as are subject to the charge, and if a receiver or manager is withdrawn with the consent of the charge, or the chargee withdraws from possession before the charge has been fully discharged, the charge shall thereupon be deemed to ease to be fixed charged and again to become a floating charge.

C. Registration of Charges Created by Companies

Pursuant to Section 222(2) of the Act, the following charges created by a company are required under the Act to be registered -

(a) charge for purpose of securing any issue of debentures;

(b) charge on the uncalled share capital of the company;

(c) charge created or evidenced by an instrument which if executed by an individual would require registration as a bill of sale

(d) charge on land, wherever or any interest therein, but not including a charge for rent or other periodical sum issuing out of the land

(e) charge on book debts of the company;

(f) floating charge on the undertaking or property of the company,

(g) charge on calls made but not paid;

(h) charge on ship or aircraft or any share in a ship; and

(i) charge on the goodwill or any intellectual property.

Subject to the provision of Part B of the Act, every charge created by a company, being a charge to which Section 222 of the Act applies, shall so far as any security on the company's property or undertaking is conferred be void against the liquidator and any creditor of the company, unless the prescribed particulars of the charge (including any provision in a floating charge that prohibits or restricts the company from granting any further charge ranking in priority to or pari passu with the floating charge) together with the instrument, if any, by which the charge is created or evidenced, have been or are delivered to the Commission for registration in the manner required by this Act or by any enactment repealed by this Act within 90 days after the date of its creation, but without prejudice to any contract or obligation for repayment of the money thereby secured, and when a charge becomes void under this section, the money thereby secured shall immediately become payable and registration under Section 222 shall give rise to constructive notice of the matters stated in the particulars of charge.

There are also provisions on the registration of a charge affecting property situated in Nigeria.[18] Further, the Act requires a charge created out of Nigeria, affecting, or relating to property situate outside Nigeria can be registered with the commission.[19] Section 222 (6) of the Act also recognise that a charge created in Nigeria but affecting or relating to property outside Nigeria, the instrument creating or purporting to create the charge may be sent for registration.

It should be noted that where a negotiable instrument has been given to secure the payment of any book debts of a company, the deposit of the instrument for the purpose of securing an advance to the company shall not, under this section, be treated as a charge on those book debts.[20] The holding of debenture entitling the holder to a charge on land is not for the purpose of Section 222 be deemed to be an interest in land.[21]

In the case of a syndicate loan transaction or any transaction where a series of debenture containing or giving by reference to any other instrument, any charge to the benefit of which the debenture holders of that series are entitled pari passu is created by a company, it is, for the purpose of this section sufficient if there are delivered to or received by the Commission within 90 days, after the execution of the deed containing the charge or, if there is no such deed, after the execution of any debenture of the series, the following particulars

    (a)   the total amount secured by the whole series;

    (b)   the dates of the resolutions authorising the issues of the series and the date                 of the covering deed, if any, by which the security is created or defined;

     (c)   a general description of the property charged; and

     (d)  the name of the trustees, if any, for the debenture holders, together with the              deed containing the charge, or if there is no such deed, one of the debentures               of the series;

Provided that where more than one issue is made of debentures in the series, there shall be sent to the Commission, for entry in the register, particulars of the date and amount of each issue, but an omission to do this does not affect the validity of the debentures issued.

D. Priority of Fixed and Floating Charge

A fixed charge on any property shall have priority over a floating charge affecting that property unless the terms on which the floating charge was granted prohibits the company from any later charge having priority over the floating charge and the person in whose favour such later charge was granted had notice of that prohibition at the time when the charge was granted to him. Provided that a person is deemed to have notice of such prohibition in a floating charge where a notice indicating the existence of such prohibition is registered with the Commission.[22]

On the powers of the court to appoint receiver or manager, Section 205 of the Act provides that whenever a fixed or floating charge has become enforceable, the Court may appoint a receiver and in the case of a floating charge, a receiver and manager of the assets subject to the charge.[23] In the case of a floating charge, the Court may, notwithstanding that the charge has not become enforceable, appoint a receiver or manager if it is satisfied that the security of the debenture holder is in jeopardy, and the security of the debenture holder shall be deemed to be in jeopardy if the Court is satisfied that events have occurred or are about to occur which render it unreasonable in the interest of the debenture holder that the company should retain the power to dispose of its assets. A receiver or manager shall not be appointed as a means of enforcing debenture not secured by any charge.[24]

On preferential payment to debenture holders in certain cases, where a receiver is appointed on behalf of the holders of any debenture of a registered company secured by a floating charge or possession is taken by, or on behalf of those debenture holders of any property comprising of the subject to the charge, then if the company is not at the time in the course of being wound up, the debts which in every winding-up are under the provisions relating to preferential payment in section 657 to be paid in priority to other debts, shall be paid out of any assets coming to the hands of the receiver or other person taking possession in priority to any claim for principal or interest in respect of the debentures.[25]

Section 207 (2) of the Act provides that in the application of the provisions relating to preferential payments - (a) section 657 shall be construed as if the provision for payment of accrued holiday remuneration becoming payable on the termination of employment before or by the effect of the winding-up order or resolution, were a provision for payment of such remuneration becoming payable on the termination of employment before or by the effect of the appointment of the receiver or possession being taken; and (b) the period of time mentioned is reckoned from the date of the appointment of the receiver or of possession being taken, as the case may be, and if such date occurred before the commencement of this Act, the provisions relating to preferential payment which would have applied but for this Act, shall be deemed to remain in full force.

Any payment made under this section shall be recouped as far as may be out of the assets of the company available for payment of general creditors. Notwithstanding, any provision in this Act or any other law to the contrary, the holder of a fixed charge shall have priority over the other debts of the company including preferential debts.

III. Debenture Trust Deed

A. Content and Execution of Debenture Trust Deed

Every debenture trust deed, whether required by the Act or not, shall state -

(a) the maximum sum which the company may raise by issuing debentures of the same class.

(b) the maximum sum discount which may be allowed on the issue or re-issue of the debentures and the maximum premium at which the debentures may be made redeemable;

(c) the nature of any asset over which a mortgage, charge or security is created by the trust deed in favour of the trustee for the benefit of the debenture holder equally, and except where such a charge is a floating charge, the identity of the assets subject to it.

(d) the nature of any asset over which a mortgage, charge or security has been or will be created in favour of the trustee for the benefit of the debenture holders equally and except where such a charge is a floating charge, the identity of the assets subject to it.

(e) whether the company has created or will create any mortgage, charge, or security for the benefit of some, but not all, of the holders of debentures issued under the trust deed.

(f) any prohibition or restriction on the power of the company to issue debentures or create mortgages, charges, or any security on any of its assets ranking in priority to or equally with the debentures issued under the trust deed.

(g) whether the company has the power to acquire debentures issued under the trust deed before the date of their redemption and to re-issue the debentures.

(h) the rate of and the dates on which, interest on the debentures issued under the trust deed shall be paid and the manner in which payment may be made.

(i) the date or dates on which the principal or the debentures issued under the trust deed shall be repaid or redeemed and unless the whole principal is to be repaid to all the debenture holders at the same time, the manner in which redemption is affected, whether by the payment of equal instalments of principal in respect of each debenture or by the selection of debentures for redemption by the company or by drawing ballot or otherwise.[26]

Section 209 (1) (j) of the Act further provides that in the case of convertible debentures, the dates, and terms on which the debenture may be converted into shares and the amounts, which may be credited as paid up on those shares in the right of the debentures held by them.

(k) the circumstances in which the debenture holders are entitled to realise any mortgage, charge or security vested in the trustee or any other person for their benefit (other than the circumstance in which they are entitled to do so by the Act);

(l) the power of the company and the trustee to call a meeting of the debenture holders and the rights of debentures holders to require the company or trustee to call such meetings.

(m) whether the right of debenture holders may be altered or abrogated and if so, the conditions which shall be fulfilled and the procedure which shall be followed to effect such an alteration or abrogation.

(n) the amount or rate of remuneration to be paid to the trustee and the period for which it is paid and whether it is paid in priority to the principal, interest, and costs in respect of debentures issued under the trust deed; and

(o) provisions for the replacement of the trustee if required.

If the debentures are issued without a covering debenture trust deed being executed, the statements required by subsection (1) of Section 209 of the Act shall be included in each debenture or in a note forming part of the same document or endorsed thereon and in applying that subsection reference to the debenture trust deed shall be construed as references to all or any of the debentures of the same class.[27] This provision will not apply if the debenture is the only debenture of the class to which it belongs which has been or may be issued, and the rights of the debenture holder may not be altered or abrogated without his consent.[28] Any director who issues a debenture in violation of the provisions of the section is liable to such fines as the Commission shall specify in the regulation.[29]

Execution of Debenture Trust Deed

Every company which offers debentures to the public for subscript or purchase shall before issuing any of the debentures, execute a debenture trust deed in respect of them and procure the execution of the deed by the trustee for the debenture holders appointed by the deed.[30] No debenture trust deed shall cover more than one class of debentures, whether or not the trust deed is required by this section to be executed.[31]

Where a trust deed is required to be executed by this section but has not been executed, the Court, on the application of a debenture holder concerned may - (a) order the company to execute a trust deed; (b) direct that a person nominated by the Court to be appointed as a trustee; and (c) give such consequential direction as it deems fit, as to the contents of the trust deed and its execution by the trustee.[32]

For the purpose of the Act, debenture shall belong to different classes if different rights attached to them in respect of the rate or dates for payment of interest; the date when or the instalments by which, the principal of the debenture shall be repaid, unless the difference is solely that the class of debentures shall be repaid during a stated period of time and particular debentures may be repaid at different dates during that period according to the selection made by the company or by drawings, ballot or otherwise; any right to subscribe for or covert the debenture into shares in, or other debentures of the company or any other company or the powers of the debenture holder to realise any security.[33]

A debenture is covered by a trust deed if the holder of the debenture is entitled to participate in any money payable by the company under the deed, or the benefit of any mortgage, charge or security created by the deed, whether alone or together with other persons. If a company issues a debenture in circumstances in which Section 208 of the Act require a debenture trust deed to be executed, without such a deed having been executed in compliance with this section, or if the company issues debentures under a trust deed which covers two or more classes of debentures the directors of the company who are in default commit an offence and are liable jointly on conviction to such fine as the court deems fit and in addition, the directors of the company shall be jointly severally liable to such fines as the Commission shall specify in the regulation.[34]

B. Contents of Debenture Covered by Trust Deed

Every debenture covered by a debenture trust deed shall state either in the body or in a note forming part of the same document or endorsed therein - the matter required to be stated in a debenture trust deed by section 209 (1) (a), (b), (f), (h), (i), (j), (l) and (m); whether the trustee of the covering debenture trust deed holds the mortgages, charges and securities vested in him by the trust deed in trust for the debenture holder equally, or in trust for some only of the debenture holders, and if so, which debenture holders; and whether the debenture is secured by a floating charge vested in the trustee of the covering debenture trust deed or in the debenture holders.[35]

A debenture issued by a company shall state on its face in legible print, that it is unsecured if no mortgage, charge, or security is vested in the holder of the debenture or in any person for his benefit as security for payment of principal or interest.[36]

Any director of a company who issues a debenture in violation of the provisions of subsections (1) and (2) is liable to such fines as the Commission shall specify in the regulation.

C. Trustees for Debenture Holders

Whether or not a debenture is secured by a charge over the company's property, there may be created in relation to such debenture, a trust deed appointing trustees for the debenture holders.[37]

It is the duty of such trustee to safeguard the rights of the debenture holders and, on behalf of and for the benefit of the debenture holders, exercise the rights, power and discretions conferred upon him by the trust deed. Charges securing the debenture may be created in favour of the debenture holder by vesting them in the trustees.[38] Any provision contained in a trust deed or in any contract with the holder of debentures secured by a trust deed is void if it would have the effect of exempting a trustee from or indemnifying him against liability for any breach of trust or failure to show the degree of care and diligence required of him as trustee having regards to the powers, authorities or discretions conferred on him by the trust deed.[39]

In Section 211 (4) of the Act, nothing is deemed to invalidate any release otherwise validly given in respect of anything done or omitted to be done by the trustee on the agreement to such release of a majority of at least three quarters in value of the debenture holders present in person, or where proxies are permitted, by proxy at a meeting summoned for the purpose.

Notwithstanding any provision contained in the debenture or trust deed, the Court may on the application of any debenture holder or of the Commission, remove any trustee and appoint another in his place, if satisfied that such trustee has interests which conflicts or may conflict with those of the debenture holders or that for any reason it is undesirable that such trustee should continue to act. Provided that where any such application is made by a debenture holder, the Court if it deems fit, may order the applicant to give security for the payment of the costs of the trustee and may direct that the application be heard in chambers.[40]

Disqualification for appointment as Trustee of Debenture Trust Deed

A person is not qualified for appointment as a trustee of a debenture trust deed if he is.

(a) an officer or employee of the company which issues debentures covered by the trust deed or of a company in the same group of companies as the company issuing debentures.

(b) less than 18 years of age;

(c) of unsound mind and has been so found by a court in Nigeria or elsewhere;

(d) an undischarged bankrupt; or

(e) disqualified under section 283 from being appointed as a director of a company, but a corporation shall not be disqualified from being appointed as a trustee.[41]

If a trustee becomes subject to any of the disqualifications mentioned above after he has been appointed, he shall immediately cease to be qualified to act as a trustee of the debenture trust deed. Any person who acts as a trustee of a debenture trust deed whose appointment is invalid under subsection (1) or who is disqualified from acting under subsection (2), commits an offence and is liable on conviction as the Court deems fit, or to such fines as the Commission shall specify in the regulation.[42]

Liability of Trustee for Debenture Holders

Subject to the provision of Section 213 of the Act, anything contained in a trust deed for securing any issue of debentures, or in any contract with the holders of debentures secured by a trust deed, is void if it would have the effect of exempting a trustee from or indemnifying him against liability for breach of trust, where he fails to show the degree of care and diligence required of him as trustee, having regard to the provisions of the trust deed conferring on him any power, authorities or discretion.

It is important to note that Section 213(1) of the Act, does not invalidate - (a) any release validly given in respect of anything done or omitted to be done by a trustee before the giving of the release; or (b) a provision enabling such a release to be given (i) on the agreement of a majority of not less than three quarters in value of the debenture holders present and voting in person or where proxies are permitted by proxy at a meeting summoned for that purpose, and (ii) either with respect to specific acts or omissions or on the trustee dying or ceasing to act.[43]

Section 213(1) of the Act does not operate to invalidate any provision in effect at the commencement of this Act in any such trust deed or contract, provided that any person entitled to the benefit of that provision, or afterwards given the benefit thereof under subsection (4) of Section 213 remains a trustee of the trust deed in question; or deprive any person of any exemption or right to be indemnified in respect of anything done or omitted to be done by him, while any such provision was in effect. While any trustee of a trust deed remains entitled to the benefit of a provision exempted by subsection (3), the benefit of that provision may be given - (a) to all trustee of the deed, present and future; or (b) to any named trustee or proposed trustee, by a resolution passed by a majority of at least three-quarters in value of the debenture holder present in person or, where proxies are permitted by proxy at a meeting summoned for that purpose in accordance with the provisions of the trust deed or, if the trust deed makes no provision for summoning meetings, a meeting summoned for that purpose in any manner approved by the Court.[44]

Restrictions on Transferability of Debentures

Except as expressly provided in terms of any debenture, debentures shall be transferable without restriction by a written transfer in any usual or common form, or any other form which the directors of the company may approve, and that the transferee is entitled to the debenture and to the money secured thereby without regard to any equity, set-off or cross-claim between the company and the original, or any intermediate holder.[45]

The terms of any debenture may impose restrictions of any nature on the transferability of debentures, including power for the company to refuse to register any transfer and provisions for compulsory acquisition or rights of first refusal in favour of other debenture holders, or member or officer of the company. Provided that if any restriction is imposed on the right to transfer any debenture, a notice of the restriction shall be endorsed on the face of the debenture or debenture stock certificate and in the absence of such endorsement, the restriction shall be ineffective as regards any transferee for value, whether or not he has notice of the restriction.[46]

IV. The Realisation of Security and Remedies available to Debenture Holders

Section 232 (1) of the Act states that a debenture holder is entitled to realise any security vested in him or in any other person for his benefit if - (a) the company fails to pay any instalment of interest, or the whole, part of the principal or any premium, owing under the debenture or the debenture trust deed covering the debenture, within one month after it becomes due; (b) the company fails to fulfil any of the obligation imposed on it by the debenture or the debenture trust deed; (c) the circumstance occur whereby the terms of the debentures or debenture trust deed entitled the holder of the debenture to realise his security; or (d) the company is wound up.

A debenture holder whose debenture is secured by a floating charge vested in him or the trustee of the covering debenture trust deed, or any other person is additionally entitled to realise his security if (a) any creditor of the company issues a process of execution against any of its assets or commences proceedings for winding-up of the company by order of any court of competent jurisdiction; the company ceases to pay its debts as they fall due; or the company ceases to carry on business; the company suffers after the issue of debentures of the class concerned, losses or diminution in the value of its assets which in the aggregate amount to more than one half of the total amount owing in respect of debentures of the class held by the debenture holder who seeks to enforce his security and debentures whose holder ranks before him for payment of principal or interest; or the circumstances occur which entitle a debenture holder who ranks for payment of principal or interest in priority to the debenture secured by the floating charges to realise his security. [47]

Remedies Available to Debenture Holders

At any time after a debenture holder or a class of debenture holders, becomes entitled to realise his or their security, a receiver of any asset subject to a mortgage, charge, or security in favour of the class of debenture holders or the trustee of the covering trust deed, or any other person may be appointed by -

(a) that trustee;

(b) the holders of debentures of the same class containing the power to appoint;

(c) debenture holders having more than one half of the total amount owing in respect of all the debenture of the same class; or

(d) the court on the application of the trustee.[48]

Subject to any condition imposed in the debenture or debenture trust deed, a debenture holder, or a trustee in the case of a trust deed, may

(a) bring an action in representative capacity against the company for payment and enforcement of the security; or

(b) realise his security by (i) bringing a foreclosure action, or (ii) commencing a winding-up proceeding.[49]

A receiver appointed under this section has, subject to the order made by the court, the power to take possession of assets subject to the mortgage, charge or security and sell those assets and, if the mortgage, charge or security extends to such property collect debts owed to the property enforce claims vested in the company, compromise, settle and enter into arrangements in respect of claims by or against the company, on the company's business with a view of selling it on the most favourable terms, grant or accept leases of land and licences in respect of patents, designs copyright or trademarks and recover any instalment unpaid on the company's issued shares. Where a representative action is being brought under subsection (2)(a), the approval of the court shall be obtained where the company is being wound up.[50]

The remedies given by Section 233 of the Act are in addition to, and not in substitution for, any other powers and remedies conferred on the trustee of the debenture trust deed or on the debenture holders, by the debentures or debenture trust deed, and any power or remedy which is expressed in any instrument to be exercisable if the debenture holder becomes entitled to realise their security, is exercisable on the occurrence of any of the events specified under section 232(1) of the Act or in the case of a floating charge in section 203 of this Act, but a manager of the business or of any of the assets of the company may not be appointed for the benefit of debenture holders unless a receiver has also been appointed and has not ceased to act.[51]

No provision in any instrument which purports to exclude or restrict the remedies given by this section is valid. It is important to state that the provisions of sections 171, 172, 175, 177, 180 and 181 of the Act relating to share certificates and transfer of shares shall apply in respect of shares as if "debentures" were substituted for "shares" and "debenture holders" for "shareholders".

V. Conclusion

The provisions of the Act on debenture, debenture trust deed and realisation of security are not so different from the earlier existing regime under the repealed Companies and Allied Matters Act, 1990. The innovative provisions of the Act on shares and shares transfer also apply to debenture transactions. This development gives predictability and certainty to parties of already concluded transactions or yet to be concluded transactions governed by the Act.

Author: Ikemefuna Stephen Nwoye, LL.B (ESUST)2010, B.L(NLS, Lagos) 2011, LL.M in International Business Regulation, Litigation and Arbitration (NYU, New York) 2014. A Barrister and Solicitor of the Supreme Court of Nigeria with expertise in the areas of banking & finance, capital markets, mergers and acquisitions, and dispute resolution. This paper should not in any way serve as a substitute for legal advice or opinion. The views expressed are personal to the author and do not necessarily reflect the views of any organisation or person that the author is or might have been affiliated to.

[1] Section 191 of the Act.

[2] There are specific provisions for the issuance of bonds by sovereigns and sovereign owned entities such as the Federal, State and Local Governments and their agencies See Part XV of the Investment and Securities Act, 2007.

[3] Section 868 of the Act. See also Folorunsho v. Rosula (Nig) Ltd & Anor(2019) LPELR -47339 (CA) Pp. 16-26, paras. F-A

[4] Section 195 of the Act.

[5] Section 193 of the Act.

[6] Section 194 of the Act.

[7] Section 196 of the Act.

[8] Section 197 of the Act.

[9] Section 198 (1) and (2) of the Act.

[10] Section 200 of the Act.

[11] Section 201 of the Act.

[12] Section 201 (2) of the Act.

[13] Section 201 (3) of the Act.

[14] Section 202 (1) of the Act.

[15] Section 202 (2) of the Act.

[16] Section 215 - 231 of the Act has provisions as to Company's Register of Charges, Debenture Holders and as to Copies of Instruments creating Charges - These sections are appropriate for Statutory Books.

[17] Section 203 (1) of the Act. See JIA Enterprises (Electrical) Ltd v. British Commonwealth Insurance Ltd (1962) LPELR - 25052 (SC) Pp. 7-8 paras. B-D on the nature of a floating charge.

[18] Section 222 (3) of the Act.

[19] Section 222(5) of the Act.

[20] Section 222(7) of the Act.

[21] Section 222 (8) of the Act.

[22] Section 204 of the Act.

[23] Section 206 of the Act requires that where a receiver or manager is appointed by the Court, advertisement to this effect shall be made by the receiver and manager in the Federal Government Gazette and in two daily newspapers.

[24] Section 205 (2) and (3) of the Act.

[25] Section 207 of the Act.

[26] Section 209 Of the Act.

[27] Section 209 (2) of the Act

[28] Section 209 (3) of the Act.

[29] Section 209 (4) of the Act.

[30] Section 208 (1) of the Act.

[31] Section 208 (2) of the Act.

[32] Section 208 (3) of the Act.

[33] Section 208 (4) of the Act.

[34] Section 208 (6) and (7) of the Act.

[35] Section 210 of the Act.

[36] Section 210 (2) of the Act.

[37] Section 211 (1) of the Act.

[38] Section 211 (2) and (3) of the Act.

[39] Section 211 (4) of the Act.

[40] Section 211 (6) of the Act.

[41] Section 212 (1) of the Act.

[42] Section 212 (3) of the Act.

[43] Section 213 (2) of the Act.

[44] Section 213 (3) and (4) of the Act.

[45] Section 214 (1) of the Act.

[46] Section 214 (2) of the Act.

[47] Section 232 (2) of the Act.

[48] Section 233 (1) of the Act.

[49] Section 233 (1) of the Act.

[50] Section 233 (3) and (4) of the Act.

[51] Section 233 (5) of the Act.