Apparently company directors can absolutely win the founders of a company in a Nigerian court of law if the clause is invoked arbitrarily, as Nigerian courts strictly view deferred payment as a debt delayed, not a debt cancelled. If our company attempts to use a deferred payment clause to permanently withhold or indefinitely delay validly earned compensation, the Chairman and Deputy Chairman are highly likely to secure a judgment against the company.
Under the Companies and Allied Matters Act (CAMA) 2020 and established Nigerian employment law, several critical boundaries dictate how a court will rule on this matter.
Corporate Affairs Commission
⚖️ Why the Company is Vulnerable to Losing in Court
Deferred Remuneration Constitutes a Debt: Under Nigerian company law, once a director’s remuneration is explicitly agreed upon in an appointment letter or the company's Articles of Association, it transforms into a legitimate debt owed by the company. The company can be sued directly for this debt or forced to account for it during insolvency.
Strict Construction of Clauses: Nigerian courts—especially the National Industrial Court of Nigeria (NICN) which handles executive labor disputes—interpret contract terms strictly against the party that drafted them. If the clause lacks specific, unambiguous triggers (such as a precise timeline or concrete cash-flow metrics), the court will rule that the money is due immediately or within a "reasonable time."
Breach of Contract: Invoking a deferral without meeting the precise contractual conditions stipulated in the appointment letters gives the Chairman and Deputy Chairman immediate grounds to sue for a material breach of contract.
Unfair Labour Practices: The NICN frequently penalizes companies that utilize opaque or indefinite payment-stalling mechanisms, viewing them as constructive dismissal or oppressive corporate behavior.
🛠️ The Only Scenarios Where our Company Can Win
Apparently our company will only succeed in defending itself if it can prove the following elements to the court:
Strict Adherence to Triggers: The exact conditions precedent for deferral outlined in the appointment letter (e.g., a specific drop in company net profit or an explicit board resolution timeline) have actively occurred.
Shareholder Approval: The deferred payment structure aligns perfectly with Section 293(1) of CAMA 2020, which mandates that directors' fees and remuneration frameworks must be approved by shareholders at a General Meeting. If the board unilaterally added the clause without general meeting backing, the clause itself might be voided.
Clear Expiration Dates: The clause features a defined, non-ambiguous "payment window" (e.g., "deferred for a maximum of 6 months"), and that timeframe has not yet elapsed.
🛑 Corporate Governance Red Flags
If we are dealing with a public or regulated company, invoking this clause arbitrarily runs afoul of the Nigerian Code of Corporate Governance (NCCG). The Securities and Exchange Commission (SEC) requires clear, transparent disclosures of all executive compensation alterations. Opaque or unapproved deferrals can lead to regulatory sanctions alongside civil litigation.
Based on that specific phrasing, our company is at a very high risk of losing in a Nigerian court of law.
Nigerian courts, particularly the National Industrial Court of Nigeria (NICN), routinely strike down clauses that leave the payment of earned executive remuneration dependent on vague, subjective, or open-ended conditions. Terms like "significant milestone" or "a certain threshold of revenue" are classic examples of legally ambiguous language that courts will interpret in favor of the executives.
⚖️ Why This Specific Phrasing Fails in a Nigerian Court
The Rule of Ambiguity (Contra Proferentem): Under Nigerian contract law, any ambiguous or vague clause is strictly interpreted against the party that drafted it (the company). Because "significant milestone" is not explicitly defined with exact dates, numbers, or metrics, the court will likely rule the clause unenforceable due to uncertainty.
Illusory Conditions: A contract term cannot make a fundamental right—like a director's remuneration under Section 293 of CAMA 2020—dependent on an event that the company can indefinitely delay or manipulate. Courts view an indefinite deferral as an unlawful attempt to avoid a debt entirely.
The "Reasonable Time" Doctrine: Even if a court accepts that a condition exists, Nigerian law dictates that where a contract specifies an event but no specific deadline, the obligation must be fulfilled within a "reasonable time." If the Chairman and Deputy Chairman have worked for months or years without payment, the court will rule that a reasonable time has long passed, regardless of the company's revenue.
Quantum Meruit (Value of Work Done): The Chairman and Deputy Chairman have actively provided leadership and services to the company. The court will not allow a company to enjoy the benefits of executive leadership while hiding behind an indefinite clause to avoid paying for that labor.
💥 How the Executives' Lawyers Will Defeat the Clause
In a Nigerian court, the lawyers representing the Chairman and Deputy Chairman will likely argue the following points to win the case:
Void for Uncertainty: They will argue that there was no "meeting of the minds" (consensus ad idem) because the threshold metrics were never clearly quantified or agreed upon.
Failure of Condition: They will argue that the company is using the vague clause as a bad-faith stalling tactic, effectively turning a "deferred payment" into a "forfeited payment."
Breach of CAMA: They will argue that if these milestones were not explicitly voted on and approved by shareholders in a General Meeting, the restriction on their statutory remuneration is illegal.
🛠️ What our Company Must Prove to Have Any Chance of Winning
To successfully defend this clause in court, our company must be able to produce documentary evidence showing:
The metrics were explicitly defined elsewhere: For example, a signed Board Resolution or an Appendix to the appointment letter that explicitly states: "Significant milestone means securing Series A funding of exactly $5 million USD."
The executives actively prevented the milestone: Evidence that the Chairman or Deputy Chairman directly caused the company to miss the revenue threshold through willful negligence or misconduct.
To help determine if there is any way to safeguard the company, has the company defined these milestones in any secondary documents (like board minutes or emails),
Yes, the Chairman and Deputy Chairman will win the company in a Nigerian court.
Inserting specific numbers like a 7.2 billion share sale or 1 billion Naira in revenue into a deferred payment clause does not change the core legal reality: under Nigerian law, remuneration is a debt that accrues from day to day.
By setting targets that are mathematically or operationally unrealistic within their 3-year tenure, the court will view the clause as a bad-faith "stalling device" or an "illusory condition" designed to make them work for free. The National Industrial Court of Nigeria (NICN) will easily strike it down and order the company to pay the full 36 million Naira (12 million Naira per annum × 3 years) plus sitting fees.
The company will lose in court based on four established principles of Nigerian law:
1. The 1 Billion Naira Revenue Target constitutes an "Unreasonable Stalling Device"
If a company currently making negligible revenue hires top-tier executives and sets a 1 billion Naira revenue target to trigger their pay, a Nigerian judge will look at the intent of the agreement.
Under the Doctrine of Reasonable Time, when a contract condition lacks a strict expiration date, the court reads an implied deadline of what is "fair and reasonable."
Holding executive salaries hostage for 3 years based on a massive, unmet revenue milestone—while actively consuming their daily labor, time, and corporate oversight—is considered an unfair labor practice by the NICN.
2. Share Sale is a "Capital Target," Not an Executive Performance Metric
The "successful sale of 7.2 billion ordinary shares of Midland Cosmos Ltd" is a capital-raising event. In Nigerian company law, a share sale depends entirely on macroeconomic factors, board approvals, and investor appetites—elements the Chairman and Deputy Chairman cannot entirely control on their own.
Nigerian courts rule that an executive’s baseline contract of service cannot be completely dependent on external, speculative investment outcomes unless they were specifically hired strictly as third-party commission-based brokers.
3. Statutory Debt under CAMA 2020 (Section 293)
Under Section 293(1) of the Companies and Allied Matters Act (CAMA) 2020, directors' remuneration accrues from day to day.
Once the 12 million Naira annual fee is approved by shareholders at a General Meeting or integrated into the appointment terms, it legally becomes a debt owed by the company.
A company cannot use an unachieved operational milestone to completely cancel or indefinitely freeze a statutory debt.
4. The Principle of Quantum Meruit (Earned Value)
The Chairman and Deputy Chairman have a 3-year tenure. If they attended board meetings, signed corporate documents, managed governance, and represented Midland Cosmos Ltd, the company has actively enjoyed the benefits of their status.
Even if the company's lawyers try to argue that the 1 billion Naira milestone was never reached, the executives' lawyers will counter-claim under Quantum Meruit (payment for the value of work performed). The NICN routinely awards full compensation under this principle to prevent companies from unjustly enriching themselves through free executive labor.
💡 Corporate Governance Implications
If Midland Cosmos Ltd is a public company or regulated by the Securities and Exchange Commission (SEC), withholding a Chairman’s sitting fees and remuneration for 3 years over unmet targets creates severe governance violations. It signals financial distress or executive oppression, which triggers regulatory audits.
The court will view a 12 million Naira annual remuneration package for a Chairman and Deputy Chairman as standard compensation for their time, not a performance bonus. The company cannot tie basic survival fees and sitting fees to massive capital benchmarks. The court will order immediate payment of the accumulated debt.
To evaluate our final options, have the executives already served out the full 3 years, or is the company attempting to restructure these terms via a new board resolution before their tenure ends
Apparently company is certain to lose this case in a Nigerian court.
Having zero revenue, zero assets, and a long timeline to reach the 1 billion Naira milestone does not legally excuse the company from its financial obligations. In Nigerian jurisprudence, commercial poverty or a lack of funds is never a legal defense for breaching a contract or failing to pay for services rendered.
If the Chairman and Deputy Chairman sue, the National Industrial Court of Nigeria (NICN) will view this setup as an illegal attempt to make high-level executives work entirely for free on a speculative "hope" contract.
Here is the exact legal breakdown of why the court will dismantle the company's defense:
1. Financial Incapacity is Not a Legal Excuse
Nigerian courts have consistently held that a company’s financial distress, lack of revenue, or absence of assets cannot invalidate a legitimate debt. When a company signs an appointment letter promising a 12 million Naira annual remuneration, it assumes the legal risk of finding those funds. The law does not allow a company to say, "We have no money, so our contract with you is paused."
2. Failure of Consideration and Executive Exploitation
A contract requires a mutual exchange of value (consideration).
The Executives' Consideration: They gave the company their time, corporate names, signatures, regulatory compliance, and 3 years of strategic governance.
The Company's Consideration: Payment of 12 million Naira annually plus sitting fees.
By invoking a clause that keeps them at zero pay until an impossible milestone is met, the company breaks the contract by providing zero consideration in return for their active labor. The NICN strictly penalizes this as an unfair labor practice.
3. The Clause Violates CAMA 2020 on "Director as Creditor"
Under Section 293 of the Companies and Allied Matters Act (CAMA) 2020, director remuneration is classified as a debt that accrues daily.
By stating that "without satisfaction of such condition they cannot be paid," your company is trying to turn a fixed salary/debt into a speculative performance bonus.
Legally, sitting fees and baseline annual remunerations are paid for attendance and governance, not for hitting sales targets. Tying a Chairman’s basic existence fees to a 1 billion Naira revenue target is a structural corporate governance violation.
4. The Trap of an "Illusory Contract"
If a contract contains a condition that is entirely within the control of one party or is practically impossible under current realities (an asset-less company trying to sell 7.2 billion shares or make 1 billion Naira), the court declares the condition void for lack of mutuality. The judge will delete that specific deferred payment clause from the dispute and enforce the rest of the contract—meaning the company must pay the full 36 million Naira immediately.
🚨 What Will Happen to the Company and Directors Personally?
If the executives win a judgment against Midland Cosmos Ltd (which they will), they can take the following devastating steps:
Winding-Up Proceedings: Because the company has zero assets and cannot pay a valid court judgment debt, the executives can petition the Federal High Court to liquidate (wind up) the company for insolvency.
Lifting the Corporate Veil: If the executives can prove that the founders or existing shareholders intentionally set up this "zero-asset, zero-revenue" company as a sham to extract free work from them without ever intending to pay, a Nigerian court can lift the corporate veil. This means the court can order the personal assets of the company's founders to be seized to pay the Chairman and Deputy Chairman.
⚖️ The Verdict
The clause is legally indefensible. We cannot hire a Chairman, use their credentials to build a company for 3 years, and then refuse to pay them because the company is still poor. The court will order the company to pay.
To prevent a total lawsuit and potential liquidation, the foundersust open up to offering the executives equity (shares) in the company to permanently replace the cash debt, or have the executives already threatened legal action.
No, terminating the contract now will not avoid the liability. In fact, terminating the contract right now will likely trigger an immediate, devastating lawsuit that our company will lose.
If we issued the appointment letters on May 30, the Chairman and Deputy Chairman have already acquired vested contractual and statutory rights. Under Nigerian law, termination does not erase the debt the company has already accumulated up to this date.
Here is the exact legal reality of what will happen if we issue a termination letter today:
1. We Still Owe for "Time Already Served"
In Nigeria, employment and executive remuneration accrue from day to day. Even if we terminate the contract today, we legally owe the Chairman and Deputy Chairman their prorated remuneration and sitting fees for every single day they have served between May 30 and today. We cannot erase past work by firing them.
2. Immediate Lawsuit for "Wrongful Termination"
If we terminate their appointment specifically to avoid paying them, it constitutes termination in bad faith. Their lawyers will immediately sue Midland Cosmos Ltd at the National Industrial Court of Nigeria (NICN) for:
Breach of Contract: Terminating without following the exact termination notice period specified in their appointment letters.
Full Damages: They will ask the court to award them the entire 12 million Naira per annum for the full 3-year tenure, arguing that the company prematurely ended their contract in bad faith just to escape its financial obligations. The NICN routinely awards massive damages for this.
3. The Deferred Clause Becomes Instantly Payable
The moment we terminate the contract, the relationship ends. The company can no longer argue that the executives should "wait for the 1 billion Naira revenue milestone," because we have stripped them of the opportunity to help the company reach that milestone. Therefore, any deferred fees automatically convert into an immediate, actionable debt that must be paid upon exit.
🛑 What You Must Do Instead of Direct Termination
To protect your zero-revenue company from a liquidating lawsuit, we must negotiate a mutual exit or a contract restructuring immediately. Do not terminate unilaterally. Take these steps instead:
Propose a Mutual Separation Agreement: Draft a document where both parties agree to end the relationship amicably. In this agreement, the executives must explicitly sign away and waive their rights to the 12 million Naira annual fee in exchange for something else (or a token mutual release).
Offer Equity/Shares in Lieu of Cash: Since the company has zero revenue but has 7.2 billion ordinary shares, offer them a specific percentage of shares in Midland Cosmos Ltd as full and final settlement of their accumulated and future remuneration. If they accept, they become co-owners, and the cash debt disappears.
Execute a Formal Variation of Contract: If we want them to stay, we must scrap the illegal deferred clause and replace it with a signed "Addendum" that clearly states: "The executives agree to work entirely on a volunteer/pro-bono basis until X milestone is achieved, explicitly waiving the 12 million Naira annual fee until that time."
To guide our very next step safely, The appointment letter should contain a specific "Termination Clause" (e.g., requires 3 months' notice or payment in lieu of notice), or the executives should express willingness to negotiate an exit.
If the appointment letters were issued on May 30 and the executives have done absolutely zero work, attended no meetings, signed no documents, and the company has not launched, our legal position is significantly stronger.
However, one still cannot just issue a blunt termination letter without risking a lawsuit. Under Nigerian law, an appointment letter creates a binding contract the moment it is signed, regardless of whether operations have commenced.
To escape this liability completely safely, must act based on the exact legal status of their engagement.
⚖️ The Two Paths to Erase Liability Completely
Path 1: Claim "Total Failure of Consideration" (If they refused to work)
If the company asked them to perform duties and they failed or refused to show up, the law is on our side. Under Nigerian contract law, a party cannot demand payment if they provided zero consideration (meaning they did absolutely nothing).
The Strategy: one can legally terminate the contract on the grounds of a fundamental breach of contract
The Defense: If they sue for their 12 million Naira, our defense in court will be: "They performed no services, attended zero meetings, and executed zero governance duties. Remuneration accrues for services rendered; zero service equals zero pay."Path 2: Frustration of Contract (If the launch was delayed outside our control)If the company projects couldn't launch due to regulatory delays, lack of permits, or unexpected economic roadblocks, the contract may be viewed as frustrated. Under Nigerian law, a frustrated contract is brought to an end automatically because unforeseen circumstances made it impossible to execute.The Strategy: one must formally notify them that due to the inability to launch corporate projects, the purpose of the appointment has been frustrated, and the contract is dissolved
⚠️ The Dangerous Catch: "Holding Out" and Readiness to Work
Before we terminate, we must confirm one critical thing: Why did they do no work?Scenario A (Safe): They were lazy, unresponsive, or abandoned the roles. You can terminate safely.Scenario B (Dangerous): They were perfectly ready, willing, and available to work, but the company gave them nothing to do because the projects weren't ready.In Scenario B, Nigerian courts side with the executives. The National Industrial Court of Nigeria (NICN) rules that an executive who holds themselves available to work is legally entitled to their pay, even if the employer fails to provide them with work. The court views their time and exclusivity as the "work" they provided.
🛠️ The 3-Step Action Plan to Exit Without Being Sued
To protect Midland Cosmos Ltd from a 36 million Naira debt claim, follow this strict protocol right now:Check the Effective Date: Did the appointment letters state that their tenure starts on May 30, or did it say “upon the successful launch of the company projects”? If it requires a launch to start, the contract has not even activated yet, and we can cancel it easily.Issue a "Request for Mutual Rescission" First: Do not fire them aggressively. Send a professional letter stating: "As company projects have not commenced and no executive duties have been activated since May 30, the company proposes a mutual termination of the appointment letters effective immediately, with zero financial obligations on either side." If they sign this, our risk is 100% eliminated.If they refuse to sign mutually: Issue a formal termination letter citing the explicit notice period contained in their appointment letters (e.g., 1 month's notice). State clearly in the letter that because no operational or governance duties were triggered or performed from May 30 to date, no remuneration or sitting fees have accrued.
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how much is 36 million naira out of 180 ordinary share in percentage
36 million Naira is 20% of 180 million Naira.
To find the percentage, we assume the total value of the ordinary shares is 180 million Naira, aligning the units for a meaningful calculation.
) to determine the share ratio.
2. Simplify the Expression
Cancel out the common zeros in the numerator and the denominator to simplify the math.
3. Convert to Percentage
Multiply the simplified fraction by 100 to calculate the final percentage value.
✅ Final Result
The calculated portion represents exactly 20% of the total ordinary share capital.
Would you like to calculate the specific dividend payout or voting power associated with this 20% shareholding?
180 billion ordinary shares of Midland Cosmos Ltd not 180m
36 million Naira is 0.02% of 180 billion Naira.
To calculate the percentage accurately, both values must use the exact same unit. Assuming the 180 billion ordinary shares have a nominal or total value of 180 billion Naira, the calculation changes as follows:
1. Set Up the Fraction
Divide the part
by the w. Simplify the Expression
Cancel out six zeros from both the top and the bottom numbers.
Convert to Percentage
Multiply the resulting fraction by 100 to get the percentage value.
This amount represents exactly 0.02% of the total capital.
If the 180 billion shares have a specific nominal value per share (for example, 50 kobo or 1 Naira per share) that changes the total monetary value, please share that nominal value.Perhaps we need help calculating the total value of the company based on this share structure
Apparently we re selling 180billion ordinary shares of Midland Cosmos Ltd at 250 naira per share and we wanted to convert 36 million naira money owed to chairman and deputy Chairman into shares what is the percentage
The 36 million Naira debt converts into 0.00008% of the total 180 billion ordinary shares.
Converting the debt at the specified offer price translates into the following figures:
1. Shares Allocated for the Debt
Divide the total money owed by the price per share to find the exact number of shares the Chairman and Deputy Chairman will receive.
Debt to convert: ₦36,000,000
Price per share: ₦250
Shares issued: 144,000 shares (
)
2. Percentage of Total Company Shares
Divide the 144,000 newly allocated shares by the 180 billion total ordinary shares pool, then multiply by 100.
📊 Share and Value Breakdown
Category Value / Quantity
Total Share Pool 180,000,000,000 shares
Total Value of Share Pool ₦45,000,000,000,000 (₦45 Trillion)
Chairman & Deputy Share Allocation 144,000 shares
Chairman & Deputy Percentage Ownership 0.00008%
Would to split these 144,000 shares between the Chairman and Deputy Chairman based on a specific ratio of the debt owed to each?
