THE P-SQUARE SAGA: WHAT I WOULD DO DIFFERENTLY

 THE P-SQUARE SAGA: WHAT I WOULD DO DIFFERENTLY

AN ANALYSIS OF THE STRUCTURE BEHIND ONE OF NIGERIA'S BIGGEST MUSIC BRANDS AND WHAT AN IDEAL LEGAL AND OPERATIONAL FRAMEWORK COULD LOOK LIKE 

In light of recent events, I have deemed it important to prepare this article to analyse some of the red flags and shortcomings that appear from the publicly reported information surrounding the legal and operational framework associated with the P-Square brand, and to suggest a framework that would create room for the continuous growth and sustainability of the stakeholders and the product.

I am not writing this article to determine who is right or wrong in the ongoing dispute, nor am I relying solely on the account of any one of the parties.

Rather, I am looking at this from the perspective of a corporate and commercial lawyer and asking:

If I were structuring the P-Square brand today, what would I do differently?

And this is where I think the conversation becomes useful for founders generally.

Because sometimes the problem is not that people don't love or trust each other.

The problem is that the business grew, but the structure did not grow with it.

 

1. THE PRE-INCORPORATION PHASE:

According to claims and information that have circulated publicly, there appears to have been a gap in the documentation of the relationship between the people who were building the business and the roles they were expected to play.

A business may start with three people who trust each other completely.

But before incorporating a company, I would advise the proposed founders/promoters to sit down and agree on the fundamental structure of the business. This is where the stakeholders agree on the structure of certain fundamental areas such as ownership, roles and responsibilities, decision-making process, the IP Ownership, payment structure etc in compliance with the Companies and Allied Matters Act 2020

These are matters that should not be left to family relationships or assumptions.

How I would structure it:

I would start with a Founders' Agreement between the principal stakeholders, supported by a Shareholders' Agreement and an agreed capitalisation table.

The Founders' Agreement would address the relationship between the people building the brand, while the Shareholders' Agreement would address their relationship as shareholders of the companies.

This means that the roles and responsibilities of each person should be clearly defined from the beginning, because the fact that you are brothers, friends or have a history of trust or pre-existing relationship does not mean you should operate without documentation.

As a matter of fact, I believe that the closer the relationship, the more important it is to clearly document the business relationship.

2. I WOULD SEPARATE THE FUNCTIONS OF MANAGEMENT COMPANY FROM THAT OF THE RECORD LABEL:

The functions of a management company and a record label can easily become blurred when everything is being run under one informal structure.

But they are not the same thing.

A management company manages the artist and the business side of the artist’s career. This may include negotiating deals, coordinating appearances, endorsements, marketing, branding and other agreed management functions.

A record label, on the other hand, is primarily concerned with the recording, distribution, licensing and commercialisation of music and related rights depending on the arrangement, this may include recording, production, distribution, marketing, licensing of sound recordings.

How I would structure it:

So, if I were structuring the business of the brand, I would clearly separate these functions.

The management company should have its own agreement with P-Square.

The record label should also have its own agreement with P-Square.

Each entity should know exactly what it is responsible for, what it is entitled to and how it gets paid.

This avoids the problem of having one entity performing several functions without clearly defining the legal and commercial relationship attached to each function.

This way, there is no confusion about whether money received by the management company is management income, recording income, royalties and so on.

 

3. THE STRUCTURE OF THE RELATIONSHIP BETWEEN NORTHSIDE ENTERTAINMENT AND ITS STAKEHOLDERS.

Although the original ownership structure of the management company associated with P-Square is subject to dispute based on the various accounts that have emerged, it is reasonable, for purposes of this analysis, to consider the apparent intention of the three parties involved.

If the intention was to establish a management company involving the three brothers, each person should have had clearly defined roles as subscribers, shareholders and/or directors, as applicable.

This becomes particularly important because two of these individuals were also the artists being managed by the company.

That means that the same individuals could potentially occupy multiple capacities within the business.

For example, Peter and Paul could potentially function as:

• shareholders of the company;
• directors, where appointed;
• artists being managed by the company; and
• beneficiaries of revenue generated from their artistic work.

Each of these capacities carries different rights, responsibilities and financial consequences.

As shareholders, they may be entitled to dividends where declared. As directors, they would have the responsibilities imposed on directors under applicable company law and could receive directors' remuneration where properly structured.

As artists, they would be entitled to the remuneration, royalties or other benefits provided for under their agreements with the relevant entity.

This distinction is extremely important because these payments should not simply be treated as one pool of money.

Meanwhile, based on the supervisory and managerial role that the elder brother appears to have played, one could reasonably assume that the intention may have been for him to occupy a managing or supervisory role within the company.

However, the specific role, authority and remuneration of that individual should have been clearly documented rather than being determined primarily by the pre-existing family relationship. 

4.. THE OWNERSHIP AND IP STRUCTURE

The P-Square brand is much bigger than a company name.

This brings us to the P-Square brand, the music catalogue, sound recordings, musical compositions, logos, photographs, videos, social media accounts and other assets that contribute to the value of the brand and thus should not be treated as one big pool of “P-Square assets.”

How I would structure it:

Before the companies are incorporated, I would identify the different assets and agree on who owns each one.

For example:

• Who owns the P-Square trademark?
• Who owns the pre-existing music catalogue?
• Who owns future recordings?
• Who owns the masters?
• Who owns the underlying compositions?
• Who has the right to license the P-Square brand?
• Who can commercially benefit from the catalogue?
• How is the income distributed?

The trademark ownership should then reflect the structure agreed by the relevant stakeholders.

The Trade Marks Act gives the registered proprietor rights in relation to the registered mark and provides for assignment and transmission of registered marks.

For copyright, the Nigerian Copyright Act 2022 also provides for assignment and licensing of copyright, with assignments and exclusive licences required to be in writing.

So, I would not simply say:

“The company owns P-Square.”

I would want to know:

Which company? Which asset? Under what agreement? And who ultimately owns the underlying right?

Where necessary, I would have an IP Assignment Agreement, licences and other appropriate IP documents to clearly establish the chain of ownership and advise on the most suitable system for updating the IP protection.

 

5. P-SQUARE AND NORTHSIDE ENTERTAINMENT

One of the biggest things I would avoid is allowing the management of the group to become dependent on one individual.

If Northsides Entertainment is the management company, then Northside Entertainment should be the entity managing P-Square.

Mr. Jude, if appointed as a director, Managing Director or authorised representative, should act on behalf of the company and within the authority given to him.

He should not personally become the management structure.

The relationship should therefore be:

P-Square → Management Agreement → Northside Entertainment

and not:

P-Square → Jude personally.

This distinction matters because the company is a separate legal person from its shareholders.

Under section 42 of CAMA 2020, an incorporated company has its own legal personality. That means the company should be capable of continuing to operate independently of the individuals occupying particular positions within it.

So, if the Managing Director changes tomorrow, the management agreement should not suddenly disappear.

The system should survive the people.

The Management Agreement should clearly define the services NSE provides, its authority, remuneration, expenses, reporting obligations, termination and how disputes are handled. 

6. THE ARTISTS SHOULD ALSO HAVE ROOM TO GROW INDIVIDUALLY

This is particularly important to me.

A successful musical group does not necessarily mean that the individual members cannot develop individual careers.

In fact, it can be a natural progression.

We have seen this with groups such as Destiny's Child, where Beyoncé and Kelly Rowland pursued solo careers while the group remained an established brand. Beyoncé released Dangerously in Love in 2003, Kelly Rowland released Simply Deep in 2002, and Destiny's Child subsequently released Destiny Fulfilled in 2004.

The point is not that P-Square should copy Destiny's Child.

The point is that a good structure should anticipate the growth of the individuals as well as the growth of the group.

So, as the P-Square brand grows, I would have:

Northside Entertainment → manages P-Square

Peter's individual manager → manages Peter's individual career

Paul's individual manager → manages Paul's individual career

This does not mean separating the group.

It means defining the boundaries.

An endorsement deal for the duo should be treated differently from an endorsement deal for each member.

A P-Square concert should be treated differently from a solo concert by the members of the duo.

A solo album should be treated differently from a P-Square album.

And where there is an overlap, the agreements should tell us exactly what happens.

This should cover the use of the P-Square name, individual names and likenesses, management fees, revenue allocation, intellectual property, approval rights and conflicts of interest.

Peter should be able to have a successful career outside P-Square.

Paul should be able to have a successful career outside P-Square.

And P-Square should still be able to remain P-Square.

The structure should make room for all three.

7. FINANCIAL AND ROYALTY MANAGEMENT

When a business has multiple income streams but no clear system showing where the money comes from, where it goes and who is entitled to what, it becomes very difficult to maintain transparency.

And this is where I would insist on proper financial operations.

How I would structure it:

There should be a proper accounting system for the group with clear records of: income; royalties; expenses; management fees; endorsement income; recording income; applicable taxes; distributions; and payments to the relevant stakeholders.

For the music catalogue, I would maintain a continuously updated catalogue showing the songs, writers, producers, masters, compositions, distributors, licensing arrangements, streaming revenue and royalty history.

The artists and relevant board members should receive periodic reports.

There should also be a proper company data room where these records are securely maintained.

Most importantly, there should be a clear trail showing:

Who earned the money → who collected it → where it went → what was deducted → who was entitled to what → when they were paid?

That is what transparency looks like.

 

THE LESSON

A lesson that can be learnt here is that legal structuring is not about anticipating failure. It is about building a structure strong enough to survive success.

This is because, Businesses grow. Relationships change. People’s interests evolve. And the structure that worked when everyone was building together may not work when the stakes are much higher.

Also, whether we like it or not, we have to admit the fact that sustainable systems feed success too.

The goal is to build something that can survive those changes.

The business should be able to survive the people.

So, don’t wait for a dispute to reveal the gaps in your structure.

Build the structure while the relationship is still great, not when you need that structure to save the business, and possibly the relationship itself.

WRITTEN BY:

COMFORTER B KETEBU (Esq)

Principal., 2C Legal Advisory.

 

Disclaimer: Good businesses are built on good decisions. This piece is for education and perspective, not a substitute for legal advice. Before you make a legal move, seek legal support tailored to your specific situation and business.

Building something you intend to last? Start with the right structure and contact us via our website https://2clegaladvisory.com/