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CAMA ALLOWS COMPANIES TO RATIFY PRE-INCORPORATION CONTRACT

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Dictum

The intention of the legislature in enacting sections 72(i), 624(i), and 626 of CAMA is quite clear. It is relevant to re-emphasis that the rule of construction of statute is to adhere to the ordinary meaning of the words used according to the intent of the legislature. The provisions of sections 624(1) and 626 make it abundantly clear that existing companies who wish to ratify pre-incorporation contract agreements could do so because the Act (CAMA) applied to them. In section 650(i), the interpretation of words used in part A of CAMA, “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”.

— U. Mohammed, JSC. Societe Favouriser v. Societe Generale (1997) – SC.126/1994

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LEAVE OF COURT BEFORE SUING A COMPANY UNDER LIQUIDATION

Let me quickly state that Section 417 of Companies and Allied Matters Act, 1990 is in all fours with Section 580 of Companies and Allied Matters Act, 2020. Now Section 417 of Companies and Allied Matters Act, 1990 provides:- “…if a winding up order is made or a provisional liquidator is appointed, no action or proceedings shall be proceeded with against the company except by leave of the Court.” The above provision is very clear and unambiguous. It means clearly that if a winding up order is made or a provisional liquidator is appointed, no action or proceedings shall be proceeded with against the company undergoing liquidation. The intendment of the said provision is not to stop an aggrieved party from proceeding against the company which has been issued a winding up order or which a provisional liquidator has been appointed, but that leave of Court must be sought and obtained before commencing the action or proceedings.

— J.I. Okoro, JSC. Universal Properties v. Pinnacle Comm. Bank, NJA, Opia, Heritage, Fatogun (SC.332/2008, Friday, April 08, 2022)

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THE COMPANY CEASES TO HAVE RIGHTS WHEN A RECEIVER IS APPOINTED

The company ceases to have any right to deal with the assets. It’s right thereto is suspended. The Receiver/Manager appointed by the Debenture holder is now regarded as agent of the company for the purposes of dealing with assets in the Receivership.

– Karibi-whyte, JSC. Intercontractors v. National Provident (1988)

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COMPANY’S DIRECTORS MAY DEAL WITH ASSET OUTSIDE RECEIVERSHIP

The Receivership in the instant case which does not necessarily result in the liquidation or winding up of the company, the right to deal with the assets in the receivership are revived at the termination of the receivership. In all cases the right of the directors of the Company to deal with the assets of the company not in receivership or other matters not suspended are not affected by the appointment of a Receiver/Manager over the assets of the Company. The directors of the company do not by virtue of a receivership become functus afficio for all purposes of the company.

– Karibi-whyte, JSC. Intercontractors v. National Provident (1988)

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COMPANY WILL NOT BE USE AS AN INSTRUMENT OF FRAUD

It must be stated unequivocally that this court, as the last court of the land, will not allow a party to use its company as a cover to dupe, cheat and or defraud an innocent citizen who entered into lawful contract with the company, only to be confronted, with the defence of the company’s legal entity as distinct from its directors. Most companies in this country are owned and managed solely by an individual, while registering the members of his family as the share holders. Such companies are nothing more than one-man-business; hence, the tendency is there to enter into contract in such company name and later turn around to claim that he was not a party to the agreement since the company is a legal entity.

– MUNTAKA-COMASSIE JSC. Alade v. Alic (2010)

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FRAUD LIFTS VEIL OF INCORPORATION

One of the occasions when the veil of incorporation will be lifted is when the Company is liable for fraud as in the instant case. – Galadima JSC. Alade v. Alic (2010)

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A REGISTERED COMPANY ACTS THROUGH AGENTS

The magisterial pronouncements in these ex cathedra authorizes, with due respect, expose the poverty of the alluring submission of the appellants counsel on the stubborn point. PW1 described himself as the chairman of the board of directors of the respondent. The respondent is a duly incorporated company under the Nigerian Companies and Allied Matters Act. By the registration, it is a persona ficta, a juristic personality which can only act through an alter ego such as its agents or servants, directors, managers, see Kate Enterprise Ltd v. Daewoo (Nig.) Ltd. (supra); Interdrill (Nig.) Ltd. v. UBA Plc. (supra). To label the PW1s evidence as hearsay, as pontificated by the appellants, will be antithetical to the corporate personality of the respondent, a legal abstraction, devoid of blood, flesh, brain and other human features.

— O.F. Ogbuinya, JCA. Impact Solutions v. International Breweries (2018) – CA/AK/122/2016

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