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FOREIGN COMPANY NOT INCORPORATED IN NIGERIA CAN SUE IN NIGERIA

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On this appeal, it was argued by counsel on behalf of the respondent that even though it may be a legal entity in its country of incorporation, it had no artificial personality in Nigeria since the Companies Act is silent on whether a company such as the appellant would be allowed to sue or not. That submission is misconceived. The principle of law that a foreign corporation, duly created according to the laws of a foreign state recognized by Nigeria, may sue or be sued in its corporate name in our courts is part of the common law. The suggestion that a foreign company duly incorporated outside Nigeria should first be registered in Nigeria under the provisions of the Companies Act, 1968 (which was then the applicable statute) dealing with registration of foreign companies, notwithstanding that it does not fall into the category of foreign company” as defined by that Act, is too preposterous and patently inimical to international trade to merit any prolonged or serious consideration. It suffices to say that the appellant company which was admitted by the respondent to be a limited liability company with its registered office in Copenhagen properly sued in its corporate name.

— Ayoola, JSC. Saeby v. Olaogun (1999) – SC.261/1993

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APPELLANT CASE WAS BASED ON THE POST-INCORPORATION CONTRACT

The facts averred in the statement of claim which are deemed to be true for the purpose of the objection taken in limine show that the appellant and the 1st respondent company entered into a new contract in the terms of the preincorporation contract after the 1st respondent company had been incorporated. In the circumstance, the rule of company law that a company is not bound by a preincorporation agreement entered into by its promoters and that the company cannot ratify such agreement after its incorporation is inapplicable to the facts of the case as pleaded in the statement of claim. As the appellant alleged that his claim was founded on the post-incorporation agreement whereas the respondents said the claim was based on the preincorporation contract, the dispute cannot be resolved in limine. The issue can only be determined upon the hearing of the case on the merits.

— Bello, JSC. Edokpolo v. Sem-Edo & Ors. (1984) – SC.89/1983

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INCORPORATED LTD. LIABILITY COMPANY IS DISTINCT FROM HER SHAREHOLDERS/DIRECTORS

In NEW NIGERIAN NEWSPAPERS LTD. V. AGBOMABINI (2013) LPELR-20741(CA) held that: “An incorporated limited liability company is always regarded as a separate and distinct entity from its shareholders and directors. The consequence of recognizing the separate personality of a company is to draw the veil of incorporation over the company. No one is entitled to go behind the veil. This corporate shell shall however be cracked in the interest of justice” Per ABIRU, J.C.A. (Pp. 40-41, Paras. F-E).

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A COMPANY IN WINDING UP IS NOT DEAD YET; A COMPANY IS DEAD UPON DISSOLUTION

In Progress Bank of Nigeria Plc. V.O.K. Contact Point Holdings Limited (CA 3) (2008) 1 NWLR (Pt. 1069) 514, the Respondent obtained judgment against the appellant (a wound-up bank). The Appellant sought to appeal the decision but the Respondent filed an objection to the capacity of the Appellant to file a Notice of Appeal on the ground that, it was dead and that only its liquidator could file such appeal on its behalf. The Court of Appeal held thus:- “l must say straight away that, there is a world of difference between the winding-up of a company and the dissolution of a company. Under the provisions of Section 454 (1) and (2) of the Companies and Allied Matters Act, 1990, a company dies once the Court orders the dissolution of the company. The revocation of the company/bank and order of Court winding – up same does not indicate its death. The appointment of a liquidator is for the purpose of ensuring the smooth burial of the company. See Nzom v. Jinadu (1987) 1 NWLR (Pt. 51) 553; CCB (Nig.) Ltd V. Onwuchekwa (2000) 3 NWLR (Pt. 647) 65. There is nothing before us to show that Progress Bank of Nigeria Plc has been dissolved. It is so clear that the said bank is under a winding-up proceedings. In such a state, the bank is seriously ill, but not dead. That is the support of Section 417 of the Companies and Allied Matters Act, 1990. My Lords, a company/bank is certified dead on its dissolution, but where the bank as in this case is under winding up proceeding it has not died. It is gravely ill, it can sue and maintain an action in Court, but no action or proceeding can be brought against it except with the leave of the Court. In CCB (Nig) Ltd v. Onwuchekwa (2000) 3 NWLR (Pt. 647) page 65 at 75 the Court of Appeal said: “A company under winding up proceedings has not died. It is still alive but perhaps sick.”

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RATIONALE FOR PRE-INCORPORATION CONTRACT NOT BINDING AT COMMON LAW

At Common Law, a pre-incorporation contract was not binding on the company because there was no principal on behalf of whom an agent could have contracted. The company was not permitted to ratify or adopt it, and it could not, after incorporation, enforce the contract, nor sue, e.g. for damages for breach of contract – Natal Land etc Co. Ltd. v. Pauline Colliery Syndicate Ltd. (1904) AC 120. These common law rules were a source of considerable inconvenience for the promotion of business.

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

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A COMPANY IS NOT BOUND BY A PRE-INCORPORATION CONTRACT

It is now a settled principle of company law that a company is not bound by a preincorporation contract being a contract entered into by parties when it was not in existence. No one can contract as agent of such a proposed company there being no principal in existence to bind. It is also settled that after incorporation a company cannot ratify such a contract purported to be made on its behalf before incorporation … But there is nothing preventing the company after incorporation from entering into a new contract to put into effect the terms of the preincorporation contract. This new contract can be in express terms or can be implied from the acts of the company after incorporation as well as from the minutes of its general meetings and board meetings.

— Nnamani, JSC. Edokpolo v. Sem-Edo & Ors. (1984) – SC.89/1983

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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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