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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Comet Shipp. Agencies Ltd v. Babbit Ltd (2001) FWLR (Pt. 40) 1630, (2001) 7 NWLR (Pt. 712) 442, 452 paragraph B, per Galadima JCA (as he then was ) held that: “Companies have no flesh and blood. Their existence is a mere legal abstraction. They must therefore, of necessity, act through their directors, managers and officials. Any official of a company well placed to have personal knowledge of any particular transaction in which a company is engaged can give evidence of such transaction.”
In Kelner v. Baxter (1866) L. R. 2 C.P. 174 Erie C.J. explaining the rationale of the principle [pre-incorporation contract] said: “as there was no company in existence at the time, the agreement would be wholly inoperative unless it were held to be binding on the defendant personally…where a contract is signed by one who professes to be signing as agent, but who has no principal existing at the time, and the contract would be altogether inoperative unless binding upon the person who signed it, he is bound thereby; and a stranger cannot by a subsequent ratification relieve him from the responsibility”.
It is now trite in law that a company or corporate body not being a human being cannot act on its own and so carries out activities through human beings who are the operators or managers of the corporate body and so the manager or operators do not become personally liable for acts carried out for and on behalf of the company in the management or day to day business of the company. The follow up is that the company is an abstraction and operates through living persons and so an officer of the company takes an action in furtherance of the affairs of the company who is the principal and it is that principal that is liable for any infraction occasioned by those acts and not the official or employee. SeeN.N.S.C. v Sabana Company Ltd (1988) 2 NWLR (Pt.74) 23; Yusuf v Kupper International NV (1996) 4 NWLR (Pt.446) 17; UBN Ltd v Edet (1993) 4 NWLR (Pt.287) 288; Niger Progress Limited v North East Line Corporation (1989) 3 NWLR (Pt 107) 68.
— Tanko Muhammad, JSC. Berger v Toki Rainbow (2019) – SC.332/2009
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)
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).
This reasoning assumes, as I understand it, that if the transaction under consideration is genuinely regarded by the parties as a sound commercial transaction negotiated at arm’s length and capable of justification on purely commercial grounds, it cannot offend against s.54 [Companies Act 1948]. This is, I think, a broader proposition than the proposition which the judge treated as having been accepted by counsel for Belmont. If A Ltd buys from B a chattel or a commodity, like a ship or merchandise, which A Ltd genuinely wants to acquire for its own purposes, and does so having no other purpose in view, the fact that B thereafter employs the proceeds of the sale in buying shares in A Ltd should not, I would suppose, be held to offend against the section; but the position may be different if A Ltd makes the purchase in order to put B in funds to buy shares in A Ltd. If A Ltd buys something from B without regard to its own commercial interests, the sole purpose of the transaction being to put B in funds to acquire shares in A Ltd, this would, in my opinion, clearly contravene the section, even if the price paid was a fair price for what is bought, and a fortiori that would be so if the sale to A Ltd was at an inflated price. The sole purpose would be to enable (ie to assist) B to pay for the shares. If A Ltd buys something from B at a fair price, which A Ltd could readily realise on a resale if it wished to do so, but the purpose, or one of the purposes, of the transaction is to put B in funds to acquire shares of A Ltd, the fact that the price was fair might not, I think, prevent the transaction from contravening the section, if it would otherwise do so, though A Ltd could very probably recover no damages in civil proceedings, for it would have suffered no damage. If the transaction is of a kind which A Ltd could in its own commercial interests legitimately enter into, and the transaction is genuinely entered into by A Ltd in its own commercial interests and not merely as a means of assisting B financially to buy shares of A Ltd, the circumstance that A Ltd enters into the transaction with B, partly with the object of putting B in funds to acquire its own shares or with the knowledge of B’s intended use of the proceeds of sale, might, I think, involve no contravention of the section, but I do not wish to express a concluded opinion on that point.
— Buckley LJ. Belmont v Williams [1980] 1 ALL ER 393
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