Beruflich Dokumente
Kultur Dokumente
BY
ABSTRACT
The Corporate Affairs Commission (CAC) has the mandate to ensure compliance with the
Companies and Allied Matters Act (CAMA). However, there are quite a number of hindrances
militating against effective performance of that function and realization of the spirit and letters
of CAMA by the CAC. There are serious gaps between the statutory standards and the actual
practice by companies in Nigeria. The power of investigation represents a great weapon in
possession of the CAC in order to attain its objectives it is also a casualty within the context in
which the CAMA and indeed the CAC operates. But instead of an attempt to provide a holistic
statutory solution, what existed are ad hoc approaches to particular sectors of the economy as
the occasion demands. While the legislator may anticipate that such issues should be resolved
via judicial activism that also has not been the case. This is due to the challenges faced by either
the affected shareholders or stakeholders in bringing such matters before the court for redress
or the CAC in performing its regulatory functions, corporate abuse has therefore continued
unabated. This paper therefore seeks to examine the regulatory functions of investigation by the
CAC with a view to indicating the challenges facing it and to suggest a direction to repositioning
the CAC by proffering a broader statutory approach to the challenges in corporate regulation in
Nigeria.
1
LL.B Ife, BL Lag, LL.M Ife, CERT. DPMIS Unilorin, M.Phil Corporate Law, Ife, Nigeria, Ph.D in Corporate
Governance Law (in view @ IIUM Malaysia), Formerly Sub-Dean, Faculty of Law University of Ilorin, Ilorin
Nigeria & Formerly Head, Department of Business Law, Faculty of Law University Of Ilorin, Ilorin, Nigeria.
1
INTRODUCTION
There are numerous reasons for the renewed interest in the governance of corporations,
some of which include the fact that technological advancement and increase international
competition have resulted in persistent unemployment, especially in the urban areas. This calls
attention to the fact that private business can affect everyone and it possessed a possible private
solution to some social and economic problems such as unemployment, provision of social
infrastructure, environmental degradation and so on. This is particularly attractive in that most
economies today including that of Nigeria operate a capitalist ideology, which is opposed state
intervention in matters of private business.2 Therefore, there is the need for the law to properly
regulate business in order to balance the various interests including that of the society which is
The increasing economic power of public and multinational companies and the
implications of the separation of ownership from control in such companies have thrown up a
number of interrelated problems. Initially these were seen as limited to the control of the
management towards ensuring the good and indeed the best for their shareholders and other
stakeholders. However, this resulted in the abuse of power by the directors. In any case the
struggle to make the directors truly accountable and responsible to the corporate stakeholders has
achieve this have always been through an increase in the information to be made available to the
stakeholders (principle of disclosure) and issues that need to either be discussed or ratified by the
shareholders at general meeting. With the emergence of globalization, it was soon realized that
the law need to be fortified in orders to provide a fair and necessary balance between directors’
2
The popularity of the capitalist system today is a natural fall out of the collapse of communism and consequential
pointing up of the merits of the market system. But the capitalist ideology as it were, accentuates corporate
capitalism with its attendant consequences of creating wider gaps in the class divide within the social setup.
2
and stakeholders interests. In England3 and the United States4 it has been recognized that what is
The key issue in corporate regulation is ensuring company management performs their
functions in order to meet the legitimate expectations of the shareholders and other stakeholders.
“It is now widely recognized in all countries that the only effective way of
effective supervision by some Government agency. The idea that shareholders can
the financial means they will often lack the inside knowledge of the fact which is
Lord Denning M.R while dealing with a matter relating to the power of investigation by a
which is beyond the control of the ordinary shareholders. The majority of the
shares are in the hands of two or three individuals. These have control of the
company’s affairs. The other shareholders know little and are told little. They
3
Paul L. Davies, Gower’s Principles of Modern Company Law, (London: Sweet & Maxwell, 8th edn., 2001), 78.
4
In the United States, there is a system of Private enforcement in which an Attorney so mutu investigate a perceived
misconduct and institute an action for appropriate remedy. J C Coffee, “Understanding the Plaintiff’s Attorney: The
Implication of Economic Theory for Private Enforcement of Law through Class Actions,” Colum. L Rev. vol. 86
(1986): 678.
5
Final Report of the Commission of Enquiry into the Working and Administration of the Company Law on Ghana,
p. 163, quoted by Okonkwo C. O. n. 20
3
receive the glossy annual reports. Most of them throw them into the wastepaper
basket. There is an annual general meeting, but few of the shareholders attend.
The whole management and control is in the hands of the directors. They are a
are the guardians of the company, the question is asked: quis custodiet ipsos
Thus Regulatory institutions are expected to set standards for corporations in every spheres
considered important by the law and regulations in force at any material time. In specifics
external regulators sets standards for corporations on issues such as registration, disclosures,
filing of returns and so on. This paper seeks to appraise existing regulatory investigatory
challenges facing the CAC in Nigeria with a view to showing its areas of strength and
weaknesses.
The present corporate legislation in Nigeria is the Companies and Allied Matters Act (CAMA).
Prior to this time the applicable statute was the Companies Act 1968. One of the major
innovations of CAMA is the provision for the establishment of the Corporate Affairs
Commission (CAC).
The Companies Act 1968 was administered by the Ministry of Trade. The Company
Registry under its Corporate Affairs Division was in charge of company registrations and
incidental matters. The Company Registry was headed by a Registrar designated as the Registrar
of Companies. The registry had a lot of problems some of which include lack of fund, as it was
6
Norwest Holst Ctd v. Department of Trade & Others (1978) 3 All E.R 280.
4
not self-accounting. The Registrar of Companies is usually posted to the Ministry of Trade from
the Ministry of Justice on secondment, while the other staff in the Registry comes from the
Ministry of Trade. These along with other bureaucratic bottlenecks compounded the situation
with the result that the registry became grossly in inefficient in its primary responsibility of
company registration and supervision could not be efficiently performed under the
circumstances. Delay and in some cases outright neglect of its primary functions became in
It was therefore, not surprising that when the opportunity came for a review of the 1968
Companies Act, the Companies Registry could not escape the eyes of the Nigerian Law Reform
Commission in 1987 and that of the Consultative Assembly on Company Law in 1988. Along
(1) to allowing the registry to remain, but with some improvements in the problem areas earlier
identified;
(2) to establish a Board within the Ministry of Trade to supervise the work of the Registry;
(3) to form a guarantee company similar to the Stock Exchange with the mandate of running the
registry; and
(4) to establish an independent statutory body to perform the functions being performed by the
Company Registry. It was this last option which carried the day.
known as the Corporate Affairs Commission (CAC). S. 1 of CAMA made provision for the
establishment of the Corporate Affairs Commissions (CAC) as a body corporate, with perpetual
5
succession and a common seal. The headquarters of the commission must be situated at Abuja,
the Federal Capital Territory of Nigeria but offices are to be established in each state of the
federation.7
The Commission has 15 members which cut across various profession and interests. A
person to be appointed as chairman of the Commission by the President must have experience or
affairs and he is therefore in a position to make beneficial contribution to the work of the
Commission.8
S. 6 provide for the appointment of a Registrar General for the Commission who is to be
eligible for appointment as a Registrar General of the CAC, an individual must have been
qualified to practice law in Nigeria for not less than ten years and he must have had experience in
Company Law practice or administration for not less eight years. The Registrar General is Chief
Executive Officer of the Commission and he is subject to the directives of the Commission. He is
also the chief accounting officer of the Commission and qualified to personally represent the
commission in legal proceedings in court. That is, he is competent to practice as a Solicitor and
Barrister for the purposes of his office.9 The remaining 13 members are appointed by the
minister of finance and economic development with the recommendation of the relevant bodies
7
S. 1(3) of CAMA.
8
S. 2 of CAMA.
9
S. 10 of CAMA.
6
to represent the fallowing interests and sectors of the economy: the business community, labor,
of Small scale Industries, the Institute of Chartered Secretaries and Administrations, the
Securities and Exchange Commission and the Ministries of Trade and Tourism, Finance and
A member of the Commission is appointed for a term of 5 years in the first instance and
he is eligible for another term of 5 years with the exception of the Registrar General other
becomes of unsound mind or is otherwise in capable of carrying out his duties as a member.
Other condition which could lead to the termination of membership of the commission include
from practicing his profession by a competent authority other than at his request.
Quorum of the meeting of the Commission is five, excluding the representatives of the
Commission and the Ministries.10 The exclusion of the representatives of the Ministries from
quorum is understandable as the CAMA presumably treated them as a part of the Establishment,
even then one will expect that the Registrar General will be included in the list as those excluded
as those excluded cannot be more establishment than him. But what is even strange is the
exclusion of the representatives of the ICSA and SEC. This may also be due to the interest they
represent. Their Presence may be treated as very important and therefore not necessarily
10
S. 5 (3).
7
representative of the diverse views necessary for a good deliberation at the meeting of the
Commission.
b) to establish and maintain Company’s registries in all the States of the Federation;
c) to arrange or conduct investigation into the affairs of any Company, where the interest of
d) to undertake such other activities as are necessary or expedient, for giving full effect to the
e) to perform such other functions as may be specified by the CAMA or any other law.11
In the course of discharging the forgoing primary duties the Commission performs some
other functions which include, receiving and registering stipulated documents, orders and
resolutions delivered to it;12 giving approvals, direction and extension of time;13 registration of
charges created by companies;14 keeping for each company a register of its charge(s) requiring
registration;15 calling or directing the calling of an annual general meeting where there has been
default;16 determining the standard of a small company within the context of the Act for the
purpose of preparing and delivering a modified and simpler financial statement;17 applying to the
11
S. 7
12
See for example s. 102(2) requiring a notice of increase in share capital of a company to be filled recorded by the
Commission.
13
See for example ss. 213(1) (b), 450(20, 467(10.
14
S. 197
15
S. 198
16
S. 213(2).
17
S. 350.
8
court for an order directing a defaulting receiver or manger of a company to render proper
accounts of his receipt; demand the filing of returns or other document; 18 receiving a liquidator’s
Aside from the forgoing the Commission also has the mandate to ensure the prevention of
corporate ombudsman is most noteworthy and should be the most pervasive of its function in this
regard.”20
The CAMA no doubt has improved on the protection available for the minorities and
To this end the combined effect of ss. 310 and 311(2) (c) is that, the commission has the
power to file a petition before the court on any of the fallowing grounds:
(a) if it appears to it that the affairs of a company are being conducted in a manner that is
(b) any actual or proposed act or omission of the company (including an act or omission on its
The forgoing empowers the commission to act proactively in defense of the minority.
This provides a complimentary or alternative means of protection for the minority where for
example they are unable to pursue their rights in this regard. This could be due to the cost of
18
S. 399.
19
S. 429.
20
Okonkwo, C.O. (1992) “The Corporate Affairs Commission” in E.O. Akanki (ed), Essays on Company Law
(University of Lagos Press, Lagos), p. 18.
9
litigation or some other reasons, which may include fear of victimization by the majority who
activities are being carried on in disregard of public interest. This power is given exclusively to
the commission and not to any group of shareholders. Public interest in this context extends
beyond investing members of the public who are interested in a particular company. It extends to
activities which may be detrimental to the interest of the country in that, they affect social,
moral, political and economic interests of the country. Thus activities contrary to public policy
will constitute a ground for petition by the commission. Thus corporate activities leading to the
production of obscene publications, smuggling, bunkering, oil pipeline vandalisation will come
Thus where the court has found that a petition by the Commission is well grounded it
may make such order or orders as it deemed fit in order to correct the situation for which the
commission has petition. For instance the court may make an order for the compulsory winding
up of the company concerned,21 it could also make an order regulating the company’s affairs
subsequently22 or an order for the purchase of a member’s shares by other members or by the
company itself,23 and also it could make an order directing an investigation by the Commission
21
S. 312(a).
22
S. 312(b).
23
S. 312(c) & (d).
24
S. 312(s).
10
The CAC performs the function of the guard in relations to corporations in Nigeria. The
Commission is empowered to appoint one or more competent inspectors to investigate the affairs
can only be brought by a number of them holding not less 25% percent or one-fourth
of the total issued shares of the company, and where the company has no share
It has been observed that the number of members required under the Nigerian Law is
high which may impede the potential benefits drivable from the Commission’s Power of
investigation. This is due to the nature of share holding structure in Nigeria which is widely
dispersed. It is therefore a difficult task to get the required number of members to send a petition
to the Commission to investigate the affairs of a company. The rational for the present provision
appears to be prevention of frivolous applications for investigation. This is not likely to be the
case since there is also the requirement of showing good reason by the members asking for
investigation by the Commission. Experience has shown that the remedy of investigating is not
being employed by members of the company of Nigeria. There is therefore, the need to
25
C.O. Okonkwo, n. 20
11
The Ghanaian Draft Companies Code Bill, contained a provision to the effect that such
application should be brought by at least 100 members or by members holding not less than one-
tenth of the issued shares or not less than one-tenth in number of the total members.26
2 Application for Investigation by the Company: The Company may also bring an
application for investigation to be conducted on the company. This independent enquiry may be
conducted where members cannot come to an agreement on how to resolve problems confronting
the company. However in practice this is an unusual procedure. Similar to the case of members’
application for investigation, application by the company must contain good grounds for the
commission to appoint investors to investigate the company. This serves the purpose of
order that the affairs of a company be investigated. Then the commission must
leeway for members who may not be able to obtain one-fourth requirement
contained in s. 314(2) (a). Such member although less than the required number
under the above provision may approach a court of law for an order directing the
26
Ghana Draft Companies Code Bill, S. 220(1).
27
315 (1).
28
This is akin to the right to ask for an order of mandamus to compel a public institution to carry out its duty under
the law. It is not clear however where the members of a company or of the public can ask for tan order of mandamus
simply sit a to compel the Commission to carry out investigation in this regard.
12
the affairs of a company if it appears to it that there are circumstances suggesting
that:
(a) the company’s affairs are being or have been conducted with intent
(d) the company was formed for any fraudulent or unlawful purpose; or
its affairs have in connection therewith been guilty of fraud, misfeasance or other
(f) the company’s members have not been given all the information with respect to its affairs
The Commission can appoint investigators to carry out investigation on its behalf based
officer, creditor or any other interested person(s) will usually make a report to it. The
Commission is also not obliged to disclose to the Company the information which it has and the
person(s) who supplied the information.29 This is particularly good in order to encourage
29
C.O. Okonfwo, n. 20
13
concerned individuals or group to assist the Commission by supplying it with necessary
commission hardly employs this power to investigate the affairs of the companies. This is
possibly due to the legion of challenges facing the Commission ranging from funding to
revealed or occurred during a voluntary winding up process. It is equally good that winding up
and persons to whom shares have been transferred or transmitted by operation of law. Thus the
investigative power of the commission is an instrument of protection for the minority members.
30
Interview with Ilorin Regional Manager Corporate Affairs Commission on 14 to Dec. 2008.
31
S. 315 (3).
32
C.O. Okonwo n. 20. In compulsory winding up however, the court has the power to take necessary steps in
relation to person suspected to be in possession of company’s property, funds or documents. See ss. 449 & 450.
14
The Commission will normally make use of its staff in the conduct of investigation in minor
cases. But in serious cases, where facts available portends grievous irregularities it will normally
The team of investigators seats in private in view of the serious implications a public
seating many have on the business, good will and public image of the company. Although the
presence of support and relevant staff of the company is allowed. Investigation of the inspectors
is not the same as court proceedings it is an investigation after which they are expected to report
to the Commission. It is meant to uncover facts upon which others may take action. However, a
report by the inspector may be far reaching in nature and could have serious implications for
individual’s career, reputation and integrity and such report could be made public.
Ltd34 Lord Dinning M.R. had said: “They (inspectors) may accuse some; they many condemn
others, they may ruin reputations or careers. Their report may lead to judicial proceedings. It may
expose persons to criminal prosecutions or to civil actions. It may bring about the winding up of
the company, and be used itself as material for the winding up.”35
One may ask at this point, since the report of inspectors has such serious implication for
managers and officers of the company to what extent doest the rule of natural justice applicable
to it. Guidance may be found in the English case of RePergamon Press Ltd.36 In that case an
American company bought a large amount of shares in a British company called Pergamon Press
Ltd. The American company subsequently made a takeover bid for the entire company. The bid
33
This is inline with the practice in the UK where a Queen’s Counsel, assisted by an experienced Accountant is
usually appointed for similar exercise.
34
(1971), Ch. 388
35
At p. 389.
36
(1971), Ch. 388 supra.
15
was later withdrawn about two months thereafter. This lead to a slump in the shares of the
company. Inspection was instituted. The American company removes some directors and filled a
suit against one of them for fraud and deceit in the process of selling the share of the company.
The sacked directors were concerned that the inspectors’ report may contain things that
are adverse to them and it may be used in the pending suit against them. They therefore, request
the inspectors to allow them access to allegations against them and to read the transcript of the
evidence of such allegation. They further requested that they should be given the opportunity to
reply to such by evidence or by oral or written submissions. The inspector responded by assuring
them that all effort will be made to ensure that no one is unjustly treated and that they will give
general notice to any one against whom any allegation is made and will allow such person an
opportunity to explain but not to read the manuscript of evidence on such allegation. They
further informed them that they could be represented by counsel if they so wish. Because they
considered the inspectors reply unsatisfactory, they refuse to answer questions put to them during
the investigation after which they filed a suit. The court held that the directors were not entitled
to assurances before answering questions puts to them by the inspectors during investigation.
Unsatisfied the directors appealed again. They contended at the court of appeal that the
investigation should be conducted as if it were a judicial inquiry; while it was argued on behalf
of the inspectors that they were not bound by the rules of natural justice.
The Court of Appeal however did not accede to either of the two extremes by the parties.
But I held that the inspectors have a duty to act fairly and to give everyone indicted in their
report an opportunity of correcting or contradicting what was said against them. And in this case
an outline of the allegation(s) is sufficient notice not necessarily the transcript of evidence. The
16
court further held that inspectors are free to design their own rule subject only to the principle of
The principle of fairness as it is known in law does not however apply to the procedure
for the appointment of inspectors by the commission, as this merely an administrative function.
The Commission is only expected to exercise its discretion in good faith in this regard.
In order to assist the body of inspectors to perform their duties CAMA has given them
sufficient powers in this regard. Thus in the process of investigating a company, the inspectors
may found that it is necessary to investigate another company which is or was in the past a
its subsidiary, the inspectors can also investigate and report on such other company in so far as
they think that the result of such investigation are relevant to the investigation at hand.37
By the combined effect of s.s. 314, 315-316 all officers and agents38 of a company under
investigation are obliged to produce all books and documents of the company or related company
under investigation, to appear and render all possible assistance to the body of inspectors when
required so to do. Similarly, all other persons, who may be considered to be in possession of
information on the company’s affairs, are under the same duties as officers and agents. 39 These
persons may be examined on oath and statements made by them may be used as evidence against
communication which come into his possession or made to him by his client except his clients
37
Okonkwo C. O. n. 20
38
Phrase “agents or officers” include present and past officers of the company and “agent” includes the true
company’s bankers, solicitors, whether or not they are officers of the co. or other co. s. 317(4).
39
S. 317(2).
40
S. 317(3) & (5).
17
name and address. In the same vein the company’s bankers are not obliged to disclose
information about their customers account or affairs except the company’s account with them41
However, inspectors may require information or documents relating to the banks account
maintained by a director past or present where they are of the view that they require information
on:
(a) emoluments of the director’s office, the particulars of which have not been disclosed in the
(b) any money resulting from or used in the financing of a transaction, the particulars of which
have not been disclosed in any financial statement of the company or in any statement
annexed to it for any financial year or the particulars of which have not been disclosed by the
f. Inspectors’ Report
The inspectors can make interim report if they are of the opinion that such report is necessary or
where the Commission so direct. They are also at liberty to intimate the Commission of the facts
and findings in their possession in the course of their investigation which tend to disclose the
Commission of an offence. In any event the inspectors are under the obligation to make a final
41
S. 330(a) & (b).
42
S. 318.
18
written report as may be directed by the Commission. The Commission may also direct that a
Where the investigation is at the instance of the court a copy of the report must be sent to
the court, including a preliminary report if any.44 In any other case, the commission may at its
discretion send a copy of any of its reports on request and payment of a prescribed fee to:
(e) any person whose financial inertest appears to the commission to be affected by the matters
The Commission may also publish the inspectors’ report on a particular company where
it considered it necessary and proper so to do.46 The question to ask is whether such publication
will not violate the right of anyone indicted in the report? Although the report of the inspectors
enjoyed absolute privilege, what happens to an individual who has been criminally indicted or he
is damaged in his reputation since the inspectors is not the same as a court proceeding.
1. Criminal proceedings: the duty imposed on officers, agents and any other person
considered by the inspectors to have information useful for the purpose of investigation
43
Ss. 320(1) & (2), 316(2).
44
S. 320(3).
45
S. 320(4) (a).
46
S. 320 (4) (b).
19
has sanctions attached. In other words, the CAMA has criminilised the obstruction of
questions put to him during inspector’s proceedings, a certified report of such an action
or omission may be forwarded to a court of competent jurisdiction which may punish the
In Repergamon Press Ltd47 one of the directors in a company being investigated refused
to give an answer when he was asked “when did you first become associated with Pergamon
Press Ltd?” The trial judge who was very lenient with the director nevertheless found his action
unjustified and ordered him to pay the cost of the proceeding. However, Lord Denning on
appeal warned that if the director persisted in his stand he should expect no mercy and he would
be guilty of contempt.
Where an inspectors’ report discloses an offence against any person(s) in the matters of
the company investigated such report shall be forwarded to the Attorney-General of the
Federation by the Commission, who may direct the prosecution of the offender(s). All officers
and agents of the company, except the accused have a duty to give all reasonable assistance
2.Civil Proceedings: Where from the report made it appears to the Commission that a civil
action ought in the public interest to be brought by the company or anybody corporate, the
Commission may bring such proceedings in the name of the company or the body corporate.
47
(1971), Ch. 388.
48
Ss. 322(1) & (2).
20
Inspector’s Report is also a good source of information for shareholders as they are usually
required to provide such detailed information in order to file an action before the court.
Under the 1968 Act applicants who want the affairs of a company to be investigated are required
to give security not exceeding #400.00 for the payment of the cost of the investigation. The
requirement has over the years discouraged minority shareholders from invoking this provision.
Thus the Law Reform Commission noted in a report on the reform of Company Law that, the
The Commission thus recommended the abolition of security especially with regard to the
Thus security for cost is no longer a requirement for an application for investigation
under s. 314 of CAMA. The expenses of an investigation are now defrayed in the first in stand
out of the Consolidated Revenue Fund. But this could be recovered where the court has
convicted any person following the investigation or where in a civil proceeding anyone is
49
Working Papers on the Reform of the Nigerian Company Law, vol. 1, p. 249.
50
Ibid.
51
S. 322(3).
21
CAC: THE REGULATORY CHALLENGES IN NIGERIA
One of the key corporate governance issues is ensuring that the management of a company
performs their function in order to meet the legitimate expectations of the shareholders and even
the stakeholders. Our discussion above show that although the regulatory framework set down in
CAMA may appear adequate on the surface, there are quite a number of hindrances to the
realization of the objectives contained therein. Except for the standards recently set by the CBN
on the qualifications and limitations of persons to be appointed directors in Banks, the CAMA
does not set such necessary detailed requirements which will guarantee the appointment of
competent and honest directors. Also the duties of directors need further elaboration. 52 While it
may be argued that issues involving a breach or a supposed breach of duty by the directors could
be redressed by judicial activism, sadly that has not been the case due to the challenges faced by
either the members in bringing such cases before the court or the CAC as a regulatory authority.
There are statutory provisions giving seemingly adequate powers to the CAC and even
protection of minority where there are dominant groups in the company. These provisions have
not been put to good use, neither have they made any contribution toward reducing the tide of
corporate abuse.
In Nigeria the share structure indicates that there are dominant group in most companies
that is, the typology of Nigerian companies is the dominant one. Therefore there is the need for a
different approach to stem the tide of corporate abuse. However the problem in corporate
regulation in Nigeria appears to be the wide gap between the statutory standards and the
52
Vincent O. Nmehielle & Enyinna S. Nwauche, External-Internal Standards in Corporate Governance in Nigeria.
http://papers.ssrn.com checked on 18/12/2010
22
application, implementation and operation of those statutory standards. But instead of an attempt
to close this gap, what exist are ad hoc approaches to any particular sector of the economy as the
occasion demands. For instance, when there were dominant shareholder and management abuse
in the Banks, the BOFIA was enacted and a Tribunal was established under it, essentially to
enforce the Act. The insurance industry also came under increased regulation with the enactment
of the Insurance Act (IA) and the establishment of an Insurance Commission, to regulate the
sector in apparent response to a similar situation in that sector. Another pointer to the ad hoc
response in lieu of the application of the existing legal framework is the recent injection of # 420
B (Four Hundred and Twenty Billion Naira) in to 5 banks in Nigeria. The Nigerian Media is
The reason for this could be explained on the ground that CAMA make general provision
which requires judicial activism in order to bring out the details and as stated above there are
bottlenecks in the way of bringing such matters before the court. The operation of CAMA in this
regard is also highly dependent on the prompting of the affected person(s), whereas as a result of
procedural difficulties or challenges such persons are unable to give that necessary push to the
CAC. For instance information to properly bring up such matter before the court are often not
available to the affected parties. With the exception of the banking industry no action has been
taken against directors and auditors for breach of duties or abuse of office leading to a violation
Even though it is a statutory requirement for companies to file annual returns which
contains valuable information on the health of the company, this has not prevented or even
53
www.newswatchngr.com, radionigeriaonline.com, www.news.dailytrust.com Checked on 17th July 17, 2010
23
identifies potential corporate failure or abuse. This apparently underscores the serious challenges
Also the power of the Corporate Affairs Commission (CAC) to order company meeting is
an incomplete one. In view of the position of the law that the CAC can only exercise its power to
direct a company general meeting if there is an application from a member of the company. This
implies that in the absence of an application from a member even if the commission is in
possession of information to this effect it can do nothing. This provision is not in the spirit of the
Another challenge for the CAC is the power to receive reports from foreign Companies
exempted from domestic incorporation, this power like that on company meeting makes the CAC
a dummy, as the power to penalize erring foreign companies lies with the Federal Executive
Council which lack the time and expertise to handle such matter on many occasions. Therefore,
such companies escape the supervisory powers of the CAC even where they fail comply with
existing laws such as Environmental Protection Act, Standard Organization of Nigeria Act,
CONCLUSION
Until shareholders and indeed stakeholders are allowed to bring up such matters before the CAC
or the court with the little information at their disposal, corporate abuse and judicial “inactivism”
will continue unabated. The CAC needs to be restructured, so as to be more proactive and
54
O.O Oladele, “Responding To the Problems of Practical Implementation Of The Companies Allied Matters Act
(CAMA) 1990.” IFJR, vol. 1 p 2 (2000): 217-225. see also A. Almustapha, "The problems of Practical
Implementation of the Companies and Allied Matters Act, 1990 CAMA and The Need for a Review," Nigerian Bar
Association Annual Bar Delegates Conference, session on papers, (2004): 42. Almustapha is the Director General of
the Corporate Affairs Commission of Nigeria. See s 213 (2) CAMA
24
independent in order to ensure the enforcement of the good provisions of CAMA. 55 But more
importantly the CAMA is overdue for amendments in order address the challenges which were
never contemplated or anticipated some two decades ago when it was enacted.
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