Associations are Not-For-Profit organizations bound by a common interest or belief and it should not be overly burdened with too many restrictions and laws to fetter their liberty.
Analysis of the Nigerian Court’s Decision Nullifying Unconstitutional Sections of the Companies and Allied Matters Act, 2020 on Incorporated Trustees
On7th August 2020, it was reported that President Muhammadu Buhari of Nigeria signed the Companies and Allied Matters Bill passed by the National Assembly into law (“the Act”). The Act made some improvements on the ease of doing business in Nigeria including making provision for a single Director and Shareholder of a Company; Companies meetings can now be legally held virtually; statutory filings can now be effected electronically; exemption of small companies from appointing auditors, introduction of limited, liability partnerships, restriction on multiple directorships of public Companies, business rescue provisions for insolvent Companies, enhancement of minority shareholder protection and engagement amongst other laudable initiative of the Act.
However, in Part F of the Act (Sections 823 to 850 of the Act), the Corporate Affairs Commission (“CAC”), the statutory body mandated to register and regulate Companies in Nigeria is given wide powers to suspend and appoint interim managers to manage the affairs of the association where it “reasonably believes” that there is a misconduct or mismanagement in the administration of an association. The Act mandates Banks to notify the CAC of 2 or more accounts held by associations and the amounts standing to the credit of associations. The trustees of associations are mandated by the Act to file a bi-annual statement of affairs with the CAC and are liable to pay penalty for every day of default. Also, Section 851 of the Act establishes an Administrative Proceedings Committee which consists of the Registrar of CAC as Chairman; Directors of operative departments of CAC and a representative of the Federal Ministry of Industry, Trade and Investment as members of the Committee to hear matters arising from the Act.
In Nigeria, places of worship such as Churches, Islamic Organizations and groups where persons practice their beliefs and faiths are registered under the above Part of the Act to form these associations. This also includes charities, Non-Government Organizations (“NGOs”) and civil societies. Persons living in Nigeria practice their freedom of conscience, thoughts and religion enshrined in Section 38 of the Constitution of the Federal Republic of Nigeria, 1999 (as amended) (“the Constitution”) and freedom of peaceful assembly and association enshrined in Section 40 of the Constitution by forming or belonging to associations.
Therefore, the provisions of the Act which gives CAC dictatorial powers to control the activities, management and accounts of association was seen by many Nigerians as creating an opportunity for the Nigerian State to unduly interfere in the private lives, beliefs and doctrines of people who have gathered themselves in a group to profess their faith or carry out the collective objective of their association. Again, the establishment of the Administrative Proceedings Committee was also perceived as a way in which the Nigerian State will deny persons in Nigeria their Constitutional rights of access to Court and usurp the powers of the Federal High Court under Section 251 (1) (e) of the Constitution.
This prompted Emmanuel Ekpenyong Esq, the Managing Partner of Fred-Young & Evans LP, a full-service commercial law firm to commenced Suit No. FHC/ABJ/CS/1076.2020;EmmanuelEkpenyong Esq. V The National Assembly, The Corporate Affairs Commission and the Attorney General and Minister of Justice of the Federation on 31stAugust 2020 at the Federal High Court, Abuja Division contending that the Plaintiff has locus standi to initiate the suit and praying the Court to hold that since the provisions of Sections 839, 842, 843, 844, 845, 846, 847 and 848 of the Act (“the offending Sections”) are inconsistent with the provisions of Section 38 and 40 the Constitution, and should be declare null and void. The Plaintiff also contended that since the provisions of Section 851 of the Act establishes an Administrative Proceedings Committee to deny the Plaintiff of his Constitutional right of access to Court under Section 6 (6) (b) and 36 of the Constitution and usurp the jurisdiction of the Federal High Court under Section 251 (1) (e) of the Constitution, Section 851of the Act should also be declared null and void.
The1st Defendant, the National Assembly filed a response to the Plaintiff’s suit and also a Notice of Preliminary Objection and contended that the Court does not have jurisdiction to entertain the suit because the Plaintiff did not serve it with a pre-action notice pursuant to Section 21 of the Legislative Houses (Power and Privileges) Act. The National Assembly also contended that the Plaintiff had no locus standi to institute the suit and there is no reasonable cause of action disclosed before the Court.
The Plaintiff filed a Reply on Points of Law to the 1st Defendant’s response and also a response to the Notice of Preliminary Objection and submitted that since Section 46 (1) of the Constitution and the Fundamental Rights(Enforcement Rules), 2009 (“the Human Right Rules”) which provides for persons to seek redress in Court when their rights are infringed does not make provisions for service of pre-action notice before commencing a fundamental right matter against any government or statutory body including the 1st Defendant, fundamental rights enforcement matter is an exception to service of pre-action notice. The Plaintiff further contended that under the Human Rights Rules a person can commence fundamental rights suit for his own interest, on behalf of another person and even in public interest. The Plaintiff argued that since the Rules provides that a fundamental right matter should not be dismissed or struck out for want of locus standi, he has locus standi to institute the suit. The Plaintiff also contended that his fundamental human rights enshrined in the Constitution are live rights and not hypothetical rights as such there is a reasonable cause of action to be tried by the Court.
The2nd Defendant, CAC filed a response to the Plaintiff’s suit and contended that the Plaintiff cannot competently raise and argue issue of his locus standi which goes to the jurisdiction of the Court in a case he commenced. CAC further contended that there is nothing in the offending Sections which infringes or is likely to infringe the Plaintiff’s rights to freedom of thought, conscience and religion and right to peace assembly. CAC also argued that the establishment of the Administrative Proceedings Committee is consistent with the right to fair hearing in Section 36 (1) of the Constitution and the Court does not have jurisdiction to grant mandatory injunction. CAC submits that the Plaintiff is a meddlesome interloper, and the suit is an abuse of Court process.
The Plaintiff filed a Reply on Point of Law to CAC’s response and contended that since issue of jurisdiction of Court to hear a matter can be raised at any time, the Plaintiff can raise the issue of his locus standi to institute the suit. The Plaintiff further contended that the enormous powers given to the CAC in the offending Sections infringes on his freedom of thought, conscience and religion and right to peace assembly enshrined in Section 38 and 40 of the Constitution respectively. The Plaintiff argued that the Administrative Proceedings Committee was established to deny the Plaintiff his rights to access to Court and usurp the jurisdiction of the Federal High Court and such the provision establishing it should be declared null and void. The Plaintiff also argued that the suit concerns his personal fundamental human rights as such he is not a meddlesome interloper and the suit is not an abuse of Court process.
The 3rd Defendant, the Attorney General and Minister of Justice of the Federation filed a response to the Plaintiff’s suit and contended that the Plaintiff does not have locus standi to institute the suit and the Plaintiff has not put before the Court sufficient facts to form a reasonable cause of action. The Plaintiff filed a Reply on Points of Law reiterating his previous arguments on locus standi and reasonable cause of action and concluded that indeed he has locus standi to institute the case and he has established a reasonable cause of action for the Court to hear and determine the suit.
In its Judgment delivered on 18th April 2023, the Court, per Justice J.K. Omotosho, distilled 3 issues for determination in the suit to wit;
1.Whether the Plaintiff has locus standi to institute the suit?
2.Whether the Plaintiff's suit against the National Assembly is competent?
3.Whether the provisions of Sections 839, 842, 843, 844, 845, 846, 847, 848 and851 of the Companies and Allied Matters Act infringes the fundamental rights provision of Chapter IV of the Constitution of the Federal Republic of Nigeria,1999 (as amended) and other provisions of the Constitution and therefore null and void?
On issue 1, the Court upheld the arguments of the Plaintiff on locus standi and held that the Plaintiff has shown facie that the suit is one of fundamental rights as it affects him personally and therefore, he is cloth with requisite locus standi to institute the suit.
On issue 2, the Court found that since the Plaintiff did not serve the National Assembly with pre-action notice in line with Section 21 of the Legislative Houses Power and Privileges Act, the suit is incompetent against it.
On Issue 3, the Court held that the enormous powers given to the Corporate Affairs Commission to regulate and administer Incorporated Trustees in Nigeria under the offending Sections infringes the Plaintiff's right to freedom of thoughts, conscience and religion enshrined under Section38 of the Constitution and freedom of peaceful assembly and association enshrined under Section 40 of the Constitution and are therefore null and void. The Court also held that the provisions of the Administrative Proceedings Committee in Section 851 of the Act denies the Plaintiff his Constitutional rights of access to Court in Sections 6 (6) (b) and Section 36 (1) of the Constitution and also usurp the powers of the Federal High Court under Section 251 (1) (e) of the Constitution. This makes the provisions of Section 851 of the Act to be null and void because it is inconsistent with the provision of the Constitution.
The import of the Judgment is that, unless the offending Sections are reinstated by a superior Court, CAC cannot enforce the same against associations. As rightly found by the Court, the provisions of the Act to inquire into the management and dormant status of an association’s Bank account is overreaching because associations are funded by donations of its members and well-wishers, and it is not the business of CAC to inquire into their management and Bank accounts. Associations are voluntary in nature and democratic and not to be overly restricted by CAC. Again, associations are Not-For-Profit organizations bound by a common interest or belief and it should not be overly burdened with too many restrictions and laws to fetter their liberty.
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