Corporate Affairs Commission Vs Incorporated Trustees – What Does CAMA Really Say on Suspension and Removal of Trustees?


By Akorede Folarin  

The enactment of the Companies and Allied Matters Act, 2020 (“the new CAMA”) has stirred some interesting debate, especially as it relates to the provisions of Section 839 thereof. The crux of the controversy is the question as to whether the suspension and removal of the management of trusteeships (including religious institutions and other non-governmental organizations) amount to giving the government a carte blanche to undermine their independence and treat them with unrestrained highhandedness and veiled persecution if they so wished. Owing to the impasse created by the debate back and forth over the effect of this provision, it became pertinent to examine it under a legal microscopic lens to see what the hullabaloo is all about and whether the uproar is justified. Thus, this article reviews the provisions of the said Section in the next few paragraphs. 

Firstly, while it may be true that the Nigerian National Assembly has been treading the path of passing more retrogressive laws recently (which, of course, may have aggravated the impasse caused by this new provision), it can be rightly said that it is not entirely a new development for governments to regulate the activities and management of entities/associations formed/registered under the law. The Corporate Affairs Commission (“CAC”) had under the old Act and still has under the new Act similar supervisory powers for the investigation into the affairs of companies – albeit with a slightly different connotation.1 

As for the allegation of likely supra-high-handedness of the CAC enabled by the Act, nothing could be farther from the truth because the letters of the relevant provision do no lend themselves to such an interpretation. The CAC is not given unfettered discretion to suspend/remove the management of an incorporated trusteeship according to its whims and caprices.  The section in question – 839(1) – provides that the Corporate Affairs Commission (CAC) “may by order suspend the trustees of an association and appoint an interim manager or managers to manage the affairs of an association where it reasonably believes that” – 

  1. There is or has been misconduct or mismanagement in the administration of the association;
  2. It is necessary or desirable for –
  • Protecting the property of the association;
  • Securing a proper application for the property of the association towards achieving the objects of the association, the purposes of the association of that property or the property coming to the association;
  • Public interest; or
  1. The affairs of the association are being run fraudulently.

It is obvious from these conditions stated for the exercise of this controversial power of suspension that the provision is intended to engender/protect the best interest of the incorporated trustee as a body corporate and the advancement of its raison d’etre as against allowing any conflict of interest that may have arisen in its leadership and management cadre to fester. In the author’s view, protecting the incorporated trustee as a corporate body against mismanagement or maladministration and fraud, corruption or misuse of property by its management is in every logical perspective a praiseworthy innovation rather than a despicable one as it is being hideously painted.

Duration of Suspension

In addition to there being already provided a list of conditions/parameters for its exercise, the power to suspend trustees and appoint interim managers does not amount to taking over an incorporated trustee or replacing its management with whomever it wants permanently. Going strictly by the letters of the concerned provision as quoted above, this power only allows for temporary external control of such an organization i.e. until new trustees can be appointed. This is even evident from the use of the word “interim” in the marginal title of the section itself. It reads thus: “suspension of trustees, etc. and appointment of interim managers, etc. In this regard, subsection (6)(a) provides that a suspension under the Act shall not exceed twelve (12) months from the date of the order or suspension. These “interim managers” are, therefore, merely to manage the affairs of the association after its extant managers have been suspended where the conditions for suspension as listed above are met and until replacement trustees can be appointed at a time not exceeding the abovestated 12 months.

Procedure for Suspension, Removal, or Replacement of Trustees – Is a Court Order Needed in all Circumstances?

Where there exists a certain level of uncertainty is in determining the body vested with the power to suspend or remove the trustees under the Act. It has been opined in some quarters that the power of suspension is not unilaterally exercisable by the CAC. This line of thinking is based on the provision under subsection (2) to the effect that trustees “shall” only be suspended under an order of Court made after a petition by the CAC itself (after investigation) or members of the incorporated trustee amounting to one-fifth (1/5) of its membership.2  While this has consequently led to the assumption in a lot of quarters (especially legal quarters) that a court order will be required in all circumstances whereby the powers of suspension, removal, and replacement as given under the Act are sought to be exercised, a closer look at the actual letters (and not simply some idealistic intendment of the Act) connotes that this is not definitively the case and that the CAC is also empowered to suspend and remove (though not replace) trustees unilaterally and without recourse to the court. Subsection (7) of the relevant section provides thus:

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“Where at any time after the Commission has made an enquiry into the affairs of the association, it is satisfied as to the matters mentioned in subsection (1), it may suspend or remove –

  1. Any trustee who has been responsible for or privy to the misconduct or mismanagement or whose conduct contributed to or facilitated it; or
  2. By order of the Court, establish a scheme for the administration of the association.”

One thing that immediately jumps out from this subsection is the inconsistency in intendment caused by the unforgivably terrible drafting. There are two ways to look at this. In the first case, it is saying that the CAC is allowed to (a) unilaterally suspend or remove trustees who are complicit in misconduct or mismanagement of the association or (b) suspend or remove trustees by order of the court and then, alongside the court, establish a scheme for the administration of the association. On the other hand, the section is also somehow saying that the CAC can unilaterally suspend or remove trustees who are complicit in misconduct or mismanagement of the association and then subsequently by order of the court to establish a scheme for the administration of the association? In any case, the choice of placement of the words “suspend or remove” in this subsection is a source of major worry and confusion as it is not clear whether they apply only to paragraph (a) of the subsection or both paragraphs.

One thing is certain though – by paragraph (a) to this subsection, the CAC can also unilaterally suspend or remove a trustee of an incorporated trustee if, after having made an ‘enquiry’ into the affairs of the association, he is found to have been complicit in misconduct or mismanagement in the administration of the organization. Therefore, it would appear that the only limits to the CAC’s exercise of this power would be that any purported suspension or removal of trustees can only be exercised if the conditions listed in subsection (1) are met and the approval of the Minister of Trade and Investment is gotten to exercise it under subsection (11).

But this creates another set of problems in itself when juxtaposed with the provision of subsections (2) and (6)(a) to the effect that trustees “shall” only be suspended upon order of Court upon the petition of the Commission or members of the association. The author believes that the Act should have been clearer on what it intends to achieve. Is a court order needed to suspend or remove the trustees in all circumstances or is the CAC also allowed to unilaterally do so in cases involving “misconduct or mismanagement” of the association? Is the CAC of equal jurisdiction with the Court with regards to suspension and removal of trustees in such cases?

It would appear that this is not the case, however, at least in the case of the suspension. The use of the imperative “shall” in subsection (2) empowers only the Court to suspend trustees and so the use of the word “may” in subsection (7) which purports to also give the CAC the power to suspend trustees will be subject to the imperativeness of subsection (2). As the Supreme Court held in Onochie v Odogwu, “The word “shall” is used to express a command of or exhortation, or what is legally mandatory. Its use in a statute or rules of court makes it mandatory that the rule or provision must be observed…”3 Also, in Utuk v The Liquidator (Utuks Construction Marketing Co. Ltd.), the Court held that “…As used in statutes, contracts or the like, the word is generally imperative or mandatory. In common parlance, and in its ordinary signification, the term “shall” is a word of command and one which must be given a compulsory meaning as denoting obligation. The word in ordinary usage means must and is inconsistent with the concept of discretion to or not to do the envisaged act.”4

As for the effect of the word “may” in subsection (7), the Court held in O.R.L. v N.C.C. that: “The word ‘may’ is merely directory and not compulsory. It confers a discretionary power. In some instances though, the word ‘may’ would be interpreted as being mandatory.”5 To see such instances where the word ‘may’ may be so interpreted as mandatory, let us look at the court’s ruling in Davis v Mendes. In that case, the court held that: “The word ‘may’ in a statute may be interpreted as directory or permissive or may be interpreted as imperative, depending on the context in which it is used. If there is a sanction for breach of an obligation created in a statute, then the obligation is mandatory and absolute but where the court cannot interfere to compel its enforcement or indeed punish the breach of the duty the act is directory…”6  This points to the fact that there ought to be something on the face of the provisions of the statute at the very least to show that the suspension of trustees must be done by the CAC. This is unfortunately not so, unlike as is the case with the requirement for an order of the court, which is clearly imperative.7

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As such, seeing that nothing in subsection (7) negates that the power given therein is discretionary and also that the use of the word “shall” in subsection (2) connotes mandatoriness,8 it is put forward that the CAC may not exercise its supposed power to suspend trustees under subsection (7) although it appears it may legally remove court-suspended trustees who are complicit in misconduct or the mismanagement of the incorporated trustee under the same subsection – the court having not been expressly given the power to remove trustees under the Act. It can rightly be said, therefore, that going by the provisions of the section and the strict rules of statutory interpretation, the CAC only has under the Act the power to remove a trustee already suspended by an order of Court.

However, it is at least clear that a court order is necessary to appoint an interim manager or replace any trustee (whether removed by the CAC or the Court itself). This much is certain from the provisions of subsections (1), (3), (6)(b) and (g), and (8).

Who Determines The Functions to be Performed by the Interim Managers?

Another place where the Act is guilty of self-infliction of uncertainty and liability to misinterpretation is its provisions concerning the delineation of the functions of the interim managers.  Different subsections of section 839 empower the court and the CAC (by regulation) to make provisions for the powers and duties of the interim managers in a way that may stir up some confusion. Subsections (3) and (4) appear to suggest that only the Court can delineate the functions to be performed by the appointed interim managers but “with the assistance of the Commission” and that the only relevance the CAC has in this – apart from investigating and petitioning, obviously – is that the interim managers are to perform their delineated functions “under the supervision of the Commission.” Subsection (7)(b) also seems to point to the fact an order of the court is necessary to “establish a scheme for the administration of the association.”

However, subsection (10) then provides that the CAC may make regulations in respect of the functions, powers, and remuneration of the interim managers and how they shall report to the CAC under 839(4). In the author’s view, this may create a dichotomy as to who gets the final say on the powers of, or functions to be performed by the interim managers – the Court or CAC’s regulations? This is so because the Act says that the Court may make provisions for the powers and duties of the interim managers with the assistance of the Commission and not subject to a regulation to be made by the Commission.

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Nonetheless, in case of any dispute as to which takes precedence between both, it is inarguable that the Court’s order will override the CAC’s regulations. This is because subsidiary legislation derives validity from the substantive law and is subject to it. See the cases of Olanrewaju v. Oyeyemi;9 Governor of Oyo State v. Folayan;10 and Famfa Oil Limited v. Attorney-General of the Federation & Anor.11 Therefore, with the Act providing that the CAC is only meant to assist the court with delineating the powers and functions of the interim managers, any court order given by the court is paramount and supersedes any contrary provision in any regulation that the CAC makes. 


Overall, despite the mass outcry claiming that the CAC has now been elevated to the position of a Greek god that can do and undo; such claims are fallacious and unfounded under the letters and spirit of the relevant provision. For one, there are conditions laid down that must be met with regards to the running of the affairs of the incorporated trustee before the exercise of the power can be embarked upon. For another, the CAC cannot unilaterally exercise the power because the Court has to be carried along through the suspension, removal, and replacement of the management, and also in the carrying of the duties delineated for the interim managers.

Moreover, what we have here is a pretty normal and fairly obtainable practice in most jurisdictions when it comes to the regulation of incorporated trustees. Section 76 of the UK Charities Act, for example, gives the UK Charity Commission the same powers except for the part of the inclusion in new CAMA of public interest and fraudulent running of the NGO as grounds for suspension of trustees or appointment of interim managers.

In the author’s opinion, it would have been more understandable if the critics of this provision are clearer about their interest in not having any sort of regulatory oversight over religious bodies, NGOs et al for whatever reason. Nevertheless, – and irrespective of the minor flaws in the drafting as highlighted in this article – it is the belief of the author that going forward this provision will ensure transparency and foster accountability in the running of the affairs of incorporated trustees in Nigeria as against the opacity with which they operated under the old regime.

Akorede Folarin is an Associate Counsel in the Corporate/Commercial/Dispute Resolution Practice Group at Kevin Martin Ogwemoh Legal, Lagos. He can be reached at or at


1 Under Section 314 of the CAMA 1990 (357 of the new Act), the CAC had the power to investigate a Company whose affairs are being run improperly, and under section 323 of the Act (366 of the new Act), the Commission could petition for the Company to be wound up after such investigation, upon which the Court could further to this application put the Company under receivership (effectively changing its control).

2 Section 839 (1), (2), (3) & (6)(a)

3 (2006) 6 NWLR (Pt. 975) 65 at 89. See also Ogidi v State (2005) 5 NWLR (Pt. 918) 286 at 327.

4 (2009) LPELR-4322(CA) Per Omokri JCA (Pp. 20-21, Paras E-B)

5 (2007) WRN (Vol. 18) 87 at 117 (CA). The court ruled similarly in Enakhimion v Edo Trans. Serv. (2006) All FWLR (Pt. 334) 1882 at 1900 (CA), holding the view that: “The word ‘may’ when used in a statute generally imports a discretion. However, in some cases it is construed as imperative. The context in which the word appears must be looked into as this is the controlling factor whether it is mandatory or discretionary.” See also Orakul Resources Ltd. v N.C.C. (2007) 16 NWLR (Pt. 1060) 270 at 3030-304 Paras G-G, 313 Paras. D-G (CA)

6 (2000) All FWLR (Pt. 348) 883 at 905 Paras. D-F

7 See section 839(1), (2), and (6)

8 Also, subsection (6)(a) reiterates the position that trustees can only be suspended upon an order of the Court upon petition by the Commission or members of the association for a period not exceeding twelve (12) months. It is interesting why the Act expatiates on the procedure and extent of orders where the Court is to exercise power but summarily breezes through in ones involving the Commission.

9 (2001) 2 NWLR (Pt. 697) 229

10 (1995) 8 NWLR (Pt. 413) 292

11 (2007) LPELR-9023 (CA)


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