Justice James Omotosho of the Federal High Court, sitting in Abuja, nullified nine sections of the Companies and Allied Matters Act (CAMA), 2020. According to the judgment nullifying the sections, the court held that they infringe on the fundamental human rights of Nigerian citizens.
The nullfied sections are sections 839, 842, 843, 844, 845, 846, 847, 848 and 51. See the provisions of the sections below:
(1) Section 839 — Suspension of trustees, etc., and appointment of interim managers, etc.
(1) The Commission 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—
(a) there is or has been any misconduct or mismanagement in the administration of the association;
(b) it is necessary or desirable for the purpose of—
(i) protecting the property of the association,
(ii) 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 of the property coming to the association,
(iii) public interest; or
(c) the affairs of the association are being run fraudulently.
(2) The trustees shall be suspended by an order of Court upon the petition of the Commission or members consisting one-fifth of the association and the petitioners shall present all reasonable evidence or such evidence as requested by the Court in respect of the petition.
(3) Upon the hearing of the petition and the appointment of the interim manager, the Court, with the assistance of the Commission, may make provision with respect to the functions to be performed by the interim manager or managers appointed by the order—
(a) the powers and duties of the interim manager or managers which may include the powers and duties of the trustees of the association concerned ; and
(b) any power or duty specified under paragraph (a) to be exercisable or discharged by the interim manager or managers to the exclusion of the trustees.
(4) The functions shall be performed by the interim manager or managers under the supervision of the Commission.
(5) The reference in subsection (1) to misconduct or mismanagement extends to the employment for—
(a) the remuneration or reward of persons acting in the affairs of the association, or
(b) other administrative purposes, of sums which are excessive in relation to the property which is or is likely to be applied or applicable for the purposes of the association.
(6) A court of competent jurisdiction may, upon the petition of the Commission or members of the association—
(a) order or suspend any person, officer, agent or employee of the association from office or employment, provided that such suspension does not exceed 12 months from the date of the order or suspension;
(b) by order appoint such number of additional trustees as it considers necessary for the proper administration of the association ;
(c) by order—
(i) vest any property held by or in trust for the association in the official custodian, who shall be a person so designated by the court from time to time ;
(ii) require the persons in whom any such property is vested to transfer it to the official custodian who will be an individual as the court may, from time to time designate, or
(iii) appoint any person to transfer any such property to the official custodian ;
(d) order any person who holds any property on behalf of the association, or of any trustee for it, not to part with the property without the approval of the Court ;
(e) order any debtor of the association not to make any payment in or towards the discharge of the debtor’s liability directly to the association but to make such payment into an interest yielding account held by the Commission for the benefit of the association ;
(f ) by order restrict (regardless of anything in the trusts of the association) the transactions which may be entered into, or the nature or amount of the payments which may be made, in the administration of the association without the approval of the court ; or
(g) by order appoint an interim manager to act as receiver and manager in respect of the property and affairs of the association.
(7) 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—
(a) any trustee who has been responsible for or privy to the misconduct or mismanagement or whose conduct contributed to or facilitated it ; or
(b) by order of the Court, establish a scheme for the administration of the association.
(8) The court may by order replace a trustee removed under subsection (7).
(9) A person who contravenes an order under subsection (6) (d), (e) and (f ) commits an offence and is liable on conviction to fine as the Court deems fit or imprisonment for a term of 6 months or to both.
(10) The Commission may make regulations in respect of—
(a) the functions, powers and remuneration of the interim manager and the manner in which the interim manager shall make reports to the Commission ; and
(b) making reports to the Commission, and such other things as may be necessary for the effective administration of the association during the period of its interim administration.
(11) The Commission shall only exercise its power under this section in respect of any association with the approval of the Minister.
(2) Section 842 – Accounts of dissolved incorporated trustees.
(1) Where a bank holds one or more accounts in the name of or on behalf of the incorporated trustees of a particular association, and the account, or, if it holds two or more accounts, and each of the accounts is dormant (as defined under the relevant banking regulation), the bank shall without delay notify the Commission of these facts.
(2) Where the Commission receives a notice under subsection (1), the Commission may request that the association provide evidence of its activities, and where the association fails to respond satisfactorily within 15 days of the request, the Commission may dissolve the association in accordance with section 850, and where an association is so dissolved, the Commission may give a direction to the bank concerned to transfer—
(a) the amount, or, as the case may be, the aggregate amount, standing to the credit of the relevant association in the account or accounts in question to such other association as is specified in the direction in accordance with subsection (3) of this section to the bank ; or
(b) to each of two or more other associations so specified in the direction, such part of that amount or aggregate amount as is there specified in relation to that association.
(3) The provisions of subsection (2) shall also apply where the Commission is unable, after making reasonable inquiries, to locate an association registered under this Act or any of its trustees.
(4) The Commission may specify in a direction under subsection (2) such other association or charity as it considers appropriate, having regard to the purposes of that association or charity : Provided that before any association may be so specified by the Commission, the trustees of such an association shall, by a written memorandum to the Commission, indicate its willingness to accept such amount to be transferred to it.
(5) Any amount received by an association by virtue of this section is to be received by the association on terms that—
(a) it is to be held and applied by the association for the purposes of the association ;
(b) as property of the association, it is nevertheless subject to any restrictions on expenditure to which it was subject as property of the relevant association ; and
(c) the receipt of a trustee for an association in respect of any amount received from a relevant bank by virtue of this section is a complete discharge of the bank in respect of that amount.
(6) The Commission shall only exercise its power under this section in respect of any association with the approval of the Minister.
(3) Section 843 – Accounts which cease to be dormant before transfer.
Where any bank has given notice to the Commission under section 842(1) of this Act, it shall, subject to any contrary provision under the relevant banking enactment, not re-activate the dormant accounts, without first notifying the Commission—
(a) if before any transfer is made by the bank in pursuance of a direction under section 842 (2) of this Act, the bank has cause to believe that the account or accounts held by it in the name of or on behalf of an association is no longer dormant, the bank shall without delay notify the Commission that the account or accounts have ceased to be dormant.
(b) if it appears to the Commission that the account or accounts in question is or are no longer dormant, or where the Commission receives satisfactory account of the activities of the association pursuant to section 842 (2), it shall revoke any direction made to the bank under section 842 (2) of this Act with respect to any such account.
(4) Section 844 — Dormant Bank accounts : Supplementary
(1) No obligation as to secrecy or other restriction on disclosure, however imposed, shall preclude a relevant bank from disclosing any information on the status of dormant bank accounts to the Commission for the purpose of enabling the Commission to discharge its functions under sections 842 and 843 of this Act.
(2) For the purposes of this section and sections 842 and 843 of this Act, an account is dormant if no transaction, other than—
(a) a transaction consisting of a payment into the account, or
(b) a transaction which the bank holding the account has itself caused to be effected, has been effected in relation to the account within the period of five years immediately preceding the date when the Commission is informed as mentioned in section 842 (1) of this Act.
(3) For the purposes of sections 842 and 843 of this Act, the term “bank” and in this section, a “relevant bank” means—
(a) any Central Bank of Nigeria designated money deposit institution ; or
(b) such other person or organisation who may lawfully accept deposits as may be prescribed by the Minister.
(4) For the purposes of sections 842 and 843 of this Act, references to the transfer of any amount to an association are deemed to be references to any of its transfers made to—
(a) the trustees of the association, or
(b) any trustee of the association, as the trustees of the association may determine, and any reference to any amount received by an association is to be read accordingly.
(5) Section 845 — Bi-annual statement of affairs.
(1) The trustees of an association shall submit to the Commission a bi-annual statement of affairs of the association, as the Commission shall specify in its regulations.
(2) If the trustees fail to comply with subsection (1), each trustee shall be liable to a penalty for every day during which the default continues in such amount as the Commission shall specify in its regulations.
(6) Section 846 — Accounting records and statement of accounts.
(1) The trustees of an association shall ensure that accounting records are kept in respect of the association and such accounting records shall be sufficient to show and explain the transactions of the association, and—
(a) disclose at any time, with reasonable accuracy, the financial position of the association at that time ; and
(b) enable the trustees to ensure that statements of accounts prepared by them comply with subsection (3).
(2) The accounting records shall, in particular, contain—
(a) entries showing from day to day, all sums of money received and expended by the association, and the matters in respect of which the receipt and expenditure took place ; and
(b) a record of the assets and liabilities of the association.
(3) The Commission may make regulations generally for the purpose of this Part and, in particular, without prejudice to the generality of the foregoing provisions, make regulation-
(a) prescribing the forms, returns and other information required under this Part ;
(b) prescribing the procedure for obtaining any information required under this Part ;
(c) requiring returns to be made within the period specified therein by any body corporate to which this Part applies ; and
(d) prescribing relevant accounting principles or standards to be adopted by the association.
(4) Regulations under subsection (3) may in particular provide—
(a) for the statement to be prepared in accordance with methods and principles as are specified or referred to in the regulations ; and
(b) any information to be provided by way of notes to the accounts.
(5) The financial year of an association shall be determined by the Commission through regulations issued under subsection (3) and the Commission may also make provision for determining the financial years of an association for the purposes of this Act and any regulation made under it.
(7) Section 847 – Preservation of accounting records
The accounting records of an association shall be preserved by it for six years from the date on which they were made.
(8) Section 848 — Annual returns
(1) The trustees of the association shall, not earlier than 30th June or later than 31st December each year (other than the year in which it is incorporated), submit to the Commission a return showing the name of the association, the names, addresses and occupations of the trustees, and members of the council or governing body, particulars of any land held by the corporate body during the year, and of any change which has taken place in the constitution of the association during the preceding year.
(2) The return referred to in subsection (1) shall be accompanied by the audited statement of accounts for the year of return.
(3) If default is made in complying with this section, the corporate body is liable to a penalty as may be prescribed by regulation.
(9) Section 851 — Establishment of Administrative Proceedings Committee.
(1) The Commission shall establish an Administrative Proceedings Committee (in this Act referred to as “the Administrative Committee”) comprising—
(a) the Registrar-General who shall be the Chairman of the Administrative Committee ;
(b) five representatives from the operational departments of the Commission, not below the grade level of a director, one of whom shall be from the Compliance Department of the Commission ; and
(c) a representative of the Federal Ministry of Industry, Trade and Investment not below the grade level of a director.
(2) The Administrative Committee may co-opt persons, at any of its meetings, as observers, representatives of relevant associations, including associations of shareholders, registrars or trustees, as are considered necessary, and members so co- opted shall not count towards a quorum or have the right to vote in respect of any decision taken by the Administrative Committee.
(3) The Commission shall designate an officer of the Commission with at least 10 years post-call experience in the legal profession who shall be the secretary of the Administrative Committee.
(4) The Administrative Committee shall—
(a) provide the opportunity of being heard for persons alleged to have contravened the provisions of this Act or its regulations ;
(b) resolve disputes or grievances arising from the operations of this Act or its regulations ; and
(c) impose administrative penalties for contravention of the provisions of this Act or its regulations in the settlement of matters before it.
(5) The chairman shall preside at every meeting of the Administrative Committee and in his absence the members present at the meeting shall select one of their numbers to preside over the meeting.
(6) The quorum at a sitting of the Administrative Committee is four members present while the determination of issue shall be by simple majority of members present and where there is equality of votes, the chairman or the member presiding shall be entitled to a casting vote.
(7) Parties shall attend the sitting of the Administrative Committee in person or be represented by a legal practitioner.
(8) Proceedings of the Administrative Committee shall be recorded on audio or visual tape or such other electronic device.
(9) Decisions reached on any matter before the Administrative Committee shall be forwarded to the parties not later than 14 days after the confirmation by the Board.
(10) The sanctions that may be imposed by the Administrative Committee, include—
(a) imposition of administrative penalties ;
(b) suspension or revocation of registration; or
(c) recommendation for criminal prosecution if matters brought before it reveals any criminal act or conduct.
(11) Decisions of the Administrative Committee are subject to confirmation by the Board.
(12) Parties dissatisfied with decisions of the Administrative Committee may appeal to the Federal High Court.
(13) Subject to the provisions of this section, the Administrative Committee to regulate its proceedings.