Oga Lawyer Series: Abeg Wetin Be the Indoor Management Rule of Companies


Good day my country Piple and I welcome una to anoda week of our Oga Lawya series.

Some weeks wen don waka pass, me and one shima enter Shoprite for Festac Town for inside Lagos State  make we for relax and see small action film wen get correct war-start. I nor kom know say na so I don dey popular reach oooo, wen one big bros just dey halla * oga Lawya I beg kom settle dis gbegeh wen dey ground”… As amebo wen I be, I waka reach there.

Now wetin kom be the gbegeh? The people wey dey manage one ogbonge company wey the big brother and im friend carry money put inside make them for do legit business don carry the moni go put for inside yawa place o, moni  don enter stori. Na so them come dey argue wether bros and im friend go fit recover their moni or not. Them dey talk say the brother suppose no say the company no too stand well. I come know sharp sharp say  the gbegeh kosine wetin oyibo dey call “ THE INDOOR MANAGEMENT RULE OF COMPANIES “.

Na that one make I  choose to knack dis topic for dis week becos if nor be say I dey there dat day, dose guys for set blow take kpuff themselves and onto say dem do local highness join the argument wen dem get.

The Indoor Management Rule bush-out come aside from the oyibo case of ROYAL BRITISH BANK VS. TURQUAND, and them bring out this rule to take reduce the sufferness wey been dey inside the one wey them call “Constructive Notice Rule”  I go describe the two give una.

Constructive notice mean say, you suppose know say company no well even though say you know dey inside the company, Indoor Management Rule come outside come say, wetin happen? How person wan know wetin you no tell am. The person na winch? That one come say “if person don see say this company na this one thing im dey do, come carry im money give them, law go take am say the company dey do that thing well well without any issue. If dey come no dey do am well come get any issue, n aim be say, the person wey give them money no go get to blame at all.

According by this  doctrine, any persons wey dey deal with any company, no go need go dey look inside whether all the things wey kosine waka of contract waka well. The only thing wey the person suppose ask na wether this thing wen them wan do, e follow for wetin them get power to do (as their memorandum and articles of association provides).

For example, this one mean say people wey get share for inside the company no go need to dey chook eye for whether the people wey dey manage the company dey do wetin them suppose do. They suppose just assume say them dey do am.

By dis oversabi rule, any contract wen fall yakayta inside the power wen the company get but the oga kpatakpata dem ( Directors) kom do pass demselves ,the  company go dey liable. Also, for own Naija case of METALIM PEX VS. AG LEVENTIS& CO. NIG LTD (1976) 2SC91. , The Almighty Supreme Court yarn say where issues dey as to appointment of company officer, or where d appointment of the officer nor dey legit and dem disqualify am but he still dey form company agent, na im be say dem go hold the company for local as person wen be outsider nor go fit know d orukuruku wen dey happen inside d company.

Although dis rule na to protect the interest of outsiders, the outsider suppose to use im akanuche to ask enough questions and get sense full him head as to the power of the company before im begin to do any runs wit the company.

When the Rule no go Apply (Exceptions)

  1. Where 419 mata dey ground or d runs nor be confam one.
  2. Where d person wen dey rely on dis rule don already know of d yamayama wen dey involve.
  3. Wen d runs wen d company do wit d outsider dey in a way wen be say e nor get reason why d outsider nor go ask questions before he enter any runs.

Oweh Anthony na Lagos Lawyer wey sabi.

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