The Federal High Court in Abuja recently nullified eight controversial sections of the Companies and Allied Matters Act (CAMA) 2020.
On 18 April, the Federal High Court in Abuja struck down eight controversial sections of the Companies and Allied Matters Act (CAMA) 2020. The verdict nullifying some of the provisions of the law was a sequel to a suit filed by a constitutional and human rights lawyer, Emmanuel Ekpenyong. In this interview with PREMIUM TIMES’ Ameh Ejekwonyilo, Mr Ekpenyong speaks on his motivation to challenge the law, and how he intends to enforce the judgement. Meanwhile, the Corporate Affairs Commission (CAC) says it has appealed against the judgement.
Excerpts:
PT: What motivated you to institute the lawsuit against sections of the CAMA 2020?
Ekpenyong: My background in the enforcement of fundamental human rights as well as constitutional law inspired the action. Now, many people, especially from the Federal Ministry of Justice, see fundamental rights as rights that are redundant. Most times, if you commence an action against the government for enforcement of fundamental rights, they usually think you are a busybody.
However, fundamental human rights are supposed to be life rights; the basis upon which every law in Nigeria is supposed to be predicated. That is why section 1 (3) of Nigeria’s constitution says ‘the constitution is supreme and every other law that is inconsistent with the provisions of the constitution is null and void to the extent of its own inconsistency.’
So, when the new CAMA was passed in 2020, it heralded a new dawn in doing business in Nigeria. A large part of our practice at Fred-Young & Evans Legal Practitioners is company law. So, when we saw the law, we were excited because it brought in innovations.
PT: What were the innovations?
Ekpenyong: For instance, the law brought in a one-man company, that is, a person can own a company these days and hold meetings via Skype and Zoom instead of calling for meetings and travelling; incurring extra expenses and the attendant issues. Another innovation was a limited partnership.
So, the CAMA 2020 is a wonderful legislation in terms of doing business in Nigeria. But I do not know what happened when it came to the issue of incorporated trustees. I think the provisions went too far without considering the fundamental human rights of Nigerians.
Therefore, there is no way the legislature should make a law that seeks to emasculate the rights the Nigerian people have. Now, either by design or by mistake, those provisions of CAMA that we applied to the court for it to declare them null and void actually ran in the face of the fundamental human rights of Nigerians.
For instance, section 839 of CAMA 2020 gives the Corporate Affairs Commission (CAC), wide latitude, and enormous powers to remove trustees of associations and appoint an interim manager if they mismanage an association. But it is not the duty of the CAC to remove the trustees of associations.
It will be recalled that under the old regime of CAMA 1990, associations were registered with the CAC and their constitutions were registered. The members were guided by their constitution. If any member of an incorporated trustee had a problem with the way the trustees ran the association, they had the power to go to court to ventilate their grievances. It is not the duty of the CAC to determine what happens in an association.
As you may be aware, churches, mosques or religious organisations, non-governmental organisations as well as other entities in which the Nigerian people practise their freedom of thought, conscience and religion are through incorporated trustees.
A simple analogy is this – I am a Roman Catholic and I practise my thoughts and religion by participating in the activities of the church. So, it is too much a power for the commission who is not a Catholic like I am for any reason of a mismanagement of the incorporated trustees of the Roman Catholic church to remove the archbishop as a trustee and appoint whoever it wants. That has infringed on my right to freedom of religion.
So, we were convinced that those provisions of CAMA from 839 to 848 infringe on the provisions of freedom of thought, conscience and religion as well as the freedom enshrined in sections 38 and 40 of the constitution which guarantees peaceful assembly.
Curiously, section 851 of CAMA went to the extent of establishing an Administrative Proceedings Committee who are to hear and determine matters that might emanate from the new legislation. But it is elementary law that matters flowing from company law should be entertained and decided by the Federal High Court. So, the parliament enacted a law that empowered a committee to take over the statutory powers of the court.
We were happy that the judge, James Omotosho, was courageous enough to strike down the offending provisions of the new CAMA owing to their inconsistency with the provisions of the constitution.
PT: What are the safeguards for the laudable intentions of the provisions of CAMA that have been nullified?
Ekpenyong: Well, the intentions of the CAMA were good, but the lawmakers adopted the Charity Act of the United Kingdom, which is completely at variance with our peculiar business climate. Laws are supposed to reflect the wishes and aspirations of the people. Though charities are registered as associations in Nigeria, the mere fact that the lawmakers adopted everything that had to do with the charity in the UK does not mean all associations in Nigeria are registered as charities.
For instance, churches and Islamic organisations in Nigeria are not charities. I think the intention of the lawmakers was that monies contributed by incorporated associations should be transparently managed. This is because there are reports that some churches and mosques generate humongous funds without paying taxes to the government. But incorporated trustees as you would realise from the judgement of the court are not incorporated companies. They are not run for the purpose of making a profit. That should not be. The government cannot regulate religious bodies the same way it does to charities.
PT: What is your grouse with the Nigerian government regulating not-for-profit organisations?
Ekpenyong: The CAMA puts incorporated trustees at par with companies. That shouldn’t be. For instance, charities should be different from churches and Islamic organisations as well as non-governmental organisations that serve as watchdogs over government activities. So, for you to allow the CAC, an agency of government, to regulate such important entities will water down their powers to check excesses of government institutions.
What we were challenging were the powers of the commission to remove the incorporated trustees and that commercial banks should report dormant accounts of incorporated trustees as failure to comply within 15 days would attract a closure of such an entity. But these are not government funds. What is CAC’s business with dormant accounts of incorporated trustees?
The essence of the suit was to curtail the excessive executive powers of the government over the Nigerian people. This did not happen during the draconian era of the military.
So, the nullified sections of the law gave discretionary powers to the commission that were subject to abuse. We believe that the powers of the CAC to regulate incorporated trustees should be limited to registration, constitutional law and ancillary matters, but not the management of the trustees.
PT: How do you intend to enforce the judgement?
Ekpenyong: Well, the judgement will be served on the CAC, and we will give a legal opinion pointing out that those provisions that granted them enormous powers to regulate incorporated trustees have been nullified, except an appellate court says otherwise. The commission should not enforce those provisions.
Then we will send the judgement to key religious organisations of different faiths – the Catholic Church, the Christian Association of Nigeria (CAN) and Islamic organisations. This is to sensitise them that those provisions of CAMA are no longer applicable to them because a court of competent jurisdiction has set them aside.
If the CAC insists on enforcing any of the nullified provisions, those organisations have the right to commence an action in court.
The judgement is a victory for Nigeria’s democracy. Now, the myth that one cannot commence an action against the government and win has been repudiated. We are in a democracy and citizens have the right to commence a suit on constitutional matters and human rights enforcement cases for the courts to make pronouncements on. This is how democracy thrives.
This is also a call to lawmakers at all levels of government to compare provisions in bills with provisions of the constitution, especially Chapter 4, which deals with the fundamental rights of citizens before such bills are sent to either the president or governor for assent.