It is important to appreciate the fact that the company neither loses its legal personality nor its title to the goods in the receivership.
– Karibi-whyte, JSC. Intercontractors v. National Provident (1988)
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One of the occasions when the veil of incorporation will be lifted is when the Company is liable for fraud as in the instant case. – Galadima JSC. Alade v. Alic (2010)
The magisterial pronouncements in these ex cathedra authorizes, with due respect, expose the poverty of the alluring submission of the appellants counsel on the stubborn point. PW1 described himself as the chairman of the board of directors of the respondent. The respondent is a duly incorporated company under the Nigerian Companies and Allied Matters Act. By the registration, it is a persona ficta, a juristic personality which can only act through an alter ego such as its agents or servants, directors, managers, see Kate Enterprise Ltd v. Daewoo (Nig.) Ltd. (supra); Interdrill (Nig.) Ltd. v. UBA Plc. (supra). To label the PW1s evidence as hearsay, as pontificated by the appellants, will be antithetical to the corporate personality of the respondent, a legal abstraction, devoid of blood, flesh, brain and other human features.
— O.F. Ogbuinya, JCA. Impact Solutions v. International Breweries (2018) – CA/AK/122/2016
Jenkins, L.J. in Edwards Vs Halliwell (1950) 2 ALL ER 1084 @ 1066, where His Lordship held inter alia: “The rule in Foss Vs Harbottle, as I understand it, comes to no more than this. First, the proper plaintiff in an action in respect of a wrong alleged to be done to a company or association of persons is prima facie the company or the association of persons itself. Secondly, where the alleged wrong is a transaction which might be made binding on the company or association and or all its members by a simple majority of the members, no individual member of the company is allowed to maintain an action in respect of that matter for the simple reason that if a mere majority of the company or association is in favour of what has been done, then cadit quaestio. Thus, the company or association is the proper plaintiff in all actions in respect of injuries done to it. No individual will be allowed to bring actions in respect of acts done to the company which could be ratified by a simple majority of its members. Hence the rule does not apply where the act complained of was ultra vires the company, or illegal or constituted a fraud on the minority and the wrongdoers are in the majority and in control of the company.”
In Progress Bank of Nigeria Plc. V.O.K. Contact Point Holdings Limited (CA 3) (2008) 1 NWLR (Pt. 1069) 514, the Respondent obtained judgment against the appellant (a wound-up bank). The Appellant sought to appeal the decision but the Respondent filed an objection to the capacity of the Appellant to file a Notice of Appeal on the ground that, it was dead and that only its liquidator could file such appeal on its behalf. The Court of Appeal held thus:- “l must say straight away that, there is a world of difference between the winding-up of a company and the dissolution of a company. Under the provisions of Section 454 (1) and (2) of the Companies and Allied Matters Act, 1990, a company dies once the Court orders the dissolution of the company. The revocation of the company/bank and order of Court winding – up same does not indicate its death. The appointment of a liquidator is for the purpose of ensuring the smooth burial of the company. See Nzom v. Jinadu (1987) 1 NWLR (Pt. 51) 553; CCB (Nig.) Ltd V. Onwuchekwa (2000) 3 NWLR (Pt. 647) 65. There is nothing before us to show that Progress Bank of Nigeria Plc has been dissolved. It is so clear that the said bank is under a winding-up proceedings. In such a state, the bank is seriously ill, but not dead. That is the support of Section 417 of the Companies and Allied Matters Act, 1990. My Lords, a company/bank is certified dead on its dissolution, but where the bank as in this case is under winding up proceeding it has not died. It is gravely ill, it can sue and maintain an action in Court, but no action or proceeding can be brought against it except with the leave of the Court. In CCB (Nig) Ltd v. Onwuchekwa (2000) 3 NWLR (Pt. 647) page 65 at 75 the Court of Appeal said: “A company under winding up proceedings has not died. It is still alive but perhaps sick.”
The Receivership in the instant case which does not necessarily result in the liquidation or winding up of the company, the right to deal with the assets in the receivership are revived at the termination of the receivership. In all cases the right of the directors of the Company to deal with the assets of the company not in receivership or other matters not suspended are not affected by the appointment of a Receiver/Manager over the assets of the Company. The directors of the company do not by virtue of a receivership become functus afficio for all purposes of the company.
– Karibi-whyte, JSC. Intercontractors v. National Provident (1988)
At common law a company before its incorporation has no capacity to contract. Consequently, nobody can contract for it as Agent nor can a pre-incorporation contract be ratified by the company after its incorporation -Transbridge Co. Ltd. v. Survey International Co. Ltd. (1986) 17 NSCC 1084; (1986) 4 NWLR (Pt. 37) 576; Edokpolo & Co. Ltd. v. Sem-EdoWire Industries Ltd. & Ors. (1984) 7 SC 119; Sparks Electrics (Nig.) Ltd. v. Ponmile (1986) 2 NWLR 579; Enahoro v.I.B.WA. Ltd. (1971) 1 NCLR 180; Kelner v. Baxter (1867) LR 2CP 174; Natal Land and Colonisation Co. v. Pauline Syndicate (1904) AC 120. The rationale for this rule was stated at page 183 of the report by Erle, C.J. in Kelner v. Baxter in these words: “………………….as there was no company in existence at the time, the agreement would be wholly inoperative unless it were held to be binding on the defendants personally. The cases referred to in the course of the argument fully bear out the proposition that, where a contract is signed by one who professes to be signing ‘as agent’, but who has no principal existing at the time, and the contract would be altogether inoperative unless binding upon the person who signed it, he is bound thereby: and a stranger cannot by a subsequent ratification relieve him from that responsibility. When the company came afterwards into existence it was a totally new creature, having rights and obligations from that time, but no rights or obligations by reason of anything which might have been done before.” The company can, however, after its incorporation, enter into a new contract to put into effect the terms of the pre-incorporation contract – Touche v. Metropolitan Railway Warehousing Co. (1871) 6 Ch. App 671; Howard v. Patent Ivory Manufacturing Co. (1888) 38 Ch D 156.
— Ogundare, JSC. Societe Favouriser v. Societe Generale (1997) – SC.126/1994
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