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LEAVE OF COURT BEFORE SUING A COMPANY UNDER LIQUIDATION

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Let me quickly state that Section 417 of Companies and Allied Matters Act, 1990 is in all fours with Section 580 of Companies and Allied Matters Act, 2020. Now Section 417 of Companies and Allied Matters Act, 1990 provides:- “…if a winding up order is made or a provisional liquidator is appointed, no action or proceedings shall be proceeded with against the company except by leave of the Court.” The above provision is very clear and unambiguous. It means clearly that if a winding up order is made or a provisional liquidator is appointed, no action or proceedings shall be proceeded with against the company undergoing liquidation. The intendment of the said provision is not to stop an aggrieved party from proceeding against the company which has been issued a winding up order or which a provisional liquidator has been appointed, but that leave of Court must be sought and obtained before commencing the action or proceedings.

— J.I. Okoro, JSC. Universal Properties v. Pinnacle Comm. Bank, NJA, Opia, Heritage, Fatogun (SC.332/2008, Friday, April 08, 2022)

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A REGISTERED COMPANY ACTS THROUGH AGENTS

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

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FRAUD LIFTS VEIL OF INCORPORATION

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)

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RATIONALE FOR PRE-INCORPORATION CONTRACT NOT BINDING AT COMMON LAW

At Common Law, a pre-incorporation contract was not binding on the company because there was no principal on behalf of whom an agent could have contracted. The company was not permitted to ratify or adopt it, and it could not, after incorporation, enforce the contract, nor sue, e.g. for damages for breach of contract – Natal Land etc Co. Ltd. v. Pauline Colliery Syndicate Ltd. (1904) AC 120. These common law rules were a source of considerable inconvenience for the promotion of business.

— U. Mohammed, JSC. Societe Favouriser v. Societe Generale (1997) – SC.126/1994

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TESTIFY: ANY OFFICIAL CAN TESTIFY FOR A COMPANY

It is not necessary that it is only that person who carried out the function on behalf of the company that must testify. Not at all, as any official of the company well equipped with the transaction and or related documents would suffice to testify. – Peter-Odili JSC. Chemiron v. Stabilini (2018)

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OBJECT CLAUSES OF A COMPANY IN ITS MEMORANDUM OF ASSOCIATION

The object clauses are no more than a list of the objects the company may lawfully carry out. They are certainly not objects that the company must execute. It is fairly common knowledge that most companies in drawing up the objects clauses of the memorandum of association cover a spectrum far wider than what they can accomplish immediately. It seems to me that the inclusion of the terms of the preincorporation agreement in the memorandum of association of a company is an indication of a strong desire by the contracting shareholders that the proposed company after its incorporation should execute the terms of the agreement so included. This can be taken together with the acts of the company after incorporation in determining whether a new contract has come into existence.

— Nnamani, JSC. Edokpolo v. Sem-Edo & Ors. (1984) – SC.89/1983

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APPELLANT CASE WAS BASED ON THE POST-INCORPORATION CONTRACT

The facts averred in the statement of claim which are deemed to be true for the purpose of the objection taken in limine show that the appellant and the 1st respondent company entered into a new contract in the terms of the preincorporation contract after the 1st respondent company had been incorporated. In the circumstance, the rule of company law that a company is not bound by a preincorporation agreement entered into by its promoters and that the company cannot ratify such agreement after its incorporation is inapplicable to the facts of the case as pleaded in the statement of claim. As the appellant alleged that his claim was founded on the post-incorporation agreement whereas the respondents said the claim was based on the preincorporation contract, the dispute cannot be resolved in limine. The issue can only be determined upon the hearing of the case on the merits.

— Bello, JSC. Edokpolo v. Sem-Edo & Ors. (1984) – SC.89/1983

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