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OBJECT CLAUSES OF A COMPANY IN ITS MEMORANDUM OF ASSOCIATION

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Dictum

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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PRE-INCORPORATION CONTRACT NOT BINDING IS A COMMON LAW RULE

The rule that the company is not bound by a pre-incorporation contract purportedly made by it on its behalf, even if ratified by it after incorporation, is a rule of common law and not a statutory provision.

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

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FOREIGN COMPANY NOT INCORPORATED IN NIGERIA CAN SUE IN NIGERIA

On this appeal, it was argued by counsel on behalf of the respondent that even though it may be a legal entity in its country of incorporation, it had no artificial personality in Nigeria since the Companies Act is silent on whether a company such as the appellant would be allowed to sue or not. That submission is misconceived. The principle of law that a foreign corporation, duly created according to the laws of a foreign state recognized by Nigeria, may sue or be sued in its corporate name in our courts is part of the common law. The suggestion that a foreign company duly incorporated outside Nigeria should first be registered in Nigeria under the provisions of the Companies Act, 1968 (which was then the applicable statute) dealing with registration of foreign companies, notwithstanding that it does not fall into the category of foreign company” as defined by that Act, is too preposterous and patently inimical to international trade to merit any prolonged or serious consideration. It suffices to say that the appellant company which was admitted by the respondent to be a limited liability company with its registered office in Copenhagen properly sued in its corporate name.

— Ayoola, JSC. Saeby v. Olaogun (1999) – SC.261/1993

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CAMA MAKES IT POSSIBLE FOR PRE-INCORPORATION CONTRACT TO BE RATIFIED

All that has now changed in this country for section 72(1) of CAMA makes it possible for a pre-incorporation contract to be ratified by a company after its incorporation and thereby becoming bound by it and entitled to the benefit thereof. There seems to be no dispute in this appeal about this conclusion.

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

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RATIONALE BEHIND NULLITY OF PRE-INCORPORATION CONTRACT

In Kelner v. Baxter (1866) L. R. 2 C.P. 174 Erie C.J. explaining the rationale of the principle [pre-incorporation contract] said: “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 defendant personally…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 the responsibility”.

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NON-REGISTRATION OF COMPANY CHARGES VOIDS IT

The effect of non-compliance with the provisions of section 94 is quite grave. Non-registration at the Companies Registry of charges created by the company, as opposed to existing charges acquired by the company, destroys the validity of the charge. Unless the prescribed particulars are delivered to the Registrar within 30 days of the creation of the charge, it will, so far as any security on the company’s assets is conferred thereby, “be void against the liquidator and any creditor of the company”. But this is “without prejudice to any contract or obligation for repayment of the money thereby secured, and when a charge becomes void under this section the money secured thereby shall immediately become payable”.

– Augie JSC. Bank v. TEE (2003)

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A COMPANY’S LEGAL PERSONALITY DIES AT THE DEATH OF THE COMPANY

A company is a legal person with legal capacity to sue or be sued. That legal personality and capacity continues until the company dies a legal death in the process, and as a result of winding up and dissolution.

– Oputa, JSC. Intercontractors v. National Provident (1988)

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