COMPANY LAW REFORM AS A DEVELOPMENTAL TOOL IN NIGERIA A COMPARATIVE STUDY

 

LIST OF CASES

 

• Aghenghen v. Waghoreghor (1974) 3 SC 15

 

• G. v. John Holt 1910, 2 NLR 1

 

• Amaya v. Associated Contractors (1990) 6 SC NJ 49A

 

• Bamford v. Bamford (1970) Ch. 212

 

• BPR Ltd v. Awayewaserere (2002) 33 WRN 138

 

• British Asbestos co v. Boyd (1912)Ch. 439

 

• Dawodu v. Danmole [1962] 1 WLR 1053

 

• Edwards v. Hallowell (1950) 2 all ER 1067

 

• Foss v. Harbottle (1843) 2 Ha 461

 

• Fulham Football Club Ltd v. Cabra Estates Plc (1992) BCC 863

 

• Hogg v. Cramphorn ltd and others (1967)Ch. 254

 

• Hutton v. Westcork Railway 1883 Ch. D, 654

 

• IGP v. Kamara (1943) 2 WACA 185

 

• Lewis v. Bankole (1908) 1NLR 81

 

• Maxwell v. Department of Trade and Industry(1974) QB 523

 

• Moriarty v. Regent’s Garage and Engineering Co. Ltd (1921) 1 K.B. 423

 

• Newton v. Birmingham Small Arms Ltd (1906) 2 Ch. 378

 

• Okoiko v. Esedalue (1974) 3 SC 15

 

• Omisade v Akande (1987)2 NWLR (pt.55), 155

 

• O’Neill v. Philips(1999) 1 WLR 1092

 

• Parke v. Daily news (1962) 3 WLR 566

 

• Pavlides v. Jenson (1956) all ER 518

 

• Percival v. Wright(1902) 2 Ch. 421

 

• Regal (Hastings) Ltd v. Gulliver (1967) 2 AC 134n

 

• Re Alma Skimming Co. (1880)16 Ch. D.413

 

• Re City Equitable Fire Insurance Co. (1920) 1 Ch. 407

 

• Re Forest of Dean Coal Mining Co. [1879]10 Ch.

 

• Re Kingston Cotton Mill Co. (1996) 1 Ch. 6

 

• Re London and General Bank (no 21895)

 

• Re Smith v. Fawcett Ltd (1942) Ch. 30

 

• Re Wels Bach Incandescent Gas Light Co. Ltd (1904) 1 Ch. 87

 

• Re Westbourne Galleries (1973) AC 360

 

• Salomon v. Salomon [1897] AC 22

 

• Scottish Insurance Corp. v. Wilsons and Clyde Coal (1949) AC 462

 

• Smith v. Anderson (1880) Ch. D.247

 

• Tika-tore press Ltd v. Abina (1973) 12 S.C.(reprint) 67

 

• Western Nigerian Finance Corporation v. West Coast Builders Ltd (1971) 1 U.I.L.R.

 

 

 

 

 

LIST OF STATUTES

 

• Companies and Allied Matters Act 1990

 

• Code of Corporate Governance for South Africa 2010

 

• English Companies Act 2006

 

• National Insurance Commission Code 5)

 

• Pension Act Cap 346 Laws of the Federation

 

• Pension Commission Code

 

• Securities and Exchange Commission Code of Corporate Governance 2010

 

• United Kingdom Corporate Governance Code

 

 

 

 

 

 

			TABLE OF ABBREVIATION
1)	AC	–	Appeal cases
2)	All ER	–	All England Report
3)	FN	–	Foot Note
4)	KB	–	Kings Bench
5)	NLR	–	Nigerian Law Report
6)	WACA	–	West African Court of Appeal
7)	WLR	–	Western Law Report
8)	SC	–	Supreme Court

 

 

Abstract

The main objective of this work is to consider how the company law framework could be utilised as a development tool in the context of developing countries. The research is done from a common law company law perspective. Nigeria is used as case study and the United Kingdom (the origin of common law) as a comparator. Insights were also drawn from other jurisdictions. This research article mainly employs historical, desktop and comparative law methodologies. It explores case law developments, statutory history and reforms, corporate governance innovations and corporate social responsibility. This research concludes that Nigeria is a budding state with its own set of values and identity. This research then postulates that in actualising development through company law, reference should be accorded to the importance of adapting some other jurisdictions policies into the Nigerian framework.

 

                                CHAPTER ONE

                                INTRODUCTION

 

Company law is the field of law concerning companies and other business organizations. These include corporations, partnerships, and other associations, which usually carry on some form of economic or charitable activity. It also includes the means of regulating the business market. It is also called law of business associations or corporate law. Law is the bedrock of every society. If there is a defect in the law, the society will not thrive. Companies operations and their regulation are crucial to economic development.

 

There are different types of business associations; some could be for profit making while others for adding social value. Primarily corporate law governs them. Therefore corporate law drives the economy and the economy affects the overall development of a nation.

 

Nigerian corporate law has not efficiently functioned rather it is characterized by a high degree of failed business modules, inter and intra firm corruption and different fraudulent misconducts. This leads to the questions:

 

What does this research article hope to achieve?

 

It hopes to address the issue of company law reform in Nigeria specifically looking into the issues of CSR, corporate governance innovations, statutory history of the Companies And Allied Matters Act 1900 and case law developments.

What methodologies will the article be using?

It will employ comparative, historical and desktop methodologies. It will use the United Kingdom as a comparator since Nigerian company law is largely modeled after English company law.

HISTORICAL DEVELOPMENT OF COMPANY LAW IN NIGERIA

Nigeria is the most populous Black Country in the world with an estimate of about 170 million people. It is influential both in sub-Saharan Africa and in the global economy. Nigeria is made up of about 250 distinct ethnic groups. Each of these has their own distinct culture. Before colonialism, Nigeria was a geographical entity made of these groups living separately but interconnected by marriage, trade and conquest. The idea and practice of law and justice was

centered on the traditional beliefs. For example, in the Yoruba region it was around the concept of “omoluabi” which literally means “of good character”¹.

Company law in Nigeria is largely substantive. Its main features include incorporation of companies and regulations of their conducts, stakeholders’ rights, duties and liabilities, corporate social responsibility and many other concepts.

 

In the description of the history of African or in this case Nigerian company law, adequate reference is not given to the indigenous means of trade and practices of business associations. Indigenous in this context means customary methods of transaction peculiar to Africans as far back as 12th century before the colonial era and Christianization of Africans.

 

For instance, the modern systems of raising capitals through debentures, loans, interests, and credits; these were all available in indigenous Nigeria and are still available in customary practices today. People who wanted to do business had opportunities to raise capitals through what is called “Owo Ele” i.e. credits and interest, loans and debentures etc. In this case, there was usually an institution of person(s) who is the lender. Sometimes the agreement might include a guarantee by land as in the position of customary pledge as described in the case of Okoiko v Esedalue². There was customary tenancy where occupational right over the land is granted by an overlord in the customary tenant in return for the grantee’s recognition of the title of the grantor and payment of customary tribute.³ These concepts are similar to modern concept of mortgage that is utilized in company practices.

 

Moreover, the payment of customary tribute could also be compared to the modern concept of taxation. This tribute is used for the administration and betterment of the village or tribe. Also, in the indigenous Nigeria, some entities had some forms of perpetual succession and geographical dominance. This is similar to perpetual succession as a result of incorporation. It is also noteworthy that most of them even have geographical dominance. E.g., the Ojikutu Pileoro family have been known to be the master meat traders in Eko(Lagos) since about 1700s⁴. In the same vein, everybody knew that the Ijebus were master garri (cassava flakes) traders etc⁵.

Furthermore, there was the principle of corporate social responsibility [CSR]. This principle is about the role a company should play in its relationship with its immediate community and environment.⁶ Successful traders gave out food and clothes to the less privileged, particularly

 

• Interviews conducted during research.

² (1974) 3 SC 15

³ Elias CJN in Aghenghen v. Waghoreghor (1974) 1 SC 1 ⁴ Interviews conducted for the research

 

⁵ See FN 6

⁶Professor Joseph E.O. Abugu, Principle

 

 

during festive periods. They also held charity parties for these people. Business philosophy was not driven by profit maximization but the need to add value to the society at large.

 

The above are evidences of rudimentary business organizations. These forms are parallels to the English rudimentary business like the Guilds,⁷the Commenda and Societas.⁸

 

With the advent of colonialism, there were changes in the normal mode of doing things in all aspects of living. The United Africa Company (UAC), was one of the earliest modern firms that operated in the area that later became Nigeria⁹. It was this firm that received the British concession for control of areas surrounding the Niger River under the charter of the Royal Niger Company in 1886. There were also other large companies. The early companies in Nigeria were British based. By virtue of Colonial statutes enacted between 1876 and 1922, the law applicable to companies in Nigeria at this time was the ‘common law, the doctrines of equity, and the statutes of general application in England on the first day of January, 1900’ subject to any later relevant statute. The implication of this approach was that the common law concepts such as the concept of the separate and independent legal personality of companies as enunciated in Salomon v. Salomon¹⁰ was received into the Nigeria Company law and has since remained part of the law.¹¹. However with continued growth of trade, the colonialist felt it was necessary to promulgate laws to facilitate business activities locally. The first company law in Nigeria was the Companies Ordinance of 1912, which was a local enactment of the Companies (Consolidation) Act 1908 of England; and even the current company law of Nigeria¹²is largely modeled on the U.K.¹³ Company Act, 1948.¹⁴ Arguably, what we have now is a complex modernization of our indigenous system. It is quite tenable to state that this system is useful because of the increase and expansion in socio-economic activities.

SOURCES OF NIGERIAN COMPANY LAW

There are five sources of Nigerian Law. These are: Customary and Islamic law¹⁵, Received English Law which includes the doctrines of Equity, Common law and Statutes of General

 

 

 

 

 

• FN 10 Page 46

⁸ FN 10 Page 48

• Google
• [1897] AC 22
• Orojo ,Company Law and Practice In Nigeria (1992) page 17
• Companies and Allied Matters Act 1990, herein CAMA
• Herein means United Kingdom
• Guobadia,2000
• Lewis vs Bankole (1908) 1 NLR 81 at p. 83. See also Dawodu v.Danmole (1962) 1 WLR 1053

 

Application¹⁶, Nigerian Local Legislation including Delegated Legislation, Judicial Precedents, Law reports and Textbooks.

 

 

 

 

 

 

 

 

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