Section 839 of the Companies and Allied Matters Act 2020 (CAMA 2020): Much Ado About Nothing?
By Sam Omotoso Esq.
Much Ado About Nothing is an expression that implies making a fuss about something little. An example will be when a child is crying, “Help, she is in labour and needs to see a Doctor” because his/her mummy’s hen at the backyard is about to lay an egg. Since CAMA 2020 became law, almost everyone is saying something. Is it much ado about nothing or much ado about something?
On 7th August 2020, President Muhammadu Buhari signed the Companies and Allied Matters Bill, which was recently passed by the National Assembly.
Following the passage of the Bill by the Senate and the eventual signing into law by President Buhari, it was not a surprise that he received commendations from various stakeholders in the business community and otherwise. The new CAMA has been described by the stakeholders as Nigeria’s most significant business legislation in three decades due to its innovations, including remote or virtual general meetings, business rescue provisions for insolvent companies, provision for electronic filing, and a lot more. But you probably know all that already. So let’s skip all that and move to the gray, controversial areas.
Section 839 (1) & (2) CAMA 2020
According to the new law, “Section 839 (1) empowers the Corporate Affairs Commission to suspend trustees of an association and appoint interim managers to manage the affairs of the association where it reasonably believes that:
(a) There is or has been misconduct, mismanagement in the administration of the association, or
(b) It is necessary or desirable for the purpose of: (i). Protecting the property of the association; (ii). Securing a proper application for the property of the association towards achieving the objects of the association, the purpose of the association of that property, or of the property coming to the association; (iii). Public interest; or
(c) the affairs of the association are being run fraudulently.”
Subsection 2 provides as follows: (i). The trustees shall be suspended by an order of Court upon the petition of the Commission or Members consisting of one-fifth of the association, and the petitioners shall present all reasonable evidence or such evidence as requested by the Court in respect of the petition.
For better understanding, let us also consider subsection 3.
Subsection 3 provides for the hearing of the petition and the appointment of the Interim Managers by the Court with the assistance of the Commission. The Interim managers are designated by the Court or the appointment of any person who cannot do as otherwise instructed without the approval of the Court.
Why the controversies?
1. Let us start with the part that the new law empowers the Commission to suspend trustees of an association and appoint interim managers to manage the affairs of the association.
First of all, incorporated trustees involves any community of persons bound together by custom, religion, kinship or nationality, or anybody or association of persons established for any religious, educational, literary, scientific, social, development, cultural, sporting, or charitable purpose. Hence, any organization that falls under this category can be registered as an incorporated trustee. N.B: Most churches in Nigeria are registered as INCORPORATED TRUSTEEs.
Hence, this provision implies that the trustees (owners) of an organization: school, church, NGO, etc. can be suspended, and a manager can be appointed to manage the affairs of the organization. For example, the owners of a school can be suspended, and a manager can be appointed in their stead. Or the owners of a church (in most cases ministers in the church) can be suspended, and a manager can be appointed. The law did not specify the qualification, religion, or ethnic background of the manager, which is a red flag. Meaning, for a church, a Muslim can be appointed, for a Mosque, a Christian can be appointed, and for a school, an illiterate can be appointed as a manager. Hilarious, isn’t it?
2. The suspension can take place only when according to Section 893(1)(a)(b)(c), there is or has been misconduct, mismanagement in the administration of the association, to protect the property of the association, for public interest sake or where it is sufficiently believed that the association is being run fraudulently.
While the major duty of the Corporate Affairs Commission is to supervise, this provision is overreaching. Every organization has a constitution and should be independently left to manage their affairs internally. Moreso, the Act does not define what amounts to misconduct or mismanagement, leaving room for deadly assumptions.
Subsection 2 of 839 provides as follows: The trustees shall be suspended by an order of Court upon the petition of the Commission… The petitioner shall present all reasonable evidence or such evidence as requested by the Court in respect of the petition.
This simply implies that the Commission cannot just suspend the trustees of an organization except by the authority of a court order after sufficient evidence in the eyes of the law has been tendered. This is still not safe haven because “juria novit curia”; it is for the Court to know the law. Whatever the Court considers “sufficient evidence” is sufficient evidence, not forgetting that the Judge is a human and might be opposed to the beliefs and objects of that organization.
3. ”Subsection 3 provides for the hearing of the petition and the appointment of the Interim Managers by the Court with the assistance of the Commission. The Interim managers are designated by the Court or the appointment of any person who cannot do as otherwise instructed without the approval of the Court.”
In my opinion, this is the most offensive part of the entire provision. The Commission that brings a petition against an organization is still the same entity that “assists” in the appointment of a manager? This is just like reporting a fellow student to a teacher, and the teacher gives the student who reports a cane to flog the reported student. How unfair does that sound? This could imply that the Commission still has the power to appoint anyone it deems fit to manage the organization because the law expressly states with the assistance of the Commission. This further implies that the Court will appoint from the recommendation of the Commission.
What can be done?
Henry Ford once said, “Don’t find the fault, find the remedy.” The provision of section 839 of CAMA 2020 is beyond all doubts faulty and can be considered draconian in a democratic society. However, what is the way out?
1. The Court: The Socio-Economic Rights Accountability Project (SERAP) described the signing of CAMA 2020 as illegal and has vowed to challenge it in Court. Steps are already being taken in this direction.
2. The outcry on social media and other media outlets: Social media is a very viable tool. The Christian Association of Nigeria (CAN), as a body, leaders of churches have been crying out on social media, blogs, and exclusive interviews, and so on. Christians seem to be more affected by this law due to the fact that churches in Nigeria are registered as Incorporated Trustees. The outcry should not stop until the law is amended.
3. Ultimately, the first and second remedy will still fall under this remedy. The Court can order for an amendment, and the outcry on social media ultimately is for an amendment of the provision of section 893 of CAMA 2020.
Section 10 of the Constitution of the Federal Republic of Nigeria clearly makes Nigeria a secular state. This constitutional provision means anyone can adopt any religion he/she pleases. Any law that implies a direct opposition against any religion in Nigeria is definitely inconsistent with the provisions of section 10 of the constitution.
The CAN have asked questions like the three below and no reasonable answers have been given:
a) How can the government sack the trustee of a church which it contributed no dime to establish?
b) How can a secular and political minister be the final authority on the affairs and management of another institution which is not political?
c) For example, how can a non-Christian head of Government Ministry be the one to determine the running of the church?
As a friend will choose to put it, “we are scared of this new law because there is reasonable apprehension that this law tends to vest even more power in the centre.”
A bit of advice: To put it mildly, we might have played a role in the passage of this law. Our attitude to public hearings as Nigerians has always been it is their business. And then we are indolent, and something happens we now run to equity whereas equity says it aids the vigilant, not the indolent. The message to Nigerians is that whenever there is a public hearing, please be interested and make use of it to advocate your concerns.
Sam Omotoso Esq.