Corporate Affairs Commission and dispute resolution: To be forewarned is to be forearmed

One of the greatest law reforms in Nigeria’s business landscape in the last century was the enactment of the Companies and Allied Matters Decree, No. 1 1990. For business convenience, the law brought the major corporate vehicles under one umbrella and reflected some of the major reforms in corporate laws across the world. After three decades in operation, the legislation was reviewed to reflect the global need for ease of doing business and to leverage the immense benefit of the revolution in information technology. The resulting Companies and Allied Matters Act, No. 3 2020 (CAMA), has expanded provisions of 870 sections, new corporate market infrastructure, and a more business-friendly regime on corporate insolvency. The Administrative Proceedings Committee (APC) is a novel enforcement and dispute resolution mechanism of this Act. Considering its strategic importance, an exposé on this institution is imperative to make for the seamless implementation of the Act for the benefit of commerce and the growth of corporate jurisprudence.

Part G CAMA 2020 provides for the establishment of the APC. By section 851 of the Act, the Corporate Affairs Commission (CAC) is empowered to establish an Administrative Proceedings Committee to provide the opportunity of being heard for persons alleged to have contravened the provisions of this Act or the Companies regulations; resolve disputes or grievances arising from the operations of this Act or its regulations; and impose administrative penalties for contravention of the provisions of the CAMA or the Companies Regulations.

The procedure at the APC is laid out in Regulations 38-45 of the Companies Regulation 2021. The committee is comprised of 7 members. The Registrar-General of the CAC chairs the committee with 5 representatives from the operational departments of the Commission, one of whom shall be from the Compliance Department, and a representative of the Federal Ministry of Industry, Trade, and Investment. These representatives shall not be persons below the grade level of director. Where necessary, the Committee is at liberty to co-opt representatives of relevant associations such as shareholders, registrars, or trustees at any of its meetings as observers. An officer of the CAC with at least 10 years of post-call experience in the legal profession shall be appointed by the CAC to serve as secretary to the Committee.

Parties shall attend the sitting of the APC in person or be represented by a legal practitioner. Proceedings of the Committee shall be recorded on audio or visual tape or such other electronic device. Decisions reached on any matter shall be forwarded to the parties not later than 14 days after the confirmation by the Governing Board of the CAC.

According to section 851(10) CAMA, the sanctions that may be imposed by the Committee include administrative penalties, suspension or revocation of registration, or recommendation for criminal prosecution if matters brought before it reveal any criminal act. Parties who are dissatisfied with decisions of the APC are at liberty to appeal to the Federal High Court (FHC).

The debut of the CAC APC, as a quasi-judicial body for the ventilation of disputes in Nigeria’s corporate scene, is a milestone in the right direction but requires a cautious approach. There is a looming jurisdictional conflict between the FHC and the APC. The matters for which reference may be made to the APC are matters “arising from the operation of the Companies and Allied Matters Act or any other enactment regulating the operation of companies.” This field has been exclusively assigned to the FHC under section 251(1)(e) of the Constitution of the Federal Republic of Nigeria 1999 (CFRN). This puts the APC on a collision course with the FHC. The implication of this is that parties can validly challenge the determination by the Committee or even object to its jurisdiction on the matters for which the CFRN and CAMA appear to confer on the FHC.

The CAC APC has a long way to travel. Useful lessons may, however, be gleaned from the trajectory of the Administrative Proceedings Committee of the Securities and Exchange Commission (SEC), which has been in existence for over three decades and weathered similar challenges. Modelled after similar bodies in the US and UK, the APC of the SEC made its debut under section 24 of the Securities and Exchange Commission Decree 1988 and survived the various law reforms. It is currently accommodated under section 310 of the Investments and Securities Act, 2007, and SEC Rules and Regulations, 2013. The APC of the SEC has proved to be a vital tool in the enforcement of capital market laws and regulations and for dealing with malpractices in the market.

Notwithstanding its contribution to the Nigerian Capital Market, the SEC APC came under severe criticism on the allegations of violation of the rules of natural justice (Oni v APC, SEC & 1 OR (2014) 13 NWLR, (Pt.1424) 334), lack of jurisdiction (Okeke v SEC & 2 ORS (2013) All FWLR (Pt.687) 731: SEC v. Osindero Oni Lasebikan (2009) 5 NWLR, (Pt.1284) 377), and lack of independence (Itsueli & Anor v. SEC & ANOR (2012) 2 NWLR, (Pt.1284) 329). The CAC APC would most likely be accused of these violations. To be forewarned is to be forearmed.

To avoid these landmines, there is a need to amend section 251(e) CFRN to loosen the grip of the exclusive jurisdiction of the FHC on matters arising from the operations of the CAMA. This will accommodate the CAC APC as the first-instance dispute resolution mechanism and the FHC as an appellate body in the matters for which the former is assigned jurisdiction. It is imperative to review the membership of the committee under section 851 CAMA to include a representative of the Ministry of Justice. A retired judge can be appointed as chairman of the committee instead of the registrar-general of the Corporate Affairs Commission to deal with the charge of bias. Properly fine-tuned, the CAC APC stands to make immense contributions to Nigeria’s business environment.

Prof. Augustine Robert Agom, Faculty of Law, Ahmadu Bello University, Zaria:[email protected]/[email protected]/08034522487)