Evaluating Section 849 of CAMA 2020 under the Nigerian Constitution

For over three decades, the Companies and Allied Matters Act (CAMA) of 1990 had been regulating businesses in Nigeria without any reform. This is despite massive development and evolution in the business world which largely render some of the provisions of the law outdated.

On August 7, 2020, (CAMA) 2020 was signed into law by President Muhammadu Buhari. The Act introduced significant changes into Nigeria’s business environment and lessened obstruction which over the years had frustrated business dealings in Nigeria.

These significant changes made under the 2020 Act are to promote access to the business world for foreigners and national investors as well as encourage investments from new entrepreneurs that permit owners of small and medium-scale businesses to succeed and improve Nigeria’s economy. Some of the apparent benefits of CAMA 2020 are: lessen the effectiveness of the regulations for micro, small, and medium enterprises; lessen the time and cost of setting up a company; encourage financial steadiness; improve investment by increasing investor confidence in the Nigerian financial sector as well as all sectors of the economy; and create conducive business for transactions.

·

Notwithstanding the aforementioned nnovations and assurance, CAMA 2020 does not come without its defects and uncertainties. Section 849 of the amended CAMA 2020 provides for the merger of associations. It provides: “Two or more associations with similar aims and objects may merge under terms and conditions as the Commission may prescribe by regulation’’.

Appraisal of Section 849 of CAMA 2020

Section 849 of CAMA 2020 is unconstitutional. The above section authorises the commission to merge incorporated trustees with the same aims which is unconstitutional, and a total aberration of fundamental rights to freedom of association as provided for in Section 40 of the 1999 Constitution.

Section 1(1) of the 1999 Constitution (as amended) makes the constitution the supreme law of the land and binding on all citizens of Nigeria. Furthermore, Section 1(3) of the constitution provides that, “if any law is inconsistent with the provisions of this constitution, this constitution shall prevail, and that other law shall to the extent of its inconsistency be void”, thus declaring any conflicting laws with any provision of the constitution inapplicable to the extent of the inconsistency.

This is called Covering the Field. Under the doctrine of covering the field, neither the National Assembly nor the State House of Assembly can make a valid law covered by the constitution. This was also the ruling of the court in the case of Attorney General of Ogun state v. Attorney General of the Federation (1982) 2 NCLR 166.

The Court of Appeal in the case of Inspector General of Police v. ANPP and Ors applied this doctrine by declaring the provisions of the Public Order Act which provides that a permit is needed from the governor before people can assemble in public, contrary to the provisions of fundamental human rights of freedom of expression and association provided for in S.40 of the constitution and therefore null and void.

Section 40 of the constitution is explicit in granting trustees and members of the Board of Trustees of a duly registered Incorporated Trustee protections under the law.

Considering the above, an association cannot be dissolved except in accordance with Section 850 of CAMA nor can it be merged with another Association with similar objects without infringing on the fundamental rights of the trustees because they are afforded protection under the law. It is therefore submitted that the provision of Section 849 is inconsistent with the provisions of the constitution and is therefore null and void to the extent of that inconsistency.

Section 849 CAMA 2020 is autocratic

From the foregoing, the provision of Section 849 of CAMA is autocratic as it fails to bring into the limelight the sovereignty of the people as enshrined in the constitution under S. 14 (2)(a) of the constitution. This democratic precept includes the protection of fundamental human rights as provided in the constitution. It is therefore autocratic and tyrannical for an association(s) to be merged without the consent of the persons who formed the association and therefore constitutes a violation of their democratic rights.

Section 849 of CAMA is incomplete

The section is incomplete as information with regards to similarities in association, the procedure for a merger, etc. were not provided by the regulation.

Conclusion

It is submitted that Section 849 of CAMA is inconsistent with the provisions of the 1999 constitution which is the supreme law of the country and is therefore null and void. This article serves as a call to the National Assembly for an urgent review in order to prevent possible autocratic exertion of powers by the registrar-general of the Corporate Affairs Commission.

Elendu is a human rights public interest lawyer, chartered mediator and conciliator (ICMC).