Options open to registered trustees in relation to Companies And Allied Matters Act (CAMA) 2019

The hullabaloo following the President’s recent signing into law of the Companies and Allied Matters Act (CAMA) 2019 is quite understandable.

For most incorporated trustees (including NGOs, Religious Bodies, Associations, and Clubs), the inclusion of the controversial Sections 839 and 842 in the said act was the final straw, an uppercut of some sort or better still, a blow below the belt. Many of them never saw it coming. The harrowing cries against the said sections of the act have been on the increase. Loudest of this umbrage are those from religious organizations. Salvos have been fired from each side of the divide. Many feel it is the government’s attempt to reap from where it has not sown. Some others contend it will work evil while some claim it will cause religious war. Some hail it. Some wail it.

Under Section 839 (1) (a) (b) & (c) of the said CAMA 2019, the Commission (i.e. the Corporate Affairs Commission) may by order suspend the trustees of an association and appoint an interim manager or managers to manage the affairs of an association where it reasonably believes that –
(a) There is or has been any misconduct or mismanagement in the administration of the association; (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 purposes 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. Under Section 839(2) of the said CAMA 2019, the trustees shall be suspended by an order of Court upon the petition of the Commission or members consisting 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. Under Section 842 of the CAMA 2019, the Commission, with the approval of the Minister, may dissolve an association, where it receives notification from a bank about the association’s dormant bank account(s) and where the association fails to provide evidence of its activities or respond satisfactorily within 15 days and also where the commission is unable, after making reasonable inquiries, to locate an association registered under the Act or any of its trustees.

The above provisions of Section 839 of the CAMA 2019 is similar in contents with the UK Charities Act 2016, Sections 2 and 4 thereof which amended Sections 76 and 79 of the UK Charities Act 2011, under which, the Commission in the UK can amongst others, of its motion by order remove any trustee, charity trustee, officer, agent or employee of the charity who has been responsible for misconduct or mismanagement, who knew of the misconduct or mismanagement but failed to take any reasonable step to oppose it and whose conduct contributed to it or facilitated it.

Although it is commonly retorted that what is good for the goose is also good for the gander, from the response of most religious bodies to the CAMA 2019, it is obvious that what is good for the UK may certainly not be good for Nigeria!

Whereas the CAC awaits the gazette of the said act to commence the formal implementation of the Act, the continuous crying over spilled milk by those who will be affected by the Act, may not be the requisite solution in sight. The intendment of this piece is to succinctly highlight options, which incorporated trustees (including NGOs, Religious Bodies, Associations, and Clubs) may consider in the wake of the signing into law of the said CAMA 2019. Mind you, this piece is not legal advice. Neither is it a clarion call. It is a considered opinion.

The under-listed options may thus be considered by the affected bodies rather than the continuous expression of consternation against the Act:
Sponsoring of an Amendment Bill. It is important to note that the said CAMA 2019 is a now a signed law having been assented to by the President, thus concluding the rigorous legislative cycle for the enactment of the Act. Note that the President cannot withdraw his assent once he has given same. I stand to be corrected. The President cannot approbate and reprobate on an assented Act. Affected associations and religious bodies desirous of effecting a change or an amendment to the CAMA 2019 may thus sponsor an amendment bill, which will be brought to the floor of the House as a private member bill for deliberations by the National Assembly.

The onus is on the affected bodies to harmonise their objections to the aforesaid sections of the Act, agree and propose an amendment thereof, propose an amended draft bill and present same to the House members sympathetic to their cause.

De-registering as a registered Incorporated Trustees
By this option, you are simply asking that your association no longer wants to be a registered association with the Commission. Whether the Commission will allow this without an order of court is another kettle of fish. Suffice it to say that the issue of registration, from the tone of the Act itself, is in my opinion, even discretional in the first place! A literal interpretation of Section 823(1) of the CAMA 2019 throws more light on this contention. The subsection states thus: Where two or more trustees are appointed by any community of persons bound together by custom, religion, kinship or nationality or by anybody or association of persons established for any religious, educational, literary, scientific, social, development, cultural, sporting or charitable purpose, they may, if so authorised by the community, body or association (in this Act referred to as “the association”) apply to the Commission in the manner provided for registration under this Act as a corporate body.

The benefits of being registered with the Commission are no doubt mouth-watering. These include: the association or trustees becomes a body corporate, enjoys perpetual succession; can create a common seal if they so wish; receives power to sue and be sued in its corporate name as such trustees; and also receives the power to hold and acquire, and transfer, assign or dispose of any property, or interests therein belonging to or held for the benefit of such association, in such manner and subject to such restrictions and provisions as the trustees might without incorporation, hold or acquire, transfer, assign or otherwise dispose of the same for the purposes of such community, body or association of persons. See Sections 823(2) & 830 of the CAMA 2019.

The decision whether or not to de-register, in the wake of Sections 839 and 842 of the CAMA 2019, would of course have to be made with serious considerations of the benefits of registration highlighted above. It is however, opined that it is not a sine qua non that an association must be registered with the Commission or any other body whatsoever. It is only an association that is a political party that has the obligation to be registered (in this case with INEC). This I believe, is the real intent of Section 40 of the Constitution of the Federal Republic of Nigeria (CFRN) 1999, which states thus: Every person shall be entitled to assemble freely and associate with other persons, and in particular he may form or belong to any political party, trade union or any other association for the protection of his interests: Provided that the provisions of this section shall not derogate from the powers conferred by this Constitution on the Independent National Electoral Commission with respect to political parties to which that Commission does not accord recognition.

The above Section 40 of the CFRN 1999 has been given judicial nod in a plethora of decided cases by our Appellate Courts. See: Abubakar Vs. A. G. Federation (2007) 3 NWLR (1022) 601 @ 638 B – G. In The Registered Trustees of Association of Tippers and Quarry Owners of Nigeria vs Yusuf& Ors, the court held thus: … the right to freely associate is unfettered except with regard to political parties not accorded recognition by the Independent National Electoral Commission (INEC).

Streamlining the number of Associations, where the Associations have the same Trustees
It is a common fact that many associations, particularly religious bodies, further have sub-associations besides the parent associations. Theses sub-associations, though legal entities in their own right, are still tied to the apron strings of their parent associations. Under this option, parent associations may have to merge with their sub-associations with the aim of streamlining the number of existing associations altogether. Good enough, Section 831(ii) of the CAMA 2019 empowers the Commission to treat any two or more associations having the same trustees as a single association.

Challenging the controversial Sections 839 and 842 of the CAMA 2019 in court.

Those who may be negatively impacted by the aforesaid Sections 839 and 842 of the CAMA 2019 may approach the Courts (Federal High Court) for a judicial interpretation of the said sections. There are instances where our courts have struck down sections of a statute and rendered them inapplicable, without necessarily striking down the overall statute itself. Refer Labour Party vs INEC& A.G. Fed. where the Federal High Court (per Kolawole J) declared Sections 140(2) and 141 of the Electoral Act (as amended) as null and void for being inconsistent with Sections 134 and 179 of the 1999 Constitution.

Although it may be argued that courts would only make pronouncements on real disputes/contentious matters rather than academic issues (see: CPC vs INEC& ORS (2011) LPELR-8257 SC), so that if your association has not had any real issue with the Commission regarding the application of the aforesaid sections of the CAMA 2019, its suit stand the risk of being struck out as such; Incorporated Trustees/NGOs/Associations/Religious Bodies/Clubs who fear that their constitutionally guaranteed rights may be trampled upon by the Commission’s applications/enforcement of the aforesaid sections of the CAMA 2019 against them may simply approach the court to enforce their fundamental rights against the Commission.

In conclusion, Incorporated Trustees/NGOs/Associations/Religious Bodies/Clubs should take solace in the fact that the CFRN 1999 is supreme to the provisions of any other law that may be inconsistent with the provisions of the Constitution. See: Section 1(1)& (3) of the CFRN 1999. Thus, where it is adjudged that the aforesaid sections of the CAMA 2019 offend any part of the CFRN 1999, the CFRN 1999 would prevail and that other law shall to the extent of the inconsistency, be void.

Orumor is a Lagos based lawyer