The concept of corporate personality was established a long time ago in the case of Salomon Vs Salomon & Company Ltd. (1897) AC 22 to the effect that a company is a legal entity distinct from its members. It has a distinct legal personality and is capable of suing and being sued in its corporate name. A company is a different person altogether from the subscribers to the memorandum and is neither an agent nor trustee for them. It also has the capacity to enter into any agreement in its corporate name. See: Marina Nominees Ltd. V. F.B.I.R. (1986) NWLR (Pt.20) 48; Afolabi & Ors. V. Western Steel Works Ltd. & Ors. (2012) 17 NWLR (Pt.1329) 286. See also Section 37 & 38 of the CAMA. A subsidiary company has its own separate legal personality. In general, the acts of a subsidiary company cannot be imputed to the parent company and vice versa. See: Union Beverages Ltd. V. Pepsi Cola International Ltd. & Ors. (supra).
BULET INTERNATIONAL NIGERIA LIMITED & ANOR v. OLANIYI &
It is noteworthy that the appellant in this appeal is a limited liability company. Can a limited liability company sue for defamation? The answer is in the affirmative. In Oduntan Vs. General Oil Ltd. (1995) LPELR-2249 (SC) 1 @ 14 A – B; (1995) 4 NWLR (Pt. 387) 1 @ 14 C – D. this Court held thus:
"A company can sue for defamation. It has reputation and goodwill which can be protected. An injury to its reputation can lead to loss of its goodwill. The Courts will, in appropriate cases, protect the reputation and goodwill of a company by award of damages and injunction. While it is true that a company, being an artificial person, is incapable of having natural grief and distress, this does not mean the same thing as its reputation in the way of its trade and business."
See also: Edem Vs Orpheo Nig. Ltd. (supra) @ 102 – 103.
In that regard nothing stopped a body corporate as the respondent to get the functions carried out by a legal firm acting on its behalf which firm would in turn utilise whatever human agent it so wished. In doing so the requirement of the law is met. Also as a follow up is that any servant or agent of the company or the legal firm acting for the company would meet the requirement of testifying as to that service carried out by the company or firm. It is not necessary that it is only that person who carried out the function on behalf of the company that must testify. Not at all, as any official of the company well equipped with the transaction and or related documents would suffice to testify. See Anyaebosi v RT Briscoe Nig. Ltd (1987) 2 NWLR (Pt.59) 84; Kate Enterprises Ltd v Daewoo Nigeria (supra). What I am grappling to put across is well captured in the case of the Supreme Court, Saleh v B. O. N. Ltd (2006) NWLR (Pt.976) 316 at 326 – 327 thus: "A company is a juristic person and can only act through its agents or servants. Consequently, any agent or servant can give evidence to establish any transaction entered into by a juristic personality. Even where the official giving the evidence is not the one who actually took part in the transaction on behalf of the company. Such evidence is nonetheless relevant and admissible and will not be discountenanced or rejected as hearsay evidence...." (Underlining mine) That principle was adopted in Comet S. A. Nigeria Ltd v Babbit Nig Ltd (2001) 7 NWLR (pt.712) pg.442, 452 para. B, per Galadima JCA (as he then was) held that: "Companies have no flesh and blood. Their existence is a mere legal abstraction. They must therefore, of necessity, act through their directors, managers and officials. Any official of a company well placed to have personal knowledge of any particular transaction in which a company is engaged can give evidence of such transaction."
It is trite that a company such as the respondent is a corporate entity and could act only through its servants and agents and as a result thereby any employee who is in a position to have a personal knowledge of a transaction by virtue of his office can give evidence of such transaction on behalf of the company. See Kate Enterprises Ltd V. Daewoo (Nig) Ltd (1985) 2 NWLR (Pt 5) P.127. See also Saleh V. Bank of the North Ltd. (2006) 6 NWLR (Pt. 976) P.316 at 326 – 327 wherein Musdapher, JSC said:
"Any agent or servant can consequently give evidence to establish any transaction entered into by a juristic personality. Even, where the official giving the evidence is not the one who actually took part in the transaction on behalf of the company. Such evidence nonetheless is admissible, will not be discountenanced or rejected as hearsay evidence. The learned trial judge was clearly in error to have ignored the evidence led by the respondents that they were not around when the appellant opened its account with the respondent bank."
My lords, the above reasoning is unimpeachable. Both at common law and under the Nigerian Companies and Allied Matters Act, a duly registered or incorporated company is a persona ficta; a juristic person, Lennards Carrying Co. v. Asiatic Petroleum Co. Ltd. (1915) AC 705, 713-714, per Viscount Haldane L.C.; Bolton (Engineering) Co. Ltd. v Graham and Sons Ltd. 1 QB 159, 172-173, Denning, L. J, that can only act through an alter ego, either its agents or servants, Kate Enterprises Ltd v Daewoo Nig Ltd [1985] 2 NWLR (pt.5) 116.
In Ishola v Societe Generale Bank Ltd (1997) LPELR 1547 (SC) 26-27; F-D, this Court, further elaborated on the nuances of this general proposition thus:
...it cannot be over emphasized that a company being a legal person or a juristic person can only act through its agents or servants and any agent or servant of a company can therefore give evidence to establish any transaction entered into by that company. Where the official giving the evidence is not the one who actually took part in the transaction on behalf of the company, such evidence is nonetheless relevant and admissible and will not be discountenanced or rejected as hearsay evidence. The fact that such official did not personally participate in the transaction on which he has given evidence may in appropriate cases, however, affect the weight to be attached to such evidence, Kate Enterprises Ltd. V. Daewoo (Nig.) Ltd. (1985) 2 NWLR (pt.5) 116; Anyaebosi v. R.T Briscoe (Nig.) Ltd [1987] 3 NWLR (pt.59) 84; Chief lgunbor and Ors v. Chief Ugbede [1976] 9-10 SC 179, 187 etc.
[Italics supplied]
Under the Companies Winding Up Rules 1983, a debt is proved against a wound-up Company by delivering or sending through post to the liquidator an affidavit verifying the debt, which must contain or refer to the statement of account showing the particulars of the debt and whether the creditor is or is not a secured creditor. The liquidator has the power to examine and admit or reject every proof lodged with it. It is only when a creditor is dissatisfied with the decision by the liquidator that he can apply to the Court to reverse or vary the decision.
The law is now well settled that until a company is formally wound up, it remains a legal entity with capacity to sue or be sued notwithstanding that it is under liquidation. See OREDOLA OKEYA TRADING CO. v BANK OF CREDIT AND COMMERCE INTERNATIONAL, IN RE AMOLEGBE (2014) LPELR-22011(SC), [2014] 8 NWLR (PT. 1408) 76, C. C. B. LTD v O’SILVAWAX INT’L LTD & ORS [1999] 7 NWLR (PT. 607) 97 and NDIC v BALONWU (2017) LPELR 41963(CA). PER AFFEN, J.C.A.
It is by the undaunting force of the law at the bottom of its creation, and protected through its growth or promotion to a functional juristic personality that it exists differently from, though not in isolation of its human components which reside mainly in its directors. That is the postulate in the doctrine of corporate personality which appears to have originated and gained persistent legitimacy for one hundred and twenty-five years now from the English decision in Salomon vs Salomon (1897) 2 AC 22. It applies in Nigeria as well. See Section 42 of the Companies and Allied Matters Act 2020.
In Adamu Muhammad Gbedu & Ors vs. Joseph I. Itie (Liquidator) (2020) 3 NWLR (Pt. 1710), 104 at 124 para C – D, the Supreme Court held that: “Company law derives from Common Law and that includes the Companies and Allied Matters Act, CAMA, applicable in Nigeria.” Its application in Nigeria has been consistently upheld by both the Apex Court and this Court. See Marina Nominees Ltd vs. FBIR (1986) LPELR – 1839 (SC), Ramanchandani vs. Ekpenyong Trenco (Nig) Ltd vs. African Real Estate & Investment Co. Ltd & Anor (1978) LPELR 33264 (SC), United Cement Co.
Ltd vs Libend Group Ltd & Anor (S016) LPELR – 42038 (SC). PER GAFAI, J.C.A.
The law is now well settled that until a company is formally wound up, it remains a legal entity with capacity to sue or be sued notwithstanding that it is under liquidation. See OREDOLA OKEYA TRADING CO. v BANK OF CREDIT AND COMMERCE INTERNATIONAL, IN RE AMOLEGBE (2014) LPELR-22011(SC), [2014] 8 NWLR (PT. 1408) 76, C. C. B. LTD v O’SILVAWAX INT’L LTD & ORS [1999] 7 NWLR (PT. 607) 97 and NDIC v BALONWU (2017) LPELR 41963(CA). PER AFFEN, J.C.A.
It is by the undaunting force of the law at the bottom of its creation, and protected through its growth or promotion to a functional juristic personality that it exists differently from, though not in isolation of its human components which reside mainly in its directors. That is the postulate in the doctrine of corporate personality which appears to have originated and gained persistent legitimacy for one hundred and twenty-five years now from the English decision in Salomon vs Salomon (1897) 2 AC 22. It applies in Nigeria as well. See Section 42 of the Companies and Allied Matters Act 2020.
In Adamu Muhammad Gbedu & Ors vs. Joseph I. Itie (Liquidator) (2020) 3 NWLR (Pt. 1710), 104 at 124 para C – D, the Supreme Court held that: “Company law derives from Common Law and that includes the Companies and Allied Matters Act, CAMA, applicable in Nigeria.” Its application in Nigeria has been consistently upheld by both the Apex Court and this Court. See Marina Nominees Ltd vs. FBIR (1986) LPELR – 1839 (SC), Ramanchandani vs. Ekpenyong Trenco (Nig) Ltd vs. African Real Estate & Investment Co. Ltd & Anor (1978) LPELR 33264 (SC), United Cement Co.
Ltd vs Libend Group Ltd & Anor (S016) LPELR – 42038 (SC). PER GAFAI, J.C.A.
Liquidation is a special circumstance which affects the concerned company and triggers the provision of Section 417 of CAMA, 1990, now Section 580 of CAMA, 2020 which makes it mandatory (by the use of the word “shall”) for leave of either the Court of Appeal or this Court to be sought and obtained by the Appellant for there to be a valid appeal. It is trite that where the law has stipulated in a mandatory provision applicable in specified circumstances, same must be given effect to. It is usually referred to as a condition precedent.
This Court has properly elucidated the expression “condition precedent” in J. S Atolagbe & Ors v Alhaji Muhammadu Awuni & Ors (1997) 9 NWLR (pt.522) 537 at 565 per Uwais CJN thus:- “Condition is a provision which makes the existence of a right dependent on the happening of an event; the right is then additional as opposed to an absolute right A true condition where the event on which the existence of the right depends is in the future uncertain, A “Condition Precedent” is one that delays the vesting of a right until the happening of an event” JOHN INYANG OKORO, J.S.C.
See Intercontractors v U.A.C. (1988) 2 NWLR (Pt 76) 303, Dagazau v Bokir Int’l Co. Ltd. (2011) 14 NWLR 261, 310, Pharmatek Industrial Projects Limited v. Trade Bank (Nig.) Plc (1997) 7 NWLR (Pt 514) 639. In UBA Trustees Ltd v Nigergrob Ceramic Ltd (1987) 3 NWLR (Pt. 62) 600, 614, the Court of Appeal considered the foregoing provisions in determining a similar question.
The Court stated: “It is the law that although on the appointment of a receiver by a debenture-holder, the management of the company in receivership becomes vested in the receiver, the board of the company can still validly act in a number of matters, outside ordinary management.
In the instant case in which the substantive action is challenging the validity of the appointment of the receiver, it would be invidious to suggest that the board could not authorise the action and that it is only the receiver who alone can authorise an action to challenge its own appointment.” HELEN MORONKEJI OGUNWUMIJU, J.S.C.
However, Section 60 (b) of CAMA is emphatic on the rights and liability of a foreign company. It provides: “60. For the avoidance of doubt, it is hereby declared that – (a) ….. (b) Nothing shall be construed as affecting the rights or liability of a foreign company to sue or to be sued in its name or in the name of its agent.” From the above, a foreign company such as the 2nd appellant has the statutory authority to sue or be sued in Nigerian Courts. The next germane issue is whether the 1st appellant is a subsidiary of the 2nd appellant and to what extent is the 2nd appellant liable?
Generally, a subsidiary company has its own separate legal personality and the act of subsidiary company cannot be imputed to the parent company nor the act of the parent company be imputed to the subsidiary company. Each of them is capable of suing or being sued in its own name. See UNION BEVERAGE LTD V PEPSICOLA INTERNATIONAL LTD (1994) 3 NWLR (prt. 330)1 and ECTHOES OF DEV. (NIG) LTD & ANOR V HUDROCHINA HOADONG (NIG) LTD & ANOR (2021) LPELR–55086. PER SHUAIBU, J.C.A.
The law is, however, trite that a limited liability company is a separate personality, different from its directors and promoters, and so should sue or be sued in its own name as regards its property or interest. I recently considered in depth and determined such issue in the case of Sadiq & Ors Vs Yunusa (2022) LPELR-56568 CA, where we held: “…This calls to question the capacity of the Respondent to institute the action, having not been done jointly with the said company, Sani Brothers Ltd.
And if Respondent, in fact, had the authority of the company to initiate the action, failure to produce such authority, was fatal as it would appear the Respondent was a busybody over a claim, which only the company had a duty to originate! The law is trite that a limited liability company is completely a different legal entity, separate from the persons who formed and/or promoted or run it. See the case of Abacha & Anor Vs A.G. Fed. & Ors (2013) LPELR – 21479 CA, where it was held: “The companies listed for investigation are severally a legal entity each with its individual personality.
In the instant case, though the companies listed for investigation may be owned by the Abacha family, the companies are at law different persons altogether from the subscribers to the memorandum of their association. The companies are not in law the agents of the subscribers or trustees for them. The subscribers as members are not liable in any shape or form, except to the extent and in the manner provided by the Companies and Allied Matters Act, 1990. See Also Motel Kaduna Ltd v. Deyemo (2006) 7 NWLR (pt. 978) page 93. In Ashibuogwu v. Attorney – General (Bendel) (1988), NWLR (pt.69) page 138.
It was held that a government owned limited liability company posses a legal personality of its own. It can sue and be sued by its name. Its shareholders, even if the major or sole shareholder is the Federal Government, it cannot be sued for debt incurred by the Company. See Macaura v. Northern Assurance Co. Ltd. (1975) AC 619. A. L. Underwood Ltd v. Bank of Liverpool and Motors Ltd (1924) 1 KB 775. An incorporated company is a creation of law, clothed with independent legal personality from the moment of its incorporation.
It has a distinct and separate personality from those that laboured to give birth to it. See Salomon v. Salomon & Co. Ltd (1897) AC 22 at 51, Trenco Nigeria Ltd v. African Real Estate Ltd (1978) 1 LRN 146 at 153, Marina Nominees Ltd v. Federal Board of Inland Revenue (1986) 2 NWLR (pt.20) page 48 at 61. A company registered is a separate and distinct entity from any one of its shareholders, no matter how many shares he may hold. See Section 37 of the Company and Allied Matters Act 1990, CBDI v. COBEC (Nig) Ltd (2004) 13 NWLR (pt. 890) page 376, K. S. O and Allied Products Ltd v.
Kafa Trading Co. Ltd (1996) 3 NWLR (pt.436) Page 244.” Per ABOKI, JCA. See also New Resources Int’l Ltd and Anor Vs Oranusi (2010) LPELR – 4592 (CA), where my Lord, Okoro JCA (as he then was) stated: “Since the decision of the House of Lords in 1897 in the much celebrated case of Salomon v. Salomon and Company Ltd (1897) AC 22, it established firmly the concept of corporate personality which means that once a company is incorporated under the relevant laws, it becomes a separate person from the individuals who are its members.
It has capacity to enjoy legal rights and is subjected to legal duties which do not coincide with that of its members. Such a company is said to have legal personality and is always referred to as an “artificial person”. PER MBABA, J.C.A.
It is also trite that the juristic personality of a body corporate is evidenced only by tendering the certificate of incorporation of the company. See BANK OF BARODA V. IYALABANI COMPANY LTD (2002) LPELR – 743 (SC), AFOLABI & ORS V. WESTERN STEEL WORKS LTD & ORS (2012) LPELR-9340 (SC), REPTICO S. A. GENEVA V. AFRIBANK NIG PLC . PER MUSA DATTIJO MUHAMMAD, J.S.C.
This brings me to the rule in Foss Vs Harbottle. In the case of Yalaju-Amaye Vs A.R.E.C. Ltd & Ors (1990) 4 NWLR (Pt 145) 422 @ 446 A . His Lordship Karibi Whyte, JSC reiterated the dictum of Jenkins, L.J. in Edwards Vs Halliwell (1950) 2 ALL ER 1084 @ 1066, where His Lordship held inter alia; “The rule in Foss Vs Harbottle, as I understand it, comes to no more than this. First, the proper plaintiff in an action in respect of a wrong alleged to be done to a company or association of persons is prima facie the company or the association of persons itself.
Secondly, where the alleged wrong is a transaction which might be made binding on the company or association and or all its members by a simple majority of the members, no individual member of the company is allowed to maintain an action in respect of that matter for the simple reason that if a mere majority of the company or association is in favour of what has been done, then cadit quaestio. Thus, the company or association is the proper plaintiff in all actions in respect of injuries done to it.
No individual will be allowed to bring actions in respect of acts done to the company which could be ratified by a simple majority of its members. Hence the rule does not apply where the act complained of was ultra vires the company, or illegal or constituted a fraud on the minority and the wrongdoers are in the majority and in control of the company… And finally, where a resolution has been passed by a simple majority, see Edwards Vs Halliwell (supra). These last mentioned circumstances are the generally recognized exceptions to the rule in Foss Vs Harbottle (supra).” PER KEKERE-EKUN, J.S.C.
Section 303 (1) of CAMA provides: “303 (1) Subject to the provisions of subsection (2) of this Section, a applicant may apply to the Court for leave to an action in the name or on behalf of a company, or to intervene in an action to which company is a party, for the purpose of prosecuting or defending or discontinuing the action on behalf of the company. (2) No action may be brought and no intervention may be made under Subsection (1) of this Section unless the Court is satisfied that – (a) the wrongdoers are the directors who are in control and will not take necessary action; (b) the applicant has given reasonable notice to the director of the company of his intention to apply to the Court under subsection (1) of this section if the directors of the company do not bring, diligently prosecute or defend or discontinue the action. (c) it appears to be in the interest of the company that the action be brought, prosecuted, defended or discontinued.” In Unipetrol (Nig.) Plc Vs.
Agip (Nig) Plc (2002) 14 NWLR (Pt. 787) 312 @ G – N, the Court of Appeal per Aderemi, JCA (as he then was), in interpreting the above provisions, held, inter alia. “It has now become accepted as settled in law that a derivative action is an action brought by a shareholder in the name of himself and all other shareholders to enforce the company’s rights.
The company must be joined as a defendant to the action so that it becomes a patty to the action and judgment can be given in its favour so that it will be bound by the Court’s judgment.” This position was affirmed by this Court in Agip (Nig) Ltd Vs. Agip Petrol International (2010) All FWLR (Pt. 520) 1198 @ 1230 – 1231 D – F. PER KEKERE-EKUN, J.S.C.